Judge mulls challenge to BP refinery blast plea

HOUSTON (Reuters) - A judge said on Wednesday she will consider a victims' challenge to a proposed $50 million fine and other elements of BP Plc's plea agreement to resolve criminal liability in a deadly 2005 blast that killed 15 people at a Texas refinery.

U.S. District Court Judge Lee Rosenthal said she wants more information on victims' claims that BP has failed to follow conditions set down by U.S. safety regulators. Victims also have criticized the proposed $50 million criminal fine against the London-based energy giant as too low.

"The victims have raised a challenge and it is my responsibility to consider that challenge," Rosenthal said at a hearing, addressing federal prosecutors and BP attorneys who hammered out the agreement behind closed doors.

A ruling on BP's plea agreement will not come until October or later, Rosenthal said.

Rosenthal's ruling continues a legal battle that began in October when federal prosecutors unveiled the deal reached in secret with BP. Victims who were injured in the blast and survivors of those who died claim their rights were violated because they were not consulted.

The $50 million criminal penalty - which would be the biggest levied under the Clean Air Act - is part of a $373 million package of fines BP agreed to pay in October to settle a raft of charges, including a 2006 Alaska oil spill and allegations it manipulated the U.S. propane market in 2004.

Analysts said the $50 million fine pales in comparison to the $17.29 billion the company earned in 2007.

"To you and me $50 million is a lot, but on a basis that's meaningful to BP, it wouldn't even count," said analyst Bill Ferrer of W.H. Reaves & Co, a New Jersey investment firm.

BP entered a tentative guilty plea in February to a criminal Clean Air Act violation in the March 23, 2005, explosion at its giant Texas City, Texas, refinery, which also injured 180 people.

BP had set aside $1.6 billion to resolve 4,000 civil lawsuits stemming from the explosion, but has not disclosed actual payouts. Less than 20 lawsuits are still pending, it said.

Rosenthal also said she will make no final decision on whether failure to honor victims' rights should void the agreement.

The U.S. Appeals Court in New Orleans sided with victims and said their rights were violated but left it up to Rosenthal to determine if that would negate BP's agreement to plead guilty, pay the $50 million fine and spend three years on probation.

Rosenthal told victims' lawyers she wanted to see whether the proposed fine was in line with their actual losses.

That drew opposition from BP attorney Mark Holscher of Kirland & Ellis LLP.

"What we pled to is not the cause of those losses," Holscher said.

In 2005, BP paid a $21.4 million fine to the federal Occupational Safety and Health Administration for worker safety violations in the blast. The company also agreed to an independent audit of its safety programs.

Victims' attorney Edward Mallett said BP employees and the outside company did spot checks instead of the audit intended by OSHA.

"We talked to OSHA and they say BP's doing fine and we say they're not," Mallett said.

(Editing by David Gregorio)