October 25, 2007 / 4:57 PM / in 12 years

BP to pay $373 million in fines in U.S. cases

WASHINGTON (Reuters) - Oil major BP will pay $373 million to settle U.S. charges stemming from a deadly Texas refinery explosion and an Alaska oil spill, as well as allegations it manipulated propane markets, the government said on Thursday.

A British Petroleum oil refinery is seen in Whiting, Indiana, August 15, 2007. BP and subsidiaries have agreed to pay $373 million in fines and restitution for environmental violations and fraud charges, the U.S. Justice Department said on Thursday. REUTERS/John Gress

The criminal fines and civil penalties come as fledgling BP CEO Tony Hayward seeks to close a dark chapter in the company’s history in the United States with a restructuring aimed at improving its record on safety and the environment.

BP agreed to pay a $50 million criminal fine for the massive explosion at its Texas City refinery that killed 15 people and injured more than 170 others in 2005.


It was the biggest criminal penalty ever levied under the Clean Air Act. BP also has spent $1.6 billion already to compensate victims of the explosion, and has resolved over 1,600 personal injury claims. The incident prompted civil lawsuits that could send the payout even higher.

BP agreed to plead guilty to one felony violation of the act, the U.S. Justice Department said in an enforcement action done in concert with other federal agencies.

“Businesses that ignore those laws and endanger their workers and communities or corrupt our markets must be held accountable,” said Peter Keisler, acting attorney general.

The criminal fine, unveiled by the Justice Department and Environmental Protection Agency, eclipses a $37.4 million criminal fine that Refrigeration USA paid in 1997.

“These agreements are an admission that, in these instances, our operations failed to meet our own standards and the requirements of the law,” said Bob Malone, chairman of BP’s U.S. subsidiary. “For that, we apologize.”


Separately, BP will pay a record $303 million to settle price-fixing charges brought by the Commodity Futures Trading Commission related to propane market manipulation in 2004.

That fine would be the largest imposed by the CFTC, and double the previous record $150 million levied against Japanese trading giant Sumitomo Corp. in 1998 for illegal copper trading.

A federal grand jury in Chicago on Thursday indicted four former BP employees of conspiring to corner U.S. propane markets in February 2004. BP is the largest propane supplier in North America.

BP will also pay $20 million in criminal fines and restitution to Alaska to resolve criminal liability for a pipeline spill at its Prudhoe Bay oilfield in Alaska in 2006.

BP Chief Executive Tony Hayward earlier this month announced a restructuring which he hopes will address some of the weaknesses which BP executives blame for the problems at BP’s U.S. operations in recent years.

Hayward was appointed in May after predecessor John Browne was forced to stand down early after lying to a UK court in an attempt to keep his personal life private.

Additional reporting by Tom Doggett and Randall Mikkelsen

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