Thursday, September 22, 2005

BP Fined Over $21 Million For Refinery Explosion That Killed 15

The Occupational Safety and Health Administration fined BP Amoco more than $21 million for over 300 violations related to the March 28 explosion that killed 15 workers and injured 170.

The citation included 170 "Egregious Willful Violations" at the maximum $70,000 each for total of $11,690,000. Willful violations are those committed with an intentional disregard of, or plain indifference to, the requirements of the Occupational Safety and Health Act and regulations. "Egregious" means that instead of one citation for a number of violations, each individual violation is cited at the maximum. There were five additional willful safety violations and two willful health violations.

OSHA Regional Administrator John Miles said that the agency is considering whether to refer some violations to the Justice Department for possible criminal prosecution. OSHA is only allowed to file criminal charges when a willful violation results in a fatality. But according to an earlier article in the Houston Chronicle, the law limits OSHA to filing criminal charges when a company kills its own employee(s). In the BP case, only employees of a contractor were killed.

Because the explosion also released 19,000 pounds of hexane and other toxic substances into the air, however, it is possible for the Environmental Protection Agency to prosecute under the Clean Air Act (CAA), which has much stronger penalties. The CAA states that a person “negligently places another person in imminent danger of death or serious bodily injury” can be sentenced to one year in jail, and a person who at the time knowingly places another person in imminent danger of death or serious bodily injury can serve up to 15 years in jail.

In the settlement with OSHA, BP also agreed to:

  • complete a review of the ISOM unit to determine how it can be operated safely and alert OSHA if and when a decision is made to start up the unit in the future;

  • retain a firm with expertise in process safety management (PSM), including pressure relief systems, safety instrumented systems, human factor analysis and performing process safety audits, to conduct a refinery-wide comprehensive audit and analysis of the company's PSM systems;

  • hire an expert to assess and report on communication within and between management, supervisors, and authorized employee representatives and non-management employees and the impact of the communication on implementation of safety practices and procedures;

  • submit to OSHA and BP Products' authorized employee representative, every six months for three years, logs of occupational injuries and illnesses ("OSHA 300 Logs") and all incident reports related to PSM issues;

  • notify the OSHA area office of any incident or injury at the Texas City facility that results in an employee losing one or more workdays during the same three-year period.
Under the agreement, BP does not admit the alleged violations or agree with the way OSHA has characterized them.

Although BP Products North America President Ross Pillari stated he was pleased to have reached an agreement with OSHA and fully endorsed the corrective actions, a BP statement cautioned that "Under the agreement, BP does not admit the alleged violations or agree with the way OSHA has characterized them."

In a preliminary report, BP claimed that the explosion was the fault of "deeply disturbing" mistakes by the workers. Despite BP's casting of blame on its employees, the US Chemical Safety and Hazard Investigation Board has found that several alarms and other equipment had failed on the day of the explosion and that The BP had been having problems with the process for five years before the explosion.

The CSB issued an urgent recommendation to BP last month to commission an independent panel that would review a range of safety management and culture issues stemming from the explosion. BP agreed to set up the panel. OSHA's Miles agreed that "the health and safety culture at the BP plant was lax, which contributed to the blast."

Personally, I'm surprised and pleased at the size of the penalty which is far higher than I had predicted. On the other hand,

  • The clear lesson for employers is not to kill too many workers at one time. After all, the fine amounts to $1.4 million per fatality. How often does a fine come anywhere close to that amount when an employer's willful actions results in the death of only one or two employees?

  • Despite the record size of the penalty, it's a mere pimple on the total profits of the company. BP had $285 billion in revenue and $17 billion in profit for 2004. For example, corporate giant Tyson Foods, with a 2004 profit of $403 million was fined only $60,000 for the 1999 deaths of two workers at its animal feed plant in Robards, Ky. As I said before, only a fine in the neighborhood of $20 billion would have a punishing financial impact on the company.

More BP stories here.