Attorneys: BP's fine could be $3.2 billion

February 18, 2008 4:22:22 PM PST
Attorneys for victims of BP PLC's deadly 2005 plant explosion contend the oil giant's fine could be as much as $3.2 billion, dwarfing the $50 million being proposed in a plea agreement. Attorneys said the fine should be at least upwards of $400 million.

The proposed fines were included in court documents filed by victims' attorneys last week at the request of a federal judge who is deciding whether to accept a plea deal from BP.

The agreement proposes that BP plead guilty to a violation of the Clean Air Act and pay a $50 million fine for its criminal conduct in the blast, which killed 15 people and injured more than 170 others at the Texas City refinery. The company would also be on probation for three years.

Plant manager Keith Casey formally entered the guilty plea on behalf of the company earlier this month.

But blast victims' attorneys asked U.S. District Judge Lee Rosenthal to reject the deal, arguing the fine was too low and the deal didn't provide for an independent monitor who would report on whether BP was meeting its safety obligations at the refinery. They also criticized prosecutors for not consulting victims while the deal was being put together.

Prosecutors and BP defended the deal, saying it's the harshest option available in assessing criminal punishment for the blast.

While Rosenthal seemed to disagree with most legal points made by attorneys for blast victims in the early February hearing, she did let them file legal briefs in which they could argue how the fine should be calculated.

Victims' attorneys said federal law calls for a defendant to be fined not more than the greater of twice the gross gain or twice the gross loss resulting from a crime.

BP has said it has paid more than $1.6 billion to settle at least 2,000 of the 4,000 lawsuits filed after the accident.

Attorneys for victims argue this figure represents the gross loss resulting from the blast and doubling that amount, as prescribed by law under the alternative fines provision, would result in a fine of $3.2 billion.

Arthur Gonzalez, one of those attorneys, said in an affidavit that if the losses are just based on pecuniary, or actual, losses victims have experienced, such as lost wages, medical and funeral expenses, that would be more than $200 million. That amount would then be doubled to more than $400 million under the law.

"The most conservative figure we can come up with is $400 million," said victims' attorney Edward Mallett. "The so called fine they are proposing is so low. This is not punishment at all. This is just their cost of doing business."

BP spokesman Neil Chapman declined to comment Monday. A spokeswoman for the U.S. Attorney's Office did not immediately return a call seeking comment. Both were expected to file their responses in court within a week.

But during the February hearing, BP's attorneys and prosecutors were skeptical about whether such actual losses could be calculated and if the civil settlements could be used to help determine the fine.

The plea deal was part of an October agreement by BP to pay $373 million to settle various criminal and civil charges.

The explosion at the Texas City plant about 40 miles southeast of Houston occurred after a piece of equipment called a blowdown drum overfilled with highly flammable liquid hydrocarbons.

The excess liquid and vapor hydrocarbons then were vented from the drum and ignited as the isomerization unit -- a device that boosts the octane in gasoline -- started up. Alarms and gauges that were supposed to warn of the overfilled equipment did not work properly.

The U.S. Chemical Safety and Hazard Investigation Board, one of several agencies that investigated the accident, found BP fostered bad management at the plant and that cost-cutting moves by BP were factors in the explosion.

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