British Petroleum to pay more than $370 million for violations in U.S.

British Petroleum and several of its subsidiaries in late October 2007 agreed to pay approximately $373 million in fines and restitution for environmental violations, according to the U.S. Department of Justice. The sanctions stem from a fatal explosion at a Texas refinery in March 2005, leaks of crude oil from pipelines in Alaska, and fraud for conspiring to corner the market and manipulate the price of propane carried through Texas pipelines, the DOJ said.

The total payments agreed to by BP include:

— $50 million in criminal fines to be paid as part of an agreement to plead guilty in the Southern District of Texas to a one-count felony violation of the Clean Air Act. The agreement resulted from the prosecution of BP by the DOJ for a catastrophic explosion that occurred at the BP Texas City refinery on March 23, 2005, that killed 15 contract employees and injured more than 170 others.

The catastrophic explosion was the result of hydrocarbon liquid and vapor being released from a “blowdown stack” and igniting during the startup of a unit that is used to increase octane content in unleaded gasoline. The unit had been shut down for nearly a month for maintenance and repairs.

BP admitted that from 1999 up until the morning of March 23, 2005, several procedures required by the Clean Air Act for ensuring the mechanical integrity and a safe startup had either not been established or were being ignored. The DOJ said the case was the first prosecution under a section of the Clean Air Act specifically enacted to prevent accidental releases that may result in death or serious injury.

— $12 million in criminal fines, $4 million in payments to the National Fish and Wildlife Foundation, and $4 million in criminal restitution to the state of Alaska, as part of an agreement to plead guilty by British Petroleum Exploration (Alaska) Inc. (BPXA) to a violation of the Clean Water Act to resolve criminal liability relating to pipeline leaks of crude oil onto the tundra as well as a frozen lake in Alaska.

— A criminal penalty of $100 million, a payment of $25 million to the U.S. Postal Inspection Consumer Fraud Fund, and restitution of approximately $53 million, plus a civil penalty of $125 million to the Commodity Futures Trading Commission, as part of an agreement to defer the prosecution of a one-count criminal information filed in the Northern District of Illinois. BP America Inc. was charged with conspiring to violate the Commodity Exchange Act and to commit mail fraud and wire fraud.

In addition, a 20-count indictment returned by a federal grand jury in Chicago charges four former employees of a subsidiary of BP America Inc. with conspiring to manipulate and corner the TET propane market in February 2004, and to sell TET propane at an artificially inflated index price in violation of federal mail and wire fraud statutes, along with substantive violations of the Commodity Exchange Act and wire fraud.

Source: U.S. Department of Justice.