BP to pay record fine for air violations: EPA

BP Products North America, Inc. has been fined more than $60m for violations of federal environmental regulations in Texas and Alaska.

In addition to the penalty, the company will spend approximately $400m on safety upgrades and improvements to prevent future chemical releases and spills, said the US Environmental Protection Agency (EPA).

Granta Nakayama, assistant administrator for EPA's Office of Enforcement and Compliance Assurance, said: "BP committed serious environmental crimes in our two largest states, with terrible consequences for people and the environment. Today's agreement sends a message that these types of crimes will be prosecuted."

This is the largest criminal fine ever assessed against a corporation for Clean Air Act violations and the first criminal prosecution of the requirement that refineries and chemical plants take steps to prevent accidental releases.

The requirement was passed in 1990 as part of the Clean Air Act following the explosion at the Union Carbide chemical plant in Bhopal, India where thousands were killed and injured.

BP will pay $50m for a catastrophic explosion in 2005 that killed 15 people and injured more than 170 others at its Texas City refinery. BP will also pay a $12m fine for spilling 200,000 gallons of crude oil onto the Alaskan tundra and onto a frozen lake in March 2006, resulting in the largest spill that ever occurred on the North Slope.

“BP committed serious environmental crimes in our two largest states, with terrible consequences for people and the environment. Today's agreement sends a message that these types of crimes will be prosecuted.

Granta Nakayama, assistant administrator for EPA's Office of Enforcement and Compliance Assurance

In addition to the $50m fine, the company pleaded guilty to a felony violation of the Clean Air Act and will serve three years of probation for the Texas City incident. BP is also required to complete a facility-wide study of its safety valves and renovate its flare system to prevent excess emissions at an estimated cost of $265m.

For the Alaska spill, BP will serve three years probation, pay $4m to the National Fish and Wildlife Foundation to support research and activities on the North Slope, and pay $4m in restitution to the State of Alaska. BP is required to replace 16 miles of pipeline at an estimated cost of $150m.

On March 23, 2005, an explosion occurred at the Texas City refinery. Investigators learned that operators regularly failed to follow written standard operating procedures for ensuring mechanical integrity of safety equipment.

The Texas City refinery is BP's largest U.S. refinery and was previously owned by Amoco, which merged with BP in December 1998.

In March 2006, BP spilled more than 200,000 gallons of crude oil on the North Slope in Alaska. A second spill occurred in August 2006, but was quickly contained after leaking approximately 1,000 gallons of oil. Investigators determined the leak was caused by a build up of sediment in the pipe, and that BP failed to properly inspect or clean the pipeline. The investigation revealed that in 2004, the company became aware of increased corrosion in the pipeline.