BP Solves One Tiny -- $50.4 Million -- Legal Headache

BP Plc. (BP), which has claimed responsibility for the worst oil spill in U.S. history, today resolved one of its many legal challenges, agreeing to pay a $50.6 million fine for failing to fix safety problems after a deadly 2005 fire at its Texas City, Texas refinery. It also plans to spend hundreds of millions of dollars on upgrades at the plant.

At issue are 270 of the 709 Occupational Safety and Health Administration citations against the company for failing to make promised fixes.in the wake of the accident, which killed 15 and injured 170 oil workers. Media reports and investigations found that the company put profits over safety. Tony Hayward was named BP CEO after that accident and promised to focus on safety "like a laser." Hayward was replaced recently by Bob Dudley, who has promised to do the same after the Gulf disaster.

Burying the Hatchet

BP said last year that it would challenge a record $87.4 million fine from OSHA. It also was fined $50 million for violating the Clean Air Act. Now the two sides have begun to bury the hatchet.

"Both parties have agreed to settle these matters and focus on moving forward collaboratively in order to continue to improve plant safety," according to a BP statement. "This new agreement addresses the concerns that OSHA raised in these citations. BP is hopeful that this agreement will provide a platform to resolve the remaining citations."

Earlier this month, 12,000 plaintiffs agreed to file suit against the U.K.-based company for
allowing the refinery to release 500,000 pounds of pollutants into the air between April 6 and May 16 before the malfunction was fixed and the public notified. BP has said it has done nothing wrong and that no notification was required. Last week, Texas's Attorney General filed a civil environmental enforcement action against the company.

Millions More for Upgrades

As part of the agreement, BP will "further accelerate" its planned upgrades of the plant, costing $500 million between 2010 and 2016.

This amount is in addition to the more than $1 billion that BP spent on improvements at the Texas City from 2005-2009. The United Steelworkers Union, which represents hourly workers at Texas City, was consulted in the process.

BP resolved cases brought by families of the dead and injured privately.

Separately, BP has agreed to fund a $20 billion escrow fund to pay for damages caused by the Gulf Oil Spill. Environmentalists want billions more to address environmental concerns. Additional lawsuits are still pending, including some filed by the same firm involved in the Texas City matter.