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Bloomberg: BP Blast Victims Seek $2 Billion, Attack `Lenient’ Plea Deal

By Laurel Brubaker Calkins and Margaret Cronin Fisk

Nov. 21 (Bloomberg) — Victims of BP Plc’s 2005 Texas refinery blast are seeking $2 billion after attacking a U.S. plea deal as “shockingly lenient” and successfully urging recusal of the judge in the case on claims of a conflict of interest.

The victims’ lawyer said he will ask a new judge for the award on claims related to the blast instead of the $50 million provided for under the plea bargain. He argued in court papers filed in Houston yesterday that U.S. District Judge Gray Miller should remove himself since he worked for BP’s law firm at the time of the explosion that killed 15 workers. Miller stepped aside a few hours later.

“BP has a prior history of terrible misconduct, and that ought to form the basis” for increasing the fine to the federal maximum of twice the criminal proceeds, victims’ lawyer David Perry said in an interview. The victims claim BP earned $1 billion from the plant in the 14 months before the blast.

BP agreed last month to plead guilty to exposing workers to toxic emissions during the Texas City explosion, trying to corner the propane-trading market and spilling 200,000 gallons of oil from corroded Alaskan pipelines. The plea bargain, with combined fines of $373 million, would end BP’s federal criminal liability from the blast and the spills.

$50 Million

The $50 million portion of the fine related to the explosion allows BP, Europe’s second-largest oil company, to retain profits made by running the plant without necessary safety improvements, workers said in their victim impact statement, filed in Houston federal court. Miller, who was to accept BP’s plea Nov. 27, worked for Houston-based Fulbright & Jaworski before being appointed to the bench by U.S. President George W. Bush in 2006.

“The plea agreement proposed by the government and the defendant BP Products North America Inc. should be rejected as shockingly lenient and providing preferential treatment to BP,” the workers said. The fine amount “allows BP to retain more than 95 percent of the profit from its criminal conduct.”

The workers’ complaint was submitted under a federal law that allows crime victims to file objections before sentencing. BP spokesman Neil Chapman declined to comment.

The explosion, which injured hundreds, occurred March 23, 2005, when an octane-boosting unit overflowed as it was being restarted following repairs. Gasoline vapors spewed into an inadequate vent system, igniting a blast that destroyed windows five miles away.

Admitted Responsibility

BP, based in London, has admitted responsibility for the blast, which generated a record $21 million fine from the U.S. Occupational Safety and Health Administration and a finding by the U.S. Chemical Safety Board that excessive budget cuts compromised safety. BP said it never intentionally endangered workers.

BP has used a $1.6 billion fund to settle all but roughly 1,200 of the more than 4,000 blast-related injury and property damage claims. Claims by eight more injured workers are set for trial Nov. 26 in state court in Galveston, Texas.

Miller’s recusal notice, filed electronically in Houston federal court, didn’t offer an explanation for his action. The case has been reassigned to U.S. District Judge David Hittner.

“I’m very pleased that Judge Miller recognized he should recuse himself in the interest of propriety,” Perry said.

The blast victims also objected that the Justice Department fined BP $303 million for the commodities trading crimes, six times the $50 million it will pay for environmental crimes linked to the Texas City deaths, said Perry.

`An Insult’

“This deal is an insult from both the government and BP,” the lawyer said.

Miller’s recusal may delay acceptance of BP’s plea deal and sentencing in the case. Miller, 58, and Fulbright spokeswoman Pam Easton didn’t return calls seeking comment.

Perry said the Justice Department waived the customary pre- sentencing investigation on BP, which would’ve “brought out all the other felonies and violations the judge should consider” when sentencing the company.

“We respectfully disagree with the objections to the terms of the plea agreement and the qualification of the court,” Houston U.S. Attorney Don DeGabrielle said in an e-mailed statement before Miller’s recusal. Afterwards, DeGabrielle spokeswoman Nancy Herrera said the government would appear before Hittner, declining further comment.

BP’s plea falls under a special legal category intended to prevent a judge from sentencing the company to terms more harsh than it agreed to in the plea deal. Federal judges typically have sentencing discretion, regardless of the terms of a plea bargain, except under binding “C-pleas” such as BP’s agreement.

Previous Rulings

In comments made as part of a criminal case related to the collapse of Enron Corp., Hittner showed disdain for “C-pleas.”

In his April 2004 rejection of such an arrangement for Lea Fastow, wife of former Enron Chief Financial Officer Andrew Fastow, Hittner, appointed in 1986 by President Ronald Reagan, said the bargain was with the Justice Department, not him.

“I’m exercising the absolute right of a federal judge to say `I am not going to be bound by the agreement reached between the government and the defense as to what you think is appropriate in this case,”’ Hittner, 68, said to Lea Fastow.

BP’s plea in the Texas City blast was the first felony conviction of a corporation for violating Clean Air Act provisions designed to protect people from accidental toxic emissions. The parts of the law that BP admitted violating were passed in 1990 as a result of the explosion at Union Carbide Corp.’s chemical plant in Bhopal, India, which killed and injured thousands.

BP’s Plea

The injured BP workers also complained that the plea gives the parent company and its affiliates blanket immunity against other potentially criminal conduct.

Several investigations have determined that BP’s corporate budget cuts and lax maintenance policies led to the Texas refinery explosion, Perry claimed.

“Those decisions affected other plants at other places,” he said. “With this plea, BP can go into any U.S. attorney’s office in another city and claim their conduct there has already been taken care of down in Houston and the company can’t be prosecuted again.”

BP’s American depositary receipts rose $1.50 yesterday to $71.81 in New York Stock Exchange trading. One ADR represents six ordinary shares of BP. Royal Dutch Shell Plc is the biggest European oil company.

The criminal case is U.S. v. BP Products North America Inc., 07-cr-434, U.S. District Court for the Southern District of Texas (Houston).

To contact the reporters on this story: Laurel Brubaker Calkins in Houston, Texas, At [email protected] ; Margaret Cronin Fisk in Southfield, Michigan, At [email protected] .

Last Updated: November 21, 2007 00:10 EST

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