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Financial Times: Legal blow to BP deal over Texas City blast

By Sheila McNulty in Houston
Published: November 22 2007 02:00 | Last updated: November 22 2007 02:00

BP’s hopes of drawing a line under its problems in the US after agreeing a $380m (£184m) settlement with the authorities have been dealt a blow by a legal challenge over the fatal explosion at its Texas City refinery.

Last month BP agreed to pay a $50m criminal fine in respect of the 2005 explosion, as part of a deal to resolve all the cases being pursued by the US government, including actions related to its trading activities and oil spills in Alaska.

But David Perry, an attorney for victims of the blast, has asked a federal judge to reject the settlement, saying it is “shockingly lenient”.

Mr Perry said: “They made more than $1bn in profits operating this plant, so the government needs to take away the profit and then go up from there,” Mr Perry said in an interview. “It doesn’t make sense to let them keep the profit.”

Ronnie Chappell, BP spokesman, declined to comment.

The settlement, announced last month, has yet to be approved by a judge.

Mr Perry filed a motion this week in the Houston federal court demanding that Gray Miller, the judge in charge, should recuse himself, because he worked for BP’s law firm when the explosion took place.

Mr Miller was replaced by Judge David Hittner, who in the past has rejected a number of settlement deals negotiated by the government.

He rejected the deal the government had agreed with Lea Fastow, wife of Andrew Fastow, Enron’s former chief financial officer, and sent her to prison for a maximum 12 months, instead of the 10-month sentence agreed with the government, which included five months under home confinement.

Mr Perry said if Judge Hittner rejected the government’s deal with BP, the UK company could either return to the negotiating table or withdraw its guilty pleas and take its chances in court.

Under the deal agreed with the government last month, BP said it would pay a record civil penalty of $125m to the Commodity Futures Trading Commission for attempting to fix propane prices. It is also to pay $20m for the pipeline leaks in Alaska, a restitution of about $53m, and $7m to settle a separate case with the Federal Energy Regulatory Commission.

Mr Perry said the fact that BP had agreed to pay far more for the trading violations than the deaths of 15 people at Texas City sent the wrong message: “It does not make sense. In the western world we value human life more than we value financial trading.”

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