U.S. v. Bp Products North America Inc.

• Citation: 610 F.Supp.2d 655
• Decision Date: 12 March 2009
• Docket Number: Criminal No. H-07-434.
• Parties: UNITED STATES of America v. BP PRODUCTS NORTH AMERICA INC.
• Court: United States District Courts. 5th Circuit. United States District Courts. 5th Circuit. Southern District of Texas

610 F.Supp.2d 655

UNITED STATES of America v. BP PRODUCTS NORTH AMERICA INC.

Criminal No. H-07-434.

United States District Court, S.D. Texas, Houston Division.

March 12, 2009.

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Abe Martinez, Stephen Mark McIntyre, Financial Litigation, Office of US Attorney, US Marshal-H, US Pretrial SVCS-H, US Probation-H, Houston, TX, Daniel W. Dooher, Department of Justice, Washington, DC, for United States of America.

MEMORANDUM AND ORDER

LEE H. ROSENTHAL, District Judge.

                   I. Introduction ..................................................................... 660
                  II. Background ....................................................................... 662
                      A. The Clean Air Act ............................................................. 662
                      B. The Explosion at the Texas City Refinery ...................................... 664
                      C. The Regulatory and Internal Investigations .................................... 666
                         1. The CSB Report and the Baker Report ........................................ 666
                         2. The OSHA Settlement Agreement .............................................. 667
                         3. The TCEQ Agreed Order ...................................................... 668
                      D. The Criminal Investigation and Plea Agreement ................................. 668
                 III. The Legal Standard for Accepting or Rejecting a Rule 11(c)(1)(C) Plea ............ 674
                  IV. The Objections to the Proposed Plea .............................................. 678
                      A. Objections that the Victims No Longer Assert or Press ......................... 678
                      B. The Present Objections ........................................................ 680
                   V. The Fine ......................................................................... 681
                      A. The Applicable Statutory Provisions ........................................... 681
                      B. Disputed Issues Relating to § 3571(d) .................................... 682
                         1. The Loss or Gain To Be Measured ............................................ 682
                         2. The Apprendi Issue ......................................................... 684
                         3. Causation .................................................................. 687
                         4. Whether Calculating Gain or Loss Under § 3571(d) Would "Unduly
                             Complicate or Prolong the Sentencing Process" ............................. 690
                            a. Multiple Victims ........................................................ 691
                            b. Disputed Causation and Other Issues ..................................... 692
                            c. Future Losses ........................................................... 694
                      C. Analysis of the Victims' Objections to the $50 Million Fine ................... 695
                         1. Calculation Based on Gain .................................................. 695
                            a. The Information and Charged Offense ..................................... 696
                                 i. The Scope of the Information ....................................... 696
                                ii. The Charged Offense and Other Offense Conduct ...................... 697
                            b. The Victims' Proposed Bases for Determining Gain ........................ 699
                                 i. Fine Based on Profits .............................................. 699
                                ii. Fine Based on Cost Savings ......................................... 700
                               iii. Fine Based on the Cost-Saving Estimate that Forms the
                                      Basis for the Proposed Plea ...................................... 701
                

                         2. Calculation Based on Loss .................................................. 702
                            a. The Victims' Submissions ................................................ 703
                            b. Worker's Compensation Records ........................................... 707
                      D. Conclusion as to the Victims' Objections to the Fine .......................... 707
                  VI. The Victims' Objections to the Terms of Probation ................................ 707
                      A. The OSHA Settlement Agreement and the Sawyer Report ........................... 709
                         1. Whether BP Products Improperly Controlled the Audit ........................ 711
                         2. Whether the Audit's Sampling Practices Were Improper ....................... 712
                         3. Whether the Time Frame Is Acceptable ....................................... 716
                         4. Whether BP Products's Remediation Response Has Been Adequate ............... 718
                         5. Whether BP Products's Provision of Data for Follow-Up Reports
                             Is Proper ................................................................. 719
                      B. The TCEQ Agreed Order ......................................................... 720
                      C. Whether an Independent Monitor Is Necessary ................................... 720
                      D. Conclusion as to the Objections to the Proposed Probation Terms ............... 722
                 VII. Whether This Court Should Order a Presentence Investigation and Report ........... 723
                VIII. Whether the CVRA Violation Provides a Basis for Rejecting the Plea ............... 725
                  IX. Whether To Accept or Reject the Proposed Plea .................................... 727
                   X. Conclusion ....................................................................... 730
                

I. Introduction

BP Products North America, Inc. entered a plea of guilty to an information charging a felony violation of the federal Clean Air Act. The charge arises from the March 23, 2005 explosion at the Texas City, Texas plant that killed 15 and injured scores. The plea agreement stipulates the sentence: a $50 million fine and three years of probation with the conditions that BP Products comply with a Settlement Agreement reached with the Occupational Safety and Health Administration ("OSHA") and an Agreed Order imposed by the Texas Commission on Environmental Quality ("TCEQ").

The United States asks this court to accept BP Products's guilty plea under Rule 11(c)(1)(C) of the Federal Rules of Criminal Procedure. Under Rule 11(c)(1)(C), if this court accepts the plea, it must impose the stipulated sentence. This court has the responsibility of deciding whether to accept or reject the proposed plea.

Victims of the explosion have objected. The victims have been given the opportunity to participate in court hearings. The victims and their lawyers have spoken at these hearings and many victims have submitted written impact statements. Through their lawyers, the victims have also filed numerous briefs and voluminous information, including a report on environmental and safety compliance prepared for the civil cases filed after the explosion. The victims have been heard and their views fully considered.

The victims' arguments include that the fine is too low and the probation conditions are too lenient. The government responds that it aggressively prosecuted BP Products. When BP Products signed the plea agreement, it would have been the first company criminally convicted of knowing violations of the Risk Management Plan regulations of the Clean Air Act.¹ The $50 million fine will be the largest criminal fine imposed against a single corporation under the Clean Air Act and the largest criminal fine imposed for a fatal industrial accident. The proposed probation conditions include compliance with requirements imposed after the explosion for extensive process safety and environmental improvements at the Texas City refinery. The government states that it required BP Products to plead to the highest offense that could have been charged based on the evidence, despite the fact that lesser charges were available. (Docket Entry No. 18 at 4, 10-11). The victims are not asking this court to reject the plea because of the offenses charged. (Docket Entry No. 66 at 100-01).

BP Products points out, and the victims have not disputed, that the fine is not the only financial consequence that BP Products will bear as a result of the explosion. In addition to paying over $1.6 billion to the victims to settle approximately 4,000 civil cases, BP Products has also paid almost $21.7 million in fines to OSHA and to the TCEQ and will pay over $265 million to do the work required under the OSHA Settlement Agreement and the TCEQ Agreed Order. (Docket Entry No. 8 at 10-11).²

A fine is just that. It is not intended to be compensation to the victims or payment for safety improvements. The victims have not objected to the proposed plea on the basis that restitution is not part of the stipulated sentence.

In deciding whether to accept or reject the proposed plea, this court's task is to make an individualized assessment of the stipulated sentence based on the facts and circumstances specific to this case. A court may not reject a plea proposed under Rule 11(c)(1)(C) based on broad policy grounds or on a categorical basis. A court's discretion to reject a plea is also limited by the constraints of the judicial, as opposed to the prosecutorial, role. A court may not reject a proposed plea because it believes that additional crimes or additional defendants should have been charged; such decisions are up to the prosecutor. Nor may a court insert itself into the plea-bargaining process by modifying or rewriting the proposed plea and sentence. A court may only evaluate the plea that the parties have proposed, not a hypothetical plea that the court might prefer but the parties have not presented. A court must accept or reject the proposed plea and explain why, but may not modify or change its terms. A disciplined and careful analysis of the facts and circumstances, under the applicable law and statutes, is required.

Based on the pleadings, the briefs, the statements, the submissions, the arguments, and the applicable law, this court finds that the proposed plea satisfies the purposes that the law recognizes as controlling....