Citgo must pay $81 million fine for 2006 spill in Louisiana: U.S. 5th Circuit

A federal judge was correct in fining the Citgo Petroleum Corp. $81 million for allowing its Lake Charles area refinery to discharge  at least 53,000 barrels of slop oil into the Indian Marais waterway, Calcasieu River and adjacent waterways in 2006, the U.S. 5th Circuit Court of Appeals ruled Wednesday (Feb. 14).

Now-retired U.S. District Judge Richard Haik Jr. in Lafayette had originally only agreed to a $6 million fine against the company in 2011, but the 5th Circuit agreed with federal prosecutors in a 2013 decision that the fine should be adjusted upward to take into account the millions of dollars that the company avoided spending by releasing the material into the water.

In 2014, Haik concluded that the company realized an economic benefit of $91.7 million, in part by not having to build two additional storage tanks to hold wastewater and the equipment needed to treat the water. Hail also concluded that the company acted with gross negligence in handling the incident.

Haik did adjust his proposed penalty downward, to $81 million, after apparently taking into account the $65 million spent by Citgo to clean up the spill.

In its ruling, a three-judge panel of the 5th Circuit concluded that Citgo was incorrect in arguing that Haik failed to consider the least costly alternative to prevent the spillage — that two additional wastewater storage tanks were needed, instead of one. It also agreed with Haik’s calculations involving the value of the company’s economic benefits from not building the tanks.

The appeals panel also disagreed with federal prosecutors that Haik should have kept the penalty at $91.7 million, saying that it was within his discretion to consider the company’s cleanup costs.

Citgo officials did not immediately respond to a request for comment on whether the company would appeal the decision.

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