Citgo 2006 Oil Spill Penalty Raised to $81M from $6M

A Louisiana federal judge has reconsidered his previous ruling for a 2006 Citgo oil spill in the Lake Charles area. Law360 reports that U.S. District Judge Richard T. Haik has found the company guilty of gross negligence and imposed a penalty of $81 million. In 2011, Haik imposed a $9 million penalty, including $3 million for state violations, and found that there was not enough evidence for gross negligence or willful misconduct. That ruling was vacated by an appeals court in 2013. “The court recognizes its error in originally penalizing Citgo only $6 million, the equivalent of approximately one day’s profit,” said Judge Haik in the most recent ruling. “Given the seriousness of this incident, the long term impact it had on the Lake Charles area, and all of the factors outlined above, an appropriate penalty belongs in a significantly higher range.”

One of the biggest onshore spills in the nation’s history occurred in 2006, when millions of gallons of oil leaked into the Indian Marais stream. Heavy rain had caused storage tanks to overflow at Citgo’s Lake Charles refinery. Although the tanks were emptied, oil spilled from a secondary holding pond. In June 2008, a lawsuit was filed on behalf of the U.S. Environmental Protection Agency (EPA) alleging Citgo was liable for billions of dollars in damages for violations of the Clean Water Act.

In 2011, Haik said evidence was not enough to find gross negligence. The judge said that Citgo built an adequate system in 1994 but only maintained it sporadically and that the company was intending to remove the excess oil but did not work quickly enough to prevent the incident. He imposed a penalty of $111 per barrel for the 54,000 barrels spilled. The U.S. appealed the penalty to the Fifth Circuit in December 2011, arguing that $6 million was not enough.

In July 2013, the appeals court vacated the $6 million verdict, stating that Judge Haik failed to consider how much Citgo profited by failing to act on the deficiencies for over a decade. It also asked the judge to reconsider the gross negligence finding and statutory penalty factors. Judge Haik reconsidered the case and came back with a gross negligence finding. He set a penalty of $1,500 a barrel, totaling $81 million.

“Upon second review of the evidence and arguments presented, this court could not agree more with the opinion of the Fifth Circuit, which stated ‘In our view, though, almost winning a highly risky gamble with the environment does not much affect the egregiousness of having been gambling in the first place,’” Judge Haik said, according to Law360. “In a state like Louisiana, where heavy rains are a common occurrence, failing to take adequate measures to prevent a tragedy such as this, with the knowledge Citgo had in its possession, rises to the level of gross negligence.”

from Parker Waichman http://www.yourlawyer.com/blog/citgo-2006-oil-spill-penalty-raised-to-81m-from-6m/