Plaintiffs seek $10 billion in BP refinery lawsuit

Wed Aug 4, 2010 2:29am BST

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* BP says sees no basis of lawsuit

* Case stems from excess pollution in April, May

By Erwin Seba

HOUSTON, Aug 3 (Reuters) - More than 2,000 people filed a class-action lawsuit in federal court on Tuesday seeking over $10 billion in punitive damages from BP Plc (BP.L)(BP.N) for 40 days of excess pollution from the company's Texas City, Texas, refinery, according to court documents.

"In order to avoid losing the profit from shutting down an operating unit ... (BP) instead spewed thousands of pounds of one of the most deadly and nastiest carcinogens into the atmosphere, exposing unsuspecting onsite workers and nearby residents," the lawsuit said.

BP reported to the Texas Commission on Environmental Quality that over 500,000 pounds of chemicals was released into the air between April 6 and May 16, when a hydrocracking unit at the refinery was malfunctioning.

BP also reported that an estimated 17,000 pounds of benzene was released during the malfunction in April and May in the hydrocracking unit called an ultracracker.

The Texas Attorney General's office is investigating whether the release should be handled as a criminal or only a regulatory matter.

A BP spokesman said monitoring equipment at the refinery did not show elevated levels of pollution during the malfunction.

"Based on our understanding of the facts and circumstances, BP does not believe there is any basis to pay claims in connection with this event," said BP spokesman Michael Marr in a statement. "BP is not taking or paying such claims."

"Each day, more than 400 pounds of benzene, a known human carcinogen, were released; a number 40 times the state reportable levels," according to the lawsuit filed on Wednesday in the U.S. District Court of the Southern District of Texas in Houston.

Houston attorney Tony Buzbee, who filed the case, said the damages were meant to punish the energy giant for its operation of the Texas City refinery, which is the nation's third-largest.

"BP averages 200, sometimes 400, releases yearly," Buzbee said in a statement. "The authorities have been unable to force BP to follow our emission laws and the regulatory penalties are insufficient. Enough is enough."

The 465,000 barrel per day (bpd) Texas City refinery was the site of an explosion in March 2005 that killed 15 workers and injured 180 others.

Several of the plaintiffs identified in Tuesday's lawsuit work at the refinery.

The lawsuit comes as BP faces federal Congressional and criminal investigations related to the oil spill in the Gulf of Mexico from its blown-out Macondo oil well.

The company took a $32 billion charge in the second quarter for costs related to the spill.

Last year, the U.S. Occupational Safety and Health Administration slapped BP with a record $87.4 million in fines for safety violations at the refinery and two-thirds of the penalty was due to failure to fix problems found in 2005 after the explosion.

BP has said it spent $1 billion to fix the problems found after the explosion. The company paid out more than $2 billion to settle claims from the blast. Last year, BP pleaded guilty to federal criminal charges in the explosion and paid a $50 million fine. The company was also placed on probation for three years.

In 2005, BP paid OSHA a $21.3 million fine for violations found in the blast. (Editing by Gary Hill)

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