Largest Fine for Clean Water Act Misdemeanor

The $13,000,000.00 fine levied against CITGO, a Delaware corporation, on September 17, 2008, is the largest ever for a criminal misdemeanor violation of the Clean Water Act (CWA”).  CITGO pleaded guilty in United States District Court in Lake Charles, Louisiana, for negligently failing to maintain storm water tanks and failing to maintain adequate storm water storage capacity at its petroleum refinery in Sulphur, Louisiana in violation of the CWA.  As a result of these failures approximately 53,000 barrels of oil was discharged into the Indian Marais and Calcasieu Rivers following a heavy rain storm.  CITGO was sentenced to pay a $13,000,000.00 fine for the negligent discharges.  In addition to the fine, CITGO was to implement an Environmental Compliance Plan (“ECP”) which will require CITGO to take measures to ensure a spill of this type will not occur in the future.  The ECP includes new reporting requirements within the corporate structure regarding environmental issues and tank maintenance, the completion of the third storage tank and the installation of new and more effective oil removal equipment for the storm water tanks.

 

In 1994, CITGO converted its lagoon waste water system into a tank system for handling excess waste water and storm water.  In order to reduce costs, only two storm water tanks were constructed, but as early as 1998, employees and outside contractors advised that an additional tank was necessary.  Despite being advised of the inadequate storage capacity, CITGO did not approve construction of a third tank until 2005.  CITGO also failed to follow standard procedures for maintaining the tanks.  While in operation, CITGO failed to remove oil, sludge and solids from the tanks and failed to repair the skimming equipment.  The failure of this maintenance allowed a significant amount of oil to build up in the storm water tanks.  This build up contributed significantly to the overflow.  

 

On June 19 and June 20, 2006, a heavy rainstorm overwhelmed the capacity of the two existing tanks and allowed the oil build up to be released from the tanks into the two rivers.  The discharge caused limited commercial transportation on the water ways for approximately ten (10) days.

 

More later.

 

As always, feel free to call me or e-mail me with any questions at walter.james@jamespllc.com.

 

WDJiii