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Judge asked to reconsider penalty against Citgo for 2006 spill at Lake Charles refinery

Last Modified: Wednesday, July 24, 2013 6:44 PM

From staff and wire reports

LAFAYETTE — A federal appeals court has ordered a district judge to reconsider a $6 million penalty levied against Citgo Petroleum in a lawsuit over a 2006 oil spill into the Calcasieu Ship Channel at the company’s Lake Charles refinery.

A recent 5th U.S. Circuit Court of Appeals’ ruling instructs U.S. District Judge Richard Haik to re-evaluate the company’s prior environmental violations and its decision to put off needed upgrades that might have prevented the spill.

The Justice Department sued Citgo in 2008, contending that the company had cut corners on safety to improve its bottom line and seeking $247 million in penalties

The oil spill occurred when heavy rains caused two “slop oil” tanks at the refinery to overflow into a bayou and the nearby Ship Channel.

Haik ruled that Citgo should pay $6 million to the federal government and $3 million to the state government for violations of the Clean Water Act lawsuit brought by the federal government.

Citgo did not deny its fault in the spill but argued against the penalties sought government Department and disputed the Justice Department’s figures on how much waste oil flowed into area waterways. Citgo said about 54,000 barrels of waste oil leaked out, while government experts put the amount at 76,800.

The figure is critical in Clean Water Act cases because the number of spilled barrels is generally used in calculating the penalty.

Haik wrote in his original ruling that he found Citgo’s figures more reasonable and used the lesser figure when determining the penalties. He also said he took into account Citgo’s response to the spill — the company reported a $65 million cleanup effort — in assessing the fines.

The $9 million in penalties in the civil case came on top of a $13 million fine that Citgo had paid after pleading guilty to a criminal Clean Water Act charge in connection with the spill.

The federal government said it would appeal Haik’s ruling shortly after it was handed down.

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