LEE H. ROSENTHAL, District Judge.
I. Introduction ..................................................................... 660 II. Background ....................................................................... 662 A. The Clean Air Act ............................................................. 662 B. The Explosion at the Texas City Refinery ...................................... 664 C. The Regulatory and Internal Investigations .................................... 666 1. The CSB Report and the Baker Report ........................................ 666 2. The OSHA Settlement Agreement .............................................. 667 3. The TCEQ Agreed Order ...................................................... 668 D. The Criminal Investigation and Plea Agreement ................................. 668 III. The Legal Standard for Accepting or Rejecting a Rule 11(c)(1)(C) Plea ............ 674 IV. The Objections to the Proposed Plea .............................................. 678 A. Objections that the Victims No Longer Assert or Press ......................... 678 B. The Present Objections ........................................................ 680 V. The Fine ......................................................................... 681 A. The Applicable Statutory Provisions ........................................... 681 B. Disputed Issues Relating to § 3571(d) .................................... 682 1. The Loss or Gain To Be Measured ............................................ 682 2. The Apprendi Issue ......................................................... 684 3. Causation .................................................................. 687 4. Whether Calculating Gain or Loss Under § 3571(d) Would "Unduly Complicate or Prolong the Sentencing Process" ............................. 690 a. Multiple Victims ........................................................ 691 b. Disputed Causation and Other Issues ..................................... 692 c. Future Losses ........................................................... 694 C. Analysis of the Victims' Objections to the $50 Million Fine ................... 695 1. Calculation Based on Gain .................................................. 695 a. The Information and Charged Offense ..................................... 696 i. The Scope of the Information ....................................... 696 ii. The Charged Offense and Other Offense Conduct ...................... 697 b. The Victims' Proposed Bases for Determining Gain ........................ 699 i. Fine Based on Profits .............................................. 699 ii. Fine Based on Cost Savings ......................................... 700 iii. Fine Based on the Cost-Saving Estimate that Forms the Basis for the Proposed Plea ...................................... 701
2. Calculation Based on Loss .................................................. 702 a. The Victims' Submissions ................................................ 703 b. Worker's Compensation Records ........................................... 707 D. Conclusion as to the Victims' Objections to the Fine .......................... 707 VI. The Victims' Objections to the Terms of Probation ................................ 707 A. The OSHA Settlement Agreement and the Sawyer Report ........................... 709 1. Whether BP Products Improperly Controlled the Audit ........................ 711 2. Whether the Audit's Sampling Practices Were Improper ....................... 712 3. Whether the Time Frame Is Acceptable ....................................... 716 4. Whether BP Products's Remediation Response Has Been Adequate ............... 718 5. Whether BP Products's Provision of Data for Follow-Up Reports Is Proper ................................................................. 719 B. The TCEQ Agreed Order ......................................................... 720 C. Whether an Independent Monitor Is Necessary ................................... 720 D. Conclusion as to the Objections to the Proposed Probation Terms ............... 722 VII. Whether This Court Should Order a Presentence Investigation and Report ........... 723 VIII. Whether the CVRA Violation Provides a Basis for Rejecting the Plea ............... 725 IX. Whether To Accept or Reject the Proposed Plea .................................... 727 X. Conclusion ....................................................................... 730
BP Products North America, Inc. entered a plea of guilty to an information charging a felony violation of the federal Clean Air Act. The charge arises from the March 23, 2005 explosion at the Texas City, Texas plant that killed 15 and injured scores. The plea agreement stipulates the sentence: a $50 million fine and three years of probation with the conditions that BP Products comply with a Settlement Agreement reached with the Occupational Safety and Health Administration ("OSHA") and an Agreed Order imposed by the Texas Commission on Environmental Quality ("TCEQ").
The United States asks this court to accept BP Products's guilty plea under Rule 11(c)(1)(C) of the Federal Rules of Criminal Procedure. Under Rule 11(c)(1)(C), if this court accepts the plea, it must impose the stipulated sentence. This court has the responsibility of deciding whether to accept or reject the proposed plea.
Victims of the explosion have objected. The victims have been given the opportunity to participate in court hearings. The victims and their lawyers have spoken at these hearings and many victims have submitted written impact statements. Through their lawyers, the victims have also filed numerous briefs and voluminous information, including a report on environmental and safety compliance prepared for the civil cases filed after the explosion. The victims have been heard and their views fully considered.
The victims' arguments include that the fine is too low and the probation conditions are too lenient. The government responds that it aggressively prosecuted BP Products. When BP Products signed the plea agreement, it would have been the first company criminally convicted of knowing violations of the Risk Management Plan regulations of the Clean Air Act.
BP Products points out, and the victims have not disputed, that the fine is not the only financial consequence that BP Products will bear as a result of the explosion. In addition to paying over $1.6 billion to the victims to settle approximately 4,000 civil cases, BP Products has also paid almost $21.7 million in fines to OSHA and to the TCEQ and will pay over $265 million to do the work required under the OSHA Settlement Agreement and the TCEQ Agreed Order. (Docket Entry No. 8 at 10-11).
A fine is just that. It is not intended to be compensation to the victims or payment for safety improvements. The victims have not objected to the proposed plea on the basis that restitution is not part of the stipulated sentence.
In deciding whether to accept or reject the proposed plea, this court's task is to make an individualized assessment of the stipulated sentence based on the facts and circumstances specific to this case. A court may not reject a plea proposed under Rule 11(c)(1)(C) based on broad policy grounds or on a categorical basis. A court's discretion to reject a plea is also limited by the constraints of the judicial, as opposed to the prosecutorial, role. A court may not reject a proposed plea because it believes that additional crimes or additional defendants should have been charged; such decisions are up to the prosecutor. Nor may a court insert itself into the plea-bargaining process by modifying or rewriting the proposed plea and sentence. A court may only evaluate the plea that the parties have proposed, not a hypothetical plea that the court might prefer but the parties have not presented. A court must accept or reject the proposed plea and explain why, but may not modify or change its terms. A disciplined and careful analysis of the facts and circumstances, under
Based on the pleadings, the briefs, the statements, the submissions, the arguments, and the applicable law, this court finds that the proposed plea satisfies the purposes that the law recognizes as controlling. The victims' arguments that the plea agreement is too lenient fail to recognize the statutory constraints that apply and the risks to the government if the plea were rejected. The court must take into account "the exigencies of plea bargaining from the government's point of view," including "limited resources and uncertainty of result." United States v. Bundy, 359 F.Supp.2d 535, 538 (W.D.Va.2005). The issues in this case, one of the few in which the government has successfully applied a felony criminal statute to an industrial accident, present significant risks that absent the plea, the government would not be able to prevail or would only obtain a $500,000 fine. These risks have been considered in weighing the adequacy and reasonableness of the proposed plea terms.
Considering the specific facts and circumstances presented in this voluminous record, including the victims' objections, this court finds that the proposed plea is a reasonable disposition given the available alternatives, the risks they present, and the limits inherent in the statutes that the government can use to obtain a felony conviction to punish conduct leading to an industrial accident. Accordingly, this court accepts the proposed plea.
The reasons are stated in detail below.
BP Products pleaded guilty to a criminal information charging it with a felony violation of the Clean Air Act, 42 U.S.C. § 7413(c)(1), which imposes criminal penalties for knowing violations of certain provisions of the Clean Air Act,
BP Products pleaded guilty to violating two of the regulations promulgated under § 7412(r)(7): 40 C.F.R. § 68.73(b), which requires the owner or operator of a plant such as the Texas City refinery to establish and implement written procedures to maintain the ongoing integrity of process equipment; and 40 C.F.R. § 68.87(b)(2), which requires the owner or operator of such a plant to warn contractors working on or adjacent to a "covered process" of the known potential fire, explosion, or toxic-release hazards related to the contractor's work and the process.
The facts set out in this section include those that BP Products admitted in the Statement of Facts that accompanied the joint motion for waiver of the presentence report. (Id., Ex. A; Docket Entry No. 96, Ex. 6). Other sources of information about the explosion include a report by the United States Chemical Safety and Hazard Investigation Board ("CSB")
The Texas City refinery is the largest BP Products refinery in the United States. When BP Products acquired the refinery in 1999, it was an aging facility. Parts of the process unit involved in the March 2005 explosion were nearly fifty years old. The refinery covers more than 1,200 acres and in March 2005 employed approximately 1,800 permanent staff and 2,000 contract workers. The plant included twenty-nine different refining units and four chemical units and had the capacity to process approximately 460,000 barrels of crude oil a day. (Docket Entry No. 8, Ex. A at 3; Ex. 2 at 194, 218-19; Docket Entry No. 96, Ex. 6 at 3).
The explosion occurred in the plant's isomerization unit ("ISOM unit"). The ISOM unit's main function was to increase the octane in a chemical component of gasoline. The ISOM unit had several process components, including a pressure vessel known as a "raffinate splitter." The raffinate splitter was a 164-foot tall tower that could hold approximately 3,700 barrels. The explosion occurred as the raffinate splitter was restarted following a shutdown for maintenance and repairs.
"Raffinate" describes gasoline components that are being or have been refined. The raffinate splitter separated the components into "heavy" and "light" raffinate. Heavy raffinate emerged from the splitter as a hydrocarbon liquid that could be blended into jet fuel or unleaded gasoline. Light raffinate emerged as hydrocarbon vapor. The process involved high pressures and temperatures. The resulting vapor was highly volatile and could easily ignite. (Docket Entry No. 8, Ex. A at 4; Docket Entry No. 96, Ex. 6 at 4).
The raffinate splitter had a set of pressure-relief valves and headers intended to prevent excess pressure build-up from hydrocarbon vapors. There were different options in the ISOM unit for using the relief valves to direct the release of the hydrocarbon vapors. Written procedures required that during a normal startup of the raffinate splitter, a flare system was to be used to burn off the hydrocarbon vapors before they were released into the
During the month before the explosion, the ISOM unit was shut down for maintenance and repairs. Around March 21, 2005, BP Products maintenance personnel informed ISOM unit personnel that critical alarms for that unit had not been properly inspected. Nevertheless, on March 23, the raffinate splitter was restarted. (Docket Entry No. 8, Ex. A at 11-12; Docket Entry No. 96, Ex. 6 at 11-12). Restarting the splitter was the most dangerous phase of operating the ISOM unit because of the reintroduction of hydrocarbons in the presence of elevated temperatures and pressure. Although federal regulations required BP Products to establish and implement specific written instructions for operators and supervisors and to ensure that alarm systems and process safety components in the ISOM unit were operating correctly, see 40 C.F.R. §§ 68.69(a), 68.73(b), on the morning of March 23, 2005, safeguards important to the safe startup of the raffinate splitter either had not been established through written procedures or the written procedures that did exist were not being followed.
The acts that BP Products has admitted as knowing violations of the RMP regulations include the following:
(Docket Entry No 8, Ex. A at 8-12; Docket Entry No. 96, Ex. 6 at 8-12).
At 1:15 p.m., on March 23, 2005, excess liquid pressure and temperature had been building up inside the raffinate splitter for several hours. Hydrocarbon vapors and liquids were released from the raffinate splitter into the blowdown stack. The volume of the hydrocarbon liquid exceeded the blowdown stack's capacity. Hydrocarbon liquid was released out of the top of the stack and flowed down, reaching the ground. A vapor cloud formed and migrated away from the blowdown stack. An ignition source, believed to be the running engine of a truck parked nearby, caused the hydrocarbon vapor cloud to explode. Fifteen people working in two temporary trailers approximately 150 feet away from the stack died. At least 170 other workers in the plant were injured. (Docket Entry No. 8, Ex. A at 7-8; Docket Entry No. 96, Ex. 6 at 7-8).
BP Products has admitted that it knowingly violated the RMP regulation requiring it to "establish and implement written procedures to maintain the on-going integrity of process equipment." 40 C.F.R. § 68.73(b). BP Products has also admitted that it knowingly violated the RMP regulation requiring it to inform contractors in the vicinity of the raffinate splitter of the risks posed by the restart. 40 C.F.R. § 68.87(b)(2).
After the explosion, investigations were conducted by federal agencies, including the CSB, OSHA, and the Department of Justice; by Texas agencies, including the TCEQ; and internally by BP Products through the Baker panel.
The CSB Report on the explosion issued on March 20, 2007. The Baker Report issued in January 2007. The CSB Report examined "immediate causes," "possible root causes," "cultural issues," and "corrective actions." The Baker Report focused on the role of BP Products's corporate hierarchy and culture, studying "the effectiveness of BP's corporate oversight of safety management systems at its five U.S. refineries and its corporate safety culture." (Baker Report at ix). Both reports emphasized that BP Products's parent company, headquartered in London, had implemented budget cuts that adversely affected the Texas City refinery, including its process safety management systems. (Docket Entry No. 8, Ex. 2 at 157-59; Baker Report at 59). The plant was aging when BP Products acquired it in 1999, with equipment and infrastructure in decline. But rather than committing resources to repair equipment and address safety problems that had been identified in audits and investigations — problems that included a lack of proper process safety management — BP Products's parent company implemented budget cuts. The CSB concluded that a "lack of investment compromised safety" and that budget cuts by BP Products's parent company "did not consider the specific maintenance needs of
The CSB Report summarized by stating that "[c]ost-cutting, failure to invest and production pressures from BP Group executive managers impaired process safety performance at Texas City." (Docket Entry No. 8, Ex. 2 at 25). The CSB Report identified various decisions affected by budget cuts and pressures: reduction in maintenance spending for a decade; "impaired training, operations staffing levels, and mechanical integrity"; and the decision on several occasions "not to replace the ISOM blowdown system" with a flare system. (Id., Ex. 2 at 188). The reports acknowledged that although BP Products had focused on "personal safety," it had not focused on "process safety." (Id., Ex. 2 at 210; Baker Report at x). The victims argue that the "root causes" of the explosion were the parent company's budget cuts and refusal to provide the resources necessary to achieve process safety compliance at the Texas City refinery. (Docket Entry No. 16 at 7-10; Docket Entry No. 28 at 5).
On September 22, 2005, BP Products and OSHA signed a Settlement Agreement under which BP Products paid a $21,361,500 penalty and "agreed to perform extensive upgrades and improvements to equipment and process safety management (`PSM') systems at the Refinery." (Docket Entry No. 94 at 3; Docket Entry No. 96, Ex. 2). BP Products was required to retain an external expert, subject to OSHA's approval, "to conduct a comprehensive audit and analysis of the PSM systems at BP Products' Refinery and assess the robustness of the PSM systems." (Docket Entry No. 96, Ex. 2 at 2). The audit, which was to be "conducted in accordance with best practices in the industry," was to include, but was not to be limited to, the following:
(Id., Ex. 2 ¶ 1(b)(1)-(11)). The auditor was to complete, and BP Products was to forward to OSHA for review, an initial report, two biannual progress reports, and one final report detailing deficiencies found and recommendations for correction. (Id., Ex. 2 at 3-4). BP Products was required to implement "all feasible recommendations" in these reports. Within thirty days of each audit report, BP Products was required to file a statement of action, informing OSHA which recommendations it would implement and the steps taken toward implementation. If BP Products chose not to implement certain recommendations, it was required to provide detailed reasons for that decision. (Id., Ex. 2 at 4).
Other requirements of the OSHA Settlement Agreement included that BP
The Settlement Agreement explicitly gives "OSHA (including its experts) access to the Texas City Refinery to determine progress and compliance with this Agreement." (Docket Entry No. 96, Ex. 2 at 14). It also permits OSHA, through an enforcement order entered by the Fifth Circuit under 29 U.S.C. § 660(b), to pursue civil contempt remedies against BP Products. (Id., Ex. 4).
BP Products was already under investigation by the TCEQ before the March 23, 2005 explosion for exceeding emissions limits in several of its Texas City facility process units. On May 31, 2006, BP Products and the TCEQ signed an Agreed Order that assessed a penalty of $336,556 and "require[d] BP Products to undertake a substantial program of improvements to control and reduce emissions from its flares." (Docket Entry No. 94 at 18; Docket Entry No. 96, Ex. 3). A number of the compliance items in the Agreed Order are not scheduled for completion until 2011. (Docket Entry No. 96, Ex. 3-A § 7). BP Products states that compliance with this Order will cost $250 million. (Docket Entry No. 8 at 10-11).
The DOJ also investigated the explosion at the Texas City refinery. As part of its investigation, the government communicated with many affected by the explosion, including those pursuing civil litigation against BP Products. (Docket Entry No. 26 at 31-32; Docket Entry No. 63 at 5). Lawyers representing many of the victims in civil cases "worked very close[ly] with the Department of Justice to try to get them the information that [they] were deriving from the civil litigation." (Docket Entry No. 120 at 149-150). One of the lawyers representing the victims in this case was also liaison counsel for the plaintiffs' steering committee in the victims' state-court civil litigation. At a hearing before this court, that lawyer explained the nature and extent of his work with the DOJ before the plea was negotiated:
(Id. at 150). At another hearing in this court, another lawyer who represented
On October 18, 2007, before any charging instrument was filed, the government filed a sealed ex parte motion seeking "an order outlining the procedures to be followed under the Crime Victims' Rights Act."
On October 22, 2007, the government filed the criminal information, under seal. The information charged a single count: the knowing violation, under 42 U.S.C. § 7413(c)(1), of two regulations under 42 U.S.C. § 7412(r)(7). The information stated:
(Docket Entry No. 1 at 7-8).
Two days later, on October 24, 2007, the government and BP Products signed a plea agreement under which BP Products agreed to plead guilty to the information. As part of the plea agreement, BP Products conceded that it knowingly failed to establish and implement written procedures to maintain the ongoing integrity of the raffinate splitter in the ISOM unit and related process equipment, in violation of 40 C.F.R. § 68.73(b), and that it failed to inform its contractors of the risks associated with the restart of the raffinate splitter and the risks of siting contractor trailers in the near vicinity of the ISOM unit blowdown stacks, in violation of 40 C.F.R. § 68.87(b)(2). (Docket Entry No. 8 at 6-7). Under the proposed plea, BP Products agreed to pay a $50 million fine within three days of sentencing and a $400 special assessment immediately upon sentencing, and to serve a three-year probation term. During probation, BP Products would be required to comply fully with the OSHA Settlement Agreement and the TCEQ Agreed Order. The plea agreement provided that if BP Products is unable to comply with its obligations under the TCEQ Agreed Order within the three-year probation term, the probation term will be extended to the statutory maximum of five years, with "compliance with and completion of the TCEQ order as the only term[s] of the extended probation period." (Docket Entry No. 96, Ex. 1 at 2). The plea agreement required BP Products to cooperate with the government in its ongoing investigation of other possible criminal violations related to the explosion, including making its employees available to participate in judicial proceedings; making documents, records, and other technical information relating to the explosion available to the government; and providing the government access to the Texas City refinery. (Id., Ex. 1 at 2-3).
On October 25, 2007, the day after the United States and BP Products signed the plea agreement, a magistrate judge signed an order unsealing the criminal information. The proposed plea was announced at a press conference that received extensive coverage. But the ex parte order was not unsealed at that time.
After the criminal information was unsealed and the plea agreement filed and announced, the government mailed written notices to victims in compliance with § 3771(a) of the CVRA.
On November 16, 2007, BP Products and the United States jointly moved under Rule 32(c)(1)(A)(ii) of the Federal Rules of Criminal Procedure for a waiver of the presentence investigation and report and acceptance of the plea agreement. (Docket Entry No. 8). On November 20, 2007, a week before a hearing set for November 27, 2007, twelve victims — Alisa Dean, Ralph Dean, Tracy Donaie, Tyrone Smith, Ronald Duhan, Mary Ann Duhan, Michael Jordan, Sandra Thomas, Kelly Porter, Calvin Thomas, Henry Rivera, and Maria Rivera — moved through counsel for leave to appear and be heard under the CVRA and asked the court to reject the proposed plea agreement or at least defer decision and require a presentence investigation. (Docket Entry No. 9). Nine other victims — Kenneth Grant, George Hardin, Lee Dusek, Jason Wimberly, Liberato Solis, Jorge Patino, Rodolfo Mendoza, Luis Villazana,
At a status conference held on November 28, 2007, lawyers for numerous victims appeared and urged that they and their clients be heard in opposition to the proposed plea agreement. This court granted the requests. The victims submitted extensive information supporting their opposition to the proposed plea agreement. At the hearing, liaison counsel for the plaintiffs' steering committee in the state-court civil litigation also agreed to communicate with the other plaintiffs' counsel to be sure that the plaintiffs in those cases were informed of their rights under the CVRA, including the right to attend hearings and to be heard on the proposed plea and sentence. (Docket Entry No. 26 at 44). The government worked with counsel handling the many civil cases relating to the explosion to ensure that the victims received notice of their CVRA rights.
At a February 4, 2008 hearing, BP Products entered its guilty plea under Rule 11(c)(1)(C). Lawyers for the victims filed motions and extensive briefs with supporting materials in opposition to the proposed plea. One hundred and thirty-four individuals filed victim-impact statements. At the hearing, the court allowed all those present who wanted to speak to do so. Ten individuals spoke in open court.
One of the asserted grounds for rejecting the plea was the government's failure to respond to two letters — one sent on December 21, 2007 and one sent on January 11, 2008 — asking for an explanation of how the $50 million fine was calculated. The day after the victims filed a motion asserting that the government had violated the victims' "reasonable right to confer" by failing to respond to the letters, the government moved to unseal the October 2007 ex parte motion and order. On February 5, 2008, the victims moved to reject the proposed plea on the ground that the October 18, 2007 ex parte motion and order granting it, as well as the government's failure to answer the two letters later sent by one of the lawyers representing the victims, violated the victims' "reasonable right to confer" with the prosecutors and to be treated with fairness. On February 21, 2008, this court issued an opinion holding that these asserted CVRA violations were not in themselves a basis for rejecting the proposed plea. (Docket Entry No. 72). The victims petitioned the Fifth Circuit for a writ of mandamus. On May 7, 2008, the Fifth Circuit denied the petition.
The Fifth Circuit held that the ex parte procedure had violated the CVRA, concluding that because "there were fewer than two hundred victims ... it [wa]s not reasonable to say that notification itself" would have been too difficult or that the government could not confer "in some reasonable
(Id. at 7).
After the Fifth Circuit's opinion, the victims — most through counsel — and the parties appeared at a July 16, 2008 hearing before this court. At the hearing, this court invited the victims to submit additional briefing and exhibits on the adequacy of the proposed fine and of the proposed terms of probation. The court specifically invited the victims to submit information about their losses and, over the parties' objections, allowed the victims to provide their expert's report on BP Products's compliance with the OSHA Settlement Agreement. (Docket Entry No. 84 at 9, 43-44). The parties were given the opportunity to respond. The victims and the parties appeared at another hearing before this court on October 7, 2008, to present argument on the victims' submissions and the parties' responses. (Docket Entry No. 120).
Four fatalities associated with the Texas City refinery have occurred since the March 2005 explosion. Three of these deaths — all to employees of contractors — were unrelated to the type of conduct that led up to the March 2005 explosion. BP Products apparently has not been implicated in these deaths. The fourth death, of BP Products employee William J. Gracia, occurred when a 500-pound lid blew off of a water-filtration unit with defective bolts in the plant's Ultracracker unit during startup on January 14, 2008. BP Products entered a settlement with OSHA, agreeing to correct six regulatory violations and to pay a $28,000 fine. (Docket Entry No. 110, Ex. 1; Docket Entry No. 111). A member of Gracia's family spoke in court to object to the proposed plea in this case. (Docket Entry No. 66 at 50-54).
Federal Rule of Criminal Procedure 11(c)(1)(C) states that the government may enter into a plea agreement in which it "agree[s] that a specific sentence or sentencing range is the appropriate disposition of the case, or that a particular provision of the Sentencing Guidelines, or policy statement, or sentencing factor does or does not apply." Such an agreement under Rule 11(c)(1)(C) "binds the court once the court accepts the plea agreement." FED. R.CRIM. P. 11(c)(1)(C); see also United States v. Shepard, 88 Fed.Appx. 44, 45 (5th Cir.2004) (unpublished); McClure v. Ashcroft, 335 F.3d 404, 413 (5th Cir.2003); United States v. Rhodes, 253 F.3d 800, 804 (5th Cir.2001). "If the court accepts a plea agreement containing a Rule 11(c)(1)(C) stipulation, it must notify the defendant that `the agreed disposition will be included in the judgment.'" In re Morgan, 506 F.3d 705, 709 (9th Cir.2007) (quoting FED. R.CRIM. P. 11(c)(4)). "Conversely, if the court rejects such a plea agreement, it must (1) inform the parties, (2) advise the defendant that the court is not bound by the plea agreement and give the defendant an opportunity to withdraw the guilty plea, and (3) advise the defendant that if the plea is not withdrawn, `the court may dispose of the case less favorably toward the defendant than the plea agreement contemplated.'" Id. (quoting FED. R.CRIM. P. 11(c)(5)).
Federal Rule of Criminal Procedure 11(c)(5) "allows the judge to reject [a Rule 11(c)(1)(C)] bargain if the agreed sentence would be one the judge deems inappropriate." In re United States, 503 F.3d 638, 641 (7th Cir.2007). "A district court may properly reject a plea agreement based on the court's belief that the defendant would receive too light of a sentence." United States v. Smith, 417 F.3d 483, 487 (5th Cir.2005), cert. denied, 546 U.S. 1025, 126 S.Ct. 713, 163 L.Ed.2d 543 (2005) (citing United States v. Crowell, 60 F.3d 199, 205-06 (5th Cir.1995); United States v. Foy, 28 F.3d 464, 472 (5th Cir. 1994); United States v. Bean, 564 F.2d 700, 704 (5th Cir.1977)).
A district court has broad discretion to accept or reject a plea agreement under Rule 11(c)(1)(C). See United States v. Vega-Nieto, 239 Fed.Appx. 74, 74 (5th Cir.2007) (unpublished); Smith, 417 F.3d at 487 ("Rule 11 does not limit a district court's discretion in rejecting a plea agreement."). The text of Rule 11(c)(1)(C) does not "define the criteria by which a district court should exercise the discretion the rule confers, or explain how a district court should determine whether to accept a plea agreement." Morgan, 506 F.3d at 710. "This conspicuous omission ... appears to be intentional, as the drafters stated that the decision to accept or reject a plea agreement should be `left to the discretion of the individual trial judge,' rather than governed by any bright-line test." Id. at 710 n. 2 (quoting FED. R.CRIM. P. 11, advisory committee note). In exercising its discretion, a court should take into account "the exigencies of plea bargaining from the government's point of view," including "limited resources and uncertainty of result." United States v. Bundy, 359 F.Supp.2d at 538.
A court may not apply categorical rules in deciding whether to accept or reject a plea agreement under Rule 11(c)(1)(C) because "the existence of discretion requires its exercise." United States v. Miller, 722 F.2d 562, 565 (9th Cir.1983). "When a court establishes a broad policy based on events unrelated to the individual case before it, no discretion has been exercised." Id. The court must make an "individualized assessment" of the plea agreement. Morgan, 506 F.3d at 712
There are limits on a court's discretion. A court may not reject a plea proposed under Rule 11(c)(1)(C) on the grounds that it fails to charge a sufficiently severe crime, provided that the government has not made its decision not to charge a higher offense contingent on the defendant's acceptance of the plea bargain. The government has wide prosecutorial discretion to bring appropriate charges, and the court must "defer to the government's position except under extraordinary circumstances." THOMAS W. HUTCHINSON ET AL., FEDERAL SENTENCING LAW AND PRACTICE § 6B1.2 (2009). A court may not "intrude upon the charging discretion of the prosecutor." U.S.S.G. § 6B1.2 cmt.
A court may not use its discretion to accept or reject a Rule 11(c)(1)(C) plea to intrude into the plea-bargaining process. "[T]he district court has a limited role regarding [Rule 11(c)(1)(C)] plea agreements.... [It] may accept or reject a plea agreement after one is reached; but, generally once the court has accepted the agreement, it may not subsequently reject or modify it." McClure, 335 F.3d at 413. A court may not accept or reject such a plea agreement on a piecemeal basis. Morgan, 506 F.3d at 709; see also 1A CHARLES A. WRIGHT & ANDREW D. LEIPOLD, FEDERAL PRACTICE AND PROCEDURE — CRIMINAL § 180 (4th ed. 2008) ("Once a court accepts a Type C agreement, it may not unilaterally modify the agreement and impose either a higher or lower sentence than the one negotiated by the parties."). A court may not condition acceptance of a Rule 11(c)(1)(C) plea on the modification of its terms. See Smith, 417 F.3d at 488 ("A district court is absolutely prohibited from participating in plea negotiations."); Crowell, 60 F.3d at 203 ("When a court goes beyond providing reasons for rejecting the agreement presented and comments on the hypothetical agreements it would or would not accept, it crosses over the line established by Rule 11 and becomes involved in the negotiations."); United States v. Miles, 10 F.3d 1135, 1140 (5th Cir.1993) ("Rule 11 requires that a district court explore a plea agreement once disclosed in open court; however, it does not license discussion of a hypothetical agreement that it may prefer.").
A court generally does not have the discretion to accept a Rule 11(c)(1)(C) plea agreement that provides for a sentence above a statutory maximum or below a statutory minimum. See United States v. Cieslowski, 410 F.3d 353, 363 (7th Cir. 2005), cert. denied, 546 U.S. 1097, 126 S.Ct. 1021, 163 L.Ed.2d 866 (2006) (holding that the sentence imposed under a Rule 11(c)(1)(C) plea agreement "must comply with the maximum (and minimum, if there is one) provided by the statute of conviction"); see also United States v. Greatwalker, 285 F.3d 727, 730 (8th Cir.2002) ("Even when a defendant, prosecutor, and court agree on a sentence, the court cannot give the sentence effect if it is not authorized by law."); United States v. Gibson, 356 F.3d 761, 766 (7th Cir.2004) (quoting Greatwalker). A court also does not have discretion to accept a plea bargain that lacks a factual basis. FED. R.CRIM. P. 11(b)(3) ("Before entering judgment on a guilty plea, the court must determine that there is a factual basis for the plea."). "The quantum of evidence needed to supply a factual basis is not specified in the rule, but it is clear that it takes less evidence than would be needed to sustain a conviction at trial." 1A CHARLES A. WRIGHT ET AL., FEDERAL PRACTICE AND PROCEDURE-CRIMINAL § 179 (4th ed.2008). "[A] district judge satisfies th[is] requirement... when he `determine[s] that the
One ground for rejecting a plea under Rule 11(c)(1)(C) does not apply here. "[A] court is well-advised to reject a plea agreement that dismisses a charge if it finds that the remaining charges do not adequately reflect the seriousness of a defendant's actual offense behavior." Smith, 417 F.3d at 487 (citing U.S.S.G. § 6B1.2(a); United States v. Mizell, 88 F.3d 288, 291 (5th Cir.1996), cert. denied, 519 U.S. 1046, 117 S.Ct. 620, 136 L.Ed.2d 543 (1996); Crowell, 60 F.3d at 206; Foy, 28 F.3d at 473). BP Products is pleading to the only charge in the information. The victims do not ask this court to reject the plea because of the offense charged. (Docket Entry No. 66 at 100-01).
Most of the cases that reject a Rule 11(c)(1)(C) plea do so for reasons that do not bear on this case, such as a proposed term of imprisonment that falls below the Sentencing Guidelines range.
In United States v. Samueli, 575 F.Supp.2d 1154, 1163-64 (C.D.Cal.2008), the court rejected as "not reflect[ing] the seriousness of" the crime a plea bargain that would have sentenced the defendant, who had been involved in a $2.2 billion options backdating scandal, to a five-year probation term. The indictment charged the defendant with "falsify[ing] dozens of corporate records to further and disguise the fraud," "select[ing] the date to which options should be backdated," and "advocat[ing] the creation and use of fraudulent employment records to compensate recruits with backdated grants through acquired companies." Id. at 1163. The court concluded that the sentence did not adequately punish this conduct. The sentence was "vastly disproportionate" to the sentences faced by the defendant's coworkers, two of whom were eligible for life in prison. Id. at 1164. In United States v. Munroe, 493 F.Supp. 134, 136 (D.Tenn. 1980), the court rejected as "too light a sentence under the circumstances of the case" a plea bargain that would have sentenced a defendant, who defrauded the factor for his company out of more than $1 million over a four-month period, to a $3,000 fine and three years' probation. Id. at 135. The court noted that "54% of the
The victims and the parties have brought to this court's attention the plea agreement entered in the 1989 Exxon Valdez oil spill disaster. The plea was to violations of the Clean Water Act, 33 U.S.C. §§ 1311(a), 1319(c)(1)(A); the Refuse Act, 33 U.S.C. § 407; and the Migratory Bird Treaty Act, 16 U.S.C. §§ 703, 707(a).
If a court rejects a plea agreement under Rule 11(c)(1)(C), the defendant must be given the option of withdrawing the plea. FED. R.CRIM. P. 11(c)(5). If the plea is withdrawn, any admissions that the defendant may have made for purposes of the plea agreement have no preclusive effect. Instead, the parties are "returned to their pre-plea posture." United States v. Cervantes-Valencia, 322 F.3d 1060, 1062 (9th Cir.2003) (citing United States v. Mukai, 26 F.3d 953, 955-56 (9th Cir.1994)); see also United States v. Agosto-Vega, No. 05-0157, 2007 WL 4116847, at *2 (D.P.R. Nov.16, 2007). The fact of, and the contents of, the guilty plea, and "any statement made in the course of any proceedings" concerning the negotiation or acceptance of that plea, are inadmissible in any future civil or criminal proceedings. FED.R.EVID. 410; see also FED. R.CRIM. P. 11(f) ("The admissibility or inadmissibility of a plea, a plea discussion, and any related statement is governed by Federal Rule of Evidence 410."). "Rule 410 excludes any evidence of a withdrawn plea of guilty; it does not distinguish between direct and circumstantial evidence. Hence, any evidence that would permit the jury to infer that the defendant had once pleaded guilty would be within the scope of the rule." 23 CHARLES A. WRIGHT & KENNETH W. GRAHAM, JR., FEDERAL PRACTICE & PROCEDURE § 5343 (1980).
The victims have submitted extensive filings, posing numerous — and evolving — objections to the proposed plea agreement. Each objection is examined and analyzed under the applicable legal standard.
In initial briefs objecting to the proposed plea, the victims raised several arguments that they have since abandoned or no longer press. These arguments show the evolving nature of the objections the victims have raised.
The victims initially urged this court to reject the proposed plea because only BP Products, and not the parent company, BP p.l.c. (referred to as "BP Global"), was criminally charged. The victims later withdrew this objection, recognizing that it had no support in the law:
(Docket Entry No. 28 at 21-22; see also Docket Entry No. 66 at 88-89 (affirming that the victims are not asking for rejection of the plea because the parent company and affiliates were not charged)).
The victims initially urged this court to reject the proposed plea because it improperly "immunized" BP Global and its subsidiaries from prosecution for future misconduct. This argument lacks a basis in the facts and the law. The plea agreement immunizes BP Products and its affiliates, including its parent, BP Global, from federal prosecution for any additional offenses "known to the Government at the time of this [plea] Agreement that are based upon evidence in the Government's possession at this time and that arose out of the conduct giving rise to the criminal investigation of the March 23, 2005 explosion." (Docket Entry No. 96, Ex. 1 at 4) (emphasis added). BP Products and the government have both clarified that this language does not prevent the prosecution of individuals for their role in the March 23, 2005 explosion. Nor does the language prevent the prosecution of BP Products, its parent, or its affiliates for their role in the explosion based on evidence that was not in the government's possession in October 2007. Nor does the language immunize any individual, BP Products, its parent, or its affiliates, from criminal liability for any offenses occurring after the March 23, 2005 explosion, even if those offenses stemmed from the same problems that caused the March 23, 2005 explosion. The government explained that the clause at issue is a standard clause and is never used to immunize postoffense conduct.
The victims also initially argued that the proposed plea should be rejected, or at least a presentence investigation performed, because the government and BP Products had underreported the prior criminal history of BP Products and its parent and affiliates worldwide. The victims argued that the "total record" for BP Products, BP Global, and its affiliates "reveals at least nine cases of fines for safety violations, five of which involve death or injury, and at least 14 cases of environmental crimes and five cases of fraud crimes." (Docket Entry No. 28 at 10-13). The victims later acknowledged that the criminal history disclosure was "not [their] main source of concern." (Docket Entry No. 66 at 93-94).
The victims continue to object to the fine, the probation terms, the absence of a presentence report, and the violation of the right to confer with the prosecution before the plea agreement was executed. The victims dispute virtually every aspect of how the fine should be calculated, including whether nonpecuniary losses and gains may be considered; what causation standard applies; and whether the fine calculation is so complex and burdensome that the statutory default maximum of $500,000 would apply if the plea were rejected.
The victims have specifically briefed the pecuniary and causation issues, (Docket Entry No. 69), and BP Products and the government have responded, (Docket Entry Nos. 74, 75). To obtain information about the nature and extent of the victims' losses and to test the difficulty of making those determinations, this court asked the victims to submit loss information for between thirty to fifty victims, including all those who died in the explosion. (Docket Entry No. 84 at 43-44). The victims filed briefs and numerous exhibits on the alleged losses, (Docket Entry No. 101), and BP Products and the government have responded, (Docket Entry Nos. 104, 107).
The victims also object to the proposed probation terms. The victims do not appear to argue that requiring compliance with the OSHA Settlement Agreement or
The victims also continue to argue that this court should deny the motion for waiver of the presentence investigation and report. (Docket Entry No. 117). BP Products and the government responded. (Docket Entry Nos. 118, 119). These arguments and response raise the issue whether the information that the parties and the victims have provided gives this court a sufficient basis to determine whether to accept the proposed plea.
Finally, the victims assert that the CVRA violation that the Fifth Circuit found is in itself a basis to reject the proposed plea. (Docket Entry No. 117 at 1-5). BP Products and the government have responded. (Docket Entry Nos. 118, 119).
Each of these issues is examined in depth.
The Sentencing Guidelines provisions on fines for organizational defendants do not apply to environmental offenses. U.S.S.G. § 8C2.1. Instead, under U.S.S.G. § 8C2.10, a court is to "determine an appropriate fine by applying the provisions of 18 U.S.C. §§ 3553 and 3572." Section 3553 sets forth the factors a court is to consider in determining a sentence.
Under § 3571, $500,000 is the statutory maximum fine against an organization that has been found guilty of a felony, but an alternative statutory fine applies if the defendant has derived pecuniary gain from the offense or the offense has resulted in pecuniary loss to a person other than the defendant. That alternative fine can be no more than the greater of twice the gross gain or twice the gross loss. Under § 3571(d), if imposing the alternative maximum fine would "unduly complicate or prolong the sentencing process," the $500,000 maximum applies.
The victims and parties disagree about how § 3571(d), which is rarely discussed in the case law, should be interpreted and applied. These disputes bear on whether the $50 million fine is adequate and just.
The victims assert that under § 3571(d), the fine must be based on the greater of twice the gross loss or gain, including all nonpecuniary losses such as pain and suffering, emotional distress, and loss of consortium. The parties vigorously dispute this interpretation. Instead, the parties argue that the statutory and Guidelines language and the case law make clear that the court is limited to considering gross pecuniary losses or gains under § 3571(d).
The victims assert that the use of the terms "pecuniary gain" and "pecuniary loss" in the first part of § 3571(d) and "gross gain" and "gross loss" in the second part indicates that Congress intended nonpecuniary as well as pecuniary gains and losses to be included in the fine calculation. The victims argue that § 3571(d) has two parts. The first is a "trigger mechanism," which invokes the Alternative Fines Act only if pecuniary gain or loss is present ("[I]f any person derives pecuniary gain from the offense, or if the offense results in pecuniary loss to a person other than the defendant ...."). The second is a "penalty calculator," which allows all forms of gain or loss to be considered in calculating the fine ("[T]he defendant may not be fined more than the greater of twice the gross gain or twice the gross loss ...."). (Docket Entry No. 69 at 1-3). The victims cite no authority to support this interpretation. The case law, the language of § 3571(d), and the related Guidelines provisions
The decisions addressing § 3571(d) have stated that calculations of loss or gain are to be based on pecuniary loss or gain amounts. See, e.g., United States v. Chusid, 372 F.3d 113, 117 (2d Cir.2004) ("Section 3571 provides for a fine which is ... twice the resulting gross pecuniary gain to the defendant or loss to the defendant's victims."); United States v. W. Coast Aluminum Heat Treating Co., 265 F.3d 986, 994 (9th Cir.2001) (upholding loss calculation based on pecuniary loss); United States v. Pippin, 903 F.2d 1478, 1483 (11th Cir.1990) ("This fine cannot exceed ... twice the gross pecuniary gain from the offense, or twice the gross pecuniary loss to the victim.").
This reading is faithful to the language of the statute. Section 3571(d) applies only "if any person derives pecuniary gain from the offense, or if the offense results in pecuniary loss to a person other than the defendant." 18 U.S.C. § 3571(d) (emphasis added). In such cases, the fine is to be "no more than the greater of twice the gross gain or twice the gross loss." As a matter of grammar and logic, the words "the gross gain" and "the gross loss" in the second part of the sentence could only refer to the pecuniary gain derived from the offense or the pecuniary loss resulting from the offense identified in the first part of the sentence. "Gross" pecuniary gain or loss simply means that the court is not to reduce the amounts to a net sum, by deducting such items as costs.
The victims' approach makes the "pecuniary gain" derived from the offense or "pecuniary loss" resulting from the offense in the first part of the sentence mean something different or refer to something different than the "gross gain" and "gross loss" in the second part of the sentence. This reading ignores the words of the statute. This reading would lead not only to considering nonpecuniary losses or gains but also to considering any losses or gains, even if they are not derived or resulting from the offense.
The Sentencing Guidelines also support interpreting § 3571(d) as including only pecuniary losses resulting and gains derived from the offense. The Guidelines consistently define "actual loss" as the "reasonably foreseeable pecuniary harm that resulted from the offense." U.S.S.G. § 2B1.1, cmt. n. 3(A)(i). Similarly, "pecuniary harm" is defined as "harm that is monetary or that otherwise is measurable in money ... not includ[ing] emotional distress, harm to reputation, or other non-economic harm." Id., cmt. n. 3(A) (iii). The Guidelines explain that they derive the terms "pecuniary gain" and "pecuniary loss" from § 3571(d). U.S.S.G. § 8A1.2 cmt. n. 3(h), (i). The Guidelines explain that the "pecuniary gain" derived by the organization from the offense or the "pecuniary
The legislative history of the predecessor statute to § 3571(d), 18 U.S.C. § 3623(c)(1) (repealed Nov. 1, 1987), also supports limiting the loss or gain to pecuniary loss or gain.
The weight of authority strongly supports limiting the fine calculation and the review of the reasonableness of the fine under § 3571(d) to pecuniary losses or gains. That precludes including such nonpecuniary factors as pain and suffering, mental anguish, or loss of consortium in examining the gross losses resulting from the offense and the gross gains BP Products derived from the offense.
BP Products and the government dispute whether under Apprendi v. New Jersey, 530 U.S. 466, 120 S.Ct. 2348, 147 L.Ed.2d 435 (2000), absent a plea, the government would have to prove the amount of gain or loss caused by the offense, to a jury, beyond a reasonable doubt, to obtain a fine above $500,000 under § 3571(d). Under the Supreme Court's decision in Apprendi, "[o]ther than the fact of a prior conviction, any fact that increases the penalty for a crime beyond the prescribed statutory maximum must be submitted to a jury, and proved beyond a reasonable doubt." 530 U.S. at 490, 120 S.Ct. 2348. "[T]he `statutory maximum' for Apprendi purposes is the maximum sentence a judge may impose solely on the basis of the facts reflected in the jury verdict or admitted by the defendant." Blakely v. Washington, 542 U.S. 296, 303, 124 S.Ct. 2531, 159 L.Ed.2d 403 (2004) (emphasis in original). A sentence below the statutory maximum may be set by the court under a preponderance of the evidence standard. BP Products argues that § 3571(c) sets a $500,000 maximum fine per felony count against a defendant organization, and that were the case to go to trial, the United States would have to prove the gain or loss to support a higher fine to the jury beyond a reasonable doubt. In support of its argument that any fine above $500,000 under § 3571(d) must be proved beyond a reasonable doubt, BP Products cites United States v. LaGrou Distribution Systems, Inc., 466 F.3d 585, 594 (7th Cir.2006), in which the Seventh Circuit vacated a $1 million fine imposed on the defendant organization for one felony count because
LaGrou does not make clear whether the district court determined that the $1 million fine was twice the maximum amount of either loss or gain under § 3571(d) or whether the court simply assessed what it believed to be the appropriate fine. Id. LaGrou appears to be the only case to have examined whether Apprendi applies to determining the amount of a fine under § 3571(d).
Other courts have similarly held that Apprendi does not apply to restitution determinations in criminal cases. See United States v. Danford, 435 F.3d 682, 689 (7th Cir.2006) ("[R]estitution `is not a criminal punishment but a civil remedy administered for convenience by courts that have entered criminal convictions.' Restitution is determined by the judge using the lower preponderance of the evidence standard.") (quoting United States v. George, 403 F.3d 470, 473 (7th Cir.2005)); United States v. Ziskind, 471 F.3d 266, 269 (1st Cir.2006), cert. denied, 549 U.S. 1316, 127 S.Ct. 1902, 167 L.Ed.2d 384 (2007); United States v. May, 413 F.3d 841, 849 (8th Cir.2005) (concluding that Apprendi does not apply because "restitution does not have a `statutory maximum'"), cert. denied, 546 U.S. 1024, 126 S.Ct. 672, 163 L.Ed.2d 541 (2005). Courts have also held that Apprendi does not apply to forfeiture orders. See United States v. Swanson, 483 F.3d 509, 516 (7th Cir.2007), cert. denied, ___ U.S. ___, 128 S.Ct. 455, 169 L.Ed.2d 318 (2007) ("[T]he Sixth Amendment and
If the conditions for applying § 3571(d) are met — pecuniary gain is derived from the offense or pecuniary loss resulted from the offense — the "statutory maximum" is the greater of twice that gross gain or gross loss and a fine within that limit arguably is not subject to Apprendi. This is consistent with the rationale some circuit courts have used in explaining why Apprendi does not apply to determining restitution or forfeiture amounts. As the Third Circuit explained in United States v. Leahy, 438 F.3d 328, 337-38 (3d Cir.2006), cert. denied, 549 U.S. 1071, 127 S.Ct. 659, 660, 661, 166 L.Ed.2d 547 (2006):
Id. (quoting 18 U.S.C. § 3664(f)(1)(A)); see also United States v. Reifler, 446 F.3d 65, 119 (2d Cir.2006) ("[A]lthough judicial fact-finding determines what th[e] full amount [of loss] is, the sentencing court is `by no means imposing a punishment beyond that authorized by jury-found or admitted facts,' or `beyond the statutory maximum as that term has evolved in the Supreme Court's Sixth Amendment jurisprudence.'") (quoting Leahy, 438 F.3d at 337).
The Sentencing Guidelines characterize § 3571(d) as creating an "alternative" for calculating fines under that statute, rather than as creating an amount that exceeds a $250,000 maximum applicable to individuals under § 3571(b) or a $500,000 statutory maximum applicable to organizations under § 3571(c). See U.S.S.G. § 5E1.2 cmt. n. 2.
In sum, there appear to be cogent arguments that Apprendi would not apply to the fine calculation were this case to go to trial. But there is some litigation risk that Apprendi would apply. The government states that although it has "extensively looked" at the issue before entering into the plea agreement, it had not been able to determine whether Apprendi would apply to fines in general and to fine determinations under § 3571(d) in particular.
Section 3571(d) applies when pecuniary gain is "derive[d] ... from the offense" or when the "offense results in" pecuniary loss. 18 U.S.C. § 3571(d). The victims and parties disagree on the causation standard that applies in determining the reasonableness and adequacy of the fine amount, and in determining the standard that the government would have to satisfy if it had to litigate the issue. The government argues that this court may consider only losses or gains that the offense of conviction proximately caused. The victims argue that the "derived from" or "results in" standard requires only the more-relaxed "but-for" causation standard. The victims argue that BP Products's "failure to implement proper and written Process Safety Management Procedures is the overarching `but for' cause" of the explosion, and that this causation satisfies the requirements of § 3571(d). (Docket Entry No. 69 at 7). As a result, according to the victims, a fine amount should be based on all losses from the explosion, which were much greater than $25 million. (Id. at 4-5).
BP Products and the government respond that the victims' argument ignores the substantial authorities requiring proximate causation under criminal statutes. The parties also argue that the victims ignore the fact that under § 3571(d), the losses or gains must be causally linked to the offense, which is not the same thing as the explosion. BP Products and the government emphasize that although BP Products agrees that its knowing violations of the Clean Air Act were "but-for" causes of the explosion, there is no such agreement as to proximate cause. According to the parties, there were many other causes of the explosion, including conduct that was not criminal and therefore cannot be the basis of criminal punishment. (Docket Entry No. 74 at 2-5; Docket Entry No. 75 at 4-5). BP Products and the government argue that proving that the offense proximately caused $25 million or more in gross pecuniary losses or that BP Products derived $25 million or more in gross pecuniary gains from the offense is a significant litigation risk that supports approving the $50 million fine as reasonable, adequate, and just.
The victims argue that had Congress intended to require proximate cause as the standard in § 3571(d), it would have so stated, as it did in the statutes governing criminal restitution and the CVRA. (Docket Entry No. 69 at 5-6); see 18 U.S.C. § 3663(a)(2) (permitting restitution for victims "directly and proximately harmed as a result of the commission of an offense for which restitution may be ordered"); 18 U.S.C. § 3663A(a)(2) (requiring restitution for victims "directly and proximately harmed as a result of the commission of an offense for which restitution may be ordered"); 18 U.S.C. § 3771(e) (extending protections to victims "directly and proximately harmed as a result of the commission of a Federal offense"). The victims argue that § 3571 should be interpreted as
The parties counter that "[c]ommon law principles of causation — principles that specifically apply to criminal law — mandate that gain or loss be both factually and proximately caused by the defendant's acts." The parties argue that "the fact that [§ 3571(d) and other criminal statutes] do not use the word `proximate' does not mean that Congress intended to abrogate the general common law of causation." (Docket Entry No. 74, at 3 & n. 6).
Construing § 3571(d) to require a proximate cause standard is consistent with the case law. See, e.g., United States v. Izydore, 167 F.3d 213, 224 (5th Cir.1999) ("[M]ere `but-for' causation is not the litmus test for loss determinations under U.S.S.G. 2F1.1."). In United States v. Spinney, 795 F.2d 1410, 1415 (9th Cir. 1986), which interprets the causation requirements of § 3623, the predecessor to § 3571(d), the court analyzed the fine based on the "basic tenet of criminal law... that the government must prove that the defendant's conduct was the legal or proximate cause of the resulting injury." Id. The court stated that "[c]ausation in criminal law has two requirements: cause in fact and proximate cause." Id. (citations omitted); see also United States v. Marlatt, 24 F.3d 1005, 1007 (7th Cir.1994) (noting "the difference between `but-for' causation and the causation — for which the presence of but-for causation is ordinarily a necessary condition but rarely a sufficient one — that imposes legal liability").
The Spinney court also pointed out that proximate causation in a criminal case presents a higher threshold for proof than proximate causation in a civil tort case. "We reject the government's argument that the RESTATEMENT OF TORTS provides a useful guideline for resolving the proximate cause issue in this case. Proximate cause analysis in crimes differs from tort analysis of causation." 795 F.2d at 1416 n. 2.
Construing § 3571(d) as imposing a proximate causation requirement is also consistent with the Supreme Court's decision in Hughey v. United States, 495 U.S. 411, 110 S.Ct. 1979, 109 L.Ed.2d 408 (1990), in which the Court concluded that a defendant could be ordered to pay restitution only for damages caused by the "offense of conviction," to the exclusion of other "losses stemming from all conduct attributable to the defendant, including conduct unrelated to the offense of conviction." Id. at 418, 110 S.Ct. 1979.
BP Products and the government argue that if a proximate causation standard applies under § 3571(d), absent the plea, the government would have a difficult time at trial establishing the necessary causal links among BP Products's charged criminal conduct, liability for the explosion, and the victims' losses or BP Products's gain.
There are two aspects to the causation issues raised by the briefing. Both bear on the litigation risks that must be analyzed in assessing the proposed plea. The first is the causal relationship between the charged offense and liability for the explosion. The government notes that before it executed the plea agreement, there was no admission from BP Products that its criminal conduct resulted in the explosion. The victims respond that since then, a BP Products business unit leader admitted at a state civil trial that BP Products's criminal conduct caused the explosion:
(Docket Entry No. 69, Ex. 2 at 137-38). The victims argue that because of this statement, the "litigation risk on the causation issue is, exactly, zero." (Id. at 8). Although the unit leader's statement establishes
(Id., Ex. 2 at 137).
The second aspect to the causation issue is the relationship between BP Products's offense and the elements of the fine under §§ 3571(c) and (d). In assessing the adequacy and reasonableness of the proposed fine, this court need not determine with precision what amount of pecuniary loss resulted from, or what amount of pecuniary gain was derived from, the offense conduct under a proximate-cause standard. This court must consider whether $25 million is a reasonable estimate of those losses or gains. As part of that analysis, this court must also consider whether, absent the plea, the difficulties in proving the pecuniary losses or gains proximately caused by the offense would trigger the complexity provision of § 3571(d) and limit the government to the default $500,000 fine amount.
A court need not — and should not — calculate a fine under § 3571(d) if calculating the gain or loss "would unduly complicate or prolong the sentencing process." 18 U.S.C. § 3571(d). If a court concludes that the calculation is unduly complicated, then the statutory maximum fine for an organization is $500,000 per felony count under § 3571(c). BP Products and the government strenuously argue that were this case to go to trial, the court would conclude that calculating the pecuniary gain derived from the offense or pecuniary loss resulting from the offense would unduly complicate and prolong the sentencing process. The result would be a $500,000 fine.
The victims have not directly addressed the argument that calculating the fine based on gain derived from or loss resulting from the offense would be unduly complicated and time-consuming. Instead, the victims argue that it is enough to show that calculating even a portion of the total gain or loss results in a figure far above $25 million. (Docket Entry No. 69 at 1). BP Products and the government counter that calculating even a portion of the gain or loss would be unduly complicated and would prolong sentencing beyond what the statute contemplates or permits.
Few authorities shed light on how complicated or prolonged a fine determination must be to trigger the complexity provision of § 3571(d). The legislative history of 18 U.S.C. § 3623(c), the predecessor statute to § 3571(d), includes a House Report that explains that the complexity provision "does not require that a fine be determined on the basis of the defendant's gain or the victim's loss in every case":
H.R.Rep. No. 98-906, at 17 (1984), reprinted in 1984 U.S.C.C.A.N. 5433, 5450.
Similar statutory sections provide useful guidance. The Victim and Witness Protection
S.Rep. No. 104-179, at 19 (1996), reprinted in 1996 U.S.C.C.A.N. 924, 931-32 (emphasis added).
The cases decided under § 3571(d) as well as under §§ 3663(a)(1) (B)(ii) and 3663A(c)(3)(B) show that courts are most likely to conclude that determining the amount of a fine or restitution would unduly complicate or prolong the sentencing proceeding when there are: multiple victims; the causation issues are disputed; or disputed future losses are involved. In the present case, all three factors are present.
In a case decided under the MVRA, In re W.R. Huff Asset Mgt. Co., LLC, 409 F.3d 555, 563 (2d Cir.2005), the Second Circuit approved a settlement creating a $715 million fund to be divided among thousands of victims. The court acknowledged that the fund did not provide full restitution to all victims. The court approved the settlement because if the case had been tried, there was a strong likelihood that the complexity exception to the MVRA would apply and the victims would receive no restitution. The court emphasized the large number of victims and the presence of disputed issues, including causation:
Id. The court concluded that "[c]learly[ ] this case fits within the dual exceptions contained in the MVRA, and the district court did not abuse its discretion by deciding to accept the provisions of the Settlement
In another MVRA case, United States v. Reifler, 446 F.3d at 113-139, the Second Circuit stated that the complexity exception might apply in a securities fraud action involving millions of shares and an unspecified number of shareholders. In that case, determining the restitution amount would require analyzing which shares were purchased in reliance on the defendants' alleged fraudulent statements and determining whether these shares were later sold, and, if so, at what price. The district court had failed to conduct this analysis before ordering the defendants to pay over $8.6 million in restitution. The appellate court vacated the sentence and remanded, stating that the district court might appropriately invoke the complexity exception to the MVRA. Id. at 139.
The Supreme Court has held in the restitution context that a defendant may only be ordered to pay restitution for damages caused by the "offense of conviction," to the exclusion of other "losses stemming from all conduct attributable to the defendant, including conduct unrelated to the offense of conviction." Hughey v. United States, 495 U.S. at 418, 110 S.Ct. 1979. Courts are more likely to apply the complexity exception if the amount of gain or loss caused by the defendant's offense conduct is difficult to separate from gain or loss attributable to other factors. In United States v. Kones, 77 F.3d 66, 69 (3d Cir.1996), the Third Circuit explained that the complexity exception in the VWPA was designed to avoid "bring[ing] fault and causation issues before the sentencing court that cannot be resolved with the information otherwise generated in the course of the criminal proceedings on the indictment." The court explained:
Id. (emphasis added). The court affirmed the district court's refusal to award restitution to a patient of the defendant doctor. The patient had become addicted to pain killers that the defendant illegally prescribed. The defendant was convicted of mail fraud based on his submission of fraudulent insurance claims, some related to the patient. The court concluded that although the patient's addiction may have arisen from drugs provided "in furtherance of" the defendant's mail fraud scheme, establishing a restitution amount based on the contribution to the patient's addiction would require prolonged and complicated proceedings to resolve the disputed issues. Id. at 71.
In United States v. Reifler, 446 F.3d at 135, the Second Circuit vacated over $8.6 million in restitution that two of the defendants were ordered to pay to victims of their securities fraud. The district court had ordered restitution based on the total diminution in value for all shares after the fraud was revealed. The Second Circuit reversed and remanded. The court noted that many of the shareholders were the defendants and their coconspirators and concluded that the restitution amount could not include those shareholders' losses. As to the losses of the nondefendant shareholders, there were "difficult questions as to both the causation requirement
Id. at 136, 139 (internal citations and quotations omitted).
In United States v. Gibson, 409 F.3d 325, 342 (6th Cir.2005), the Sixth Circuit upheld the district court's invocation of the complexity exception under § 3571(d). The defendant corporation was convicted of conspiracy, making false statements to and concealing material facts from a federal agency, and violating the Mine Safety and Health Act. The government pursued a sentence under § 3571(d) based on the defendants' pecuniary gain derived from the offense. The district court acknowledged that the corporation "probably realized some gain," but refused to hear evidence the government sought to present on the pecuniary gain issue. Id. The court concluded that "there's no defensible methodology to use in calculating the gain with any reasonable certainty." Id. The district judge added: "I might be here for a long time and still have lots of questions about the amount, and I'd be[ ] engaging in speculation and guesswork, ... and certainly I think it's going to complicate matters, and it's going to prolong this sentencing." Id. The Sixth Circuit concluded that the district court did not err in invoking the complexity provision of § 3571(d).
Similarly, in United States v. Schwartz, No. 3:06-cr-2, 2006 WL 1662899, at *1 (D.Conn. May 25, 2006), the defendant, a tax accountant, pleaded guilty to two counts of making false statements to the IRS in his own federal income tax returns and in income tax returns he prepared on behalf of the CEO of his company. The CEO and the CEO's wife sought restitution, arguing that the defendant's actions had cost them between $2.1 million and $5.4 million in tax penalties. Id. The court concluded that the complexity exception to the restitution statutes applied because "a determination of fault, causation, and amount of restitution in this case would clearly overwhelm an otherwise straightforward sentencing proceeding." Id. at *5. The court described the complexities in calculating the loss amount to determine restitution:
Id. at *6. The court noted that determining restitution would be complicated because the amount of the victims' loss was "intertwined with the losses caused by defendant's allegedly fraudulent and other wrongful conduct" that were not part of the criminal charge but had been the subject of prolonged civil litigation. Id.
In United States v. Foote, No. 00-cr-20091, 2003 WL 22466158, at *7 (D.Kan. July 31, 2003), the defendant was convicted of conspiracy to traffic in counterfeit goods. The defendant argued, and the court agreed, that restitution under § 3663 based on loss would be inappropriate, in part because the causation issues would unduly complicate the sentencing. There was no reliable way to quantify the pecuniary losses to the victims — which included purchasers, manufacturers, and retailers — resulting from the sales of the counterfeit goods, and the "government ha[d] not proposed any reliable estimate of victim losses." Id. The court concluded, however, that a fine under § 3571(d) based on the gross gain realized by the defendant from sales of the infringing products was calculable and appropriate. The court based the fine upon the defendant's revenues from the sale of the infringing merchandise. Id.
BP Products argues that future losses should never be compensable under § 3571(d). The parties and victims agree that no case has addressed the issue in the context of § 3571(d). BP Products cites the Seventh Circuit's opinion in United States v. Fountain, 768 F.2d 790, 802 (7th Cir.1985), cert. denied, 475 U.S. 1124, 106 S.Ct. 1647, 90 L.Ed.2d 191 (1986), in which the court held that in calculating restitution under the statutory predecessor to § 3663, "a calculation of lost future earnings unduly complicates the sentencing process and hence is not authorized by [§ 3663] — unless, to repeat a vital qualification, the amount is uncontested, so that no calculation is required." Id. The court concluded that "projecting lost future earnings has no place in criminal sentencing if the amount or present value of those earnings is in dispute." Id. BP Products argues that the logic underlying the court's determination that calculating future losses unduly complicates a restitution order is equally applicable to fine calculations under § 3571(d). (Docket Entry No. 107 at 4-7).
This court disagrees that applying Fountain results in a categorical bar to basing restitution or a fine on future losses resulting from an offense. Courts in this circuit have, without discussion, approved using future losses to determine restitution. See United States v. Razo-Leora, 961 F.2d 1140, 1146 (5th Cir.1992) (affirming order that defendant pay $100,000 in lost future income as restitution to the victim's widow); United States v. Jackson, 978 F.2d 903, 915 (5th Cir.1992), cert. denied, 508 U.S. 945, 113 S.Ct. 2429, 124 L.Ed.2d 649 (1993) (holding that the district court has the authority to award future lost income under the VWPA, but remanding for further factual findings on the victim's losses).
Courts in other circuits have questioned or rejected a categorical approach, while recognizing that the difficulties in calculating future loss are likely to trigger the complexity exception. In United States v. Oslund, 453 F.3d 1048, 1063 (8th Cir. 2006), the Eighth Circuit concluded that the restitution statutes "do[ ] not prevent the district court from using its abundant
In United States v. Cienfuegos, 462 F.3d 1160 (9th Cir.2006), the Ninth Circuit concluded that interpreting § 3663A to bar restitution for lost future income "would conflict with Congress's stated intent to force offenders to `pay full restitution to the identifiable victims of their crimes.'" Id. at 1165 (quoting S.Rep. No. 104-179, at 12 (1996), reprinted in 1996 U.S.C.C.A.N. 924, 925). The court stressed, however, that proof of future losses "must not be predicated on speculation or conduct unrelated to the offense of conviction, as such an award would be inconsistent with congressional intent." Id. at 1168 (citing S.Rep. No. 104-179, at 19 (1996), reprinted in 1996 U.S.C.C.A.N. 924, 932 ("The committee believes that losses in which the amount of the victim's losses are speculative, or in which the victim's loss is not clearly causally linked to the offense, should not be subject to mandatory restitution.")). The court remanded for calculation of restitution to the estate of a manslaughter victim's family consistent with its order. Id. at 1169.
In United States v. Serawop, 505 F.3d 1112, 1123-25 (10th Cir.2007), the Tenth Circuit concluded that future losses may be included in a restitution order under § 3663A, citing Cienfuegos. The court noted, however, that the statute does not cover "incidental, consequential, or pain and suffering awards ... [or] speculative reimbursements." Id. at 1124. The court upheld the award of lifetime future earnings to the estate of a three-month-old homicide victim but commented that "[t]he district court would also certainly have been on firm ground, noting the time and complexity of its subsequent proceedings, to have left such complex matters to a civil determination. Indeed, it might often be the case that complexity or delay caused by these determinations should be deferred to a civil forum." Id.
This court must consider the risk that absent the parties' agreement as to the fine, the complexity provision of § 3571(d) would likely apply. The criteria the cases use for applying the provision are all met: there are multiple victims (in numbers that could range from 180 to 4,000); there are disputed issues as to causation; and many of the victims have claimed future losses in amounts that are vigorously disputed. These considerations impact the reasonableness of the fine amount in the proposed plea.
The government and BP Products have clarified that the $50 million fine represents a reasonable estimate of twice BP Products's gross pecuniary gain derived from the Clean Air Act violations to which it pleaded guilty. The government arrived at the $50 million figure by calculating BP Products's cost savings in not replacing the blowdown stack in the ISOM unit and in not using an off-site contractor facility. (Docket Entry No. 66 at 120-22). The government calculated the costs that BP Products incurred in replacing eleven other blowdown stacks at the Texas City refinery ($50 million). The government also calculated the costs that BP Products incurred in manufacturing an off-site contractor
The victims contend that the $50 million fine is far too low a measure of gross gain. The victims correctly note that "[g]ain can result from either additional revenue or cost savings." U.S.S.G. § 8A1.2 cmt. n. 3(h). But the victims' arguments for a higher gain amount are factually or legally deficient under § 3571(d). The bases the victims urge for determining a higher gain amount rely on an improper construction of the information and are too tenuously connected to the offense conduct.
The victims argue that the information charges a plant-wide offense, and that a fine based on gross gain derived from the offense should therefore be based on the profits from the entire Texas City refinery, not just the cost savings allocated to the ISOM unit. The victims point to the introduction section of the information, which states that "[w]ithin the BP Products Texas City refinery, there were 29 different refining units and four chemical units that had the capacity to process 460,000 barrels of crude oil per day into components including gasoline, jet fuel, diesel fuel, and chemical feed stocks." (Docket Entry No. 1 at 1). The victims also point to the fact that one of the two regulatory violations charged in the information — the failure to warn the contractors of the raffinate splitter startup, in violation of 40 C.F.R. § 68.87(b) (2) — explicitly references the ISOM unit, while the other charged violation — failing to [e]stablish and implement written procedures, in violation of 40 C.F.R. § 68.73(b) — does not.
The information states:
(Docket Entry No. 1 at 7-8). The victims argue that because the § 68.73(b) charge does not reference the ISOM unit, this charge applies to the entire Texas City refinery. (Docket Entry No. 51 at 22-24 & n.9).
The information describes the entire plant only in an introductory section, under the subheading "BP Texas City Refinery
"An indictment must be read in its entirety." United States v. Miranda, 494 F.2d 783, 785 (5th Cir.1974), cert. denied, 419 U.S. 966, 95 S.Ct. 228, 42 L.Ed.2d 181 (1974) (citing United States v. Wilshire Oil Co., 427 F.2d 969 (10th Cir. 1970)). "An indictment is reviewed entirely on a practical basis, rather than in a `hypertechnical manner.'" United States v. Sandoval, 347 F.3d 627, 633 (7th Cir. 2003) (quoting United States v. Craig Smith, 230 F.3d 300, 305 (7th Cir.2000)). "The indictment or information must be a plain, concise and definite written statement of the essential facts constituting the offense charged." FED. R.CRIM. P. 7(c)(1). The information, viewed as a whole, describes and charges conduct in the ISOM unit that led up to the March 2005 explosion. The information does not allege criminal conduct outside the ISOM unit.
The government asserts that it only intended to charge a criminal violation of the Clean Air Act in the ISOM unit, where the explosion occurred. (Docket Entry No. 66 at 124-25). In the Statement of Facts, BP admits to criminal violations of the Clean Air Act only in the ISOM unit. (Docket Entry No. 8, Ex. A at 8-16; Docket Entry No. 96, Ex. 6 at 8-16). The information and Statement of Facts support the parties' interpretation of the information as limiting the criminal conduct alleged to the ISOM unit.
A fine under § 3571(d) may only be based on the conduct specifically charged in the information, not on other uncharged criminal activity or other wrongdoing. Under § 3571(d), the fine may be no more than the greater of the gross (pecuniary) gain derived from the "offense" or the gross (pecuniary) losses resulting from the "offense." "Offense," in Guidelines terms, means the offense of conviction and relevant conduct. See Section 8A1.2, application note 3(h) (the term "pecuniary gain" is derived from § 3571(d) and means additional before-tax profit — either additional revenues or costs savings — resulting from the offense of conviction and relevant conduct under § 1B1.3). "Relevant conduct" is "all acts and omissions... that occurred during the commission of the offense of conviction, in preparation for that offense, or in the course of attempting to avoid detection or responsibility for that offense." U.S.S.G. § 1B1.3(a). Relevant conduct is limited to criminal conduct and cannot extend to acts or omissions that are not criminal, even if they are negligent or repugnant. "Relevant conduct includes offenses that
As noted, few cases analyze the application of § 3571(d). One such case is instructive in defining the term "offense." In United States v. Aguilar, 928 F.2d 1137, 1991 WL 40339, at *1 (9th Cir. Mar.25, 1991) (unpublished), the defendant pleaded guilty to one count of possession with intent unlawfully to use or transfer five or more false United States immigration documents. The court imposed a $33,580 fine, the amount found at the defendant's home, where agents also discovered 64 false immigration documents. The evidence received by the district court indicated that the defendant's "normal" fee for the use of these documents was $500 per person, that she had been involved in this "business" since 1988, when she was arrested in possession of 284 false documents that she was then "renting" for between $45-$140, and that the documents were returned to the defendant upon their users' successful entrance to the United States, thereby becoming available for repeated use. Id. at *3. The court approved the fine calculation, which was based on a conservative estimate that each document discovered in the defendant's home was used just once, at the going rate of $500. Id. The defendant argued that the court had wrongly based the fine on the gains derived from her "illegal activity" — all 64 documents — as opposed to the gains derived from the "offense of conviction." The court found that the district court had properly calculated the fine even assuming that the "term pecuniary gain as used in § 3571(d) refers only to the gain from the `offense of conviction.'" Id. The court emphasized that the indictment to which the defendant had pleaded guilty charged unlawful use of "five or more" false immigration documents. Id. "Given the inevitable uncertainty involved in assessing how much money has been derived from particular criminal conduct, the district court's determination that the `pecuniary gain' to Aguilar from the `offense of conviction' was $33,580.00 was not clearly erroneous." Id. at *4.
The Seventh Circuit's opinion in United States v. Alldredge, 551 F.3d 645 (7th Cir. 2008), is a recent effort to define the word "offense." The defendant was convicted of distributing counterfeit currency. The defendant had received the currency as payment for checks that she forged and shipped for sale overseas. The district court had enhanced the defendant's sentence on the basis that part of the offense had occurred outside the United States. The Seventh Circuit reversed, noting that the defendant had not been charged with forging checks or participating in international counterfeiting. Id. at 647. Because the offense of conviction — distributing counterfeit currency — occurred exclusively in the United States, the related international aspects of the defendant's transaction could not be used as a basis for an enhanced sentence. The court noted that the Guidelines, which in relevant part are derived from § 3571(d), "implement a charge-offense system rather than a real-offense system." Id.; see also United States v. Schaefer, 291 F.3d 932, 938 (7th Cir.2002) (rejecting a loss calculation derived from all receipts used in the defendant's artwork business, despite agreeing with the government that the defendant's business was "permeated with fraud," because the government had not established by a preponderance of the evidence that
The fine levied against BP Products must be based on the offense of conviction and "relevant conduct." Those are criminal acts and omissions in the ISOM unit.
The victims argue that the fine should be twice the Texas City plant's profits for the six years before the explosion because the information charges a six-year period of noncompliance with Clean Air Act, (Docket Entry No. 28 at 32; Docket Entry No. 51 at 21-24); or twice $1 billion, BP Products's profits from the entire Texas City refinery in the fourteen months before the explosion; or twice $450 million, which the victims allege was BP Products's cost savings from not bringing the entire Texas City plant into compliance with the Clean Air Act, (Docket Entry No. 66 at 103-05); or twice $725 million, which is the result of multiplying the $25 million gain from not updating the ISOM unit (the basis for the fine in the plea agreement) by the 29 refinery units at the Texas plant, (id. at 123).
Putting aside the issue of whether BP Products has pleaded guilty to plant-wide criminal conduct, the victims have not identified a factual or legal basis for finding that all of BP Products's profits from the Texas City refinery for the fourteen months — or six years — preceding the accident were derived from the offense. The victims recognize, for example, that then-record oil prices were a major part of the refinery's profits. The victims argue that BP Products "kept unsafe units in operation to reap the windfall profits of increased gas prices." (Docket Entry No. 28 at 32) (emphasis added). The premise of the victims' argument is that the profits were made possible by keeping unsafe equipment and procedures in use. This argument is contradicted by the facts in the record. Those facts show that the ISOM unit was taken offline and kept offline after the explosion, and that the Texas City refinery experienced little change to its profits as a result. (Docket Entry No. 66 at 102). Those facts also show that after the explosion, there were many safety improvements made throughout the plant, during which the plant continued to operate and generate profits. These facts defeat the causal link the victims argue exists between deferring or avoiding safety steps needed to comply with the Clean Air Act and the ability of the plant to continue operating and to generate profit. (Id. at 108).
Basing the fine on the Texas City refinery's entire profits would not satisfy the § 3571(d) requirement that the gross gain have been derived from the offense. Using gross profits from the entire Texas City plant as the starting point for the fine — whether for fourteen months or six years — would require the court to determine what part of these profits were either costs saved or additional revenues generated by the failure to implement the process safety measures that are the basis of the offense. Making this determination — even estimating it — would require a lengthy and prolonged sentencing process to try to separate the costs avoided or additional revenues received from failing to establish or implement these safety measures from the total profits of all or part of the refinery. If, as BP Products urges, Apprendi applied, these problems would be compounded by the requirement of proof beyond a reasonable doubt. Attempting to use the total plant profits as the basis for the fine would "unduly complicate and prolong" the sentencing process and would result in the application of the complexity provision of § 3571(d), leaving a default fine of $500,000. The government states that it
The victims alternatively argue that the fine should be based on BP Products's cost savings from a plant-wide failure to establish and implement written process safety procedures. In the present case, the voluminous record shows that BP Products did not adequately address process safety throughout the Texas City refinery. But that record does not provide a basis to establish or estimate the extent to which such conduct amounted to criminal acts and omissions throughout the refinery. Instead, the record shows that there were a number of problems throughout the plant, including failures to train employees adequately. The victims do not contend, and could not contend, that every deficiency identified in the Baker Report, the CSB Report, or other documents is criminal. And many of the deficiencies are not part of the offense of conviction — the violations of 40 C.F.R. § 68.73(b) or § 68.87(b)(2) charged in the information — or offense conduct. Even putting aside that the information charges violations only in the ISOM unit, and putting aside BP Products's Apprendi argument, to calculate the fine using gross cost savings (or additional revenues) derived from not establishing or implementing process safety steps throughout the plant would require extensive proceedings to identify what deficiencies were criminal and within the offense of conviction and relevant conduct, and the amount of the savings or additional revenues attributable to those deficiencies. Such proceedings would be unduly complicated and prolonged, triggering the complexity provision.
The court in United States v. Gibson reached a similar conclusion, refusing to base a fine on the defendant's alleged pecuniary gains from violating the Mine Safety and Health Act and making false statements to a federal agency. 409 F.3d at 342. Although the court conceded that the defendant corporation had "probably realized some gain," the court declined to calculate the fine based on that gain because it could think of "no defensible methodology to use in calculating the gain with any reasonable certainty," so any resulting fine would be premised on "speculation and guesswork." Id. The court in United States v. Schwartz similarly declined to determine restitution based on the putative victims' losses, noting that it would be virtually impossible to distinguish the portion of the victims' losses attributable to the defendants' charged tax fraud from other "intervening factors." 2006 WL 1662899, at *6. The court concluded that the connection between the "conduct of conviction — which was lying to the IRS," not the victims, and the losses claimed, which included the penalties, interest, and attorneys' fees incurred by the victims after their tax returns were prepared by the defendant, was too complex. Id. at *4. The court noted that the victims alleged that the defendant had made other, uncharged misrepresentations, both criminal and noncriminal, that contributed to the losses. Id. The court's conclusion was bolstered by the fact that the loss amounts attributable were disputed. A protracted battle of forensic experts would be necessary even to approximate the appropriate loss amount, and the process "would clearly overwhelm an otherwise straightforward sentencing proceeding." Id. at *5.
In the present case, making the determinations necessary to satisfy § 3571(d) could easily extend the sentencing phase longer than any trial and would require complex — and to some inevitable extent,
The victims suggest in the alternative that a fine based on gross gain could easily be calculated by taking the $25 million cost savings from not replacing the blowdown stack in the ISOM unit and not moving the contractors' facility in that unit offsite (the basis for the $50 million fine in the plea) and multiplying that figure by all 29 refining units at the Texas City refinery. But this seemingly simple approach could not be done absent stipulation. Even putting aside that BP Products pleaded guilty to criminal violations only in the ISOM unit, each of the refinery units had different equipment and processes and performed different tasks. There is no factual basis for assuming that each of the 29 units had the same type of safety deficiencies as the ISOM unit or that similar cost savings were derived in each unit.
BP Products takes the position that even the $25 million cost savings figure from the ISOM unit that forms the basis for the plea agreement could not be established absent stipulation. (Docket Entry No. 66 at 126-27). The government adds that the figures from which the $25 million was derived—the cost of replacing the blowdown stack and of building an offsite facility for contractors—results from steps that were not legally required but were instead a "voluntary remedial measure" by BP Products. (Id. at 128). The parties assert that the basis used to compute the stipulated fine could not be used in litigation if the plea agreement were rejected.
The victims urge that this court
(Docket Entry No. 51 at 13-14). The victims' argument raises two issues. First, may this court accept as part of the plea agreement a fine that was computed on a basis that the parties contend could not be used in litigation? And second, what is the legal effect of the parties' agreement to such a fine if this court rejects the plea agreement and BP Products withdraws the plea?
On the first issue, the parties do not contend that there is no factual basis for a $50 million fine. Instead, they argue that proving gross pecuniary gain or loss at trial, using any of the various metrics the victims have proposed, would so unduly complicate a sentencing determination that the complexity provision of § 3571(d) would apply. The parties have proposed a basis for the stipulated fine that, although not based exclusively on the criminal conduct that is the offense of conviction, has a strong factual nexus to that criminal conduct and estimates the pecuniary gain derived from that conduct. At the February 4, 2008 hearing, the government explained that although the basis it chose in calculating the fine incorporates certain noncriminal elements, this was the best method it could determine for arriving at an appropriate fine: "[W]e have searched hard and long to try to find a felony resolution on this case and we have stretched the facts as far as we think we can stretch them to
On the second issue, if this court were to reject the plea agreement, the parties would return to their "pre-plea posture." Cervantes-Valencia, 322 F.3d at 1062; FED.R.EVID. 410; FED. R.CRIM. P. 11(f). The parties' agreement that the cost savings from not replacing the ISOM unit's blowdown stack is an appropriate metric for calculating the fine could not be introduced in a subsequent proceeding.
The victims have vigorously criticized the proposed gross-gain basis for the fine as unreasonably low. But the alternatives the victims identify for calculating a higher fine based on gross gain are all problematic under § 3571(d). Each alternative would, at a minimum, unduly complicate and prolong the sentencing proceedings to such a degree that the default $500,000 maximum fine under § 3571(c) would apply.
The victims argue that this court should reject the plea because the $50 million fine is far lower than could have been obtained using the gross losses resulting from the offense. The government contends that it did not use gross losses as the fine basis because the calculation would be unduly complex, prolonged, and highly speculative. The victims counter that gross losses would not be unduly complicated to calculate and would yield a fine amount significantly higher than the $50 million in the plea agreement.
The victims initially proposed several methods for the court to use in calculating the fine. Most of these methods have since been abandoned or revealed as flawed. The victims asserted that the $1.6 billion in civil settlements BP Products had paid up to that point would reasonably estimate the victims' losses resulting from the offense. (Docket Entry No. 51 at 20). But the amount of civil settlements does not equate to gross loss in a criminal fine. Such settlements are just that—settlements—and
In a later brief, the victims submitted an affidavit from one of their lawyers serving as liaison counsel in the civil cases. In the affidavit, the lawyer stated that he had "a good faith basis for believing that the victims of the explosion have suffered a total pecuniary loss in excess of $200 million." The lawyer appears to have arrived at this figure by calculating a "mean average for pecuniary losses" for a subset of victims and multiplying that number by the "over 2,000 victims" that he alleges suffered personal injury in the explosion. (Docket Entry No. 69, Ex. 1 at 2-3). Although reasonable estimation is permitted, this affidavit is an inadequate basis for calculating the fine based on gross losses. There is no recognition of the differences among, or disputes over, the victims' injuries, medical expenses, and lost wages, both past and future. The government argues that the affidavit would raise serious issues under Daubert and does not provide the level of proof required in a criminal proceeding. (Docket Entry No. 75 at 3 n. 4).
The victims argued that the lack of more precise loss information was one of the consequences of the government's failure to confer with them before the plea. The victims also argued that a presentence investigation should be conducted to gather detailed loss information. To ensure that the victims had a full opportunity to provide the government and the court with detailed loss information and to provide information relevant to deciding whether a presentence investigation is necessary and whether losses resulting from the offense are a proper basis for calculating and evaluating the fine, this court issued an order at the hearing on July 16, 2008. That order set a deadline, agreed to by the victims' counsel, to submit detailed information on gross pecuniary losses resulting from the offense. The order invited the victims to submit loss information for up to fifty victims. The victims were instructed to provide pecuniary loss information about all fifteen individuals killed in the explosion and to choose thirty-five more, thereby ensuring that the information would address the highest losses. Supporting documentation was to be included. (Docket Entry No. 84 at 21, 43-44). The purpose was not to arrive at a total loss number, but rather to assist this court in determining whether the pecuniary losses resulting from the offense could feasibly be determined under § 3571(d); whether they were so far in excess of $25 million as to make the $50 million stipulated fine unreasonable; whether a presentence investigation should be conducted; and whether, if the plea were rejected, the sentencing procedure required to arrive at a loss calculation would be unduly complicated and prolonged. (Id. at 31-32).
The victims submitted pecuniary loss information for twenty-eight victims, not fifty. The submission contained loss information for just four of the fifteen who died in the explosion. The loss information was divided into three categories: lost wages; past medical; and future medical. The victims asserted that the total pecuniary losses for this sample group were $102,122,228.88. (Docket Entry No. 101, Ex. 1).
The government and BP Products pointed out numerous flaws in the victims' methodology and errors in the victims' calculations. Some are described below.
(Docket Entry No. 104; Docket Entry No. 107 at 16-25 & App'x; Docket Entry No. 120 at 88-99).
The government and BP Products also point out general problems with the information submitted. The losses are based on projections or estimates provided by victims' counsel or by experts retained in the civil cases, primarily for the purpose of settling those cases. In most cases, the victims did not submit documentation such as tax returns or hospital or medical bills to support the projections or assertions. Many of the victims' lost future earnings were calculated without reference to their ages at the time of the explosion, so future lost wages for individuals at or near retirement age were calculated as if these individuals would miss decades of future work. For some of the victims, the loss estimates assume an inability to return to work, despite the fact that those victims went back to work immediately, some at higher wages. For other victims, the future medical expenses are based on life-care plans prepared for civil litigation that, according to information BP Products submitted, overstate the victims' actual expenses under those plans.
The government and BP Products argue that the errors and uncertainties in the victims' submissions demonstrate that the pecuniary loss estimates that the victims provided are unreliable and cannot not be used to determine a fine. The government argues that this court's difficulty in obtaining reliable information from victims represented by counsel about their pecuniary losses demonstrates the practical difficulties that the parties, probation officers, and the court would face in a sentencing proceeding trying to calculate a fine based on twice the gross losses resulting from the offense.
BP Products's causation arguments focus on the liability link between the offense and the explosion. It is not necessary to resolve that argument. Nor is it necessary to decide that Apprendi applies, as BP Products asserts. The problems with the information the victims submitted lead to the conclusion that relying on gross losses resulting from the offense to set the fine absent the plea would trigger the complexity exception to § 3571(d) at the sentencing phase.
The cases show that if there are multiple victims present, the causation issues are disputed, and the losses include significant amounts of disputed future losses, the complexity exception to calculating losses in setting a fine (or restitution) is likely to apply. See Huff, 409 F.3d at 563-64 (multiple victims); Reifler, 446 F.3d at 113-139 (multiple victims and disputed causation); Foote, 2003 WL 22466158, at *7 (multiple victims and disputed causation); Kones, 77 F.3d at 69 (disputed causation); Gibson, 409 F.3d at 342 (disputed causation); Schwartz, 2006 WL 1662899, at *5 (disputed causation); Oslund, 453 F.3d at 1062-63 (disputed future losses); Cienfuegos, 462 F.3d at 1167-68 (disputed future losses). This case has all of those features. This court tested the extent to which those features would complicate determining the fine amount based on losses by inviting the victims to submit the type of information that they would ask the court to use to determine the criminal fine. The victims' own submissions showed that there is no practical or legal way to arrive at a fine using the loss prong of § 3571(d) without triggering the complexity provision.
The victims' information was unreliable, incomplete, and contradicted by documents and other data. Much of the information was vigorously disputed. Many of those disputes centered around projected future losses. Resolving those disputes and ensuring that the loss information was sufficiently reliable for use—under even a preponderance of the evidence standard—for hundreds or thousands of victims, is beyond the capability of an already burdened probation office; a presentence investigation is not the solution to this problem. Determining the pecuniary losses in this case would require a sentencing court to "become embroiled in intricate issues of proof." Reifler, 446 F.3d at 136. This would be inconsistent with the legislative intent that courts should avoid "protracted hearing[s] that would last longer than the trial" in determining fines. H.R.Rep. No. 98-906, at 17 (1984), reprinted in 1984 U.S.C.C.A.N. 5433, 5450. Faced with cases presenting less complicated sentencing information, appellate courts have indicated
The victims propose using the worker's compensation payments BP Products made to determine the past pecuniary losses resulting from the offense. The government required BP Products to submit worker's compensation records as part of the DOJ investigation. Those records show that BP Products paid $21 million to 463 workers injured in the explosion. (Docket Entry No. 104 at 5 n. 3; Docket Entry No. 120 at 120). The parties and the victims dispute that $21 million reliably describes past pecuniary loss.
The government and BP Products argue that the figure inflates the amount of pecuniary loss because the Texas Worker's Compensation statute is "liberally construe[d]... in favor of the injured worker," Castellow v. Swiftex Mfg. Corp., 33 S.W.3d 890, 896 (Tex.App.-Austin 2000), abrogated on other grounds, Lawrence v. CDB Servs., Inc., 44 S.W.3d 544 (Tex. 2001), and is "akin to strict liability," (Docket Entry No. 120 at 120). The victims argue that the $21 million figure underrepresents the amount of past pecuniary loss, because BP Products made an agreement with medical providers that allowed it to pay about fifty cents on the dollar for most claims. (Id. at 135).
Even if the worker's compensation records could be used to estimate past pecuniary losses, that would not take into account, or provide a way to address, future pecuniary losses. If those future losses are excluded and the worker's compensation payments are the only basis for past pecuniary losses, the losses resulting from the offense are lower than the $25 million the government and BP have agreed to as the base fine. If the disputed future losses are included, if the worker's compensation figures are disputed, and if additional past pecuniary losses have to be determined, the difficulties in determining the fine remain. See Kones, 77 F.3d at 69 (the complexity provision in VWPA should apply when there are "fault and causation issues before the sentencing court that cannot be resolved with the information otherwise generated in the course of the criminal proceedings on the indictment"); Reifler, 446 F.3d at 136 (the complexity provision in MVRA should apply to avoid "becom[ing] embroiled in intricate issues of proof" involving "the determination of complex factual issues"); Gibson, 409 F.3d at 342 (complexity provision in § 3571(d) should apply when there is "no defensible methodology to use in calculating the gain with any reasonable certainty").
The victims' objections to the fine because it is based on too low a gain amount, and is not based on the victims' losses, are not a basis for finding the proposed plea unacceptable. The methods and measurements the victims propose are either unsupported by the law and facts or would raise such difficult issues as to likely trigger the complexity provision of § 3571(d).
Under the proposed plea agreement, BP Products will serve a three-year term of probation. Title 18 U.S.C. § 3563 sets out mandatory conditions for a probation term. A sentencing court must require as part of any term of probation that the defendant not commit another crime during the probation term and that the defendant pay
BP Products will also be required to comply fully with the Settlement Agreement executed by BP Products and OSHA on September 22, 2005 and the Agreed Order executed by BP Products and the TCEQ on May 31, 2006. The government explained that based on the overlap of the PSM regulations and the Clean Air Act RMP regulations, for purposes of the criminal resolution of this case, compliance with the OSHA Settlement Agreement as a condition of probation was appropriate. (Docket Entry No. 96 at 4). BP Products and the government have represented to this court that these requirements are rigorous steps to address and remedy the underlying causes of the explosion, beyond the causes that BP Products admitted in the plea to the criminal information and in the Statement of Facts.
The victims' primary objection to the proposed probation conditions is that BP Products is not in compliance with the OSHA Settlement Agreement. The victims have not challenged BP Products's compliance with the TCEQ Agreed Order. (Docket Entry No. 120 at 59). The victims argue that appointment of an independent monitor is necessary to ensure that BP Products fulfills its obligations under the OSHA Settlement Agreement. The victims ask that this court appoint a monitor with "no fiduciary or administrative loyalties to BP" to oversee BP Products's compliance with the regulatory settlements. (Docket Entry No. 28 at 39). The victims also ask this court to reject the plea because the probation terms do not include certain other terms, such as requiring the parent company, BP Global, to provide BP Products with sufficient money to "make this plant safe," including compliance with "all applicable laws and regulations," and implementation of an "effective Ethics and Compliance Program." (Docket Entry No. 120 at 71-72, 135).
The OSHA Settlement Agreement required BP Products to retain an independent PSM expert to conduct a "comprehensive audit and analysis of the PSM Systems at BP Products' Refinery and assess the robustness of the PSM systems," and supply OSHA with statements of action addressing the expert's findings. (Docket Entry No. 96, Ex. 2). BP Products also agreed to conduct an additional pressure relief-valve audit in satisfaction of this Agreement. (Id., Ex. 12). The results of that audit were due to OSHA by December 31, 2008.
At the October 7, 2008 hearing before this court, counsel for the victims asserted that OSHA is wrong in its conclusion that BP Products is in compliance with the Settlement Agreement: "I think the facts absolutely demonstrate an inadequacy [in compliance with the agreement]. I don't want to characterize OSHA in any pejorative way. I know that government agencies are oftentimes understaffed and underbudgeted and stretched." (Docket Entry No. 120 at 38). The victims assert that the probation terms are inadequate because OSHA is an inadequate monitor. The victims ask this court to reject the plea because OSHA's conclusion that BP Products is in compliance with its Settlement Agreement is wrong.
The victims do not address whether and to what extent OSHA is entitled to deference in its enforcement of the Settlement Agreement. An agency's interpretation of, or finding of facts under, a regulation it is charged with enforcing is entitled to deference because "[a]dministrative agencies are simply better suited than courts to engage in such a process." Ford Motor Credit Co. v. Milhollin, 444 U.S. 555, 569, 100 S.Ct. 790, 63 L.Ed.2d 22 (1980); see also 3 CHARLES H. KOCH, JR., ADMINISTRATIVE LAW AND PRACTICE § 12.24[3] (2d ed. 1997) ("It is readily recognized that many conclusions reached by the agency are the result of a technical competence that even the most arrogant nonexpert could not hope to replicate."). The Supreme Court has "recognized on several occasions over many years that an agency's decision not to prosecute or enforce, whether through civil or criminal process, is a decision generally committed to an agency's absolute discretion." Heckler v. Chaney, 470 U.S. 821, 831, 105 S.Ct. 1649, 84 L.Ed.2d 714 (1985). Although this court is not directly reviewing OSHA's findings, it must determine whether the record supports the victims' allegation that OSHA is wrong in finding that BP Products is in compliance with the Settlement Agreement.
At the July 18, 2008 hearing, this court invited submissions from the parties and victims on BP Products's compliance with the OSHA Settlement Agreement and with the PSM regulations the Agreement is intended to enforce. The victims submitted an expert report by Michael E. Sawyer, an industry safety consultant who was retained
These criticisms must be considered in light of OSHA's Compliance Guidelines and Recommendations for Process Safety Management, 29 C.F.R. § 1910.119 App'x C, which include guidelines for compliance audits. Under 29 C.F.R. § 1910.119(o), such audits must be completed at least once every three years. The guidelines state in part that:
29 C.F.R. § 1910.119 App'x C ¶ 14. "An effective audit includes a review of the relevant documentation and process safety information, inspection of the physical facilities, and interviews with all levels of plant personnel." Id.
OSHA's guidelines endorse the use of sampling techniques in compliance audits, provided that the "sample size [selected is] sufficient to give a degree of confidence that the audit reflects the level of compliance with the standard." Id. The Center for Chemical Process Safety,
OSHA guidelines also provide that after an audit, the company's management should craft a comprehensive corrective action plan, "establish[ing] priorities, timetables, resource allocations and requirements and responsibilities." 29 C.F.R. § 1910.119 App'x C ¶ 14. OSHA recognizes that although "[m]any of the deficiencies can be acted on promptly, ... some may require engineering studies or more detailed review of actual procedures and practices." Id.
Each of Sawyer's criticisms of BP Products's compliance with the Settlement Agreement is examined below.
Sawyer criticizes BP Products on the ground that AcuTech merely "assisted" BP Products in conducting the audit. This criticism is based on statements in AcuTech's initial report that "AcuTech assisted BP to conduct a comprehensive PSM Systems compliance audit, and analysis and assessment of the robustness of the PSM Systems at BP Products' Texas City Refinery." (Docket Entry No. 94, Ex. 6 at 6). But these statements are clarified by other portions of the initial report confirming that AcuTech personnel conducted the audit. "The audit was conducted by a team of seven auditors from AcuTech and Lloyd's Register Capstone, Inc. who are degreed engineers with training and experience in auditing, PSM, engineering, operations, and construction." (Id.). "[T]he audit team did not include any persons from BP or other external organizations." (Id., Ex. 6 at 29). The report explains that "BP permitted certain representatives from the BP U.S. Refineries Independent Safety Review Panel [the Baker panel] to participate as observers. At various times throughout the audit, the Panel representatives accompanied the audit team but were not part of it; nor did they influence or interfere with the conduct of the audit." (Id.). The report makes clear that AcuTech conducted the audit, as required by the OSHA Settlement Agreement.
Sawyer criticizes the audit as a "spot check" of the required items, rather than a comprehensive review. Sawyer complains that of 26 refinery units in the Texas City plant,
(Docket Entry No. 89, Ex. 1 at 14-16). Sawyer asserts that this "sampling" violates the Settlement Agreement requirement that the auditor "conduct a comprehensive audit and analysis of the PSM Systems at BP Products' Refinery and assess the robustness of the PSM systems." (Id., Ex. 1-A ¶ 1(a)).
Sawyer's characterization of the audit as addressing only 24 of 26 refinery units is
(Docket Entry No. 94, Ex. 6 at 16). AcuTech's definition is drawn directly from the definition in 29 C.F.R. § 1910.119. AcuTech identified 26 PSM-covered processes at the plant. Two of those processes—in the ISOM Unit and the Fluidized Catalytic Cracking unit No. 2—were being taken permanently off-line. AcuTech reviewed each of the 24 remaining PSM-Covered Processes. (Id., Ex. 6 at 25, 40-41).
The initial report reveals that in designing the sampling plan, AcuTech followed the PSM audit management guidelines set out by the Center for Chemical Process Safety.
In conducting the comprehensive audit required by the OSHA Settlement Agreement, AcuTech was to take a representative sampling of all of the PSM elements at the Texas City refinery. This could be done within the Settlement Agreement's deadline: AcuTech had to issue its PSM systems audit report within six months of being retained. An exhaustive review of every piece of equipment and every aspect of the refinery could not be accomplished in six months, but would take years. (Id. at 26-27). OSHA's conclusion that BP Products complied with the audit requirement of the Settlement Agreement is supported by the record. Sawyer's contention that BP Products violated the Settlement Agreement by permitting sampling practices
The Sawyer report does not discuss in detail the instructions in the OSHA Settlement Agreement on what items BP Products was to emphasize in its "comprehensive audit and analysis of the PSM Systems." These items included:
(Docket Entry No. 96, Ex. 2 ¶ 1.b.(1)-(11)).
AcuTech's first report stated that "[t]he initial audit did not include a detailed analysis of items 1.b.(1)-1.b.(11) listed in OSHA's Settlement Agreement with BP." (Docket Entry No. 94, Ex. 6 at 26). The audit was structured so that if the examination of the fourteen PSM elements revealed problems with the eleven items OSHA had enumerated, "more detailed analyses of these issues [would] be recommended" for future investigation. (Id.). One issue is whether, even if AcuTech's decision to sample and method of sampling was proper, it sampled the wrong things. In other words, did the failure to make these points of emphasis a special focus of the audit violate the OSHA Settlement Agreement? The record shows that OSHA detected this initial failure, and demanded and obtained additional action consistent with the Agreement.
OSHA concluded that the audit as initially structured did not comply with paragraph 1.b.(1)-(11) of the Settlement Agreement and took action. In an undated letter written as a follow-up to an August 3, 2007 meeting with BP Products's PSM Manager and other BP Products representatives, OSHA's Acting Area Director wrote:
(Docket Entry No. 96, Ex. 10).
AcuTech took steps to address these special-emphasis items in an addendum to the initial report and in follow-up reports. Instead of organizing its compliance discussion by the fourteen PSM elements, AcuTech addressed compliance under the eleven special-emphasis items. For each item, AcuTech described the extent that the item was addressed in the audit (including which of the tested PSM elements had revealed information pertinent to the special emphasis item), along with the actions and follow-up associated with any applicable audit findings and recommendations. To the extent that an aspect of the special-emphasis items was not addressed in the initial audit, AcuTech described current or planned activities by BP Products and AcuTech to address the item. (Docket Entry No. 94, Exs. 7, 8, 9, 10). AcuTech's final report was published on February 16, 2008.
BP Products also informed OSHA in a January 16, 2008 letter, after being warned by the government that noncompliance would threaten the plea bargain, (Docket Entry No. 96, Ex. 11), that it would hire a third-party consultant to conduct an additional audit. This audit was to test the engineering soundness of the refinery's pressure-relief systems, focusing on two of the refinery's units that "formerly relied on blowdown stacks that have now been eliminated." BP Products stated that "if any major systemic deficiencies as determined by the expert consultant are uncovered in the audit, BP will address these deficiencies in all the process units." The results of this audit were due to OSHA no later than December 31, 2008. (Id., Ex. 12).
OSHA's conclusion that these additional steps satisfy the Settlement Agreement, and that "based upon the information known to OSHA at this time, it has not found any evidence that BP is currently violating the Settlement Agreement," (id., Ex. 4), is supported by the record. OSHA's diligence in pursuing this issue paints a far different picture of the agency than the picture painted by the victims or by Sawyer. OSHA conducted a follow-up investigation, issuing subpoenas and conducting additional interviews. (Id., Ex. 10). As a result of OSHA's investigation, BP Products is conducting the additional audit that Sawyer faults BP Products for not doing initially. (Id., Ex. 12).
As discussed below, concerns about the focus of the audit are also satisfied to a large extent by the fact that the audit of the fourteen PSM elements and the follow-up reports do address many of the special emphasis items. To the extent that the audit did not comprehensively address these items, the follow-up reports include important information about steps that BP Products has taken or will take to address these items.
In his report, Sawyer asserts that BP Products has acted too slowly in remediating the deficiencies identified in the AcuTech audit. Sawyer complains in particular that when BP Products responds in a statement of action to OSHA that it has "closed" an item, this does not necessarily
The OSHA Settlement Agreement instructs BP Products to "implement all feasible recommendations" from the audit report but does not specify a time frame in which this must be completed. OSHA's Appendix to § 1910.119 recognizes that implementing audit recommendations requires an employer to "establish priorities, timetables, resource allocations and requirements and responsibilities," and that some deficiencies "may require engineering studies or in depth review of actual procedures and practices." 29 C.F.R. § 1910.119, App'x C at 14. There is no evidence from the language of the plea agreement or from OSHA's interpretation of the PSM regulation that BP Products breached the Settlement Agreement by failing to implement the recommendations quickly.
Whether the time frame BP Products has proposed for implementation is reasonable under the PSM regulations is a separate issue. Sawyer argues that BP Products has demonstrated undue delay in inspecting and updating its Safety Instrumented Systems (SIS), one of the special-emphasis items in the OSHA Settlement Agreement. SIS have sensors for detecting abnormal operating conditions and are capable of automatically returning conditions to a safe state or shutting down the process when abnormal conditions are sensed. The ISOM unit did not have SIS in place at the time of the explosion. Sawyer complains that "it does not appear that AcuTech actually inspected any SIS system on any unit, or determined which units are or are not equipped with SIS." (Docket Entry No. 89, Ex. 1 at 9). Sawyer also complains that BP Products's promise to implement advanced SIS in all relevant units by 2012 is unreasonably slow. (Id., Ex. 1 at 10-11).
Sawyer's statement that the audit did not test for the presence and soundness of SIS does not appear accurate. AcuTech's reports show that the Texas City refinery was audited for compliance with 29 C.F.R. § 1910.119(d)(3), which requires the compilation of process safety information relating to equipment, including interlocks and detection or suppression systems, and § 1910.119(j), which requires inspection, testing, and implementation of written procedures for the maintenance of emergency shutdown systems and controls, including "monitoring devices and sensors, alarms, and interlocks." (Docket Entry No. 94, Ex. 10 at 36). OSHA has characterized § 1910.119(d)(3) and § 1910.119(j) as regulations governing SIS.
AcuTech's report also states that as a long-term project,
(Docket Entry No. 94, Ex. 10 at 36). The TCACP implementation was to proceed on a timetable. At the time of the final report, the Phase 1 engineering was complete and installation was scheduled for completion by May 2009. Phase 2 was to be completed by late 2009, Phase 3 by December 2010, and Phase 4 by early 2011. All process units were to be completed by the end of 2012. (Id., Ex. 10 at 37-38). Sawyer argues that there was no timetable in place when the first progress report was published, that the second progress report slated completion for the end of 2011, and that the final report's upward revision to 2012 represents an unacceptable delay. But Sawyer presents no basis for rejecting OSHA's determination that the timetable for significant plant-wide renovation is reasonable and properly implements the Settlement Agreement. Sawyer's criticism is not a persuasive basis for rejecting the plea because of deficient conditions of probation.
The Sawyer report states that the AcuTech audit did not comply with the OSHA Settlement Agreement because "an evaluation of [the relief valves ("RVs")] to determine if the relief capacities and settings are correct for the equipment [they] protect[ ] still has not been conducted to date." (Docket Entry No. 89, Ex. 1 at 4). Sawyer quotes AcuTech's final report, which acknowledges the limited study of the relief valves:
(Docket Entry No. 94, Ex. 10 at 33). Sawyer appears correct that the AcuTech audit did not comply with the OSHA Settlement Agreement requirement that "[t]he adequacy of pressure relief for individual pieces of equipment" be studied as a special-emphasis item. (Docket Entry No. 96, Ex. 2 ¶ 1.b(8)). As BP Products recognizes, high pressure and high temperatures are sources of risk at refineries such as the Texas City plant, particularly plants that have been in operation for years. Another employee at BP Products's Texas City refinery, William Gracia, was killed after the metal lid of a water filtration unit in the Ultracracker process unit blew off due to overpressure. (Docket Entry No. 110, Ex. 1). BP Products entered a settlement with OSHA after Gracia's death, agreeing to correct six regulatory violations and to pay a $28,000 fine. (Id.; Docket Entry No. 111).
Sawyer's criticism, however, does not provide a basis for rejecting the proposed plea. The record does not show that the solution to the problem is an additional monitor of the OSHA Settlement Agreement, on top of the monitoring OSHA already provides, both under the Agreement and under its general regulatory mandate. As discussed above, OSHA detected this problem—even before the Gracia tragedy—and acted, requiring BP Products to retain a relief-systems expert and to conduct
Sawyer also complains, citing the final AcuTech report, that numerous relief-system issues detected by the AcuTech audit have not yet been remedied. His complaints include the following:
(Docket Entry No. 89 at 5-6; Docket Entry No. 94, Ex. 10 at 19-21). These criticisms appear to be taken out of context. AcuTech explained that it was providing these figures as an update on the progress of BP Products's Atmospheric Blowdown & Flare Project ("ABF Project"), which "was established in late March 2005 with [the] scope of upgrading relief systems across the Texas City Refinery." The "primary goal" of the ABF Project was the "elimination of blowdown stacks and ensuring the capability and adequacy of the refinery's relief systems including individual relief devices, flares, drums and spheres." (Docket Entry No. 94, Ex. 10 at 17). When AcuTech's final report issued, BP Products had reduced the number of blowdown stacks in service from twelve to one. The report explained: "The remaining blowdown stack in service is in emergency heavy oil, steam and condensate service and is assessed as low risk with no plans for removal. Of the remaining 11, none are tied to a process and 9 have actually been demolished or are associated with mothballed units." (Id., Ex. 10 at 19). The ABF Project is scheduled for completion in 2012. (Id., Ex. 10 at 21). Sawyer's criticisms of the remediation of the relief systems that were the subject of the audit do not show noncompliance with the OSHA Settlement Agreement.
The Sawyer report correctly points out that BP Products's compliance with the OSHA Agreement and the PSM regulations has been directly verified by a third party (AcuTech) only once, during the initial audit. "[S]ince the initial audit of May 2006, the PSM Expert has not performed any additional audit activities or verification of audit resolutions." (Docket Entry No. 89, Ex. 1 at 14). AcuTech acknowledges in its follow-up and final reports that "[t]he progress reported regarding the status of and progress on the initial audit
The victims did not argue that making compliance with the Settlement Agreement a condition of probation was too lenient because the Settlement Agreement's terms were insufficient. Rather, the victims argued that BP Products had failed to comply, making additional enforcement steps necessary. The record does not show failure to comply, as the victims assert. The victims' objections to the terms of probation relating to the enforcement of the OSHA Settlement Agreement are not grounds for rejecting the proposed plea.
The victims have not asserted that BP Products has failed to comply with the TCEQ Agreed Order or that the terms of that order are inadequate. (Docket Entry No. 120 at 59). A brief discussion of BP Products's progress under that Order is useful to analyze the adequacy of the probation terms.
Sawyer's report asserts that as of February 16, 2008, 40% of flare-design deficiencies identified at the refinery had not been resolved. (Docket Entry No. 89, Ex. 1 at 5). On August 13, 2008, the Director of the TCEQ's Enforcement Division wrote a letter to this court, stating as follows:
(Docket Entry No. 96, Ex. 5). The TCEQ letter provides confirmation from an additional agency that BP Products is on track to update its flare system and that the time frame is reasonable.
The victims argue that this court should appoint an independent monitor to ensure that BP Products is meeting its PSM obligations and the terms of the OSHA Settlement Agreement and the TCEQ Agreed Order. The victims argue that the plea agreement's reliance on OSHA and the TCEQ to police their own agreements limits the government's enforcement power to whatever enforcement powers already exist under the OSHA and TCEQ orders. The victims further assert that OSHA has failed to exercise the enforcement powers that it already has. At the October 7, 2008 hearing, counsel for some of the victims asserted that OSHA is mistaken—or worse—in its conclusion that BP Products
The victims' argument that the plea agreement limits the agencies' enforcement powers to those specified in the Settlement Agreement and Agreed Order is unpersuasive. Under these agreements, OSHA and the TCEQ retain all of their original regulatory powers. (Docket Entry No. 96, Ex. 2 at 14) ("Nothing in this Agreement shall be construed as limiting OSHA's authority to conduct any type of inspection authorized by the Act."); (id., Ex. 3 at 12) ("Nothing in this Agreed Order shall prevent the Executive Director from initiating an enforcement action against BP Products alleging that emissions from any Affected Combustion Device constitute an emissions event."). OSHA already has an order from the Fifth Circuit under 29 U.S.C. § 666(b),
(Docket Entry No. 33 at 8).
Furthermore, under the proposed plea, if BP Products breaches the OSHA Settlement Agreement or the TCEQ Agreed Order, it will be subject not only to a civil contempt order but to a criminal probation violation. Under 18 U.S.C. § 3565(a), the punishment for violating a probation condition may include "extending the term [of probation] or enlarging the conditions," or "revok[ing] the sentence of probation and resentenc[ing] the defendant." See also U.S.S.G. § 8F1.1 ("Upon a finding of a violation of a condition of probation, the court may extend the term of probation, impose more restrictive conditions of probation, or revoke probation and resentence the organization."). A court may modify or revoke a defendant's probation if it is "reasonably satisfied," by a preponderance of the evidence, that the defendant's conduct "has not been as good as required by the conditions of probation." United States v. Levine, 983 F.2d 785, 787 (7th Cir.1993) (internal quotations omitted) (quoting United States v. Thomas, 934 F.2d 840, 846 (7th Cir.1991)); see also United States v. Teran, 98 F.3d 831, 836 (5th Cir.1996). Proof beyond a reasonable
"[A] single probation violation [i]s sufficient to support the district court's exercise of discretion to revoke [a defendant's] probation." United States v. Lindo, 52 F.3d 106, 107-08 (6th Cir.1995). The Sentencing Guidelines suggest as a matter of policy that if imprisonment cannot be part of the sentence, revocation of probation "is the appropriate disposition" when the defendant commits two or more violations. U.S.S.G. § 7B1.3, cmt. n. 1. The Sentencing Guidelines also provide that "[i]n the event of repeated violations of conditions of probation [by an organizational defendant], the appointment of a master or trustee may be appropriate to ensure compliance with court orders." U.S.S.G. § 8F1.1, cmt. n. 1. When a defendant violates a condition of probation, the district court must hold a hearing and consider the sentencing factors set forth in 18 U.S.C. § 3553(a)—the same factors that the court is required to consider in imposing the initial sentence. 18 U.S.C. § 3565(a); FED. R.CRIM. P. 32.1(b)(2).
If this court concluded, by a preponderance of the evidence, that BP Products was not complying with the terms of these settlements, it would have the option of revoking BP Products's probation and resentencing, or modifying the terms by extending the length or imposing additional terms, including the type of independent monitor the victims seek. The proposed plea agreement adds enforcement powers to the existing regulatory requirements. The record supports OSHA's conclusion that BP Products is in compliance with the OSHA Settlement Agreement. The victims agree that BP Products is in compliance with the TCEQ Agreed Order. The record does not show that the Settlement Agreement requires an additional monitor to be effective. OSHA appears to be a diligent monitor and has kept the government apprised of BP Products's progress. BP Products and OSHA have an "on-going dialogue," in which "[r]epresentatives from the Refinery and OSHA meet on a monthly basis to discuss safety and health matters related to the Refinery." (Docket Entry No. 94 at 27). The government will confer with OSHA and the TCEQ on the second Monday of every month if the proposed plea is approved. (Docket Entry No. 120 at 10-11). The fact that the proposed plea agreement does not require an additional monitor does not provide a sound basis for rejecting the plea.
It is also not clear that an additional court-appointed monitor at this time would provide the advantages that the victims seek. Neither the court nor the probation office have the expertise or the resources to monitor BP Products's compliance with the complex and detailed provisions of the PSM regulations. Delegating this task to a court-appointed expert would not solve this problem. Although BP Products would pay the expert's expenses and fee, the court would still have to analyze the expert's findings and recommendations and settle disputes between BP Products and the expert, which the court is ill-equipped to do. OSHA and the TCEQ have the expertise and have demonstrated that they and the Department of Justice are committed to the increased scrutiny the Settlement Agreement and Agreed Order require.
The victims' primary objection to the terms of probation was that the terms did not provide for an additional court-appointed monitor to ensure that the OSHA Settlement Agreement was properly enforced. The victims also criticized the fact that the proposed plea agreement did not contain a provision that allowed the court to impose other conditions of probation
The victims do not appear to argue that the terms of the OSHA Settlement Agreement or the TCEQ Agreed Order are inadequate. Instead, the victims' primary argument is that OSHA is not adequately enforcing the Settlement Agreement and that BP Products is not in compliance, making an additional independent monitor necessary. The record shows that BP Products is in compliance, that OSHA's enforcement has been effective, and that OSHA and the Department of Justice are committed to continued effective monitoring and enforcement. There is accordingly no factual or legal basis to reject the proposed plea on the grounds the victims assert.
BP Products and the government have moved to waive the presentence investigation and report. (Docket Entry No. 8). The victims object. "Presentence reports, while often an important resource, are not a mandatory part of the sentencing process." United States v. Brown, 557 F.3d 297, 299 (6th Cir.2009). "[A] district court may dispense with a presentence report if it finds that such a report is unnecessary." United States v. Cantu, 786 F.2d 712, 712 n. 1 (5th Cir.1986), cert. denied, 479 U.S. 847, 107 S.Ct. 169, 93 L.Ed.2d 106 (1986) (holding that a presentence report was not required because the district court found that "it had all the necessary information at hand," and noting that "the district court granted the petitioners the opportunity to address the court regarding sentencing"); see also United States v. Colmenares-Hernandez, 659 F.2d 39, 42-43 (5th Cir.1981), cert. denied, 454 U.S. 1127, 102 S.Ct. 979, 71 L.Ed.2d 116 (1981) (upholding the district court's decision not to order a presentence report because "there was sufficient information in the record for the court to meaningfully exercise the sentencing discretion" and there was no indication that the probation officer would likely provide additional information).
Federal Rule of Criminal Procedure 32(c)(1)(A) permits a court to forgo a presentence investigation and report if "the court finds that the information in the record enables it to meaningfully exercise its sentencing authority under 18 U.S.C. § 3553, and the court explains its finding on the record." FED. R.CRIM. P. 32(c)(1)(A)(ii).
Local Rule 32.1 requires that a motion to waive a presentence report contain:
S.D. Tex.Crim. L.R. 32.1. The motion filed by BP Products and the government complies with these requirements. (Docket Entry No. 8). BP Products has submitted a sworn statement of facts admitting its conduct in committing the offense. (Id., Ex. A; Docket Entry No. 96, Ex. 6). BP Products has stated that it has no criminal history, while acknowledging violations at the Texas City refinery and criminal offenses by affiliate entities.
This case is unusual because the criminal investigation was only one part of extensive efforts to learn and understand the acts and omissions of the defendant. In most cases, the presentence investigation is necessary because such information either has not been gathered or has not been analyzed in ways relevant to sentencing considerations. That is not the case here. The record includes lengthy and detailed reports about BP Products's acts and omissions, criminal and otherwise, far beyond what a probation office could accomplish or supplement. There are lengthy and detailed reports about the requirements imposed since the explosion to address BP Products's acts and omissions, including reports provided by experts retained by the victims in their civil cases. The victims have been given ample opportunity to submit information relevant to sentencing, and they have done so. Those submissions have shown that the probation office could not effectively or efficiently obtain reliable, useful information as to the victims' losses in a presentence investigation. All these reports and submissions have provided this court with an exhaustive
The Fifth Circuit found a CVRA violation because the government did not
This court has "take[n] heed that the victims have not been accorded their full rights under the CVRA and [has] carefully consider[ed] their objections and briefs ... in deciding whether the plea agreement should be accepted." (Docket Entry No. 79 at 8). This court has ensured that the victims have had ample opportunity to participate in the sentencing process and to have their views and information fully considered.
This court has also considered whether, had the victims conferred with the government on the proposed plea terms before the agreement was executed, no plea or a different plea would have resulted. The record does not support such a conclusion. Instead, the record shows that the victims had extensive communications with the prosecutors before the plea's execution. During that period, the victims provided the government with much of the information that they later submitted to this court in support of their argument that the proposed plea should be rejected. At the October 7, 2008 hearing before this court, counsel for some of the victims described how the victims had "worked very close[ly] with the Department of Justice to try to get them the information that [they] were deriving from the civil litigation," (Docket Entry No. 120 at 149-150), as follows:
(Id. at 150-151). The government has confirmed that it "remained in contact with counsel for the victims through the investigation [and] benefitted from their cooperation with the investigation." (Docket Entry No. 63 at 5). Despite knowing the victims' criticisms about BP Products's compliance with the OSHA Settlement Agreement, the government agreed with BP Products that compliance with this Agreement, along with the TCEQ Agreed Order, should be included in the probation terms of the proposed plea. The record shows no basis to conclude that had the conferral right been honored before the plea agreement was executed, the plea
The victims argue that had the conferral right been met, they would have been able to provide the government with more extensive information as to their losses. But the victims argued that the conferral right would have been met by procedures tailored to the number of victims and the stage of the government's negotiations with BP Products. (Docket Entry No. 79 at 6). The victims suggested that such procedures could have included a town-hall meeting or a meeting with a few of the victims' counsel. Such procedures would not allow the kind of detailed information-gathering that obtaining individual victims' losses would require. Moreover, this court put into place a procedure that did give the victims and their counsel an opportunity to provide detailed loss information. The results showed that obtaining and analyzing the loss information would be difficult and time-consuming. Again, the record shows no basis to conclude that had the conferral right been honored, the result would have been different.
The purpose of the conferral right is not to give the victims a right to approve or disapprove a proposed plea in advance or to participate in the plea negotiations. The purpose of the reasonable right to confer is for victims to provide information to the government, obtain information from the government, and to form and express their views to the government and court. See In re W.R. Huff Asset Management Co., L.L.C., 409 F.3d at 564; United States v. Sacane, No. 3:05-cr-325, 2007 WL 951666, at *2 (D.Conn. Mar.28, 2007); United States v. Ingrassia, No. Cr. 04-0455, 2005 WL 2875220, at *17 n. 11 (E.D.N.Y. Sept.7, 2005); 150 Cong. Rec. S4260, S4262 (daily ed. Apr. 22, 2004) (statement of Sen. Feinstein). The government was in extensive and regular contact with the victims before the plea agreement. The records that the government obtained from the victims during that time had much of the information that the victims assert would have affected the terms of the plea had they been able to confer with the government before the plea agreement was executed. The government's extensive investigation allowed it to learn much from the victims before the plea agreement was negotiated and executed.
The Fifth Circuit held that "the victims should have been notified of the ongoing plea discussions and should have been allowed to communicate meaningfully with the government, personally or through counsel, before a deal was struck." (Docket Entry No. 79 at 7). Although "these victims should have been heard at an earlier stage," this court has "fully consider[ed] the victims' objections and concerns in deciding whether the plea agreement should be accepted." (Id. at 8). This court has taken extensive steps, including over the parties' objections, to ensure that the CVRA violation did not in any way diminish the force or effect of the victims' objections. This court concludes that the CVRA violation does not provide a basis to reject the proposed plea.
In reviewing the victims' objections, this court has analyzed many aspects of the proposed plea terms. Those terms must be analyzed under 18 U.S.C. §§ 3553, 3563, and 3572.
Section 3553 requires, in relevant part, that in assessing the appropriateness of a sentence, a court must consider the history and characteristics of the defendant, the seriousness of the offense, whether the proposed sentence is an adequate deterrent to future criminal conduct, and whether the sentence protects the public. Section
The seriousness of the offense cannot be overstated. Fifteen people died and over 170 were injured. The explosion would not have occurred had BP Products complied with the requirements of 40 C.F.R. §§ 68.73(b) and 68.87(b)(2) in testing and operating the raffinate splitter in the ISOM unit and in warning the contractors in the trailers before the March 23, 2005 startup of the splitter. The record also shows that BP Products has a history of inadequate and deficient process safety management, at the Texas City refinery and elsewhere. The CSB concluded that several of the causes that contributed to the explosion had been identified in previous audits at the refinery but not remedied. (Docket Entry No. 8, Ex. 2 at 138-140). In 2006, OSHA fined BP Products an additional $2.4 million for violations at its Oregon, Ohio refinery that were similar to those involved in the March 2005 explosion, including "locating people in vulnerable buildings among the processing units; failing to correct de-pressurization deficiencies; failing to correct deficiencies with gas monitors; and failing to prevent the use of non-approved electrical equipment in locations in which hazardous concentrations of flammable gases or vapors may exist."
Having considered the entire record, this court concludes that the sentence addresses the factors set out in §§ 3553 and 3572(a). BP Products is pleading guilty to a felony violation, one of the first under the RMP regulations of the Clean Air Act. There is no basis to conclude that a higher offense could have been charged. The $50 million fine is the largest criminal fine assessed for a violation of the Clean Air Act regulations, and appears to be the largest criminal fine imposed for a fatal industrial accident. (Docket Entry No. 12 at 2). The $50 million fine is derived from a reasonable estimate of the gross pecuniary gain that BP Products derived from the criminal offense. There is no basis to find the fine unreasonable or inadequate because it is not based on a higher gross pecuniary gain. The complex causation issues that would attend any effort to determine, absent the plea, what cost savings or additional revenue BP Products derived from the offense, including relevant criminal conduct, would present a significant likelihood of triggering the § 3571(d) complexity exception and result in a maximum fine of $500,000.
Nor is there any basis to find the fine unreasonable or inadequate because it is not based on the gross pecuniary losses resulting from the offense. Because of the number of victims, the complexity of the causation and related issues, and the disputed nature of the future losses, attempting to base the fine on the victims' losses would trigger the complexity exception to
It is appropriate in considering the adequacy of the fine to examine the other financial consequences of the criminal conduct and other conduct that caused the explosion. In United States v. The Purdue Frederick Co., 495 F.Supp.2d 569, 572 (W.D.Va.2007), for example, the court concluded that a $500,000 criminal fine was adequate after examining other civil and state penalties to which the defendants were subject, which totaled over $600 million. The crime was misbranding of prescription opioid medication, in violation of the Food, Drug and Cosmetic Act, 21 U.S.C. §§ 331(a), 333(a)(2). The penalties included over $100 million to federal government healthcare agencies under a civil settlement agreement; almost $60 million in escrow for states that elected to settle claims; over $3.4 million to Medicaid programs for improperly calculated rebates; $20 million to the state of Virginia for a prescription monitoring program; $5.3 million to the Virginia Medicaid Fraud Control Unit's Program Income Fund; $276.1 million in forfeiture to the United States; $130 million in private settlements; and over $4.6 million in monitoring costs under an agreement with the United States Department of Health and Human Services. Id. In United States v. Huber, 462 F.3d at 952-53, the Eighth Circuit affirmed the district court's refusal to fine the defendants after concluding that a $3.9 million forfeiture award "adequately covered the ground that a fine would cover." In In re the Exxon Valdez, 296 F.Supp.2d at 1079 n. 111, the court explained that it had accepted a plea agreement that allocated a significantly larger portion of the penalty to restitution than to a fine because it was "far preferable for Exxon to be sanctioned by means of a restitution obligation which would be employed for restoration of the environment than by a larger fine which would not be so employed." See also United States v. Anderson, 267 Fed.Appx. 847, 849-850 (11th Cir.2008) (unpublished) (affirming a sentence of three years of probation and six months of home detention, despite the fact that the Guidelines called for a sentence of 18 to 24 months of imprisonment, because the defendant had made full restitution of $134,999.40 plus $16,844.75 in interest and had paid a civil penalty of $134,999.40 and $2,874.99 in interest to the SEC before he learned that criminal charges would be brought against him; the court concluded that the prompt payment "indicated his genuine intent to make amends for his wrongdoing."); cf. United States v. Corrado, 227 F.3d 543, 558 (6th Cir.2000) (rejecting as inadequate fines imposed in lieu of restitution because "[n]either of these fines was adequate [in amount] to take the place of the forfeitures sought").
BP Products has paid over $1.6 billion to the victims to settle approximately 4,000 civil lawsuits arising from the explosion. BP Products has also paid almost $21.7 million to OSHA and the TCEQ in fines. BP Products will pay an additional $265 million to comply with the OSHA Settlement Agreement and the TCEQ Agreed Order. These additional penalties may be considered in assessing the adequacy of a fine. The plea agreement allocates a substantially larger proportion of the financial consequences from the explosion to civil judgments and regulatory compliance measures rather than the criminal fine.
The court must also take into account "the exigencies of plea bargaining from the government's point of view," including "limited resources and uncertainty
Considering the specific facts and circumstances presented in this voluminous record, including the victims' objections, this court finds that the proposed plea is a reasonable disposition given the available alternatives, the risks they present, and the limits inherent in the statutes that the government can use to obtain and punish a felony conviction for conduct leading to an industrial accident.
This court accepts the plea agreement.
"resulting in very serious limitations in the ability to independently initiate, sustain, or complete activities of daily living." 20 C.F.R. Part 404 Subpart P, App. 1, § 4.04C. Notably, in the instant case, a 95% narrowing was noted in Plaintiff's previously-stented distal right coronary artery ("RCA") as of September 2010, and Plaintiff's cardiologist, Dr. Kroll, was unable to open the artery to any degree using percutaneous transluminal coronary angioplasty ("PTCA"). (Tr. at 646, 771.) In describing Plaintiff's 2010 repeat catheterization, the ALJ omitted any mention of the unsuccessful portion of the procedure, which Plaintiff contends meets 20 C.F.R. Part 404 Subpart P, App. 1, § 4.04C(1)(b). Thus, the ALJ's analysis does not provide a basis for concluding that Listing 4.04C's angiographic requirement has not been met. Plaintiff also notes that the NYHA Class III angina pectoris recognized by the ALJ provides evidence of "very serious limitations" in Plaintiff's activities of daily living, and there is no basis to conclude that the ALJ relied on Plaintiff's activities of daily living to conclude that Listing 4.04C had not been met. The Court notes that Listing 4.04C also requires that "in the absence of a timely exercise tolerance test or a timely normal drug-induced stress test, an MC, preferably one experienced in the care of patients with cardiovascular disease, has concluded that performance of exercise tolerance testing would present a significant risk to the individual." Because this provision has not been addressed by the Parties or the ALJ, the Court will not address it in the first instance, and leaves these provisions for analysis and fact-finding by the ALJ, with medical consultation as appropriate.