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Former oil executive sentenced to prison, fined $50,000 for role in 2012 explosion

20 July 2020

The former president and CEO of US oil company Custom Carbon Processing has been sentenced to 18 months in prison, three years of supervised release and fined $50,000 for his role in a 2012 explosion that injured three workers at the company’s oil processing plant in Wibaux, Montana.

Image: Shutterstock
Image: Shutterstock

A jury in September found Peter Margiotta guilty of all three counts in an indictment, including conspiracy, Clean Air Act - general duty, and Clean Air Act - knowing endangerment. 

“By failing to comply with the law in the construction and operation of a plant that handled hazardous materials, Mr. Margiotta endangered his employees, three of whom were injured in the explosion. Companies doing business in Montana must follow environmental regulations," U.S. Attorney Alme said. 

“By knowingly operating an oil processing facility without appropriate safeguards, the defendant endangered workers and the public,” said Bert Marsden, Resident Agent in Charge of the Environmental Protection Agency’s criminal enforcement program.  “Today’s sentencing reflects the egregious nature of the defendant’s actions.”

During a five-day jury trial, the prosecution said that Margiotta was President and CEO of Custom Carbon Processing, a Wyoming-based company that constructed the Michels Disposal Well and Oil Reclamation Facility in Wibaux in 2012. The construction was done in ways that allowed extremely hazardous hydrocarbon vapors and air pollutants to be released into the air.

On July 4, 2012, Margiotta directed the opening of the plant before implementing appropriate electrical wiring, ventilation and other safety measures. On that date, the project manager emailed Margiotta: “The control panels must be moved asap with the explosion proof wiring. We also run the risk of killing someone, not only our operators but also customers.”

Margiotta also directed employees to accept shipments of highly volatile and flammable “natural gas condensate” or “drip gas” into the operations in a purported effort to help thin and process the slop oil at the plant.

Margiotta disregarded repeated warnings from the plant’s foreman that the natural gas condensate was not effective in thinning the slop oil and instead was creating a dangerous situation because of its highly volatile and flammable nature. 

On December 29, 2012, the plant accepted a delivery of natural gas condensate. During the offloading of the material, hazardous and flammable vapours from the condensate filled the plant building and spread out the open bay doors where the truck delivering the condensate was located. The vapours reached an ignition source, triggering an explosion that injured three employees and extensively damaged the plant, the truck and trailer involved in the delivery.

“Employees expect that their employers prioritise their safety by ensuring adherence to Federal safety regulations. In hazardous material transportation and processing, this expectation is paramount,” stated Cissy McCune, Regional Special Agent-in-Charge, U.S. Department of Transportation Office of Inspector General.  “Our work with the U.S. Attorney’s Office and agents from the U.S. Environmental Protection Agency, which resulted in the sentencing of Mr. Margiotta, is a testament to our commitment to protecting the safety of our nation’s transportation workforce.”

“The hard work and dedication of our federal partners to bring justice for victims and hold Mr. Margiotta accountable for his unacceptable actions is to be commended,” said Rita Lucero, Acting Regional Administrator for OSHA’s Denver Region. “OSHA will continue to collaborate with federal agencies to hold employers accountable if they violate federal workplace safety and health laws that place their employees at risk of serious physical harm and death.”

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