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Citgo to Pay $19.7 Million Fine for Louisiana Oil Spill

The oil giant agreed to cough up nearly $20 million for damaging natural resources in a 2006 oil spill.

WASHINGTON (CN) — Texas-based Citgo Petroleum Corporation has reached a settlement with the Justice Department and Louisiana to pay $19.69 million for a major oil spill in June 2006 near its wastewater treatment facility in the state.

On Thursday, the government file both a federal complaint and a consent decree in which Citgo agreed to pay for natural resources damages under the Oil Pollution Act and the Louisiana Oil Spill Prevention and Response Act. 

On June 19, 2006, a severe rainstorm overwhelmed the company’s storage tanks, pushing millions of gallons of oil wastewater into a containment area in Lake Charles. About 54,000 barrels of waste oil then leaked into southern Louisiana waterways like the Indian Marais waterway, the Calcasieu River, and the Calcasieu Estuary. The spill caused catastrophic damage to the region, exposing nearby workers to hazardous waste and wreaking havoc on the estuary system where locals source their fish. 

“The discharged oil killed birds and fish and other aquatic life and contaminated aquatic and shoreline habitats,” the complaint states. "Oil traveled downriver from the refinery as well as upriver due to tidal influences.” 

But the spill also put locals at risk. 

“Refineries have huge areas that really negatively impact the community, particularly the African American communities in the area,” Wilma Subra, technical adviser for the Louisiana Environmental Action Network, said in a phone call. “A lot of those communities survive by fishing and harvesting from the estuary itself.” 

The settlement is the latest development in the ongoing legal battle stemming from the spill. In 2012, Citgo was sued by 14 construction workers after they were injured by noxious fumes emanating from the spill while working at another refinery nearby. 

“While oil and gas producers are a major source of employment in Louisiana, they have a sacred obligation to protect our environment and use our resources wisely,” U.S. Attorney Alexander C. Van Hook of the Western District of Louisiana said in a statement. “This settlement sends a clear signal that those who pollute our environment will be held accountable.” 

Citgo isn’t the only oil company in the area. There are over a dozen petrochemical plants and refineries around Lake Charles, many of which have caused similar damage to the waterway over the years.  

“They’ve completely surrounded the estuary,” Subra said. “So, any releases they have will immediately contaminate the estuary. And then there’s the ship channel, which then carries the contamination out to the Gulf of Mexico.” 

But a district court found that Citgo was particularly negligent, “improperly using the tanks to accumulate oil, sludge and oily wastewater at its treatment unit.” The National Oceanic and Atmospheric Administration later found that the oil was spilled “in a highly volatile and acutely toxic form,” which required the area to be shut down for days. 

Thursday's consent decree between Citgo and the U.S. and Louisiana governments said the settlement money will help "restore, replace, or acquire the equivalent of” the natural resources damaged or lost from the spill, as well as pay any remaining costs incurred in the investigation. 

Citgo did not immediately respond to requests for comment. 

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