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Press Release

Former Custom Carbon Processing official sentenced to prison, fined for violating Clean Air Act for actions leading to explosion of Wibaux oil processing plant

For Immediate Release
U.S. Attorney's Office, District of Montana

BILLINGS – The former president of Custom Carbon Processing, Inc. was sentenced today to 18 months in prison, three years of supervised release and fined $50,000 for his actions related to an explosion that injured three workers at the company’s oil processing plant in Wibaux, U.S. Attorney Kurt Alme said.

A jury in September found Peter Margiotta, 63, of Edmonton, Alberta, Canada, guilty of all three counts in an indictment, including conspiracy, Clean Air Act—general duty and Clean Air Act-knowing endangerment.

U.S. District Judge Susan P. Watters presided. Judge Watters took restitution under advisement and will issue a ruling later. Margiotta was released pending assignment to a federal prison.

“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.”

“Employees expect that their employers prioritize 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.”

During a five-day jury trial, the prosecution presented the following evidence:

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

This Clean Air Act prosecution was of national significance not only for the extent of the harm caused, but also because it is the first trial conviction under 42 U.S.C. Sec. 7413(c)(5), which imposes increased penalties for anyone who knowingly releases hazardous air pollutants knowing that, at the time of the release, they have put someone in imminent danger of death or serious bodily injury. It is also the first conviction under 42 U.S.C. Sec. 7412(r)(1), which places a general duty on owners/operators of facilities handling extremely hazardous substances to prevent and mitigate the consequences of accidental releases of those substances.

Assistant U.S. Attorney Bryan Dake and Special Assistant U.S. Attorney Eric Nelson prosecuted the case, which was investigated by the Environmental Protection Agency, the U.S. Department of Transportation Office of Inspector General and the Occupational Safety and Health Administration.



Clair Johnson Howard
Public Information Officer

Updated July 10, 2020