Jury convicts former Custom Carbon Processing president of Clean Air Act violations stemming from explosion of Wibaux oil processing plant

BILLINGS – After a five day trial, a jury today convicted the former president and director of Custom Carbon Processing, Inc. of multiple violations of the federal Clean Air Act after a 2012 explosion at the company’s oil processing plant in Wibaux injured three employees and caused extensive damage to the plant, U.S. Attorney Kurt Alme said.

The jury found Peter Margiotta, 62, 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. Margiotta faces a maximum 15 years in prison, a $250,000 fine for an individual, a $1 million fine for an organization and three years of supervised release on the knowing endangerment crime.

The jury trial began on Sept. 23.

U.S. District Judge Susan P. Watters did not immediately set a sentencing date and continued Margiotta’s release.

“Cutting corners in the construction and operation of the oil processing plant violated the Clean Air Act, compromised the safety of employees and resulted in an explosion that injured three workers. Mr. Margiotta’s conviction should send the message that compliance with environmental regulations is required and that we will prosecute violators,” U.S. Attorney Alme said. “I also want to thank Assistant U.S. Attorney Bryan Dake, Special Assistant U.S. Attorney Eric E. Nelson, the Environmental Protection Agency and the U.S. Department of Transportation Office of Inspector General for their work in prosecuting and investigating this case.”

“We believe today’s conviction sends a strong message to those responsible for properly handling hazardous material,” said Jeffrey Dubsick, Regional Special Agent in Charge for the U.S. Department of Transportation Office of Inspector General. “Working with our law enforcement and prosecutorial partners, we will continue our vigorous efforts to protect against those who would risk the safety of the public and the environment for personal gain.”

"The defendant ignored warnings and knowingly put his employees and the public at risk by constructing and operating his facility without appropriate safeguards," said Jeff Martinez, Special Agent in Charge of the Environmental Protection Agency's criminal enforcement program. "This case highlights the importance of a risk management program that protects public health and the safety of our communities," Martinez said.

The prosecution presented evidence at trial of the following:

Margiotta was president and director of Custom Carbon Processing, Inc., a Wyoming company, which constructed the Michels Disposal Well and Oil Reclamation Facility in Wibaux in 2012. The construction was done in ways that allowed hydrocarbon vapors, extremely hazardous substances and hazardous air pollutants to be released into the air.

 On July 4, 2012, Margiotta directed the opening of the plant before the implementation of 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.

Beginning in October 2012, 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 at the plant, hazardous and flammable vapors from the natural gas 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, causing an explosion that injured three employees and extensive damage to the plant, the truck and trailer involved in the delivery.

AUSA Bryan Dake and SAUSA Eric Nelson prosecuted the case, which was investigated by the Environmental Protection Agency and the U.S. Department of Transportation Office of Inspector General.

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