BP Unit to Pay $25 Million to Settle Alaska Spill Claims
May 03, 2011, 5:07 PM EDTBy Tom Schoenberg and Simon Lomax
(Updates with BP comment in eighth paragraph.)
May 3 (Bloomberg) -- A BP Plc unit agreed to pay $25 million to settle a U.S. lawsuit stemming from two oil spills in Alaska and other alleged environmental violations.
BP Exploration (Alaska) Inc., in a filing today in federal court in Anchorage, Alaska, agreed to pay the civil penalty and make $60 million of improvements to its pipelines. London-based BP didn’t admit any liability, according to the proposed agreement. The public will have 30 days to comment on the settlement, which must be approved by a judge.
“Companies like BP Alaska must understand that they can no longer afford to ignore, neglect or postpone the proper monitoring and maintenance of their pipelines,” Assistant Attorney General Ignacia S. Moreno, who oversees the Justice Department’s Environment and Natural Resources Division, said in an e-mailed statement. “This agreement will help prevent future environmental disasters and protect the fragile ecosystem of Alaska’s North Slope.”
The U.S. sued the BP unit in 2009 for violations of the Clean Air Act, the Clean Water Act and federal pipeline safety laws. The violations arose from the spill of about 5,000 barrels of crude oil in Alaska in March 2006, a second, smaller spill in the state later that year, and improper removal of asbestos materials from its pipelines. The Justice Department said the penalty is the largest “per-barrel penalty” for an oil spill.
‘Cut Corners’
“BP admits it cut corners and failed to do what was required to adequately maintain its pipelines,” Karen Loeffler, the U.S. attorney for Alaska, said on a conference call with reporters.
The settlement requires BP to develop a program to inspect and maintain its 1,600 miles of pipeline on the North Slope in Alaska. The program will cost about $60 million over three years, the Justice Department said. BP has already spent about $200 million replacing the lines that leaked.
In 2007, BP Exploration (Alaska) was ordered to pay a $20 million criminal penalty after pleading guilty to one misdemeanor violation of the Clean Water Act for the 2006 spill. The company was also sentenced to three years probation, the Justice Department said.
A BP spokesman, Steve Rinehart, said in an e-mail that “the terms of the agreement are fair.”
BP still faces litigation and investigations from the Deepwater Horizon disaster in the Gulf of Mexico last April.
The rig exploded while drilling a BP well off the Louisiana coast, killing 11 workers. The subsea gusher spewed more than 4.1 million barrels of crude into the Gulf of Mexico.
Much of the Gulf’s fisheries were closed, wildlife was injured or killed, and hundreds of miles of shoreline were fouled by the drifting oil.
The case is U.S. v. BP Exploration (Alaska) Inc., 09-cv- 00064, U.S. District Court, District of Alaska (Anchorage).
--Editors: Fred Strasser, Larry Liebert
To contact the reporter on this story: Tom Schoenberg in Washington at tschoenberg@bloomberg.net.
To contact the editors responsible for this story: Michael Hytha at mhytha@bloomberg.net; Larry Liebert at lliebert@bloomberg.net.
