BP Exploration Alaska, Inc. today agreed to pay a $25 million penalty for spilling more than 5,000 barrels of crude oil from the company's pipelines on the North Slope of Alaska in 2006. It's the biggest per-barrel fine ever collected by the government for an oil spill.
The spill was caused by pipeline corrosion, and the government faulted BP for inadequate maintenance, filing suit against the company in March 2009 in Anchorage federal court.
“This penalty should serve as a wake-up call to all pipeline operators that they will be held accountable for the safety of their operations and their compliance with the Clean Water Act, the Clean Air Act and the pipeline safety laws,” said Ignacia Moreno, assistant attorney general for the Justice Department’s Environment and Natural Resources Division, in a conference call with reporters. “It’s a just result for the American people.”
BP has already spent $200 million replacing the leaky lines. Under the terms of today’s settlement, the company will need to spend about $60 million more to develop a system-wide program to manage pipeline integrity for the company’s 1,600 miles of pipeline on the North Slope.
“The spill was the result of gross negligence on the part of BP,” said Cynthia Giles, who is assistant administrator at the Environmental Protection Agency. “The Clean Water Act gives the U.S. authority to assess higher penalties when oil spills are the result of gross negligence, and this case sends a message that we intend to use that authority and to insist that BP Alaska and other companies act responsibly to prevent pipeline oil spills.”
Of the $25 million penalty, $20.05 million will be deposited in the Oil Spill Liability Trust Fund. The rest will go to the U.S. Treasury.
This isn’t BP’s first penalty related to the spill. In 2007, the company pled guilty to one misdemeanor violation of the Clean Water Act and paid a $20 million criminal fine.
The consent decree is subject to a 30-day period of public comment and must be approved by the court. BP was represented by chief counsel Randal Buckendorf and outside counsel Carol Dinkins of Vinsen & Elkins in Houston.