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May 04, 2011
BP to Pay $85 Million for Oil Spills in Alaska
    by Robert Kropp

The company agrees to pay $25 million in civil penalties and $60 million for pipeline improvements after "gross negligence" led to spills of more than 5,000 barrels of oil on Alaska's North Slope in 2006.


In March 2006, a pipeline owned and operated by BP Exploration Alaska spilled more that 5,000 barrels of crude oil on the North Slope in Alaska. In August of that year, another 24 barrels of oil spilled. The Department of Transportation's Pipeline and Hazardous Materials Safety Administration (PHMSA) issued a Corrective Action Order to BP following the 2006 spills, ordering the company to repair or replace pipeline. BP failed to comply with the terms of the Order, which led to criminal charges against the company.

In 2007, BP Alaska pled guilty to one misdemeanor violation of the Clean Water Act for the spills. The company was sentenced to three years probation and ordered to pay a $20 million criminal penalty.

In addition, BP Alaska replaced 16 miles of its oil pipelines, at an estimated cost of $200 million, "with increased capacity for pipeline inspection and maintenance," according to the US Environmental Protection Agency (EPA).

Yesterday, EPA and PHMSA announced a settlement of civil charges against BP for the Alaskan oil spill. According to the press release, BP "will pay $25 million in civil penalties and implement a system-wide pipeline integrity management program," at an estimated cost of an additional $60 million.

"Today's settlement with BP Alaska imposes a tough penalty and requires the company to take action to prevent future pipeline oil spills on the Alaska North Slope," stated Cynthia Giles of EPA. "The Clean Water Act gives the US 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."

EPA's press release specifically stated, "The penalty is the largest per-barrel penalty to date for an oil spill." However, a spokesperson for BP Alaska argued that the penalty was not a per-barrel assessment. The spokesperson also stated, "We believe the terms of the agreement are fair."

If it is determined that BP was grossly negligent in last year's Gulf of Mexico oil spill, when an estimated 5 million barrels of crude oil flowed into the Gulf before the well was sealed, the company could be liable for penalties exceeding $20 billion.

 

 
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