Environmental Enforcement: BP to Pay $85m for Alaska Spill
BP Exploration Alaska is to pay $25 million in civil penalties and install around $60 million in pipeline improvements for spilling more than 5,000 barrels of crude oil on the North Slope of Alaska, the U.S. Environmental Protection Agency has announced.
The EPA settlement – made in conjunction with the U.S. Department of Justice and the U.S. Department of Transportation’s Pipeline and Hazardous Materials Safety Administration – is the largest per-barrel penalty to date for an oil spill. BP Alaska will also implement a system-wide pipeline integrity management program as part of the deal.
In March 2006, BP Alaska spilled approximately 5,054 barrels of crude oil on the North Slope in Alaska. A second spill occurred in August 2006 with approximately 24 barrels of crude oil spilled. Investigators from the EPA and the Transport Department’s pipeline division determined that the spills were a result of BP Alaska’s failure to properly inspect and maintain the pipeline to prevent corrosion.
The pipeline administration issued a Corrective Action Order to BP Alaska that addressed risks and ordered pipeline repair or replacement. When BP Alaska did not fully comply with the terms of the corrective action, the case was referred to the Department of Justice. The settlement also addresses Clean Air Act violations arising out of BP Alaska’s improper asbestos removal along the pipeline in the aftermath of the spill, according to the EPA.
The settlement requires BP Alaska to develop a system-wide program to manage pipeline integrity for the company’s 1,600 miles of pipeline on the North Slope, based on an integrity management program run by the Department of Transportation body. The program will address corrosion and other threats to these oil pipelines and require regular inspections and adherence to a risk-based assessment system. The actions will cost an estimated $60 million over three years and are in addition to the approximately $200 million BP Alaska has already spent replacing the lines that leaked on the North Slope.
Of the $25 million penalty, $20.05 million will be deposited in the Oil Spill Liability Trust Fund established under the Clean Water Act. The remainder, $4.95 million, will be paid to the U.S. Treasury. The funds paid to the Oil Spill Liability Trust Fund will be used to finance federal response activities and provide compensation for damages sustained from future discharges or threatened discharges of oil into water or adjoining shorelines.
Oil spills are known to cause both immediate and long-term harm to human health and ecosystems, including the suffocation of wildlife and the contamination of nesting habitats.
In 2007, BP Alaska pleaded guilty to one misdemeanor violation of the Clean Water Act for the March 2006 spill. The company was sentenced to three years’ probation and a $20 million criminal penalty, including a $12 million fine, $4 million to the National Fish and Wildlife Foundation to support research and activities on the North Slope and $4 million in restitution to the state of Alaska.
“[This] 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,” said Cynthia Giles, assistant administrator for EPA’s Office of Enforcement and Compliance Assurance. “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.”
The enforcement action comes in the wake of last year’s Deepwater Horizon oil rig explosion in the Gulf of Mexico. At the height of the problem, BP estimated that around 5,000 barrels of oil were being discharged directly into the Gulf every day as a result of the accident.
Picture credit: © BP PLC.
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