Today from Energy & Environment:

BP to pay $25M fine, spend $60M in pipeline upgrades for Alaska spill (05/03/2011)

BP PLC today agreed to pay $25 million in civil fines and implement safety upgrades worth $60 million to settle with the federal government over 2006 pipeline breaks that spilled more than 5,000 barrels of oil in Alaska's North Slope.

The consent decree filed today in an Anchorage court represents the largest per-barrel oil spill fine issued since the Clean Water Act came into force.

About $20 million of the fine is headed for the federal Oil Spill Liability Trust Fund, while the remainder will go to the Treasury, according to officials from U.S. EPA and the Justice Department.

"This agreement will protect the fragile tundra of Alaska's North Slope from oil spills," DOJ's assistant attorney general for environment and natural resources, Ignacia Moreno, the director of DOJ's Environmental and Natural Resources Division, told reporters today. BP's Alaskan subsidiary, she said, would commit to implementing $60 million in safety improvements along its 1,600 miles of pipeline in the Arctic.

Pipeline and Hazardous Materials Safety Administration chief Cynthia Quarterman also depicted the settlement as a "stern reminder to pipeline operators" that failure to comply with orders issued by her agency carries a high price.

PHMSA gave BP one year to embark on a strict course of maintenance and inspection aimed at fighting the corrosion that was pinpointed as the culprit in two 2006 spills on its Prudhoe Bay pipelines, Quarterman said. But the company failed to comply within that time frame, in what she described as "a willful thing" rather than an inadvertent oversight.

The initial lawsuit filed by DOJ on behalf of EPA and PHMSA touched on two spills that occurred in March and August 2006 in Prudhoe Bay, the largest North American oil field (Greenwire, April 1, 2009). Federal officials said today's settlement would not fully resolve a separate case touching on alleged probation violations resulting from a 2009 spill in the area (Greenwire, Dec. 21, 2010).

Among the safety measures the company agreed to take as part of the deal, EPA said, are three years of independent safety monitoring on the Prudhoe Bay system, the treatment of the area as "high consequence" for the purposes of heightened federal regulation, and the development of high-tech leak and integrity management systems.

Link to the Gulf?

Whether the consent decree stands to influence the ongoing legal battle over BP's liability in last year's Gulf of Mexico oil gusher remains to be seen.

At least one House Democrat today contrasted the per-barrel fine levied for "gross negligence" in the pipeline spill with BP's proposal to be charged lower per-day fines in the more high-profile Gulf spill case.

"Hopefully these fair fines for BP's Alaska accident are a harbinger for the fines that will be levied for BP's Gulf of Mexico disaster," Rep. Ed Markey of Massachusetts, the top Democrat on the House Natural Resources Committee, said in a statement.

"Whether it's an accident at the top of the world, or at the bottom of the ocean, BP needs to be held fully accountable for their woeful safety track record."

BP could pay as much as $16 billion more if the government pursues the maximum $4,300-per-barrel fine levied in today's Alaskan settlement as opposed to the per-day fines the oil company is seeking in the Gulf case (Greenwire, April 6).