BP will be penalized in North Slope oil spill settlement

The Anchorage Daily NewsMay 4, 2011 

BP Exploration (Alaska) Inc. has agreed to pay a $25 million civil fine to settle a federal lawsuit over the largest-ever oil spill on Alaska's North Slope, according to a proposal filed in U.S. District Court in Anchorage on Tuesday.

The U.S. Department of Justice sued BP in 2009 on behalf of regulators over what it contended were water and air pollution violations from a March 2006 spill topping 200,000 gallons and a smaller spill that August. Both were at Prudhoe Bay.

The government says the penalty is sizable even considering BP's $7.2 billion in net profits for the first quarter of 2011.

The amount works out to the highest per-barrel penalty to date for an oil spill, the Justice Department said. It also tops the maximum provided for under the federal Clean Water Act, according to the Justice Department. That's because some of the claims fell under the Clean Air Act and pipeline safety laws. In all, 5,078 barrels spilled in the two incidents.

The public gets 30 days to weigh in on the proposed settlement, called a consent decree. It also must be approved by a federal judge.

The spills occurred because BP failed to inspect and maintain large transit lines carrying crude oil from processing centers to the trans-Alaska oil pipeline, investigators determined. The lines became corroded and leaked. The March spill remains the biggest ever on the North Slope.

"BP did cut corners in the maintenance of its pipeline," said U.S. Attorney Karen Loeffler of Anchorage. "This sends the message that if you are going to transport oil, you have to maintain the system in a way that does not result in environmental harm."

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