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Wednesday, May 4, 2011

BP fined $25 million

Posted By on Wed, May 4, 2011 at 1:54 PM

March and August, 2006, Prudhoe Bay, Alaska: BP's pipeline in the largest U.S. oil field spills 5,078 barrels — a fraction of the 4.9 million barrels that bled from the Gulf of Mexico last summer.

For those 2006 spills, BP faced a 2009 multi-agency federal suit (including the Department of Justice and Environmental Protection Agency) invoking the Clean Water Act, and yesterday, BP agreed to a settlement, which includes the $25 million fine (with interest, amounting to more than $60 million over three years) and replacement of oil transit lines in that area, and maintenance and improvement on more than 1,600 miles of pipeline. Assistant U.S. Attorney Ignacia Moreno:

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.

BP already is set to face billions in penalties for the 2010 blowout. But if this settlement sets a precedent, that figure is likely to spike to more than $20 billion: The maximum fine under Clean Water Act provisions is typically $4,300 per barrel. For the Alaska spills, BP was slapped with $4,923 per barrel. If courts find BP to have been "grossly negligent" in the Gulf oil disaster, and courts stick to that $4,923 per barrel figure, fines could amount to more than $24 billion — not counting potential fines from Natural Resource Damage Assessment investigations, or the $20 billion Kenneth Feinberg-controlled claims fund. All told: Billions in fines and payments, over years, and years, and years — but only if the DOJ is as aggressive, and BP is as willing to "get it over with."

Otherwise, with the Clean Water Act's wording, the oil giant could get off comparatively light for 2010's months-long leak.

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