Environmental Law

A $20,000,000.00 Penalty

By Walter James

On November 29, 2007, British Petroleum Exploration (Alaska), Inc., (?BPXA?) pleaded guilty to a one count information alleging a criminal violation of the Clean Water Act for spilling 200,000 gallons of crude oil from a pipeline onto the tundra and a frozen lake on the North Slope in March 2006. BPXA was also sentenced to pay a total of $20,000,000.00 in criminal penalties

by United States District Court Judge Ralph R. Beistline. The $20,000,000.00 criminal penalty breaks down as follows: $12,000,000.00 is the criminal fine; $4,000,000.00 is community service payments to the National Fish and Wildlife Foundation; and $4,000,000.00 is criminal restitution to the State of Alaska. BPXA also received a three-year term of probation.

A joint federal and state criminal team investigated the matter which involved two different leaks from oil transit lines operated by BPXA. The leaks occurred in March and August of 2006. The government alleged that the leaks were the result of BPXA?s failure to heed many red flags and warning signs of imminent internal corrosion. The first pipeline leak was discovered on March 2, 2006, by a BPXA employee who smelled the leaking crude oil. The leak resulted in more than 200,000 gallons of crude oil spreading over the tundra and a nearby frozen lake. The second leak occurred in August 2006, but was quickly discovered and contained after leaking approximately 1,000 gallons of oil onto the tundra.

Because of BPXA?s immediate spill response and its cooperation with the investigation, BPXA was not charged with the second spill.

According to the investigation, approximately six inches of sediment was found on the bottom of the thirty-four-inch-diameter pipe. The sediment builds up in a pipeline and creates an environment in which acid producing bacteria can thrive. The acid produced by these bacteria can corrode pits or, if unchecked, holes in the wall of the pipe. The government alleged that BPXA should have cleaned these lines with a piece of equipment called a maintenance ?pig? and inspect the pipes for corrosion with a smart pig, which had not been done for eight years. It was this failure to adequately manage the corrosion in the pipeline that leaked (in light of the risks known to BPXA) that led to the criminal information.

More later.

As always, feel free to contact me at walter.james@jamespllc.com.

WDJiii

Full post as published by Environmental Crimes Blog on December 04, 2007 (boomark / email).