Even as the disaster unfolds in the Gulf of Mexico, lawyers for BP and federal regulators are working to settle a civil suit the government brought in connection with the 2006 pipeline spills in Alaska’s Prudhoe Bay oilfield. In papers BP and government lawyers jointly filed in US District Court in Anchorage recently, the two sides said they had “conducted extensive settlement discussions including…exchanging several drafts of various settlement constructs.” Judge John Sedwick granted a motion to extend deadlines related to expert witness disclosure and discovery until near the end of the year.
The US Justice Department sued BP in 2009 on behalf of the EPA and other federal regulators, seeking millions of dollars in fines for water and air pollution violations, as well as failure to meet deadlines in a corrective action order from the Pipeline and Hazardous Materials Safety Administration. BP’s lawyers deniy many of the federal claims, and say some of the deadlines in the order were impossible to meet.
The suit stems from the 212,252-gallon oil spill—the largest ever on the North Slope—in March 2006, and a smaller spill the following August. The second spill forced a partial shutdown of BP’s Prudhoe Bay fields, that briefly rattled world oil markets. It also sparked congressional and regulatory criticism of BP’s upkeep of corroded transit lines that funnel crude into the Trans-Alaska Pipeline.
BP’s Alaska subsidiary in late 2007 was sentenced to three years probation and ordered to pay $20 million in penalties after the company pleaded guilty to a federal environmental misdemeanor. The plea deal ended criminal prosecution of BP, for both the federal and state governments.
But BP is still defending the civil suit, as well as a civil case filed by Alaska. The state suit, pending in Superior Court in Anchorage, seeks some $1 billion in fines as well as lost oil revenues resulting from production slowdowns caused by the leaks and subsequent pipeline repairs. The state cites a production shortfall of at least 35 million barrels of oil and natural gas liquids from the Prudhoe Bay and Milne Point fields as a result of the spills. The state accuses BP of knowingly neglecting corroded pipelines in the interest of cutting costs, with the suit citing “outrageous” or “reckless” conduct. (Anchorage Daily News, May 23)