Settlement talks continue in Alyeska case

Negotiations continue in an effort to settle a civil suit the operator of the trans-Alaska oil pipeline brought against federal pipeline regulators.

On June 20, the U.S. attorney’s office for Alaska, representing the Department of Transportation’s Pipeline and Hazardous Materials Safety Administration, filed a motion asking the court to stay the case until Sept. 19.

It’s the second such timeout the federal government has sought in the case to allow for further settlement talks.

Alyeska Pipeline Service Co., the Anchorage-based energy company consortium that operates the 800-mile pipeline system, sued PHMSA on Aug. 3, 2010, in U.S. District Court. The suit challenges a $263,000 fine.

The June 20 motion said the stay was requested to allow Alyeska’s general counsel to continue settlement negotiations with PHMSA’s chief counsel.

The motion cited several examples of conference calls and correspondence between representatives of the two sides.

U.S. District Judge John W. Sedwick granted the stay on June 21, giving the government until Sept. 19 to file the administrative record, which would be necessary in the event the settlement talks failed and the case proceeded to trial.

PHMSA issued a final order against Alyeska on Jan. 13, 2010, alleging the company committed two violations of pipeline safety regulations.

First, Alyeska was too slow to obtain a vendor’s full report on a 2004 pig run on the pipeline, PHMSA said. A pig is a device that travels through a pipeline to test for hazards such as corrosion.

Second, Alyeska failed to promptly repair a dent discovered during the summer of 2004 on top of a buried segment of pipe near mile 546.

Among other arguments, Alyeska said in its suit that the fine was excessive.

—Wesley Loy