Associated Press

SEATTLE — Olympic Pipe Line has agreed to pay $10 million in state and federal fines for the June 1999 pipeline rupture that led to an explosion and the deaths of two 10-year-old boys and a young man in a Bellingham park, a newspaper reported Tuesday.

BP Pipelines North America, which took control of Olympic last year, reached the agreement with the state Department of Ecology and the federal Environmental Protection Agency, a Seattle newspaper reported, quoting state officials and people close to the company.

Some details were still being worked out, including safety provisions for Olympic, said Ecology Department spokeswoman Sheryl Hutchinson. The settlement, along with state findings on the rupture, is to be officially announced by the state agency today at a Bellingham news conference, the newspaper said.

Olympic, the subject of an ongoing federal criminal investigation and two wrongful-death lawsuits, will make no admissions of wrongdoing, though the state may outline alleged acts of negligence, the newspaper said.

Olympic has estimated its costs from the rupture could top $70 million, including the wrongful-death claims.

State and federal officials are still negotiating with Equilon, a Houston-based joint venture of Shell and Texaco whose 37.5 percent share of Olympic was a majority interest in June 1999. Those discussions could lead to a settlement or to the filing of civil actions against Equilon, the newspaper reported, quoting people involved in the case.

At today’s news conference, Ecology Department officials may announce proposed penalties involving Equilon that could reach record sums, possibly near $8 million, the newspaper quoted its sources.

Equilon has contended it was not operating the pipeline at the time of the rupture, merely lending six supervisory and administrative employees to Olympic under the partnership. Those employees included the president, three vice presidents and the head of environmental compliance.

"We hope to reach a satisfactory conclusion for everyone," Equilon spokeswoman Barbara Kornylo said of the talks with state and federal officials.

It remains undecided how the $10 million BP has agreed to pay will be split between the state and federal governments, a federal official told the newspaper. Olympic also was fined a record $3 million by the federal Office of Pipeline Safety in a separate penalty last year.

The focus of the state and federal investigations, and the lawsuits, has been whether Olympic failed to properly inspect anomalies in the 400-mile system that runs through Western Washington into Oregon. Investigators also have examined what Olympic knew about a faulty valve and whether employees in the company’s control room made proper decisions the day of the rupture.

Talks also are continuing between Ecology Department officials and IMCO General Construction, a Bellingham company Olympic has accused of damaging the pipeline while installing water pipes for the city of Bellingham in the mid-1990s. IMCO has denied the allegation.

The rupture on June 10, 1999, spilled more than 200,000 gallons of gasoline into Bellingham’s Whatcom Creek. The spill fueled a fireball that fatally burned 10-year-olds Wade King and Stephen Tsiorvas. Liam Wood, an 18-year-old who was fishing, died after fumes overcame him.

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