Olympic Pipe Line seeks bankruptcy
Olympic Pipe Line filed for bankruptcy protection yesterday, citing mounting financial costs arising from the 1999 pipeline rupture in Bellingham that killed two boys and a young man.
Olympic officials said that despite the filing, they would complete on schedule critical safety improvements imposed on the Renton-based company by federal and state agencies in the aftermath of the rupture.
But as part of bankruptcy proceedings, the officials said they would ask the agencies for more time to complete some upgrades that don't immediately affect safety.
"Safety is our top priority," Bobby Talley, Olympic's president, said in an interview last night, hours after the company filed for Chapter 11 bankruptcy reorganization in U.S. Bankruptcy Court in Seattle.
Olympic's move was assailed by Frank King of Bellingham, whose 10-year-old son, Wade King, was fatally burned when the rupture led to a massive explosion and fire in a Bellingham park.
"If they are filing for bankruptcy, they need to shut down," King said, asserting that it was too risky to allow a pipeline company to operate while it is in bankruptcy proceedings.
The pipeline ruptured on June 10, 1999, also killing Stephen Tsiorvas, 10, and Liam Wood, 18.
Olympic officials said the bankruptcy filing will have no bearing on a $75 million settlement with the families of King and Tsiorvas, and an undisclosed payment to Wood's family.
Those sums have been paid by insurers, they said.
Talley said reorganizing the company was the best way to ensure that Olympic completes its safety projects and pays its debts.
He said Olympic intends to pay $6 million in fines and $5 million in civil penalties it is facing as a result of its guilty plea in December to federal criminal charges stemming from the rupture.
Olympic is to be sentenced in U.S. District Court in Seattle on June 2.
One of its lawyers, Angelo Calfo, wrote a letter yesterday to the judge, Barbara Jacobs Rothstein, informing her of the bankruptcy filing. Calfo said Olympic would immediately ask the bankruptcy court to allow the company to pay its first installment of $1 million at the time of sentencing.
Talley said Olympic also intends to meet the terms of a consent decree it signed with the U.S. Justice Department and Washington state in January, promising to spend $15 million to bolster inspections of the pipeline and make other safety improvements.
But he said Olympic plans to ask federal and state officials to adjust timetables for some work less critical to safety, subject to the approval of the bankruptcy court.
Talley said the bankruptcy filing would not affect the delivery of millions of gallons of gasoline, jet fuel and other fuels carried on its 400-mile line running from Whatcom County to Portland.
He said Olympic has pledges of financial backing from its two shareholders, BP, which owns 62.5 percent of Olympic, and Shell, which owns 37.5 percent, that will assure the company's continued operation.
The financing will allow Olympic to avoid layoffs, he said.
Talley said Olympic was forced into bankruptcy because expenses have been exceeding revenues for several years, despite $148 million in loans or loan guarantees from BP and Shell. He said those loans form the bulk of Olympic's debt and that it has few unsecured creditors.
Olympic's problems mounted when federal regulators denied a request to raise rates charged to oil companies that pump fuel through the line, and state officials approved only a slight increase, Talley said.
BP and Shell are not a party to the bankruptcy filing.
Shell, as a partner in Olympic, was named in the criminal case, pleading no contest to two counts and agreeing to pay $15 million in criminal fines and $10 million in civil penalties. Under the consent decree, it agreed to spend up to $72 million for improvements to the Olympic line and pipelines its operates in other parts of the country.
Shell's obligations aren't affected by Olympic's bankruptcy action.
Keith Cohon, assistant regional counsel for the Environmental Protection Agency in Seattle, said last night that Olympic's filing should not have a major bearing on safety improvements it had promised to make.
But Cohon said the full impact was uncertain.
In the letter to Rothstein, Olympic attorney Calfo said the bankruptcy filing "is not aimed at avoiding the obligations" in the criminal case or the consent decree.
"In fact, Olympic believes that this bankruptcy filing will improve Olympic's ability to meet its obligations," Calfo wrote.
Calfo said the intent of the filing was to allow the reorganization of a company that is "critical to Western Washington's economy, as it transports most of this region's retail gasoline and is the only method of transporting jet fuel to Seattle-Tacoma International Airport."
Without bankruptcy protection, Olympic would have to barge its fuel products at greater environmental risk, company officials said.
In addition to notifying Rothstein, Olympic informed U.S. Sen. Patty Murray, U.S. Rep. Rick Larsen and Gov. Gary Locke as well as Justice Department officials in Washington, D.C.
Steve Miletich: 206-464-3302 or firstname.lastname@example.org
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