Colonial Pipeline Co. fined $34 million
WASHINGTON -- Colonial Pipeline Co. has agreed to pay a civil fine of $34 million, the largest penalty ever assessed for an environmental violation, government officials announced Tuesday.
The fine against Alpharetta-based Colonial stems from a series of spills across the South.
In a consent decree filed in U.S. District Court in Atlanta, Colonial also agreed to spend an additional $30 million to upgrade environmental protection on a 36-inch, 5,500-mile fuel artery the company operates between Pasadena, Texas, and Linden, N.J.
Colonial, owned by a consortium of oil companies, is the largest pipeline transporter of refined petroleum products in the world.
"This is a chronic violator having to finally pay the fiddler," said Assistant Attorney General Thomas L. Sansonetti.
He said a combination of pipeline corrosion, operator error and mechanical damage caused the spills.
The civil penalty eclipses the previous record of $30 million paid by Koch Industries Inc. of Wichita, Kan., to settle a suit brought by the Environmental Protection Agency and the state of Texas for pipeline spills near Corpus Christi.
Neither penalty was even close to more than $2 billion ExxonMobil Corp. claims to have spent on cleanup efforts following the 1989 Exxon Valdez oil tanker spill in Alaska. However, that spill did not result in a civil penalty paid to the federal government.
As in the Koch action, EPA and the Justice Department brought suit against Colonial under the federal Clean Water Act without involving the Office of Pipeline Safety, a small agency responsible for policing more than 2 million miles of petroleum and natural gas pipelines in America.
In addition to a 950,000-gallon diesel fuel spill in 1996, resulting from a corrosion break where the Colonial pipeline crosses South Carolina's Reedy River, the company was charged with:
Sansonetti was unable to say how much of the $30 million worth of improvements the Justice Department and EPA claim they are forcing Colonial to undertake are required to be carried out under amendments to the federal Pipeline Safety Act passed last year.
Colonial spokeswoman Susan Castiglione said all the improvements were required under the new law or had already been started by the company before it agreed to the court settlement.
"And we don't know where that $30 million figure came from," she added. The $34 million to be paid to the government will go into the national Oil Spill Liability Trust Fund, officials said.
Colonial officials seemed surprised by the Washington announcement, even though company attorneys signed the consent decree in Atlanta on Friday.
"We were bound by confidentiality restrictions to say nothing until the decree was filed," Castiglione said, adding that Colonial did not even know the government had filed the 40-page document in court until the company began receiving calls from reporters.
Castiglione said the 1996 Reedy River spill was a "watershed" event for Colonial, leading to a new management structure and a new commitment to pipeline integrity.
She pointed out that the company had 1,255 barrels escape from its pipeline in 1998 and only 16 barrels last year.
"The changes in our operating standards since 1996 have been phenomenal," she said. Colonial, owned by Unocal Corp., ConocoPhillips Inc., Koch Industries, Shell Pipeline Co., Marathon Oil Co. and Citgo Pipeline Co., carries 95 million gallons of liquid petroleum products a day through its pipe and network of distribution lines and tank farms.
Copyright The Atlanta Journal-Constitution