Careless Damage to Pipeline Costs Oklahoma Company Millions

Magellan Midstream Partners today agreed to pay a $5.3 million civil penalty for these alleged violations of the Clean Water Act, the Justice Department and U.S. Environmental Protection Agency announced today.

The spills had a number of causes, including third party damage from farm equipment and bulldozers, corrosion, leaks and pipeline operator error.

"This agreement will ensure that the company will take steps to prevent members of the general public from accidentally damaging this pipeline, the most common cause of the pipeline spills addressed in this action," said Ronald Tenpas, assistant attorney general for the Justice Department's Environment and Natural Resources Division.

The settlement was reached without Tulsa-based Magellan admitting violations of the Clean Water Act.

"We are pleased to have resolved this historical issue with the EPA, and Magellan has more than adequately reserved for this matter in our previous financial results," said Don Wellendorf, chief executive officer.

"We believe safe operations and environmental stewardship are essential elements of success, and our management team and employees are focused on ensuring compliance with safety and environmental laws and regulations in all aspects of our business," Wellendorf said.

According to the federal government complaint, the company discharged more than 17,000 barrels of gas and fuel oil on 11 different dates between March 1999 and May 2006.

Two of the largest spills flowed into a tributary and into the Missouri River itself in 1999 and 2005.

In 2005, approximately 2,830 barrels of unleaded gasoline spilled from a ruptured pipe near Kansas City, Kansas, most of which flowed into the Missouri River, and in 1999, over 4,500 barrels of diesel fuel spilled into the Missouri River near Atchison, Kansas.

Magellan also agreed to resolve allegations related to Spill Prevention Control and Countermeasure regulations for violations found at two facilities in Iowa and Nebraska.

The Clean Water Act authorizes EPA to establish SPCC regulations for preventing, preparing for and responding to oil spills or hazardous substances that may reach surface waters.

Along with the civil penalty, Magellan has agreed to establish a program to minimize third-party damage to the pipeline system, a cause of some of the spills, and will spend $750,000 on removing or minimizing any external threats along selected segments of its pipeline.

The company will also implement system-wide changes to improve employee training, leak response procedures and protocols for detecting and responding to leaks and ruptures.

Magellan is the owner and operator of a 6,700 mile long petroleum pipeline network and 39 terminal facilities in the states of North Dakota, South Dakota, Minnesota, Nebraska, Iowa, Wisconsin, Illinois, Missouri, Arkansas, Kansas and Oklahoma.

The pipeline transports gasoline, diesel and aviation fuel from refineries through interconnections with other interstate pipelines to retail gasoline stations, truck stops, railroads, airports and other end users.

"Pipeline owners and operators must take steps to minimize the potential of fuel and oil spills," said Granta Nakayama, assistant administrator for EPA's Office of Enforcement and Compliance Assurance. "Today's settlement will prevent spills that can pollute our waters and harm sensitive ecosystems."

The consent decree, lodged in the U.S. District Court for Kansas, is subject to a 30-day public comment period and approval by the federal court. Magellan is required to pay the penalty within 30 days of the court's approval of the settlement. A copy of the consent decree is available on the Justice Department website.

Copyright Environment News Service (ENS) 2008. All rights reserved.