Positive Environment News

Oil firm Koch pays record us fine for pipeline spills

Date: 14-Jan-00
Country: USA

The fine settles complaints previously brought against Koch by the
Environmental Protection Agency and Texas for violations of the Clean
Water Act. The civil fine is the largest imposed against a single
company under the Clean Water Act.

Wichita-based Koch was faulted for more than 300 oil spills that leaked
about 3 million gallons or almost 72,000 barrels of petroleum in
sensitive wetlands and along shorelines in six states between 1990 and

The spills occurred in Texas, Oklahoma, Kansas, Missouri, Louisiana and

"This record civil penalty will put those who transport hazardous
materials on notice - you cannot endanger public health or the
environment," said Attorney General Janet Reno. The Justice Department
filed the lawsuit on behalf of the EPA, and Texas joined in the suit.

EPA Administrator Carol Browner said the fine "sends a strong message
that those who try to profit from polluting our environment will pay the

Koch said the said the settlement was "fair and reasonable," avoiding
years of more litigation. The company also pointed out that some the
leaks were caused by the actions of third parties, but Koch was still
liable for the spill penalties under federal law.

"We're proud of the tremendous progress we made in the 1990s to prevent
pipeline leaks from occurring in the first place," said Pat McCann,
senior vice president of Koch Industries' pipeline subsidiary. "But when
they do, we are committed to cleaning them up quickly and completely."

The fine could have been much higher. The government had sought a
penalty of between $1,000 and $3,000 for each barrel of oil that was
spilled, the maximum allowed by law, but settled for an average $325 a
barrel, Koch said. A barrel holds 42 gallons of oil.

The settlement also calls for Koch to spend a separate $5 million on
environmental projects, including buying and preserving wetlands and
wildlife habitat in Kansas and Oklahoma and improving the emergency
response of Texas officials to oil spills in Corpus Christi Bay.

Most of the spills took place in Oklahoma, Texas and Kansas. In one
spill, almost 100,000 gallons of oil caused a 12-mile oil slick on
Texas' Nueces Bay and Corpus Christi Bay.

In addition to the fine, Koch must check the condition of the 2,500
miles of pipeline it currently operates and repair any defects.

The company must also implement a better leak-prevention and detection
programme, an inspection programme and a training programme to prevent
future leaks.

An independent auditor will be hired by Koch to check on the company's
efforts annually for the next three years and report to the federal
government and Texas whether the firm is in compliance.

The $30 million fine will be split equally between Texas and the federal
government. The government's share will go into a special trust fund set
up in 1990 after the Exxon Valdez oil spill in Alaska. The fund helps
pay for damages and cleanup costs caused by oil spills.

© Thomson Reuters 2000 All rights reserved

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