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U.S. Reaches Landmark Settlement with Colonial Pipeline for Oil Spills in Five States -- $34 Million Civil Penalty Is the Largest Paid by a Company in EPA History

Release Date: 04/01/2003
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• WASHINGTON, D.C. (04/01/03) - The Department of Justice and the Environmental Protection Agency today announced a settlement with Colonial Pipeline Company, resolving charges that the company violated the Clean Water Act on seven recent occasions by spilling 1.45 million gallons of oil from its 5,500 mile pipeline in five states. Under the consent decree, Colonial will upgrade environmental protection on the pipeline at an estimated cost of at least $30 million, and pay $34 million, the largest civil penalty a company has paid in EPA history.
• Atlanta-based Colonial is the largest-volume pipeline transporter of refined petroleum products in the world, moving an average of 83 million gallons of petroleum products each day through an underground pipeline that stretches from Port Arthur, Texas, to Linden, N.J., passing through Louisiana, Mississippi, Alabama, Georgia, Tennessee, South Carolina, North Carolina, Virginia, District of Columbia, Maryland, and Pennsylvania.
• The government maintained that pipeline corrosion, mechanical damage, and operator error in seven recent spills resulted in the release of approximately 1.45 million gallons of oil and other petroleum products into the environment, including numerous rivers, streams, and wetlands. Oil spills from the pipeline damaged a variety of aquatic systems. In one spill, more than 950,000 gallons of diesel fuel spilled into the Reedy River in South Carolina in 1996, killing 35,000 fish and other species of wildlife, and dispersing more than 34 miles downstream. It can take years for an ecosystem to recover from damage caused by an oil spill. Other spills forming the basis of the penalty occurred in Georgia, Tennessee, Louisiana, and North Carolina.
• “Maintaining the integrity of our nation’s industrial infrastructure, such as oil pipelines, is a critical priority for the Justice Department,” said Attorney General John Ashcroft. “Today’s settlement sends the message that we will vigorously pursue violations of environmental laws that subject our citizens and our environment to potentially catastrophic consequences.”
• “This settlement is another example of EPA’s ‘smart enforcement’ approach, illustrating how an enforcement decision translates into the very real results of cleaner air, purer water and better protected land. The combined efforts of EPA and DOJ successfully address environmental damage and prevent future harm to public health and the environment,” said EPA Administrator Christie Whitman.
• Today’s settlement requires Colonial to designate its entire pipeline as potentially affecting “high consequence areas.” This will subject the entire 5,500 mile pipeline to the pipeline integrity regulations of the U.S. Department of Transportation’s Office of Pipeline Safety (OPS). Under the terms of the settlement, Colonial is also required to:
• Inspect its corrosion prevention system along the entire pipeline system every five years;
• Repair problems detected in the corrosion prevention system to meet the standards developed by the National Association of Corrosion Engineers (NACE);
• Maintain its right-of-ways, including mowing and removing debris;
• Have personnel on site when utility or other excavation is occurring within five feet of the pipeline; and
• Survey and inspect the pipeline where it crosses water, and address areas of the pipeline that are exposed or insufficiently buried.
• Finally, the settlement requires Colonial to pay for an independent monitoring contractor, approved by EPA, to ensure that the company incorporates these requirements into its existing programs and then implements the requirements.
• Colonial’s $34 million civil penalty will go to the United States’ Oil Spill Liability Trust Fund. The Fund underwrites oil spill cleanup activities nationwide.
• On Feb. 25, 1999, Colonial Pipeline Company pled guilty to criminal charges in connection with the Reedy River, S.C., spill. The company was ordered to pay a $7 million fine and serve a five-year term of probation.
• In addition to this settlement, the United States has taken action recently against several other pipeline companies for oil spill violations. For example, in January of this year, the United States and the State of Washington reached civil settlements with Olympic Pipe Line Company and Shell Pipeline Company that included penalties totaling $15 million plus injunctive and other relief for violations leading to a fatal pipeline rupture in Bellingham, Wash., in 1999. In December 2002, Olympic and Shell entered pleas and agreed to pay $21 million in criminal fines for criminal violations arising from the same incident.
• Today’s settlement agreement has been lodged at the U.S. District Court for the Northern District of Georgia in Atlanta and is subject to a 30-day public comment period and final court approval.