Pipeline Company Settles with the EPA for $5.3 Million
Recently the Magellan Pipeline Company reached a settlement with the Environmental Protection Agency to resolve an ongoing lawsuit alleging illegal discharge of fuel. Magellan is the owner and operator of a 6,700 mile long petroleum pipeline network with 39 terminal facilities in the states of North Dakota, South Dakota, Minnesota, Nebraska, Iowa, Wisconsin, Illinois, Missouri, Arkansas, Kansas, and Oklahoma that came under scrutiny after two investigations revealed potential inadequacies in Magellan’s pipelines. The pipelines transport petroleum products including 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.
The pipelines suffered a series of gasoline and fuel discharges from 1999 to 2006 due to a variety of causes, including corrosion, damage from farm equipment, pipeline operator error, and acts from third parties (e.g. in one instance in 1999, a bulldozer operator operated by a third party ruptured a pipeline in Illinois, causing the discharge of nearly 2,700 barrels of unleaded gasoline). These discharges prompted the EPA to inspect two of Magellan’s terminal facilities. The first inspection took place in 2003 at the Coralville terminal in Iowa; the second took place in 2006 at the terminal in Roca, Nebraska. On both occasions, the EPA found that Magellan was not in compliance with Spill Prevention Control and Countermeasure regulations (40 C.F.R. Part 112) because the plan at each facility insufficiently predicted the quantity of oil which could be discharged from the facility and failed to adequately plan for containment in case of an emergency.
Based on the findings from these inspections, the EPA, on behalf of the United States, charged Magellan with illegally discharging more than 17,000 barrels of fuel oil 11 times between May 1999 and May 2006. The complaint, styled U.S. v. Magellan Pipeline Co., was filed in the United States District Court for the District of Kansas on June 16, 2008. The U.S. asserted 13 claims against Magellan, requesting civil penalties for violation of section 311(b) of the Clean Water Act, which prohibits the discharge of hazardous substances. The EPA asserted an additional claim for injunctive relief under section 309(b) of the Clean Water Act to undertake appropriate action to prevent further discharges of oil from the pipeline into the waters of the United States.
Magellan filed a consent decree, agreeing to establish a program to protect its pipeline system from damage and spend $750,000 in order to remove or minimize threats along certain segments of its pipeline. Magellan has now agreed to settle and pay an additional $5.3 million in civil penalties.
