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Oil Spill Takes 17 Years to Resolve

Tuesday, August 18, 2015

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Although industry experts say neither oil spills nor their corresponding settlement agreements are uncommon in Texas, waiting 17 years to come up with a consent order for one is.

That is exactly what has happened in the case of a south Texas spill that occurred in October 1998. The U.S. Department of Justice (DOJ); the Texas Attorney General; state parks and wildlife agencies; and state’s environmental agency filed their agreement with a Koch Industries affiliate on Aug. 11.

The consent agreement settles a complaint regarding the spill: The United States of American and The State of Texas v. Koch Pipeline Company, L.P.

Case Against Koch

In its complaint, the plaintiffs had sought monetary awards for damages for the Oct. 18, 1998, spill in Karnes County. The case documents state that Koch formerly owned a 50,000-barrel tank about 400 feet from Marcelinas Creek. About 963 barrels of crude oil escaped both the tank and the company’s containment system and flowed into the creek and the surrounding vegetation.

©iStock.com /  iznashih

Some oil experts say they don't know why it took 17 years for the government to reach a settlement over a small Texas oil spill, but officials have said they have been working diligently since 1998.

That creek eventually runs to the Guadalupe River, which is a major water source for the San Antonio Bay Estuary, according to case documents.

In the agreement, Koch Pipeline Company—which is based in Delaware—will pay $770,000 for spilling 30,300 gallons of crude oil into Marcelinas Creek and the surrounding area. Koch does not accept liability for its containment leak, the agreement says.

A Long Time Coming

Still, industry officials want to know: What took so long?

“When BP happened, all of the smaller stuff like this got shoved on the back burner,” said Jim Phillips, who was the former state land office general counsel and the former chief of Texas’s attorney general energy division.

In his comments to the Texas Tribune, Phillips offered that suggestion as one reason why the settlement may have taken so long. He was referring the 2010 Deepwater Horizon explosion and spill off the state’s Gulf coast.

The DOJ offered a different explanation for the time lapse.

“Though selecting a suitable project ultimately took some time, the parties have diligently worked towards reaching an agreement that would fully fund the restoration of the damaged natural resources,” said Wyn Hornbuckle, a department spokesman, in an email to the Tribune.

Not everyone buys that story.

“It’s extremely weird,” said Jim Bradbury in an interview with the Tribune. “It suggests to me that DOJ or somebody was slow to the party in terms of acting on this thing.”

Bradbury, a Fort Worth-based energy attorney, said he has negotiated consent decrees with more complicated terms for similar spills in just a couple of years.

Meanwhile, the most recent agreement with Koch comes under the Natural Resources Damage Assessment (NRDA), which is a federal restoration process for hazardous spills. The agreement isn’t “final,” and it will include a public comment period once it is.

It’s the third of similar settlements with Koch over oil spills, the Tribune reported. All three happened at about the same time.

Settlement Beneficiaries

Once final, the consent order requires Koch to make the nearly $800,000 in payments for damage that occurred to natural resources. The payments break down as follows:

  • A fee for restoring, replacing or acquiring the damaged natural resources, including future restoration costs, which will be placed into a jointly administered trust: $616,358.58;
  • A past assessment cost to the Department of the Interior: $49,119.46; and
  • Spilt past assessment costs to the state totaling $104,521.90, including $29,388.78 to the Texas Parks and Wildlife Department; $62,483.74 to the Texas Commission on Environmental Quality; and $12,649.38 to the Texas General Land Office.

   

Tagged categories: Laws and litigation; Lawsuits; North America; Oil and Gas; Pipeline; Pipelines; Quality Control

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