Exxon Fined $1.7M in Yellowstone Leak


ExxonMobil Pipeline Company has been slapped with a $1.7 million federal fine for its 2011 crude-oil pipeline failure in the Yellowstone River, doubling its tab to date for the disaster, regulators announced this week.

On Monday (March 25), the Pipeline and Hazardous Materials Safety Administration announced an administrative enforcement action against ExxonMobil, saying the company had failed to address flooding risks and properly train employees for emergency response.

On July 1, 2011, the 12-inch Silvertip pipeline burst about 10 miles west of Billings, MT, during excessive flooding, releasing 1,509 barrels of crude oil.

About 69 miles in length, the pipeline transports 40,000 barrels of crude oil daily beneath the river.

"It is our priority to ensure that America's transportation system is the safest in the world," said U.S. Transportation Secretary Ray LaHood, whose agency includes PHMSA.

"This system includes the nation's 2.6 million miles of pipelines, and it is our responsibility to see that those who operate them are held accountable for adhering to federal safety standards," said LaHood.

In an email sent Wednesday evening (March 27), ExxonMobil spokeswoman Rachael Moore said, "We are disappointed in the findings of this report, which are contrary to the earlier report Pipeline and Hazardous Materials Safety Administration (PHMSA) issued in December and would like to understand what changed.

"We committed to learn from the incident and have since applied the learning to our remote control valve procedures and operator training as recommended by the [PHMSA].

"We will review the PHMSA letter in greater detail and will continue to work with PHMSA on any follow-up actions," Moore said.

Alarm Miscue

The failure was first detected by ExxonMobil's Operations Control Center in Houston, TX. When an alarm went off indicating a drop in line pressure, the controller "apparently did not see or recognize this alarm," the violation notice stated.

The valve wasn't closed until almost an hour after the first alarm, allowing "approximately 1,063 additional barrels of crude oil to contaminate the river," the notice said.

An internal investigation from ExxonMobil and PHMSA's failure investigation report found that the failure was caused by a submerged guillotine break in the pipeline. Flooding forced debris into the exposed pipe, which gradually increased external stress until the pipe ultimately failed.

City officials in Laurel, MT, had expressed concerns for years about flood conditions and downstream erosion on the Yellowstone River; in late May 2011, officials contacted ExxonMobil to express concerns about the safety of the Silvertip pipeline.

On two occasions, ExxonMobil shut down the line for several hours but eventually resumed operation.

pipeline failures
Center for Environment, Commerce & Energy

PHMSA alleged five violations by ExxonMobil. Four of them total $1.7 million in fines; another requires the company to properly train personnel within 30 days.

Alleged Probable Violations

PHMSA alleges that ExxonMobil committed probable violations of the Pipeline Safety Regulations, Title 49, Code of Federal Regulations. These include violations of:

  • "Pipeline integrity management in high-consequence areas" as ExxonMobil "failed to consider all relevant risk factors in identifying the need for additional preventive and mitigative masures" in managing the pipeline;
  • "Pipeline integrity management in high-consequence areas" for failing to operate remote control valves "in a manner that would actually prevent or mitigate the consequences of a failure";
  • "Emergency response training" for failing to establish and conduct a continuing training program for emergency response personnel; and
  • "Procedural manual for operations, maintenance, and emergencies" for failing to have written procedures to protect the pipeline after being notified of a natural disaster; and
  • "Procedural manual for operations, maintenance, and emergencies" for failing to have written procedures to minimize the oil released in the event of a failure.

The first two violations carry fines of $495,500 and $504,500; the fourth and fifth violations carry $600,000 and $100,000 fines.

The third violation, for emergency response training, triggered a Compliance Order giving the company 30 days to provide documentation that it had completed training for all controllers, future and existing, on all hazardous liquid pipelines.

The company has 30 days to contest the allegations.

Earlier Action, State Fines

Within a week of the of the pipeline failure, PHMSA issued a Corrective Action Order requiring ExxonMobil to take numerous safety measures; replace and re-bury the pipeline underneath the Yellowstone River; evaluate the pipeline for any existing or potential damage where it intersects with waterways; and revise operation and emergency response procedures.

All of the required actions in the order were completed by August 2012, according to PHMSA.

The spill prompted the PHMSA to issue an alert to all operators and owners of pipeline systems in high-water areas.

In January 2012, ExxonMobil agreed to pay $1.6 milion to the state of Montana, including more than $760,000 in reimbursement for cleanup costs through Dec. 31, 2012.

maximum pipeline fines
Montana DEQ

In addition to the proposed federal fines, ExxonMobil agreed to pay the state of Montana $1.6 million in January 2012.

The penalty was the largest in the state's history, according to the Montana Department of Environmental Quality (DEQ).

DEQ Director Richard Opper stated that the penalties would have been "a lot higher" if Exxon had not cooperated in the cleanup.

"It was a significant violation. There were hundreds and hundreds of acres of land affected and it was a major oil spill," Opper said.

The Pipeline Safety, Regulatory Certainty, and Job Creation Act of 2011, signed into law last year by President Obama, doubled the maximum civil penalty amount PHMSA can issue from $100,000 to $200,000 for each violation and from $1 million to $2 million for a related series of violations.

This story was updated at 10:00 a.m. ET, March 29, 2013.


Tagged categories: Cleanup; Enforcement; Environmental Controls; Environmental Protection; Environmental Protection Agency (EPA); Health and safety; Oil and Gas; Pipeline; Pipelines; Regulations; Violations

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