U.S., Enbridge reach $177 million pipeline spill settlement

Wed Jul 20, 2016 3:53pm EDT
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By Valerie Volcovici

WASHINGTON (Reuters) - Canadian pipeline operator Enbridge Inc (ENB.TO: Quote) has agreed to pay $177 million in penalties and improved safety measures in a settlement with the U.S. government tied to one of the largest inland oil spills in U.S. history.

The settlement, announced on Wednesday by Enbridge, the U.S. Justice Department and the Environmental Protection Agency, resolves Clean Water Act violations stemming from the 2010 failure of Enbridge's Line 6B near Marshall, Michigan, which spilled some 20,000 barrels of oil into a branch of the Kalamazoo River.

It also resolves a second spill that same year in Illinois and commits the company to spend at least $110 million to prevent future spills and improve operations on its pipeline system that extends through seven U.S. states in the Great Lakes region.

Under the settlement, Enbridge Energy Partners, a U.S. subsidiary of Calgary-based Enbridge, will pay a $61 million fine related to the Marshall spill, plus a $1 million fine for a September 2010 spill of about 6,400 barrels of oil from a second pipeline in Romeoville, Illinois.

Enbridge said it accepts the fines and measures required under the consent decree. Brad Shamla, Enbridge vice president of U.S. operations, said the settlement "won't have a material impact on us from a financial perspective." The company estimated the total cost for cleanup to date at $1.2 billion.

"We have accepted the penalties and, in fact, already enacted many of the safety measures set out in the consent agreement," Shamla said on a conference call with reporters.

Shamla added that the company has transformed its safety culture in the aftermath of the 2010 spills.

Enbridge last year reached a $75 million settlement with Michigan requiring it to restore wetlands, compensate the state for money spent on the cleanup, and other measures.   Continued...

A cleanup worker watches the absorbent booms collecting oil from the Kalamazoo river after an oil  pipeline, owned by Enbridge Energy Partners, leaked an estimated 820,000 gallons of oil into the Kalamazoo river in Western Michigan, near Marshall July 31, 2010.   REUTERS/Rebecca Cook/File Photo