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Record Fine Against Enbridge for Michigan Oil Pipeline Spill

Federal agency proposes $3.7 million penalty for 22 probable violations by Canadian pipeline operator.

By Elizabeth McGowan and Lisa Song, InsideClimate News

Jul 2, 2012
Crew clad picks up contaminated soil along the banks of the Kalamazoo River.

WASHINGTON—The federal government today proposed a record $3.7 million civil penalty against Enbridge Inc. for the 2010 oil spill that closed 36 miles of Michigan's Kalamazoo River for nearly two years.

At least 1 million gallons of diluted bitumen, tar sands oil from Canada, spilled into wetlands near Marshall, Mich., after pipeline 6B ruptured on July 25, 2010. A small section of the river remains closed while the cleanup continues.

In a document that was delivered to Enbridge Monday, the Pipeline and Hazardous Materials Safety Administration, a division of the U.S. Department of Transportation, listed 22 probable violations and the penalty each could carry. The violations include failure to follow operational and management procedures, as well as failures to meet reporting and operator qualification requirements.

The two largest proposed fines are $1 million each, and both are related to Enbridge's failure to address corrosion defects on 6B in a timely manner. An InsideClimate News investigation of the spill found that in the year before the accident, Enbridge had not repaired 329 defects it had detected on 6B. A defect in the area where the pipeline eventually ruptured was identified as early as 2005.

"We will hold pipeline operators accountable if they do not follow proper safety procedures to protect the environment and local communities," U.S. Transportation Secretary Ray LaHood said in a news release announcing the fine.

In its letter to Enbridge, PHMSA faulted the company for restarting the ruptured pipeline twice, despite receiving multiple alarms. In the first restart 10,460 barrels of dilbit were pumped into the line. In the second, 5,831 barrels were injected. Enbridge admits to spilling a total of about 20,000 barrels during the accident, although the U.S. Environmental Protection Agency says that more than 24,000 barrels have already been recovered.

Enbridge has 30 days to respond to PHMSA's notice.

"We're in the process of reviewing the notice of probable violation, but haven't had the chance to review it in great detail," Enbridge spokeswoman Terri Larson told InsideClimate News Monday. "We appreciate the hard work that went into the document."

The company has several opportunities to contest the fine and ask that it be reduced. It can ask for a hearing before an administrative judge, or it can submit written explanations or clarifications to PHMSA.

PHMSA spokesman Damon Hill said the agency's findings are based on its own investigation of the spill and aren't connected to the separate National Transportation Safety Board investigation. The NTSB is expected to release its findings on July 10.

The cost of the cleanup has now reached at least $765 million, making it the most expensive oil pipeline spill since the government began keeping records in 1968. Enbridge is responsible for all of the cost, with most of it being paid by its insurance company.

In 2011 Enbridge's operating income was more than $1 billion. The Calgary, Alberta-based company is Canada's largest transporter of crude oil. Pipeline 6B is owned and operated by its U.S. branch, Enbridge Energy Partners.

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