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Olympic/ Shell Settle with U.S. and State of Washington for $92 Million in Connection with Fatal Pipeline Rupture -- Settlement includes $77 million in state-of-the-art spill prevention work in nine states

Release Date: 01/17/2003
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UNITED STATES ENVIRONMENTAL PROTECTION AGENCY

FOR IMMEDIATE RELEASE
FRIDAY, JANUARY 17, 2003
WWW.USDOJ.GOV
ENRD (202) 514-2007
EPA (202) 564-7873
EPA REGION 10 (206) 553-1203





WASHINGTON, D.C. (01/17/03) – The Justice Department, the U.S. Environmental Protection Agency (EPA), and state of Washington announced today that a civil settlement has been reached with Olympic Pipe Line Company and Shell Pipeline Company LP for environmental violations leading to the 1999 fatal pipeline rupture in Bellingham, Washington.

The civil settlement addresses claims against the two companies in civil cases arising from the rupture, which caught fire and caused the deaths of two 10-year-old boys and an 18-year-old man and resulted in the discharge of over 230,000 gallons of gasoline into Whatcom.

The settlements require Shell to pay civil penalties of $10 million, split equally between EPA and the Washington Department of Ecology (WDOE). Additionally, the settlement with EPA requires Shell to spend an estimated $62 million to conduct a program lasting a minimum of five years to perform state-of-the-art spill prevention work on more than 2,100 miles of Shell’s main product pipelines in seven states. The pipeline systems covered by the program are Shell’s East, North, Chase and Orion systems in the states of Colorado, Kansas, Illinois, Indiana, Ohio, Oklahoma and Texas.

The settlements with Olympic, based on a limited ability to pay, require the pipeline company to pay civil penalties of $5 million, split equally between EPA and WDOE. Additionally, Olympic’s settlement with EPA requires the company to spend an estimated $15 million to conduct a spill prevention program lasting a minimum of five years on the entire 400-mile Olympic Pipeline where the tragedy occurred. The required work covers the states of Washington and Oregon and is designed to address all of the causes of the rupture. Olympic’s pipeline spill prevention program supplements the pipeline safety remedial program already required by the Department of Transportation (DOT) shortly after the accident occurred.

"This is an example of a successful federal-state partnership to enforce environmental laws," said Tom Sansonetti, Assistant Attorney General for the Justice Department’s Environment and Natural Resources Division. "The State of Washington and the United States have achieved our joint goal of imposing measures to help prevent such a tragedy from ever happening again and of deterring other pipeline companies from endangering the public and the environment."

“The tragic deaths of Stephen, Wade, and Liam have had a profound impact on our work on this case,” said EPA Regional Administrator L. John Iani. “Their families’ unimaginable losses have steeled us as we’ve worked to hold the companies accountable for their past failures and their environmental responsibilities. Americans and the environment will be better protected because of the significant pipeline spill prevention upgrades that the companies will conduct.”

The five-year plans, as required by today’s settlements, include a wide range of measures including:
  • Internal inspections of pipeline using “Smart PIG” technology (devices that travel through pipeline to scan for defects);
  • Preventive maintenance and repair of pipeline and valve defects;
  • Installation, maintenance, and testing of corrosion control equipment;
  • Testing and repair of leak detection systems;
  • Installation of block valves and check valves to divert the flow of gasoline in an emergency;
  • Protective measures for exposed pipe;
  • Protective measures for insufficiently buried pipe near commercially navigable waterways;
  • Monitoring of construction activities near the pipelines;
  • Frequent pipeline surveys;
  • Operator training; and
  • Programs to ensure that changes in the pipeline system are analyzed for their effect on the operations and safety of the entire pipeline.

The settlements also require the companies to pay independent contractors, which EPA and the companies will jointly select, to monitor implementation of the terms of the settlements, and to report to EPA.

Monitoring of third-party construction activity near the pipelines is required by Department of Transportation regulations, but the settlements have specific requirements for both companies regarding actual presence of pipeline employees at any construction activity that is close enough to the pipelines to pose a risk of damage.

The civil penalties in this case are in addition to the criminal fine of $15 million levied against Shell and the criminal fine of $6 million levied against Olympic in a separate criminal case announced last month by the United States Attorney for the Western District of Washington. The plea agreements in the criminal case were conditioned on Shell and Olympic’s agreement to the pipeline spill prevention programs in the settlements announced today.

All pipeline companies are required to comply with the regulations of the Department of Transportation, the federal pipeline safety authority. These include new pipeline integrity management regulations that are far more stringent than those in effect at the time of the Bellingham accident. In addition, the Pipeline Safety Improvement Act of 2002, enacted in December, 2002, has added requirements. Under the consent decrees, the companies have agreed to additional inspections and maintenance procedures, and the use of specified state-of-the-art tools to help their pipelines meet DOT’s pipeline safety objectives.

The consent decrees with Shell and Olympic describing the terms of the federal civil settlements were filed today in the United States District Court for the Western District of Washington in United States v. Shell Pipeline Co. LP fka Equilon Pipeline Co. LLC and Olympic Pipe Line Co., CV02-1178R and are subject to a 30-day public comment period.