Koch Industries to Pay Record Fine for Oil Spills

Koch Industries $30 million fine to resolve claims relating to more than 300 oil spills from its pipelines, is the largest civil fine ever imposed on a company.

Koch Industries will pay the largest civil fine ever imposed on a company under any federal environmental law to resolve claims related to more than 300 oil spills from its pipelines and oil facilities in six states.

A settlement filed last week by the Justice Department and the EPA requires Koch, the second-largest privately held company in the United States, to pay a $30 million civil penalty, improve its leak-prevention programs and spend $5 million on environmental projects.

The settlement resolved two lawsuits charging that for years Koch's pipeline subsidiary had left thousands of miles of pipeline in disrepair, leading to hundreds of oil leaks from 1990 to 1997.

Koch, based in Wichita, Kan. operates more than 35,000 miles of oil and gas pipeline throughout the United States and Canada. The company has refineries in Texas and Minnesota through its Koch Petroleum Group subsidiary.

Besides Kansas, the spills polluted waterways in Texas, Oklahoma, Kansas, Louisiana and Missouri, according to EPA.

In one case, almost 100,000 gallons of oil was spilled in Texas and caused a 12-mile oil slick on Nueces Bay and Corpus Christi Bay.

"This landmark fine against Koch Industries for egregious violations of the Clean Water Act sends a strong message that those who try to profit from polluting our environment will pay the price," said EPA Administrator Carol M. Browner. "It is another sign of the Clinton-Gore Administration's strong commitment to protecting our communities from environmental threats."

Complaints filed in 1995 and 1997 allege that Koch unlawfully allowed some 3 million gallons of crude oil and related products to leak from its pipelines into ponds, lakes, rivers and streams, or onto adjacent shorelines.

Most of the spills were caused by corrosion of pipelines in rural areas. The governments allege that Koch could have prevented the corrosion by proper operation and maintenance.

"This record civil penalty sends a clear message to those who transport hazardous materials. You cannot endanger the public health or the environment," said Attorney General Janet Reno.

Under the settlement, Koch must assess the condition of 2,500 miles of pipeline that currently operates and repair any defects.

The settlement also requires Koch to implement an improved leak-prevention and detection program, a maintenance and inspection program, and a training program aimed at preventing leaks.

An additional $5 million in fines goes to preserve wetlands in Kansas and Oklahoma, conduct a pipeline safety study and aid environmental programs in Texas.

Browner said the fine was the largest ever against a single company under the

Clean Water Act, surpassing a $12.6 million fine against Smithfield Foods Inc., in 1997 for dumping hog waste into Chesapeake Bay.

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