Koch Industries Inc., Wichita, has agreed to pay a record civil fine for environmental violations, the US Department of Justice and Environmental Protection Agency said.
To resolve claims related to more than 300 oil spills from its pipelines and oil facilities in six states, Koch will pay a $30 million civil penalty, improve its leak-prevention programs, and spend $5 million on environmental projects. The settlement resolved two lawsuits in Houston and Tulsa that alleged Koch illegally discharged crude and petroleum products in Texas, Oklahoma, Kansas, Missouri, Louisiana, and Alabama. Texas had joined the US in suing Koch and will share equally in the $30 million payment.
Koch is the second-largest privately held company in the US. Last year, it agreed to an $8 million fine for a Minnesota refinery leak (OGJ, Oct. 11, 1999, p. 31).
DOJ said most of the spills occurred in Oklahoma, Texas, and Kansas. In a Texas case, a spill of almost 100,000 gal of oil caused a 12-mile oil slick in Nueces Bay and Corpus Christi Bay.
Complaints filed in 1995 and 1997 alleged Koch allowed 3 million gal of crude and products to leak from its pipelines during 1990-97. The governments said that corrosion caused most of the spills and that they could have been prevented with proper operations and maintenance.
Settlement
Under the deal, Koch must assess the condition of its 2,500-mile pipeline system in the US Midwest and repair defects. It also must implement an improved leak-prevention and detection program, a maintenance and inspection program, and a training program aimed at preventing leaks.
Koch must hire an independent auditor, who will monitor its operations for 3 years and report to the federal government and Texas whether the company is meeting the settlement's requirements and applicable laws.
The company will pay $1.5 million to buy and preserve wetlands or wildlife habitat in Kansas and Oklahoma. It will spend $1 million to conduct a pipeline safety study in Texas, Kansas, and Oklahoma aimed at educating the oil and gas industry about spill prevention. And Texas will get $2.5 million for environmental projects to enhance water quality and improve emergency response in the Corpus Christi Bay.
Koch's $15 million payment to the federal government will go into the Oil Spill Liability Trust Fund, which is used to pay for damages, cleanup costs, and some operation expenses related to oil spills.
Koch said the settlement was "fair and reasonable" and avoided years of litigation. It observed that third parties caused some of the leaks.
