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WASHINGTON | By Valerie Volcovici
Canadian pipeline company Enbridge Inc (ENB.TO) has agreed to pay $177 million in penalties and improved safety measures in a settlement with the U.S. government announced on Wednesday arising from 2010 oil spills from pipelines in Michigan and Illinois.
The settlement, disclosed by Enbridge along with the U.S. Justice Department and the Environmental Protection Agency, resolves violations of the Clean Water Act following one of the largest inland oil spills in U.S. history, into the Kalamazoo River at Marshall, Michigan.
It also commits the company to spend at least $110 million on a series of steps to prevent future spills and improve operations across nearly 2,000 (3,200 km) miles of its pipeline system across seven U.S. states in the Great Lakes region.
The bigger of the two spills that prompted the settlement occurred in July 2010 in Marshall, dumping about 20,000 barrels of crude oil and affecting some 38 miles (61 km) of the Kalamazoo River after the rupture of a pipeline due to corrosion fatigue. It affected water quality, fish and wildlife.
The settlement also involved a September 2010 spill involving another pipeline in Romeoville, Illinois, with about 6,400 barrels of oil.
Under the settlement, Enbridge Energy Partners, a U.S. subsidiary, will pay $62 million in fines: $61 million for the Marshall spill and $1 million for the Romeoville spill.
Enbridge Energy Partners said in a statement it accepts the penalties and safety measures it is required to take under the consent decree with the federal agencies.
"The enhanced safety measures included in the decree are consistent with our approach to safety and integrity and our current practices, and have largely been implemented over the past six years," said Mark Maki, the company's president.
The company reached a $75 million settlement with Michigan in May 2015 that required Enbridge to restore wetlands, compensate the state for money spent on the cleanup and other measures.
The Justice Department said the new settlement also resolves Enbridge's liability under the Oil Pollution Act, based on Enbridge's commitment to pay more than $5.4 million in unreimbursed costs incurred by the government in connection with cleanup of the Marshall spill, as well as all future removal costs incurred by the government in connection with that spill.
"This settlement will make the delivery of our nation's energy resources safer and more environmentally responsible," Assistant Attorney General John Cruden of the Justice Department's Environment and Natural Resources Division said.
Cruden said in addition to having to pay a "significant penalty," Enbridge will be required to improve the maintenance and monitoring of its Lakehead pipeline system, and adopt measures to protect lakes, rivers, land and communities across the U.S. upper Midwest.
The settlement requires Enbridge to install leak-detection and monitoring systems to prevent future accidents, which would be audited by a third party, said Cynthia Giles, the EPA's assistant administrator for enforcement.
Peter DeFazio, top Democrat on the House of Representatives Committee on Transportation and Infrastructure, lauded the settlement.
"Enbridge's actions leading up to the spill were deplorable: federal investigators found that Enbridge's integrity management procedures were so deficient that Enbridge allowed well-documented crack defects in corroded areas to propagate until the pipeline failed," DeFazio said.
(Reporting by Valerie Volcovici; Additional reporting by David Shepardson; Editing by Eric Walsh and Will Dunham