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Exxon reaches $1.6M Montana spill settlement

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July 2,2011: Oil from a ruptured ExxonMobil pipeline is seen in the Yellowstone River and along its banks near Laurel, Mont.AP

Exxon Mobil agreed Thursday to pay the state of Montana $1.6 million in penalties over water pollution caused by a pipeline break last summer that fouled dozens of miles of shoreline along the scenic Yellowstone River, a state official said.

Montana Department of Environmental Quality director Richard Opper told The Associated Press that the penalty marks the largest in the agency's history.

The Texas oil company will pay $300,000 in cash and spend $1.3 million on future environmental projects, Opper said. Exxon will reimburse more than $760,000 in emergency response costs racked up by state agencies.

Also Thursday, Exxon increased its estimate of how much crude spilled into the river during the July 1 accident near Laurel to 1,509 barrels, or more than 63,000 gallons.

That's up from earlier estimates of 1,000 barrels spilled -- a number that Gov. Brian Schweitzer had disputed as too low.

Only about 10 barrels of crude were recovered by cleanup crews. That's less than 1 percent of the total spilled, federal officials have said.

Thursday's settlement over water pollution violations came after more than three months of negotiations between attorneys for Exxon and the state. It contains provisions to shield the company against any future lawsuits from state agencies, although it will not become final until after a 30-day comment period.

Opper said company representatives were expected to sign the deal late Thursday.

"It was a significant violation. There were hundreds and hundreds of acres of land affected and it was a major oil spill," Opper said. He added the penalties likely would have been "a lot higher" if Exxon had not cooperated on the cleanup.

"It doesn't mean they were perfect. They were responsible, but they really were committed to undoing the damage that was caused," he said.

As part of the settlement, Exxon also will reimburse more than $760,000 in emergency response costs racked up by state agencies.

Exxon spokesman Alan Jeffers declined immediate comment on the settlement.

Regarding the change in how much crude spilled, Jeffers said the company recalculated the volume after discovering the pipeline had been completely severed during the July 1 accident near Laurel. Jeffers says pipeline breaches typically involve a crack or fissure. That was the assumption used to craft the initial estimate.

Jeffers added that the higher estimate would not have changed the response to the spill, which at its peak involved more than 1,000 Exxon Mobil contractors working to clean up oil-soaked sandbars, log jams and vegetation.

"We had a lot of people and a lot of resources brought to bear in response to the spill," he said. "None of this would have made any difference."

Still pending against the company is a lawsuit from a group of riverfront property owners who are seeking tens of millions of dollars in damages over allegations that the company failed to properly clean up after the spill.

Attorneys for Exxon have asked U.S. District Judge Richard Cebull in Billings to dismiss the case. A decision is pending.

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