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Kinder Morgan subsidiary fined for Bay Area oil spill

http://www.bizjournals.com/sanjose/stories/2005/04/25/daily29.html

Silicon Valley / San Jose Business Journal

Wednesday, April 27, 2005

Santa Fe Pacific Pipeline L.P., a subsidiary of Kinder Morgan Energy Partners, has pleaded guilty to four misdemeanor counts in connection with a pipeline rupture in 2004 that dumped 103,000 gallons of diesel fuel into the Suisun Marsh, a part of the San Francisco Bay ecological area.

As part of a settlement announced by California Attorney General Bill Lockyer, the company will pay a $5 million fine.

"The pipeline operator's conduct in the Suisun Marsh case warranted prosecution, and Kinder Morgan has repeatedly and unlawfully failed to report spills or breaches in their pipelines," Mr. Lockyer says, in a written statement.

The money will fund investigation and prosecution of environmental crimes, help restore the Suisun Marsh's ecosystem to health, and reimburse the state and Solano County for the cleanup expenses and legal costs incurred by taxpayers.

SFPP also agreed to a three-year probation requiring it to reform its business practices to prevent future harm to the environment and public health. The agreement includes provisions designed to ensure proper reporting of discharges and threatened discharges, strengthened pipeline inspection and maintenance procedures, and installation of sensors to better detect problems.

Kinder Morgan Inc. (NYSE: KMI) of Houston, Texas, controls the largest independent refined petroleum products pipeline system in the United States, in terms of volume delivered. Its subsidiaries operate more than 25,000 miles of pipeline which transport more than two million barrels a day of petroleum products, such as gasoline, and nearly 7.8 billion cubic feet a day of natural gas.

The rupture occurred April 27, 2004 in the company's pipeline that runs through the 55,000-acre Suisun Marsh, California's largest wetland and a Pacific Flyway haven for more than a million migrating and resident shorebirds and waterfowl. The pipeline carries diesel, jet fuel and gasoline from Bay Area refineries to Concord, Sacramento, Rocklin, Chico and Reno.