The U.S. Department of Transportation's pipeline regulation agency Monday proposed a record $3.7 million fine against Enbridge Energy Partners stemming from a 2010 oil leak from the company's pipeline in Michigan.
The Pipeline and Hazardous Material Safety Administration said its investigation into the July 2010 leak of 20,000 barrels of oil near the Kalamazoo River found 24 violations of federal safety regulations. The spill was one of the largest pipeline leaks in the U.S., closing parts of the river for nearly two years amid cleanup efforts.
Enbridge waited for 10 hours before enacting emergency procedures, allowing the leak to grow, PHMSA said. Enbridge's failure to immediately respond to the leak justified the size of the fine, PHMSA said.
"Despite control center alarms, there were several attempts to restart the line, resulting in more pressure that expelled more oil," PHMSA said in announcing the fines, the largest the agency has ever proposed.
Enbridge Energy, an indirectly owned subsidiary of Calgary-based Enbridge Inc., has 30 days to respond to the findings, PHMSA said. An Enbridge spokeswoman declined comment pending review of PHMSA's fine proposal.
The size of the fine may pale next to Enbridge Energy Partner's forecast $1.1 billion in 2012 net earnings, but should be considered more than a slap on the wrist, said Morningstar analyst David McColl.
"Issuing a record fine sends a message to Enbridge and others that they need to continue putting in the safety measures they have started," Mr. McColl said.
Copyright (c) 2012 Dow Jones & Company, Inc.
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