Colonial Pipeline to Pay Alabama $3.3 Mln for 2016 Spills -State Official



March 15 (Reuters) - Colonial Pipeline Co will pay $3.3 million to the state of Alabama to cover damages and penalties from an explosion and a spill on its gasoline line in 2016, the state's attorney general said on Thursday.

A combined 11,800 barrels of gasoline were spilled in rural Shelby County, causing pump prices to soar in much of the southeastern United States, which depends heavily for supplies on the Colonial pipeline system, the largest refined product pipeline system in the country.

The settlement includes a $1.3 million civil penalty and $1.8 million in projects for the state.

"This agreement first and foremost addresses the environmental damage to land and water caused by significant gasoline spills in Shelby County during 2016," Alabama Attorney General Steve Marshall said in a statement.

A nine-man crew was working on the Colonial pipeline system at the time of the Oct. 31 explosion, killing a worker and sending five to the hospital. More than 4,400 barrels spilled. The explosion was caused by an accidental strike to the pipeline by excavating equipment, the statement said.

In the September incident, nearly 7,400 barrels leaked below ground, and was discovered by a mining inspector who was nearby doing unrelated work. Reports indicate the leak was caused by pipe fatigue that resulted from improper compaction of soil below that portion of the pipeline, the attorney general's office said.

The 5,500-mile (8,850-km) Colonial Pipeline transports more than 3 million barrels per day of fuel including gasoline, diesel and jet fuel from the U.S. Gulf Coast to the New York Harbor area. The pipelines that were shut run from Houston to Greensboro, North Carolina.

"The events that contributed to this settlement are regretful," a spokesman for Colonial Pipeline said in an emailed statement.

"However, we have learned from these events and have implemented a number of system-wide programs as a result of the incidents."

Colonial also has to complete the cleanup of fuel released into the soil and waters of the state. (Reporting by Devika Krishna Kumar in New York; editing by Grant McCool)

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