What Will Exxon Pay to Clean Up This Mess?

U.S. federal regulators proposed a $1.7 million fine on Exxon Mobil (NYSE:XOM) on Monday as compensation for an oil leak in its Silvertip pipeline that put 1,500 barrels of crude into the Yellowstone River in 2011. Heavy rains and soil erosion were cited as the cause for the leak. Oil was found along a 70 mile stretch of the river and required a workforce of 1,000 people to clean up.

According to the U.S. Pipeline and Hazardous Material Safety Administration, Exxon Mobil — the country’s largest oil and gas producer — did not have appropriate written protocols to instruct employees on how to protect the pipeline in the event of a natural disaster, Fox News reported.

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“ExxonMobil failed to properly address known seasonal flooding risks to the safety of its pipeline system, including excessive river scour and erosion, and to implement measures that would have mitigated a spill into a waterway,” PHMSA said in its allegations. In addition to drafting written instructions, the PHMSA is also proposing that the company implement a training program to educate employees on how to react to emergencies.

Company spokeswoman Rachael Moore said that Exxon was “disappointed in the findings in the report,” but have taken cues since the incident.

The Department of Transportation cited Exxon employees’ failure to close an upstream safety valve among its list of failures to prevent the leak, which could have significantly reduced the size of the spill after it was first detected. As a result, the agency said, oil continued gushing into the river for almost an hour after the break was noticed by pipeline controllers in Houston, the Huffington Post said.

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“We committed to learn from the incident and have since applied the learning to our remote control valve procedures and operator training,” she said.

The company has already spent $135 million or so on the cleanup efforts and replacement of the damaged pipeline. Exxon has 30 days to file an appeal, or the proposal becomes final.

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