Summit Charged, Fined for North Dakota Pipeline Leak
A subsidiary-owned pipeline near Marmon, North Dakota, spilled more than 700,000 bbl of produced water over a period of almost 5 months in 2014–2015.
Summit Midstream Partners will pay $35 million in criminal and civil penalties related to a North Dakota pipeline leak that spilled 29 million gallons of produced water over a 5-month period in 2014–2015—believed to be the largest inland spill in history. The penalty comes as the US Department of Justice filed criminal charges under the Clean Water Act against Summit for contaminating land, groundwater, and more than 30 miles of tributaries of the Missouri River.
The discharge emanated from a ruptured pipeline at Blacktail Creek near Marmon, North Dakota, owned by a Summit operating subsidiary Meadowlark Midstream Company LLC, which at the time, was a subsidiary of, and operated by, Summit Midstream Partners. The spill ran unchecked for 143 days.
“Summit prioritized profits over the environment,” said Todd Kim, assistant attorney general of the Justice Department’s Environment and Natural Resources Division. “The company’s disregard for pipeline safety resulted in pollution of the environment on a massive scale over 143 days. Summit’s conduct was criminal and its failure to immediately report the discharge a felony. This resolution holds the company financially accountable, requires enhanced compliance measures to prevent future spills, and provides compensation for North Dakota’s damaged natural resources.”
According to Summit, the payments will break down as $20 million for a total penalty payable pursuant to a civil consent decree over a period of up to 5 years for the $10 million federal portion and over a period of up to 6 years for the $10 million state portion, with interest accruing on the outstanding amount at a fixed rate of 3.25%; and $15.0 million for a total penalty payable pursuant to a criminal plea agreement with the US over a period of up to 5 years, with interest accruing on the outstanding amount at the federal statutory interest rate (currently 0.07%).
Summit will also pay an additional $1.25 million in natural resource damages to the federal and state governments payable within 30 days after the consent decree becomes effective.
"As a company, we have accepted responsibility for the produced water spill at the Blacktail Creek site from the beginning and have been working diligently over the past seven years on efforts to fully remediate the environmental impacts to the area, while also investing heavily in preventative system improvements, including state-of-the-art leak detection technology, centralized control room monitoring and alarm systems, and significant changes to our company-wide operating practices and procedures,” said Heath Deneke, president, chief executive, and chairman of Summit Midstream Partners. “Since discovering the spill in 2015, we have invested approximately $75 million on these overall system improvements and environmental remediation measures at the Blacktail Creek site.”
Summit added that the settlement is an important final step to fully resolve the ongoing government investigations and legal matters. Deneke added that the company considered the overall monetary settlement penalties severe under the circumstances, particularly given the company’s substantial remediation and mitigation efforts to date. The company will serve 3 years of probation while those remedial measures are being completed and monitored by state regulators.
“We believe that putting this matter behind us with manageable payment terms over the next six years is in the best interest of all of Summit’s stakeholders and employees,” he said.