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Exxon faces $2.7 million fine for Arkansas pipeline spill

Emergency crews work to clean up an oil spill near Interstate 40 in Mayflower, Arkansas March 31, 2013. REUTERS/Jacob Slaton
Emergency crews work to clean up an oil spill near Interstate 40 in Mayflower, Arkansas March 31, 2013. REUTERS/Jacob Slaton

WASHINGTON (Reuters) - Exxon Mobil Pipeline Co faces a fine of nearly $2.7 million for a pipeline spill of thousands of barrels of Canadian crude oil in an Arkansas suburb last spring, the U.S. pipeline safety office said on Wednesday.

The Pipeline and Hazardous Materials Safety Administration (PHMSA) found nine probable violations of safety rules in the rupture of the nearly 70-year old Pegasus pipeline that forced residents to evacuate their homes.

The 95,000 barrel-per-day pipeline has been shut since March 29 after spilling about 5,000 barrels in Mayflower, Arkansas.

In August, PHMSA said an original manufacturing defect by a now defunct Youngstown, Ohio steel pipe company appeared to have led to the accident.

On Wednesday, the agency said Exxon did not adequately account for risks on the pipeline. "Specifically, the operator failed to include the susceptibility of its Youngstown, pre-1970 ... pipe seam to failures as a risk factor for the Pegasus Pipeline System in the implementation of its integrity management program," PHMSA said in a letter to Exxon.

Senator Mark Pryor, an Arkansas Democrat, praised the PHMSA's decision on Wednesday. "Exxon has caused undue harm to Arkansas families and must be held accountable," he said in a statement.

Exxon said it was disappointed by the decision but was cooperating with the pipeline safety office in its investigation.

It said it was still reviewing the government's notice and had not determined its course of action. "However, it does appear that PHMSA's analysis is flawed and the agency has made some fundamental errors," it said.

Exxon has 30 days to contest the allegations.

(Reporting by Timothy Gardner; Editing by Alan Raybould)

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