IW 50 Best: Chevron Faces More Environmental Battles

Company accused of not following proper procedures prior to pipeline leak in Utah.

Two weeks after Chevron Corp. launched an ad campaign aimed at promoting its environmental awareness, the company finds itself answering allegations that it's responsible for a pipeline failure that caused 33,600 gallons of crude oil to spill into a Utah creek.

The U.S. Transportation Department said Nov. 1 it has proposed a $423,600 fine against Chevron Corp. for a pipeline failure in Salt Lake City. The DOT's Pipeline and Hazardous Materials Safety Administration claims the company may have failed to implement and follow required procedures to prevent the accident, including controlling corrosion on the system and protecting the pipeline from stray electrical currents. The DOT also alleges Chevron may not have an adequate leak-detection system along its pipeline.

Chevron said in an e-mail Nov. 2 that it had not yet received the DOT order and will not comment on the agency's findings until it has a chance to review them.

The accident occurred in June near the University of Utah campus and leaked the equivalent of 800 barrels of crude oil into the ground and nearby Red Butte Creek. The pipeline involved in the failure leaked crude oil for more than 10 hours before Chevron received notification of the failure from the local fire department, according to the DOT.

The DOT also issued a proposed compliance order that would require the company to improve its rights-of-way inspections, take measures to protect its system against damage from lightning or stray electrical currents and improve its leak detection capabilities. Chevron has 30 days to respond to allegations and can voluntarily take these actions before the order is finalized, the DOT says.

The proposed penalties come after the company announced its "We Agree" ad campaign to demonstrate it shares common ground with people who are concerned about the oil industry's role in energy and environmental issues.

"We hear what people say about oil companies - that they should develop renewables, support communities, create jobs and protect the environment - and the fact is, we agree," said Rhonda Zygocki, vice president of Policy, Government and Public Affairs at Chevron, in an Oct. 18 statement.

The ads feature 30-second TV spots that focus on five main themes, including the company's investment in economic development, its efforts in renewable energy, clean-energy technologies, support for small businesses and community development.

The campaign caught the ire of environmental groups who accused the company of "greenwashing." A group of pranksters called the Yes Men partnered with activists to release a spoofed version of the ad campaign to media outlets. Several publications took the bait and erroneously reported that Chevron was admitting to past mistakes through the campaign.

Environmentalists have been particularly critical of Chevron for its alleged actions in Ecuador. The company is defending itself in a lawsuit that claims residents in Ecuador's Amazon region were impacted by outdated drilling practices by Texaco, which Chevron purchased in 2001.

Chevron on Oct. 29 reported a quarterly profit of $3.8 billion, down nearly 2% from the same period last year.


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