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CLAIM DETERMINATION 

Claim Number: E19509-0001 

Claimant: Magellan Midstream Partners, L.P.

Type of Claimant: RP

Type of Claim: Defense to Liability, Act or Omission of a 3rd Party

Claim Manager: 

Amount Requested: $1,161,286.21 

Action Taken: Approved 

EXECUTIVE SUMMARY:

On April 24, 2019, an 8” pipeline carrying diesel fuel ruptured and released diesel fuel into 

the Yellow Medicine River, a tributary to the Minnesota River, a navigable waterway of the 

United States.1 The discharge of oil was reported to the U.S. Coast Guard (CG) National 

Response Center.2

 Magellan Midstream Partners, L.P. (“Magellan” or “Claimant”), owner and 

operator of the pipeline, responded and hired West Central Environmental Consultants, Bay 

West Inc., and Haz Mat Response to conduct the pollution removal activities.3 The U.S. 

Environmental Protection Agency (EPA) Federal On-Scene Coordinator (FOSC) also responded 

to provide oversight of the spill response and determined that Magellan was the party responsible 

for the oil spill.

4

 An investigation into the cause of the pipeline rupture conducted by the Lyon 

County Sheriff’s Department identified intentional gunfire as the cause of the pipeline failure.5 

On August 27, 2019, the EPA FOSC determined that cleanup of the discharged diesel fuel was 

complete.

6

 Magellan submitted a claim for entitlement to a defense to liability, based on an act 

or omission of a third party7 to the CG National Pollution Funds Center (NPFC) and seek 

reimbursement of removal costs incurred under the defense in the amount of $1,161,286.21.8

 

The NPFC has thoroughly reviewed all documentation submitted with the claim, analyzed the 

applicable law and regulations, and concluded that Magellan has demonstrated an entitlement to 

a defense to liability. Additionally, the NPFC has determined that $1,122,617.64 of the 

requested $1,161,286.21 is compensable and offers this amount as full and final compensation of 

this claim9 for its uncompensated removal costs and damages under the Oil Pollution Act 

(OPA).10

 

1 U.S. EPA POLREP #2 (F) dated August 27, 2019.

2 CG National Response Center Report # 1243669 dated April 24, 2019.

3 U.S. EPA POLREP #2 (F) dated August 27, 2019.

4 U.S. EPA POLREP #2 (F) dated August 27, 2019. See also, Notice of Federal Interest issued to Magellan Pipeline 

dated April 25, 2019. 

5 Magellan claim submission dated March 16, 2020. See also Lyon County Sheriff’s Department Incident Report 

Narrative ICR# 19-6458. 6 U.S. EPA POLREP #2 (F) dated August 27, 2019.

7 33 U.S.C. § 2703(a)(3).

8 Magellan claim submission dated March 16, 2020, with a sum certain of $1,150,399.52. Magellan subsequently 

revised its sum certain to $1,173,710.24 after discovering additional uncompensated removal costs not submitted 

within its original claim submission. See Magellan letter to the NPFC dated May 15, 2020. Magellan then revised 

its sum certain to $1,169,595.55 after receiving a credit from a contractor whose costs constituted a portion of its

claimed sum certain. See, email from Magellan to the NPFC dated August 20, 2020. Lastly, Magellan revised its

sum certain to $1,161,286.21 after identifying a mistake within their claimed uncompensated costs. See, email from 

Magellan to the NPFC dated August 28, 2020.

9 33 CFR 136.115.

10 33 U.S.C. § 2703(a). 

(b) (6), (b)
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I. FACTUAL BACKGROUND: 

A. The Oil Spill and Immediate Response Activities

On April 24, 2019, an 8” pipeline owned and operated by Magellan was ruptured and 

released diesel fuel into judicial drainage ditch #24 (drainage ditch).11 The pipeline was exposed 

and crossed the drainage ditch approximately 725 feet downstream from Cottonwood Lake in 

Lyon County, MN. Diesel fuel from the pipeline sprayed onto the banks and into the moving 

waters within the drainage ditch and traveled approximately 10 miles into the Yellow Medicine 

River. The Yellow Medicine River is a tributary to the Minnesota River, which is a navigable 

waterway of the United States.12

A Magellan pipeline controller was immediately notified of the loss of pressure within the 

pipeline by its electronic monitoring system. Upon notification, the controller immediately 

initiated emergency response procedures, which included remotely shutting down the pipeline, 

closing automated valves and discharging personnel to close manual valves. NPFC notes that 

the quick action and due care exercised by Magellan resulted in only 93 barrels13 of the potential 

798 barrels oil in the pipeline being released.14 Additionally, Magellan also timely immediately 

notified Federal, State and local authorities in the vicinity of the oil spill.15 

Magellan hired West Central Environmental Consultants (WCEC), Bay West Inc., and Haz 

Mat Response to conduct the pollution removal activities which included booming off the 

Yellow Medicine River and oil recovery from the drainage ditch and the oiled banks and riprap 

lining the drainage ditch.16

US EPA personnel provided oversight of the oil spill response. The EPA FOSC accessed the 

Oil Spill Liability Trust Fund (OSLTF) and obtained Federal Project Number (FPN) E19509-

0001 to fund their response.17

B. Recovery Operations

The Cottonwood Fire Department was first on-scene and installed a clamp over the damaged 

section of pipeline, which provided a temporary repair to the pipeline and stopped the release of 

diesel fuel into the drainage ditch.18 

WCEC, Bay West Inc., and Haz Mat Response responded with personnel and equipment. 

The entrance to the Yellow Medicine River was boomed to prevent further discharge into the 

river and multiple containment and recovery areas were established along the 10-mile stretch of 

 

11 The pipeline is a Department of Transportation (DOT) regulated pipeline and is subject to DOT regulations for 

operations, maintenance and public awareness. 

12 U.S. EPA POLREP #2 (F) dated August 27, 2019. See also Magellan claim submission dated March 16, 2020. 13 One barrel of oil is equivalent to 42 gallons. 14 Letter to NPFC dated April 17, 2020, responses to questions 8-10. 15 Magellan claim submission to the NPFC dated March 16, 2020. 16 U.S. EPA POLREP #2 (F) dated August 27, 2019. 17 Id. See also, email from EPA FOSC to the NPFC dated March 24, 2020. 18 Magellan claim submission to the NPFC dated March 16, 2020.
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the drainage ditch, which consisted of hard boom, sorbent boom and pads, vacuum trucks and 

skimmers. Approximately 140 tons of oil-contaminated soil was removed and approximately 78 

barrels of diesel fuel were recovered from the surface of the drainage ditch.19 The EPA FOSC 

determined cleanup was complete on August 27, 2019.20

C. Responsible Party and the Claim 

On March 16, 2020, Magellan submitted a claim for entitlement to a defense to liability, act 

or omission of a third party21 claim to the NPFC requesting compensation of removal costs 

incurred under the defense in the amount of $1,161,286.21.22 During the review and 

adjudication of the claim, Magellan requested a tolling agreement for additional time to locate 

and provide additional information to support their claim. That request was approved and 

extended NPFC’s deadline to respond to the claim to October 28, 2020.23

II. DISCUSSION:

The NPFC utilizes an informal process when adjudicating claims against the OSLTF.24 As a 

result, 5 U.S.C. § 555 (e) requires the NPFC to provide a brief statement explaining its 

determinations. This determination is issued to satisfy that requirement for the Claimant’s claim 

against the OSLTF.

When adjudicating claims against the OSLTF, the NPFC acts as the finder of fact. In this 

role, the NPFC considers all relevant evidence, including evidence provided by claimants and 

evidence obtained independently by the NPFC, and weighs its probative value when determining 

the facts of the claim.25 The NPFC may rely upon, but is not bound by the findings of fact, 

opinions, or conclusions reached by other entities.26 If there is conflicting evidence in the record, 

the NPFC makes a determination as to what evidence is more credible or deserves greater 

weight, and finds facts and makes its determination based on the preponderance of the credible 

evidence.

III. DETERMINATION PROCESS:

A responsible party is liable for all removal costs and damages resulting from either an oil 

discharge or a substantial threat of oil discharge into a navigable water of the United States.27 A 

responsible party’s liability is strict, joint, and several.28 When enacting the Oil Pollution Act 

 

19 U.S. EPA POLREP #2 (F) dated August 27, 2019. 20 Id. 21 33 U.S.C. § 2703(a)(3). 22 See, note 3, supra. 23 Tolling agreement between Magellan Midstream Partners, L.P. and the NPFC dated July 17. 2020. 24 33 CFR Part 136. 25 See, e.g., Boquet Oyster House, Inc. v. United States, 74 ERC 2004, 2011 WL 5187292, (E.D. La. 2011), “[T]he 

Fifth Circuit specifically recognized that an agency has discretion to credit one expert's report over another when 

experts express conflicting views.” citing Medina County v. Surface Transp. Bd., 602 F.3d 687, 699 (5th Cir. 2010). 26 See, e.g., Use of Reports of Marine Casualty in Claims Process by National Pollution Funds Center, 71 Fed. Reg. 

60553 (October 13, 2006) and Use of Reports of Marine Casualty in Claims Process by National Pollution Funds 

Center 72 Fed. Reg. 17574 (concluding that NPFC may consider marine casualty reports but is not bound by them). 27 33 U.S.C. § 2702(a). 28 See, H.R. Rep. No. 101-653, at 102 (1990), reprinted in 1990 U.S.C.C.A.N. 779, 780.
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(OPA), Congress “explicitly recognized that the existing federal and states laws provided 

inadequate cleanup and damage remedies, required large taxpayer subsidies for costly cleanup 

activities and presented substantial burdens to victim’s recoveries such as legal defenses, 

corporate forms, and burdens of proof unfairly favoring those responsible for the spills.”29 OPA 

was intended to cure these deficiencies in the law. 

Notwithstanding the above, under limited circumstances the Oil Spill Liability Trust Fund, 

administered by the NPFC, may reimburse a responsible party for its uncompensated removal 

costs and damages when the responsible party establishes an entitlement to a defense to liability 

under 33 U.S.C. § 2703. 

 Under the plain meaning of 33 U.S.C. § 2708(a), a responsible party must demonstrate that a 

defense under 33 U.S.C. § 2703 applies before the OSLTF can reimburse removal costs or 

damages. Consistent with this statutory requirement, the OSLTF’s claims regulations also 

require all claimants to carry the burden of proving an entitlement to reimbursement.30

Therefore, as with any other claimant, a responsible party must prove an entitlement under the 

OPA before receiving reimbursement from the OSLTF. If a responsible party fails to introduce 

evidence in support of any of the elements necessary to establish entitlement to compensation 

from the OSLTF, or fails to establish each of the elements by a preponderance of the credible 

evidence, the NPFC must deny the claim.31 

The third-party defense under the OPA is “narrowly construed.”32 A defendant must 

demonstrate that “the release or threatened release was caused solely by an unrelated third 

party.”33 In order to prevail on its defense, Magellan must establish by a preponderance of the 

 

29 Apex Oil Co., Inc. v United States, 208 F. Supp. 2d 642, 651-52 (E.D. La. 2002)(citing S. Rep. No. 101-94 

(1989), reprinted in 1990 U.S.C.C.A.N. 722.). 30 See, 33 CFR 136.105(a)(“The claimant bears the burden of providing all evidence, information, and 

documentation deemed necessary by the Director, NPFC, to support the claim.”); and 33 CFR 

136.105(e)(6)(Requiring that each claim include evidence to support the claim). 31 OPA’s legislative history makes it clear that a responsible party has the burden of showing an entitlement to 

OSLTF compensation under 33 U.S.C. § 2708. As explained in the House Conference Report on OPA:

Section 1008 of the House bill allows a responsible party..., or a guarantor for that 

responsible party... to assert a claim for removal costs and damages only if the responsible 

party... can show that the responsible party...has a defense to liability, or is entitled to a 

limitation of liability. 

 

H.R. Conf. Rep. 101-653 at 110 (1990), reprinted in 1990 U.S.C.C.A.N. 779, 788 (emphasis added). See also, Apex, 

208 F.Supp.2d 642 (claimant failed to carry its burden of proof with respect to the “act of God” defense); 

International Marine Carriers v. OSLTF, 903 F.Supp. 1097 (S.D. Tex. 1994) (claimant must show elements of a 

third party defense by a preponderance of the evidence); Water Quality Insurance Syndicate v. United States, 632 

F.Supp.2d 108, 113-114 (D. Mass. 2009) (holding that a responsible party has the burden of showing an entitlement 

to OSLTF compensation under 33 U.S.C. § 2708). 32 Xiamen Ocean Shipping Co. v. United States, 2012 WL 12882375, *7 (D. Haw. 2012). See also, Int'l Marine

Carriers v. Oil Spill Liability Trust Fund, 903 F.Supp. 1097, 1105 (S.D. Tex. 1994). 33 United States v. A & N Cleaners & Launderers, Inc., 854 F.Supp. 229, 239 (S.D.N.Y. 1994); see, Shore Realty

Corp., 759 F.2d 1032, 1044–45 & n. 17; United States v. Stringfellow, 661 F.Supp. 1053, 1061 (C.D. Cal.

1987) (third-party defense applies “only where a totally unrelated third party is the sole cause of the release or 

threatened release of a hazardous substance”). 
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evidence that the discharge of oil and the resulting damages or removal costs were caused solely 

by an act or omission of a third party34 and that it

(a) exercised due care with respect to the oil concerned, taking into 

consideration the characteristics of the oil and in light of all relevant 

facts and circumstances and 

(b) took precautions against foreseeable acts or omissions of any 

such third party and the foreseeable consequences of those acts or 

omissions.35 

The claimant has satisfied its burden on each of these statutory requirements. 

A. “... evidence that the discharge of oil and the resulting damages or removal costs were 

caused solely by an act or omission of a third party” 

The Lyon County Sheriff’s Department responded and conducted an investigation into the 

cause of the incident. Its investigation determined that intentional gunfire was the cause of the 

pipeline failure and identified two suspects who were subsequently arrested, charged, and 

convicted of criminal damage to property in the first degree.36 In addition, the United States 

Attorney’s Office for the District of Minnesota filed an information against both suspects in 

federal court.

The NPFC asked Magellan if the person responsible for shooting their pipeline was a current 

or former employee of Magellan or if Magellan had any previous interactions with that 

individual. Magellan responded that the individual responsible for shooting their pipeline was 

not a current or former employee and that prior to the events of April 24, 2019, Magellan had no 

interaction or contact with the person responsible for shooting its pipeline.37

The NPFC finds that Magellan has met its burden under this portion of the statute in that the 

damages to Magellan’s pipeline were caused solely by an act or omission of a third party.

B. “... evidence that the responsible party exercised due care and took precautions 

against foreseeable acts” 

 

Due care has been described by the courts as being “derived not only from statutory 

standards, but also from the dictates of reasonableness and prudence under the given 

circumstances of a case.”38 As a result, Magellan was required to take reasonable precautions to 

prevent both intentional and accidental spills in light of all the relevant facts and circumstances. 

 

34 33 U.S.C. § 2703(a)(3). 35 Id. See also, “[The statute] ... requires a showing that the responsible party exercised due care with respect to the 

spilled oil and that it took precautions against the foreseeable acts or omissions of the third party to whom it is 

attempting to shift liability.” Buffalo Marine Servs. Inc. v. United States, 663 F.3d 750, 752 (5th Cir. 2011). 36 Lyon County Sheriff’s Department Incident Report Narrative ICR# 19-6458. See also, State of Minnesota Lyon 

County Register of Actions Case #42-CR-19-686. 37 Letter to the NPFC dated April 17, 2020, response to question 11. 38 Baby Oil, Inc. v. United States, 938 F. Supp. 2d 640, 646 (E.D. La. 2013) (citing Coumou v. United States, 107 

F.3d 290, 295–96 (5th Cir. 1997), withdrawn and superseded in part on reh'g by Coumou v. United States, 114 F.3d 

64 (5th Cir. 1997)).
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When interpreting OPA’s predecessor statute, the U.S. Court of Claims held that “... a claimant 

cannot recover, even if a vandal or third party immediately caused the spill, if the claimant does 

not prove that reasonable action had been taken to prevent or forestall such intervention by the 

third party.”39 

At the outset, the NPFC notes that immediately upon notification of a reduction of pressure 

within the affected pipeline, the Magellan pipeline controller immediately initiated its emergency 

response procedures, which included shutting down the pipeline, remotely closing automated 

valves and discharging personnel to close manual valves.40 These timely actions greatly reduced 

the drain down volume of the pipeline and decreased the potential for a larger oil spill. These 

actions also activated the Cottonwood Fire Department whose timely repair of the pipeline 

greatly reduced the amount of diesel fuel that was discharged into the drainage ditch. 

In addition, the NPFC asked Magellan to provide other evidence that it exercised due care 

and took precautions against foreseeable acts. Magellan responded by providing proof of a public 

awareness program within Lyon County. Specifically, Magellan distributed approximately 400 

pipeline safety brochures to residents and businesses located on or near Magellan’s right of way 

in an effort to enhance public safety and environmental protection through increased public 

awareness. These brochures detailed “how to identify a pipeline in your area”; “how to identify a 

leak within the pipeline”; and emergency preparedness guidance with directions to follow in the 

event of an emergency involving its pipeline.41 The Cottonwood Fire Department received 

Magellan’s pipeline safety brochure. Its timely and effective response to clamp the damaged 

pipeline prevented the continued discharge of diesel fuel into the drainage ditch. The NPFC 

believes that Magellan’s outreach program is, at least, partially responsible for the efficacy of the 

fire department’s response. 

 Magellan also provided maintenance and inspection records of the affected pipeline which 

documented the structural integrity of the pipeline prior to the incident.42 It also provided 

evidence that it had marked this pipeline with a highly visible pipeline marker.43 Finally, 

Magellan provided evidence that it regularly conducts overflights of it 11,000 miles of pipeline 

and that it specifically conducted overflights of this pipeline on eight occasions in the four 

months prior to the incident.44 

In sum, Magellan’s community outreach, inspection and maintenance programs, and its 

planning for, and execution of, its immediate response efforts represent noteworthy examples of 

its due care and its reasonable precautions taken to prevent both intentional and accidental 

releases of oil. 

As such, the NPFC finds that Magellan has met its burden under this portion of the statute in 

that they exercised due care with respect to the oil concerned and took precautions against 

 

39 Union Petroleum Corp. v. United States, 228 Ct. Cl. 54, 73, 651 F.2d 734, 745 (1981) (citing Chicago, 

Milwaukee, St. Paul & Pacific R.R. Co. v. United States, 216 Ct. Cl. 155, 159, 575 F.2d 839, 841 (1978). Cf., United 

States v. HVI Cat Canyon, 314 F.Supp.3d 1049 (C.D.Cal. 2018) 40 Id. 41 Letter to NPFC dated April 17, 2020, response to question 12. 42 Letter to NPFC dated April 17, 2020, responses to questions 4 and 5. 43 Magellan claim submission dated March 16, 2020. 44 Letter to NPFC dated April 17, 2020, response to question 12.
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foreseeable acts or omissions of any such third party and the foreseeable consequences of those 

acts of omissions. 

IV. OSLTF COMPENSIBLE RESPONSE COSTSs 

The NPFC is authorized to pay claims for uncompensated removal costs that are consistent 

with the National Contingency Plan (NCP).45 The NPFC has promulgated a comprehensive set 

of regulations governing the presentment, filing, processing, settling, and adjudicating such 

claims.46 The claimant bears the burden of providing all evidence, information, and 

documentation deemed relevant and necessary by the Director of the NPFC, to support and 

properly process the claim.47

 Before reimbursement can be authorized for uncompensated removal costs, the claimant must 

demonstrate by a preponderance of the evidence: 

(a) That the actions taken were necessary to prevent, minimize, or mitigate the effects of the 

incident; 

(b) That the removal costs were incurred as a result of these actions;

(c) That the actions taken were directed by the FOSC or determined by the FOSC to be 

consistent with the National Contingency Plan. 

(d) That the removal costs were uncompensated and reasonable.48

 In this case, Magellan submitted a claim for entitlement to a defense to liability, act or 

omission of a third party to the NPFC and seek reimbursement of removal costs incurred under 

the defense in the amount of $1,161,286.21.49 

 

The NPFC analyzed each of these factors and determined the majority of the costs incurred 

by the claimants and submitted herein are compensable removal costs based on the supporting 

documentation provided. The NPFC determined all approved costs invoiced at the appropriate 

rate sheet pricing were billed in accordance with the rate schedule provided. All approved costs 

were supported by adequate documentation, which included invoices, proofs of payment, and/or 

FOSC statements.

The amount of compensable costs is $1,122,617.64 while $38,668.57 was deemed not 

compensable for the following reasons: 

1. Charges in the amount of $21,984.84 for personnel and equipment costs incurred by 

Kane Logistics and personnel costs incurred by Magellan that lacked sufficient 

documentation to support personnel and/or equipment on-scene during the response 

to the oil spill; 

2. Charges in the amount of $7,158.20 for costs incurred by Pinnacle Engineering, 

Enerpipe Pipeline Specialists, and M&H Energy Service that were in excess of their 

 

45 See generally, 33 U.S.C. § 2712 (a)(4); 33 U.S.C. § 2713; and 33 CFR Part 136. 46 33 CFR Part 136. 47 33 CFR 136.105. 48 33 CFR 136.203; 33 CFR 136.205. 49 See note 3, supra. 
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published rate schedule; 

3. Charges in the amount of $2,748.31 for administrative costs incurred by Pinnacle 

Engineering which are not OPA compensable removal actions; 

4. Charges in the amount of $1,892.60 for costs incurred by Pinnacle Engineering, 

Vollan Oil, and Bay West for services that were not on their published rate schedule; 

5. Charges totaling $827.92 for denied mark-up costs. Specifically, $472.30 for WCEC 

mark-up costs mistakenly claimed and not incurred by Magellan as OPA 

compensable removal costs and charges in the amount of $355.62 for mark-up costs 

charged by M&H on costs that were denied by the NPFC;

6. Charges in the amount of $791.13 for costs incurred by Haz-Mat Response and Jack’s 

Oil for the repair/replacement of items damaged during the response that were not 

properly justified by Magellan; 

7. Charges in the amount of $160.70 for an airline credit received by the The Response 

Group and submitted as an uncompensated removal costs. 

8. Charges in the amount of $1,146.53 for costs incurred by M&H Energy Services for 

plane tickets purchased two days in advance of the oil spill; 

9. Numerous charges totaling $1,733.34 for receipts that lacked itemization, contained 

differences between invoiced amounts and claimed amounts, billing rate errors and 

rounding errors;

10. The claimant has received $225.00 in restitution directly related to this incident to 

date based on the criminal charges filed in this case. As such, this amount is deducted 

from the amount of uncompensated removal costs approved for reimbursement by the 

NPFC.

50 

 

Overall Denied Costs: $38,668.5751 

V. CONCLUSION

 Based on a comprehensive review of the record, the applicable law and regulations, and 

for the reasons outlined above, the claimant’s request for a defense to liability, based on an act or 

omission of a third party is approved and its request for uncompensated removal costs is 

approved in the amount of $1,122,617.64. 

 

50 The claimant has been made aware that any future amounts received in restitution for this incident are payable to 

the Oil Spill Liability Trust Fund. Details for those payments have been provided in separate correspondence. 51 Enclosure 3 provides a detailed accounting of the amounts denied.