The company, headquartered in Houston, Texas, was co-founded by Richard Kinder and William Morgan. The company began in 1997 as a spinoff of some assets of Enron, and now employs many former Enron employees, including former Enron whistleblower Jordan Mintz.
On November 9, 2004 in Walnut Creek, California, a petroleum pipeline carrying gasoline to San Jose owned and operated by Kinder Morgan Energy Partners (here KMEP) was struck by a backhoe used by Mountain Cascade Inc., a contractor operating in the construction of a water pipeline for the East Bay Municipal Utility District. A massive gasoline spill was subsequently ignited, likely by welders of subcontractor Matamoros Welding working inside the water pipe, resulting an explosive fireball that caused the deaths by burns of four workers and their supervisor and the severe injury of four others. Several nearby homes were ignited and one was partially destroyed. The fire burned for several hours before being brought under control by firefighters from departments throughout the central Contra Costa County region. Preliminary indications are that the location of the petroleum pipeline was staked out with an error of five feet by KMEP. EBMUD contract with MC specifies that "contractor shall verify location" [of the KM pipeline prior to construction (in this section)]. EBMUD had terminated the first Contractor, Modern Continental (MC) for moving too slowly, with MC pointing out the need for caution due to a previous staking error of 13 feet in another location. KM claims that it is not its responsibility to determine exactly the location of the pipeline . Contrary to established procedures, KMEP had no representative on site at the time of the disaster. EBMUD denies rushing its contractors and is currently suing Modern Continental for breach of contract. Investigation by State of California authorities was completed and the results announced on May 5, 2005. CalOSHA (California Occupational Safety and Health Administration) placed principle blame on the pipeline operator (a unit of Kinder Morgan) for failure to accurately stake out the pipeline location, with some responsibility shared by the other parties.
Further details were released in a State Senate report published June 11, 2005 and widely reported throughout the Bay Area. According to a Contra Costa Times article published June 19th, 2005 the report noted that the KMEP "line rider" (the person with primary responsibility for locating the pipeline) was unable to read blueprints. Furthermore a second line KMEP line rider had stated in response to subcontractor inquires that the pipe would be bent only where it was to go around a tree and since no tree was present there was not a bend in the pipe. (The tree had been removed prior to the construction.) KMEP continues both to deny responsibility and to press its legal appeals.
On Wednesday, July 7, 2005, the California State Fire Marshal assessed a fine of $500,000 upon KMEP, the largest ever levied within the state.
On Friday, September 22, 2007 the subsidiary pleaded no contest to six felony charges and will pay a fine of fifteen million dollars and accept two years of probation, plus a separate five million dollars in civil penalties for violations of fair business practices laws The significance of the recent plea is not the dollar amount of the fines, even though record setting, but rather the criminal nature of the settlement. The company has previously settled civil liabilities to injured parties for a total of sixty-nine million dollars.