The Utah Division of Water Quality and the state's Parks and Recreation department said the settlement will be spent on mitigation projects and to enhance Willard Bay State Park, in Willard, Utah.
A pipeline previously owned by Chevron that runs through the park ruptured in March, spilling an estimated 27,500 gallons of diesel fuel, the Salt Lake Tribune said.
The park was partially closed to the public during clean-up and a portion of the settlement is meant to offset the damage done as a result of lost tourism revenue.
The remainder will be spent after a competitive process to determine which projects will enhance the park and eventually the surrounding area, said Walt Baker, director of the Utah Division of Water Quality.
"We appreciate the work done by DWQ and Chevron in negotiating the settlement," Fred Hayes, director of Utah State Parks, said in prepared release. "We feel the settlement adequately addresses the problems caused by the spill."
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