A state-commissioned report concluded the Exxon Corp. pipeline that poured 567,000 gallons of heating oil into a busy waterway between New York and New Jersey cracked because of damage which occurred a "substantial" time before it burst.

The report, released Tuesday, appeared to contradict Exxon contentions that recent damage may have caused the underwater pipe to burst and foul the Arthur Kill waterway between New Jersey and Staten Island, N.Y.Judith Yaskin, New Jersey Department of Environmental Protection commissioner, said visual inspections by the company could have averted the spill, which began late New Year's Day and ended Jan. 2.

But Exxon officials said the pipeline was pressure tested four times a year, and had passed its last test Dec. 18.

The study of the pipeline, conducted by Battelle Laboratories of Columbus, Ohio, concluded the pipe was dented well before the leak occurred but was slow to rupture because oil was pumped through it at low pressure, the report said.

Internal examinations may have revealed the 10-foot indentation and damage to the pipe, said Ms. Yaskin.

Exxon officials, in a statement Tuesday, said the pressure testing should have been enough to detect any damage. "This type of rigorous test would have detected a small leak in the line," the statement said.

Exxon officials said the Battelle report confirmed the company's conclusions that the 23-year-old pipeline was damaged by a foreign object and was not corroded through neglect. Exxon officials had theorized that the pipeline may have been hit by a ship, but later retracted that statement.

State officials said tougher guidelines are needed to make sure the pipelines are regularly tested. The pipeline did not carry enough fuel per hour to require inspection by the Office of Pipeline Safety in the U.S. Department of Transportation.

Exxon will be billed for the report and also has agreed to pay $660,000 for a second study to determine the environmental impact of the spill.