Matson to pay $1 million for Honolulu molasses spill under plea agreement

By Malia Zimmerman | Watchdog.org

HONOLULU — Matson Terminals Inc., the company responsible for spilling 220,000 gallons of molasses into Honolulu Harbor in September 2013, has pleaded guilty to two misdemeanor violations of the Rivers and Harbors Act of 1899, court records show.

The molasses spill killed 26,000 fish and much of the reef in Honolulu Harbor and nearby Keehi Lagoon.

Sierra Club called the spill “one of the worst environmental disasters in Hawaii’s history.”

Taxpayers have paid millions of dollars to clean up the spill and dead fish, and also funded the subsequent investigation and monitoring.

Under a plea agreement with the U.S. attorney’s office, Matson Terminals, a division of Matson, will pay $1 million, including a $400,000 fine.

The remaining $600,000 will go toward “community service.” Some $300,000 will be directed to the University of Hawaii’s Waikiki Aquarium to support coral programs and invasive algae clean-ups. The other $300,000 will go to Sustainable Coastlines Hawaii, an organization that organizes local beach clean-ups.

The U.S. District Court must still approve the proposed resolution.

The company likely faces additional fines for the molasses spill, which occurred Sept. 9 and 10 of 2013, when the molasses leaked at Pier 52 through a hole in a pipe.

A spokesman for the company said Matson Terminals and its affiliates haven’t yet resolved any potential civil claims by the U.S. Environmental Protection Agency or claims by the state of Hawaii.

“While we regret the incident, we are focused on resolving the matter, subject to the court’s approval of the agreement,” said president and CEO Matt Cox. “We continue to cooperate with the state and the EPA in an effort to address impacts from the incident.”

Matson Terminals has suspended its molasses pipeline system at the Sand Island terminal.

The fine against Matson’s subsidiary comes just three months after parent company Matson Navigation Co. Inc. was fined nearly $10 million as part of a settlement agreement with the U.S. Department of Justice and Illinois freight consultant Mario Rizzo.

Matson Navigation Co. Inc. was fined $9.95 million as part of a settlement agreement with the U.S. Department of Justice

Rizzo, who in 2010 filed lawsuit under the False Claims Act in U.S. District Court in California on behalf of himself and the federal government, claimed the company and Hawaii’s other major cargo container shipping company, Horizon Lines, improperly billed the U.S. Department of Defense, costing $2 million a year in damages.

Matson allegedly billed the government for ocean transport fuel charges when rail was used for some portions.

In a separate case, Matson was subpoenaed by the Justice Department’s antitrust division — the agency investigating pricing practices of ocean carriers — in April 2008 for documents and information relating to water carriage.

The subpoena was issued in connection with the Justice Department’s ongoing investigation into the pricing and other competitive practices of carriers operating in domestic trades, including Alaska, Hawaii and Guam.

Horizon Lines, Inc., which transports containerships between the continental United States and Alaska, Hawaii, Guam, Micronesia and Puerto Rico, finalized its settlement with the Justice Department after an extensive probe into alleged price fixing and antitrust charges in 2011, agreeing the company would pay $15 million over five years for the violations, down from the original $45 million fine, for federal antitrust violations in the Puerto Rico trade lane.

Both Matson and Horizon control the cargo container shipping market in Hawaii under the Jones Act, a 1920 federal law that requires American-owned and manned ships transport goods and services between American ports.