PROVIDENCE – The Southern Union Co. (NYSE: SUG), the Houston-based owner of New England Gas Co. and former owner of Providence Gas Co., was indicted by a federal grand jury yesterday on charges it illegally stored mercury at a Pawtucket site and failed to report mercury spillage.
The three-count indictment was jointly announced by U.S. Attorney Robert Clark Corrente; Ronald J. Tempas, acting assistant attorney general in charge of the R.I. Department of Environmental Management’s Environment and Natural Resources Division; and Michael E. Hubbard, special agent in charge of the Criminal Investigation Division of the U.S. Environmental Protection Agency’s regional office in Boston.
The indictment states that in 2001, Southern Union launched a program to remove mercury-containing regulators from customers’ homes. (Such regulators had been installed in homes built before the 1960s to control the flow of piped-in natural gas.)
Initially, the company hired an environmental services company to safely remove the mercury, the document states. New England Gas workers would bring the regulators to a company facility at the end of Tidewater Street in Pawtucket, at the edge of the Seekonk River. The contractor then would remove the mercury from the devices and Southern Union’s environmental coordinator would ship it to a distillation facility.
But that system allegedly collapsed after the removal contract expired at the end of 2001. New England Gas technicians continued to remove the regulators from customers’ homes, the indictment states, but the mercury-containing devices then were stored in a vacant building at the Tidewater facility, some in plastic kiddie pools. Liquid mercury also was stored in various containers in the building, including the locker of a deceased employee, the document states.
Although requests for proposals (RFPs) for removal of the mercury accumulating at the Tidewater plant were drafted by a local executive in 2002, 2003 and 2004, the company allegedly never finalized those RFPs or put them out to bid. By July 2004, the indictment states, the facility was holding about 165 mercury-containing regulators plus more than a gallon of liquid mercury stored in containers including glass jars and a plastic jug.
Meanwhile, the facility allegedly had been falling into disrepair – with gaps in the perimeter fencing, broken windows and doors, and graffiti appearing on vacant buildings – and by May 2004, three attempted break-ins allegedly had been documented by the company’s environmental coordinator.
In September 2004, three youths broke into the mercury storage building at Tidewater, taking several containers of liquid mercury, breaking some of the containers and spilling mercury on the facility grounds, where puddles of the metal remained for about three weeks, the indictment states. The youths allegedly also took some of the mercury to a nearby apartment complex, spreading it about the grounds there.
The next month, shortly after the spill was discovered by a company employee, Southern Union arranged for an environmental services company to remove the mercury from Tidewater, the indictment states. But the company allegedly failed to notify the Pawtucket Fire Department and State Fire Marshal about the spill, as required by federal law.
Southern Union is charged with two counts of storing hazardous materials without a permit, which carries a maximum penalty of $50,000 for each day of violation; and one count of failing to notify the appropriate emergency officials of a hazardous-waste spill, which caries a maximum fine of $500,000.
The company is accused of illegally storing liquid mercury at the site for 762 days, from Sept. 19, 2002, to Oct. 19, 2004; and illegally storing mercury-containing regulators for 575 days, from March 23, 2003, to Oct. 19, 2004. At $50,000 per day, the maximum fine for those two charges would come to $66.85 million for a total possible penalty. Including the potential fine on the failure-to-notify charge, that brings the total possible fine to $67.35 million.
The maximum possible fine would amount to about 50 cents per share from Southern Union’s earnings, Gordon Howald, an analyst at Calyon Securities USA Inc. in New York, told Bloomberg News.
“It’s certainly not a material amount,” Howald said. “The bigger concern would be if investors lose faith in management’s ability to run these operations, because that’s a situation that certainly shouldn’t happen.”
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Southern Union did not immediately respond to the Providence Business News’ requests for comment. But in a statement to its hometown paper, the the Houston Chronicle, the company said:
“We are extremely disappointed that the U.S. Attorney’s Office is pursuing this matter, when we were the victims of a crime. We will defend ourselves vigorously and expect to be vindicated at trial.”
The investigation from which the indictment resulted was a joint effort of the EPA’s Criminal Investigative Division and the R.I. DEM’s Office of Criminal Investigation. The case is being prosecuted by U.S. Attorney Terrence P. Donnelly, EPA-CID lawyer Diane Chabot and Kevin Cassidy, a lawyer with the DEM’s Environment and Natural Resource Division.
Southern Union Co. (NYSE: SUG), which sold the former Providence Gas Co. to National Grid Plc in August 2006, still owns the New England Gas Co., a utility serving about 50,000 Massachusetts residents. In addition, its Panhandle Energy unit operates 15,000 miles of interstate natural gas pipelines. To learn more, visit www.southernunionco.com.
