It began with a process that turned coal into gas, and it has resulted in a pollution case that underscores how liabilities survive corporate mergers and acquisitions.
Throw in nearly 100 property owners in Tiverton – who want Southern Union Co. to remove toxic waste from their yards, and the issue draws media attention and calls from political leaders, including Gov. Donald L. Carcieri, for immediate action. It’s also spurred a federal lawsuit against the company, by affected residents.
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“There is no immediate and or easy solution to this,” said W. Michael Sullivan, director of the R.I. Department of Environmental Management, which has been working on the case for four years.
Many believe the pollution came from the Fall River Gas Co., now owned by Houston-based Southern Union, which decades ago used coal in a process to make gas. Waste from this process, containing cyanide and other poisons, was discovered in properties on Bay Street in Tiverton in 2002, according to DEM reports.
The DEM, the Town of Tiverton and the property owners have pushed for Southern Union to clean up the contamination, but those efforts have so far failed to produce results.
Declining to give specifics on how it plans to act on the issue, the company provided the following statement Aug. 17, through a spokesman:
“Southern Union would like to underscore its commitment to work with relevant government agencies … to amicably resolve the environmental issues affecting the Tiverton neighborhood.”
Southern Union, owner of New England Gas Co., bought Fall River Gas Co. in 2000. In the deal, the Texas-based company also acquired the local utility’s liabilities, said Andrew M. Teitz, town solicitor for Tiverton, whose private practice in Providence specializes in real estate law.
Amid efforts to resolve the pollution problem, Southern Union is also involved in another major transaction.
The company was expected to close last Thursday on the $575 million sale of its New England Gas assets in Rhode Island to National Grid plc. That deal does not involve the former assets of Fall River Gas, said Christopher Medici, a spokesman for New England Gas.
The R.I. Public Utilities Commission approved the sale July 25, despite objections of Tiverton residents and town lawyers who argued that the agency should make Southern Union set aside $55 million for the cleanup, as a condition of approval.
Last week, a state Superior Court judge denied the town’s appeal of the decision and its motion to delay the sale. But Attorney General Patrick C. Lynch was expected to file an appeal of the PUC decision last week, according to Michael Healey, a spokesman for Lynch.
“[Southern Union] has a Rhode Island liability,” Tiverton’s Teitz said in an interview before the Superior Court decision. But if the company is not held to account for the problem, he said, “the taxpayers of Rhode Island are going to have to pay for the cleanup of polluting Rhode Island land.”
It’s unclear who will be responsible for the cleanup, Sullivan said, but “all fingers are pointing to Southern Union.”
On orders from the governor, the DEM was expected to issue a notice of violation to Southern Union late last week. The agency sent the company a “notice of intent to enforce” on Nov. 23 – the date from which “substantial” fines for noncompliance began to accrue, said Sullivan.
“After several years of work,” Carcieri said in a statement, “I’m saying enough is enough. We must get this problem resolved now … Southern Union must begin to clean up the contamination in Tiverton.”
The pollution may have come from fill taken to Tiverton decades ago, from Fall River Gas property in Massachusetts, to develop land near Bay Street, Sullivan said. Fill with the same contaminants, he said, may also have been used for building roads in the town, so the town could also share in the liability.
“The gas company had the waste, and they paid for or allowed the waste to be removed as filling materials,” Sullivan said. “[Yet] part of the gas company’s position is ‘that you can’t prove we had any involvement.’ ”
