Matson will pay $15.4M in molasses spill settlement

Matson has agreed in a settlement with the state to pay $15.4 million for a massive molasses spill at Honolulu Harbor and to end its molasses operation in Hawaii.

State Attorney General Douglas Chin said at a news conference Wednesday that the settlement was one of the largest for an environmental violation in state history and sends a message that the state takes environmental crimes seriously.

State and Matson Navigation Co. officials signed the agreement on Tuesday, settling all claims the state could have in connection with the September 2013 spill.

Gov. David Ige said in a statement that the “resolution allows reparations to occur now and helps see to it that such an environmental disaster does not happen again in Hawaii.”

Matson will pay $5.9 million to the state as compensation for lost marine life, legal fees, the state’s response and other costs.

The remaining $9.5 million will go toward removing Matson’s molasses tank farm on Sand Island, disposing of any remaining molasses in the system, and converting the remaining pipeline to other nonfluid uses.

When asked whether the $9.5 million would have been spent by Matson to remove its tank farm anyway, Chin said by including it in the agreement, the state could guarantee that Matson would end its molasses business at Honolulu Harbor, which hasn’t been in operation since the spill.

“That will ensure to our minds that no molasses ever harms this harbor again,” he said.

Molasses operations by other companies may still continue, however, such as one on Maui.

The 2013 spill dumped about 233,000 gallons of molasses into the harbor and killed more than 26,000 fish and other marine life. One state official called it the “largest environmental response efforts ever in the state,” drawing more than 100 responders from federal and state agencies.

Microbes feeding off the molasses consumed the oxygen in the water, which killed off coral and other aquatic life.

Chin said the spill killed 15,000 to 30,000 corals in the harbor.

“This really was a widespread decimation of coral with very little chance of coral being able to regrow for a significant period of time,” he said.

Chin said the state reached an agreement before ever filing a lawsuit, which could have taken eight to 12 years to resolve. So far, the state has spent more than $2 million on legal costs, which are part of the settlement.

He said one guiding principle of the agreement was to find a solution now rather than in the future.

Chin said he got the sense that Matson officials also wanted to “make this right as soon as possible.”

Matt Cox, president and CEO of Matson, said in a statement: “Environmental stewardship is a core value in our company, so this event was a blow to all of us at Matson.”

He added, “We can’t take back what happened, but we’ve done our best to make it right.”

But some were skeptical of the agreement.

Paul Achitoff, managing attorney for Earthjustice in Hawaii, a nonprofit environmental law organization, said in an email that Matson is “getting off very, very easily.”

He said Matson knew for a year that its pipe was leaking and didn’t fix it.

“The result of its conscious disregard of its obligation was an environmental disaster,” he said. “Matson’s behavior was egregious, and the harm was very significant, exposing Matson to penalties reaching tens of millions of dollars.”

Chin said the settlement also includes $500,000 for a coral nursery somewhere outside of Honolulu Harbor to replace the coral that was damaged or destroyed.

Additionally, the settlement includes $200,000 for the World Conservation Congress — the largest conservation event in the world — that will be held in Hawaii next year. The quadrennial congress, organized by the International Union for Conservation of Nature, is held to discuss the world’s pressing environmental challenges.

Chin said the state will receive the settlement funds in about 10 days. Those funds will then go into a trust fund for the state agencies involved, rather than into the state’s general fund.

Matson still could face civil claims by the U.S. Environmental Protection Agency. Dean Higuchi, of the EPA office in Honolulu, said Wednesday that the EPA was still investigating and will be reviewing the settlement. He said civil claims could arise from violations of the Clean Water Act.

In October, Matson resolved criminal proceedings against it for the spill by pleading guilty in federal court to two misdemeanor charges and agreeing to pay $400,000 in fines and $600,000 in restitution to local nonprofits.

Achitoff, of Earthjustice, criticized the state’s agreement, saying reimbursement should be part of any deal and is not a penalty. He said it’s possible Matson no longer wanted to maintain its molasses facility, since it “was just another disaster waiting to happen,” and “paid itself to get rid of it while getting credit for it.”

“So where’s the big penalty, designed to let others know that this kind of behavior won’t be tolerated?” he wrote. “There is none. … Matson solves its problem with what, in reality, is a minor business expense.”

According to a Matson report of the incident released Wednesday, the molasses spill was caused by a hole in a pipe elbow while molasses was being transferred to a ship.

A year before the incident, the report said, the state Department of Transportation notified Matson about a leak observed in the pipeline, but Matson could not find the leak after searching on two occasions.

In May 2013, state DOT employees observed a molasses leak from the same area but did not inform Matson, the report said.

State Rep. Chris Lee, chairman of the Energy and Environmental Protection Committee, said he will work on legislation next year to create fines for companies that destroy natural resources in a negligent manner and ensure any money recovered goes to repairing the environment.

Speaking of the settlement, Lee (D, Kailua-Lanikai-Waimanalo) said: “You really can’t put a value on our reefs, but acknowledging that it would have taken many, many years in court facing litigation trying to get money and having taxpayers have to foot the bill … I think it’s a step in the right direction.”