New twist in criminal case against Matson for massive molasses spill

GOO: The molasses spill impacted sealife in Ke’ehi Lagoon, seen here, and Honolulu Harbor
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GOO: The molasses spill impacted sealife in Ke’ehi Lagoon, seen here, and Honolulu Harbor
GOO: The molasses spill impacted sealife in Ke’ehi Lagoon, seen here, and Honolulu Harbor

HONOLULU – There’s a new twist in criminal case against Matson Navigation Company for the Sept. 2013, 220,000 gallon molasses spill into Honolulu Harbor that killed 26,000 fish and caused substantial damage to the area reefs and ocean.

Peter Heilmann, Matson Navigation Company’s general counsel and senior vice president, pleaded guilty to two misdemeanor violations of the Rivers and Harbors Act of 1899 on behalf of the company in U.S. District Court on Friday.


The company agreed to pay a $400,000 fine and direct another $600,000 to two charities that focus on the environment, including the University of Hawaii’s Waikiki Aquarium and Sustainable Coastlines Hawaii.

However, U.S. Magistrate Judge Richard Puglisi did not accept all of the terms of its plea agreement Friday, saying he isn’t certain whether the donations are legal. Puglisi will look into the matter further, he said.

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

Photo by Elizabeth Miles
MOLASSES KILL: Dead fish picked up on the beach at Ke’ehi Lagoon.

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

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.

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.

BIG NAME: Matson imports the majority of goods to Hawaii.
BIG NAME: Matson imports the majority of goods to Hawaii.

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.





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