Matson to Pay $15.4 Million in Molasses Spill Settlement

Honolulu harbor, file photo.

By Wendy Osher

The State of Hawaiʻi has reached a $15.4 million settlement with Matson Navigation Company over the September 2013 molasses spill that dumped some 233,000 gallons into Honolulu Harbor, killing fish and damaging coral at the site.

The agreement was announced during a news conference today hosted by state attorney general Doug Chin.  Today’s agreement plus the $600,000 Matson already paid in restitution add up to $16 million.

“This is one of the largest settlements for an environmental violation in Hawaiʻi’s history,” said Chin in a statement. “The resources made available as part of this settlement will now begin to restore coral and fund programs to assist with restoring aquatic life.”

The settlement aims to resolve all civil, criminal and administrative claims that the state could have as a result of the incident.

Under the agreement the following provisions will occur:

• Matson will pay $5.9 million to the State as compensation for damaged coral and lost fish, as well as the State’s response and other costs.
• Matson has terminated its molasses operations in Honolulu and has committed to remove the molasses risers and tanks at Sand Island terminal at an estimated cost of between $5.5 million and $9.5 million bringing the total cost to Matson of between $11.4 million and $15.4 million.
• Matson will record an $11.4 million charge in its second quarter results which will be released on August 4, 2015.

In addition, Matson has agreed to the following conditions:

• Matson will reimburse the state for clean-up, response, investigative, administrative and legal costs arising from the molasses spill;
• Matson will regrow a coral nursery in a different location than Sand Island Terminal to help replace coral that had been damaged or destroyed;
• Matson will pay for removal of the molasses tank farm from the Sand Island Terminal on Oʻahu and safely dispose of all remaining molasses in the pipeline; and
• Matson will support the International Union for Conservation of Nature World Conservation Congress, being hosted by Hawaiʻi in 2016.

In October 2014, Matson pleaded guilty in federal court to two misdemeanor charges for the spill and agreed to pay $400,000 in fines to the federal government and $600,000 in restitution to local non-profit organizations.

As previously agreed to in 2013, Matson also released a report detailing its investigation of the incident, the resulting impact to aquatic life and the settlement of legal claims.

According to the report, Matson collected roughly 26,000 dead fish in Honolulu Harbor and Keehi Lagoon during the Incident response.  “These fish were collected daily, both on the shore and on the surface of the water.  Each fish was carefully counted and categorized.  The vast majority collected (over 20,000) were small fish under five inches in length,” the report stated.

As for corals, Matson’s consultant estimated that 17,000 corals were “recently dead.”  The report notes that, “Because there are always recently dead corals in any colony, it is not possible to exactly determine what portion of the 17,000 corals died shortly before the Incident and what portion were impacted by the Incident.”

Department of Land and Natural Resources First Deputy Kekoa Kaluhiwa said, “DLNR’s natural resource damage assessment showed that some of the coral killed in the molasses spill can take hundreds of years to grow and are irreplaceable.”

Immediately following the Incident, Matson also established a claim process for individuals and businesses impacted by the Incident.  The company received a total of 25 such claims and has paid $232,159.54 to resolve them.

“Environmental stewardship is a core value in our company, so this event was a blow to all of us at Matson,” said Matt Cox, president and CEO of the company in a press statement. “We can’t take back what happened, but we’ve done our best to make it right,” he said.

In a statement, Governor David Ige said, “Matson has been a member of the community for more than a hundred years, and the company’s leadership understands the damage the molasses leak caused. The resolution allows reparations to occur now and helps see to it that such an environmental disaster does not happen again in Hawaiʻi.”

Senate Majority Leader, Senator J. Kalani English of Maui also issued a statement on behalf of the State Senate today in response to the settlement.  His statement is as follows:

“We are thankful a settlement has been reached between the State and Matson. The Senate has always viewed the protection of our natural resources as one of the top priorities and over the years has proposed a number of bills to ensure the safety of our environment. We are pleased that the settlement not only addresses past damages, but also covers long-term environmental damages.”

The extensive damage to the coral reefs and ecosystem caused by the molasses spill was devastating enough for the Senate to pass an emergency appropriation bill in the 2015 Legislative Session to ensure the litigation was properly handled and the State was properly defended and represented. SB1072 was passed and became law (Act 50) on May 15, 2015. 

The molasses spill was also an impetus behind SB632 (Act 218) in the 2014 Legislative Session that established environmental courts to promote and protect Hawaii’s natural environment through the consistent and uniform application of environmental laws.”