FOR IMMEDIATE RELEASE ENR
THURSDAY, MAY 23, 1996 (202) 616-2771
TDD (202) 514-1888
BUILDER OF VAST NORTHEASTERN GAS PIPELINE PLEADS GUILTY,
WILL PAY $22 MILLION IN CRIMINAL AND CIVIL FINES
Environmental Fine Second Only To Exxon Valdez
WASHINGTON, D.C. -- In the largest penalty in an
environmental case since the 1989 Exxon Valdez oil spill, the
Connecticut-based Iroquois Pipeline Operating Company will pay
$22 million in criminal and civil fines for violating federal
environmental and safety laws, the United States announced today.
The violations stem from the construction of one of the country's
longest natural gas pipelines running 370 miles from Canada
through upstate New York and Connecticut to Long Island.
The company and four of its high-level officers and
supervisors pleaded guilty today to numerous criminal violations
of the Clean Water Act including failure to clean up or restore
damage to nearly 200 streams and wetlands as a result of rushing
to meet construction deadlines.
The plea agreements entered into in U.S. District Court in
Syracuse, are the result of a four-year investigation led by the
United States Attorney for the Northern District of New York.
The investigation stemmed from the company's violations of
permits issued by the Army Corps of Engineers and the Federal
Energy Regulatory Commission.
The company pleaded guilty to having failed to construct
safety devices called "trench breakers" at regular intervals
along the pipeline ditch and at the edge of wetlands. These
devices control soil erosion and corrosion of the pipeline,
especially where the terrain slopes. The failure to install the
required number of breakers within the trench could have washed
out the soil which holds the pipeline securely in place.
Other matters addressed in the plea agreement include the
improper placement of large rocks on the pipeline in an effort to
quickly fill the trenches in which it is housed. Placement of
rocks in such a manner can damage the pipeline, posing a serious
threat to its structural integrity.
"The widespread nature of the criminal violations is almost
impossible to overstate," said Joseph A. Pavone, Acting United
States Attorney for the Northern District of New York. "The
pipeline construction industry is now on notice that it will be
held accountable and criminally liable for knowingly failing to
comply with promises made to the public and government regarding
adherence to environmental and safety laws."
"Almost everywhere we dug we found violations," said Lois J.
Schiffer, Assistant Attorney General in charge of the Justice
Department's Environment and Natural Resources Division. "With
these criminal pleas and the large fine, we've shown that even
the most powerful companies must obey the law."
"Violations of the terms of these permits constitute a
breach of the public trust," said Joe Seebode, Regulatory Chief
of the Army Corps of Engineers New York District Office. "After
establishing the significant nature of the adverse impact
associated with the violations, the Corps referred the case to
the Justice Department and assisted them in this thorough
investigation."
Other agencies involved include the Federal Bureau of
Investigation; Environmental Protection Agency; U.S. Department
of Transportation, Office of the Inspector General; U.S.
Department of Energy, Office of the Inspector General; U.S.
Department of the Army, Criminal Investigative Division; and U.S.
Attorney's Offices for the Southern and Eastern Districts of New
York and the District of Connecticut.
Each of the four felony violations of the Clean Water Act to
which Iroquois pleaded guilty fall into one of three categories:
þ failure to clean up or otherwise restore 188 streams
and wetlands;
þ failure to install innumerable trench breakers;
þ failure to install trench breakers at the edges of
wetlands.
In total, the categories encompass thousands of individual
Clean Water Act violations.
One of the felony counts to which the company pleaded guilty
involved its failure to clean up or otherwise restore 188 streams
and wetlands. The construction permit issued by the U.S. Army
Corps of Engineers required Iroquois to backfill soil excavated
during the laying of the pipeline and restore all adversely
affected wetlands along the right-of-way. However, the company
left many mounds of soil standing within the wetlands. This not
only interrupted the overall circulation of waters within those
wetlands, but also reduced their size, damaged aquatic life, and
eliminated stream bottom habitat. After the company learned that
it was the object of a federal criminal investigation, it began
to restore a number of the affected streams and wetlands.
The company has also agreed to enter four civil settlements
to resolve Clean Water Act violations, one in each of the
following districts: the Northern, Southern and Eastern
Districts of New York and the District of Connecticut.
In June, 1991, Iroquois commenced construction of a pipeline
to transport natural gas from Ontario, Canada to Long Island, New
York. The pipeline crossed 500 rivers, streams and wetlands
throughout New York and Connecticut. Permits issued by the
United States Army Corps of Engineers and the Federal Energy
Regulatory Commission required that specific steps be taken to
avoid damage to the environment and to cleanup construction sites
following the pipeline's completion. The pipeline was completed
in January, 1992 and the gas began to flow immediately.
In addition to the criminal and civil actions, the Iroquois
Pipeline Operating Company agreed to the entry of two
administrative Orders against it: one by the Federal Energy
Regulatory Commission, and the second by the United States
Department of Transportation. The administrative Orders relate
to violations of the FERC certificate, governing construction of
the pipeline, and DOT safety laws and regulations, also governing
pipeline construction.
The criminal, civil and administrative agreements require
Iroquois to take specific steps to correct the problems uncovered
during the criminal investigation including further cleanup and
remedial work on 30 wetland and stream sites and continual
monitoring to insure no safety or related problems arise from the
improper placement of the rocks on the line and the failure to
install the numerous breakers.
In addition to the enforcement actions against the company,
the following individuals pleaded guilty:
Robert Reid, former President of Iroquois Pipeline Operating
Company, pled guilty to three counts of negligently
violating the Clean Water Act;
John Mackenzie, former Iroquois Manager of Engineering &
Construction, pled guilty to three counts of negligently
violating the Clean Water Act;
Michael Saley, former Iroquois Spread One Construction
Supervisor, pled guilty to one count of negligently
violating the Clean Water Act; and
Carl Addison, former Iroquois Spread Two Construction
Supervisor, pled guilty to one count of negligently
violating the Clean Water Act.
According to the terms of their plea agreements, each of the
individual defendants is subject to one year in jail and a
$100,000 criminal fine. They will be sentenced at a later date.
The criminal and civil fines imposed on Iroquois are as
follows:
þ a $15 million dollar federal criminal fine, 1.5 million
of which will be suspended on the condition that it is
paid as restitution to the State of New York;
þ a $2.25 million federal civil penalty with an
additional $2.25 million in the form of a supplemental
environmental project going to the National Fish and
Wildlife Foundation for the creation of wetlands in the
vicinity of the pipeline;
In addition, Iroquois will $2.5 million to New York State
for for resolution of violations of Iroquois' state permit.
This case follows the $1 billion dollar Exxon Valdez
settlement, as the second largest environmental penalty ever
imposed by the United States.
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