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KeySpan Fined $250,000 for Breach of LNG Storage Site

Massachusetts regulators have ordered KeySpan Corp. to pay a civil penalty of $250,000 for a security breach at its liquefied natural gas (LNG) storage site in Lynn, MA, in August that went unreported for five days.

A notice of probable violation issued by the state Department of Telecommunications and Energy (DTE) identified several violations of safety regulations that the agency alleges occurred at the Lynn plant, and it proposed remedial actions to be undertaken by KeySpan to prevent a repeat of similar incidents in the future.

In setting the penalty, the DTE said it considered the gravity of the security breach, KeySpan's culpability and the remedial actions undertaken by KeySpan following the incident. The DTE had the authority to penalize KeySpan up to $50,000 per violation per day, with a ceiling of $1 million per incident.

The Brooklyn, NY-based company, which is the fifth largest distributor of gas in the United States and the largest in the Northeast, has 30 days to either sign a consent agreement and pay the fine or request a hearing before the DTE.

Following the August security breach at the KeySpan facility, Massachusetts Gov. Mitt Romney ordered state regulators and public safety officials to carry out a security review of all of the state's LNG storage facilities (see Daily GPI, Aug. 28). There are a total of 20 LNG storage sites in Massachusetts, seven of which are owned by KeySpan, according to the company.

The results of the investigation, which were submitted to Romney in September, found the state's LNG facilities to be in substantial compliance with state and federal safety and security regulations.

The governor ordered the review after a security tape showed two intruders cutting through a fence to scale a storage tank at the KeySpan LNG facility in Lynn. There was no damage to the facility, which houses one storage tank with a capacity of 1 Bcf.

Regulators were concerned that it took KeySpan five days to report the breach to authorities. The breach occurred on Aug. 16 and the company did not notify state officials until Aug. 21.

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