The U.S. Supreme Court last Monday said it will review a lower court’s decision penalizing Houston-based Southern Union Co. $18 million for illegally storing a hazardous waste, mercury, without a permit in Rhode Island.

The U.S. District Court for the District of Rhode Island imposed the fine on the gas distribution company, and it was upheld by the U.S. Court of Appeals for the First Circuit in December 2010. The high court will take a closer look at the appellate ruling.

According to the appellate decision, “140 pounds of mercury became the play toy of young vandals who spread it about, including at their homes in a local apartment complex, after they spilled it around Southern Union’s largely abandoned and ill-guarded Tidewater site in Pawtucket, RI.”

In June 2001 Southern Union began removing outdated mercury-sealed gas regulators (MSR) from customers’ homes and replacing them with updated regulators, the appeals court noted. The old MSRs were taken to a brick building at Southern Union’s Tidewater facility where, for about five months, an environmental firm removed the mercury from the regulators and shipped it to a recycling facility.

“Southern Union stopped removing MSRs as a matter of course in November 2001, and its arrangement with the environmental firm ended in December 2001. However, Southern Union continued to remove MSRs whenever they malfunctioned, bringing them to Tidewater, where they were ‘stored’ in double plastic bags placed in plastic kiddie pools on the floor of the brick building,” the court said.

Southern Union estimated that it spent more than $6 million remediating the spill sites. All five buildings in the apartment complex were evacuated. And 150 residents were displaced for two months. Most were tested for mercury levels in their blood, and while some had elevated levels, none met the current standards for hazardous exposure, the court noted.

Southern Union began supplying natural gas to Rhode Island and Massachusetts customers in 2000 through a subsidiary, New England Gas Co., that it formed after acquiring several local companies. It stopped serving Rhode Island customers in 2006.

According to the First Circuit, the case tests whether federal criminal enforcement may be used under the Resource Conservation and Recovery Act, where certain federally approved state regulations involving hazardous waste storage have been violated. And the case also raises the important question of whether a criminal fine must be vacated where a judge, and not a jury, determined the facts as to the number of days of violation under a schedule of fines.

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