Matson Navigation Company, Inc.

Molasses Report
July 29, 2015
Introduction
On September 16, 2013, Matson Navigation Company, Inc. (Matson) committed
to publicly release a report concerning the September 2013 molasses incident (the
Incident), described below. The following report reflects information developed during
Matsons investigation, inquiries by state and federal agencies, and claims asserted by the
government and third parties.
A.

Matsons Sand Island Terminal and the Molasses Pipeline System

Matson provides ocean freight transportation services between the U.S. West Coast
and Hawaii, Alaska, Guam and Micronesia, and provides expedited freight services from
China to Long Beach, California. Matsons wholly-owned subsidiary, Matson Terminals,
Inc. (Matson Terminals), operates the Sand Island Terminal in Honolulu Harbor, the
land for which is leased from the Hawaii Department of Transportation. Matson
Terminals Sand Island Terminal includes Piers 51C, 52, and 53. Matsons former
competitor, Horizon Lines Inc. (Horizon), operated a terminal adjacent to Matson
Terminals facility. Horizons terminal included Pier 51B, which borders Pier 51C to the
West. On May 29, 2015, The Pasha Group purchased Horizons assets and business in
Hawaii and now operates the terminal at Pier 51B.
Prior to the Incident, Matson Terminals operations at the Sand Island Terminal
included transfer of molasses between vessels and two molasses storage tanks, in an area
called the tank farm, at the terminal. Barges transported molasses from a facility not
owned by Matson at Kahului, Maui to the Sand Island Terminal, where it was pumped
from the barges through a pipeline system and to the tank farm for storage. The stored
molasses was then pumped back through the pipeline system to certain Matson ships for
transport to the U.S. West Coast.
The pipeline system ran underground from the tank farm to the piers, and then
continued along the underside of the piers. At each of Matson Terminals piers, a riser was
attached to an elbow in the pipeline. During loading and unloading, a hose would be
connected to the riser to allow pumping of molasses from the barges and to the ships. The
risers were the only portions of the pipeline system that were above ground and visible
from the terminal. The pipeline system extended under Piers 51B, 51C, 52 and 53.
However, there was no riser at Pier 51B at Horizons terminal, and no molasses transfers
have occurred at Pier 51B in many years.
On July 31, 2012, approximately one year prior to the Incident, the Hawaii
Department of Transportation, Harbors Division, notified Matson that Harbors Division
staff and consultants observed a leak from the molasses pipeline under Pier 51B. In
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response, Matson employees corresponded with the Department of Transportation and

searched for the leak on two occasions, at low and high tide, but did not locate any leak.
On May 28, 2013, Harbors Division staff and consultants observed a molasses leak
from the same pipe under Pier 51B, but did not inform Matson of their observation.
B.

The September 2013 Molasses Incident

On September 7 and 8, 2013, molasses was transferred from the tank farm at
MatsonTerminals Sand Island Terminal to the S.S. Maui, which was berthed at Pier 53.
During the transfer, the ships officers were in regular contact with longshoremen, who
were supervising the pumping operation at the tank farm. At one point, a ship officer noted
a discrepancy between the amount of molasses the ship had received and the amount the
tank farm reportedly pumped. However, longshoremen believed that the tank measuring
device (called a pneumercator) was faulty. In addition, the ships officer inspected the
water in the vicinity of the ship and did not observe any discoloration or odor indicating a
release of molasses. At the time, a container ship was moored at Horizons Pier 51B
blocking any access to or view of the under pier molasses pipe.
On September 9, 2013, Matson received reports of molasses in Honolulu Harbor.
After extensive investigations in the water and under the piers, Matsons contractors
discovered a hole in a pipe elbow beneath Pier 51B. The hole was plugged immediately
upon discovery and the pipe elbow was isolated from the rest of the pipeline using a metal
plate. After discussions with the state, the pipe elbow was removed and the pipe was
capped.
The pipe elbow has been examined and tested in a metallurgical laboratory. These
examinations have revealed that the pipe elbow was coated with a tar-like substance that
effectively prevented corrosion. However, the hole formed in a small area that lacked the
protective coating. Operation of the molasses pipeline system was suspended at the time
of the Incident. As agreed with the State as part of the Settlement Agreement, Matson will
end its molasses operations in Honolulu. Accordingly, Matson will remove the molasses
risers and tanks that cannot be repurposed at an estimated to cost of between $5.5 million
and $9.5 million and will have a spill response plan in place with the State prior to removal
of the risers. The underground pipes will be repurposed for electrical conduits to be used
for terminal improvements so Matson may better serve its customers. Matson is working
with the owner of the molasses and the State to determine the disposition of the
approximately 890,000 gallons of molasses remaining in the tanks.
It has been estimated that approximately 233,000 gallons of molasses ended up in
Honolulu Harbor. The molasses provided a food source for microbes, which consumed
oxygen in the water. Aquatic life was impacted by the resulting decreased dissolved
oxygen levels. Matson worked cooperatively with state and federal authorities during
Incident response, and at the States request, hired a third party contractor to collect dead
fish during the Incident response. Post-Incident surveys showed impacts to certain species
of coral in the harbor. State authorities closed Keehi Lagoon to recreation activities.
2

Within ten days of the Incident, conditions in the water column had returned to
normal. In a September 18, 2013 KITV4 news story, the National Oceanic and
Atmospheric Administration reported that the water quality including dissolved oxygen
levels in the Honolulu Harbor and most of Keehi Lagoon have returned to normal or near
normal levels largely due to the natural flushing.1
Shortly after the Incident, fish began returning to Honolulu Harbor and Keehi
Lagoon. In June 2014, nine months after the Incident, a KHON news story reported that
fishermen have noted that all types of fish have been thriving in the harbor and that many
believe that the number of fish in the harbor is probably back to normal levels.2
In the same news story, Hawaii Department of Land and Natural Resources
(DLNR) Chair William Aila was quoted as stating that he heard similar stories from
other fishermen. Id. In-water surveys conducted less than a year after the Incident
revealed that much coral in the affected area remained alive and many other benthic
organisms in the harbor were rapidly returning to their previous condition through
recolonization.
C.

Impacts to Aquatic Life

1.

Baseline Harbor Conditions

In 2012, the State commissioned a survey of aquatic life in Honolulu Harbor. This
survey, which was performed by coral reef ecologist Steven Dollar, Ph.D., established a
baseline of the quality and quantity of marine life in Honolulu Harbor before the Incident.
Dollars survey was part of an Environmental Impact Statement prepared for the State
Department of Transportation, Harbors Divisions proposal to develop the Kapalama
Container Terminal.
Dollars study, the results of which were released in October 2012, includes a
qualitative and quantitative assessment of the then-existing marine biotic communities
within the harbor areas proposed for redevelopment. The survey concluded that the
quantitative data gathered, particularly of coral colony size-frequency, can be considered a
more precise representation of the entire population . . . and may be considered a complete
census of the coral community. In commenting on Dollars survey, the State noted that
the final data set produced a complete census of the areas of interest with essentially no
uncertainty.

Andrew Pereira, Molasses Spill Continues to Dissipate, KITV.com, Sept. 18, 2013,
http://www.kitv.com/news/hawaii/molasses-spill-continues-to-dissipate/22013168.
Manolo Morales, Fish Return to Keehi Lagoon after Molasses Spill, Fine Still Pending, KHON2.com,
June 26, 2014,
http://khon2.com/2014/06/26/fish-return-to-keehi-lagoon-after-molasses-spill-fine-still-pending/.

Although Dollars team did not survey the entire area impacted by the Incident, the
survey was conducted in the area of greatest impact. The results show that corals, fish, and
benthic organisms in Honolulu Harbor prior to the Incident were living in a highly stressed
commercial environment with high sedimentation, low water quality, and other conditions
unfavorable to the growth and long-term success of marine life.
As the State recognized in its Final Environmental Impact Statement (FEIS),
water quality in Honolulu Harbor has been categorized by the State Department of Health
as impaired. It does not meet established water quality standards for turbidity, total
nitrogen, and chlorophyll . In addition, water clarity throughout most of the 2012 survey
area was limited to two to four meters, and Dollars team found high concentrations of
suspended particulate material throughout the water column.
Dollar noted that the whole area is non-natural, as it had been created and
extensively modified by human activity. The study described the physical survey area as
composed of three distinct forms: 1) undeveloped dredged shorelines with narrow
(several meters) nearly flat shelves that abut the shoreline . . . 2) vertical concrete square
pilings that support (or previously supported) pier decks, and 3) solid sheet pilings that
support pier decks. Id. Notably, a consistent characteristic of these areas is a ubiquitous
coating of fine-grained silty sediment over all non-living surfaces.
The 2012 study also noted that Observations of the Harbor floor throughout the
survey area revealed no colonization by corals or other macro-benthos on the mud
surface. Because light exposure is required for coral growth and colonization, corals are
generally limited to a vertical zone extending from about one to six meters below the
surface of the water, and were only found on the outer-facing surfaces of concrete pilings.
Otherwise, the Dollar study characterizes the harbor as essentially devoid of coral
colonization.
Furthermore, the 2012 study noted the existence of large, but completely dead
skeletal remains of coral, which indicated that events have occurred throughout the harbor
that elevated stress to the point of complete mortality of living communities. Dollar stated
that such catastrophic stresses typically occur on naturally occurring reefs in Hawaii,
primarily as a result of hurricanes or other large wave events. He further suggested that
flood conditions in Honolulu Harbor, which deliver sediment loads that overwhelm
physiological defenses, may cause similar results.
Polluted storm water runoff has also caused damage to aquatic life in Honolulu
Harbor, including coral. These discharges to the Harbor were the subject of a September
2014 settlement involving the State Department of Transportation and the U.S.
Environmental Protection Agency under the federal Clean Water Act. The settlement

includes long-term changes to increase the protection of beaches, coral reefs, and water
quality on Oahu.3
Regular dredging activities in Honolulu Harbor have also negatively impacted
coral colony growth. U.S. Army Corps of Engineers (USACOE) records show that
periodic maintenance dredging of the harbor began as early as 1948 and continued roughly
every five years up through the 1990s. These dredging projects are intended to maintain an
adequate depth to facilitate shipping. We understand that USACOE is scheduled to
conduct maintenance dredging activities in Honolulu Harbor, and elsewhere in Hawaii,
during the 2015 or 2016 calendar year. Additionally, various construction projects, such as
the Kapalama Container Terminal and the Aloha Tower Waterfront, have involved
dredging of the harbor to varying degrees.
2.

Extent of Injury to Coral

Shortly after the Incident, representatives of the State and federal governments,
along with consultants retained by Matson, conducted surveys of aquatic life in the
impacted area. These surveys identified numbers of corals that were living, recently dead,
and previously dead. Species with significant numbers of recently dead corals and
relatively few or no live corals were determined to have been impacted by the Incident.
Species with significant numbers of live corals and relatively few recently dead corals,
including Leptastrea and Porites, were determined to have suffered little or no impact from
the Incident. Based on these surveys, Matsons consultant estimated that 17,000 corals
were recently dead. 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. Of these 17,000 recently dead
corals, the vast majority were under 10 cm in size. Corals of this size have a high natural
mortality rate and are more readily replaced than larger corals through recolonization.
These smaller corals also provide less structural habitat for other organisms than is
provided by larger corals.
This estimate of recently dead coral is consistent with the total number of live
corals counted by the 2012 Dollar study in the areas impacted by the Incident. Although
the Dollar survey covered a portion of the area impacted by the Incident, it is possible to
use data from the survey to determine the extent of live coral in the larger impacted area. In
particular, Dollars data concerning the distribution of live coral by species and size can be
extrapolated to the entire impacted area. This extrapolation, taking into account the
percentage of each type of coral in the survey area and the different habitat types in the
non-surveyed potion of the impact area, yields a total count of between 14,000 and 15,000
live corals in the impacted area prior to the Incident. Due to the nature of the environment
in Honolulu Harbor, the majority of these corals were of the small corals noted above.
3

U.S. EPA, DOH Require Hawaii Department of Transportation to Protect Oahus Coastal Waters, Sept.
10, 2014, http://yosemite.epa.gov/opa/admpress.nsf/0/A771A00E15DC5F4585257D4F0071CCB2 (last
visited Sept. 18, 2014).

Notwithstanding initial concerns that the Incident may have caused impacts to
aquatic life in excess of other recent incidents in Hawaii, these concerns turned out to be
unfounded, largely because much of Honolulu Harbor was already substantially devoid of
living coral due to dredging and industrial activity. For example, in contrast to the
estimated 15,000 corals impacted by the Incident, the 2005 grounding of the M/V Cape
Flattery was found to have impacted over 1 million corals.
3.

Value of Lost Coral

The value of coral can be roughly estimated from settlements and judgments in
other cases involving significant coral damage. Matson has identified four such cases in
Hawaii during the past fifteen years: Pilaa, M/V Cape Flattery, USS Port Royal, and M/V
Vogetrader. The table below lists each case, the number of impacted corals, and the States
overall recovery of damages.
Case
Pilaa (Pflueger), 2001
M/V Cape Flattery, 2005
USS Port Royal, 2009
M/V VogeTrader, 2010

Coral
Injured
85,2504
1,159,5075
375,9486
103,0257

Judgment/Settlement
$3,963,000
$7,500,000
$8,500,000
$840,000

It should be noted that the coral involved in the Pilaa case was among the oldest,
largest and most beautiful in the state. The Pilaa reef was described as unique and
having supported a rich and diverse coral community before it was damaged. Moreover,
the lack of public access ha[d] limited the use of the Pilaa area, so Pilaa reef [had]
retained much of its pristine nature. As a result, the coral involved had a particularly high
service value. Likewise, the coral damaged by the USS Port Royal grounding just off shore
from the Honolulu Airport was also in an area characterized as being relatively pristine and
also having a relatively high service value. These incidents stand in contrast to the coral in
Honolulu Harbor before the Incident, which had been subsisting in a non-natural and
sub-optimal environment.

Inferred from 2,943 square meters coral using the same size class distribution as Honolulu Harbor.

U.S. Dept. of Commerce (NOAA), the U.S. Dept. of the Interior (USFWS), the State of Hawaii (DLNR),
Damage Assessment and Restoration Plan and Environmental Assessment for the February 2, 2005,
M/V Cape Flattery Grounding at Kalaeloa, Barbers Point Oahu 25.

Dave Gulko, USN Port Royal Injury Event Off Reef Runway, Oahu, February 2009: Damage Value
Estimate 1 (Division of Aquatic Resources, March 2, 2010).

November 2014 Consent Decree between the State and federal government.

4.

Extent of Injury to Fish

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.
5.

Extent of Injury to Non-Coral Benthic Communities

Benthos is the community of organisms that live on, in, or near the seabed. Prior to
the Incident, the Kapalama Basin contained a variety of benthic organisms, including
sponges, tunicates, bivalves, and byrozoans. Generally, these invertebrates were more
abundant on piers and pilings than on dredged areas within the harbor. Habitats
characterized by very high sedimentation on narrow rocky shelves and slopes contained
much smaller colonies of benthic organisms. In its FEIS, the State also noted the relative
scarcity of living mollusks, as virtually all underwater hard surfaces contained a layer of
dead mollusk shells.
As noted by the 2012 Dollar study, of Hawaiis invertebrates that have established
communities in marine and brackish waters, 301 species are introduced (non-native). The
State has also recognized that almost all of the recorded introduced species at the
Kapalama site are widespread in the Hawaiian Islands.
As mentioned above, conditions in the Harbors water column were observed to
have returned to normal within ten days of the Incident. In addition, consultants engaged
by Matson and the State undertook in-water surveys approximately one year after the
Incident. These surveys showed that the benthic community in the Harbor is restored and
thriving.
D.

Settlement of Legal Claims

Immediately following the Incident, Matson established a claim process for

individuals and businesses impacted by the Incident. Matson received 25 such claims and
has paid a total of $232,159.54 for these claims.
Matson Terminals entered into a settlement agreement with the United States
resolving all federal criminal claims arising from the Incident. Pursuant to this settlement,
on January 29, 2015, Matson Terminals entered a guilty plea to two misdemeanor counts of
violating the Rivers and Harbors Act of 1899 (the Refuse Act). In connection with this
plea, Matson Terminals paid a $400,000 fine, and also paid $600,000 in restitution to
Waikiki Aquarium and Sustainable Coastlines Hawaii. The restitution payment to
Waikiki Aquarium was for the express purpose of supporting their coral programs and
invasive algae clean-ups. The Aquarium was the first in the world to display live corals
and propagate them in captivity. Rare and threatened Hawaiian corals are housed and bred
in its Coral Ark, in order to preserve them should they go extinct in the wild. The
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Aquarium currently is the largest coral propagator, with the largest and oldest coral
collection in the world.
The restitution payment to Sustainable Coastlines Hawaii was for the express
purpose of inspir[ing] local communities to care for their coastlines through beach
clean-ups, as set forth in that nonprofit organizations mission statement. Sustainable
Coastlines Hawaii is focused on tackling the problem of marine debris while inspiring
stewardship of the coastlines. Sustainable Coastlines Hawaii not only cleans the beaches
but stresses the importance of clean ups and community involvement for public education
purposes.
Matson has agreed to make a cash pay of $5,900,000 to the State of Hawaii in
complete satisfaction of any and all claims that could have been brought by the State. A
portion of this $5,900,000 payment will include a payment of $500,000 for an in situ coral
nursery designed to regrow coral, and $200,000 to support the International Union for
Conservation of Natures World Conservation Congress 2016 which will be held in
Honolulu. In addition, Matson agreed as part of the Settlement Agreement that it will end
its molasses operations in Honolulu. Accordingly, Matson will remove the molasses risers
and tanks at an estimated to cost of between $5,500,000 and $9,500,000.
In total, Matson has committed to paying $6,500,000 in compensation for damage
to aquatic life from the Incident and reimbursement of the states costs and expenses
($600,000 in restitution and $5,900,000 for the States claims).
Case
Pilaa (Pflueger), 2001
M/V Cape Flattery, 2005
USS Port Royal, 20091
M/V VogeTrader, 2010
Molasses Federal Criminal
Plea--Restitution
Matson State of Hawaii Settlement

Coral Injured
85,250
1,159,507
375,948
103,025

Judgment/Settlement
$3,963,000
$7,500,000
$8,500,000
$840,000

15,000

$600,000

Same as above

$5,900,0002

Number does not include Navys costs in failed attempts to re-attach coral.

Number does not include criminal fines or the costs to remove the molasses risers and tank farm.