Discontinued Operations

12 Months Ended

Dec. 31, 2011

Notes to Financial Statements [Abstract]

Discontinued Operations, Policy [Policy Text Block]

23. Discontinued Operations

In October 2004, New England Gas Company discovered that one of its facilities, formerly associated with discontinued operations sold in 2006, had been broken into and that mercury had been released both inside a building and in the immediate vicinity, including a parking lot in a neighborhood several blocks away. Mercury from the parking lot was apparently tracked into nearby apartment units, as well as other buildings. Cleanup was completed at the property and nearby apartment units. The vandals who broke into the facility were arrested and convicted. In October 2007, the U.S. Attorney in Rhode Island filed a three-count indictment against the Company in the U.S. District Court for the District of Rhode Island (District Court) alleging violation of permitting requirements under the federal RCRA and notification requirements under the federal Emergency Planning and Community Right to Know Act (EPCRA) relating to the 2004 incident. Trial commenced on September 22, 2008, and on October 15, 2008, the jury acquitted Southern Union on the EPCRA count and one of the two RCRA counts and found the Company guilty on the other RCRA count. On October 2, 2009, the District Court imposed a fine of $6 million and a payment of $12 million in community service. The payment of the fine and community service amounts were stayed while the Company pursued an appeal.

On December 22, 2010, a United States Court of Appeals for the First Circuit (First Circuit) panel affirmed the conviction and the sentence. On February 17, 2011, the First Circuit denied the Company's petition for en banc rehearing. With regard to the sentence, the First Circuit panel ruled that although the jury's verdict was necessarily limited to a single day's violation of RCRA (carrying a maximum fine of $50,000), the trial judge was nevertheless authorized for sentencing purposes independently to find the number of days the Company purportedly violated RCRA. In its decision, the Panel noted that the sentencing issue as applied to criminal fines was a novel one in the First Circuit and that, if the First Circuit panel's application of judicial precedents is incorrect, it would not be harmless error to the Company and the case must be remanded to the District Court for resentencing.

The Company thereafter filed a petition for a writ of certiorari review of the sentence by the United States Supreme Court (Supreme Court) in which the Company argued that the sentence, which went beyond the fine authorized by the jury's verdict, violated the Company's jury trial rights under the Fifth and Sixth Amendments, and was contrary to Supreme Court precedent. The Supreme Court granted the Company's petition, and briefing of the Company's appeal is now in process. The Supreme Court will hear oral argument on the Company's appeal on March 19, 2012.

In light of the First Circuit's decisions, the Company recorded a charge to earnings of approximately $18.1 million in 2010 and reported such charge as Loss from discontinued operations in the Consolidated Statement of Operations. The earnings charge is nondeductible for federal and state income tax purposes.