Horizon Lines Reaches Resolution on Environmental Record-Keeping Incident

Horizon Lines, Inc. (OTCQB: HRZL) announced that its Horizon Lines, LLC operating subsidiary has entered into an agreement with the U.S. Department of Justice, under which the ocean cargo carrier will plead guilty to two counts of providing federal authorities with false vessel oil record-keeping entries on a containership in the U.S. West Coast-Hawaii service.

Under the agreement, which is subject to court approval, the company will pay a fine of $1.0 million and donate an additional $500,000 to the National Fish & Wildlife Foundation for environmental community service programs. The company also has agreed to be placed on probation for three years and institute an environmental compliance plan.

The charges stem from the improper use of an oily water separator and related inappropriate record keeping on the Horizon Enterprise, an American-flag containership that sails between Tacoma, Oakland and Honolulu. Oily water separators are used to remove oil from bilge or wastewater, so that the water can then be legally discharged into the ocean.

The company responded promptly and proactively to the discovery of these violations. As part of the company’s environmental review, Horizon Lines conducted a fleet-wide audit and has cooperated fully with the Department of Justice, the U.S. Coast Guard and other authorities involved. It also immediately implemented a compliance and training program, which is being performed by an outside contractor. The program augments the company’s existing environmental policies for mitigating operational impacts while at sea. Additionally, the company has established the position of Environmental Compliance Director to lead Horizon’s overall environmental compliance programs. The position reports directly to the company’s Chief Compliance Officer and the Board of Directors.

“Horizon Lines has always endeavored to operate as a responsible environmental steward,” said Stephen Fraser, President and Chief Executive Officer. “We do not in any way minimize the unauthorized actions by a few individuals that run contrary to the care and training normally demonstrated by our vessel crews throughout the company. We are making every effort to see that this does not happen again, as we continue to provide service to our customers as an environmentally responsible American corporation.”