Tenneco, Inc., pleaded guilty in federal court here yesterday to criminal charges concerning its diversion of natural gas without federal permission, and was fined $1.025 million.
Federal investigators alleged that the gas should have been sent along the firm's pipe lines to residential and business users in the New England area, but was instead covertly diverted to satisfy a separate Tenneco contract unknown to government regulators.
Justice Department attorney Richard Sauber and Assistant U.S. Attorney Lawrence H. Wechsler of the fraud division said the charges were the first to be filed under the Natural Gas Act of 1938.
U.S. District Court Senior Judge George L. Hart Jr. accepted the plea and imposed the fine as part oa a plea-bargaining arrangement between the government and Tenneco.
The firm, through its attorneys, pleaded guilty to three counts of failing to obtain the proper certificates for shipping gas along its lines, and entered "no contest" pleas to two other counts. One of its subsidiaries, Tenneco Oil Co., pleaded guilty to one similar count.
On the only misdemeanor count among the charges, Hart fined the firm $500 a day for "knowingly and willfully" failing to ask the government for approval of the gas deliveries, for a total of $1 million. He imposed the maximum $5,000 fine on each of the five remaining felony counts.
Tenneco spokesman Charles E. Schneider I said the charges involved "technical violations of a complex area of law," and said they related to transactions that began as much as 20 years ago. He said the firm itself brought the possible violations to the attention of the Federal Power Commission five years ago.
The firm entered the pleas, he said, because defense against these charges would require prlonged litigation, involving extensive costs, time and effort as well as protracted uncertainties."
The certification program is now a part of the Federal Energy Regulatory Commission, the successor to the FPC. Federal officials said the certification program is needed to set the priorities for customers during various natural gas shortages.
Officials added the requirement of certificates allows FERC to monitor, for example, the amount of gas being supplied and the price at which it is supplied to customers.
Investigators who worked on the case said the events leading to the charges had their beginnings in a 1964 contract that Tenneco had with a private firm to supply gas at certain prices and in certain amounts over a 15-year period.
As the contract developed, investigators said, Tenneco never obtained the certificates - which were apparently unnecessary when the contract began but were needed later. Tenneco then hid the contract from the government for several years, while continuing to supply the gas, investigators added.
The investigators said it would have been difficult to show exactly who suffered from the diversions, but noted that they occurred at a time when residences and businesses in New England were suffering from severe winter gas shortages.
The plea bargain wipes out any future criminal charges against executives of the firm or its subsidiaries, but the government could still press civil charges.