Kinder Morgan Energy Partners LP, Kinder Morgan Operating LP and Kinder Morgan Operating LP have agreed to a USD 25 million civil settlement related to the unauthorized sales of customers' coal.

US’s Department of Justice in a statement said that the Tennessee Valley Authority contracted with Kinder Morgan to handle coal at Kinder Morgan's Cora and Grand Rivers terminals. Tennessee Valley Authority ordered large quantities of coal which was shipped to Cora and or Grand Rivers where it was offloaded, stored and eventually loaded onto barges for delivery to the Tennessee Valley Authority.

The government said that coal coming to the terminals was weighed by certified scales when it was loaded onto the train. However, at the Cora terminal, outgoing coal was weighed by barge draft. The barge draft method usually weighed 2% to 3% than the certified scales.

According to US’s Justice Department, Kinder Morgan exploited this weighing differential to show that it shipped out the same amount of coal as it had received. The Department of Justice said that Kinder Morgan took and sold about 258,725.84 tons of coal attributable to the Tennessee Valley Authority which amounted to a total loss of USD 6.6 million for the Tennessee Valley Authority.

The government said that Kinder Morgan has agreed to pay back three times this amount to the United States for a total of USD 19.8 million. In addition, Kinder Morgan will reimburse other private customers in the amount of USD 5.2 million for a total settlement of USD 25 million.