The staff of the Utilities and Transportation Commission filed the settlement agreement Thursday. It would suspend $1.5 million of the penalty if the company completes a compliance program.
The settlement still must go before the three-member commission, which can accept, reject or modify it.
In July, the UTC filed a complaint against Cascade, after a staff investigation found the company was unable to provide the required documentation for nearly 40 percent of its high-pressure pipelines in the state.
A company spokesman said Thursday that "Cascade Natural Gas recognizes the importance of having accurate records and is committed to achieving compliance through the settlement agreement."
Kennewick-based Cascade Natural Gas Corporation serves nearly 200,000 customers in the state.