NiSource’s Columbia Gas to Pay $53M, Plead Guilty for Massachusetts Gas Explosions

Columbia Gas of Massachusetts has agreed to accept responsibility for the gas explosions on Sept. 13, 2018, in Lawrence, Andover and North Andover that killed one individual, injured 22, and damaged homes and businesses.

According to the terms of a plea agreement with the government, Columbia Gas of Massachusetts (CMA) will pay a criminal fine of $53 million, which prosecutors said represents twice the amount of profits that CMA earned between 2015 and 2018 from a pipeline infrastructure program.

The parent company, NiSource, has also agreed to sell CMA and give up any profit from the sale.

“We’re here because this investigation found that Columbia Gas, through a pattern of flagrant indifference in the face of extreme risk to the life and property, knowingly violated minimum safety standards,” said U.S. Attorney Andrew Lelling at a press conference announcing the settlement.

“This disaster was caused by wholesale management failure at Columbia Gas.”

Bay State Gas Co., which does business as CMA, has agreed to plead guilty to violating a minimum safety standard of the federal Natural Gas Pipeline Safety Act for failure to implement procedures to prevent the over-pressurization of its low-pressure gas distribution system in South Lawrence during a pipe replacement project known as the South Union Project.

In addition to a fine, CMA’s operations will be subject to monitoring during a three year period to ensure Columbia’s compliance with federal and state safety regulations.

The U.S. Attorney’s office said it has also entered into a Deferred Prosecution Agreement (DPA) with CMA’s parent company, NiSource, based in Indiana. As part of the DPA, NiSource has agreed to undertake its “best reasonable best efforts” to sell CMA, after which NiSource and CMA would stop all gas pipeline operations in Massachusetts.

In exchange for the government’s agreement to defer prosecution of NiSource as a result of CMA’s conduct, NiSource has also agreed to forfeit any profit it may earn from the sale of CMA and implement each of the safety recommendations from the National Transportation Safety Board resulting from the Sept. 13, 2018 incident.

CMA said in a statement that it would take “full responsibility” for the September 13, 2018 tragedy that affected its customers throughout the Merrimack Valley.

According the U.S. attorney’s charging documents, during the afternoon of Sept. 13, 2018, the over-pressurization of a low pressure gas distribution system in South Lawrence caused multiple fires and explosions in the communities of Lawrence, Andover, and North Andover. As a result, one individual in Lawrence was killed and another severely disabled, 22 people were injured, and approximately 131 residential homes and commercial buildings were damaged.

What Happened

The charges filed against CMA allege that the company recklessly disregarded a known safety risk related to regulator control lines – sections of pipe connected to regulator stations that helped monitor and control downstream gas pressure. By at least 2015, according to an internal company notice, CMA knew that the failure to properly account for control lines in construction projects could lead a “catastrophic event,” including fires and explosions. Aging cast iron pipes were being replaced, but the failure to remove or relocate control line pipes that were later abandoned would automatically cause regulator stations to continually increase pressure to the point of dangerous over-pressurization, according to the government.

The failure to account for control lines that led to the Sept. 13, 2018 event took place during a pipe replacement project known as the South Union Street Project that began in Lawrence in 2016. Throughout the project, the government says CMA disregarded the known safety risks related to control lines, and instead focused on the timely completion of construction projects to maximize the company’s earnings. The charging document alleges that the company failed to implement any plan or action to ensure against over-pressurization and that failure led to the eventual fires and explosions in the Merrimack Valley on Sept. 13, 2018.

The agreement with NiSource acknowledges the fact that NiSource has previously made voluntary restitution payments to the victims of the 2018 incident, and has agreed to seek to resolve all pending civil claims.

The U.S. attorney said most of the $53 million fine will be directed to the Justice Department’s Crime Victims Fund, which funds victim services throughout the country.

Separately, CMA reached a $143 million settlement last July with residents and businesses affected by the explosions. It also signed an $80 million agreement with the three communities and reached a settlement with a family whose child was killed during the explosions.

Photo: In this image take from video provided by WCVB in Boston, firefighters battle a large structure fire in Lawrence, Mass, a suburb of Boston, Thursday, Sept. 13, 2018. Emergency crews are responding to what they believe is a series of gas explosions that have damaged homes across three communities north of Boston. (WCVB via AP)