Columbia Gas Must Pay $53M and Cease Operations in Pipeline Explosion Crime Case
A Massachusetts energy utility has admitted to criminal wrongdoing in connection with a series of natural gas pipeline explosions and fires that in 2018 killed a teenager and caused massive property damage in the state's Merrimac Valley.
To avoid federal prosecution, Columbia Gas of Massachusetts agreed to pay more than $53 million in fines, U.S. Attorney Andrew E. Lelling announced today.
In addition, Columbia's parent company, the Indiana-based NiSource, will be forced to sell the company and cease all pipeline operations in Massachusetts. For now, Columbia will operate under a three-year period of supervised probation.
Columbia, also known as Bay State Gas, admitted responsibility for the gas explosions on Sept. 13, 2018, in Lawrence, Andover and North Andover that killed one individual, injured 22, and damaged 131 homes and businesses, Lelling said.
Lelling told reporters today that his office "knew that one of the things those communities wanted is for Columbia Gas to simply go away."
The explosions and fires were due to over-pressurized natural gas distribution lines. A preliminary NTSB report said the incidents occurred "after high-pressure natural gas was released into a low-pressure gas distribution system."
Prosecutors alleged that the company recklessly disregarded a known safety risk, and instead rushed to finish a project to maximize profits. The company exhibited a "pattern of flagrant organizational indifference" and failed to implement any plan to prevent over-pressurization, the charging documents state.
Specifically, Columbia violated a safety standard of the Natural Gas Pipeline Safety Act. The company failed to prevent the over-pressurization of its low-pressure gas distribution system in South Lawrence during the South Union Project to replace leaky distribution lines.
According to the plea agreement, Columbia will pay a criminal fine of more than $53 million. That represents twice the profits the company earned between 2015 and 2018 from a program called the Gas System Enhancement Plan, or GSEP.
Prosecutors also entered into a deferred prosecution agreement with NiSource, Columbia's corporate parent. NiSource agreed to undertake its "best reasonable efforts" to sell Columbia Gas of Massachusetts and stop all gas pipeline operations in the state.
NiSource will also forfeit any profit it may earn from the sale of Columbia, and must implement safety recommendations from the National Transportation Safety Board in other states.
NiSource has already made voluntary restitution payments to the victims, and agreed to resolve all pending civil claims.
"We take full responsibility for the tragic events of September 13, 2018 that so impacted our customers throughout the Merrimack Valley. Today’s resolution with the U.S. Attorney’s Office is an important part of addressing the impact," a Columbia Gas spokesman said in a statement. "Our focus remains on enhancing safety, regaining the trust of our customers and ensuring that quality service is delivered."
Lelling's office initially announced the expected plea in a tweet. The Boston FBI posted on Twitter that Columbia Gas will be "held criminally & financially accountable for the Merrimack Valley explosions & fires on 9/13/18."
Most of the $53 million fine will be directed to the DOJ's Crime Victims Fund, a major funding source for victim services throughout the United States, Lelling's office said.