Columbia Gas Ordered Out of State, Hit With $53 Mil Fine
Prosecutors Cite "Complete Organizational Failure"
2/26/20 1:19 PM
BOSTON, FEB. 26, 2020.....Columbia Gas of Massachusetts and its parent company displayed "a pattern of flagrant organizational indifference" when it came to the safety of the natural gas distribution system, the FBI and U.S. attorney's office said Wednesday as they announced that the utility has agreed to plead guilty in connection to the 2018 natural gas disaster in the Merrimack Valley and stop all operations in Massachusetts.
The fires and explosions that rocked Lawrence, Andover and North Andover on Sept. 13, 2018, killed one teenager, Leonel Rondon, injured 22 other people, and damaged more than 130 homes and businesses. Columbia Gas, the natural gas provider in the area, has accepted responsibility and agreed to plead guilty to a federal felony charge of violating a minimum safety standard in the federal Natural Gas Pipeline Safety Act.
Under the agreement, Columbia Gas will pay a $53 million fine to the federal government and its parent company, NiSource, Inc., must sell off the Columbia Gas business and cease all operations in Massachusetts, U.S. Attorney for Massachusetts Andrew Lelling said Wednesday.
"This particular company couldn't be bothered to maintain the safety of its customers," he said at a press conference at the federal courthouse. He added that the Merrimack Valley incident was caused by "a wholesale management failure at Columbia Gas" and that the company, "in the face of extreme risks to life and property, knowingly violated" the minimum federal safety standards.
Columbia Gas does not operate solely in the Merrimack Valley. The company serves about 325,000 customers across Massachusetts, including service areas around Brockton and Springfield.
"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 of Massachusetts spokesman said in a statement. "Our focus remains on enhancing safety, regaining the trust of our customers and ensuring that quality service is delivered."
Charging documents made public by Lelling's office Wednesday allege that Columbia Gas, "through the actions of its employees in Engineering, Construction and Operations and a pattern of flagrant organization indifference, failed to implement and follow 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."
No date has yet been set for the company's plea hearing, Lelling's office said.
The federal prosecutors allege that Columbia Gas "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 2015, Lelling's office said, Columbia Gas knew that its "failure to properly account for control lines in construction projects could lead a 'catastrophic event,' including fires and explosions."
Special Agent in Charge Joseph Bonavolonta, the head of the FBI's Boston office, painted a picture of a company that disregarded safety issues to instead focus on its bottom line and kept lousy records.
"They failed to maintain reliable records of their control lines by updating their geographical information mapping system because it was too costly. They hired inexperienced and untrained workers. They failed to coordinate and communicate with the city of Lawrence about ongoing construction projects, and they failed to meet an urgent need for additional resources for a several year period," he said. "Based on what we uncovered, I can tell you the company had no idea what control lines were in the ground. Their records were outdated, incomplete and unreliable. Columbia Gas could not provide our colleagues at the National Transportation Safety Board with an accurate picture of who their customers were in the immediate aftermath of the explosions."
The company agreed to waive an indictment and plead guilty to the charges that it knowingly and willfully failed to "prepare and follow a procedure for the starting up and shutting down of a pipeline designed to assure operation within the maximum allowable operating pressure."
The state Department of Public Utilities, which regulates Columbia Gas and other utilities and oversees the state's natural gas distribution network, did not immediately respond to requests for reaction Wednesday.
Under the agreement announced, Columbia Gas is to pay a fine of just more than $53 million -- twice the amount of money the company gained through the state Gas Safety Enhancement Plan program from 2015 through 2018, according to court records.
Lelling said the fine levied "is by far the largest criminal fine ever imposed under the Pipeline Safety Act." But that was not enough for U.S. Sen. Edward Markey, who called the financial penalty "a mere slap on the wrist."
He said the fine "will not do nearly enough to dissuade other massive billion-dollar energy companies from future negligence or from exploiting the same regulatory loopholes."
"Our natural gas pipeline infrastructure is a ticking time bomb unless we pass my Leonel Rondon Pipeline Safety Act and close the regulatory safety loopholes," Markey said, promoting a bill he's filed to tighten oversight of natural gas pipelines.
The $53 million fine must be paid within 30 days of the company's plea and will be deposited into the U.S. Department of Justice's Crime Victims Fund, which funds services for crime victims nationwide.
In addition to the direct financial penalty, Columbia Gas parent company Indiana-based NiSource, Inc., has entered into a deferred prosecution agreement with federal prosecutors and has agreed to "undertake their reasonable best efforts" to sell off Columbia Gas of Massachusetts and cease all business activities in Massachusetts. The company will forfeit any profit it might make from the sale of Columbia Gas.
Lelling said his office "knew that one of the things those communities wanted is for Columbia Gas to simply go away and so that's why one of the components of this agreement is that that company will now go away." U.S. Rep. Seth Moulton, who represents North Andover and parts of Andover, shared a similar sentiment.
"NiSource/Columbia Gas has finally admitted what we all know: its negligence caused havoc and death in our community. This guilty plea is important, but nobody I represent has confidence in this company's ability to provide service safely," Moulton said. "Peace of mind will not return so long as Columbia Gas/NiSource is doing business in the Merrimack Valley. It should be shut down."
Lawrence Mayor Daniel Rivera, who had previously called for Columbia Gas to be shut down, tweeted Wednesday morning simply, "#justice."
The agreement also states that "the U.S. Attorney does not intend to criminally prosecute any individual for violations of the Natural Gas Pipeline Safety Act ... for the conduct related to the allegations ... the Event, or Defendant's and NiSource's restoration work in the Merrimack Valley."
Lelling said Wednesday that the federal investigation into the company found that no single person's conduct rose to the level of warranting a federal prosecution. "Sometimes you just have a complete organizational failure," he said.
NiSource has three years to try to sell off Columbia Gas, Lelling said, and an independent monitor will be selected to ensure that the company complies with state and federal safety standards during a three-year probationary period. That monitor, Lelling said, will report monthly to the federal and state governments on the company's progress.
And because Columbia Gas is not the only gas distribution system that NiSource operates -- it has similar subsidiaries in Indiana, Ohio, Pennsylvania, Maryland, Kentucky and Virginia -- the agreement requires that NiSource adopt the recommendations the National Transportation Safety Board made in the immediate wake of the Merrimack Valley incidents across all of its subsidiaries.
In July, Columbia Gas and NiSource announced that they had agreed to a $143 million settlement to resolve all the class action lawsuits that had been filed over damages that resulted from the Merrimack Valley incident.
The company said the settlement was part of the $1 billion it dedicated to recovery efforts, including its claims process, the replacement of nearly 18,500 appliances in homes and businesses, temporary housing for more than 2,000 families, and separate settlements with the three municipalities, a Lawrence family that experienced several injuries, and with the family of the Lawrence teen killed in the incident, Leonel Rondon.
A preliminary NTSB report into the Sept. 13 explosions and fires that left one man dead and damaged 131 structures said the incidents occurred "after high-pressure natural gas was released into a low-pressure gas distribution system."
Serving the working press since 1894
Click here to start your free, no‑obligation, 21-day trial.
- Bump Puts Thumb on 4th District Scale 4:50 PM Mon
- Somerville Challenger Knocks House Leadership 9:31 AM Thu
- Pelosi Touts Neal's Leadership 12:18 PM Wed
Latest COVID-19 Figures in Mass.
|COVID-19 Municipal Data||List Including Color Categories|
State House Takeout Podcast
The Massachusetts Almanac
FREE throughout 2020 for SHNS subscribers!
Click here to learn more