Columbia Gas to plead guilty in Merrimack disaster, pay $53 million fine; parent company must leave Mass.

Columbia Gas of Massachusetts in Lawrence.Jessica Rinaldi/Globe Staff

LAWRENCE — The utility company responsible for the 2018 gas pipeline disaster in the Merrimack Valley has agreed to plead guilty to violating federal regulations and will sell off its operations in Massachusetts, helping to bring closure to a community that has remained rattled since fires and explosions forced residents to evacuate their homes.

Columbia Gas of Massachusetts also agreed to pay a $53 million criminal fine, which federal prosecutors called the largest-ever for a pipeline safety violation. And its parent company, NiSource, would turn over to a federal victims’ fund any profits it reaps from the sale of the Massachusetts property, according to an agreement reached with prosecutors.

Wednesday evening, Eversource Energy announced that it had agreed to purchase Columbia Gas’s natural gas assets in Massachusetts for $1.1 billion from NiSource.

“This disaster was caused by a wholesale management failure at Columbia Gas,” US Attorney Andrew Lelling said Wednesday in announcing the penalties.

He said no one person could be held responsible for the disaster, which killed one person and injured more than 20 others, but instead blamed it on a series of systemic failures.

“The company as a whole had simply failed to do what it was supposed to do to ensure public safety," Lelling said. Company representatives are slated to plead guilty in federal court in Boston on March 9.

The agreement was welcomed by Merrimack Valley residents, who say they have lost trust in the area’s gas distributor, because of both the disaster and its botched response. Federal investigators have said the event, which set fire to more than 130 homes across Lawrence, Andover, and North Andover, would not have occurred had proper mechanisms been in place.

“It will be a great day in the Merrimack Valley and in the Commonwealth when Columbia Gas of Massachusetts no longer exists,” said Lawrence Mayor Dan Rivera, who has called for regulators to revoke the company’s license.

“If you can’t do the job, you shouldn’t be here,” said Steven Cyr, a retired teacher who was forced to evacuate his South Lawrence home after the incident.

Senator Edward J. Markey, whose family is from the area, said that the punishment will do little to dissuade billion-dollar energy companies from skirting safety laws. He called the penalty “a mere slap on the wrist.”

“Merrimack Valley deserves justice, but we also deserve to have laws on the books that would prevent this sort of injustice from ever occurring,” said Markey, who has since proposed toughening federal pipeline safety laws.

The agreement was announced a day before a state judge was to review a $143 million settlement that Columbia Gas reached with residents in a class-action lawsuit. The company has already agreed, on top of that, to pay more than $80 million to the three towns, for costs associated with the response. And the company reached an undisclosed settlement with the family of 18-year-old Leonel Rondon, who was killed when a house explosion toppled a chimney onto him.

NiSource reported to investors last year that costs associated with the disaster soared past $1.6 billion and were expected to continue climbing.

Columbia Gas released a statement through a spokesman Wednesday taking responsibility for the disaster “that so impacted our customers throughout the Merrimack Valley.”

NiSource released its own statement, adding that the agreement to plead guilty “is an important step in addressing the tragic event of September 13, 2018.”

“We are committed to doing what is in the best interests of both the public we serve and our dedicated employees, and we will fulfill the terms of our agreement today consistent with that commitment,” the statement said.

Under the agreement, Columbia would plead guilty to a single charge that it was reckless in overlooking key safety measures in violation of the federal Natural Gas Pipeline Safety Act.

Columbia would pay the $53 million fine, which represents twice the amount of profits the company received from its pipeline replacement program from 2015 to 2018. Lelling said he had agreed to defer prosecution of NiSource for similar charges under the condition that the company sell its assets in Massachusetts.

NiSource also agreed to implement safety measures that were recommended by a National Transportation Safety Board review at all of its other properties in six other states. Meanwhile, the company must pay for a federal monitor to ensure compliance with safety measures at its Massachusetts properties until a sale is complete.

“Part of what we’re doing here is attempting to vindicate the outrage in the city of Lawrence and the surrounding towns,” Lelling told reporters. “We knew that one of the things those communities wanted is for Columbia Gas to simply go away. … The tragedy was at such an extent that it would be extremely difficult for the populations of those towns to trust this company going forward.”

In its own review last year, the National Transportation Safety Board found that Columbia Gas had a “weak engineering management system” that cultivated an environment that enabled the disaster.

An engineer who drafted construction plans for the replacement of a pipeline had failed to account for the relocation of a pressure sensor during a project in South Lawrence.

With the old sensor in place, remote monitors detected low pressure in the pipeline and increased it, overwhelming the system and setting off a series of fires and explosions. Three homes were destroyed. Tens of thousands of residents went without heat and hot water for two months and, as cold weather set in, were forced to live in hotels and portable trailers as crews scrambled to repair the gas system.

Lelling said the engineer’s oversight was part of a broader management failure in which Columbia did not keep updated, appropriate plans of the location of pipeline and pressure sensors. And the company knew of the consequences, he said: Years earlier, supervisors had sent out a companywide e-mail after a pipeline was nearly struck during a construction project, noting the dangers of over-pressurizing the system.

Instead, Lelling said, the company followed informal communications during construction projects, even at a time of turnover in overseeing engineering plans for highly consequential projects.

“This is like relying on informal communications to run a nuclear reactor or land an airplane,” Lelling said.

The agreement to sell Columbia’s Massachusetts assets to Eversource came hours after Lelling’s news conference.

“We have a strong track record of investing in infrastructure to significantly improve the reliability and safety of our systems,” said Eversource Gas president Bill Akley. “Our commitment to operational excellence and superior customer service will create value for customers, employees, shareholders, and the communities we serve.”

Under the agreement, Columbia will remain responsible for the "liabilities related to the September 2018 gas distribution incidents,'' Eversource said in a statement.

Eversource already has 300,000 natural gas customers and 1.5 million electric customers in Massachusetts. Many areas currently served by Columbia Gas already receive electric service from Eversource.

Travis Andersen of the Globe staff contributed to this report.