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Obscure State Rule May Hamper Lawsuits Against Columbia Gas

State Protections For Columbia Gas Could Hamper Lawsuits After Merrimack Valley Explosions

Fires, Explosions Rock Lawrence Area
Crews work to knock down a fire in Lawrence, Massachusetts on Sept. 13, 2018 after three gas explosions rocked the Merrimack Valley.
Jessica Rinaldi/The Boston Globe via Getty Images
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Obscure State Rule May Hamper Lawsuits Against Columbia Gas

Around 4 p.m. on Sept. 13, David BeBurro, a retired Coast Guard veteran was home, at his South Lawrence apartment with English bulldog puppy, Bullsye, when he heard a series of booms. He ran to the roof of his building.

“I started seeing the billowing smoke," DeBurro recalled. "It was like back to the deployment days in the military.”

When evacuation alerts began coming in on his cell phone, DeBurro wasted no time.

“You keep your get out of dodge bag ready," he said. "It was a good thing I had it ready to go ... I even had a bag ready for the dog, and off we went.”

The emergency shelters wouldn't take DeBurro with his dog, but he eventually found a dog-friendly hotel and stayed there for five nights, paying for the room with his next month's rent. Still, DeBurro was luckier than some. By some miracle, his building still had gas service when he returned.

Junior Hernandez was not so lucky. The family convenience store he opened nine years ago, Hernandez Grocery, still doesn't have gas service.

“I built this nine years. In less than a month, it's all gone,” Hernandez said. He’s worried he will go out of business.

Now, both men are clients of law firms suing Columbia Gas of Massachusetts and its parent company, NiSource, which is based in Indiana. Almost a dozen suits have been filed, some seeking class status, on behalf of affected residents and business owners. The lawsuits argue that what happened wasn’t just an accident but was the result of negligence. The plaintiffs are seeking damages for everything from the emotional trauma of displacement and fear to months of lost income and business revenue.

But there might be a hitch in the form of a few obscure sentences in agreements between all of Massachusetts' gas utilities and the Department of Public Utilities, which regulates them.

Language buried in the agreements, called “tariffs” that public utilities negotiate with the DPU, could protect the state’s gas utilities, including Columbia Gas, from those very lawsuits from its consumers.

“It basically says they’re immune from being sued,” said Michael Burg, of the Colorado-based law firm Burg Simpson, which sued Columbia Gas and NiSource in October. (DeBurro is a named plaintiff).

Burg is referring to a couple of clauses that appear in tariff agreements for each of the state’s gas utilities.

Even if the utility has acted “in a negligent or intentionally wrongful manner,” states one clause in the agreement between Columbia Gas and the DPU, “The company shall be held liable only for direct damages resulting from the Company’s conduct of business.”

“In no event,” the agreement states elsewhere, “shall the Company be liable to any party for any indirect, consequential or special damages.”

It’s legalese, but the reference to “indirect,” or “consequential” damages could, Burg said, have major implications for those seeking relief in court.

“If you have a grocery store, and all of a sudden all of the food spoils, they’re going to say that’s not a direct damage,” he added.

In other words, despite the thousands of residents who've been displaced or are still living without heat or hot water and the hundreds of businesses that have had to close, the utilities’ agreements with the state could protect Columbia Gas from being successfully sued for any of that.

Columbia Gas has not so far claimed — in public or in the lawsuits filed against it — that its agreement with the state protects it from lawsuits for economic losses, hardship or other “indirect” or “consequential” damages. The company declined to comment on its own interpretation of those clauses, citing the pending litigation.

The company, which has already paid out substantial sums for recovery efforts, says it has spent more than $430 million on relief efforts and has paid out more than $2 million in individual claims.

DeBurro and Hernandez both submitted claims to Columbia Gas. DeBurro received a pre-paid debit card worth $100; Hernandez says that so far, despite speaking on the phone with numerous assessors for Columbia Gas, he's received nothing.

And Columbia Gas has repeatedly said it intends to make affected residents whole, a pledge the company's president, Stephen Bryant, made the day after the disaster, telling reporters, “This is the sort of thing that a gas distribution company hopes never happens, and what we’re doing now is trying to provide all the resources we possibly can to correct the damage.”

But multiple legal experts who spoke with WGBH News, and who are not parties to litigation in this matter, affirmed that the while language in the utilities’ tariff agreements could leave room for interpretation, it also could be used by Columbia Gas to claim preemption from the bulk of lawsuits being brought against the company.

And it’s happened before.

In 2014, electric utility NStar argued before the Massachusetts Supreme Judicial Court, that it couldn't be held liable for indirect economic losses after a fire was caused by its workers at an MIT facility.

NStar was sued for damages by an insurance company seeking to recoup its losses.

NStar didn’t deny that its employees had been negligent. Instead, attorneys for the utility invoked the same sentences now being scrutinized by attorneys suing Columbia Gas, arguing that the DPU’s own agreement with the utility expressly protected it from liability for “indirect’ economic losses.

Arguing against the utility, attorney Matthew O'Leary told the SJC that such an interpretation set a dangerous precedent.

At stake in the case, O’Leary said, was the question of “whether it is reasonable for a public utility to immunize itself for economic losses caused by its own aggravated conduct, including gross negligence and willful and wanton conduct.”

O’Leary said that NStar’s argument boiled down to the assertion that Massachusetts’ public utilities “can never, no matter how egregious their conduct, be liable for economic losses.”

That, O’Leary argued, could not be the intention of the regulations and laws under which the state’s public utilities are bound.

But the SJC disagreed, ruling in NStar's favor.

In its decision in Maryland Casualty Company v. Nstar, the court noted that the utilities had not “immunized themselves,” from lawsuits, as O’Leary had argued, but had been granted certain immunities by the DPU, a public body, through a public process that included public input and public oversight.

It’s an argument attorney Burg rejects, saying that the utilities' agreements with the DPU amount to backroom deals from which members of the public were effectively, if not literally, shut out.

“The consumers, they did not sign off to have any limitation to sue Columbia gas or its owner,” Burg said. “They did not agree to this.”

Whether the SJC’s 2014 decision favoring Nstar will be invoked or applied to the lawsuits against Columbia Gas isn’t clear. The magnitude of damage in the Merrimack Valley — both in economic terms and the more subjective, but very real, degree of suffering and hardship families have endured — is without precedent in Massachusetts.

Whether that will cast a different shade on the apparent protections afforded by the state DPU to the utilities it regulates is a question the courts may have to decide.

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