On March 21, 2015, a home exploded in Upper Arlington, Ohio, which caused an estimated $9 million in damages to approximately 20 properties and rendered a number of homes uninhabitable. On July 24, 2015, the Public Utilities Commission of Ohio’s (“Commission”) staff filed a Natural Gas Pipeline Failure Investigation Report (“Report”) regarding this explosion, which indicates that the explosion may have been caused by Columbia Gas of Ohio’s (“Columbia”) failure to properly remove an old gas line from service. The Report indicates that the old service line, although not being used, remained connected to an active main line and was not properly plugged or sealed. The Commission staff indicated in the Report that Columbia’s actions may constitute a violation of the Commission’s pipeline safety rules. It remains to be seen how Columbia will respond to this Report, what action the Commission will take and whether lawsuits will be filed against Columbia for damages caused by the explosion.

1.    Commission’s Gas Pipeline Safety Rules and Investigations

In Ohio, natural gas utilities are required to comply with the pipeline safety rules in Ohio Administrative Code (“O.A.C.”) 4901:1-16, which are called the gas pipeline safety (“GPS”) rules. The GPS rules set forth the safety standards and requirements for intrastate gas pipeline facilities that are subject to the Commission’s jurisdiction. The GPS rules include the United States Department of Transportation’s standards and requirements for gas pipelines, which are contained in 49 C.F.R. 40, 49 C.F.R. 191, 49 C.F.R. 192 and 49 C.F.R. 199.

Under O.A.C. 4901:1-16-12(A)(1), the Commission can initiate a gas pipeline safety proceeding after an “incident” has occurred. An “incident" means an event that involves a release of gas from an intrastate gas pipeline facility and results in any of the following:

  1. A death.
  2. Personal injury requiring inpatient hospitalization.
  3. Unintentional estimated gas loss of three million cubic feet or more.
  4. Estimated property damage of $50,000 or more, excluding the cost of gas lost, which is the sum of:
  1. The estimated cost of repairing and/or replacing the physical damage to the pipeline facility.
  2. The cost of material, labor and equipment to repair the leak, including meter turn-off, meter turn-on and light up.
  3. The estimated cost of repairing and/or replacing other damaged property of the operator or others, or both.

O.A.C. 4901:1-16-1(K).

Thankfully, there were no reported deaths or injuries as a result of the Upper Arlington explosion. However, the explosion would likely be considered an “incident” because the explosion caused approximately $9 million dollars in property damage.

The Commission’s rules state that a hearing shall be held after an incident report is filed to consider if there has been any noncompliance with the GPS rules. O.A.C. 4901:1-16-12(D). However, in almost all GPS cases, the Commission staff and the utility reach an agreement regarding the alleged incident prior to an evidentiary hearing (these agreements are referred to as “stipulations” in Commission cases). In these stipulations, the utility usually agrees to take certain remedial measures and agrees to pay an agreed forfeiture amount. These stipulations also contain certain disclaimers that indicate that the utility does not admit to any of the factual allegations in the incident report. This language is critical from the utility’s perspective because the utility may be sued in a separate proceeding regarding personal injury or property damage. This language limits a potential claimant’s ability to use the incident report or the stipulation filed in the GPS proceeding against the utility in any subsequent lawsuit.

2.    Details of the Report

The Report indicates that one of the alleged reasons for the explosion was Columbia’s apparent failure to follow its own procedure for the abandonment of service lines. A “service line” is the gas line that connects directly to the customer’s meter. Service lines often run under customers’ front yards and deliver gas directly to customers’ properties. Service lines are fed by “main” or “distribution” lines, which are higher pressure lines that distribute gas throughout a larger neighborhood.

The Report states that an old service line was taken out of service at the property sometime between 1985 and 1997. When the old service line was removed from service, Columbia’s abandonment procedure stated “the service line shall be cutoff at the main, and all open ends of the abandoned pipe plugged or sealed.” The abandonment procedure also required Columbia to either remove the curb box connected to the service line or render the curb valve inoperable. The curb box is a ground level receptacle that covers the curb valve. The curb valve is used by the utility to shut off or turn on gas to a specific customer’s property.

Although it appears that the gas was shut off from the old service line, the Report indicates that Columbia may not have taken the steps necessary to ensure that no person could open the curb valve and did not take the steps necessary to disconnect the old service line from the main line. When a worker from the Columbus Water Department (“CWD”) arrived at the property to shut off the water, the Report indicates that the CWD worker accidently opened the curb valve that was still connected to the old service line. According to the Report, this allowed gas to leak out of the old service line and accumulate around the property’s foundation until the gas reached an explosive concentration, which ultimately led to the explosion.

3.    Two Potential Violations

Commission staff found that Columbia violated two federal pipeline safety regulations in connection with the incident. With the first, the Commission staff found that Columbia may have run afoul of the federal regulation, which states, “Each operator shall maintain, modify as appropriate, and follow the plans, procedures, and programs that it is required to establish under this part.” 49 C.F.R. § 192.13(c). With the second, the Commission staff found Columbia’s actions to fall short of the federal regulations governing discontinuing service found at 49 C.F.R. § 192.727(d). Specifically, that regulation provides:

Whenever service to a customer is discontinued, one of the following must be complied with:

  • The valve that is closed to prevent the flow of gas to the customer must be provided with a locking device or other means designed to prevent the opening of the valve by persons other than those authorized by the operator.
  • A mechanical device or fitting that will prevent the flow of gas must be installed in the service line or in the meter assembly.
  • The customer's piping must be physically disconnected from the gas supply and the open pipe ends sealed.

Under R.C. 4905.95(B)(1)(b), the Commission may assess a forfeiture amount of up to $100,000 for each day of each violation if it determines that a violation occurred. The Commission staff has not recommended a specific forfeiture amount yet, but it may do so in the future.

3.    What happens now?

If the matter proceeds to a hearing, Columbia will have an opportunity to formally respond to the allegations in the Report. If the staff and Columbia reach a stipulation prior to a hearing, the Commission will have to approve the stipulation. However, even if the Commission approves the stipulation, Columbia may face lawsuits brought by property owners or insurance companies. The lawsuits would likely be filed in the courts, not with the Commission. While the Commission has the jurisdiction to determine if a gas utility is violating the GPS rules, it does not have jurisdiction to determine what, if any, damages a property owner is entitled to as a result of an explosion. This often means that the utility faces legal battles on two different fronts after a gas pipeline explosion occurs: a proceeding before the Commission and another proceeding in court.

The most recent example of this two-front battle is East Ohio Gas Company d/b/a Dominion East Ohio’s (“Dominion”) legal challenges surrounding the Fairport Harbor explosion. In 2012, Dominion agreed with the Commission staff to pay a $500,000 forfeiture amount in its GPS case regarding the Fairport Harbor explosion. In a separate proceeding in the Lake County Court of Common Pleas, Dominion agreed to a separate settlement amount to resolve lawsuits that were brought by various property owners who were allegedly affected by the explosion.

For more information regarding this case or the Commission’s gas pipeline safety rules, please contact Devin D. Parram.