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PG&E Found Guilty on Five of 11 Counts in San Bruno NatGas Pipeline Tragedy

Pacific Gas and Electric Co. (PG&E) was found guilty by a federal jury in San Francisco on Tuesday on five of 11 counts of violating natural gas pipeline safety regulations related to the September 2010 San Bruno natural gas transmission pipeline explosion that killed eight people (see Daily GPI, Sept. 13, 2010).

No PG&E employees were charged in the federal criminal prosecution, but the San Francisco-based combination utility faces fines of up to $3 million for the convictions. PG&E already has withstood several billion dollars in regulatory and civil penalties (see Daily GPI, April 9, 2015).

Jurors, who deliberated for seven days, convicted PG&E for failing to gather risk information and to classify a gas pipeline as high risk.

Federal prosecutors focused on making the case that PG&E -- not specific employees -- made a series of "deliberate and illegal" choices regarding covering up alleged negligence in the incident, which has had a far-reaching impact on the natural gas pipeline industry.

The company has maintained that it was not guilty. PG&E could have been slapped with up to $562 million in fines if convicted on all 27 counts originally brought by prosecutors. Several days into the jury deliberations, prosecutors said they would not pursue the full fine. Approved by U.S. District Judge Thelton E. Henderson, the decision reduced the company's maximum liability to $6 million (see Daily GPI, Aug. 3).

According to prosecutors, PG&E pipeline violations caused the ill-fated San Bruno high-pressure transmission line not to be identified as high risk and properly assessed before the explosion.

PG&E was found guilty of violating the Natural Gas Pipeline Safety Act of 1968 (PSA) and obstructing an agency proceeding, violations uncovered in the course of an investigation initiated after the fatal San Bruno explosion. An obstruction charge was added later, after investigators discovered PG&E attempted to mislead the National Transportation Safety Board (NTSB) during its investigation.

The verdict follows a five-and-a-half week trial. The PSA-related charges stem from PG&E’s recordkeeping and pipeline “integrity management” practices.

“The evidence at trial demonstrated that PG&E willfully failed to address recordkeeping deficiencies concerning its larger natural gas pipelines knowing that their records were inaccurate or incomplete,” prosecutors said. “The evidence further demonstrated that PG&E willfully failed to identify threats to its larger natural gas pipelines and to take appropriate actions to investigate the seriousness of threats to pipelines when they were identified.

“In addition, PG&E willfully failed to adequately prioritize as high risk, and properly assess, threatened pipelines after they were over-pressurized, as required by the PSA and its regulations.”

In finding PG&E guilty, the jury concluded the company “knowingly and willfully violated the PSA and its regulations between 2007 and 2010.”

The charge of obstructing an agency proceeding was included in a superseding indictment filed in July 2014. The charge centers around PG&E’s use of a letter in an attempt to mislead the NTSB during an investigation. The NTSB began its investigation immediately after the San Bruno explosion.

“During the course of the NTSB’s investigation, PG&E provided a version of a policy outlining the way in which PG&E addressed manufacturing threats on its pipelines,” prosecutors said. “In accordance with this policy, PG&E did not prioritize as high-risk, and properly assess, many of its oldest natural gas pipelines, which ran through urban and residential areas.

“Although PG&E was operating under the policy from 2009 through April 5, 2011, the company submitted a letter to the NTSB attempting to withdraw the document. According to PG&E’s letter, the policy was produced in error and was an unapproved draft.”

In finding PG&E guilty of obstructing an agency proceeding, the jury concluded PG&E “intentionally and corruptly tried to influence, obstruct or impede” the NTSB investigation.

“On occasion an event occurs that is sufficiently devastating that a public account must be made, either through an admission of wrongdoing and acceptance of responsibility, or through the judgment of the people acting through a jury,” said U.S. Attorney Brian J. Stretch. “Such an event was the explosion in San Bruno...and the physical and emotional injuries suffered by so many that terrible day.

“In the aftermath of the explosion, our office, along with the District Attorney of San Mateo and the California Attorney General’s Office, charted a course to examine whether PG&E had complied with the federal regulations designed to keep people safe, or willfully disregarded those regulations. To honor the memory of those who perished in the explosion required nothing less. The jury has determined that PG&E management chose willfully not to follow certain of those regulations.”

The verdict, he said, “in no way diminishes or calls into question the hard, honest work done by PG&E’s employees in the field, as they labor tirelessly day and night to provide us with light and heat. It is a reflection only of the choices and priorities set at the top.

“PG&E provides gas and electricity to the citizens of Northern California and must adhere to certain safety requirements and financial limitations. We hope that the verdict today ensures that PG&E’s management will adhere faithfully to this compact in the future.”

Henderson has scheduled post-trial motions to be heard Oct. 11.  

The prosecution is the result of an investigation conducted by the U.S. Attorney’s Office for the Northern District of California, the California Attorney General’s Office, the San Mateo County District Attorney’s Office, the U.S. Department of Transportation Office of Inspector General, the FBI, the Pipeline and Hazardous Material Safety Administration, and the City of San Bruno Police Department.

A PG&E spokesperson in San Francisco told NGI on Tuesday that "while we are very much focused on the future, we will never forget the lessons of the past."

Without commenting on the guilty verdicts, he reiterated that the company has made "unprecedented progress" since the tragedy in San Bruno, and has committed to an unprecedented focus on safety in its operations. "We want our customers and their families to know that we are committed to re-earning their trust...working around the clock."

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