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PG&E's Potential Criminal Fine in San Bruno Case Reduced to $6M

With a jury deliberating the outcome of a federal criminal court case against Pacific Gas and Electric Co. (PG&E) for alleged illegal actions and subsequent coverup related to the 2010 San Bruno, CA, natural gas pipeline rupture and explosion, prosecutors asked the court to reduce the potential criminal fine to $6 million from the previously requested $562 million.

Prosecutors offered no explanation for the eleventh-hour reversal in the proposed Notice of Dismissal of Alternative Fines Act sentencing allegations they filed Tuesday in U.S. District Court for the Northern District of California [CR 14-0175]. Judge Thelton E. Henderson signed the order late Tuesday.

The case, which began in June, went to the jury last Wednesday (July 27) (see Daily GPIJune 21). The company has maintained a not guilty plea.

Two years ago, a federal grand jury issued an indictment charging PG&E with obstructing a safety investigation and violating the 1968 Pipeline Safety Act related to the 2010 rupture of a natural gas transmission pipeline that killed eight people in San Bruno (see Daily GPIJuly 31, 2014). 

The utility was charged with one count of obstructing a federal agency proceeding and 27 separate counts of violations of the PSA. Federal, state and county legal representatives announced the allegations of obstructing the National Transportation Safety Board investigation that began immediately after the pipeline failure in San Bruno, about 10 miles south of San Francisco.

Prosecutors had said they would attempt to make the case that the multi-billion-dollar San Francisco-based combination utility -- not specific employees -- made a series of "deliberate and illegal" choices to cover up alleged negligence in the incident.

At the time, prosecutors said PG&E faced collective fines of up to $14 million, with $500,000 being the maximum fine for each of the 28 counts, but the fines also could be up to twice the gross gain derived from the violations, or twice the gross losses suffered by the victims, either of which could have totaled hundreds of millions of dollars. The indictment alleged that PG&E derived gross gains of $281 million, and victims in the case suffered losses of about $565 million.

By the time the case went to the jury, the charges had been trimmed to 12 counts. By withdrawing their request for penalties based on PG&E's financial gains, prosecutors moved the maximum fines back to $500,000 per count.

"Regardless of this action or the next legal steps, we want our customers and their families to know that we are committed to re-earning their trust by acting with integrity and working around the clock to provide them with energy that is safe, reliable, affordable and clean," a PG&E spokesman said Wednesday.

PG&E has been slapped with billions of dollars of fines and penalties by state regulators (see Daily GPI, Aug. 14, 2015April 9, 2015). The disaster also sparked national investigations and legislation on pipeline safety.

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