Pacific Gas & Electric Co. was ordered to pay $3 million, the maximum fine allowed, for deliberately violating pipeline safety law in the 2010 gas pipeline explosion that killed eight people and for obstructing the subsequent investigation.
U.S. District Judge Thelton Henderson found PG&E’s criminal violations merited the maximum fine and in addition he ordered a cout-appointed monitor to keep a watchful eye on the company’s compliance with pipeline safety law.
In 2010, a massive fire ball poured over a residential neighborhood in the city of San Bruno, a few miles south of San Francisco, killing eight people and destroying 38 homes.
PG&E has previously been fined $1.6 billion for the San Bruno explosion and fire by California utility regulators.
Following a five and one-half week criminal trial, the company was convicted of 11 counts of pipeline safety violations in August 201. Jurors found the company failed to gather information to evaluate the weaknesses in the gas-line and deliberately did not classify a gas line as high risk, so it would be subject to a more costly and higher level of testing.
Company executives attempted to thwart the National Transportation Safety Board (NTSB) inquiry by denying it pumped natural gas through the transmission pipeline at pressures higher than allowed by federal standards.
No individual employees were criminally charged.
PG&E gained significant advantage when federal prosecutors decided, in the midst of jury deliberations, not to seek a potential $562 million fine if PG&E was found guilty on the pipeline counts.
The government did ask that Henderson order restructuring of the company bonus program and to require an advertising campaign publicizing its conviction.
The NTSB began its investigation immediately after the blast and PG&E provided a version of a policy outlining the way the company addressed potential manufacturing defects on its pipelines. The company did not assess or prioritize as high-risk its oldest pipes in residential areas. Although it operated under that policy from 2009 to 2011, PG&E sent a letter to the NTSB withdrawing a document outlining that policy saying it was only an “unapproved draft.”
It was that conduct that was the basis of the obstruction charge.
The company says it has spent $2.7 billion in shareholder funds to improve the natural gas system.
Case: U.S. v. PG&E, No. 14-CR-175