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PG&E Faces $1.1B Criminal Indictment

Thursday, July 31, 2014

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A federal grand jury has accused California's largest utility of "knowingly and willfully" violating pipeline safety laws and obstructing the federal investigation into a gas-line explosion that killed eight people and leveled a neighborhood.

In a superseding criminal indictment announced Tuesday (July 29), the San Francisco-based jury charges Pacific Gas & Electric with obstructing the National Transportation Safety Board's investigation of the 2010 San Bruno disaster and additional violations of the Natural Gas Pipeline Safety Act.

The new indictment carries a potential fine of more than $1.1 billion.

SanBruno
Wikimedia Commons / MisterOh

The San Bruno pipeline explosion destroyed or damaged more than 100 homes and businesses.

The U.S. Department of Justice alleges that the violations gained $281 million for PG&E, one of the largest utilities in the United States, and cost its victims about $565 million.

Expanded Indictment

The new indictment supersedes the original 12-count criminal indictment returned April 1 in U.S. District Court for the Northern District of California. Those criminal charges related only to the 1968 Pipeline Safety Act and carried a penalty of up to $6 million.

PG&E pleaded not guilty to those charges in April and denied any intentional wrongdoing. The utility is scheduled to appear Aug. 18 in court on the charges.

PG&E officials issued a statement this week saying they had not seen the new indictment. But they added: "[B]ased on all of the evidence we have seen to date, we do not believe that the charges are warranted and that, even where mistakes were made, employees were acting in good faith to provide customers with safe and reliable energy."

The San Bruno Disaster

The explosion, in the San Francisco suburb of San Bruno, occurred at 6:11 p.m. local time on Sept. 9, 2010, when a 30-inch-diameter PG&E natural-gas pipeline exploded in flames.

San Bruno - NTSB
NTSB

The blast unearthed a 28-foot-long, 3,000-pound section of pipe and launched it 100 feet from the site.

The ruptured 28-foot-long, 3,000-pound section of pipe was found about 100 feet from where it had been buried.

So loud and powerful was the blast that it took crews nearly an hour to identify the cause. It took PG&E 95 minutes to stop the flow of gas and to isolate the rupture site—an "excessively long delay" that increased the damage and risks to residents and responders, the NTSB said.

Packing the force of a magnitude 1.1 earthquake, the blast ignited a wall of fire more than 1,000 feet high, witnesses said. More than 900 emergency responders worked the scene, and firefighting operations continued for two days.

In the end, eight people were dead; dozens were injured, many seriously; and more than 100 homes and businesses were damaged or destroyed.

NTSB Investigation

The NTSB, which immediately began an investigation, later laid the proximate cause to a cracked longitudinal weld in the ruptured pipe. Investigators also reported numerous other defective welds in the pipe and varying thicknesses in the pipe walls.

San Bruno - NTSB
NTSB

Firefighting operations continued for two days. More than 900 emergency personnel responded.

However, PG&E records had listed the pipe as seamless—an initial red flag into what proved to be widespread recordkeeping irregularities, according to NTSB.

NTSB also found that the utility had failed to inspect the 50-year-old San Bruno line, despite previous gas surges, and had ignored reports of gas odors in the days before the blast.

In a scathing 153-page report issued 11 months after the disaster, NTSB detailed system-wide PG&E deficiencies in pipeline design, installation, inspection, monitoring and emergency response. Investigators called the utility's pipeline integrity management program "deficient and ineffective."

'Very Cozy' Ties and 7,000 E-Mails

State and local authorities have also blamed California's Public Utilities Commission (CPUC) for lack of sufficient oversight of PG&E, even after the disaster.

On Monday (July 28), San Bruno officials released 7,000 pages of emails between PG&E executives and commission president Michael Peevey and his staff.

San Bruno - NTSB
NTSB

It took PG&E 95 minutes to identify the rupture site and shut off the gas flow, greatly increasing the property damage, NTSB investigators reported.

The emails, obtained through a city lawsuit, included unsolicited public-relations advice by the commission to PG&E as regulators were determining the utility's fine for the disaster.

(The fine has still not been determined.)

"There is a very cozy relationship between the PUC and PG&E, and the results of that cozy relationship killed eight people," San Bruno Mayor Jim Ruane said at a news conference, according to reports by Fox News and others. The emails show "it was illegal, improper and has to change."

San Bruno officials are calling for Peevey's resignation or firing.

Obstruction of Justice

The new indictment accuses PG&E of lying to the NTSB during the investigation.

Throughout the investigation, "PG&E provided a version of a policy outlining the way in which PG&E addressed manufacturing threats on its pipelines," the Department of Justice said.

San Bruno site - NTSB
NTSB

The National Transportation Safety Board began an immediate investigation after the September 2010 disaster. The new indictment accuses PG&E of obstructing that investigation.

"PG&E later withdrew that policy claiming it was produced in error, and was an unapproved draft.

"In fact, PG&E was operating under the so-called unapproved draft from 2009 through April 5, 2011."

The upshot, authorities said: 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."

More Pipeline Management Charges

The new charges also outline 27 counts of "knowingly and willfully violating" the Pipeline Safety Act.

The charges accuse PG&E of:

  • Failing to address recordkeeping deficiencies concerning its larger natural gas pipelines, "knowing that their records were inaccurate or incomplete";
  • Failing to identify threats to its larger natural gas pipelines;
  • Failing to take appropriate actions to investigate the seriousness of threats to pipelines when they were identified; and
  • Failing to adequately reprioritize and assess threatened pipelines after the pipelines were over-pressurized as required by federal PSA regulations.

Said Ruane: "The new criminal charges demonstrate a pattern of deceit by PG&E."

   

Tagged categories: Enforcement; Explosions; Fatalities; Health and safety; Inspection; Laws and litigation; PHMSA; Pipelines; Regulations; Utilities

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