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Jury: PG&E Guilty of Pipeline Safety Breaches

Thursday, August 11, 2016

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A federal jury found California utility company Pacific Gas and Electric Co. guilty of criminal charges connected to the fatal 2010 San Bruno pipeline explosion, which carry a maximum $3 million fine.

PG&E faced 11 charges of violating the U.S. Pipeline Safety Act and one charge of obstruction of a National Transportation Safety Board proceeding, the San Francisco-based company explained in a statement Tuesday (Aug. 9).

The jury convicted the utility on five counts of violating U.S. Pipeline Safety Act regulations related to integrity management and one count of obstructing an agency proceeding.

PG&E was found not guilty of six counts of Pipeline Safety Act regulations related to record keeping.

"While we are very much focused on the future, we will never forget the lessons of the past,” PG&E said in its statement to the media.

“We have made unprecedented progress in the nearly six years since the tragic San Bruno accident and we are committed to maintaining our focus on safety,” it added. “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."

PG&E had pleaded not guilty to the criminal charges when the trial was announced in April.

Implications of the Explosion

The guilty verdicts come nearly six years after the blast, which occurred Sept. 9, 2010, when a segment of PG&E's 30-inch gas transmission line exploded in the neighborhood of San Bruno. The explosion killed eight people, injured 58, destroyed 38 homes and damaged another 70.

The cause was determined to be a defective seam weld in the 1950s-era pipeline that the company’s charts had labeled as seamless, the San Francisco Chronicle reported.

While the utility company had sought to keep any mention of the 2010 blast out of the criminal trial, U.S. District Judge Thelton Henderson noted early on that such references were "unquestionably relevant" to the charges in the case.

The incident makes it "at least somewhat more likely" the pipeline was not properly maintained in line with safety regulations, and it underpins the obstruction charge, he explained.

The blast also prompted the NTSB probe, during which investigators reportedly found that the company was not closely monitoring aged pipelines, such as the one in San Bruno, and was not testing or replacing pipelines when gas pressures exceeded federal limits.

Investigators also reportedly determined that the utility’s database was filled with informational errors, adding that the company’s managers knowingly relied on flawed records in making safety-related decisions. PG&E denied these charges, and the jury ultimately found the company not guilty of them.

Prosecutors also said the utility knowingly “chose a low-cost inspection method that was incapable of detecting internal welding flaws, violating laws that require pipeline operators to conduct effective scrutiny.”

Similarly, in a separate investigation in 2015, the California Public Utilities Commission fined PG&E $1.6 billion for committing 2,425 violations related to the blast. In a 301-page decision document, the CPUC said its investigations into the explosion revealed that PG&E's recordkeeping practices and the pipeline classification related to higher density populations "have brought to light the characteristics and consequences of PG&E's longstanding failure to heed federal and state regulations governing the safe operation of natural gas transmission pipelines throughout its system."

Final Outcome

According to reports, the 12-member jury deliberated for a little more than seven days before returning unanimous verdicts.

It determined PG&E was guilty of five felony counts of knowingly failing to inspect and test its gas lines for potential dangers, in addition to the felony obstruction count. This included a failure to “gather information to evaluate potential gas line threats and deliberately not classifying a gas line as high risk,” the Los Angeles Times reported.

Jurors determined PG&E was aware of two earlier leaks—one of which was in the San Bruno line in 1988—but did not put them into its database or include them in plans to inspect and test the pipelines, reports said.

The jury also found PG&E guilty of “failing to identify and evaluate potential risks, to use the most accurate assessment methods and to give the highest priority to the most serious hazards,” the Chronicle stated.

Jurors also agreed that company officials had tried to interfere with the investigation into the blast “by denying a practice of pumping natural gas through aging pipelines at excessive pressures,” according to the Chronicle.

The jury acquitted PG&E of six charges of deliberately failing to maintain proper records of pipeline tests and repairs.

"This verdict in no way diminishes or calls into question the hard, honest work done by PG&E's employees in the field," U.S. Attorney Brian Stretch said in a statement. "It is a reflection only of the choices and priorities set at the top."

“The motive was profit over safety,” Assistant U.S. Attorney Jeffrey Schenk said in closing arguments.

According to Jim Ruane, mayor of San Bruno, city officials had wanted criminal charges to be filed against PG&E executives, who “made conscious decisions to put safety on the bottom of their list.”

Although only the company itself faced charges, Ruane indicated the company convictions were satisfying, noting that the verdicts “put a very dark stain on the corporate seal.”

$3M Maximum Fine

While Henderson reportedly has not yet scheduled a sentencing date, the maximum fine the company could face is now $3 million.

This is only a fraction of the penalties prosecutors originally sought. Earlier this month, Henderson approved a reduction of the maximum penalty from $562 million to just $6 million. 

While no explanation for the reduction was offered at the time, the Chronicle indicated prosecutors sought the fine of up to $562 million for convictions on all 12 counts, indicating this was twice as much as PG&E had saved by skirting safety programs.

Henderson, however, “ruled that prosecutors could not use new state safety standards to prove illegal cost-cutting,” the Chronicle wrote. As a result, they opted to seek fines of up to $500,000 for each conviction.

To some, like Rep. Jackie Speier (D-Hillsborough), the fine “is woefully inadequate.” In a statement she noted, “A paltry maximum fine of $3 million—or 0.3 percent of PG&E’s $888 million profits in 2015—is not a strong message to industry that safety must take priority over profits.”

PG&E has not said whether it plans to appeal the verdict, the Chronicle noted, but its lawyers indicated they would ask for the convictions to be overturned and charges to be dismissed.

   

Tagged categories: Criminal acts; Fatalities; Laws and litigation; North America; NTSB (National Transportation Safety Board); Oil and Gas; Pipeline; Pipes; Quality Control; Safety; Utilities

Comment from Jeffrey Smith, (8/11/2016, 9:04 AM)

Greed the root of all evil. They are all bought out. 8 People dead! And all they pay is a small part of their profit for one year. No Jail? What a disgrace.


Comment from Chuck Pease, (8/11/2016, 5:12 PM)

Feel like I need to vomit.


Comment from Gregory Stoner, (8/12/2016, 6:06 AM)

I see nothing here showing how this accident will change how this industry will change for the better in the future...Instead it shows that money once again wins over human sacrifice.


Comment from Chuck Pease, (8/12/2016, 4:23 PM)

Touche Gregory, Well said!!! Chump change compared to their direct margin.


Comment from M. Halliwell, (8/15/2016, 11:36 AM)

Pathetic. Six years later and a likely appeal to follow. It seriously looks like the lawyers will be the only ones getting rich and nothing will change at PG&E or in the industry as a whole. Is it any wonder that, in spite of the fact that pipelines are much safer than rail transport, the public wants nothing to do with any pipeline other than water?


Comment from Car F., (8/16/2016, 10:55 AM)

Criminals are running amuck and literally getting away with murder. One justice system for the powerful and well connected and another one for the poor and illiterate petty criminal. Any doubts that the system is rigged?


Comment from Brian Brooker, (8/23/2016, 6:12 AM)

This is how big companies operate in this day and age. It's all about the profit margin and keeping the stock holders happy at whatever cost including human life. It's absolutetly a crime when these big companies like PG&E, BP, etc. decide when, where and how they're going to conduct business no matter what. It is amazing how stingent these companies like PG&E and the BP's are when it comes to awarding a bid to a contractor for services to be performed for them. It takes an act of God to meet there contractor safety requirements just to be awarded the bid. Trying to perform work on there facilities is like sending a man equipped to go to the moon when it pertains to safety gear requirements by these companies.I have provided services in the past as an inspector and a contractor for the PG&E's, BP's, Plains, etc.and the service companies I was working for were held to the tightest of safety requirements to be awarded the work and we were held accountable every single minute of the day for our safety procedures while performing the services for them. These particular companies required contractors to provide and perform above and beyond most other large companies safety requirements. They don't have any reservations whatsoever that require a contractor to spend whatever is needed on safety to work for them but it's alright that they can decide how they're going to by pass safety as they see fit. I say put the hammer down on these companies, hit them where it hurts the most in there pocket and hold them legally accountable when they don't fly right.This is totally unacceptable in this day and age for this type of business to be conducted by anybody.


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