Energy

Feds Reduce Fines For Pipeline Explosion From $562 Million To $6 Million

REUTERS/Alejandro Dias

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Chris White Tech Reporter

Prosecutors dramatically lowered financial penalties they are seeking against natural gas producer Pacific Gas & Electric Co. in connection with a pipeline explosion that killed eight people and destroyed several homes in 2010.

The California-based company is facing federal criminal charges that it violated pipeline safety laws and obstructed a probe into the pipeline explosion and fire in San Bruno, California. Prosecutors slashed PG&E’s potential fines in the case to $6 million from $562 million.

The maximum fine is now $500,000 per each of the 12 counts the company now faces, totaling $6 million, a far cry the initial amount prosecutors sought. They wanted penalties to be nearly twice as high as the amount of money the company saved or earned by skirting pipeline safety laws.

Regulators said they weren’t surprised by the reduction in fines, considering prosecutors were facing an uphill climb convicting the company. The 2014 indictment accuses PG & E of knowingly violating the federal Pipeline Safety Act of 1968, between 2003 and 2010.

“The way the federal act is written, it’s nearly impossible to return a guilty verdict. It would have been the largest such fine in U.S. history,” Brigham McCown, former head of the Pipeline and Hazardous Materials Safety Administration, told reporters Tuesday. “It requires knowledge and intent on the part of the company. That’s nearly impossible to prove and that’s why there have been next to no convictions. ”

San Bruno Mayor Jim Ruane said the fine amount is irrelevant. The primary objective is for the jurors in the case to return a guilty verdict, Ruane added.

“We’re hoping desperately for a conviction,” Ruane said. “We still feel the judge has leeway, regardless of the money, to take some other actions.”

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