Federal Jury Says California’s Largest Utility Obstructed Probe Into A Pipeline Explosion

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Chris White Tech Reporter
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California’s largest utility was found guilty Tuesday of obstructing investigations into the explosion of one of its natural gas pipelines in 2010.

A federal jury convicted California’s Pacific Gas & Electric Co. of obstruction on five of 11 counts of pipeline safety violations. They also convicted the company of purposely not classifying a gas line as high risk.

One of the company’s pipelines in San Bruno, Calif., exploded in 2010, killing 8 people and flattening nearly 40 homes in the area.

The decision could force PG&E to ante up millions of dollars in fines, though no employees were charged.

“While we are very much focused on the future, we will never forget the lessons of the past,” PG&E said in a statement. “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 argued its employees were simply doing the best they could to understand and administer a cavalcade of meandering and complicated regulations.

The entire case shifted on a pivot after prosecutors decided, at the last moment, to withdraw a $562 million fine if PG&E was found guilty, instead, pegging the number down to $6 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 larger fine would have inevitably ratcheted up the stakes in the case, potentially making the outcome of the case uncertain, Robert Weisberg, a criminal law professor at Stanford University, told reporters.

“The government needed a felony conviction to act as a deterrent and stigma,” he said. “I think it got out of this what it wanted.”

The case spiraled into an exercise in finger pointing, as prosecutors and PG&E’s attorneys wrestled over whether it was company that was responsible or confusing regulations.

The company refused to properly classify pipelines; instead it took short cuts to save money, prosecutors said.

“The motive was profits over safety,” Assistant U.S. Attorney Jeffrey Schenk said during his closing arguments.

PG&E engineers did not intend to mislead investigators, nor did they think the pipelines pose a danger to the public, PG&E attorney Steven Bauer said during the trial.

“Nobody at PG&E is a criminal,” he said during his closing argument, ending his case with accusations that prosecutors were engaging in an “elaborate second-guessing exercise.”

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