PG&E Faces Criminal Charges in Fatal San Bruno Explosion

A federal grand jury for the Northern District of California has returned an indictment charging Pacific Gas and Electric Co. (PG&E) with obstruction of the investigation of the National Transportation Safety Board (NTSB) into the deadly San Bruno, Calif., pipeline explosion in 2010 that killed eight people, injured dozens more and destroyed 38 homes. The company also has been charged with additional violations of the Natural Gas Pipeline Safety Act of 1968 (PSA).

“Based 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,” said PG&E spokesman Greg Snapper in a prepared statement.

The indictment, announced July 29 by U.S. Attorney Melinda Haag, California Attorney General Kamala D. Harris, San Mateo County District Attorney Stephen M. Wagstaffe, U.S. Department of Transportation Office of Inspector General Special Agent in Charge William Swallow and FBI Special Agent in Charge David J. Johnson, alleges that PG&E obstructed the NTSB’s investigation that began immediately after the San Bruno explosion. According to the superseding indictment, during the course of the NTSB’s investigation, PG&E provided a version of a policy outlining the way in which PG&E addressed manufacturing threats on its pipelines. 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. As a result, PG&E did not prioritize as high-risk or properly assess many of its oldest natural gas pipelines, which ran through urban and residential areas.

Additionally, the indictment charges PG&E with 27 counts of knowingly and willfully violating the PSA. These charges stem from PG&E’s record-keeping and pipeline “integrity management” practices. The superseding indictment alleges, “PG&E failed to address recordkeeping deficiencies concerning its larger natural gas pipelines knowing that their records were inaccurate or incomplete.”

The indictment also alleges that PG&E failed to identify threats to its larger natural gas pipelines and that PG&E did not take appropriate actions to investigate the seriousness of threats to pipelines when they were identified. Finally, the indictment alleges that PG&E failed to adequately reprioritize and assess threatened pipelines after the pipelines were over-pressurized as required by the PSA and its regulations.

PG&E is charged with one count of obstruction of an agency proceeding in violation of 18 U.S.C. §1505, and 27 separate counts of violations of the PSA. The maximum statutory penalty for each count is a $500,000 fine or a fine based on the twice the gross gain PG&E made as a result of the violations, or twice the losses suffered by the victims. The superseding indictment alleges that PG&E derived gross gains of $281 million, and victims suffered losses of approximately $565 million.

On Sept. 28, 2010, PG&E President Chris Johns testified before the U.S. Senate Commerce, Science and Transportation Committee, Subcommittee on Surface Transportation and Merchant Marine Infrastructure, Safety and Security Legislative during a hearing about pipeline safety, prompted by the San Bernadino explosion.

“Those of us who have been to the scene of the accident, as I have on several occasions including the night of the fire, and who have spoken with a number of families from the neighborhood, will not ever forget these experiences. They are heartwrenching,” Johns told the committee. “And yet, they cannot begin to approach what the residents in that neighborhood witnessed and felt the evening of the disaster – and in the difficult days that have followed.”

At the time, he told the senators, “PG&E's attention and resources have been focused on three priorities:

1. Getting help to the families and individuals affected.
2. Assuring everyone that our system is safe.
3. Cooperating fully with any and all investigations into the causes of this terrible accident.”

San Bruno Mayor Jim Ruane doesn’t appear to believe PG&E’s contention that it has acted in good faith. He told the Associated Press, "The new criminal charges demonstrate a pattern of deceit by PG&E."

PG&E is scheduled to appear on Aug. 18 before U.S. District Judge Thelton E. Henderson.