Judge Outlines Plan For PG&E Penalty

SAN FRANCISCO, CA — A federal judge in San Francisco has outlined the sentence he plans to give PG&E Co. for six criminal counts but deferred pronouncing the final penalty until another hearing on Thursday.

The utility was convicted by a jury in the court of U.S. District Judge Thelton Henderson in August of five counts of violating a pipeline safety law and one count of obstructing an investigation into a fatal
pipeline explosion in San Bruno in 2010.

Henderson said at a sentencing hearing Monday that he plans to impose the maximum fine of $3 million, accept an agreement between prosecutors and PG&E for appointment of a monitor, and order PG&E to obey a
list of conditions during five years of probation.

The unfinished details are the specific conditions, which could include 10,000 hours of community service by PG&E executives and employees and a requirement for PG&E to mention its conviction in advertisements
touting its safety measures.

After a 90-minute hearing, Henderson said he wanted to think more about the details and will announce the sentence Thursday.

The judge said the purpose of the criminal trial was not to determine the cause of the San Bruno explosion and that he was not drawing conclusions about the cause.

But he said, "The criminal conduct in this case was quite serious." PG&E's conduct "implicates the safety of the public and implies the possibility of serious harm," he said.

It "makes such incidents more likely," he said.

The San Bruno explosion of a high-pressure natural gas transmission pipeline and resulting fire killed eight people, injured 66 others and damaged or destroyed dozens of houses on Sept. 9, 2010. The National Transportation Safety Board determined the cause was the rupture of a defective seam weld in a pipe segment that was installed in 1956, incorrectly listed in PG&E records as seamless, and not properly tested or repaired.

The federal criminal case grew out of investigations of the explosion.

PG&E was convicted of five counts of violating the U.S. Natural Gas Pipeline Safety Act's requirements for identifying, evaluating, recording and prioritizing risks in regard to several Bay Area transmission lines.

It was also found guilty of obstructing the NTSB's investigation by misleading the agency about its policy on when it was necessary to conduct expensive high-pressure water tests on potentially risky lines. The $3 million fine is the maximum allowed for the six counts.

Prosecutors initially sought a higher fine under a rule that allows an alternate penalty of either twice the loss or twice the profit resulting from the crimes, if the calculation is not too complex. They said the amount under that rule would be either $1.13 billion or $562 million.

But Henderson ruled before the trial that using the first method would be too complicated, and prosecutors dropped a bid for the second method during the trial without giving a reason.

In other proceedings, PG&E has paid $70 million in compensation to San Bruno, settled survivors' civil cases in San Mateo County Superior Court for about $565 million, and paid a record $1.6 billion penalty in three cases before the California Public Utilities Commission concerning the San Bruno explosion, pipeline record-keeping, and pipeline maintenance in high-population areas.

During Monday's hearing, Henderson heard testimony from five victims, including two women who lost family members, a man who lost his house, San Bruno Mayor Jim Ruane and an NTSB official.

Sue Bullis, whose 17-year-old son, husband and mother-in-law perished in the fire, said that seeing glimpses of the blaze on television that night while she unsuccessfully searched for her family members at hospitals "was beyond horrible for me."

Because of the high temperature of the fire, it was weeks before her husband and mother-in-law could be identified from DNA in the ashes of their house, and her son's remains were never identified, Bullis said.
"My life changed forever," said Bullis.

"The loss of my loved ones occurred due to the negligence of a greedy company which put profits ahead of safety. PG&E caused eight people to die," she charged.

For a time, "I did not want to live. The pain was just too much," said Bullis.

She said she has somewhat improved, but is still in intensive therapy for anxiety and depression and expects to continue that for the rest of her life.

Ruane told the judge, "The horror of that night remains firmly etched in our minds. A tight-knit community was ripped apart. It important to impose the strongest possible sentence on PG&E."

NTSB Deputy Managing Director Stephen Klejst asserted, "PG&E engaged in a course of conduct designed to circumvent our investigation at almost every turn."

The alleged lack of cooperation cost the agency hundreds of thousands of extra dollars and caused it to change its procedures "to ensure honesty" when dealing with pipeline operators, he said.

Since the trial verdict, however, cooperation by operators has improved, he said.

PG&E told the judge in a filing earlier this month that it has made "sweeping and transformational changes" to improve its safety culture and operations since the explosion.

PG&E senior vice president Julie Kane, who joined the company in 2015 as its new chief ethics and compliance officer, said at the hearing, "We sincerely apologize to the family and friends of those who lost their lives."

"We are profoundly sorry," she told survivors sitting the courtroom.

— Bay City News; Image via Shutterstock