PG&E Charged with Obstruction

A federal grand jury in San Francisco returned a superseding indictment charging Pacific Gas and Electric Company (PG&E) with obstruction of a federal investigation into a 2010 pipeline explosion that killed eight people in San Bruno, California.

The indictment alleges that PG&E obstructed the National Transportation Safety Board’s investigation that began immediately after the deadly San Bruno explosion.

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.

The consequence of this practice was that PG&E did not prioritize as high-risk, and properly assess, many of its oldest natural gas pipelines, which ran through urban and residential areas.

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 indictment alleges that 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.

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.

Federal officials alleged that PG&E derived gross gains of $281 million, and victims suffered losses of approximately $565 million.

PG&E is next scheduled to appear on August 18, 2014 before federal judge Thelton E. Henderson.

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