PG&E Pipeline Blast: Company Faces Higher Court-Imposed Fines

Image: PG&E Pipeline Blast: Company Faces Higher Court-Imposed Fines A bouquet of roses hangs on a fence near the epicenter of a deadly gas explosion 2010 in San Bruno, California.

Tuesday, 22 Apr 2014 09:01 AM

By Michael Mullins

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PG&E, responsible for the pipeline blast that killed eight and injured dozens in the San Francisco Bay Area in 2010, is facing increased court-imposed fines.

Federal prosecutors on Monday announced their intention to amend their indictment against Pacific Gas and Electric Co. and increase $6 million the company owes in fines — the most allowed by law.

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PG&E was indicted on 12 federal felony violations on April 1 for the fatal natural gas pipeline explosion that occurred in the California city of San Bruno in September 2010. The indictments had previously carried a potential fine of $6 million.

Thirty-eight homes were leveled when the gas pipe ruptured and sparked a fireball that engulfed the surrounding area. Federal prosecutors allege that the cause of the fatal explosion stemmed from PG&E knowingly and willfully violating the federal Pipeline Safety Act and its regulations, the Oakland Tribune reported.

In their attempt to increase the fines associated with the blast, federal prosecutors are invoking a provision of a law that permits the government to collect special fines in instances in which individuals have died or there has been an environmental disaster, the San Francisco Chronicle reported. Such an amendment would give prosecutors the ability to increase the fines in the case to either twice the associated loss suffered by victims or twice the profit associated with the alleged conduct, whichever is greater.

Any additional money gained from the increased fines would be used towards pipeline safety or victim compensation, the San Francisco Chronicle reported.

San Bruno City Manager Connie Jackson welcomed the news of enhanced federal fines.

"We believe that action will hold PG&E further accountable for decades of neglect," Jackson told the Chronicle, adding that such enhanced fines would be a "message not only to that corporation but the entire industry" that there would be zero tolerance for such conduct.

In its indictment, prosecutors cited a report from investigators with the National Transportation Safety Board that found that PG&E’s failure to correct existing pipe problems that were initially discovered by the company’s own inspectors was the cause of the blast.

In response to the indictment, PG&E Chairman and CEO Tony Earley said earlier in the month that the company holds itself accountable and is deeply sorry for what occurred.

"We have worked hard to do the right thing for victims, their families, and the community, and we will continue to do so," Earley said in a statement. "We want all of our customers and their families to know that nothing will distract us from our mission of transforming this 100-plus-year-old system into the safest and most reliable natural gas system in the country."

The company, however, did not agree with the prosecution's assessment that employees intentionally violated safety regulations.

According to city attorney Steven Meyers, any additional money gained through the enhanced fines would go toward enhanced safety projects around the city and not individuals affected by the blast.

"The city of San Bruno is not interested in any money," Meyers said, adding their desire is to "increase the safety and reliability of the system."

According to the Chronicle, PG&E has already paid out approximately $500 million in settlements to the families of the victims, while it will likely cost an additional $2.5 billion to replace the pipelines damaged by the explosion itself.

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