Court Rejects San Francisco Lawsuit Against Federal Pipeline Safety Regulators

A federal appeals court has rejected a lawsuit from San Francisco officials alleging that a federal agency failed to ensure enforcement of safety standards for gas pipelines, contributing to unsafe conditions and the deadly 2010 San Bruno pipeline explosion.

The 9th U.S. Circuit Court of Appeals Thursday upheld a lower court ruling dismissing San Francisco's suit against the Pipeline and Hazardous Materials Safety Administration.

San Francisco City Attorney Dennis Herrera accused the pipeline safety administration of arbitrarily approving a state commission's pipeline safety certification and failing to determine whether the commission was adequately enforcing federal pipeline safety standards.

The city said it was worried about the pipelines in its ground.

"Events surrounding these recent pipeline disasters paint a disturbing picture. They reveal that, for over a decade, the CPUC has failed to enforce federal pipeline safety standards as required by its certification and has allowed PG&E to blatantly violate those standards. This has occurred because PHMSA has abdicated its duty to oversee the CPUC and to ensure that federal pipeline safety standards are being enforced," Herrara wrote in his complaint.

But the 9th Circuit said the agency had wide discretion over certification decisions.

"San Francisco has presented very troubling allegations about the Agency’s approach to monitoring the CPUC’s regulation of intrastate pipelines. However, '[w]e have no authority to compel agency action merely because the agency is not doing something we may think it should do,'” Chief Judge Sidney R. Thomas wrote in his opinion.

PHMSA oversees pipeline safety regulations nationally and is part of the Department of Transportation. As part of its duties, the agency evaluates and scores regulators annually. In turn, the California Public Utilities Commission uses PHMSA guidelines to evaluate utilities like Pacific Gas & Electric Co. In 2009, the year before the San Bruno explosion, PHMSA gave the California regulator a score of 99.5 out of 100.

However, state prosecutors and a federal grand jury are currently zeroing in on alleged improper ties between PG&E and top state regulators. State investigators acting on a search warrant earlier this year seized iPhones, a laptop and bank statements from the residence of former CPUC President Michael Peevey and took similar items from the home of PG&E’s former vice president of regulatory affairs, Brian Cherry, all on suspicion of felony activity relating to a judge-shopping scandal brought to light by email records.

A National Transportation Safety Board investigation into the San Bruno explosion strongly criticized PHSMA, stating, "PG&E exploited weaknesses in a lax system of oversight. We also identified regulators that placed a blind trust in the companies that they were charged with overseeing -- to the detriment of public safety."

Investigators asked the Department of Transportation to assess the effectiveness of PHMSA's oversight.

The Associated Press contributed to this report.