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PG&E Likely to Get $3M Fine for Deadly San Bruno Blast and an Order to Air Ads

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Four days later, a couple walks by homes that were destroyed by fire following a deadly gas explosion on Sept. 9, 2010, in San Bruno, California. ( Justin Sullivan/Getty Images)

A San Francisco federal judge said Monday that PG&E should receive the maximum sentence for violating pipeline safety laws before and after a deadly San Bruno gas pipeline explosion in September 2010. But U.S. District Judge Thelton Henderson delayed the formal sentencing until Thursday.

A jury last year found PG&E guilty of five counts of violating pipeline safety rules and one count of obstructing a federal investigation of the disaster that killed eight people, injured dozens more and destroyed 38 homes on Sept. 9, 2010.


The utility said in court documents that it would accept the $3 million fine, a tiny fraction of the $562 million that federal prosecutors originally sought. It also agreed to a court-appointed monitor to ensure that PG&E complies with Pipeline Safety Act regulations and five years of probation.

“It’s shameful that the sentence is so minor,” said Sen. Jerry Hill, a Democrat who represents San Bruno. “When you look at $3 million for a company that makes over a billion dollars in profit annually, it’s nothing. This is a drop in the bucket for them.”

But Hill welcomed the prospect of an independent monitor for PG&E.

“Frankly, PG&E has actually done quite a few things in the right direction. They’re moving forward. I think it would be important to have an independent monitor to make sure they continue in that direction.”

Sponsored

Henderson said it would be "appropriate" to make PG&E acknowledge the criminal conviction publicly. Prosecutors called for the company to air ads explaining the pipeline safety violations and to show a hotline number for the public to report safety concerns. The advertisements would have to run on the same television networks that the company used during its trial, as well as in the San Francisco Chronicle and Wall Street Journal. Lawyers for PG&E argued that the advertisements should promote safety and "not be punitive."

PG&E lawyers said they would agree to senior executives spending 2,000 hours on local community service.

"It deters PG&E from making choices simply based on the cost -- PG&E cannot simply pay its way out but actually has to spend its time and energy repairing the communities it harmed and put at risk by its criminal conduct," prosecutors wrote in a court document.

However, the company protested the prosecutor's request to restructure PG&E's bonus compensation program to prioritize safety. Attorneys for the utility argued that PG&E emphasizes safety, and that public and employee safety measures are supposed to make up 50 percent of bonus criteria. They also argued that the proposal could encourage employees to underreport safety incidents. Henderson said he was "not inclined" to support the bonus restructuring.

Julie Kane, senior vice president and chief ethics and compliance officer for PG&E, read a statement in court: “We sincerely apologize to the families and friends of those who lost their lives or were injured in this tragic explosion and we want them to know our mission and our commitment to safety will never stop. We will remain forever committed to taking action to meet the high safety standards that our customers, and we, demand and expect. We are profoundly sorry.”

Two years ago the California Public Utilities Commission fined PG&E $1.6 billion for its role in the fatal blast. That money largely went into safety improvements and into California's general fund. The utility has already settled claims amounting to nearly $500 million with San Bruno victims and families.

PG&E is not the only utility company to face criminal charges. In 1999, a ruptured pipeline killed three people and spilled gasoline into creeks in Bellingham, Washington. Three company officials went to jail or on probation for the explosion. No PG&E utility executives were specifically named in this lawsuit.

Hill thinks that PG&E will not really reform until individuals are held accountable.

"Someone needs to go to prison, that will change the culture, that will cause the regret that we need to see to stop this happening in the future," Hill told KQED.

The state senator also called for new California Attorney General Xavier Becerra to conclude a criminal investigation begun in 2015 into former PG&E executives and California Public Utility commissioners.

This story was updated at 10 a.m. on Tuesday, January 24, 2017 with comment from state Sen. Jerry Hill.
Erika Kelly contributed to this report.

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