PG&E Pleads Not Guilty to Hindering Pipeline Blast Probe

PG&E Corp. (PCG)’s utility pleaded not guilty to obstructing a federal investigation of the 2010 natural-gas pipeline explosion that killed eight people in a San Francisco suburb and said it received grand jury subpoenas in what prosecutors said was a separate probe of its gas division.

Pacific Gas & Electric Co. could be fined as much as $1.13 billion if convicted in the criminal case over the pipeline explosion alleging 27 counts of violations of federal pipeline safety law and obstructing an investigation of the blast by the National Transportation Safety Board.

The obstruction charge and 15 new pipeline safety counts were added to a revised indictment filed July 29 in which federal prosecutors said the utility tried to hide from the NTSB its failure to prioritize or properly assess many of its oldest natural-gas pipelines as high-risk from 2009 to 2011. Steven Bauer, a lawyer for Pacific Gas, said the company pleaded not guilty to all charges at a hearing before a U.S. magistrate judge today in federal court in San Francisco.

Bauer said the company had received grand jury subpoenas related to its gas operation in recent months and prosecutors told the company that a second case against it could be related to the pipeline-explosion case.

The recent subpoenas are related to a separate investigation, Assistant U.S. Attorney Hallie Hoffman.

Separate Matter

“That is a totally separate matter,” Hoffman said at a second hearing today about the explosion case. “We may seek to join them if that makes sense.”

Bauer declined to comment on the subpoenas after the hearing.

PG&E’s gas operations include its natural-gas distribution and transmission system in northern and central California. The utility’s network includes about 42,500 miles of distribution pipelines and more than 6,000 miles of transmission pipelines.

“Regardless of the next legal steps, nothing will distract us from our goal of making our gas system the safest in the country,” Greg Snapper, a Pacific Gas spokesman, said in an e-mail.

San Bruno asked federal prosecutors today to put the company under an independent monitor as part of the penalty for the blast and use money from fines to establish a pipeline safety trust.

“Multiple investigations found PG&E’s tragic explosion to be entirely man-made and the result of its willful decision to divert pipeline safety funds and use them for executive compensation and shareholder returns for many decades,” San Bruno Mayor Jim Ruane said in a statement.

Correction Letter

The obstruction charge was based on a document error that the company corrected with a letter to the NTSB, which the agency published online as part of its accident investigation, Pacific Gas said.

“Based on all of the evidence we have seen to date and our review of the new indictment, we still do not believe that PG&E employees intentionally violated the federal Pipeline Safety Act, and that, even where mistakes were made, employees were acting in good faith to provide customers with safe and reliable energy,” Pacific Gas said in an e-mailed statement today.

State regulators are separately considering a $2.25 billion penalty for the blast that sparked a fireball which engulfed a San Bruno neighborhood.

PG&E Chairman and Chief Executive Officer Tony Earley last year said a fine that large could force the San Francisco-based company to the brink of bankruptcy.

The case is U.S. v. Pacific Gas and Electric Co., 14-cr-00175, U.S. District Court, Northern District of California (San Francisco).

To contact the reporter on this story: Karen Gullo in federal court in San Francisco at kgullo@bloomberg.net

To contact the editors responsible for this story: Michael Hytha at mhytha@bloomberg.net Joe Schneider, David Glovin

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