PG&E ordered to pay $3M, run safety campaign for fatal San Bruno blast

SAN FRANCISCO (BCN) -- A federal judge in San Francisco today ordered PG&E Co. to advertise its pipeline safety criminal conviction in newspapers and on television as part of its sentence for that conviction.

U.S. District Judge Thelton Henderson also sentenced the utility to the maximum $3 million fine, placed PG&E on five years' probation, and ordered the establishment of a court-appointed monitor.

Henderson also required PG&E officials to provide 10,000 hours of community service, including 2,000 hours by high-level personnel.

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PG&E was found guilty by a jury in Henderson's court in August of five counts of violating a federal pipeline safety law and one count of obstructing an investigation into a fatal pipeline explosion in San Bruno in 2010.

Henderson said during the sentencing, "I find the crimes at issue to be very serious and to pose great risks to public safety."

The advertising campaign must include full-page ads in the Wall Street Journal and San Francisco Chronicle, plus 12,500 60-second television ads. The messages must explain PG&E's conviction, its sentence and the steps it has taken to remedy the safety violations.

An agreement on the terms of the ads was reached by PG&E and federal prosecutors this morning before the sentencing, after Henderson indicated at a hearing on Monday that he planned to accept prosecutors' request for an advertising requirement. Henderson accepted that agreement during the sentencing.

In a separate written order concerning the monitor today, Henderson said that prosecutors and PG&E can agree on the monitor to be chosen, but that he will appoint the monitor if the two sides do not agree.

"The goal of the monitorship shall be to prevent the criminal conduct with respect to gas pipeline transmission safety that gave rise to" the indictment in the case, Henderson wrote.

PG&E said in a statement, "We want San Bruno and all of the communities we serve to know that we at PG&E have committed ourselves to a goal of transforming this company into the safest and most reliable energy provider in America and to re-earning their trust through our actions."

"We sincerely apologize to the families and friends of those who lost their lives or were injured in this tragic explosion," the statement said.

U.S. Attorney Brian Stretch stated, "We are gratified that the verdicts and sentence memorialize PG&E's criminal conduct.

"While the conviction and sentence in this case will not bring back those who were lost on September 9, 2010, or eliminate the suffering of their surviving family members, it does take the necessary steps toward ensuring PG&E will never again engage in this type of criminal behavior that puts all of its customers at substantial risk," Stretch said.

The San Bruno explosion of a high-pressure natural gas transmission pipeline and the resulting fire killed eight people, injured 66 others and damaged or destroyed dozens of houses on Sept. 9, 2010.

The National Transportation Safety Board determined the cause was the rupture of a defective seam weld in a pipe segment that was installed in 1956, was incorrectly listed in PG&E records as seamless, and was not properly tested or repaired.

The federal criminal case grew out of investigations of the explosion.

PG&E was convicted of five counts of violating the U.S. Natural Gas Pipeline Safety Act's requirements for identifying, evaluating, recording and prioritizing risks in regard to several Bay Area transmission lines.

It was also found guilty of obstructing the NTSB's investigation by misleading the agency about its policy on when it was necessary to conduct expensive high-pressure water tests on potentially risky lines.

The $3 million fine is the maximum allowed for the six counts.

Prosecutors initially sought a higher fine under a rule that allows an alternate penalty of either twice the loss or twice the profit resulting from the crimes, if the calculation is not too complex. They said the amount under that rule would be either $1.13 billion or $562 million.

But Henderson ruled before the trial that using the first method would be too complicated, and prosecutors dropped a bid for the second method during the trial without giving a reason.

In other proceedings, PG&E has paid $70 million in compensation to San Bruno, settled survivors' civil cases in San Mateo County Superior Court for about $565 million, and paid a record $1.6 billion penalty in three related cases before the California Public Utilities Commission.

The CPUC cases concerned the San Bruno explosion, pipeline record-keeping, and pipeline maintenance in high-population areas.

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