Prosecutor calls PG&E ‘A company that lost its way'

A prosecutor told a federal jury in San Francisco today that "PG&E  is a company that lost its way" and that it "made a decision to maximize profits instead of prioritizing safety."

Assistant U.S. Attorney Jeffrey Schenk made the claim during closing arguments in the utility's six-week criminal trial on charges of violating a pipeline safety law and obstructing a federal probe of a fatal 2010 explosion in San Bruno.

"For years, they forced engineers to act more like business people than engineers," Schenk argued.
He charged that the company failed to keep required records, failed to assess and test for possible risks on its natural gas transmission pipelines and developed an illegal testing policy to avoid expensive high-pressure water tests on the lines.

PG&E safety engineers were "making decisions on data they knew was wrong and choices they knew were fixed," Schenk said.

Defense attorney Steven Bauer, meanwhile, argued to jurors that the charges weren't proved beyond a reasonable doubt and the case was "an elaborate second-guessing exercise" by prosecutors.
PG&E employees are "decent people, competent engineers doing their job the best they could," he said.

"Nobody at PG&E is a criminal," he said.

He said that small increases above the maximum allowed pressure in pipelines may have been natural testing fluctuations and were "tiny little exceedances which were not a safety concern."

The jury in the court of U.S. District Judge Thelton Henderson recessed for the day before Bauer completed his argument.

The defense will finish its case and the prosecution will present  a rebuttal on Wednesday, to be followed by jury instructions and the start of deliberations.

If convicted of all charges, San Francisco-based PG&E could be fined $562 million.

In a separate civil proceeding, the California Public Utilities Commission last year fined PG&E $1.6 billion for regulatory violations related to the San Bruno explosion, pipeline record-keeping and operation of pipelines in high-population areas. In the federal trial, PG&E is accused of 11 counts of violating record-keeping, assessment and testing requirements of the U.S. Natural Gas Pipeline Safety Act and one count of obstructing a National Safety Transportation Board investigation of the San Bruno explosion.

Eight people died and a neighborhood was destroyed when a high-pressure, 30-inch-diameter transmission pipeline in San Bruno exploded on Sept. 9, 2010.

The NTSB concluded the cause of the explosion was a rupture on a pipeline segment installed in 1956 that had a defective seam weld, was incorrectly listed in PG&E records as seamless and was not properly tested and repaired.

The criminal obstruction charge centers on a letter PG&E sent to the NTSB on April 6, 2011, withdrawing a previous letter that said PG&E had a policy of not conducting high-pressure water tests on older pipelines unless the gas pressure had risen to 10 percent above the allowed maximum.

The April 6 letter said the earlier letter was an unapproved draft. Prosecutors claim trial evidence shows the utility did carry out the 10 percent policy between 2009 and early 2011 in violation of federal regulations and that PG&E intended to mislead the NTSB.

PG&E was originally charged with 12 counts of violating the safety law, but prosecutors today dropped one of those charges, so the final charges are one count of obstruction and 11 counts of safety law violations.
Henderson has told jurors the cause of the San Bruno explosion is not an issue in the trial and has limited prosecutors in the amount and type of evidence they can present about the accident.

But after the jury left for the day, prosecutor Hallie Hoffman argued to the judge that two statements made by Bauer during his closing had opened the door to allowing prosecutors to present more evidence about San Bruno.

Henderson said he will consider the prosecution motion Wednesday morning before the jury convenes. One statement was Bauer's claim that the prosecution hadn't proved that certain pipeline segments were in highly populated areas, known as High Consequence Areas, triggering stricter testing requirements.

West argued that statement should allow prosecutors to show previously forbidden photos of the urban neighborhood hit by the explosion and resulting fire, to prove the area was densely populated.
The second claim prosecutors want to challenge was Bauer's statement to the jury that no regulatory violations caused the San Bruno explosion.

West said prosecutors want to reopen their case to show "there were very explicit findings" that violations caused the explosion.