Pacific Gas & Electric could be facing new penalties of more than $1 billion when it appears in a U.S. federal court in San Francisco on Aug. 18 to address charges under a July 29 indictment that more than doubles the number of its alleged violations of the federal Pipeline Safety Act linked to a fatal 2010 gas pipeline blast in San Bruno, Calif.

Photo by AP/Wideworld
New criminal charges were filed against PG&E in the 2010 San Bruno pipeline fire that killed eight people.

The new 27-count indictment also charges the utility with obstructing the National Transportation Safety Board investigation of the accident in which eight people died.

The indictment, announced by U.S. Attorney Melinda Haag in San Francisco, California Attorney General Kamala Harris and other federal and local officials, charges PG&E with “knowingly and willfully” violating the pipeline law through inaccurate recordkeeping and failure to address inadequacies and hazards in its pipeline integrity management practices, all related to the explosion of its 30-inch-dia. transmission pipe that also destroyed 38 homes.

The indictment also includes one charge that, during the NTSB probe, completed in 2011, PG&E provided the agency with a version of its policy outlining how it addressed pipeline manufacturing threats along its system. But the company later said that submission was in error and described the policy as a draft.

“In fact, PG&E was operating under the so-called unapproved draft from 2009 through April 5, 2011,” prosecutors allege. “The consequence of this practice was that PG&E did not prioritize as high-risk, and properly assess, many of its oldest natural gas pipelines,which ran through urban and residential areas.”

The case could have broad implications for the utility and pipeline industries as it is believed to be the first instance of criminal charges filed against a natural gas pipeline operator under the law, sources note.

The new indictment alleges that PG&E “derived gross gains of $281 million and victims suffered losses of approximately $565 million.” It replaces one issued on April 1 with only 12 criminal counts and fines up to $6 million.

We’ve pushed hard for this for four years,” says San Bruno Mayor Jim Ruane. “The California Public Utilities Commission (CPUC) was doing nothing, and we actually had to sue them earlier this year to obtain documents related to its investigation of the incident.” CPUC handed over 7,000 documents in July as part of that suit.

PG&E did not disclose its planned plea to the criminal charges at its upcoming appearance before U.S. District Court Judge Thelton D. Henderson. But “based on all of the evidence we have seen to date, we do not believe that the charges are warranted and that, even where mistakes were made, employees were acting in good faith to provide customers with safe and reliable energy,” it said in a July 30 statement.

The rupture of PG&E’s Line 132 was the result of a seam weld defect, present on the pipeline at its installation in 1956, which grew over time until it exploded after electrical work at an upstream compressor station triggered an accidental pressure spike, according to NTSB’s final report. No complete record of the pipeline’s origin nor of any pressure testing at the time of installation was ever found.

“PG&E maintained that the pipeline met current construction standards, yet the pipeline contained unknown materials,” says Evan Vokes, a Calgary, Alberta-based engineer and pipeline safety consultant. “A lot of engineers knew about the multitude of problems with this pipe. The NTSB report shows that.”

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