PG&E Charged with Obstruction of the Investigation of the National Transportation Safety Board and Additional Violations of the Natural Gas Pipeline Safety Act
SAN FRANCISCO—A federal grand jury for the Northern District of California returned a superseding indictment charging Pacific Gas and Electric Company (PG&E) with obstruction of the investigation of the National Transportation Safety Board (“NTSB”), as well as additional violations of the Natural Gas Pipeline Safety Act of 1968 (PSA), announced U.S. Attorney Melinda Haag, California Attorney General Kamala D. Harris, San Mateo County District Attorney Stephen M. Wagstaffe, U.S. Department of Transportation Office of Inspector General Special Agent in Charge William Swallow, and FBI Special Agent in Charge David J. Johnson.
The superseding indictment alleges that PG&E obstructed the NTSB’s investigation that began immediately after the deadly San Bruno explosion. According to the superseding indictment, during the course of the NTSB’s investigation, PG&E provided a version of a policy outlining the way in which PG&E addressed manufacturing threats on its pipelines. PG&E later withdrew that policy claiming it was produced in error, and was an unapproved draft. In fact, PG&E was operating under the so-called unapproved draft from 2009 through April 5, 2011. 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.
Additionally, the superseding indictment charges PG&E with 27 counts of knowingly and willfully violating the PSA. These charges stem from PG&E’s record keeping and pipeline “integrity management” practices. The superseding indictment alleges that PG&E failed to address recordkeeping deficiencies concerning its larger natural gas pipelines knowing that their records were inaccurate or incomplete. The superseding indictment also alleges that PG&E failed to identify threats to its larger natural gas pipelines and that PG&E did not take appropriate actions to investigate the seriousness of threats to pipelines when they were identified. Finally, the superseding indictment alleges that PG&E failed to adequately reprioritize and assess threatened pipelines after the pipelines were over pressurized as required by the PSA and its regulations.
PG&E is charged with one count of obstruction of an agency proceeding in violation of 18 U.S.C. §1505, and 27 separate counts of violations of the PSA. The maximum statutory penalty for each count is a $500,000 fine or a fine based on the twice the gross gain PG&E made as a result of the violations, or twice the losses suffered by the victims. The superseding indictment alleges that PG&E derived gross gains of $281 million, and victims suffered losses of approximately $565 million. PG&E is next scheduled to appear on August 18, 2014 before the Honorable Thelton E. Henderson, United States District Judge.
Kim A. Berger and Hallie M. Hoffman are the Assistant U.S. Attorneys who are prosecuting the case, with the assistance of Alycee Lane and Pat Mahoney, along with Deputy Attorneys General Brett Morris and Deborah Halberstadt from the California Attorney General’s Office. The prosecution is the result of an investigation conducted by the San Mateo County District Attorney’s Office, the United States Department of Transportation Office of Inspector General, the FBI, the Pipeline and Hazardous Material Safety Administration, and the city of San Bruno Police Department.
Please note, an indictment contains only allegations and, as with all defendants, PG&E must be presumed innocent unless and until proven guilty.