January 26, 2017
PG&E Convicted of Obstruction and Multiple Violations of the Natural Gas Pipeline Safety Act
On January 26, 2017, Pacific Gas & Electric Company (PG&E)—California’s largest utility—was sentenced in U.S. District Court, San Francisco. Previously, on August 9, 2016, PG&E was found guilty of multiple willful violations of the Natural Gas Pipeline Safety Act of 1968 (PSA) and obstructing an agency proceeding. The court ordered PG&E to pay a maximum fine of $3 million; serve 5 years of probation; agree to a monitor to ensure compliance with safety regulations; implement a court-approved ethics program; run a $3 million TV and radio advertising campaign publicizing the conviction, sentencing, and steps the company is taking to prevent a repeat of the crimes committed; perform 10,000 hours of community of service, at least 2,000 of which must be performed by executive-level personnel; and publish full-page articles in the Wall Street Journal and San Francisco Chronicle announcing and detailing its criminal conviction.
DOT-OIG had initiated an investigation after the 2010 explosion of a natural gas pipeline in San Bruno, CA, that killed eight people. The PSA charges related to PG&E’s record-keeping and pipeline “integrity management” practices; the obstruction charge was added later after PG&E attempted to mislead the National Transportation Safety Board (NTSB) during its investigation of the explosion.
The evidence presented at trial demonstrated that PG&E willfully failed to address record-keeping deficiencies concerning its larger natural gas pipelines; identify threats to its larger natural gas pipelines and take appropriate actions to investigate the seriousness of threats to pipelines when they were identified; and adequately prioritize as high risk and properly assess threatened pipelines after they were over-pressurized, as required by the PSA and its regulations. In finding PG&E guilty, the jury concluded the company knowingly and willfully violated the PSA and its regulations between 2007 and 2010.
The charge of obstructing an agency proceeding was included in a superseding indictment filed on July 29, 2014 and centers around PG&E’s use of a letter in an attempt to mislead NTSB. During the investigation, PG&E provided a version of a policy that outlined the way it had addressed manufacturing threats on its pipelines. Specifically, 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. Although PG&E operated under the policy from 2009 through April 5, 2011, the company submitted a letter to NTSB that attempted to withdraw the document, stating that it was an unapproved draft that had been submitted in error. In finding PG&E guilty of obstructing an agency proceeding, the jury concluded the company intentionally and corruptly tried to influence, obstruct, or impede the NTSB investigation.
DOT-OIG conducted this investigation with the San Bruno Police Department, San Mateo County District Attorney’s Office, and FBI.