Written by The Business Journal Staff
(AP) — Pacific Gas & Electric Co. says it is prepared to pay the maximum fine of $3 million after a jury convicted the company of deliberately violating pipeline safety regulations before a deadly natural gas pipeline blast in the San Francisco Bay Area.
But California’s largest utility is asking a federal judge not to restructure its bonus program for employees or require an advertising campaign publicizing its conviction. U.S. District Court Judge Thelton Henderson is scheduled to sentence PG&E on Monday, and prosecutors want him to impose the bonus and advertising requirements. They say a $3 million fine alone would be a “drop in the bucket” for PG&E.
“PG&E’s crimes compel a serious sentence that will alter its culture for good,” prosecutors said in a sentencing memo filed with the court.
The 2010 blast of a PG&E natural gas pipeline sent a giant plume of fire into the air, killing eight people and destroying 38 homes in the city of San Bruno.
Jurors convicted the company in August of five of 11 counts of pipeline safety violations, including failing to gather information to evaluate potential gas-line threats and deliberately not classifying a gas line as high risk. Prosecutors said the company deliberately misclassified pipelines so it wouldn’t have to subject them to appropriate testing, choosing a cheaper method to save money.
Jurors also convicted the utility of obstructing investigators after the blast.
PG&E attorneys said during trial that the company’s engineers did not think the pipelines posed a safety risk, and the company did not intend to mislead investigators.
The stakes in the case dropped dramatically, however, when prosecutors made the surprising decision several days into jury deliberations not to pursue a potential $562 million fine if PG&E was found guilty of any of the pipeline safety counts. No PG&E employees were charged, so no one is facing prison time.
In addition to the advertising campaign, prosecutors are asking Henderson to restructure the company’s employee bonus program to reward safety over meeting budgets and earnings. They have also told the judge that blast victims may want to speak at the sentencing hearing.
PG&E says changes to the bonus program could jeopardize safety by limiting the company’s ability to attract and retain talented employees and interfering with state oversight of the utility’s compensation programs — oversight that the company says prioritizes safety.
The advertising campaign is not necessary because the trial and verdict were widely covered in the media, the utility said. It has agreed to prosecutors’ request for a monitor to oversee compliance with pipeline safety regulations.
“Both since the accident in San Bruno and since the criminal trial, PG&E has taken steps to move beyond the legal disputes and focus its energies on becoming the safest public utility in the country,” attorneys representing PG&E said in their sentencing memo.
PG&E has previously been fined $1.6 billion for the San Bruno blast by California regulators.