SAN FRANCISCO— Pacific Gas and Electric Company
(“PG&E”) was sentenced today to submit to an expansive
program of probation after having been found guilty of
multiple willful violations of the Natural Gas Pipeline
Safety Act of 1968 (“PSA”) and obstructing an agency
proceeding, announced U.S. Attorney Brian J. Stretch, 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 John F. Bennett. Among the provisions
included in the program of probation issued by the Honorable
Thelton E. Henderson, District Judge, are the obligation to
submit to a corporate compliance and ethics monitorship, the
obligation to complete 10,000 hours of community service,
and the requirement to spend up to $3 million to inform the
public in print advertisements and television commercials to
notify the public of the utility’s criminal and neglectful
behavior.
On August 9, 2016, after a 5 ½ week trial, a federal jury
found PG&E guilty of multiple willful violations of the
PSA and obstructing an agency proceeding. The
PSA-related charges stem from PG&E’s record keeping and
pipeline “integrity management” practices and were uncovered
in the course of the San Bruno investigation. The
obstruction charge was added after investigators discovered
PG&E attempted to mislead the National Transportation
Safety Board (NTSB) during its investigation. The
evidence at trial demonstrated that, between 2007 and 2010,
PG&E willfully failed to address recordkeeping
deficiencies concerning its larger natural gas pipelines
knowing that its records were inaccurate or
incomplete. The evidence further demonstrated that
PG&E willfully failed to identify threats to its larger
natural gas pipelines and to take appropriate actions to
investigate the seriousness of threats to pipelines when
they were identified. In addition, PG&E willfully
failed to adequately prioritize as high risk and properly
assess threatened pipelines after they were over
pressurized, as the PSA and its regulations required.
These charges were filed in an indictment on April 1,
2014. In finding PG&E guilty, the jury concluded
the company knowingly and willfully violated the PSA and its
regulations between 2007 and 2010. The jury
found PG&E guilty of six felony counts—five willful
violations of the PSA and one count of corruptly obstructing
the federal investigation into the 2010 fatal pipeline
explosion in San Bruno, in violation of 18 U.S.C. §
1505. The jury acquitted PG&E of an additional six
alleged violations of the PSA.
The charge of obstructing an agency proceeding was included
in a superseding indictment filed July 29, 2014. The
evidence at trial demonstrated that 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, and then sought to
withdraw the document. According to PG&E’s letter,
the policy was produced in error and was an unapproved
draft. In finding PG&E guilty of obstructing an
agency proceeding, the jury concluded PG&E intentionally
and corruptly tried to influence, obstruct, or impede the
NTSB investigation, in violation of 18 U.S.C. § 1505.
“Today, the Pacific Gas and Electric Company was sentenced
for its crimes after having been found guilty of violating
federal regulations designed to keep our citizens safe and
obstructing an agency proceeding,” said U.S. Attorney
Stretch. “As a part of the sentence, the court has imposed
upon PG&E a monitor to ensure the company’s future
compliance with the rules and regulations the company has
chosen in the past to flaunt. As we know from the
horrible explosion in San Bruno in 2010, the failure of
PG&E to deliver gas safely can have devastating
consequences that no amount of fines and no monetary
penalties can ever remedy. While the conviction and
sentence in this case will not bring back those who were
lost on September 9, 2010, or eliminate the suffering of
their surviving family members, it does take necessary steps
toward ensuring PG&E will never again engage in this
type of criminal behavior that puts all of its customers at
substantial risk. I would like to acknowledge the many
public servants—including the men and women of this office,
the California Attorney General’s Office, the San Mateo
County District Attorney’s Office, the San Bruno Police
Department, the Federal Bureau of Investigation, and the
U.S. Department of Transportation Office of Inspector
General—whose hard work uncovered PG&E’s violations of
the law and the company’s efforts to obstruct the
investigation. We are gratified that the verdicts and
sentence memorialize PG&E’s criminal conduct.”
“Today’s sentencing of PG&E makes clear the solemn
obligation that those entrusted with the public’s safety
must make it their highest priority,” said William Swallow,
regional Special Agent-in-Charge, USDOT OIG. “The
pipeline system is a critical part of our Nation’s
infrastructure, and working with our Federal, state and
local law enforcement and prosecutorial colleagues, we will
continue to protect the safety and integrity of our
transportation infrastructure from fraud, waste, abuse and
violations of law.”
“The residents of San Mateo County are indebted to the
public servants of the Office of the United States
Attorney,” said District Attorney Wagstaffe. “We are very
thankful for their hard work and perseverance without which
we would not have seen such a successful conclusion to this
case.”
"The FBI San Francisco Division echoes the sentiments of our
law enforcement and prosecutorial partners. PG&E
demonstrated a lack of concern and irresponsibility to our
community,” said FBI San Francisco Special Agent in Charge
Jack Bennett. “We have a responsibility not only to uphold
and enforce the laws of the United States but also to do
everything within our power to protect our citizen’s and our
community. This sentence is symbolic of the FBI’s commitment
to serving justice and to show that no company is too large
to be held accountable for criminal acts.”
In handing down the $3 million monetary penalty, Judge
Henderson ordered PG&E to pay the maximum statutory
penalty allowable for each count charged under the PSA and
for obstruction of justice. In addition to the
monetary penalty, Judge Henderson ordered PG&E to the
maximum term of five years’ probation. While on
probation, PG&E will submit to a corporate compliance
and ethics monitorship, pay for advertising in national
media outlets to publicize its criminal conduct, and engage
in community service.
Judge Henderson ordered PG&E to develop within the first
six months “an effective compliance and ethics program” as
well as a schedule for implementation of the program.
Judge Henderson’s order directs PG&E to create a program
that will prevent criminal conduct with respect to gas
pipeline transmission safety. In addition, during the
five-year period, PG&E will be supervised by a
Compliance and Ethics Monitor whose job it will be to
approve the program, oversee PG&E’s compliance with the
program, inspect PG&E’s records, and receive
notifications from PG&E regarding any changes in the
company’s financial status.
With respect to publicity, Judge Henderson ordered PG&E
to spend $3 million to publicize “the nature of the offenses
it committed, the convictions, the nature of the punishment
imposed and the steps that will be taken to prevent the
recurrence of similar offences.” The $3 million
expenditure will include two parts. PG&E must
purchase a full page advertisement in both the Wall Street
Journal and the San Francisco Chronicle. Also,
PG&E was ordered to purchase television time to air
commercials “to the greatest extent possible replicating the
same channels and air times that PG&E used” in the time
period around when the case was being tried.
Judge Henderson also ordered PG&E to engage in 10,000
hours of community service that must be pre-approved by a
federal probation officer. Of the 10,000 hours, 2,000
must be completed by “high level” employees. In
addition, Judge Henderson stated his expectation that the
planned community service would be approved only if is
separate from, and in addition to, service that PG&E
already had planned to do. Judge Henderson also
advised PG&E that he expected the community service
would be completed, to the greatest extent possible, in San
Bruno.
Assistant United States Attorneys Hallie Hoffman, Jeff
Schenk, and Hartley West prosecuted the case with the
assistance of Denise Oki, Beth Margen, Maryam Beros, Alycee
Lane, Bridget Kilkenny, and Maureen French. The
prosecution is the result of an investigation conducted by
the U.S. Attorney’s Office for the Northern District of
California, the California Attorney General’s Office, 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.
