By CASSANDRA SWEET and REBECCA SMITH
Pipeline safety officials are calling for a stiffer
punishment of PG&E Corp. for its role in a lethal pipeline
explosion in San Bruno, Calif., in 2010.
A new proposal, issued Tuesday by staff lawyers for the
California Public Utilities Commission, asks the agency's
commissioners to levy a $300 million fine and additional
penalties topping $1.9 billion.
The plan replaces an earlier proposal that ordered the
utility to pay the same amount but included no fine, which
analysts said lowered the company's costs on an after-tax
basis. The new plan also limits the amount of money that
PG&E has already spent on pipeline upgrades that it can
count toward paying the penalties.
The company has already put aside $200 million to cover a
fine; the commission still is months away from reaching a final
The penalty case stems from the September 2010 explosion of
a high-pressure natural-gas pipeline owned by Pacific Gas and
Electric Co, which cut through a residential neighborhood in
The rupture caused a massive fireball that killed eight people,
injured 58 others, and damaged or destroyed more than 100
homes. It was one of the largest pipeline disasters in US
history, and reconstruction of the neighborhood is
Federal and state investigators determined that PG&E was
to blame for the pipeline rupture, following separate
investigations that revealed a pattern of neglect, including
lost or incomplete pipeline records, shoddy welding of the
pipeline that ruptured, and inadequate safety testing.
The call for harsher punishment shows that hard-liners at
the regulatory agency prevailed in an internal dispute, among
investigators and lawyers, concerning the appropriate
The initial penalty proposal favored by Jack Hagan, the head
of the utility commission's investigative division, would have
allowed the utility to get credit for some prior spending. That
proposal did not include any outright fines.
A team of lawyers at the commission, led by 31-year veteran
Harvey Morris, said the proposed punishment was far too
lenient. As a result of the disagreement, the team of lawyers
was temporarily removed from the case. City leaders from San
Bruno sided with the ousted lawyers and said they, too, wanted
harsher punishment and explicit fines.
The legal team was restored to the case in late June and
soon notified a hearing judge that it would file a new penalty
recommendation in the case.
San Bruno city officials still are calling for $3.85 billion in
penalties, including a $900 million fine and increased spending
on pipeline improvements, City Manager Connie Jackson said.
City officials also have asked the federal Pipeline and
Hazardous Materials Safety Administration to strip California
regulators of responsibility for enforcing federal pipeline
safety laws. PHMSA, which in most states delegates those duties
to utility regulators, told the city on Monday that it would
audit California's inspection and enforcement program.
Dow Jones Newswires