Government Files Criminal Indictment Against PG&E - California Case Law
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Government Files Criminal Indictment Against PG&E

Almost four years after an explosion in San Bruno, California, devastated a community, destroying homes and taking lives, the U.S. Government filed a criminal indictment against Pacific Gas and Electric Company ("PG&E") on April 1.

The Criminal Indictment

The indictment lists 12 counts of violations of the Natural Gas Pipeline Safety Act, for knowingly and willfully violating minimum safety standards including not maintaining the proper records, failing to identify threats, and failing to fix parts of the pipeline. According to the indictment, PG&E was missing pipeline records, and existing records had errors and omissions. The company received notice about the record deficiencies from employees, agencies, and third-party consultants and auditors.

The indictment further alleges that although PG&E knew about areas of threatened pipe, the utility failed to label the pipes as high risk.

PG&E Apologizes

PG&E Chairman and Chief Executive Officer Tony Earley once again apologized for the San Bruno explosion and, according to Bloomberg, stated: "We've taken accountability and are deeply sorry. ... We have worked hard to do the right thing for victims, their families and the community and we will continue to do so." Even so, PG&E knew that an indictment would probably be forthcoming when settlement negotiations broke down between the utility and the U.S. Attorney.

Despite that, according to an SEC 8-K filing last week, PG&E asserted that it "believes that criminal charges are not merited and that it did not commit any knowing and willful violation." It noted that if the charges were filed that its reputation would suffer, and further acknowledged that if found guilty, the "penalties could have a material impact on PG&E Corporation's and the Utility's financial condition, results of operations, and cash flows."

PG&E could face a maximum fine of up to $500,000 per count, totaling $6 million. We'll keep you posted as the case progresses.

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