Mysteriously, prosecutors who were seeking a $562 million fine against Pacific Gas & Electric for its role in the 2010 San Bruno explosion, yesterday (August 2) backed away while the jury was still deliberating.
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The prosecutors did not explain their action and neither did U.S. District Judge Thelton Henderson who approved the reduction Tuesday.
On the evening of September 9, 2010, in San Bruno, a suburb of San Francisco, a natural-gas pipeline over a half-century old exploded, sending pipe parts and fire into the air, leaving eight people dead, injuring almost five dozen more and destroying 38 homes. The surprising decision by federal prosecutors in San Francisco to slash almost all of a potential $562 million fine in a criminal case against one of the nation’s largest utilities has raised concerns about the office’s handling of corporate prosecutions in the wake of a criminal case against shipping giant FedEx that prosecutors abruptly abandoned recently during trial.
Prosecutors insisted that PG&E paid a fine of no more than $6 million, in case it’s convicted, however, initially the sum amounted to $562 million. The company is also accused of obstructing the federal investigators by misleading them about the pressures at which it was pumping gas through aging pipelines, such as the one that ruptured in San Bruno.
Three years ago, before either development was in the cards, PG&E Chief Executive Officer Tony Earley anxious aloud that the mounting fallout from a disaster that blew up a neighborhood 12 miles (19.3 kilometers) south of San Francisco might push the company to the brink of bankruptcy for the second time in a dozen years. It declined immediate comment on its handling of corporate prosecutions.
Laurie Levenson, a former federal prosecutor who now teaches at Loyola Law School in Los Angeles, said such prosecutions are hard to win in part because of the legal resources corporations have. “They sincerely believed they needed to do these cases to have a bigger impact on the corporate world”.
That case almost two-years in the making accused FedEx of shipping prescription drugs that it knew were illegal to dealers and addicts, some of whom died. A judge said the company was innocent.
PG&E now faces a maximum fine of $6 million if convicted of 11 pipeline safety violations and obstructing investigators in the wake of the 2010 blast in the city of San Bruno. Deliberations were in their fifth day Wednesday following a trial that lasted more than a month.
“Until we know the rationale, the victims’ families, residents of San Bruno and current PG&E customers everywhere are likely to feel that their concerns are being ignored”, Mullin said.
The potential $562 million fine was double the amount of money prosecutors said PG&E saved by skirting pipeline safety requirements.
According to the court filing, the company argued the penalty phase would become “unduly complicated”, because it would have been necessary to present evidence related to how state regulators make decisions on whether ratepayers or shareholders, or a combination, will pay for upgrades to PG&E’s vast web of gas pipelines. No PG&E officials are facing prison time. That’s on top of the break the company caught previous year when state regulators lopped $650 million off the $2.25 billion civil fine they’d threatened to impose. That could lead them to side with the utility.
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“It seems a rather remarkable development at this point in the criminal case”, Paul Patterson, an analyst at Glenrock Associates LLC, said of the government’s decision to reduce the fine sought against PG&E.
