PG&E Hearing Reveals Ongoing Additional Grand Jury Investigation

Defense and prosecution attorneys revealed at a hearing in PG&E Co.’s criminal case in federal court in San Francisco today that a grand jury is continuing an investigation of the utility in what may be a separate case.

“Right now we view the (second possible) case as separate,” Assistant U.S. Attorney Hallie Hoffman told U.S. District Judge Thelton Henderson.

No charges have been filed in connection with the current investigation.

In the existing criminal case, PG&E has been indicted on one count of obstructing justice in a probe of a fatal pipeline explosion and fire in San Bruno in 2010 and 27 counts of violating a federal pipeline safety law.

The utility was arraigned on that indictment before a federal magistrate this morning and through its lawyer, Steven Bauer, entered a plea of not guilty.

The indictment issued by a federal grand jury on July 29 was a superseding indictment that added new counts to an earlier indictment issued in April.

The continuing investigation was disclosed by Bauer this afternoon at a status conference before U.S. District Judge Thelton Henderson, the trial judge in the existing criminal case.

Bauer said the utility’s natural gas division received grand jury subpoenas after the superseding indictment was announced. He said PG&E’s defense lawyers wanted to know whether that investigation might lead to another superseding indictment in the same case or to a separate case, if any charges are eventually filed.

Hoffman then responded that prosecutors currently view the cases as separate but “may seek to join them if that makes sense” at a later date.

She gave no further details.

Henderson set a further status conference in the case for Sept. 22. No trial date has been set.

Outside of court, spokespersons for U.S. Attorney Melinda Haag and for PG&E declined to comment on the current investigation.

The San Bruno explosion and subsequent fire killed eight people and injured 66 others on Sept. 9, 2010. The cause was a rupture in a defective seam weld in a pipeline segment that was incorrectly listed in PG&E records as seamless, according to the National Transportation Safety Board.

In the superseding indictment, announced by prosecutors on July 29 and filed in court on July 30, PG&E is accused of obstructing the NTSB’s probe and violating Natural Gas Pipeline Safety Act record-keeping and management requirements in connection with the San Bruno pipeline and several other pipelines.

The maximum possible fine in the criminal case, if PG&E is convicted, would be $1.13 billion, or twice the amount of the victims’ losses.

The indictment cites a figure of $565 million in losses, which is the amount of settlements reached in San Mateo County Superior Court in lawsuits filed against PG&E by family members of victims, people who were injured and people whose property was damaged.

In a separate action, San Bruno officials revealed today that they have asked prosecutors to recommend the appointment of an independent federal monitor to oversee PG&E’s progress in improving safety as part of the penalty if the utility is convicted.

In a letter to Haag on Aug. 11, San Bruno City Manager Connie Jackson wrote that a monitor would “provide the depth and breadth of resources needed to validate PG&E’s regulatory responsibilities.”

If PG&E is convicted, the penalty would be determined by the judge.

PG&E issued a statement today saying, “Based on all of the evidence we have seen to date and our review of the new indictment, we still do not believe that PG&E employees intentionally violated the federal Pipeline Safety Act and that, even where mistakes were made, employees were acting in good faith to provide customers with safe and reliable energy.”

San Bruno also asked Gov. Jerry Brown last month to appoint an independent state monitor.

San Bruno spokesman Sam Singer said the city has not heard back from Brown and said, “We’re disappointed and will continue to press the governor.”

The city’s letter to Brown came after San Bruno officials obtained copies of emails that they allege show that California Public Utilities Commission president Michael Peevey and his staff improperly exchanged private emails with PG&E executives on matters being investigated by the

In an administrative proceeding that is separate from the federal criminal case, the commission is considering how much to fine PG&E for record-keeping and safety-compliance failures. San Bruno has urged it to levy a penalty and fine of $2.45 billion.

The criminal obstruction-of-justice charge in the indictment alleges that during the NTSB investigation in February 2011, PG&E submitted a document outlining when it considered a manufacturing problem to be high-risk, but later withdrew the document in a letter on April 6, 2011, saying it had never been approved.

The indictment alleges that PG&E did not disclose in the letter that it in fact followed the practices set forth in the document between 2009 and April 2011, and also failed to disclose that it knew the policy violated a requirement of the pipeline safety law.

In its statement today, PG&E said it responded to hundreds of questions from the NTSB during the probe and that in one response, “PG&E had submitted a cover sheet approval form mismatched to the wrong internal engineering document.”

“PG&E corrected this error with a letter dated April 6, 2011. The NTSB published the letter on its accident investigation docket on September 30, 2011, and it has been publicly available since then. PG&E believes the letter is true and accurate and stands by it,” the utility said in its statement.

Julia Cheever, Bay City News

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