A state appeals court in San Francisco on Tuesday upheld a $14.35 million fine imposed by the California Public Utilities Commission on PG&E for a belated and misleading correction of records on a natural gas pipeline in San Carlos.
The correction, submitted to the PUC on July 3, 2013, concerned seams on Line 147, a 3.8-mile high-pressure pipeline in San Carlos. The previous incorrect information affected the amount of pressure the PUC authorized for the line in 2011.
The correction was submitted the day before a holiday weekend under the title of “errata,” a term normally used to disclose minor typographical errors.
The fine, levied by the commission on Dec. 19, 2013, included $11.45 million for the utility’s delay of more than seven months after verifying the information to submit it formally to the PUC, plus $2.9 million for a misleading and incomplete correction.
The commission said the “errata” filing had the effect of concealing significant information and was also not allowed because the proceeding to set pipeline pressure was closed. PG&E should have petitioned to reopen the record instead, the commission said.
The commission’s probe of the correction came in the wake of the Sept. 9, 2010, explosion of a PG&E pipeline in San Bruno in which eight people died. The National Transportation Safety Board determined that the cause was a rupture in a defective seam weld that was incorrectly listed in
PG&E records as seamless.
In the aftermath of the tragedy, PG&E was ordered by the PUC to improve its record-keeping and inform the commission of any information affecting the safety of pipeline operations.
After receiving the fine, PG&E appealed to the state Court of Appeal, which handles appeals of PUC rulings. In Tuesday’s decision, a three-judge panel unanimously upheld the penalty in a 63-page opinion.
PG&E spokesman Donald Cutler said the utility will not appeal further to the state Supreme Court.
“We accept the ruling and do not intend to appeal,” Cutler said.
The appeals court rejected a series of PG&E arguments, including claims that no harm was done by the belated correction, that the fine was incorrectly calculated and that the penalty violated a constitutional prohibition on excessive fines.
“Although the amount is large, so is the real and potential harm caused by PG&E’s inaction,” Justice James Richman wrote for the court.
Richman wrote that it was “preposterous” for PG&E to argue that the PUC should not have used its authority to impose a fine unless harm such as another explosion had occurred.
“‘No harm, no foul’ may work in the schoolyard, but it is no principle for the maintenance of public safety. Given the context here, PG&E’s emphasis on actual damages is dismaying, antithetical to the entire concept of deterrence,” Richman wrote.
PG&E had originally reported that three sections of line 147 were seamless and that a fourth had a double-arc weld. On the basis of that information, the PUC in 2011 authorized operation of the line at a pressure of 365 pounds per square inch.
In the correction, PG&E said all four segments had a weaker type of single weld, which required a pressure limit of no more than 330 pounds per square inch. The utility said it had already been operating the line at that pressure or lower.
In a separate case, the commission in April imposed a record $1.6 billion fine on PG&E in three proceedings related to the San Bruno explosion. The fine was for violations of federal and state regulations on pipeline record-keeping, classification and maintenance.
PG&E Chairman Tony Earley said at the time that the utility did not expect to appeal that fine.
Julia Cheever, Bay City News