SAN BRUNO -- Adding to the fallout from the deadly San Bruno pipeline blast, a federal grand jury on Tuesday indicted PG&E on criminal charges for violations of federal pipeline regulations.
The 12-count indictment alleges that PG&E knowingly and willfully violated the federal Pipeline Safety Act and its regulations between 2003 and 2010, culminating in the September 2010 explosion that killed eight people, injured 66 and destroyed 38 homes.
"The citizens of Northern California deserve to have their utility providers put the safety of the community first," U.S. Attorney Melinda Haag said in a prepared release. "Today's indictment of PG&E for violating the minimum safety standards established by the Natural Gas Pipeline Safety Act reflects the company's failure to follow that very basic principle."
PG&E, which last week announced it had been warned that a criminal indictment was pending, said in a prepared release the charges have no merit and it will remain focused on improving the safety of its century-old natural gas system.
The utility has committed to spend $2.7 billion on safety related work, including upgrades and improvements to the natural gas system. In 2013, it opened a state-of-the-art gas control center in San Ramon.
Filed with the U.S. District Court in San Francisco, the indictment states that PG&E failed to properly identify potential threats to a gas pipeline beneath San Bruno, failed to gather relevant data that could have forestalled the explosion, maintained flawed records and didn't accurately assess the dangers related to the line.
PG&E faces a maximum penalty of $500,000 for each count, or a fine based on gains the company realized through a violation of the pipeline statutes or the loss caused to the victims. It's also possible, legal experts said last week, that some of the utility's gas pipeline operations could be forced into receivership and placed under the control of an independent authority as a result of the criminal prosecution.
The criminal charges resulted from a joint investigation by federal, state and local officials.
"Today's indictment is an important step in providing justice for the individuals, families and community devastated by the 2010 pipeline explosion and fire in San Bruno," state Attorney General Kamala Harris said in a prepared release. "As alleged in the indictment, PG&E knowingly and willfully failed to identify and evaluate threats to its transmission pipelines."
Following their investigations, state and federal regulators concluded that flawed record keeping and lax maintenance efforts were the primary contributors to the gas pipeline explosion.
In addition to the criminal charges, PG&E faces the prospect of a record-setting fine of up to $4 billion from the state Public Utilities Commission in connection with the lethal blast. The state regulatory agency is expected to announce its penalty this year.
"One of the worst natural gas disasters in American history was caused by PG&E's gross misconduct,¿" San Bruno Mayor James Ruane said in response to the criminal charges. "Its executives should get the harshest penalty to prevent this from ever happening again."
Both the utility and its primary state regulator have failed to protect the public, said state Sen. Jerry Hill, a Democrat whose legislative district includes San Bruno. "PG&E and the PUC have failed to put the safety of the public first and we will not stop fighting until they do so."
The federal indictment alleges that San Francisco-based PG&E knew it had faulty records and was warned by employees, regulatory agencies, auditors and other experts about the deficiencies related to Line 132, the gas pipeline that exploded in San Bruno.
"Despite knowledge of these deficiencies, PG&E did not create a record-keeping system for gas operations that would ensure that pipeline records were accessible, traceable, verifiable, accurate and complete," it alleges.
Following the release of the criminal charges, PG&E CEO Anthony Earley issued a prepared statement describing the San Bruno blast as "a tragic accident."
"We've taken accountability and are deeply sorry," he said. "We have worked hard to do the right thing for victims, their families and the community, and we will continue to do so."
Contact George Avalos at 408-859-5167. Follow at twitter.com/georgeavalos