Prosecutor: PG&E ignored regulations to cut costs

In this Sept. 9, 2010, file photo, a massive fire following a pipeline explosion roars through a mostly residential neighborhood in San Bruno, Calif. One of the country's largest utility companies is set to face a jury in a criminal trial accusing it of misleading investigators in the wake of a deadly pipeline explosion in the San Francisco Bay Area. The September 2010 blast of a Pacific Gas & Electric Co. natural gas pipeline sent a giant plume of fire into the air in a neighborhood in San Bruno, killing eight people and destroying 38 homes. Opening arguments in the trial began Thursday, June 16, 2016. (AP Photo/Jeff Chiu, File)

Pacific Gas & Electric Co. ignored pipeline safety regulations to cut costs and tried to cover up its illegal practices by misleading federal officials investigating a deadly explosion of one of its natural gas pipelines in the San Francisco Bay Area, a prosecutor said Friday as a criminal trial against the utility giant got underway.

PG&E knew exactly what to do to comply with regulations but didn’t do it, Assistant U.S. Attorney Hallie Hoffman said in her opening statement.

“Instead, it chose a cheaper method that did not ensure the safety of pipelines running through high-consequence areas,” Hoffman said.

PG&E attorney Steven Bauer said the company’s employees did what they could in the face of ambiguous regulations they struggled to understand.

“The evidence is going to show good, qualified people coming into work every day and doing the best they can under the circumstances they are in,” he said.

A PG&E natural gas pipeline exploded in the city of San Bruno six years ago, sending a giant plume of fire into the air. The blast killed eight people and destroyed 38 homes. During the investigation that followed, prosecutors say the San Francisco-based utility misled federal officials about how it was identifying high-risk pipelines.

The standard the company used violated safety regulations and led to a failure to classify the San Bruno pipeline and other similar pipelines as high risk, prosecutors said in a 2014 indictment.

Hoffman said the company did not subject the pipelines to appropriate testing, choosing a cheaper method.

Bauer said the company’s engineers did not think the pipelines posed a safety risk. The company also did not intend to mislead investigators, he said. It inadvertently sent them a draft policy about its standard for identifying high risk pipes, not one the company was actually following, he said.

PG&E has pleaded not guilty to one count of obstruction and multiple charges that it violated pipeline safety regulations by, for example, ignoring errors in its records about pipelines. It faces a $562 million fine if convicted.

Family members of blast victims along with San Bruno’s mayor, fire chief and police chief were in the courtroom during Friday’s opening statements.

Bauer cautioned jurors not to let the 2010 explosion “overwhelm” their evaluation of the case, saying the trial was not about determining compensation for the blast victims or determining future pipeline regulations.

Investigators have blamed the September 2010 blast in part on poor PG&E record-keeping that was based on incomplete and inaccurate pipeline information. California regulators fined the company $1.6 billion for the blast last year.

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