Prosecutors drop bid for $562 million PG&E fine, maximum will be $6 million if convicted

Federal prosecutors in the criminal pipeline safety trial of PG&E Co. in San Francisco on Tuesday suddenly dropped their bid for an enhanced fine of $562 million if the utility is convicted.

Instead, the maximum penalty PG&E could now be given if found guilty of all 12 counts it faces would be $500,000 per count, or a total of $6 million.

The move came as the jury was in its fourth day of deliberations, following a five-and-one-half week trial in the court of U.S. District Judge Thelton Henderson.

Jurors left for the day shortly after 3 p.m. Tuesday and will reconvene at 9 a.m. today.

PG&E is accused of 11 counts of violating pipeline record-keeping, evaluation and testing requirements of the U.S. Natural Gas Pipeline Safety Act for high-pressure transmission lines.

It also faces one count of obstructing a National Transportation Safety Act probe into the fatal rupture and explosion of a defectively welded transmission pipeline in San Bruno in 2010. Eight people died and a neighborhood was leveled in the blast and ensuing fire.

In a 2014 indictment, prosecutors originally sought an enhanced fine under the federal Alternative Sentencing Act.

In the event of a conviction, that law would have allowed a fine of double the profit PG&E gained from the alleged crimes. The indictment alleged the base amount of such profit was $281 million, making a potential total of $562 million when doubled.

Tuesday’s move means that the possible fine, if PG&E is convicted, would be the amount normally set by the pipeline safety and obstruction laws: $500,000 per count, or a total maximum of $6 million.

Prosecutors announced the change in a two-page filing, which did not give a reason. U.S. Attorney’s Office spokesperson Abraham Simmons said he could not comment on the change.

PG&E spokesperson Greg Snapper said, “Regardless of this action or the next legal steps, we want our customers and their families to know that we are committed to re-earning their trust by acting with integrity and working around the clock to provide them with energy that is safe, reliable, affordable and clean.”

The disclosure of prosecutors’ change of heart came amid recent disputes between PG&E and the federal lawyers about how an alternative fine could be calculated and whether the fine would be determined by the current jury or by a new, second jury if PG&E were convicted.

In a brief filed on Saturday, PG&E attorneys argued that the profit PG&E gained from specific violations “would be impossible to isolate and quantify.”

In a separate civil proceeding, the California Public Utilities Commission last year fined PG&E $1.6 billion in three cases concerning the San Bruno explosion, pipeline record-keeping and maintenance of pipelines in high-population areas.

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