Regulatory judges in California have levied a massive fine to the tune of $1.4 billion on the state’s largest utility company, Pacific Gas and Electric (PG&E) in relation to a gas pipeline explosion that occurred in 2010. The massive explosion occurred in the San Mateo County city of San Bruno and resulted in dozens injured and the deaths of eight people. Two of the victims were a mother and her 13-year-old child. In addition to the loss of life, the pipeline explosion caused an entire neighborhood of more than three dozen homes to burn to the ground. The $1.4 billion penalty is the heaviest public-safety fine ever levied against a public utility in California.
The pipeline that ruptured and caused the explosion was an aging 30-inch natural gas line that had originally been installed in 1956. Jacqueline Greig, the mother of the 13-year-old child, actually worked for the California Public Utilities Commission (CPUC). In her role in the company Greig had been involved in the study of investment proposals as they related to the safety of the old pipelines and in a sad twist of fate, she became one of eight victims in one of the state’s largest utility disasters.
ABC News is reporting that according to CPUC, the cause of the pipeline explosion was due to approximately “3,800 violations of state and federal law regulations” in the operation of PG&E gas pipelines. Further, in early 2014, a federal grand jury charged PG&E with “knowingly and willingly violating the federal Pipeline Safe Act.” The jury also charged the utility with obstructing a federal investigation into the disaster. PG&E plead not guilty to those charges and the grand jury case is still pending in San Francisco’s federal court.
According to Timothy J. Sullivan, one of the judges that wrote the order, the heavy penalty is intended to “send a strong message to PG&E” as well as other pipeline utilities, that they must be in full compliance with “federal and state pipeline safety requirements, or face severe consequences.” However, PG&E, while accepting accountability and acknowledging “a penalty is appropriate” still has 30 days in which to appeal the penalty. According to PG&E representative Greg Snapper, the utility company is “reviewing the decision.”
One controversial aspect to the $1.4 billion safety fine levied against PG&E is that the largest portion of the funds are to be paid directly to the state of California. An amount of $950 million will be sent to the state’s general fund, which means it will not necessarily be spent on increasing the safety of aging pipelines but could be allocated to other projects. Only $400 million will be directly allocated for improvements in the pipelines with an additional $50 million to “enhance pipeline safety.”
This allocation of funds was not received well by Jim Ruane, Mayor of San Bruno who stated that he was “disappointed” because he did not believe the allocation was enough to improve pipeline safety. Representing officials in San Bruno, Ruane further stated that “Overall we’re not pleased with it.”
It remains to be seen if PG&E, as California’s largest utility company and the company responsible for one of California’s largest utility disasters will file an appeal against the levied fine of $1.4 billion. The alternative is to fully accept the heavy fiscal responsibility for the deadly explosion that resulted in death and the significant destruction of property and focus on public safety.
By Alana Marie Burke