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PG&E Could Face More Fines for Fatal Blast

SAN FRANCISCO (CN) - Pacific Gas & Electric may face new criminal fines for the pipeline explosion that killed eight people and leveled 38 homes in San Bruno in 2010, a federal judge ruled Wednesday.

U.S. District Judge Thelton E. Henderson said he needs more details to decide whether calculating the profits PG&E gained by breaking federal laws would "unduly complicate" a criminal trial against the utility giant.

Under the Alternative Fines Act, the federal government can fine PG&E no more than twice the amount it gained or lost by breaking federal laws.

The government charged PG&E with 27 counts of violating the federal Pipeline Safety Act before the fatal blast that leveled a neighborhood in 2010, damaging 108 homes.

In its motion to dismiss the alternative fines, PG&E said the $1.6 billion penalty assessed by the California Public Utilities Commission - the largest fine ever imposed on a utility by the state - coupled with its civil settlements justify dismissing any new alternative fines.

Judge Henderson did not appear persuaded.

"PG&E cites no authority to suggest that payments of state fines or civil settlements defeat the purposes of a criminal fine authorized by federal statute, other than to note that the Alternative Fines Act was intended to prevent defendants from profiting from their wrongdoing," he wrote in an 8-page ruling.

Henderson cited U.S. v. BP Products, a 2009 case from the Southern District of Texas, which BP agreed to pay $373 million in alternative fines, despite having paid $1.6 billion in civil settlements and $21.7 million in other fines for a fatal oil refinery blast in Texas and pipeline leaks in Alaska.

But the judge said he needs more details from the government before he can decide whether calculating PG&E's ill-gotten gains would "unduly complicate" an already complex trial for the jury.

Henderson ordered the government to reveal the kinds of evidence and approximate number and types of witnesses it plans to present at trial to prove PG&E profited by failing to maintain pipelines.

"The Court will consider this proposal and, depending on its complexity, make a final determination whether allowing the government to seek gains-based alternative fines would be appropriate," Henderson wrote.

The judge agreed with PG&E that determining the losses it suffered from the pipeline safety violations and subsequent blast would overly complicate the trial.

PG&E said calculating the losses would require the court to litigate "500 different mini-trials" and look at issues affecting individual victims, including home values and hospital bills, while differentiating between financial losses and non-monetary damages, such as emotional distress.

Henderson granted PG&E's motion to dismiss loss-based alternative fines and gave the U.S. government until Jan. 11, 2016, to submit its plan for proving PG&E profited by failing to maintain pipelines in violation of federal law.

The judge has yet to rule on four other motions to dismiss PG&E filed in September, alleging multiplicity, failure to state an offense and that erroneous instructions were given to the grand jury before the indictment.

A jury trial is set for March 8, 2016.

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