SAN FRANCISCO (CN) - Pacific Gas and Electric on Monday asked a judge to dismiss a 28-count criminal indictment on charges related to the 2010 San Bruno pipeline blast that killed eight people and leveled 38 homes.
The United States indicted PG&E on 27 counts of violating the Natural Gas Pipeline Safety Act and one count of obstructing a criminal investigation in July 2014.
In September, PG&E filed five motions to dismiss the indictment, based on alleged failures to state an offense, multiplicity, erroneous legal instructions to the grand jury and improper interpretation of the Alternative Fines Act.
Teams of attorneys from PG&E and the U.S. government spent two hours debating the utility giant's five dismissal motions before U.S. District Judge Thelton E. Henderson on Monday.
PG&E attorney James Scott Ballenger said the government cannot prosecute the company for allegedly breaking federal pipeline safety laws because the state of California has exclusive authority to regulate pipelines within its borders.
In April, PG&E was fined $1.6 billion for the explosion - the largest penalty ever assessed against a utility by the California Public Utilities Commission.
"How is it that the federal government can seek a duplicate penalty after it has officially certified that the state has exclusive authority to regulate pipeline safety on intrastate pipelines in California?" PG&E asked in its Sept. 7 motion to dismiss.
U.S. Attorney Owen Martikan responded that although the law empowers states to enforce pipeline safety standards with civil penalties, it does not strip the U.S. government's authority to criminally prosecute violations of federal law.
"Why would congress subsequentially completely remove the Attorney General's ability to bring prosecution?" Martikan asked. "Why did Congress implement these criminal measures?"
PG&E also urged the judge to dismiss 15 charges of federal pipeline safety violations on the grounds of multiplicity, arguing that one course of conduct does not warrant multiple criminal charges.
The utility company pointed to the U.S. Supreme Court decision, United States v. Universal C.I.T. Credit Corp., which found a company's policy of underpaying employees constituted only one violation of the Fair Labor Standards Act.
"This case is not about a single act," U.S. Attorney Jeffery Schenk replied. "The trial will be full of evidence of individual, distinct acts - not a single act."
Schenk pointed to the Ninth Circuit decision in United States v. Kennedy, which found a defendant that made multiple false statements to a bank as part of a single scheme could be charged on multiple counts.
PG&E also asked the judge to dismiss one count of obstructing a criminal investigation, arguing that obstruction charges can only be prosecuted in cases where the investigating agency has "regulatory" or "adjudicative" authority.
U.S. Attorney Hallie Hoffman said the National Transportation Safety Board, which investigated the blast, has the power to issue subpoenas and make witnesses testify under oath.
"The defense ignored how Congress broadened the definition of agency to include agencies that are not rulemaking or adjudicatory agencies," Hoffman said.
On PG&E's motion to dismiss over erroneous instructions to the grand jury, the prosecution argued the standard for dismissing charges on that basis is very high and requires proof of a blatant violation, such as perjury.
PG&E attorney Steven Baur said the government's theory of collective knowledge to show willfulness that was presented to the grand jury was prejudicial and cannot be used to show specific intent.
"The point of the grand jury is to ensure that cases are only brought when there's a probable cause of violating the law," Baur said. "Did that incorrect legal instruction improperly influence the jury?"
PG&E further argued the government should not be allowed to seek fines beyond the statutory maximum under the Alternative Fines Act. That law allows the government to seek criminal fines up to twice the total gain or loss that resulted from a criminal act, as long as imposing that fine does not "unduly complicate or prolong" court proceedings.
"If we go down this path of attempting to prove these AFA allegations, we're talking about a substantial amount of work.," said PG&E attorney Kate Dyer, adding the jury would have to consider civil settlements and lawsuits related to the blast, creating "hundreds of mini-trials."
U.S. Attorney Hartley West urged the judge to separate the Alternative Fines Act determinations from the jury trial to "de-complicate" the proceedings, and not to limit evidence of profits PG&E allegedly gained by failing to comply with safety standards.
Judge Henderson granted PG&E's request to submit supplemental briefings on the government's request to bifurcate the fine determination from the jury trial. The five-page briefings must be submitted by Monday, Oct. 26.
Henderson is still considering PG&E's previous motion to dismiss seven charges based on the statute of limitations, which the U.S. government argues it can still prosecute based on the theory of a continuing offense.
The government claims PG&E failed to keep accurate records of leak repairs from 1978 to 1988, along with other missing documents the company was obligated to maintain over the course of several decades.
Henderson ended the Oct. 19 hearing after two hours, with no indication on when he will rule on the motions to dismiss.Follow @NicholasIovino
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