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PG&E Ordered to Advertise Pipeline Blast Conviction on TV

Pacific Gas and Electric must spend $3 million to advertise its criminal conviction for violations related to the fatal 2010 San Bruno pipeline blast on TV, and pay a $3 million fine under the terms of a criminal sentence handed down Thursday.

SAN FRANCISCO (CN) – Pacific Gas and Electric must spend $3 million to advertise its criminal conviction for violations related to the fatal 2010 San Bruno pipeline blast on TV, and pay a $3 million fine under the terms of a criminal sentence handed down Thursday.

U.S. District Judge Thelton Henderson handed down the sentence after hearing emotional testimony on Monday from victims who lost loved ones in the deadly natural gas explosion.

On Sept. 9, 2010, Line 132 ruptured in a residential neighborhood of the San Francisco suburb of San Bruno, causing a gas explosion and fire that killed eight people, injured 58 and destroyed 38 homes.

During a trial last summer, prosecutors presented evidence that PG&E prioritized profits over safety, neglected to keep accurate records on its pipelines and failed to adequately inspect lines that had manufacturing flaws and experienced over-pressurizations as required by federal law.

A 12-member jury convicted PG&E on five counts of Pipeline Safety Act violations and one count of obstructing an investigation into the cause of the explosion.

The sentence handed down Thursday includes a five-year probation term and a requirement that PG&E perform 10,000 hours of community service on top its existing service programs, with 2,000 of those hours to be performed by high-level executives.

During its probation, PG&E must also establish a revised compliance and ethics program and cooperate with a court-appointed monitor and the probation office, which will review PG&E's natural gas operations and records to ensure compliance with pipeline safety laws.

Advertising Requirement

In arguing that PG&E be required to advertise its criminal conviction, prosecutors cited the blitz of primetime TV ads the company aired before and during the trial, touting its commitment to safety.

PG&E initially objected to imposing an advertising requirement as part of its probation. It argued the cost of airing ads would "functionally increase the penalty beyond its statutory maximum." But the utility company later reached an agreement with prosecutors on the advertising condition before sentencing on Thursday.

As part of its probation terms, PG&E must within the next 60 days place full-page ads in the Wall Street Journal and San Francisco Chronicle "clarifying nature of offenses committed, convictions, nature of punishments imposed, and steps to be taken to prevent the occurrence of similar offenses."

Additionally, the company must advertise that same information over a three-month period with TV commercials "replicating the same channels and airtimes" it used during and before the trial.

Fulfilling that requirement will cost $3 million and result in 12,500 commercials being aired over a three-month period, according to PG&E estimates provided to the court.

The company also agreed to waive its right to appeal that condition of its probation, PG&E attorney Steven Bauer told the judge.

Adequate Punishment?

After hearing closing arguments during the trial last summer, San Bruno Mayor Jim Ruane said he hoped a criminal fine would not be viewed as simply "the cost of doing business" for PG&E, adding he was also disappointed that no individual executives faced criminal charges.

That was a sentiment repeated in victim impact statements sent to the court, which Henderson briefly addressed before handing down his sentence.

"I want to point out that the government brought this case only against PG&E, the corporation, and not against any particular individuals, and so this proceeding is limited to determine a just and fair sentence for the company as a whole," Henderson said. "Whether specific individuals deserve punishment is not before the court and never has been."

Rene Morales, who lost her 20-year-old daughter in the blast, told the court on Monday that while she understands "no CEO will see the inside of a jail cell," she also hopes those individuals will "do something every day to change and try to look back."

The maximum fine of $3 million represents a miniscule percentage of the $2.38 billion in profit PG&E earned in 2015.

Prosecutors initially sought $1.13 billion in penalties, but Henderson reduced the maximum fine to $562 million in December 2015. The U.S. government then pressed forward with plans to fine PG&E $562 million, twice the amount it allegedly gained by violating pipeline safety laws.

But in August, prosecutors abruptly dropped Alternative Fines Act charges without explanation, cutting the maximum fine to $6 million, or $500,000 per count.

In April 2015, the California Public Utilities Commission slapped PG&E with a $1.6 billion fine, the largest penalty ever assessed against a utility company in state history.

In a statement released Thursday, PG&E outlined steps it has taken to improve safety since the accident, including the replacement of hundreds of miles of gas pipelines, installation of new emergency shutoff valves, and construction of a new "state-of-the-art gas safety operations center."

"We want San Bruno and all of the communities we serve to know that we at PG&E have committed ourselves to a goal of transforming the company into the safest and most reliable energy provider in America and to re-earning their trust through our actions," PG&E declared in its statement.

Speaking outside the courthouse on Thursday, Mayor Ruane said seeing PG&E slapped with a criminal sentence was "satisfying in some ways," but added "it will never be over" for victims of the San Bruno pipeline disaster.

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Categories / Business, Criminal

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