Defendant’s Supplement of Recent Adverse Publicity 03-07-16

8/19/2019 Defendant’s Supplement of Recent Adverse Publicity 03-07-16

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DEF.’S SUPPLEMENT ORECENT ADVERSE PUBLICIT

Case No. CR-14-00175-TE

LATHAM & WATKINS LLPSteven M. Bauer (Bar No. 135067)

[email protected] A. Tough (Bar No. 218056)

[email protected] Montgomery Street, Suite 2000San Francisco, California 94111-6538

Telephone: +1.415.391.0600Facsimile: +1.415.395.8095

LATHAM & WATKINS LLPMelissa Arbus Sherry ( pro hac vice)

[email protected] 11th Street, NW, Suite 1000Washington, DC 20004-1304Telephone: +1.202.637.2200Facsimile: +1.202.637.2201

CLARENCE DYER & COHEN LLPKate Dyer (Bar No. 171891)

[email protected] Ellis StreetSan Francisco, California 94109-7807Telephone: +1.415.749.1800Facsimile: +1.415.749.1694

Attorneys for DefendantPACIFIC GAS AND ELECTRIC COMPANY

UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA

SAN FRANCISCO DIVISION

UNITED STATES OF AMERICA

v.

PACIFIC GAS AND ELECTRICCOMPANY,

Defendant.

CASE NO. CR-14-00175-TEH

DEFENDANT’S SUPPLEMENT OFRECENT ADVERSE PUBLICITY INSUPPORT OF ITS REQUEST FORJURY QUESTIONNAIRE ANDCERTAIN OTHER JURYSELECTION PROCEDURES

Judge: Hon. Thelton HendersonDate: March 7, 2016Time: 3:00 p.m.Place: Courtroom 2, 17th Floor

Case 3:14-cr-00175-TEH Document 343 Filed 03/07/16 Page 1 of 8


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1 DEF.’S SUPPLEMENT ORECENT ADVERSE PUBLICIT


The threat of adverse pretrial publicity denying defendant Pacific Gas and Electric

Company (“PG&E”) its constitutional right to a fair and impartial jury has only increased since

PG&E filed its Request for Jury Questionnaire and Certain Other Jury Selection Procedures

(“Request”) on February 22, 2016. Dkt. 297. The steady drum beat of media coverage, which

has vividly connected the tragic San Bruno explosion to this trial, appears to be reaching a

crescendo at the most sensitive juncture—the eve of jury selection when such adverse publicity

in the media may have the greatest prejudicial impact on the minds of potential jurors.

The supplemental examples below of adverse pretrial publicity against PG&E since

February 22 (which PG&E respectfully submits in support of its Request) further confirm the

acute need for a jury questionnaire and additional jury selection procedures in this case. See id.

(1) Just last night, SFGate.com and the San Francisco Chronicle published an article thatappears to be based on sealed (i.e., leaked) court documents. It reported: “PG&E haddecided it would test for weld problems on its older lines only if pressure on the pipeshad spiked to a level 10 percent above the standard defined under federal rules,according to an internal company document instructing operators how to manage thegas transmission system. A month later, PG&E executives said the policy documentwas only a draft and indicated that it was never been in effect…. The indictment ofPG&E says that denial was an obstruction of justice. It says investigators turned uprecords that showed PG&E repeatedly used the policy to avoid testing lines like the onethat exploded in San Bruno.” J. Van Derbeken, Tug-of-War over Lawyers’ EmailsCould Delay PG&E Trial, SFGate.com (Mar. 6, 2016) (“killed eight people and

destroyed 38 homes”) (http://www.sfgate.com/crime/article/Tug-of-war-over-lawyers-emails-could-delay-6873879.php). Reported also at San Francisco Chronicle (http://www.sfchronicle.com/crime/article/Tug-of-war-over-lawyers-emails-could-delay-6873879.php). The article leads with this reused image:

(1A) Connected to the SFGate article are social media comments posted by readers,including one that illustrates the prejudicial influence of the information: “Way to lookguilty as hell, PG&E.” (http://www.sfgate.com/crime/articleComments/Tug-of-war-over-lawyers-emails-could-delay-6873879.php).


http://www.sfgate.com/crime/article/Tug-of-war-over-lawyers-emails-could-delay-6873879.phphttp://www.sfgate.com/crime/article/Tug-of-war-over-lawyers-emails-could-delay-6873879.phphttp://www.sfgate.com/crime/article/Tug-of-war-over-lawyers-emails-could-delay-6873879.phphttp://www.sfgate.com/crime/article/Tug-of-war-over-lawyers-emails-could-delay-6873879.phphttp://www.sfchronicle.com/crime/article/Tug-of-war-over-lawyers-emails-could-delay-6873879.phphttp://www.sfchronicle.com/crime/article/Tug-of-war-over-lawyers-emails-could-delay-6873879.phphttp://www.sfchronicle.com/crime/article/Tug-of-war-over-lawyers-emails-could-delay-6873879.phphttp://www.sfchronicle.com/crime/article/Tug-of-war-over-lawyers-emails-could-delay-6873879.phphttp://www.sfgate.com/crime/articleComments/Tug-of-war-over-lawyers-emails-could-delay-6873879.phphttp://www.sfgate.com/crime/articleComments/Tug-of-war-over-lawyers-emails-could-delay-6873879.phphttp://www.sfgate.com/crime/articleComments/Tug-of-war-over-lawyers-emails-could-delay-6873879.phphttp://www.sfgate.com/crime/articleComments/Tug-of-war-over-lawyers-emails-could-delay-6873879.phphttp://www.sfgate.com/crime/articleComments/Tug-of-war-over-lawyers-emails-could-delay-6873879.phphttp://www.sfgate.com/crime/articleComments/Tug-of-war-over-lawyers-emails-could-delay-6873879.phphttp://www.sfchronicle.com/crime/article/Tug-of-war-over-lawyers-emails-could-delay-6873879.phphttp://www.sfchronicle.com/crime/article/Tug-of-war-over-lawyers-emails-could-delay-6873879.phphttp://www.sfgate.com/crime/article/Tug-of-war-over-lawyers-emails-could-delay-6873879.phphttp://www.sfgate.com/crime/article/Tug-of-war-over-lawyers-emails-could-delay-6873879.php


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(2)

(http://sfist.com/2016/03/03/pg_e_san_bruno_blast_trial.php (“The giant, blown-out

piece of gas pipeline from the 2010 San Bruno blast might be trucked to the courtroomfor PG&E’s upcoming criminal trial, which is finally happening.” (contains link toMarch 2, 2016 San Francisco Chronicle article below))).

(3) “If federal prosecutors get their way, jurors in the upcoming Pacific Gas and ElectricCo. criminal case will get to see for themselves the giant gas-transmission pipe thatexploded in San Bruno…. Prosecutors say the elaborate show-and-tell is an essential part of proving that PG&E is guilty of 13 criminal charges that grew out of theinvestigation into the September 2010 pipeline explosion that killed eight people anddestroyed 38 homes….” J. Van Derbeken, Exhibit A in PG&E Criminal Trial: GiantSection of San Bruno Pipe, San Francisco Chronicle (Mar. 2, 2016)

(http://www.sfchronicle.com/crime/article/Exhibit-A-in-PG-E-criminal-trial-giant-section-6866843.php) (includes comparisons to “Unabomber” and “murder cases”).

(3A) Embedded into the online version of that March 2 Chronicle article is an eleven-minute video titled “San Bruno’s Survivors – 5 Years After the Blast,” which depictsinterviews with survivors about their experiences, injuries, and lost loved ones andshows images of burning homes, personal injuries, and property damage. Id. Imageswithin the video include the following:


http://sfist.com/2016/03/03/pg_e_san_bruno_blast_trial.phphttp://sfist.com/2016/03/03/pg_e_san_bruno_blast_trial.phphttp://sfist.com/2016/03/03/pg_e_san_bruno_blast_trial.phphttp://www.sfchronicle.com/crime/article/Exhibit-A-in-PG-E-criminal-trial-giant-section-6866843.phphttp://www.sfchronicle.com/crime/article/Exhibit-A-in-PG-E-criminal-trial-giant-section-6866843.phphttp://www.sfchronicle.com/crime/article/Exhibit-A-in-PG-E-criminal-trial-giant-section-6866843.phphttp://www.sfchronicle.com/crime/article/Exhibit-A-in-PG-E-criminal-trial-giant-section-6866843.phphttp://www.sfchronicle.com/crime/article/Exhibit-A-in-PG-E-criminal-trial-giant-section-6866843.phphttp://www.sfchronicle.com/crime/article/Exhibit-A-in-PG-E-criminal-trial-giant-section-6866843.phphttp://sfist.com/2016/03/03/pg_e_san_bruno_blast_trial.php


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(3B) The same March 2 Chronicle article is tweeted on and can be accessed throughTwitter (https://twitter.com/sfchronicle/status/705244511576784896).

(3C) The same March 2 Chronicle article can also be accessed via Facebook, whichincludes reader comments, such as: “Too bad the jury won’t get to see the burned bodies of the victim... Not the same impact as hearing that the victims were burned todeath.” (https://www.facebook.com/sanfranciscochronicle/posts/10153945090784524)

(4)

Text of the above March 3, 2016 TV broadcast: “Jury selection expected later thismonth in the criminal trial of PG&E over the San Bruno pipeline disaster. TheChronicle reports a jury could see a 28-foot long section of the pipe that ruptured asevidence in the case. That explosion in 2010 killed eight people, injured dozens more,


https://twitter.com/sfchronicle/status/705244511576784896https://twitter.com/sfchronicle/status/705244511576784896https://twitter.com/sfchronicle/status/705244511576784896https://www.facebook.com/sanfranciscochronicle/posts/10153945090784524https://www.facebook.com/sanfranciscochronicle/posts/10153945090784524https://www.facebook.com/sanfranciscochronicle/posts/10153945090784524https://www.facebook.com/sanfranciscochronicle/posts/10153945090784524https://twitter.com/sfchronicle/status/705244511576784896


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and destroyed 38 homes. PG&E is fighting the display of that pipe. They argue it’s notrelevant to the specific charges in this case. PG&E is accused of criminal violationsincluding poor record keeping and maintenance. Also failure to identity safety threats.”(Similar reports and images were rerun multiple times during the same newscast themorning of March 3, 2016.)

(5)

Text of the above March 3, 2016 TV broadcast: “[N]ow to the trial of PG&E for thatdeadly San Bruno explosion nearly 6 years ago. When that will trial starts later thismonth, it could create quite the traffic jam. Prosecutors plan to truck a giant section ofthe pipeline to the front of the federal court house in San Francisco. The Chronicle says it could be one of the first piece of evidence the jury sees. PG&E is fighting thatidea and asking the Judge to stop it. Prosecutors say the elaborate show and tell is anessential part of proving PG&E is guilty of 13 criminal charges in the 2010 pipelineexplosion. Eight people died. 38 homes in San Bruno’s Crestmoor neighborhoodwere destroyed.”

(6) “It would be the second-largest penalty ever against PG&E for gas-related violations, behind the $1.6 billion that the commission imposed last year stemming from the 2010explosion in San Bruno that killed eight people.” J. Van Derbeken, Judge Asked toFine PG&E $112 Million for Carmel Blast, SFGate.com (Updated Mar. 3, 2016)(http://www.sfgate.com/bayarea/article/Judge-asked-to-fine-PG-E-112-million-for-Carmel-6861837.php). Reported at San Francisco Chronicle first on March 1, 2016(http://www.sfchronicle.com/bayarea/article/Judge-asked-to-fine-PG-E-112-million-for-Carmel-6861837.php).

(6A) Connected to the SFGate article above are social media comments posted byreaders, including the following: (i) “All of upper management at PG&E … should all be incarcerated for a very long time;” (ii) “Jailtime is the only thing that will get theattention of these sleezeballs. Oh, and no rate increases for ten years. NONE!” and(iii) “Fire and Fine the top ten officers of PG&E and throw them in jail.”(http://www.sfgate.com/bayarea/articleComments/Judge-asked-to-fine-PG-E-112-million-for-Carmel-6861837.php).


http://www.sfgate.com/bayarea/article/Judge-asked-to-fine-PG-E-112-million-for-Carmel-6861837.phphttp://www.sfgate.com/bayarea/article/Judge-asked-to-fine-PG-E-112-million-for-Carmel-6861837.phphttp://www.sfgate.com/bayarea/article/Judge-asked-to-fine-PG-E-112-million-for-Carmel-6861837.phphttp://www.sfgate.com/bayarea/article/Judge-asked-to-fine-PG-E-112-million-for-Carmel-6861837.phphttp://www.sfchronicle.com/bayarea/article/Judge-asked-to-fine-PG-E-112-million-for-Carmel-6861837.phphttp://www.sfchronicle.com/bayarea/article/Judge-asked-to-fine-PG-E-112-million-for-Carmel-6861837.phphttp://www.sfchronicle.com/bayarea/article/Judge-asked-to-fine-PG-E-112-million-for-Carmel-6861837.phphttp://www.sfchronicle.com/bayarea/article/Judge-asked-to-fine-PG-E-112-million-for-Carmel-6861837.phphttp://www.sfgate.com/bayarea/articleComments/Judge-asked-to-fine-PG-E-112-million-for-Carmel-6861837.phphttp://www.sfgate.com/bayarea/articleComments/Judge-asked-to-fine-PG-E-112-million-for-Carmel-6861837.phphttp://www.sfgate.com/bayarea/articleComments/Judge-asked-to-fine-PG-E-112-million-for-Carmel-6861837.phphttp://www.sfgate.com/bayarea/articleComments/Judge-asked-to-fine-PG-E-112-million-for-Carmel-6861837.phphttp://www.sfgate.com/bayarea/articleComments/Judge-asked-to-fine-PG-E-112-million-for-Carmel-6861837.phphttp://www.sfgate.com/bayarea/articleComments/Judge-asked-to-fine-PG-E-112-million-for-Carmel-6861837.phphttp://www.sfchronicle.com/bayarea/article/Judge-asked-to-fine-PG-E-112-million-for-Carmel-6861837.phphttp://www.sfchronicle.com/bayarea/article/Judge-asked-to-fine-PG-E-112-million-for-Carmel-6861837.phphttp://www.sfgate.com/bayarea/article/Judge-asked-to-fine-PG-E-112-million-for-Carmel-6861837.phphttp://www.sfgate.com/bayarea/article/Judge-asked-to-fine-PG-E-112-million-for-Carmel-6861837.php


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(7) “‘PG&E has also known about its gas distribution record-keeping failures for decades,’the PUC safety division stated in its brief for the proceeding. ‘The impacts of PG&E’sfailures have been felt across its service territory. PG&E’s gas distribution record-keeping violations endanger the public.’…. The new PUC filings, along with other proceeding such as a criminal trial connected to the San Bruno explosion that is due to begin in a few weeks, are a reminder that numerous issues brought to light by the SanBruno blast remain front and center.” G. Avalos, PG&E Could Face PUC Fines of Up

to $652 Million in Gas Records Probe, Contra Costa Times (Feb. 29, 2016)(http://www.contracostatimes.com/breaking-news/ci_29577445/pg-e-could-face-puc-fines-up-652). Repeated at, e.g., Marin Independent Journal (http://www.marinij.com/article/zz/20160229/NEWS/160224859); San Jose Mercury News (http://www.mercurynews.com/business/ci_29577444/pg-e-could-face-puc-fines-up-652).

(8) “[I]n a criminal trial to determine PG&E’s guilt or innocence in connection with alethal explosion in San Bruno[,] …. [p]rosecutors intend to prove that PG&E knew ofmanufacturing problems on the natural gas pipeline that exploded, destroyed documentsconnected to the pipeline hidden beneath San Bruno, attempted to impede a federal probe into the aftermath of the blast, sought to divert revenue to profits at the expenseof safe gas operations and equipment, and harvested ill-gained profits by neglecting

safety.” G. Avalos, San Bruno: PG&E and Federal Prosecutors Dig in Ahead ofCriminal Trial, Contra Costa Times (Feb. 24, 2016)(http://www.contracostatimes.com/news/ci_29558257/san-bruno:-pge-and-federal- prosecutors-dig-in-ahead-of-criminal-trial). Repeated at, e.g., Marin Independent Journal (http://www.marinij.com/article/ZZ/20160224/NEWS/160227471); San Jose Mercury News (http://www.mercurynews.com/business/ci_29558257/san-bruno-pg-e-and-federal-prosecutors-dig).

(8A) The San Jose Mercury News copy of the above February 24 article also is linkedto and can be accessed from Facebook with this image:

(https://www.facebook.com/mercurynews/posts/10154056119291337).


http://www.contracostatimes.com/breaking-news/ci_29577445/pg-e-could-face-puc-fines-up-652http://www.contracostatimes.com/breaking-news/ci_29577445/pg-e-could-face-puc-fines-up-652http://www.contracostatimes.com/breaking-news/ci_29577445/pg-e-could-face-puc-fines-up-652http://www.contracostatimes.com/breaking-news/ci_29577445/pg-e-could-face-puc-fines-up-652http://www.marinij.com/article/zz/20160229/NEWS/160224859http://www.marinij.com/article/zz/20160229/NEWS/160224859http://www.marinij.com/article/zz/20160229/NEWS/160224859http://www.mercurynews.com/business/ci_29577444/pg-e-could-face-puc-fines-up-652http://www.mercurynews.com/business/ci_29577444/pg-e-could-face-puc-fines-up-652http://www.mercurynews.com/business/ci_29577444/pg-e-could-face-puc-fines-up-652http://www.mercurynews.com/business/ci_29577444/pg-e-could-face-puc-fines-up-652http://www.contracostatimes.com/news/ci_29558257/san-bruno:-pge-and-federal-prosecutors-dig-in-ahead-of-criminal-trialhttp://www.contracostatimes.com/news/ci_29558257/san-bruno:-pge-and-federal-prosecutors-dig-in-ahead-of-criminal-trialhttp://www.contracostatimes.com/news/ci_29558257/san-bruno:-pge-and-federal-prosecutors-dig-in-ahead-of-criminal-trialhttp://www.contracostatimes.com/news/ci_29558257/san-bruno:-pge-and-federal-prosecutors-dig-in-ahead-of-criminal-trialhttp://www.marinij.com/article/ZZ/20160224/NEWS/160227471http://www.marinij.com/article/ZZ/20160224/NEWS/160227471http://www.marinij.com/article/ZZ/20160224/NEWS/160227471http://www.mercurynews.com/business/ci_29558257/san-bruno-pg-e-and-federal-prosecutors-dighttp://www.mercurynews.com/business/ci_29558257/san-bruno-pg-e-and-federal-prosecutors-dighttp://www.mercurynews.com/business/ci_29558257/san-bruno-pg-e-and-federal-prosecutors-dighttp://www.mercurynews.com/business/ci_29558257/san-bruno-pg-e-and-federal-prosecutors-dighttps://www.facebook.com/mercurynews/posts/10154056119291337https://www.facebook.com/mercurynews/posts/10154056119291337https://www.facebook.com/mercurynews/posts/10154056119291337https://www.facebook.com/mercurynews/posts/10154056119291337http://www.mercurynews.com/business/ci_29558257/san-bruno-pg-e-and-federal-prosecutors-dighttp://www.mercurynews.com/business/ci_29558257/san-bruno-pg-e-and-federal-prosecutors-dighttp://www.marinij.com/article/ZZ/20160224/NEWS/160227471http://www.contracostatimes.com/news/ci_29558257/san-bruno:-pge-and-federal-prosecutors-dig-in-ahead-of-criminal-trialhttp://www.contracostatimes.com/news/ci_29558257/san-bruno:-pge-and-federal-prosecutors-dig-in-ahead-of-criminal-trialhttp://www.mercurynews.com/business/ci_29577444/pg-e-could-face-puc-fines-up-652http://www.mercurynews.com/business/ci_29577444/pg-e-could-face-puc-fines-up-652http://www.marinij.com/article/zz/20160229/NEWS/160224859http://www.contracostatimes.com/breaking-news/ci_29577445/pg-e-could-face-puc-fines-up-652http://www.contracostatimes.com/breaking-news/ci_29577445/pg-e-could-face-puc-fines-up-652


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(9) “PG&E is seeking more revenue to undertake improvements and upgrades in its gastransmission and storage system in the wake of a fatal explosion in September 2010that killed eight and demolished a San Bruno neighborhood. ‘PG&E wants more andmore of our paycheck every month,’ said Mindy Spatt, a spokeswoman for The UtilityReform Network, a consumer group.” G. Avalos, PG&E Bills Headed Higher in Marchand in 2017, Contra Costa Times (Feb. 23, 2016)(http://www.contracostatimes.com/news/ci_29552486/pge-bills-headed-higher-in-

march-and-in-2017). Repeated at, e.g., Marin Independent Journal (http://www.marinij.com/article/NO/20160223/NEWS/160229920); San Jose Mercury News (http://www.mercurynews.com/news/ci_29552486/pge-bills-headed-higher-in-march-and-in-2017).

The full text news articles linked above are, for the record, also included in Appendix C hereto.

* * *

These supplemental adverse publicity examples since February 22 demonstrate that a jury

questionnaire is vital to improving the chance of securing an impartial jury in this case. For

instance, the individuals who wrote comments about “burned bodies” and “[j]ailtime” and those

who share similar views must be screened off the jury for cause, and the Court can only hope to

do so—efficiently and effectively do so—with extensive oral voir dire following the

questionnaire attached as Exhibit 1 to the Request, which is drawn from similar questionnaires in

other criminal cases. See, e.g., Skilling v. United States, 561 U.S. 358 (2010); United States v.

Blankenship, No. 5:14-cr-244, Dkt. 351 (S.D. W.Va. Sept. 2, 2015). See Dkt. 297 at 1-13.

With “vivid, unforgettable” images of burning homes and personal injuries and

recitations of death counts, these recent examples continue to paint a picture that is likely to

incite prejudice. Skilling, 561 U.S. at 384. Indeed, as the Court found when denying PG&E’s

earlier motion to strike, “the deaths, injuries, and property damage that resulted from the

explosion, and were reported by the media,” may “prejudice a jury” and “will” require “an

extensive process” for jury selection. Dkt. 43 at 8.1 There thus continues to be a “greater-than-

normal need, due to pretrial publicity, to ensure against jury bias” in this trial. Skilling, 561 U.S.

at 389. Accordingly, for all these and the reasons discussed in the Request, the Court should

1 Again, while the explosion is not relevant to the specific charges of violating regulations andobstruction here (e.g., Dkt. 273 MIL No. 1), media coverage that is factually unrelated to thecharges can impact jury selection. See Dkt. 297 at 2, 6 & n.6.


http://www.contracostatimes.com/news/ci_29552486/pge-bills-headed-higher-in-march-and-in-2017http://www.contracostatimes.com/news/ci_29552486/pge-bills-headed-higher-in-march-and-in-2017http://www.contracostatimes.com/news/ci_29552486/pge-bills-headed-higher-in-march-and-in-2017http://www.contracostatimes.com/news/ci_29552486/pge-bills-headed-higher-in-march-and-in-2017http://www.marinij.com/article/NO/20160223/NEWS/160229920http://www.marinij.com/article/NO/20160223/NEWS/160229920http://www.marinij.com/article/NO/20160223/NEWS/160229920http://www.mercurynews.com/news/ci_29552486/pge-bills-headed-higher-in-march-and-in-2017http://www.mercurynews.com/news/ci_29552486/pge-bills-headed-higher-in-march-and-in-2017http://www.mercurynews.com/news/ci_29552486/pge-bills-headed-higher-in-march-and-in-2017http://www.mercurynews.com/news/ci_29552486/pge-bills-headed-higher-in-march-and-in-2017http://www.mercurynews.com/news/ci_29552486/pge-bills-headed-higher-in-march-and-in-2017http://www.mercurynews.com/news/ci_29552486/pge-bills-headed-higher-in-march-and-in-2017http://www.marinij.com/article/NO/20160223/NEWS/160229920http://www.contracostatimes.com/news/ci_29552486/pge-bills-headed-higher-in-march-and-in-2017http://www.contracostatimes.com/news/ci_29552486/pge-bills-headed-higher-in-march-and-in-2017


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ATTORNEYS AT L AW

S AN FRANCISCO



(i) use the jury questionnaire attached as Exhibit 1 to the Request and further (ii) conduct

individual voir dire, (iii) allow attorneys to ask follow-up questions during voir dire, and

(iv) grant PG&E at least two additional peremptory challenges. See Dkt. 297 at 1-18.

Dated: March 7, 2016 Respectfully submitted,

By /s/Steven M. BauerMargaret A. ToughLATHAM & WATKINS LLP

Kate DyerCLARENCE, DYER & COHEN LLP

Attorneys for DefendantPacific Gas and Electric Company



9/41

APPENDIX C

Case 3:14-cr-00175-TEH Document 343-1 Filed 03/07/16 Page 1 of 33


10/41

http://www.sfgate.com/crime/article/Tug-of-war-over-lawyers-emails-could-delay-6873879.php

Tug-of-war over lawyers’ emails could delay PG&E trialBy Jaxon Van Derbeken Published 5:45 pm, Sunday, March 6, 2016

A federal magistrate is recommending that prosecutors seeking to convict Pacific Gas and Electric Co. of obstructing the investigation into the San Bruno

pipeline disaster be given confidential emails between the company and its lawyers, which the government believes will show that the attorneys were

involved in the alleged obstruction, The Chronicle has learned.

The magistrate’s recommendation has not been made public, but on Friday PG&E filed sealed court motions to support an objection to her findings. The

challenge means the judge overseeing the criminal trial against PG&E must settle the issue of whether the contested emails will be given to federal prosecutors.

If U.S. District Judge Thelton Henderson goes along with the recommendation from Magistrate Maria-Elena James, PG&E’s trial on the obstruction charge

and 12 counts of violating pipeline safety laws may well be delayed months beyond its scheduled March 22 opening in San Francisco.

Henderson’s ruling could come as soon as Monday, when he is scheduled to consider several motions in a case that stems from the federal investigation into

the September 2010 gas-pipeline explosion that killed eight people and destroyed 38 homes in San Bruno.

No current or former PG&E employees are charged with crimes, but the company itself faces as much as $500 million in fines if convicted.

Crucial to case

The dispute over the emails began last year, when federal prosecutors identified seven communications between PG&E executives and the company’s criminal

attorneys, from the law firm Latham and Watkins, that concerned a document at the heart of the obstruction case.

IMAGE 1 OF 2

A huge fire roars through San Bruno’s Crestmoor neighborhood on Sept. 9, 2010. PG&E is on trial for its role in a gas pipeline explosion that killed eight people and destroyed 38 homes.

Tug-of-war over lawyers’ emails could delay PG&E trial - SFGate#photo-9508715#photo-9508715#p...




11/41

That document was a letter PG&E sent to investigators with the National Transportation Safety Board in April 2011, seven months after the explosion. The

investigators were looking into PG&E practices that might have caused the blast, and one area they were focusing on was the company’s avoidance of costly

pipeline inspections that the federal government requires after gas-pressure surges.

Such inspections are intended to ensure that pressure spikes haven’t damaged critical pipeline parts such as welds, like the one that failed and contributed to

the San Bruno blast. Before the explosion, PG&E never conducted the costly inspections, opting for a less-expensive method that could not detect a bad weld.

Internal document

In March 2011, The Chronicle reported that PG&E had decided it would test for weld problems on its older lines only if pressure on the pipes had spiked to a

level 10 percent above the standard defined under federal rules, according to an internal company document instructing operators how to manage the gas-

transmission system.

A month later, PG&E executives said the policy document was only a draft and indicated that it was never been in effect. “We have no indication that it was

ever approved,” PG&E gas official William Hayes said of the policy in an April 6, 2011, letter to National Transportation Safety Board investigators.

The indictment of PG&E says that denial was an obstruction of justice. It says investigators turned up records that showed PG&E repeatedly used the policy to

avoid testing lines like the one that exploded in San Bruno.

Court documents show that prosecutors sought the emails and other documents to verify their theory that Latham and Watkins lawyers’ suggestions went into

the drafting of Hayes’ letter — and amounted to part of the alleged obstruction of the San Bruno investigation.

To support their case, prosecutors cited Hayes’ testimony before the federal grand jury that indicted PG&E. Hayes testified that although he signed the letter,

he did not write it. He said he had gotten the letter to sign from attorneys, but that he did not remember their names.

Attorney-client talks

Last year, PG&E said it was resisting turning over 140 pages of documents to prosecutors, apparently including the emails. It maintained that the documents

were confidential communications between the attorneys and their client. Prosecutors later pressed for disclosure of the seven emails, arguing that the

privilege does not extend to attorneys’ fraudulent or deceptive conduct.

James’ recommendation to Judge Henderson remains under seal, but sources with knowledge of her findings told The Chronicle that she said some of the

seven emails should be turned over to the U.S. attorney’s office.

If Henderson agrees, PG&E is likely to appeal. If the company ultimately has to turn over the emails, it will almost certainly have to find new attorneys to

defend it, something that could delay the trial for months.

Prosecutors have argued that it would be a conflict of interest for attorneys involved in the preparation of the letter at the heart of the obstruction charge to

defend the company against that very charge. They also said they needed to see the communications if the company invoked an advice of counsel defense,

essentially blaming the letter on attorneys.

“If the records show that an attorney wrote the misleading letter to the NTSB regarding PG&E’s policies or directed someone else to do so, and PG&E is relying

on that advice in an effort to negate its corrupt intent, there is a potential conflict this court will need to address,” prosecutors said in a motion filed in October.

The company has since told Henderson it will not use that defense, that as a result, prosecutors are not entitled to see the emails. A spokesman for PG&E did

not respond to a request for comment Friday.

‘Pretty common’

Rory Little, a professor at UC Hastings College of the Law in San Francisco who has been both a criminal defense lawyer and prosecutor, said government

efforts to force companies to disclose communications with lawyers are not unusual.

“This is pretty common in white-collar corporate criminal investigations, for attorney communications to come under scrutiny,” Little said. “But it’s not that

common for a magistrate judge to agree with prosecutors that the documents need to be examined.”

Even if Henderson orders the emails turned over on the grounds they may be part of the obstruction case, the chances that the lawyers could actually be

charged with obstruction are remote, Little said. “Usually, prosecutors don’t go any further,” he said.

axon Van Derbeken is a San Francisco Chronicle staff writer. Email: [email protected] Twitter: @jvanderbeken

Tug-of-war over lawyers’ emails could delay PG&E trial - SFGate#photo-9508715#photo-9508715#p...




12/41

Tug-of-war over lawyers’ emails could delay PG&E trial

BACK TO ARTICLE

CommentsSFGATE welcomes a free exchange of ideas in the Comments section. We encourage comm

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Write your comment here

11 hours ago Likes

theantireagan Rank 2001

Say, are these the same lawyers Big Tobacco used to hide incriminating documents under attorney-client p

Yes or no, that's ALWAYS been a favored corporate tactic. And, why not. As Little of Hastings pointed out,

0

Tug-of-war over lawyers’ emails could delay PG&E trial - SFGate

http://www.sfgate.com/crime/articleComments/Tug-of-war-over-lawyers-emails-could-delay-6873879.php

Case 3:14-cr-00175-TEH Document 343-1 Filed 03/07/16 Page 4 o


13/41

11 hours ago Like

permiewriter Rank 25

Way to look guilty as hell, PG&E.

1

Tug-of-war over lawyers’ emails could delay PG&E trial - SFGate

http://www.sfgate.com/crime/articleComments/Tug-of-war-over-lawyers-emails-could-delay-6873879.php



14/41

By Jaxon Van Derbeken | March 2, 2016 | Updated: March 2, 2016 8:10pm

0

Exhibit A in PG&E criminaltrial: giant section of San Brunopipe

Crime

Page 1 of 8Exhibit A in PG&E criminal trial: giant section of San Bruno pipe - San Francisco hroni!!!

"#"#$%1http:##'''!sfchronicle!com#crime#article#Exhibit-A-in-PG-E-criminal-trial-giant-section-8!!!



15/41

If federal prosecutors get their way, jurors in the upcoming Pacific

Gas and Electric Co. criminal case will get to see for themselves the

giant gas-transmission pipe that exploded in an !runo " and they

won#t have to go far to do it.

$he section of pipe, %& feet

long and ',((( pounds, is to

)e truc*ed to the front of

the federal courthouse on

Golden Gate +venue in an

rancisco as one of the first

pieces of evidence to )e

IMAGE 1 OF 3

Federal investigators inspect a 40-foot section of pipeline on Glenview Drive in San r!no near w"ere t"e

#last occ!rred$

%"oto& %a!l '"inn( )"e '"ronicle

Page $ of 8Exhibit A in PG&E criminal trial: giant section of San Bruno pipe - San Francisco hroni!!!




16/41

presented to the jury when

the trial opens this month "

unless a judge sides with

PGE and )loc*s the plan.

Prosecutors say the

ela)orate show-and-tell is

an essential part of proving

that PGE is guilty of '

criminal charges that grew

out of the investigation into

the eptem)er %(( pipeline explosion that *illed eight people and

destroyed '& homes in an !runo#s Crestmoor neigh)orhood.

If convicted, the company could face as much as /0(( million in

fines. 1o current or former PGE employees are charged.

$he 2.. attorney#s office says the explosion itself, and the '(-inch-

diameter section of ruptured pipe, )y extension, is physical evidence

that is clearly relevant to its case. Prosecutors contend the )last

could have )een prevented if PGE had adhered to pipeline safety

laws that the company is charged with violating.

howing the pipe section to the jury, they added in arguments to

2.. 3istrict 4udge $helton 5enderson, will demonstrate that the line

ran through a heavily populated, 6high-conse7uence area.8

San Bruno's Survivors - 5 Years After the Blastfrom San Francisco Chronicle PRO

Page " of 8Exhibit A in PG&E criminal trial: giant section of San Bruno pipe - San Francisco hroni!!!




17/41

5 years after San Bruno

blast, survivors find new

life

California’s natural gas

supply ust be better

regulated for

MORE ON PG&E

Irrelevant to case?

$he company is accused of % counts of violating safety laws, many

of them connected to its hapha9ard record-*eeping system, along

with one count of o)structing the federal investigation of the

explosion.

1one of the counts, PGE contends, is directly connected to the

explosion itself " something the company lawyers point to in

see*ing to have 5enderson )loc* any mention of the )last during the

trial, let alone truc*ing in the ruined pipe for the jury to see.

In particular, the PGE lawyers scoff at the notion that 6parading the

ruptured pipe on a flat)ed truc*8 is needed to show that the line ran

through a high-ris*, heavily populated area. 61o one disputes8 that,

they told 5enderson, adding that there are 6many su)stantially less-

prejudicial means to prove this same fact " including that PGE will

stipulate to it.8

‘Unabomber’ precedent

5enderson must settle that

dispute and many other

evidentiary fights )efore the

trial, which is tentatively

scheduled to )egin with jury

selection :arch %%.


"#"#$%'http:##(((!sfchronicle!com#crime#article#Exhibit-A-in-PG-E-criminal-trial-giant-section-'8!!!



18/41

!"#$’s %uge profit fro

exit fee signals need forrefor

Professor ;ory ac9yns*i pleaded guilty in ??& to a

string of )om)ings that *illed three people and injured %' others, so

the shac* issue was never decided. $he structure is now at the

1ewseum in @ashington, 3.C.

‘This is not unusual’

6$he point )eing, this is not unusual in this *ind of high-profile trial

" you typically see this in murder cases, where the prosecutors

ma*e them go see the scene,8


19/41

Little added, “I would be wondering, ‘is this purely to get the jury all

excited about the case’” — and is it relevant to the charges against

P!"#

Bad records

P!" was indicted in $pril on allegations that it repeatedly and

%nowingly violated provisions o& the &ederal 'atural as Pipeline

(a&ety $ct re)uiring operators to *aintain accurate records about

gas pipes, identi&y ris%s to lines and inspect or test when pipe

pressures exceeded the legal *axi*u*+

he obstruction charge accuses P!" o& *isleading investigators bydisowning a docu*ent that outlined a sche*e &or avoiding costly

pipeline inspections a&ter gas-pressure surges, in apparent de&iance

o& &ederal law+

P!" insisted to investigators that the policy docu*ent was only a

dra&t+ $s &or the regulatory violations, co*pany lawyers contend that

“even the govern*ent’s witnesses discuss engineers striving to do

their level best with new, unclear regulations — o&ten while grappling

with con&licting advice &ro* the regulators the*selves+”

Prosecutors say they *ay call as a witness &or*er P!" .orp+ .hie&

"xecutive /&&icer Peter 0arbee, who they say reaped tens o& *illions

in bonuses while his co*pany was allegedly cutting corners on

sa&ety+ P!" lawyers are &ighting prosecutors on this &ront as well,

saying 0arbee’s testi*ony would not be relevant to the cri*es P!"

is accused o& co**itting+

‘Pushback’ from boss

Prosecutors also are expected to call Leslie 1anach 2c'iece, who*

P!" hired in 3453 to help clean up extensive record-%eeping





20/41

proble*s with its gas syste*+ (he is expected to describe the

“pushbac%” she got &ro* P!"’s then-President, .hris 6ohns, when

she urged that the co*pany adopt a new record-%eeping policy+

2c'iece is also expected to recount &inding a co*pany *ap o& the

(an 1runo pipeline in a trash bin outside her o&&ice in 7alnut .ree%+

he *ap she provided had handwritten re&erences to the 5899

discovery o& a &lawed weld on the (an 1runo line+

Prosecutors say the discovery should have pro*pted P!" to test

the rest o& the line &or weld proble*s, so*ething it never did+ he

explosion happened when the pipe ruptured at a substandard weld,

investigators &ound+

Map wasn’t destroyed

P!" :ice President (u*eet (ingh told 2c'iece to destroy the *ap

because it had been scanned into the co*pany’s co*puter syste*,

prosecutors say+ ;owever, the co*pany never disclosed the

existence o& the 5899 notation to investigators — prosecutors say

they got the docu*ent &ro* 2c'iece, who %ept it in a sa&e deposit

box rather than destroy it+

P!" wants ;enderson to prevent 2c'iece &ro* ta%ing the stand,

arguing that prosecutors waited too long to disclose her testi*ony

and that it a*ounts to hearsay+

Jaxon Van Derbeken is a San Francisco Chronicle staff writer. Email:

[email protected]

Jaxon Van

Derbeken

Police/CourtsReporter





21/41

© 2016 Hearst Corporation





22/41

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San Francisco Chronicle

PG&E lawyers not only want to ban any mention of the fatal blast from the

trial, they also want to block the jury from seeing the pipe.

March 2 at 8:18pm ·

If federal prosecutors get their way, jurors in the upcoming Pacific Gas and Electric

Co. criminal case will get to see for themselves the giant gas-transmission pipe that

exploded in San Bruno.

Exhibit A in PG&E criminal trial: San Bruno pipe

SFCHRONICLE.COM

22 Likes 5 Comments 3 Shares

Share

Top CommentsDirk Johnson, Anna Marie Kingdom, Harith Al-Rubaie and 19 others

like this.

3 shares

Douglas Le Too bad the jury won't get to see the burned bodies of the

victim... Not the same impact as hearing that the victims were burned to death.

March 4 at 1:22am · Edited

Leslie Aguayo Critical to follow the money on this one. I have troublewrapping my mind around a public utility that has shareholders.

2 · March 2 at 8:23pm

Michael C Palau Of course they do!

I'm sure Manson's lawyers wanted

no mention or pictures of Sharon Tate either


1 Reply

Jan Blum of course they want to strike the evidence against them.

March 3 at 9:39pm

Marie Russo That's total BS !


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PG&E lawyers not only want to ban any... - San Francisco Chronicle

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23/41

http://www.sfgate.com/bayarea/article/Judge-asked-to-fine-PG-E-112-million-for-Carmel-6861837.php

Judge asked to fine PG&E $112 million for Carmel blastBy Jaxon Van Derbeken Updated 2:52 pm, Thursday, March 3, 2016

Pacific Gas and Electric Co. should be fined nearly $112 million in connection with a natural

gas explosion that leveled a Carmel cottage and damaged three other homes in 2014, the

safety division of the state Public Utilities Commission says.

“Protecting public safety mandates a substantial fine being applied to PG&E,” Ed Moldavsky, an

attorney for the safety division, said Friday in urging administrative law Judge Maribeth Bushey t

impose a $111.9 million fine against the company for its “deeply flawed” records and for allegedly

failing to reveal a 12-year gap in pipeline repair documents.

A house at Guadalupe and 3rd in Carmel after a gas explosion on March 3, 2014.

Judge asked to fine PG&E $112 million for Carmel blast - SFGate




24/41

It would be the second-largest penalty ever against PG&E for gas-related violations, behind the

$1.6 billion that the commission imposed last year stemming from the 2010 explosion in San

Bruno that killed eight people.

PG&E noted that it has already paid $10.8 million in fines for the March 3, 2014, blast in Carmel,

after regulators found the company had failed to alert residents of the gas leak promptly and had

handled the emergency poorly.

The company maintains it should not be penalized further, saying the safety division’s

recommendation misinterprets “applicable regulations and the record in this proceeding, and

(fails) to acknowledge the significant improvements PG&E has made to its distribution records.”

The Carmel explosion happened as crews were replacing a street distribution gas line, a smaller

pipe than the type that ruptured in San Bruno. The replacement line was supposed to be hooked uto a separate pipeline, which PG&E records showed was made of steel.

However, sometime after 1997, PG&E or a contractor had inserted a plastic pipe inside the steel

one. In doing so, workers made slices in the steel line, rendering it useless for carrying natural gas

No one marked the changes on PG&E’s pipeline maps.

In 2014, workers relying on the inaccurate documents drilled into the old steel main and pierced

the plastic line inside. Gas then flowed out of the plastic line and into the surrounding steel line.

The gas escaped through a cut in the steel pipe and eventually got into the cottage at Third Avenu

and Guadalupe Street. A pilot light apparently touched off the explosion that destroyed the one-

bedroom cottage, which was empty, and damaged three nearby homes. No one was injured.

Utilities commission staffers say a similar incident happened in July 2013 in Mountain View, whe

welding crews caused a leak when they melted an unmapped plastic insert in a steel pipe. The lea

forced an evacuation but caused no injuries.

PG&E recently conceded that it has lost 12 years of gas-line paper repair records for the South Ba

but has not said that contributed to the Mountain View incident. Moldavsky accused the company

of hiding the problem from regulators until last June, more than year after the Carmel blast

investigation began.





25/41

“PG&E should be reminded that the commission and its staff are not operating on a ‘need-to-kno

basis with PG&E,” Moldavsky wrote in his recommendation. “It should not have taken an (official

regulatory probe) to pry this information from PG&E.

“PG&E has a duty to disclose even troubling facts to the commission,” Moldavsky wrote. “PG&E’s

failure to do so makes a mockery out of the regulatory compact.”

PG&E, in its argument to Bushey, acknowledged that “inaccuracies in its records contributed” to

both the Mountain View and Carmel incidents, but said regulators “failed to demonstrate that

PG&E fell short of what the regulations do require.”

The company conceded that it does not have “perfect records,” but added, “No pipeline operator

does.”

For their part, Carmel officials are asking Bushey to levy a $652 million fine against PG&E for the

blast in their city and other problems.

“How many times does the corporate mule need to be hit over the head with a 2-by-4 to get its

attention?” city attorneys asked Bushey. “Yet here we are again. The facts are clear, and the law is

clear.”

Jaxon Van Derbeken is a San Francisco Chronicle staff writer. Email:

[email protected]

© 2016 Hearst Communications, Inc.





26/41

udge asked to fine PG&E $112 million for Carmel blast

BACK TO ARTICLE

CommentsSFGATE welcomes a free exchange of ideas in the Comments section. We encourage comm

moderators by flagging comments that threaten violence in any way, are spam, or use vulga

epithets or other obscene terms toward a specific group. Please read our terms and conditi

(22) Comments

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Write your comment here

2 days ago Likes

mcbane Rank 407

$112M is a pittance to PG&E

0


http://www.sfgate.com/bayarea/articleComments/Judge-asked-to-fine-PG-E-112-million-for-Carmel-68618



27/41

4 days ago Likes

shootist3006 Rank 4670

All of upper management at PG&E and the CA Public utilities Commission that regulates them should all bea facility like San Quentin, Folsom or pelican bay. Not some white collar country club!

2

4 days ago (edited) Likes

noescuses Rank 172

Jailtime is the only thing that will get the attention of these sleezeballs.

Oh, and no rate increases for ten years. NONE!

2

5 days ago Likes


No amount of fines will do the job.

Break PG&E up, hand its service territories over to municipal utility districts. Disband the PUC - which has pincompetent. And criminal charges for all the crimes.

3

theantireagan Rank 2001





28/41

5 days ago Likes

Fines are tax deductible if NOT punitive or NOT paid to the govt. (Fines can be charged to ratepayers by PUC action increases or to ensure utility solvency.)

Most of the San Bruno fine will be deducted from income because the CA legislature failed to pass a law preventing it.because EVERY Repub voted against.

http://ww2.kqed.org/news/2015/07/14/bill-would-block-pge-from-deducting-115-million-of-san-bruno-fine

Depending on how the proposed fines for... » more» more

2


primaryfocus Rank 123

how about this For EVERY explosion two-five from the executive board are removed and never to hold officPG&E or fail 240 days in jail with no probation offered

If two or more explosions happen in a 8 year period then GOV'T has 10 years to break up the monopoly. Emup to multiple energy sources.

2

2 days ago Like

MrInsBrokerSF Rank 891

@primaryfocus You are far too generous or lax in your proposal. The State should just take ovcombine them in one new state power agency to be run by a non profit public benefit corp. simimplement the same strict penalties for mismanagement people have suggested. And ban curthose top positions unless it can be clearly demonstrated they had no part in the failures of pacritical... » more» more

1





29/41

5 days ago Like


Protecting public safety mandates a substantial fine being applied to PG&E

and PG&E will make sure Customers feel it with increases.....

this is what you get with a monopoly

1

5 days ago Likes

dumdumbenny Rank 73

Translation:

PG&E customers will be paying the $112 million.

3

5 days ago Likes

optimusHackus Rank 1199

Break up PGE. Gas and electric biz

2

TeaRexx Rank 748





30/41


Notice your PG&E bills going up?They don't pay the fines, YOU pay the fines.Oh, and they "lost" the records.Kamala Harris not sending anyone to jail. Make sure we elect her to the US Senate

5

2 days ago Likes


@TeaRexx Oh yeah - 80% plus Democratic Convention approval = slam dunk!

0

5 days ago Likes

EXSFSAM Rank 492

FIVE TIMES THAT! They are smug and takes us for granted because of the CROOKS on the CPUC!!! Wai just few days before the election. She's as A crook as her mentor, jerry brown!

2

5 days ago (edited) Like


@EXSFSAM they could hundred it.....just means there will be more ZERO's in your bill

until someone goes to jail or they break them up nothing will change --- its a corrupt monopoly

1





31/41

2 days ago Likes


@EXSFSAM That former CPUC President Mr. Peavey has no shame. I'd like to see him lose what he's already collected from it since retiring. Also ban him from future public service pleas

0


toby7 Rank 198

Such a "feel good" decision...And who will pay? Yes you the taxpayers with a smile on your face....Wake up

2

5 days ago Like

guldam Rank 8913

Fire and Fine the top ten officers of PG&E and throw them in jail. If you fine the company, then customers ealways start at the top and work your way down. This is a failure of leadership.

1

5 days ago Like

pbag Rank 12

Smokescreen to de-privatize utilities.

1





32/41

5 days ago Like

toby7 Rank 198

@pbag Agree....Put it all under "big brother" so we all can pay double.....

1

5 days ago Likes


@pbagPG&E is making billions for its investors and executives.

Municipal Utility Districts (like the one Sacramento enjoys) don't turn a profit. Their rates are hinfrastructure instead of some stockholder making a literal killing.

0

5 days ago Like

section14row18 Rank 94

PG&E BLOWS UP San Bruno neighborhood in 2010. Fast forward 3.5 yrs to Carmel. PG&E BLOWS UP a

In 2014, regulators (if that's how you see the CPUC knowing what we know about their ties to PG&E) find in1. ""deeply flawed” records and for allegedly failing to reveal a 12-year gap in pipeline repair documents." (s2. "the company had failed to alert residents of the gas leak promptly" (really?)3. "handled the emergency poorly." (Nooo, I'm shocked!)

But PG&E has... » more» more

1





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5 days ago Likes

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'No pipeline operator has perfect records' - but the better ones have better records than PG&E seems to haaccurate, instead of complaining when they're fined for having inaccurate ones that result in explosions.

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Big fine urged against PG&E for Carmel blast; Judge asked to fine PG&E $112

million for Carmel blast

The San Francisco Chronicle (California)

March 1, 2016 Tuesday

Copyright 2016 San Francisco Chronicle All Rights Reserved

Section: Main News; Pg. C1

Length: 657 words

Byline: By Jaxon Van Derbeken

Body

Pacific Gas and Electric Co. should be fined nearly $112 million in connection with a natural-gas

explosion that leveled a Carmel cottageand damaged three other homes in 2014, the safety division of

the state Public Utilities Commission says.

″ Protecting public safety mandates a substantial fine being applied to PG&E,″ Ed Moldavsky, an

attorney for the safety division, said Friday in urging administrative law Judge Maribeth Bushey to

impose a $111.9 million fine against the company for its ″ deeply flawed″ records and for allegedly

failing to reveal a 12-year gap in pipeline repair documents.

It would be the second-largest penalty ever against PG&E for gas-related violations, behind the $1.6

billion that the commission imposed last yearstemming from the 2010 explosion in San Bruno that

killed eight people.

PG&E noted that it has already paid $10.8 million in finesfor the March 3, 2014, blast in Carmel, after

regulators found the company had failed to alert residents of the gas leak promptly and had handled

the emergency poorly.

The company maintains it should not be penalized further, saying the safety division’s recommendation

misinterprets ″ applicable regulations and the record in this proceeding, and fails to acknowledge the

significant improvements PG&E has made to its distribution records.″

The Carmel explosion happened as crews were replacing a street distribution gas line, a smaller pipe

than the type that ruptured in San Bruno. The replacement line was supposed to be hooked up to a

separate pipeline, which PG&E records showed was made of steel.

However, sometime after 1997, PG&E or a contractor had inserted a plastic pipe inside the steel one.

In doing so, workers made slices in the steel line, rendering it useless for carrying natural gas. No one

marked the changes on PG&E’s pipeline maps.

In 2014, workers relying on the inaccurate documents drilled into the old steel main and pierced the

plastic line inside. Gas then flowed out of the plastic line and into the surrounding steel line.


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The gas escaped through a cut in the steel pipe and eventually got into the cottage at Third Avenue and

Guadalupe Street. A pilot light apparently touched off the explosion that destroyed the one-bedroom

cottage, which was empty, and damaged three nearby homes. No one was injured.

Utilities commission staffers say a similar incident happened in July 2013 in Mountain View, when

welding crews caused a leak when they melted an unmapped plastic insert in a steel pipe. The leak

forced an evacuation but caused no injuries.

PG&E recently conceded that it has lost 12 years of gas-line paper repair recordsfor the South Bay,

and said that gap may have contributed to the Mountain View incident. Moldavsky accused the

company of hiding the problem from regulators until last June, more than year after the Carmel blast

investigation began.

″ PG&E should be reminded that the commission and its staff are not operating on a ’need-to-know’

basis with PG&E,″ Moldavsky wrote in his recommendation. ″ It should not have taken an official

regulatory probe to pry this information from PG&E.

″ PG&E has a duty to disclose even troubling facts to the commission,″ Moldavsky wrote. ″ PG&E’sfailure to do so makes a mockery out of the regulatory compact.″

PG&E, in its argument to Bushey, acknowledged that ″ inaccuracies in its records contributed″ to both

the Mountain View and Carmel incidents, but said regulators ″ failed to demonstrate that PG&E fell

short of what the regulations do require.″

The company conceded that it does not have ″ perfect records,″ but added, ″ No pipeline operator does.″

For their part, Carmel officials are asking Bushey to levy a $652 million fine against PG&E for the

blast in their city and other problems.

″ How many times does the corporate mule need to be hit over the head with a 2-by-4 to get its

attention?″ city attorneys asked Bushey. ″ Yet here we are again. The facts are clear, and the law is

clear.″

Classification

Language: ENGLISH

Publication-Type: Newspaper

Subject: FINES & PENALTIES (91%); ENERGY & UTILITY LAW (89%); GAS LEAKS (78%);ADMINISTRATIVE LAW JUDGES (77%); ADMINISTRATIVE PROCEDURE (77%);

LITIGATION (76%); LAWYERS (73%); ADMINISTRATIVE LAW (72%); AGENCY

ADJUDICATION (72%); JUDGES (71%); WOUNDS & INJURIES (65%); EXPLOSIONS;

GOVERNMENT; UTILITIES

Company: PG&E CORP (98%)

Ticker: PCG (NYSE) (98%)

Big fine urged against PG&E for Carmel blast; Judge asked to fine PG&E $112 million for Carmel blast


http://lost12yearsofgas-linepaperrepairrecords/http://lost12yearsofgas-linepaperrepairrecords/


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PG &E could face PUC fines of up to $652 million in gas records probe

Contra Costa Times (California)

February 29, 2016 Monday

Copyright 2016 Contra Costa Newspapers All Rights Reserved

Section: BREAKING; News; Local; BusinessLength: 679 words

Byline: By George Avalos , [email protected]

Body

SAN BRUNO -- PG&E could face fines of up to $652 million for an array of alleged violations

connected to record-keeping for its natural gas system, which has been under intense scrutiny since a

fatal explosion in San Bruno, according to a new regulatory filing Monday.

City officials in Carmel, the scene of a PG&E-caused house explosion in 2014, staffers with the statePublic Utility Commission Safety and Enforcement Division, and The Utility Reform Network have

filed opening briefs in a proceeding that could lead to the PUC imposing hundreds of millions of

dollars in penalties on the embattled utility, a PG&E filing with the Securities and Exchange

Commission on Monday disclosed.

″ PG&E has also known about its gas distribution record-keeping failures for decades,″ the PUC safety

division stated in its brief for the proceeding. ″ The impacts of PG&E’s failures have been felt across

its service territory. PG&E’s gas distribution record-keeping violations endanger the public.″

The safety unit, in a Feb. 26 filing, wants PG&E shareholders to finance a fine of $111.9 million and

is asking the PUC to order the utility to undertake several record-keeping remedies.

The new PUC filings, along with other proceeding such as a criminal trial connected to the San Bruno

explosion that is due to begin in a few weeks, are a reminder that numerous issues brought to light by

the San Bruno blast remain front and center.

″ PG&E insists that it did not break the law, despite the mountain of evidence to the contrary,″ Carmel

city officials stated in its filing with the PUC. ″ The utility’s denials show that PG&E prefers to waste

limited resources instead of facing responsibility for its actions.″

The city of Carmel, in a Feb. 26 filing, urged the PUC to impose a fine for all the record-keeping

violations being reviewed in the proceeding. The proposed $651.8 million would include a $136.6

million fine for the flawed records connected to the Carmel blast.

The San Bruno explosion, federal investigators have determined, was caused by a combination of

PG&E’s flawed record-keeping and shoddy maintenance, and the PUC’s lazy supervision of the utility.

″ PG&E disagrees with the Safety and Enforcement Division’s and the city of Carmel’s conclusions,

which we believe misinterpret applicable regulations and the record in this proceeding, and fail to

acknowledge the significant improvements PG&E has made to its distribution records,″ said PG&E

spokesman Gregory Snapper.


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A PUC law judge would have to issue a recommendation, which would then receive a final decision

from the PUC, on whether to levy fresh penalties on PG&E.

Besides the Carmel explosion, the proceeding is looking at alleged violations in connection with

incidents in Mountain View, Castro Valley, Morgan Hill, Milpitas, San Ramon, Antioch, Alameda,

Kentfield, Alamo, Lafayette, San Francisco, San Jose, Fresno, Colusa, Sacramento and Roseville.

What’s more, the PUC is also investigating missing gas leak repair records from its De Anza division,

which serves 420,000 residents in western Santa Clara County. The unit includes the cities of

Campbell, Cupertino, Los Altos, Los Altos Hills, Los Gatos, Monte Sereno, Mountain View, Palo Alto,

Saratoga, and Sunnyvale. Among the well-known corporate or government customers of the division:

Apple, Google, Lockheed Martin and the NASA Ames complex.

The De Anza division is missing records from 1979 through 1991, according to the Safety and

Enforcement Division filing.

San Francisco-based PG&E said it has undertaken numerous initiatives since the San Bruno explosion

in September 2010 to improve its gas operations. Among them, the utility has: digitized more than 12million pages of gas system records in recent years; deployed digital mapping and analytics tools for

its gas distribution system; and empowered employees to stop work on projects if the gas system

records don’t match what is observed in the field.

″ We’ve made extensive progress,″ Snapper said. ″ We have more work to do.″

Contact George Avalos at 408-859-5167. Follow him at Twitter.com/georgeavalos .

Classification

Language: ENGLISH


Subject: FINES & PENALTIES (91%); ENERGY & UTILITY LAW (90%); CITY

GOVERNMENT (89%); SUITS & CLAIMS (78%); INVESTIGATIONS (78%); CITIES (77%);

US FEDERAL GOVERNMENT (77%); SECURITIES LAW (77%); FEDERAL

INVESTIGATIONS (74%); SPECIAL INVESTIGATIVE FORCES (71%); SHAREHOLDERS

(69%); JUDGES (65%)


Organization: SECURITIES & EXCHANGE COMMISSION (56%)


Industry: PUBLIC UTILITIES COMMISSIONS (90%); NATURAL GAS & ELECTRIC

UTILITIES (90%); ENERGY & UTILITY LAW (90%); NATURAL GAS DISTRIBUTION (89%);

UTILITIES INDUSTRY (77%); NATURAL GAS PRODUCTS (77%); SECURITIES LAW (77%);

NATURAL GAS (72%)

PG&E could face PUC fines of up to $652 million in gas records probe



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San Bruno: PG&E and federal prosecutors dig in ahead of criminal trial


February 24, 2016 Wednesday




Body

SAN BRUNO -- The prosecution and the defense in a criminal trial to determine PG&E’s guilt or

innocence in connection with a lethal explosion in San Bruno appear to be firmly entrenched and

committed to winning the case, just one month before jury selection begins.

″ Both sides are digging in, neither side has blinked,

″ said Peter Henning, a professor of law with

Detroit-based Wayne State University. ″ This is gladiatorial combat in a courtroom.″

Prosecutors intend to prove that PG&E knew of manufacturing problems on the natural gas pipeline

that exploded , destroyed documents connected to the pipeline hidden beneath San Bruno, attempted

to impede a federal probe into the aftermath of the blast, sought to divert revenue to profits at the

expense of safe gas operations and equipment, and harvested ill-gained profits by neglecting safety.

San Francisco-based PG&E’s defense team plans to show that the prosecutors are engaged in a

campaign to distract jurors and prejudice them against the embattled utility, and that the government

has fashioned a case riddled with holes. PG&E attorneys say no company employee deliberately and

willfully broke pipeline safety rules in connection with the San Bruno disaster.

″ PG&E focused on maximizing profits at the expense of safety,″ the federal prosecutors stated in court

papers this week.

″ The government’s strategy here is now becoming apparent. It intends to distract and seeks to

prejudice,″ PG&E attorneys stated in their court filing this week. ″ The government will distract the

jury with weeks of testimony not directed to a careful evaluation of the actual elements of the charged

violations. And it will prejudice the jury by trying a case against a corporate logo. ″

A jury will have to sort through those arguments in a case that could last weeks or months. Meanwhile,

critics are watching with interest.

″ The truth is, and that truth is well known, that PG&E diverted funds away from safety,″ said state Sen.

Jerry Hill, whose San Mateo County district includes San Bruno.

The explosion in September 2010 killed eight and leveled a San Bruno neighborhood. PG&E faces

13 criminal counts, including 12 allegations that the company violated pipeline safety rules and one

that it obstructed a National Transportation Safety Board probe into the disaster. In December, the

judge in the trial dismissed 14 charges and sharply reduced the original maximum fine of $1.13 billion.

PG&E has pleaded not guilty on all the counts and faces a fine of up to $562 million if convicted.


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The prosecution witnesses include two key former executives with PG&E and a former top staffer with

the state Public Utilities Commission, according to court papers.

Those witnesses for the government include Peter Darbee, the ex-CEO who headed the company

during the years before the explosion as well as a period after the blast; Brian Cherry, a former

regulatory executive and lobbyist with PG&E who is one of the key figures in an email scandal that

outlines cozy ties between the PUC and PG&E that created an atmosphere of lax supervision by the

PUC of PG&E; and Paul Clanon, former executive director of the PUC.

Other key prosecution witnesses include Leslie McNiece, a former PG&E employee who was hired

to improve the utility’s record keeping system for its pipeline network, and Howard Lubow, a gas

industry expert who will testify that PG&E placed profits ahead of safety.

PG&E has objected, to one degree or another, to all the government witnesses.

The trial is due to start March 22 with jury selection. Prosecutors estimate that their presentation and

witness testimony should take roughly four weeks. It’s expected that the defense could require two

weeks for its presentation. Jury selection and jury deliberations would add an unknown amount tothose estimates.

Contact George Avalos at 408-859-5167. Follow him at Twitter.com/georgeavalos .

Classification

Language: ENGLISH


Subject: JURY TRIALS (90%); WITNESSES (89%); CRIMINAL FINES (78%); CRIMINAL

CONVICTIONS (78%); TESTIMONY (78%); LAW COURTS & TRIBUNALS (77%); LAW

SCHOOLS (76%); COUNTY GOVERNMENT (76%); CAMPAIGN FINANCE (75%); ENERGY

& UTILITY LAW (75%); ENERGY & UTILITY SECTOR PERFORMANCE (75%); US

FEDERAL GOVERNMENT (74%); FEDERAL INVESTIGATIONS (74%); JURY DUTY (73%);

COLLEGE & UNIVERSITY PROFESSORS (71%); FINES & PENALTIES (71%); EXECUTIVES

(68%)



Industry: PIPELINE TRANSPORTATION (90%); LAW SCHOOLS (76%); ENERGY &

UTILITY LAW (75%); ENERGY & UTILITY SECTOR PERFORMANCE (75%); UTILITIES

INDUSTRY (75%); NATURAL GAS PRODUCTS (75%); COLLEGE & UNIVERSITY

PROFESSORS (71%); NATURAL GAS PIPELINES (70%); PUBLIC UTILITIES

COMMISSIONS (70%); NATURAL GAS (70%)

Person: PETER A DARBEE (56%)

San Bruno: PG&E and federal prosecutors dig in ahead of criminal trial



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PG &E bills headed higher in March and in 2017


February 23, 2016 Tuesday




Body

SAN FRANCISCO -- PG&E monthly bills for residential customers are on the rise again.

The upcoming increases will arrive in two stages. Starting in March, as a result of previous approvals

by the state Public Utilities Commission, electricity bills for average residential customers will rise

$2.29 a month, bringing the average residential bill to $149.50 a month.Separately, in papers filed Tuesday with the Securities and Exchange Commission, the utility said it

needed additional revenue increases from ratepayers that could lead to a $3 a month average rise in gas

and electricity bills.

Bottom line: By January 2017, gas and electricity bills could climb to $152.50 a month, which would

be $5.29 a month higher than the current average bill for gas and electricity of $147.21 a month.

These pending and potential increases in Pacific Gas & Electric bills come on the heels of a $9.55

monthly increase for gas and electricity that went into effect on Jan. 1 of this year, the result of prior

PUC votes. At the end of 2015, the average residential PG&E bill was $137.66 a month.

″ We are here to help our customers and their families make smart energy choices and save money

whenever possible,″ said Donald Cutler, a spokesman for the utility. ″ PG&E provides our customers

with a number of programs that help them use less energy, run their homes and businesses more

efficiently and (manage) their monthly energy bills.″

PG&E is seeking more revenue to undertake improvements and upgrades in its gas transmission and

storage system in the wake of a fatal explosion in September 2010 that killed eight and demolished a

San Bruno neighborhood.

″ PG&E wants more and more of our paycheck every month,″ said Mindy Spatt, a spokeswoman for

The Utility Reform Network, a consumer group. ″

We know that customers are struggling already withhousing affordability, and higher utility bills add to that. And we believe the PUC could do more,

absolutely, to protect ratepayers.″

It could have been worse. San Francisco-based PG&E did detail on Tuesday proposals that potentially

could extract less of a bite from ratepayers than first expected.

The utility had originally anticipated it would require revenue increases from ratepayers that would

have increased monthly bills by $4 a month starting in early 2017, but that idea was replaced by the

$3 a month increase.


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Nevertheless, the already authorized increase in electricity bills of $2.29 a month, along with the

potential $3 rise starting in 2017, depending on future PUC decisions, still leaves customers facing the

prospect of monthly bills that would be $5.29 a month more, or 3.6 percent higher, than the current

PG&E

Documents

Defendant’s Supplement of Recent Adverse Publicity 03-07-16