'A Company That Lost Its Way': PG&E, Prosecutors Differ Starkly in Federal Case - NBC Bay Area
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'A Company That Lost Its Way': PG&E, Prosecutors Differ Starkly in Federal Case

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    Assistant U.S. Attorney Jeff Schenk accused PG&E of being a "company that lost its way," during his closing argument in a federal case against the utility agency. Jaxon Van Derbeken reports. (Published Tuesday, July 26, 2016)

    Prosecutors portrayed PG&E engineers as knowingly and illegally relying on faulty data to vouch for gas pipelines while the defense painted them as “good people trying the best they can” to deal with the complex federal regulations at issue in the case.

    “Pacific Gas and Electric is a company that lost its way,” Assistant U.S. Attorney Jeff Schenk told the jury in his closing argument in the case.

    The company stands accused on a dozen counts, including the alleged obstruction of the federal probe of the 2010 San Bruno gas pipeline blast that left eight people dead. Schenk said there was ample evidence in the case to show that profit was the motive for the alleged wrongdoing.

    “It forced its engineers to act like businessmen — instead of engineers,” Schenk argued to the jury. “Why? For cost.”

    Schenk said PG&E engineers knowingly relied on an inferior inspection method that was less expensive but incapable of finding weld flaws for gas lines regulations deem at-risk of becoming unstable following surges in pipeline pressure.

    PG&E engineers knew, he said, that the company’s computerized information of its lines – critical to understanding the risks involved — was problematic at best.

    “These engineers were making decisions based on data they knew to be wrong,” Schenk said.

    Separately, Schenk argued that PG&E officials intentionally misled National Transportation Safety Board investigators probing the blast.

    Specifically, he alleged, that PG&E tricked busy investigators into thinking the company did not have a policy in place to bypass federal rules requiring inspections on certain over-pressurized gas pipelines.

    While the regulations specify any overage beyond allowable levels must trigger costly inspections, PG&E accorded itself a ten percent “cushion” of pressure surges, Schenk argued.

    The company has asserted that the document involved was simply a draft that was never implemented. But Schenk told the jury that the evidence – including internal emails — showed the company had put the policy into effect and the April 2011 letter its lawyers wrote was aimed at fooling federal investigators.

    “They misled the NTSB,” Schenk said, “and misleading the NTSB is a crime.”

    The company is also charged with failing to keep proof of high pressure water tests that was required for sections of pipelines installed after 1970.

    Schenk concluded: “They knew about problems, they knew how to fix the problems, they chose not to.”

    Before closing arguments on Tuesday, prosecutors dropped one of the counts related to the lack of test records. That action may have been prompted by PG&E’s having produced hundreds of pages of previously missing test records in the midst of trial.

    In response to the government’s case, meanwhile, PG&E’s lead lawyer Steve Bauer argued that the engineers charged with complying with federal law had to sort out a confusing and contradictory array of regulations that even federal regulators did not fully understand.

    Bauer called the entire case an “elaborate second guessing exercise” that amounted prosecutors substituting outsider opinion for the “good faith, best judgment” of PG&E engineers. Bauer said the prosecution also cherry- picked testimony and emails “all in a big, massive effort to make PG&E look terrible.”

    “Fortunately, they don’t get to make that decision,” on whether the company committed wrongdoing, Bauer said. That, he said, was up to the jurors.

    Bauer asked the panel to recall in their minds the assortment of company engineers who took the stand in the case.

    “Do you see a group of people so despicable that they were finding out ways of breaking the laws?” he asked. “Are they bad people or were they good people doing the best they can under the circumstances?”

    Bauer dismissed the allegations at the heart of the government’s case – that PG&E failed to carry out mandated tests following pressure surges on at-risk pipelines.

    PG&E engineers, he said, were confused by regulations that had little engineering justification, he said, and so relied on their “best engineering judgment” in considering small pressure overages as not triggering inspections.

    Bauer pointed to a briefing paper prepared by federal regulators after the blast in which they acknowledged that the regulations at issue were in fact confusing and suggested operators were struggling to understand them.

    “Here is (federal pipeline safety regulators) agreeing with PG&E’s engineers point of view. Is that good faith, or a knowing violation of the law?”

    By his count, Bauer found eleven separate causes for reasonable doubt in the federal case. “All you need is one, a doubt based on reason. I have given you eleven.”

    In addressing the jury, Bauer also stressed “this case is not about the explosion at all” and asserted that no regulatory violation had been tied to the explosion.

    That last claim drew the ire of prosecutors. After the jury went home for the day, they asked U.S. District Judge Thelton Henderson to allow them to opening their case and bring evidence that in fact regulatory violations had been found related to the blast.

    Henderson told prosecutors to review the transcript of PG&E’s closing – which is still in progress — and he will hear the issue before the jury hears more arguments on Wednesday.

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