PG&E Relies on 24-Year-Old Non-Engineer to Justify Not Inspecting At-Risk Pipelines

PG&E tasked a non-engineer – just 24 years old, straight out of college and admittedly confused by federal pipeline regulations – with the job of drafting PG&E’s rationale for avoiding mandated inspections on certain at-risk pipelines just before the San Bruno gas explosion.

“I was confused” about apparent contradictions in the federal pipeline regulations, Calvin Lui testified Friday in the federal pipeline safety trial of PG&E. He admitted that he never sought guidance for that confusion beyond the walls of the company.

Lui was brand new at the company in May 2010 when assigned to write a “memo to file” about the company’s decision to avoid high pressure water inspections on untested lines following pressure surges. Although regulations appeared to require such inspections, Lui said company engineers considered the pressure surges insignificant.

Lui’s memo is a key issue at the heart of the obstruction charge the company faces. PG&E is charged with misleading National Transportation Safety Board investigators as they probed the September 2010 blast by insisting the company did not have an approved policy to avoid costly inspections for its older, at risk pipelines following the pressure surges.

Prosecutors point to Lui’s memo as proof the company had such a policy. PG&E lawyers will use it to show the company was grappling with complex and contradictory regulations and as proof that no final decisions had been made.

Lui testified Friday that he wrote the “memo to file”– two years before he became a licensed engineer -- to summarize the company’s thinking with a state audit looming.

He said although his memo justified the company’s position of not inspecting pipelines unless pressure levels exceed federal allowable levels by ten percent, no such policy was in actually in effect.

In any event, the issue that was addressed in his memo never came up during the state, Lui said.

In earlier testimony, Lui’s boss, veteran engineer William Manegold recounted how he wrote his own justification for the policy but shredded after the issue was not raised in the audit. Manegold testified that he feared PG&E was about to be “slaughtered” in the audit because he failed to provide technical support for the 10 percent stance.

As support, PG&E defense attorneys have repeatedly pointed out that BP, another pipeline operator, asserted the 10 percent buffer in its defense in a separate audit. However, as federal prosecutors have shown the line at issue in that audit had been tested by the very method PG&E’s policy sought to avoid.

On the stand, Lui said he wrote the memo despite the fact that he and his colleagues were puzzled about the federal rule that stresses that any pressure surge, no matter how small, must trigger inspections.

“That was a little bit confusing for us,” he said. “The answer is very black and white. It doesn’t make sense from an engineering perspective” given that pipelines typically operate with generous safety margins and were unlikely to fail following such minor surges.

Hoffman asked Lui – who was not yet an engineer at the time -- was trained to only consider surges beyond 10 percent as meriting inspections.

“We were trained at all times to follow the code,” he replied.

Lui said he did not know that the BP audit issue – the one the company used to justify not testing over pressurized gas pipelines -- involved a pipeline that had in fact already been tested.

He also acknowledged that no one at the company asked state or federal pipeline officials about the issue. He said he did not raise the 10 percent margin during the state audit.

“That topic did not come up,” he said.

After Lui testified, federal prosecutors announced they intend to rest their case by the middle of next week, signaling that a number of high profile witnesses will not be summoned to the stand.

Among those who will now be spared are former PG&E head Peter Darbee and former regulatory affairs vice president Brian Cherry. It was Cherry who forced out amid a scandal involving improper backdoor communications between the company and regulators.

Prosecutors also will not call Leslie Banach McNiece, a former employee turned whistle-blower previously billed as a star witness to show the company valued profits above safety. Federal authorities did not explain their decision.

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