Probation Terms Increase the Pain to Convicted PG&E

In August 2016, a jury convicted Pacific Gas & Electric (“PG&E”) of five counts of record keeping violations, and one count of obstructing an agency investigation.  The judge has now sentenced PG&E, assessing the maximum fine of $3 million and setting some severe probation terms.  Complying with those terms will more than double the economic pain of the convictions, and will burden PG&E for years.

San Bruno Explosion

A PG&E pipeline exploded in 2010 in San Bruno, CA, killing eight people and causing extensive property damage.  Although PG&E’s convictions were not directly related to the cause of the explosion, the catastrophe triggered an extensive investigation into PG&E’s practices, which led to the criminal charges.

Severe Probation Terms

In addition to assessing the maximum fine, the judge placed PG&E on probation for five years.  The probation terms require PG&E to:

  • Spend at least $3 million (above and beyond the fine) on television advertising, to inform California residents of this criminal conviction.
  • Hire and pay for a third party monitor to ensure PG&E’s ongoing compliance with safety requirements.  PG&E may not stop using the monitor for as long as PG&E is subject to this probation, except with approval of the Court.  The judge issued a separate eleven page document, describing the duties of the monitor, including a provision that the monitor may employ others, also at PG&E’s expense, as necessary to accomplish the goals of the monitoring program.
  • Perform 10,000 hours of community service, with at least 2,000 hours performed by “high-level personnel.”

Serious Consequences of Inadequate Record Keeping

As I stated in an earlier Alert on this conviction [August 15, 2016], all but one conviction was for knowingly failing to keep proper records; the convictions were not for causing the explosion.  PG&E’s sentence demonstrates how serious “record keeping” requirements can be, with so much business activity potentially subject to criminal penalties.

Finally, PG&E has announced that it will not appeal its conviction or sentence.

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