United States v. Pac. Gas & Elec. Co.

• Decision Date: 18 April 2016
• Docket Number: Case No. 14-cr-00175-TEH
• Citation: 178 F.Supp.3d 927
• Parties: United States of America, Plaintiff, v. Pacific Gas and Electric Company, Defendant.
• Court: U.S. District Court — Northern District of California

178 F.Supp.3d 927

United States of America, Plaintiff,

v.Pacific Gas and Electric Company, Defendant.

Case No. 14-cr-00175-TEH

United States District Court, N.D. California.

Signed April 18, 2016

Jeffrey Benjamin Schenk, US Attorney's Office, San Jose, CA, Hallie Mitchell Hoffman, Northern District of California, Hartley M.K. West, Owen Peter Martikan, U.S. Attorney's Office, San Francisco, CA, for Plaintiff.

James Scott Ballenger, Melissa Arbus Sherry, Latham & Watkins LLP, Benjamin William Snyder, Jonathan Yates Ellis, Washington, DC, Eric Matthew Hairston, Walter F. Brown, Orrick Herrington & Sutcliffe LLP, Margaret Tough, Robert E. Sims, Steven Mark Bauer, Christopher James Carlberg, NicoleCharlene Valco, Latham & Watkins LLP, Adam F. Shearer, Kate Dyer, Clarence Dyer & Cohen LLP, San Francisco, CA, for Defendant.

ORDER ON MOTIONS IN LIMINE

THELTON E. HENDERSON, United States District Judge

Defendant Pacific Gas and Electric Company (“PG&E”) and the Government submitted simultaneous motions in limine on January 11, 2016. Dkt. Nos. 236, 237. Both parties timely opposed and replied in support of their respective motions. Dkt. Nos. 277, 281, 300, 308. The Court held limited oral argument on April 12, 2016. After carefully considering the parties' written and oral arguments, the Court now GRANTS IN PART and DENIES IN PART the parties' motions in limine , as set forth below.

BACKGROUND

On September 9, 2010, a gas line owned and operated by PG&E ruptured, causing significant damage to a residential community in San Bruno, California. Superseding Indictment (“SI”) ¶ 5 (Dkt. No. 22). PG&E stands charged with one count of obstructing the National Transportation Safety Board (“NTSB”) investigation that followed the San Bruno explosion. Id. ¶ 61. PG&E is also charged with 12 counts of violating the minimum federal safety standards for the transportation of natural gas by pipeline (“Pipeline Safety Act”), as set forth in 49 C.F.R. pt. 192 (“Part 192”). Id. ¶¶ 62-75. Congress criminalized “knowing and willful” violations of these minimum standards under 49 U.S.C. § 60123 (“Section 60123 ”).

I. Count 1: Obstruction

The NTSB began an investigation immediately after the San Bruno explosion, examining the cause of the explosion, the characteristics and history of the failed pipe, the adequacy of PG&E's emergency response, and PG&E's operations. SI ¶¶ 54-55. The investigation revealed a number of deficiencies in PG&E's recordkeeping, integrity management program, and maintenance practices as they related to various sections of the pipeline, including the line that ruptured—Line 132. Id. The agency concluded that these deficiencies were a probable cause of the explosion. Id .

As part of its investigation, “the NTSB sent PG&E a series of data requests concerning instances where PG&E's planned and unplanned pressure increases exceeded the 5-year MOPs and/or MAOPs of pipelines in HCAs.” Id. ¶ 56. HCAs, or high consequence areas, are densely populated locales where a release of gas could pose a significant risk of injury or death, 49 C.F.R. § 192.903 ; the 5-year MOP is the “maximum operating pressure experienced during the preceding five years,” 49 C.F.R. § 192.917(e)(3)(i) ; and the MAOP is the “maximum allowable operating pressure” for a pipeline segment, 49 C.F.R. § 192.903.

In response to the NTSB data requests, PG&E provided a copy of Risk Management Instruction-06 (“RMI-06”), an internal policy document that stated “PG&E would only consider a manufacturing threat as unstable if the pressure on the line exceeded the 5-year MOP by 10%.” SI ¶ 57. The Pipeline Safety Act makes no such “10% or more” allowance. See 49 C.F.R. § 192.917(e) (“If an operator identifies any of the following threats, the operator must...address the threat...[including] [o]perating pressure increases above the [MOP] experienced during the preceding five years.”).

On April 6, 2011, PG&E sent a letter to the NTSB (1) explaining that the “10% or more” version of RMI-06 that had previously been disclosed was actually an “unapproved draft,” and (2) attaching another version of RMI-06 that did not include the “10% or more” policy. SI ¶ 59. The Government alleges that what PG&E did not disclose in this letter is that its integrity management group had actually followed the “10% or more” policy set forth in the original copy of RMI-06, whether or not that policy was formally approved and despite knowing that such a policy violated the Pipeline Safety Act. Id. ¶ 60.

On the basis of this conduct, the indictment charges that PG&E “did corruptly influence, obstruct, and impede” the NTSB investigation. Id. ¶ 61.

II. Counts 2-13: Pipeline Safety Act Violations

Counts 2-13¹ allege knowing and willful violations of the Pipeline Safety Act.

Counts 2 and 5-8 allege violations of Part 192's Subpart O, known as the Integrity Management (“IM”) regulations. Id. ¶¶ 62-63, 66-73. Count 2 charges PG&E with violating 49 C.F.R. § 192.917(b), which states that “[t]o identify and evaluate the potential threats to a covered pipeline segment, an operator must gather and integrate existing data and information on the entire pipeline that could be relevant to the covered segment,” on two pipelines: Lines 132 and 109. Id. ¶ 63. Count 5 charges PG&E with violating 49 C.F.R. § 192.917(a), which states that “[a]n operator must identify and evaluate all potential threats to each covered pipeline segment,” on three pipelines: Lines 132, 153, and DFM 1816-01. Id. ¶ 67. Count 6 charges PG&E with violating 49 C.F.R. § 192.919, which states that “[a]n operator must include [certain] elements in its written baseline assessment plan,” on six pipelines: Lines 132, 153, DFM 1816-01, 107, 191-1, and 109. Id. ¶ 69. Count 7 charges PG&E with violating 49 C.F.R. § 192.917(e)(3), which states that “[i]f an operator identifies the threat of manufacturing and construction defects (including seam defects) in the covered segment, an operator must analyze the covered segment to determine the risk of failure from these defects,” and if certain changes occur, that “an operator must prioritize the covered segment as a high risk segment for the baseline assessment or a subsequent reassessment,” on four pipelines: Lines 132, 153, DFM 1816-01, and 109. Id. ¶ 71. Count 8 charges PG&E with violating 49 C.F.R. § 192.917(e)(4), which states that “[i]f a covered pipeline segment contains [certain characteristics], an operator must select an assessment technology or technologies with a proven application capable of assessing seam integrity and seam corrosion anomalies, [and] must prioritize the covered segment as a high risk segment for the baseline assessment or a subsequent reassessment,” on five pipelines: Lines DFM 1816-01, 191-1, 109, 107, and 132. Id. ¶ 73.

Counts 3-4 and 9-13 allege that PG&E's recordkeeping practices fell below the standards required of Part 192's recordkeeping provisions. Counts 3-4 charge PG&E with violating 49 C.F.R. § 192.709(a), which requires pipeline operators to maintain and retain the “date, location, and description of each repair made to pipe...for as long as the pipe remains in service.” Id. ¶ 65. Counts 9-13 charge PG&E with violating 49 C.F.R. § 192.517(a), which requires that pipeline operators “make, and retain for the useful life of the pipeline, a record of each [pressure] test performed” pursuant to certain other provisions of Part 192. Id. ¶ 75.

LEGAL STANDARD

Federal Rule of Evidence (“Rule”) 401 states that evidence is relevant if it “has any tendency to make a fact more or less probable” and “the fact is of consequence in determining the action.” Fed. R. Evid. 401. Rule 402 creates a general presumption that relevant evidence is admissible unless otherwise prohibited. Fed. R. Evid. 402. Rule 403 allows the court to “exclude relevant evidence if its probative value is substantially outweighed by a danger of one or more of the following: unfair prejudice, confusing the issues, misleading the jury, undue delay, wasting time, or needlessly presenting cumulative evidence.” Fed. R. Evid. 403.

“The term 'unfair prejudice,' as to a criminal defendant, speaks to the capacity of some concededly relevant evidence to lure the factfinder into declaring guilt on a ground different from proof specific to the offense charged.” Old Chief v. United States , 519 U.S. 172, 180, 117 S.Ct. 644, 136 L.Ed.2d 574 (1997). That is, unfairly prejudicial evidence is evidence having “an undue tendency to suggest decision on an improper basis, commonly, though not necessarily, an emotional one.” Id. (citation and internal quotation marks omitted). In weighing unfair prejudice, “what counts as the Rule 403'probative value' of an item of evidence, as distinct from its Rule 401'relevance,' may be calculated by comparing evidentiary alternatives.” Id. at 184, 117 S.Ct. 644.

“Rulings on admissibility of evidence normally should be deferred until trial, so that questions of foundation, relevancy, and potential prejudice may be resolved in proper context.”In re Air Crash Disaster at Sioux City, Iowa , 1991 WL 279284, at *1 (N.D.Ill. Dec. 26, 1991).²

PG&E'S MOTIONS IN LIMINE

I. PG&E's Motion in Limine No. 1

PG&E moves to exclude: “All evidence and argument relating to the San Bruno accident, including: (a) the accident itself and its causes; (b) PG&E's work clearance for the work done at Milpitas Terminal on September 9, 2010, PG&E's pre-incident work clearance procedures, and the work performed at Milpitas; and (c) PG&E's emergency response.” Def.'s Mots. in Limine Nos. 1–10 (“PG&E Mot.”) at ii (Dkt. No. 273).³

The Government does not oppose PG&E's motion with respect to either PG&E's Milpitas work clearance and procedures (request (b)) or PG&E's emergency response to the explosion (request (c)). U.S.'s Resp. to Def.'s Mots. in Limine (“Gov't Opp'n”) at 1 (Docket No. 277). Accordingly, PG&E's first motion in limine is hereby GRANTED with respect to these categories.

With respect to category (a), regarding the San Bruno...