San Bruno blast: PG&E settles nearly all remaining lawsuits for a $565 million total

by Paul Rogers, San Jose Mercury News

Closing a major chapter in the catastrophic explosion of its natural gas transmission line that killed eight people and leveled a quiet suburban neighborhood, Pacific Gas & Electric on Monday — the third anniversary of the blast — announced it has settled nearly all of the remaining victims’ lawsuits for $565 million.

Altogether, 499 people will share the money, ranging from the families of residents who were killed when PG&E’s pipeline burst in a massive fireball on Sept. 9, 2010, to people who suffered serious burns and families with minor property damage. The exact amounts per victim vary widely, but were not made public, due to confidentiality clauses in the settlement agreements.

“It’s a huge deal. The clients are getting what we felt is a very fair settlement for them under the circumstances,” said attorney George Corey of Millbrae, whose firm represented about 120 of the victims. “It took a long time for PG&E lawyers to get the company to stand up to the serious facts of this case. But they finally did, and it was fair.”

Of 501 people affected by the explosion, PG&E had settled with 152 people before a recent round of negotiations, according to PG&E spokeswoman Brittany Chord. The company settled with an additional 286 people on Friday and 61 more on Monday, she said, leaving just two plaintiffs’ cases still unresolved. Chord said she could not comment on what issues might be holding up a settlement in those two legal actions.

“Our goal since the accident occurred was to settle these claims as quickly and as fairly as possible for everyone involved,” she said. Chord said funds for the settlement will come from shareholders, not ratepayers. An undisclosed portion of the amount is covered by PG&E’s insurance.

The cases that were settled earlier included nearly all of the fatalities, and totaled $455 million. In a regulatory filing Monday, PG&E said the cases resolved on Friday and Monday totaled $110 million.

The explosion, one of the worst pipeline disasters in U.S. history, occurred when a 30-inch steel underground natural gas pipeline owned by PG&E ruptured under San Bruno’s Crestmoor neighborhood. The explosion was caused by faulty welds in the pipe, federal investigators later concluded, and created a fireball up to 1,000 feet high, blasting a crater 167 feet wide and measuring as a magnitude-1.1 earthquake.

Investigators from the National Transportation Safety Board concluded that the doomed pipe, installed in 1956, was constructed from several smaller odd-shaped pieces and was not welded properly on both the inside and outside. The NTSB sharply criticized PG&E not only for the shoddy work, but for a record-keeping system so disorganized that PG&E did not know what type of pipe it had in the ground there, a key piece of information that is used to set the pressures that utilities operate natural gas pipes.

Carole, 74, and Jerry Guernsey, 69, ran for their lives the night of the fire and lost their Concord Way home in the blaze. They have moved back into their rebuilt home in the neighborhood. They said they are satisfied with the settlement, yet at the same time don’t feel they had many options. “What they never do is give you what you asked for. They whittle you down. You have to come down,” said Carole Guernsey of PG&E. “It’s this or nothing.” Guernsey said she and her husband are tired after the long process. “It’ll be OK,” said Carole Guernsey. “It’s just a shame we had to go through three years to get to this point.”

PG&E still faces massive fines in connection with the case.

In July, the staff of the California Public Utilities Commission recommended that PG&E pay a $2.25 billion penalty. The commission, whose five members are appointed by the governor, will decide in the coming months whether to hit PG&E with that amount or a different penalty.

San Bruno Mayor Jim Ruane expressed dismay at PG&E’s announcement of the latest settlements just hours before Ruane and others planned to attend an event in San Bruno to honor victims of the blast. “It may be a little insensitive as far as I’m concerned,” he said. “It’s just the timing of this, when we’re going to have a memorial service.”

Noting that the blast destroyed 38 homes and damaged — in some cases seriously — another 66, Ruane said at total of 16 displaced families have moved back to the neighborhood and four more are about to do so.

Corey, the attorney for many of the victims, said PG&E announced the settlement on the three-year anniversary because that represents the statute of limitations beyond which others cannot sue.

Although the details of each settlement remain confidential, documents erroneously posted last year by the San Mateo County Superior Court on its website revealed the details of one case. In July, 2012, PG&E agreed to a pay a teenage girl, whom this newspaper didn’t name because she is a minor, $1.8 million, plus an additional $677,700 to cover her attorneys’ fees and $19,400 for medical expenses.

The girl suffered second- and third-degree burns in the flames, which caused her to miss school and required special medical treatment. The burns will leave her with permanent scars, her lawsuit said.

“We’ve made progress, both operationally and in resolving these cases,” PG&E spokeswoman Chord said. But “we have a lot of work to do, and that includes strength-testing our pipelines, replacing pipelines and making our system one of the safest in the nation.”