Following a natural gas pipeline explosion in the San Francisco suburb of San Bruno, the government charged Pacific Gas & Electric (PG&E) with eleven counts of violating the U.S. Pipeline Safety Act. The blast killed 8 people, injured 58, and caused the destruction of 38 homes. Alleging that PG&E impeded an investigation by the National Transportation Safety Board, the government also charged a count of obstructing justice.

The government intends to call two expert witnesses (as well as dozens of lay witnesses) to prove its case. PG&E has filed a motion to prohibit the experts from testifying.

Prosecution of PG&E

Prosecutors hope to prove that PG&E knew of manufacturing problems regarding the natural gas pipeline before it exploded. The prosecution contends that PG&E failed to conduct required pipeline assessments and deliberately disregarded federal pipeline safety regulations. The government asserts that those decisions were driven by a corporate culture that prioritized profits over safety.

The government plans to call former PG&E employee Leslie McNiece to testify that after the pipeline exploded, she found records concerning the pipeline in a dumpster outside of PG&E’s gas operations facility. McNiece is also expected to testify that she was instructed to destroy pipeline records and that she “encountered opposition and pushback from top executives” when she tried to improve the company’s recordkeeping concerning its pipelines. PG&E says that the discarded documents were copies and the originals had been scanned into the company’s recordkeeping system.

Expert witness – Corporate Culture and Spending

The government intends to call Henry Lubow, a consultant with 40 years of experience in utility regulation, to explain how PG&E’s finances, budgeting, and cost-cutting measures adversely affected its commitment to safety. Based on a review of company documents, Lubow would testify that PG&E places more emphasis on profits than safety. Lubow would also testify that he found multiple examples of employee warnings concerning safety issues that were ignored or not taken seriously by management.

PG&E has objected to the testimony on the ground Lubow would merely be placing his own “spin” on documents that he would summarize for the jury. In PG&E’s view, Lubow’s opinions reflect no expert analysis and require no expertise. Lubow’s opinions are the sort of argument that a prosecutor might make in a closing argument, but “previewing” a closing argument is not, in PG&E’s judgment, an appropriate use of expert testimony.

The government also wants to use Lubow’s testimony to bolster its proof that PG&E acted willfully. The testimony would help the government establish that PG&E had a financial motive to disregard government regulations. PG&E argues that an expert who has no connection with a corporation is not qualified to testify about the corporation’s intent.

Finally, the government expects Lubow to testify that PG&E spent less on safety precautions than the amount authorized by the California Public Utilities Commission (CPUC). PG&E contends that for most years, the CPUC did not specify a spending allowance when it set PG&E’s rates, and that Lubow’s attempt to “impute” a spending level that PG&E should have followed is based on unsound methodologies.

The government responded that expert testimony about the requirements imposed upon regulated utilities would help the jury understand PG&E’s obligations. The government argues that Lubow’s experience with safety regulatory standards enables him to express opinions as to whether PG&E met those standards, based on his review of relevant documents. Since the Federal Rules of Evidence allow witnesses to base testimony on hearsay, the government argues that Lubow is entitled to base his testimony on a document review rather than personal experience with PG&E.

The government denies that Lubow would testify about PG&E’s corporate intent, but argues that he should be allowed to testify about facts (such as cost-saving measures) that would permit a jury to infer that PG&E willfully failed to pay sufficient attention to safety in order to strengthen its profits. The government contends that Lubow’s testimony will show that PG&E allocated money to executive compensation when it could have been correcting deficiencies in recordkeeping and pipeline maintenance. The government argues that the jury could infer from those facts that PG&E intentionally disregarded regulatory duties to pursue priorities other than safety.

The government faults PG&E’s attack on Lubow’s analysis of PG&E’s spending because it views the attack as going to credibility, not to reliability. The government says that that Lubow will testify about the amounts of money PG&E told CPUC it would spend and will compare those estimates to the amount that PG&E actually spent. Whether Lubow’s accounting is correct is a question for the jury to decide and not, according to the government, a basis for excluding expert testimony.

Expert Testimony – Regulatory Requirements

The government also proposes to call Steve Nanney, a senior engineer at the Pipeline and Hazardous Materials Safety Administration, to testify about the requirements of the Pipeline Safety Act and the regulations that implement that law. PG&E contends that experts cannot explain the law to the jury. According to PG&E, the judge is the only authority on the law, and the jury learns about the law from the instructions it receives at the end of the trial, not from experts.

The government counters that an expert explanation of “complex and technical regulatory requirements” does not run afoul of the general rule that an expert cannot explain the law. Since the regulations are promulgated by an administrative agency, the government argues that a witness from that agency should be allowed to explain the regulatory framework and how specific regulations within that framework are meant to be implemented. The government denies that the expert will usurp the judge’s role because the expert will not be offering legal conclusions in his testimony.

Daubert Hearing

The court will presumably conduct a Daubert hearing before deciding whether the government’s witnesses can testify. After hearing evidence, the court will decide whether the expert testimony is relevant and reliable.

It may be some weeks before that hearing takes place, as PG&E is complaining that the government recently produced 100,000 pages of records, some of which may have a bearing on the expert testimony. PG&E’s lawyers told the court that they would need three weeks to review the newly produced documents before further assessing the proposed expert testimony.

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