So. California Utility Will Pay a Hefty Price for Cutting Corners

A San Diego jury convicted San Diego Gas & Electric on four felony charges, three of which involved the improper removal of asbestos from one of its former properties, and one for making false statements. A fifth count of conspiracy to violate safety standards was dropped. In addition, two workers, an environmental specialist for SDG&E and a project supervisor for the removal contractor, were convicted on felony charges. The removal contractor was IT Corporation, a national industrial company specializing in the disposal of hazardous materials. The company declared bankruptcy in 2002 and was acquired by the Shaw Group, a multi-national energy corporation based in Louisiana. The Shaw Group is one of the contractors involved in the Hurricane Katrina cleanup currently under investigation by the Inspector General of Homeland Security. The Encanto Gas Holder Facility, once owned by SDG&E, was built on a sixteen-acre site in the 1950s as storage for natural gas. These storage pipes were coated with asbestos insulation, as was common practice up until 25 years ago.

The property was sold to a land developer seven years ago. Removal of storage pipe was a condition of the sale. According to U.S. Attorney Melanie Pierson, SDG&E attempted to cut removal costs by using lower-cost but inappropriate equipment in order to scrape the asbestos insulation off the pipes. Earlier this summer, she said that SDG&E has cultivated a “culture of corporate arrogance” in which workers were encouraged to ignore safety regulations. “It’s about time and money…mostly about the money,” Pierson said. According to government and EPA regulations, the removal of “friable,” or crumbling, asbestos requires specific protocols and methods, which were not followed in this case. Defense attorneys for SDG&E insist that the asbestos posed no danger, and say they intend to appeal the case in September. Meanwhile, the company faces fines totaling $2 million. In addition, the two individuals could spend five years in prison and be fined $250,000 each. According to the company’s website, San Diego Gas & Electric is a “regulated public utility”; however, according to a Wikipedia entry, it is owned by Sempra Energy, a nine-year-old holding company that also owns Southern California Gas Company, Sempra Generation, and Sempra Commodities.