By Cassandra Sweet

PG&E Corp. (PCG) and California investigators started fresh talks Friday to settle allegations that the utility violated numerous state and federal safety rules prior to a fatal pipeline explosion.

The California Public Utilities Commission has been holding public hearings following three investigations it launched after a section of the utility's gas pipeline in San Bruno ruptured on Sept. 9, 2010, igniting a giant fireball that killed eight people and injured 58, and destroyed 38 homes and damaged 70 others.

Both federal and state investigators found that PG&E was responsible for the blast and pointed to defects in the utility's aging pipeline and shoddy pipeline safety management as contributing to the rupture.

State investigators, who work for a division of the CPUC, found that the utility violated multiple pipeline safety regulations over several years. The commission has said it plans to fine the company and consider other penalties over the alleged violations.

State investigators last Friday asked judges in the CPUC cases to suspend public hearings in the cases to allow time for renewed negotiations with PG&E to discuss a possible settlement. The utility had been in talks with the investigators, consumer advocates and representatives of the city of San Bruno for several months earlier this year, with no result.

San Bruno attorneys and local officials opposed delaying the hearings for negotiations, saying that the victims of the disaster have waited more than two years for a public airing of the facts about the incident.

But two CPUC judges formally suspended the hearings in a ruling late Thursday, saying that a settlement "may be a reasonable alternative" to continued litigation and a decision that could come as late as mid-2013.

"By suspending proceedings at this time, we enable parties to focus their efforts on negotiations that potentially could lead to a stipulated outcome," the CPUC judges, Mark Wetzell and Amy Yip-Kikugawa wrote in the ruling.

PG&E has "been in support of negotiations that lead to a universal settlement in all three cases," said Brittany Chord, a spokeswoman for the utility. "We'll continue to coordinate and communicate with our regulators, our elected officials and our customers."

PG&E executives have said the company accepts responsibility for the pipeline explosion.

The judges ordered attorneys for the state investigators to report back in two weeks on any progress made in the talks.

The public hearings in the CPUC's San Bruno cases, which previously were scheduled to run through mid-October, will restart Nov. 26 and run through Jan. 8, the judges ruled.

Separately, victims of the disaster have sued PG&E, seeking damages to compensate them for injuries, damaged or destroyed homes and other losses. Those lawsuits have been consolidated into groups of cases that are scheduled to go to trial in January.

Write to Cassandra Sweet at cassandra.sweet@dowjones.com

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