By Jerri-Lynn Scofield, who has worked as a securities lawyer and a derivatives trader. She is currently writing a book about textile artisans.
The Wall Street Journal published a comprehensive story yesterday, U.S. PG&E’s Long Record of Run-Ins With Regulators: A ‘Cat and Mouse Game, outlining Pacific Gas and Electric’s (PG&E) long history of breaking the law with impunity.
This made me wonder: where was Kamala Harris? You know, the person who served as California’s attorney general from 2011 through 2017, and touts that experience as grounds to support her presidential candidacy.
Before I answer the question, let me share some gems from the article:
…The Wall Street Journal identified repeated instances over 25 years in which PG&E misled regulatory authorities, withheld required information, didn’t follow through on promised improvements, engaged in improper back-channel communications with regulators or obstructed an investigation.
The company has paid more than $2.6 billion in state and federal penalties and lawsuit settlements in such cases. While the penalty came to less than $1 million in about a half-dozen of the incidents, it was much more in other cases, some of them involved death and heavy property destruction, and regulators consider all violations that involve safety to be serious matters….
Recall that PG&E has now filed for bankruptcy, for the second time in two decades, for its role in causing wildfires. The company estimates its potential liability from these claims alone at more than $30 billion.
The company has long played its own regulatory game, according to its own rules:
Several close observers of PG&E said they witnessed a pattern of conduct over the years that troubled them because it seemed to violate norms of behavior for California utilities. “PG&E, in comparison to others, stands apart,” said Mark Ferron, a former member of the California Public Utilities Commission.
For years, he said, PG&E seemed to play a “cat and mouse game” with regulators of doing what it wanted and waiting to see if it got caught, which he said was unfortunate because the utilities commission “is not a particularly adroit cat.”
Catherine J.K. Sandoval, another former utilities commissioner and now a Santa Clara University law professor, said PG&E has “a trust issue and a conduct issue,” and it violates rules of conduct so often it amounts to a pattern. “They are definitely the worst” among the utilities she oversaw, she said.
This has stymied regulators, who have failed to find a way to compel the utility to obey the law:
“The commission has tried to rein PG&E in using the traditional tools of regulation—increasing fines and removal of responsible parties—and those tools haven’t worked,” said Darwin Farrar, chief counsel of the state utilities commission’s Public Advocates Office, in an email. Mr. Farrar wrote in a July public filing that PG&E “has dealt with the Commission dishonestly.”
…The utilities commission since 2015 has been studying what to do about PG&E’s safety culture. According to state fire officials, its record includes accidentally starting fires that killed 107 people in 2017 and 2018, destroyed 22,000 buildings and burned 350,000 acres.
The WSJ account thoroughly examines multiple lapses by the company, and I encourage interested readers to read the full account (alas, it is paywalled). I’ll highlight here just one recent incident:
On July 10, Judge Alsup, overseeing PG&E’s federal probation, ordered the company to respond, paragraph by paragraph, to a Journal article saying PG&E long knew it had power lines that could spark fires but failed to perform necessary upgrades to towers and other equipment. The judge told the company to give him a clear answer and not bury him in thousands of pages of records, which he said it had done in the past.
In its response, PG&E acknowledged it had long known its aged high-voltage lines could fail and trigger fires, and had delayed some upgrades to the line that broke in November and sparked the Camp Fire that ravaged the town of Paradise. But PG&E denied it had neglected maintenance, saying the delayed upgrades weren’t related to maintenance but rather to design, such as the height of lines above the ground.
Kamala Harris and PG&E – Soft on Utilities
Back to Kamala. Seems I’m not the only one who’s been asking a similar question. Where was Kamala on all this?
Now, to be clear, the primary responsibility for regulating the utility falls with the California Public Utilities Commission. But Harris had a potential role to play – one she chose not to. Let’s look at one episode in detail, the San Bruno pipeline explosion.In 2010, a natural gas pipeline owned by PG&E exploded. A massive fire ensued, destroying or damaging dozens of homes and other property; eight people died.
As The New York Times tells the story in The Political Playbook of a Bankrupt California Utility:
After the pipeline explosion, the City of San Bruno sued to obtain thousands of emails between PG&E executives and the state’s utility regulator, the California Public Utilities Commission.
The emails revealed that a PG&E executive complained to the commission about a judge assigned to determine who should pay for pipeline upgrades, a case with major financial consequences.
In what became known as the judge shopping scandal, PG&E was granted the administrative judge of its choosing. The company was fined $1 million after the scandal became public, a sanction that critics said was a slap on the wrist for a company with annual revenues of $17 billion.
Other emails obtained by San Bruno described how company executives socialized and casually discussed company projects with the official meant to be regulating them. A 2010 dinner between a top PG&E lobbyist, Brian Cherry, and Michael Peevey, who was then president of the Public Utilities Commission, took place at Mr. Peevey’s vacation home and became famous for the “two bottles of good Pinot” that they drank. Mr. Cherry and two other executives at the company were fired after the emails became public.
Jim Ruane, the former mayor of San Bruno, tried to have the staff of the California attorney general at the time, Kamala Harris, bring charges for what he said was illegal cooperation between the company and regulators.
“They just blew us off,” said Britt Strottman, a lawyer who represented San Bruno after the pipeline explosion.
A year later, a state senator, Jerry Hill, wrote to Ms. Harris to renew calls for an investigation.
“The response we got was ‘thanks for the letter — go away,’” Mr. Hill said.
This issue is being reexamined, now that Harris is running for president. Over to The New York Times:
Chris Harris, the head of communications for Ms. Harris, who is now a United States senator and a 2020 presidential candidate, said an investigation was opened while she was attorney general.
“There is no way for us to know the current status of that ongoing investigation, but she believes that if there is evidence to support them, charges should be filed against any and all bad actors so they can be held fully accountable for their actions,” Mr. Harris said. The office of the current attorney general, Xavier Becerra, would not confirm whether an investigation was still open.
Ms. Harris did not receive any contributions from PG&E for her successful campaign for Senate, her spokesman said.
Note that while she may not have received any campaign contributions from PG&E, that really doesn’t mean much. There need not be any explicit quid pro quo for influence to be deployed – no matter what the United States Supreme Court says. According to The New York Times:
Willie Brown, a longtime Democratic power broker and a former mayor of San Francisco and speaker of the California Assembly, said in an interview that he has consulted for PG&E for the past decade, and recently approached [California governor Gavin] Newsom with a message that the company paid him to deliver.
Mr. Brown declined to give details on the discussion or when it occurred, but said he hoped to continue lobbying for PG&E, even in bankruptcy.
“I hope that they call me because every call generates an invoice,” he said.
Willie Brown isn’t the only one generating invoices. I’ll mention in passing that PG&E regularly availed itself of the best legal advice it could buy – including the services of Harvard law professor Laurence Tribe – not a name many would normally associate with a recidivist corporate predator (see The New Yorker’s Tribe takedown, Did Laurence Tribe Sell Out?).
And finally, Kamala’s soft prosecutorial approach to California utilities also extended to California Edison, according to the San Diego Reader, Attorney general Kamala Harris’s predictable “malpractice“:
At this meeting, Peevey sketched out a strategy for Edison (majority owner of the now-shuttered San Onofre power plant) and San Diego Gas & Electric (minority owner) by which they could pass on the decommissioning costs of closing San Onofre to ratepayers, who had nothing to do with the mismanagement that led to the shutdown. Later, the commission approved a deal, which was very similar to what Peevey had suggested in Warsaw: ratepayers would pick up the tab for a whopping $3.3 billion. (Edison and SDG&E already had among the highest utility rates in the nation.)
The state attorney general’s office investigated and recovered the notes from that Warsaw meeting. Those notes were a smoking gun for obstruction of justice. But skeptics guffawed: attorney general Kamala Harris was running for the U.S. Senate. She wouldn’t dare cross Peevey pal and fellow Democratic governor Jerry Brown — whose sister Kathleen has been on Sempra Energy’s board of directors since 2013. (Sempra is the parent company of SDG&E.) The skeptics doubted that Harris would actually pursue a prosecution.
Interested readers might also wish to see also this KQED account, Critics Unhappy With Kamala Harris’ Approach to San Onofre Probe; and this report by Capitol Watchdog, Harris Lets Statute Of Limitations On San Onofre Lapse, Defends Brown.