Tag Archives | City of San Bruno

PG&E Attempt to Improperly Influence California PUC Should Result in Penalty, City of San Bruno Demands in Legal Filing

Jack Hagan, CPUC Safety HeadElizaveta Malashenko

Jack Hagan and Elizaveta Malashenko of the CPUC Safety Enforcement Division made allegedly illegal deal with PG&E

San Bruno, Calif. – An attempt by Pacific Gas & Electric Company to broker what appears to be a secret deal with a California Public Utilities Commission staffer should result in significant penalties and fines for the utility company and the creation of an independent monitor to ensure transparency and accountability of the CPUC, San Bruno demanded in a legal filing with the CPUC today.

The apparent backroom deal, revealed in a report by Jaxon Van Derbecken San Francisco Chronicle newspaper, detailed how PG&E hoped to quietly pay  a $375,000 fine to avoid paying a proposed $2.5 billion in penalties and fines for the 2010 San Bruno explosion and fire that killed eight, injured 66, destroyed 38 homes and left a giant hole in the center of the city.

In a legal motion filed with the CPUC on Friday, San Bruno officials demanded that PG&E face a significant fine for violating CPUC rules when, in December, it paid a $375,000 fine imposed by the CPUC’s safety enforcement division – and then quietly asked that the fine count against the multi-billion-dollar penalty it faces for violations stemming from the San Bruno pipeline disaster.

It was revealed that no parties involved in the more than three-year San Bruno penalty proceeding were made aware of PG&E’s secret payment. Instead, the CPUC withdrew the fine and refunded the $375,000 payment amid concerns that PG&E had attempted to broker a backroom deal that could have triggered a form of regulatory double jeopardy, preventing the CPUC’s administrative law judges from levying a sufficient future penalty.

“Instead of being transparent and forthcoming, PG&E appears to have consciously elected to conceal an ill-fated attempt to quietly settle for the fatal and tragic pipeline disaster in San Bruno,” said San Bruno Mayor Jim Ruane. “We believe PG&E should be fined and reprimanded for trying to undermine the ongoing penalty investigation and possibly jeopardizing more than three years of work to ensure that what happened in San Bruno never happens again, anywhere.”

“This attempt to circumvent the legal and public process also raises troubling questions about the CPUC safety division and its staffer who attempted to conceal this backroom deal,” representatives for the city added. “This action is just the latest attempt by the PG&E and some members of the CPUC safety division to hide from public view the unholy alliance and power PG&E has with our State’s regulatory agency.  That is why San Bruno demands an independent monitor to ensure the CPUC is operating properly and transparently.”

The $375,000 fine was originally levied in December by the CPUC’s safety enforcement division in response to a 2012 audit, which concluded that for more than four decades PG&E lacked the proper procedures to monitor its gas-transmission pipelines. Reliable reports indicate that CPUC safety division deputy director Elizaveta Malashenko, who made this deal with PG&E, has a longstanding personal relationship with PG&E outside of her CPUC job.

Because the infraction related directly to the ongoing San Bruno-related penalty proceeding, it should have been handled as part of that process. Instead, it was handled and paid separately, without notification to any parties and in violation of CPUC’s own procedures.

San Bruno officials say they suspect that a backroom deal, involving illegal ex-parte communications between PG&E and the CPUC, played a role in this mishap. Attorneys for San Bruno have filed a public records request to determine whether PG&E officials spoke directly with CPUC leadership to arrange for the fine that PG&E paid – and later tried using to reduce their overall penalty.

In December, the CPUC fined PG&E $14 million for failing to disclose faulty pipeline records in San Carlos to both the CPUC, the public and the City of San Carlos for nearly a year, creating a possibly dangerous public safety issue that one of its own engineers likened to possibly “another San Bruno situation” in an internal email to PG&E executives.

San Bruno officials say this latest attempt to undercut its obligation to the public further underscores the need for an Independent Pipeline Safety Monitor to serve as a vigilant third-party watchdog over both PG&E and its regulator, the CPUC.

“The Commission lacks the resources to effectively comprehend and oversee PG&E’s compliance,” said the city’s filling. “An Independent Monitor would partner with and provide additional resources to the Commission in order to have more robust regulatory oversight necessary to protect the safety of the public.”

The San Bruno filing came on the same day as the announcement that CPUC Commissioner Mark Farron will be resigning from the Commission to concentrate on beating prostate cancer.

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California PUC to Consider Historic Fine Against PG&E and Orrick Herrington Law Firm Attorney in Faulty Gas Line Case

Joseph M. Malkin

PG&E and its Orrick Herrington Attorney are Facing Historic Fines and Legal Sanctions for Misleading the California Public Utilities Commission

The California Public Utilities Commission will vote on historic sanctions and a fine of up to $17 million against the Pacific Gas & Electric Corp. Thursday, Dec. 19 for failing to disclose faulty pipeline records in San Carlos to both the CPUC, the public and the City of San Carlos for nearly a year, creating a possibly dangerous public safety issue that one of its own engineers likened to possibly “another San Bruno situation” in an internal email to PG&E executives.

PG&E and its attorney Joseph M. Malkin of Orrick Herrington & Sutcliffe LLP law firm are facing a fine of up to $17 million for violating CPUC rules and discreetly filing an “errata” – the legal term for a minor correction – on the status of two pipelines, located in San Carlos and Millbrae, nearly a year after a gas leak unexpectedly revealed faulty records for those pipelines.

Pipelines listed as “seamless,” as in the case of the line that ruptured in San Bruno, were in fact a 1929 vintage welded and reconditioned gas pipe with a strength test less than records showed. The legal correction was made quietly on the afternoon of July 3, 2013, a day before the CPUC took off for the July Fourth holiday, disclosing the fact that PG&E had relied on faulty records to determine the specifications for those pipelines to handle gas at high pressure.

The Commission will make this decision three weeks after PG&E CEO and Chairman Tony Earley made a special presentation before the CPUC in an attempt to convince commissioners and the public of the company’s renewed commitment to safety. Earley was met with a skeptical commission, which challenged PG&E’s credibility in the face of mounting recordkeeping errors and threats to public safety. “We find ourselves here today with a public that doesn’t believe you and in many respects doesn’t believe us,” Commissioner Mike Florio said to Earley at the hearing.

City of San Bruno officials have agreed with the proposed fine against PG&E and are calling on the CPUC to uphold proposed sanctions against PG&E for deliberately covering up the facts after it used faulty records to determine that two Bay Area pipelines could safely operate – a decision demonstrating the continued problem with PG&E record keeping practices. Bad record keeping was one of the causes of the 2010 PG&E disaster in San Bruno and continues to threaten public safety.

Calling the July 3 PG&E filing a “brazen and calculated act of damage control,” San Bruno attorneys say PG&E’s legal maneuver illustrates PG&E’s ongoing attempts to cover its tracks as it continues to use natural gas pipelines at inappropriate operating pressures, without accurate records and with the same flawed materials that caused a tragic explosion and fire in San Bruno that killed eight, destroyed 38 homes and damaged scores more.

City officials were shocked to discover that, after gross negligence and bad recordkeeping by PG&E resulted in the fatal tragedy in San Bruno, PG&E paid its legal team to perpetuate their deception at the risk of public safety. They are now calling on the CPUC to issue sanctions and send the strong message that such behavior will not be tolerated. Officials question how many communities must endure tragedy before PG&E and our state utility regulators wake up and put safety first.

Faulty recordkeeping was found to be a major contributor to the explosion and fire in San Bruno after federal and state investigators found that PG&E had maintained bad or nonexistent pipeline safety records for much of its 1,000+ miles of urban natural gas transmission lines. As a result, state regulators required PG&E to lower pressure on its other Peninsula gas pipelines until safety records could be verified.

In 2011, PG&E declared that the pipeline construction records were accurate for both Line 101, which runs from Milpitas to San Francisco, and Line 147, which runs in the San Carlos area. Based on PG&E’s representations, the CPUC allowed PG&E to increase the pressure back to pre-explosion levels.

In reality, PG&E’s pipelines were not rated to operate at higher pressure, as revealed after an October 2012 corrosion-related leak in San Carlos revealed seams in the pipeline previously not thought to exist. Yet, it took nine months for the company to admit – by way of the subtle “errata” filing — that the records it had relied on to make that determination were faulty.

At previous CPUC hearings, regulators pressed PG&E over the “profoundly troubling” oversight, which occurred despite “the expenditure of hundreds of millions of dollars for record review and validation.” PG&E now faces fines of up to $17 million, on top of a possible $2.25 billion penalty and fine stemming from the fatal 2010 explosion and fire in San Bruno.

San Bruno officials say this is just the latest example of PG&E expending millions on top attorneys – more than $120 million by PG&E’s own admission – to subvert the truth and put profits over people.

 

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