Commentary: Is Criminal Charges Against PG&E the Way to Go?

A US District Judge, William Alsup, has ordered PG&E to determine if it played any role in the deadly Camp Fire – which killed 88 people and destroyed nearly 14,000 homes, nearly completely destroying the city of Paradise.

Judge Alsup asked the Attorney General’s office to identify potential criminal offenses the utility might have committed if it were determined that “any recent California wildfire” was “started by reckless operation or maintenance of PG&E power lines.”

Following the 2010 San Bruno gas pipeline explosion which killed eight people, PG&E received five years probation and was ordered to pay a $3 million fine in that case.

In an interview with the LA Times, Laurie Levenson, professor at Loyola Law School, said the severity of charges the utility faces depends on whether it was “on notice of the risk that their equipment may start the fires and lead to deaths.”

“Callous disregard of that risk could be murder,” she said. “The more likely charge would probably be involuntary manslaughter, which requires criminal negligence…. The real key here is how much risk they realized they were taking and why they took it.”

It sounds good if PG&E is found criminal liable, but what it is means is less clear.  For instance, the company executives do not face personal jail or prison time.  However, they can be fined and “debarred from contracts.”  In essence, PG&E could face a corporate death penalty.

The brief argues that “starting a wildfire by recklessly operating or maintaining power lines could implicate three different categories of California criminal offenses” ranging from a misdemeanor offenses that would relate to vegetation and power lines to felonies for starting a fire or implied-malice murder.

“ ‘Recklessness’ could include the mental state of multiple offenses. These mental states resemble a sliding scale. As the mental state becomes more culpable, the applicable offense becomes more serious,” the filing said.

It continued: “At criminal negligence, PG&E could have committed involuntary manslaughter, starting a fire without permission, and failing to keep its lines and poles clear of vegetation. At recklessness … PG&E could have committed the felony of unlawfully starting a fire. And at malice, PG&E could have committed murder.”

The Bee reported that Butte County DA Mike Ramsey has not determined whether they would file criminal charges against PG&E even if an investigation by the Department of Forestry determines they are at fault.

The AG’s office briefing is based on theoretical lability if it is determined that PG&E is at fault, it does not make a determination whether the utility was the cause of the fires.

But criminal proceedings are not the only risk PG&E faces.

In early December it was reported that there have been at least 20 lawsuits filed against PG&E.  They are accused of allowing its equipment to spark the blaze.

One of the suits lasts a corporate culture that allegedly places “reputation above public safety” along with advertising that “promotes a false and misleading picture” of Northern California’s electricity supply.  It charges that PG&E had a “callous and despicable disregard for the safety of California communities.”

“Rather than spend the money it obtains from customers for infrastructure maintenance and safety, PG&E funnels this funding to boost its own corporate profits and compensation,” another suit states. “This pattern and practice of favoring profits over having a solid and well-maintained infrastructure that would be safe and dependable for years to come left PG&E vulnerable to an increased risk of a catastrophic event such as the Camp Fire.”

“Despite its own recognition of these impending hazardous conditions, on the day of the Camp Fire’s ignition, PG&E ultimately made the decision not to proceed with its plans for a power shutoff,” the lawsuit states.

Meanwhile PG&E has admitted that they might be to blame.  In a document filed in November with the Securities and Exchange Commission the company acknowledged “its equipment may have sparked the Camp Fire.”  However, they did not offer specifics about the problem.

For the AG’s office, “Determining PG&E’ s potential criminal liability, if any, for recent wildfires would require an investigation into the cause or causes of those fires. If PG&E caused any of the fires, the investigation would have to extend into PG&E’s operations, maintenance, and safety practices to determine whether criminal statutes were violated with the requisite mental intent.”

There is no question that PG&E has legal trouble mounting here.  They could be facing billions in lability from civil suits.

There are also questions as to how much lability they would have here.  For instance, an attorney who filed one of the suits noted that they did not use insulated lines, and had they done so, the fire would have never happened (at least in his opinion since the determination has not been made).  However, he acknowledged that the lack of insulation “is the industry norm.”

The Camp Fire is also only the latest in a series of events.  For years, PG&E has been criticized for failure to oversee their transmission liens and other equipment.  PG&E is being sued over the fires in the win country last year said, “PG&E recognizes they have an aging infrastructure.”

The Bee noted earlier this year, that separate from the Camp Fire, “PG&E faces billions in claims for the wine country fires, which killed 44 people in October 2017. Cal Fire has cited PG&E equipment problems for 16 of the wine country fires; it has yet to assign a cause for the Tubbs Fire in Santa Rosa, the deadliest of the 2017 fires.”

On Monday, PG&E acknowledged that its potential role in the recent wave of fires “could create fresh legal problems for a company already on criminal probation following a natural gas pipeline disaster.”

“If it were determined that a wildfire had been started by reckless operation or maintenance of PG&E power lines,” PG&E attorneys told the judge, “that would, if the specific circumstances gave rise to a violation of federal, state, or local statutes, implicate the requirements” of the probation judgment, “which provides that while on probation, PG&E shall not commit another Federal, State, or local crime.”

Still, it remains unclear what additional potential penalties PG&E could face – if – that were occur.  In addition to potentially billions in civil penalties, the PUC is considering breaking up the utility.

—David M. Greenwald reporting


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About The Author

David Greenwald is the founder, editor, and executive director of the Davis Vanguard. He founded the Vanguard in 2006. David Greenwald moved to Davis in 1996 to attend Graduate School at UC Davis in Political Science. He lives in South Davis with his wife Cecilia Escamilla Greenwald and three children.

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11 thoughts on “Commentary: Is Criminal Charges Against PG&E the Way to Go?”

    1. John Hobbs

      “Heavy fines are the way to go.”

      Can rate payers afford them? We know that PG&E will pass those along, just like the cost of gas line retrofits.

        1. John Hobbs

          SB901, passed and signed into law sets a limit to how much PG&E would pay. The bill calls for the PUC to conduct a bankruptcy stress test, determining how much of a financial blow PG&E could withstand. Any costs beyond that would be passed on to ratepayers. It is welfare for a corporate giant that is to important to politicians’ aspirations to let fail.

  1. PhilColeman

    There is an endless number of examples where corporate negligence caused massive destruction of lives and property, literally and figuratively. In almost every instance the corporate head responsible suffered little or no consequence except for a loss of reputation and early retirement.

    I don’t think there has been a single instance where corporate negligence has resulted in the responsible having any personal financial consequence. Fines and penalties are assessed against the organization. Often, CEO’s walked with a huge severance package to keep them in 7-figure financial comfort for the rest of their lives. Instead of fines, forfeiture of all non-essential personal assets as determined by a bankruptcy court would get their attention.

     

    There are legal precedents for criminal charges to be lodged against leadership demonstrating gross negligence. The water debacle in Flint, Michigan comes to mind.  In California, unfortunately, gross criminal negligence occurs only when somebody gets into a vehicle.

    A visceral measure of satisfaction comes with an image of corporate or public utility heads being outfitted with orange coveralls should they fail to give public safety adequate attention. Their allegiance to stockholders and investors would be measured against the prospect of spending a few years in the slammer.

    1. Jim Hoch

      To Phil’s point SarbOx has changed some fundamentals of how companies do business. Just having the CEO be personally liable for financial statements was key.

      However the effect of personal responsibility will be the dramatically increased costs of power-lines and ratepayers will be responsible for those. They will likely be cost prohibitive without subsidies in certain low density areas.

      Right now we have electricity to essentially every house in the state while many places are not served by sewer pipes. The difference is cost of course and if you make electric power-lines cost as much as putting in pipes there will be some serious choices to make.

      1. PhilColeman

        Jim’s comments well taken. PG&E didn’t want to have their aging infrastructure continue as a hazard. Nor did they want to minimize its inspection of faulty lines. They did not have the resources, were fearful of being refused for more funding, and took a calculated risk.

        Major utilities are losing lots of customers to solar power with homes and businesses. Yet they are expected to continue massive infrastructure in place with dwindling revenue despite their monopoly status.

        The long-range solution is obvious but politically charged: Start the long-range evolutionary process of disbanding large public utility programs as our prime energy source. Instead, restructure toward localized community public works expansion to include providing electricity, with increased incentives to have homeowners install solar power. Building codes would be modified to mandate solar power on all new construction. This would require federal legislation and current prospects for same are doubtful.

         

        1. Jim Hoch

          Phil, if customers need to pay the true cost of building and maintaining electric lines many will chose to go for local generation instead.  While solar and wind will play a big part diesel generators will be a good choice for vacation residences and whether we want to allow that is a big decision.

          There will be some negativity if you tell people that they need pay $50K upfront and $5K per year for maintenance to be connected to the power grid *in addition* to electricity costs.

          I agree with your larger point, we have been operating the grid on the cheap because people like cheap power.

        2. Richard McCann

          There’s much more to this, but the solution is putting in distributed generation and microgrids in the “wildlands” and taking down the distribution (and maybe transmission) lines. This is now technically feasible and even cost-effective. The CPUC is claiming it will look at a wide range of solutions in its Safety OII, so we’ll see what happens.

          PG&E has a long record of failing to maintain safety in its system, starting at least in the 1990s when it used $500 million intended for tree trimming to boost shareholder returns instead (that was revealed in its 1999 General Rate Case–I may still have the testimony around on that.) And then there was the decades long pipeline management fiasco. Now its back to the rural distribution network. That’s 3 strikes…

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