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CPUC's Top Lawyer Blasted by Staff During, and After, Keynote SpeechAt regulators conference, Frank Lindh offered a "hypothetical" that sounded a lot like the real controversy roiling his legal department as it fashions penalties for the San Bruno pipeline blast.
2013-06-18 05:28:44 PM
SAN FRANCISCO — For the first time in more than a decade, the California Public Utilities Commission is hosting the three-day annual meeting of the National Conference of Regulatory Attorneys in San Francisco. And attendees got more than they bargained for on Monday.
Frank Lindh, the CPUC's embattled general counsel, surprised the crowd — and his own staff — with a speech about a "hypothetical" state utility regulator whose staff attorneys needed to learn a lesson about loyalty and good judgment.
On hand were regulators from around the country who watched as Lindh's own staffers heckled him for what they saw as a veiled attack on his legal team. The tense scene offered a glimpse of the firestorm within the CPUC's legal department as it deliberates the financial penalty against Pacific Gas & Electric Co. for its role in the deadly 2010 San Bruno explosion.
Lindh's speech has ratcheted up tensions between the agency's staff attorneys and Lindh and CPUC President Michael Peevey, according to interviews with CPUC attorneys and internal communications obtained by The Recorder.
"I feel compelled to say that your decision to give this speech, which was a thinly veiled critique of the actions of the San Bruno attorney team, demonstrated very poor judgment," Assistant General Counsel Helen Mickiewicz wrote Monday afternoon in an email sent to Lindh and copied to many other CPUC attorneys. "What is NOT appropriate is for you to take your case public, arguing your position in the press, and then today, before a hundred attendees from all over the country at a regulatory conference."
Neither Lindh nor the CPUC responded to requests for comment.
Attorneys at the CPUC want an investigation of their own agency after Lindh reassigned four staff attorneys who sought stiffer financial penalties against PG&E than CPUC management had approved in a June 5 brief.
That's when the director of its consumer product and safety division — Brigadier General Jack Hagan — recommended that PG&E be made to pay $2.25 billion toward repairing the faulty infrastructure blamed for the San Bruno blast that killed eight and destroyed 38 homes. But the five CPUC attorneys originally assigned to the case refused to sign on, citing — among other reasons — the Bay Area energy supplier's culpability in the disaster and its ability to write off about $1 billion in safety improvements the company has already made. Longtime CPUC attorney Robert Cagen resigned from the PG&E case in protest. But CPUC attorneys Harvey Morris, Patrick Berdge, Darryl Gruen and Travis Foss were pulled off the case by Lindh, according to CPUC attorneys, who asked not to be named.
Lindh told the Bay Area News Group on Friday that those attorneys "withdrew from the case" and left him "with the obligation to fill in behind them."
That assertion drew immediate fire from Morris.
"I request that you cease immediately your defamatory representations that I and the other attorneys in the San Bruno [case] voluntarily left the case," Morris wrote Friday "We did not work for two-and-one-half years in intensive litigation against PG&E, including writing hundreds of pages of briefs establishing hundreds of safety violations, if we did not feel that PG&E was totally responsible for the San Bruno tragedy."
Lindh, who worked in PG&E's legal department earlier in his career and was general counsel of its gas pipeline transmission unit from 1996 to 1998, said last week that he, too, wanted the AG to investigate. A spokeswoman for Kamala Harris said the AG is reviewing the requests.
Morris' email to Lindh has circulated widely among lawyers in the approximately 70-lawyer division, with colleagues rushing to his defense.
"Harvey Morris has earned the admiration and respect of his colleagues at the CPUC, including all the attorneys who have worked with him," said Karen Paull, acting chief counsel of the CPUC's Division of Ratepayer Advocates. "We know him to be an attorney of exceptional skill, extraordinary commitment to the public interest, and utmost integrity," she said, adding that "the suggestion that he has done something unethical has infuriated his colleagues at the CPUC."
"Morale in legal division has never been lower," wrote Nicholas Sher, another CPUC attorney, in an email circulated to colleagues.
City leaders of San Bruno have watched the conflict at the CPUC closely — and with anxiety.
"We're extremely concerned about what we believe is total disarray within the CPUC," said San Bruno city manager Connie Jackson during an interview on Monday. "We have worked for 2 1/2 years with the attorneys who have been investigating and researching and developing the case against PG&E. We are extremely concerned that they have been removed. That is not in the interest of a fair and reasonable outcome to the proceedings."
The personnel scramble is causing a headache for San Bruno's legal team.
"We've been dealing with these lawyers for more than two years," said Britt Strottman of Meyers Nave Riback Silver & Wilson, which represents San Bruno in proceedings before administrative law judges. "And now we're left with no one — not one attorney that knows the elementary facts of the case."
So far, PG&E is not complaining.
"We agree with the CPUC that if there is a penalty it should go back into gas safety infrastructure work," said Daren Chan, a PG&E spokesman.
Chan said the company recognizes that "a penalty is warranted here" but insisted that penalties should be spent toward reinvesting in the safety of the company's infrastructure. PG&E has spent $900 million to improve gas safety work since 2010, and it plans to spend an additional $1.3 billion on more safety improvements, according to Chan.
But Jim Ruane, mayor of San Bruno, wants the CPUC's penalty to send PG&E a message and he said allowing the company to get credit for safety work that should have been done "over the past 50 years" is unacceptable.
An outside audit of PG&E found that between 1999 to 2010 it regularly failed to use money collected from ratepayers to maintain its gas distribution pipelines.
"We want it to be a fine," Ruane said on Monday. "We want PG&E to hurt. We want them to understand they did something terribly wrong."
Joining Ruane in his demands for strong regulatory action against PG&E is state Senator Jerry Hill, D-San Mateo, whose district includes San Bruno. Hill has been a harsh critic of what he calls a cozy relationship between the CPUC and PG&E.
"It's business as usual, in my opinion," Hill said. "Mr. Lindh seems to have tried to rewrite history last week."
Hill said he doesn't think the CPUC will allow PG&E to be hit with any sizable penalties. He's pinning his hopes instead on criminal investigations being conducted by the U.S. attorney's office and the San Mateo County district attorney.
"My hope now is the criminal aspects of this case will be coming to light, hopefully within the next month."