SAN FRANCISCO — The California Public Utilities Commission voted on Thursday to impose a $14.35 million fine on Pacific Gas & Electric Co. for filing faulty records related to a natural gas pipeline and waiting too long to correct them.
“There should be no question that the CPUC expects nothing less than forthright and timely disclosure in all matters of public safety,” said Commissioner Mark Ferron, who authored the decision. “This fine sends a strong signal to PG&E, and to all of the utilities that we regulate, that delay and obfuscation will not be tolerated.”
However, the commission rejected a call to sanction the Orrick, Herrington & Sutcliffe partner who represented PG&E and who was criticized for his handling of the correction.
The penalty approved 5-0 by the utility regulator stems from PG&E’s attempts in 2011 to loosen restrictions on a gas pipeline traversing San Carlos, a 28,000-person city on the San Francisco Peninsula.
In order to win regulatory approval, PG&E filed two documents later that year which included erroneous data and overstated the safe operating capacity of its line. The company began discovering its mistakes in October 2012 but waited until July 2013 to correct them, according to the CPUC.
The commission faulted Orrick attorney Joseph Malkin for filing an “errata”—a document type not allowed by agency rules—to inform the regulator of the mistakes, rather than providing more formal notice.
“This submission had the effect of concealing from the commission and the parties the actual nature of the document,” the commission stated in a proposed decision released prior to Thursday’s vote. “The ensuing level of controversy caused by the issues revealed in the July 3, 2013 document stands in stark contrast to the routine-sounding title chosen by the lead counsel.”
The CPUC based $11.45 million of the total fine on PG&E’s decision to wait 229 days before informing the regulator of the change. The remaining $2.9 million in sanctions stem from the method of correcting the record.
In its defense, PG&E cites an internal review by Munger Tolles & Olson which concluded “that there was no intent to mislead or deceive the commission or its staff.”
“While we appreciate the Commission’s decision to allow us to return this line to service and agree with the Commission that timely and transparent communication with the CPUC and the public is essential, we believe the fine associated with this ruling is excessive,” the company said in a statement.
Orrick’s Malkin called it “absurd” to suggest that his errata was an effort to mislead. In fact, he said, the filing contained the word “error” four times on the first page alone.
“This was a good faith effort to comply with an arcane set of regulations—and it is unfortunate that so much time and energy has been focused on the title of a filing rather than the steps PG&E has taken to ensure public safety,” he said in a prepared statement.
Malkin added that far from trying to bury news of the mistake, PG&E sent notice to more than 200 parties, including CPUC staff and the media.
Attorneys for the city of San Bruno, who have closely watched PG&E’s latest bout with the CPUC, had urged the commission to make Orrick and Malkin pay for PG&E’s fine. The utility regulator is currently weighing potential billion-dollar fines against PG&E over its role in a deadly 2010 pipeline explosion in San Bruno. Investigations later faulted PG&E for not repairing infrastructure that led to a massive blast.
“We supported the proposed decision’s legal reasoning, conclusions of law and findings of fact,” said Meyers Nave’s Britt Strottman, who is special counsel to both San Bruno and San Carlos. “But there should be repercussions for the lawyers and the law firm that result in misrepresentations to the commission.”
Contact the reporter at firstname.lastname@example.org.