Judge has authority to force PG&E changes despite the utility’s objections, experts say

SAN FRANCISCO -- The federal judge overseeing the Pacific Gas & Electric Co.'s probation has "profound authority" to require the utility to make changes despite its objections that the matter should be left to state and federal regulators, legal observers said Thursday.

"Since PG&E pled to a felony offense, Alsup has extreme and broad powers over its operations," said UC San Diego professor of public interest law Robert Fellmeth. "For PG&E to say he doesn't is nonsense."

While acknowledging the court's increased role in reviewing and monitoring the progress of its wildfire mitigation work, PG&E argued in a Wednesday filing Judge William Alsup does not have the authority or understanding of the industry to alter the terms of its probation and require further action.

The judge's proposed modifications, which include deciding when PG&E would de-energize power lines and how it would perform maintenance and modifications to its vegetation management program, should be addressed by the Federal Energy Regulatory Commission, which has authority over transmission lines, and the California Public Utilities Commission, which has similar comprehensive authority over distribution lines, the utility proposed.

"[Alsup's order] interferes with the role of state and federal regulators without fully accounting for the risks that some of those actions may create and while imposing significant costs on California without assessing whether those costs are necessary," wrote defense attorney Reid Schar of Jenner & Block LLP in a response to show cause as to why PG&E's conditions of probation should not be modified.

A hearing to consider the probation modifications is scheduled for Jan. 30. U.S. v. Pacific Gas & Electric Co., 14-CR175 (N.D. Cal, filed April 1, 2014).

The state and federal commissions have the institutional and technical expertise to evaluate the competing policy interests, Schar continued, adding the hearing cannot be rushed since the court must hear from all stakeholders, including environmentalists, schools and hospitals.

Objecting to what it views as the judge overstepping his authority, PG&E attorneys also argued probation is the wrong lens to address the wildfire mitigation since "the goal expressed in the proposal and the comprehensive restrictions and requirements ... are not (as federal law requires) reasonably related to the convictions that gave rise to probation in the first place."

UC Berkeley Goldman School of Public Policy lecturer Steven Weissman, who is also an attorney and was an administrative law judge for the California Public Utilities Commission, disagreed with PG&E's characterization of the authority and jurisdiction of state regulators.

The commission is responsible for how the utility will pay for improvements and ensuring the safety of the electrical grid, the latter of which overlaps with Alsup's duties.

"What is clear is that the CPUC would have authority to go beyond what Alsup is requiring if so necessary to keep the system safe," he said. "It's another question entirely whether the CPUC could let PG&E off the hook entirely. [It] cannot tie Judge Alsup's hands."

The utility could argue the court's proposal to de-energize lines during high risk weather conditions is a threat to public safety, Weissman added. If the commission agrees that initiative would harm safety, the matter would have to be decided by the courts.

Likewise, the Federal Energy Regulatory Commission has the authority to help determine how PG&E will pay for improvements to its transmission lines and possibly even how it is done but not whether Alsup has the authority to force those changes, according to Fellmeth.

"He is absolutely in his jurisdiction to say, 'In order to comply with probation and prevent further criminal acts, you have to do the following,'" he said.

In another development, the Department of Forestry and Fire Protection concluded Thursday a private utility line, not PG&E wires, caused the Tubbs fire in 2017.

"Regardless of today's announcement, PG&E still faces extensive litigation, significant potential liabilities and a deteriorating financial situation," a utility spokesperson said in a statement.

The utility did not comment about its pending bankruptcy filing.

Fellmeth said companies are rarely taken to criminal court since there is a higher ceiling on civil fines and penalties and this case exemplifies the advantages of federal prosecution.

"This case is different in that we have a continuing power being exercised and that repetition of a felony is likely unless they obey the terms of the probation that prevent further offenses," Fellmeth said. "That casts the court in a role that is coextensive with the bankruptcy court, the CPUC and FERC, but that doesn't mean they shouldn't be doing it."