Lawyer Who Stepped Down From San Bruno Case Cites 'Unlawful Recommendations' by CPUC

by Jon Brooks and Laird Harrison

Robert Cagen, a California Public Utilities Commission lawyer who was working on the penalty case against PG&E relating to the 2010 San Bruno pipeline explosion, emailed KQED's Peter Jon Shuler today with the following:

"I personally could not continue working on the San Bruno penalty briefs because I concluded that the CPSD recommendations that were to be made in the briefs were unlawful and contrary to what our team had worked to accomplish in the last two and a half years."

The CPSD is the CPUC's Consumer Protection and Safety Division, which is making a penalty recommendation of $2.25 billion to administrative law judges.

While that would be the largest fine ever levied by the CPUC, it has become controversial because the proposal calls for the money to be spent on safety improvements, rather than going into the state's general fund. Consumer advocates say that under those recommendations, PG&E would receive tax breaks and credit for improvements it already has made, reducing the penalty by $900 million.

The San Bruno explosion and fire killed eight people and destroyed 38 homes. The National Transportation Safety Board, which investigated the disaster, cited a litany of failures by both PG&E and the CPUC in its final report in 2011.

On Wednesday, a behind-the-scenes dispute at the CPUC broke out into the open when San Bruno Mayor Jim Ruane issued a statement saying that four commission lawyers who had been working on the penalty case had been reassigned to other duties.

CPUC spokesperson Terrie Prosper said in a news release that the lawyers requested the reassignment, but did not give a reason for those requests.

Ruane speculated that the attorneys asked to be reassigned because they disagreed with the agency's position on the penalties, a suspicion that appears to have been confirmed by Cagen's statement today.

"I think [the lawyers'] recommendations are not being followed by the CPUC," Ruane told Peter Jon Shuler.

Ruane called for an investigation of the CPUC by the California attorney general and the state Legislature.

"It seems that the upper echelons of the CPUC want to give – I’ll just say it straight – PG&E a free ride," he said.

Ruane thinks PG&E should pay a penalty into the state's general fund. This would serve as a better deterrent to other utilities that might neglect safety, he said.

The San Francisco Chronicle reported that the agency's general counsel, Frank Lindh, ordered the reassignment, after the legal team's leader, Harvey Morris, filed a successful motion challenging PG&E's estimates of the amount it already had spent on improvements. Lindh, a  former lawyer for PG&E, had originally recused himself from handling the case because of the potential conflict of interest, the Chronicle reported.

The administrative law judges' decision will come in late summer, the CPUC said.

Update 2:15 p.m. In a statement today, Jack Hagan, the director of the CPUC's Consumer Protection and Safety Division, said the following:

I am aware that some California Public Utilities Commission (CPUC) employees are criticizing the $2.25 billion penalty recommendation I made in the Pacific Gas and Electric Company (PG&E) pipeline safety cases. My proposal is that PG&E be required to spend $2.25 billion of shareholder money on safety improvements to its gas system. Safety is my number one priority. The criticism I am hearing is that some of this money should go to the State’s General Fund as a fine. I have not recommended that approach because of the importance I place on safety. The CPUC’s Commissioners ultimately will decide this, but I stand by my proposal. Make PG&E pay $2.25 billion to fix its broken gas system and make California safer. We owe this to the victims of the San Bruno pipeline rupture and their families.

Update 7:26 p.m. The Chronicle is reporting that Robert Cagen was "brought out of retirement by the [CPUC] in 2010 to handle PG&E-related cases." The Chron also quotes CPSD Director Jack Hagan as saying, "I checked with the general counsel; he said this was not unlawful."