PG&E logo visible through raindrops on a San Francisco window in January 2019. The company faces new criminal probation conditions growing out of its role in the deadly wildfires of 2017 and 2018.  Justin Sullivan/Getty Images
PG&E logo visible through raindrops on a San Francisco window in January 2019. The company faces new criminal probation conditions growing out of its role in the deadly wildfires of 2017 and 2018.  (Justin Sullivan/Getty Images)

Judge Would Block Shareholder Dividends as Part of Probation Conditions for 'Dismal' PG&E

Judge Would Block Shareholder Dividends as Part of Probation Conditions for 'Dismal' PG&E

Updated 1:50 p.m. Wednesday

This report contains a correction.

The federal judge overseeing PG&E's criminal probation for violating pipeline safety laws has suggested new conditions of supervision for the company, including a provision barring the company from issuing further shareholder dividends while it works on a project to make its nearly 100,000 miles of above-ground power lines safe from nearby vegetation.

U.S. District Court Judge William Alsup said in a "show cause" order issued late Tuesday that the proposed conditions -- which include full compliance with state laws prescribing clearance between power lines and trees, brush and other plant matter -- are necessary because "the record demonstrates that PG&E’s performance with respect to vegetation management has been dismal."

Pacific Gas and Electric in Court
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Alsup issued the proposal after finding in January that PG&E had violated the terms of probation imposed after its 2016 conviction on five counts of breaking pipeline safety laws and one count of obstructing a federal investigation into the 2010 San Bruno pipeline disaster.

The judge ruled during a Jan. 30 hearing that the utility had failed to obey a condition that required it to tell probation officials if it became the subject of a criminal investigation. The violation involved PG&E's failure to adequately notify a probation officer that Butte County prosecutors were considering charges against the company for a 2017 fire that scorched 150 acres outside Paradise.

"The question is the extent to which the offender’s conditions of probation should be modified to protect the public from further crimes and to help rehabilitate the offender," Alsup wrote in his Tuesday order.

The judge specifically rejected PG&E's claim in a filing last month that it's virtually impossible to achieve full compliance with two sections of state law -- Sections 4292 and 4293 of the Public Resources Code -- that govern vegetation clearance standards around power lines.

“Given the dynamic conditions of vegetation, it is impossible for a utility to achieve perfect compliance or to represent that it is in full compliance at all times,” PG&E said in a filing Feb. 23.

"This order rejects PG&E’s ... contention that 'perfect compliance” with Section 4293 is impossible due to 'densely forested, highly dynamic, living environments, in which conditions can rapidly change,' " Alsup wrote.

The judge criticized the company for not providing evidence of its claim and took a swipe at its past efforts to influence legislation in Sacramento.

"If state or federal law is too strict, moreover, PG&E’s remedy would be to seek the relaxation of such laws through its well-oiled lobbying efforts," he wrote.

Alsup's new conditions would include:

  • Full compliance with California Resources Code Sections 4292 and 4293.
  • Full compliance with vegetation management and other targets PG&E laid out in a wildfire mitigation plan filed with the California Public Utilities Commission last month.
  • Unannounced inspections by the monitor the court appointed in 2017 to oversee the company's safety activities.
  • "Traceable, verifiable, accurate, and complete records of its vegetation management efforts." The company will be required to provide records to the monitor and report on its vegetation management progress on the first day of every month.
  • The company must "ensure that sufficient resources, financial and personnel, including contractors and employees, are allocated" to meet the new conditions of probation. To make sure that all available resources are devoted to meeting the new terms, the company may not issue dividends until it is in full compliance.

In a statement Wednesday, PG&E said it "shares the court’s commitment to safety and agrees that we must all continue to work together with urgency to address the risk of wildfire throughout Northern and Central California."

The company said it's committed to completing the work detailed in the wildfire safety plan submitted to the CPUC last month. The plan envisions at least $1.7 billion in spending in 2019 to, among other things, remove 375,000 potentially dangerous trees, clear vegetation from 2,450 miles of power lines and inspect and repair 685,000 power poles and 40,000 transmission towers.

Alsup set a hearing for April 2 on the additional conditions, including one not detailed in the Tuesday document: requiring PG&E to shut down any power line that it cannot certify as safe during times of extreme fire danger.

The new condition blocking dividends may be moot, as PG&E suspended such payments after the 2017 Northern California fire siege and the company is now in Chapter 11 bankruptcy proceedings.

Alsup's new proposal comes against the backdrop of the devastating series of fires that have swept Northern California communities in the last 18 months.

Cal Fire has determined that PG&E equipment may have played a role in 18 of the more than 170 fires that broke out in October 2017 and referred 11 of those incidents to local district attorneys for possible prosecution. Last week, PG&E said in a financial filing that investigators are likely to find its equipment sparked last November's Camp Fire in Butte County, a catastrophe that killed 85 people and destroyed 14,000 homes in and around the community of Paradise.

Alsup brought up the company's dividend payments during the Jan. 30 hearing on his first set of proposed expanded probation conditions, which would have required the company to immediately undertake a vast expansion of its vegetation management and safety programs.

At one point in the proceeding, Alsup asked PG&E's lawyers, "Why is it that PG&E should be permitted to start a single wildfire?"

"The answer ... is bringing the risk to zero is incredibly complicated," PG&E attorney Reid Schar said, and needed to factor in liability costs and the cost of aggressive vegetation management versus other risks.

The mention of cost prompted Alsup to respond: "In the last five years, 4.5 billion dollars of dividends have been paid out to the owners of PG&E -- 4.5 billion, at least if I've done the math right. Some of that money could have been used to cut trees and trim trees, the very same trees that caused" some of the fires that swept the state in 2017 and 2018.

"Those trees could have been cut. No, the money went to the shareholders," Alsup said. "Why is it that PG&E says all the time, 'Safety is our number one thing,' I hear it all the time. 'Safety, safety safety.' But it's not really true. Safety's not your number one thing."

Correction: This story incorrectly described Judge William Alsup's March 5 "show cause" order regarding PG&E's criminal probation. The order contains proposals for new conditions, but does not impose the new conditions.

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