SHASTA COUNTY, Calif. — Despite finding that PG&E’s “egregious” behavior started the deadly 2020 Zogg Fire, the state agency tasked with protecting the public from for-profit utilities plans to allow PG&E to settle “severe” violations without a finding of wrongdoing.
The five governor-appointed members of the California Public Utilities Commission plan to vote during their meeting this Thursday to water down language of the proposed settlement, which would impose a $10 million fine against PG&E.
Former CPUC President Loretta Lynch said the proposal is further proof that the regulator has been captured by California’s for-profit utilities.
The commission is “supposed to be a watchdog,” she said, but “has transmogrified into a lapdog.”
Family members of people killed in the Zogg Fire find the proposal offensive.
Eight-year-old Feyla McLeod and her mom Alaina died together trying to escape the Zogg Fire, as did neighbor Karin King. Ken Vossen died in a hospital, succumbing to severe burn injuries.
PG&E admits its power line sparked the fire when a gray pine fell onto it in a September 2020 windstorm, but pleaded not guilty to manslaughter and reckless arson charges filed in Shasta County criminal court.
“It might not have been intentional, I understand that,” said Zach McLoed, husband of Alaina and father of Feyla. “No one came after my family with guns and weapons, but there was negligence involved.”
While on criminal probation, PG&E admitted to a federal judge that it believes its tree contractor marked the tree in 2018 as a hazard that needed to be removed. The removal never happened.
“Mistakes, your honor, are not crimes,” PG&E defense attorney Brad Brian said in February during a criminal manslaughter hearing in Shasta County. He characterized the decision to leave the tree in place as a “judgment call” by tree experts.
“They're not admitting to wrongdoing,” said McLeod, who believes PG&E needs to be held responsible in order to pressure its leaders to do a better job of preventing future deaths.
PG&E has repeatedly claimed to be "making it safe and making it right" in the wake of the Zogg Fire, language McLeod sees as a softly-worded admission that deep down the company knows it did do something wrong.
ACCOUNTABILITY STRIPPED FROM CPUC LANGUAGE
The CPUC has a separate process outside of criminal court to handle violations of its regulations.
A draft released last month of the CPUC’s resolution on the Zogg Fire case declared “PG&E’s offense was indeed severe” and that “PG&E’s conduct was egregious.”
Those phrases are both crossed out in red in a new version of the document, scheduled for a vote by the CPUC commissioners.
Instead, the version up for a vote on CPUC’s Thursday agenda would declare the utility and its regulator “dispute both the existence and severity of PG&E’s alleged offense.”
“When PG&E tells the PUC to jump,” former CPUC President Loretta Lynch said. “The PUC responds ‘How high?’”
PG&E did request these changes, complaining in a filing last month that the stronger language didn’t “give full effect” to the deal it reached with the regulator’s Safety and Enforcement staff.
The deal did not require PG&E to admit wrongdoing. Whether PG&E admits it or not, the CPUC’s revised language also strips away any formal finding of wrongdoing.
Spokesperson Terrie Prosper declined to provide a comment when asked why the CPUC felt it appropriate to settle the Zogg Fire without a finding of wrongdoing, referring us to the text of the proposed resolution.
The text declares itself “reasonable.”
Lynch and other former agency officials also see the Zogg Fire settlement as a worrisome development because of a lack of transparency in the CPUC’s process to reach it.
The deal was reached behind closed doors between CPUC staff and PG&E in a newer process called an “Administrative enforcement order,” which cuts out the opportunity for third parties to ask questions.
The agency, which already has a reputation for secrecy, has described the new process adopted in 2020 as being more “expeditious and efficient” than the previous method it used for evidentiary hearings into investigations.
PG&E negotiated its fine down from a proposed $155.4 million to only $10 million, which equates to about four hours of the monopoly’s revenue.
The settlement also calls for PG&E to spend $140 million on so-called “shareholder-funded initiatives.”
Most of those are aimed at improving PG&E’s handling of hazardous trees, which critics argue PG&E should have been doing better anyway.
However, $3 million of that money is designated to buy the CPUC a consultant to “review and update” the very rules PG&E was accused of breaking.
CPUC ACTION COINCIDES WITH CRIMINAL SETTLEMENT TALKS
As the CPUC process unfolds, PG&E is attempting to settle the criminal manslaughter charges filed against it in the Zogg Fire.
Prosecutors are in a weak negotiating position after Shasta County Judge Daniel Flynn recently reversed his own position, announcing his intention to overturn a fellow judge’s preliminary hearing binding PG&E for jury trial in the case.
A proposed ruling by Flynn, revealed one week after the CPUC’s watered-down settlement language, would toss out all of the felony charges filed against PG&E.
That would leave Shasta County District Attorney Stephanie Bridgett with options to appeal Flynn’s ruling or accept his dismissal of the case and refile charges, effectively starting the case over again.
Flynn said prosecutors did not establish probable cause to support an allegation at the heart of their case: that PG&E and/or its contractors were aware of the hazard tree before the Zogg Fire.
The tree was too weak to support itself. Photos show most of the wood was missing from the base of the tree's trunk, damage that a Cal Fire arson investigation concluded would have been obvious for years before the Zogg Fire.
The CPUC’s proposed language for Zogg Fire resolution could offer some evidence to support prosecutors on that point.
“PG&E failed to remove two trees previously flagged for removal due to a combination of poor recordkeeping, poor communication, and lack of caution,” the CPUC’s Safety and Enforcement Division (SED) found.
PG&E violated state safety rules by “fail[ing] to remove trees due to poor recordkeeping” and failing to perform the correct inspections and patrols of trees, according to SED.
WILL PG&E CONTINUE TO CAUSE MORE DESTRUCTION?
PG&E disasters have killed more than a hundred people in the last decade.
While on criminal probation for six federal felonies stemming from the 2010 San Bruno gas explosion, the company committed felony reckless arson and 84 felony counts of manslaughter in the 2018 Camp Fire.
It was the deadliest mass homicide committed by a corporation in the United States. The Zogg Fire started just three months after PG&E pleaded guilty in June 2020.
PG&E fires also killed people in 2015 Butte Fire and the 2017 Northern California firestorm.
In the wake of a state bailout of PG&E orchestrated by Gov. Gavin Newsom after the Camp Fire, prosecutors dropped criminal cases against the utility for starting the 2019 Kincade and 2021 Dixie Fires.
Instead, PG&E was allowed to enter into a civil settlement that included terms for paying survivors and five years of monitorship by a contractor working for prosecutors.
“In the Zogg case, PG&E’s actions caused the deaths of four people,” Bridgett said last April. “A civil settlement alone, such as was reached in the Dixie Fire case, would not be sufficient to hold PG&E accountable for their actions.”
The company also faces a federal investigation after forest service officials seized parts of a PG&E transmission line at the origin point of the 2022 Mosquito Fire.
Through all of it, the state government has annually certified PG&E as a safe utility under a 2019 law known as AB 1054. The safety certificate grants PG&E a presumption that its actions were reasonable, which makes it easier to pass wildfire costs on to customers.
An ABC10 investigation revealed the bill was authored at taxpayer expense by PG&E’s longtime law firm, working under a contract to represent Newsom’s office in PG&E’s 2019 bankruptcy case.
Lynch fears the state’s response will beget more grim headlines about PG&E in the future.
“The reason [PG&E is] a rogue corporation is because the PUC, the entity that the California Constitution sets to oversee and regulate this private utility, is not doing its job,” Lynch said. “If anything, Sacramento has prevented the PUC from doing a good job with AB 1054.”
The McCloud family hopes the commissioners do some soul searching and change their approach to PG&E’s disasters.
“The people that regulate them need to maybe do a better job,” Zach McLeod said.
GO DEEPER: This story is part of ABC10's FIRE - POWER - MONEY reporting project. If you have a tip that could reveal more about California's crisis with utilities and wildfires, please contact investigative reporter Brandon Rittiman at brittiman@abc10.com.
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