|
In 1911 the
Railroad Commission of California was
established because an outraged public
demanded there be some regulation of the
powerful rail barons that had repeatedly
proved they were incapable of regulating
themselves.
A century
later, that agency — redubbed the California
Public Utilities Commission — would come
under fire from a once-again outraged public
for not adequately regulating a different
powerful industry. This time the results
were deadly: Eight people died on Sept. 9,
2010, when a PG&E gas transmission line
exploded and reduced a San Bruno
neighborhood to ash.
Commission
leaders initially defended the agency’s
oversight of PG&E, but after federal
investigators and an independent panel
created by the commission both condemned the
regulator for a host of inadequacies, even
the agency’s leadership has come to agree it
bears some responsibility.
The CPUC
could have helped avert this disaster,
concluded the National Transportation Safety
Board, which just wrapped up a yearlong
investigation into the pipeline blast. An
adequate regulator would have known that
PG&E lacked documentation about its pipe
system, that its inspection programs were
feeble, and that it had an inadequate
emergency response plan, NTSB investigators
testified in a hearing last week.
Worse, even
when they did realize PG&E was violating
regulations, the commission simply took
industry leaders at their word when they
promised to fix the problems, rarely
imposing fines or enforcing major changes.
NTSB
Chairwoman Deborah Hersman said PG&E
“exploited weaknesses in a lax system of
oversight” and that regulators placed “blind
trust in an operator that doesn’t deserve
that trust.”
Earlier
this year, the independent panel formed by
the CPUC to investigate the San Bruno
accident concluded that the state regulatory
agency hadn’t been doing its job. The
panel’s report said that though
well-meaning, the commission’s staff was
plagued by a culture satisfied with making
sure PG&E was in compliance with regulations
— filing paperwork, meeting deadlines, and
“checking off boxes.” Meanwhile, the
agency’s true mandate to ensure public
safety had been obscured. Even when the
staff auditors and inspectors did find
problems, as they did in an audit months
before the San Bruno blast, those concerns
were given such low priority that the staff
failed to bring them to the full commission
for months, the independent panel found.
Often, when concerns were brought to the
commission, nothing was done and no fines
were imposed.
Among other
recommendations, the NTSB has urged Gov.
Jerry Brown to authorize CPUC safety staff
to directly impose fines on the industry,
rather than waiting on the full commission
to impose penalties.
This host
of regulatory failures could result in at
least one lawsuit against the agencies
overseeing the energy industry. San
Francisco City Attorney Dennis Herrera has
threatened to sue the CPUC and its federal
counterpart, the Pipeline and Hazardous
Materials Safety Administration, for failing
to enforce gas pipeline safety standards.
Because
major gas transmission lines run through San
Francisco, these regulatory failures placed
the people who live and work in The City at
risk, Herrera argues.
“It has
become increasingly obvious that blame must
be shared by regulators who were either
asleep at the switch or too cozy with the
industry they’re supposed to regulate,”
Herrera said in a written statement.
CPUC
Executive Director Paul Clanon acknowledged
his agency has “some responsibility to learn
the lessons of San Bruno.”
“Eight
people died — nobody at the PUC thinks that
we are immune from some responsibility for
that,” he said.
And it has already beefed up its oversight,
by doubling the number of pipeline safety
inspectors it had a year ago, and creating a
new unit whose sole responsibility is to ask
hard questions about safety.
Rep. Jackie
Speier, D-San Mateo, noted that historically
the CPUC conducted “desk audits,” where they
rarely conducted site visits or dug more
deeply into safety issues than necessary.
She said auditors once “were easily
persuaded by the utility to cut corners,”
but that has now drastically changed.
And the
makeup of the commission itself has changed,
she said. Three of the five members on the
board last year have since been replaced by
appointments from Gov. Jerry Brown, bringing
a more consumer-oriented bent to the board.
Among the
new commissioners is Mike Florio, who spent
much of his career fighting for consumers as
the general counsel of advocacy group The
Utility Reform Network. He said the agency
must accept “a fair share of the blame” for
San Bruno.
“It’s not
that people were slacking off, but I think
they weren’t asking the right questions, or
asking the hard questions,” he said. “I
think it’s in the process of being
transformed. I think the whole situation
really shook people here. All of us had
become a little bit complacent.”
Disaster’s
regulatory aftermath
San Bruno
has already inspired a host of regulatory
changes:
- Every
state pipeline operator must test or
replace all pipelines that they lack
records of testing before.
- State
operators can no longer solely use the
cheap but lax “direct assessment” method
to test pipes.
-
Pipeline operators must immediately call
911 when a possible rupture is detected.
-
Pipeline operators nationwide must
proactively adapt their management
strategies to avoid the circumstances of
the San Bruno explosion.
-
Pipeline operators nationwide must
notify first responders about the
pipelines that run through their
regions.
Outnumbered
9:
Number of CPUC safety inspectors before
blast
11,000: Average miles of pipeline per
safety inspector before blast
18: Number of safety inspectors now
5,500: Average miles of pipeline per
safety inspector now
Source:
California Public Utilities Commission
Industry
and regulators share messy family tree
Ask Paul
Clanon whether his agency deserves the
reputation of being too cozy with the
industry it regulates, and you can feel his
temperature rising.
“I think
it’s completely off-base. It’s completely
wrong in every way,” said the executive
director of the California Public Utilities
Commission.
But those
people don’t seem to be going away. For the
past year, the regulator has been under the
microscope after a San Bruno neighborhood
was maimed by an exploding PG&E natural gas
pipeline. Those looking through that
microscope — media, residents and lawmakers
— have continued to question whether the
regulator was complicit in the tragedy
because it was too trusting and permissive
with the industry it was tasked to put
limits on.
Clanon’s
outright dismissal of these concerns did not
sit well with Assemblyman Jerry Hill, D-San
Mateo.
“If he
believes that then it’s time for him to go,
because he’s living in a dream world,” Hill
said.
Hill was
among those who have questioned whether the
commission and its staff are too enmeshed in
the industries it regulates. He has
repeatedly asked the commission about its
staff general counsel, Frank Lindh, who
worked for 16 years as an attorney for PG&E.
Lindh is now participating in an
investigation into PG&E, and Hill has asked
whether there may be a conflict of interest.
Lindh has
many defenders, even among consumer
advocates who faced him when he worked for
PG&E.
Sam Kang,
general counsel of consumer advocate
Greenlining Institute, described Lindh as a
“great resource” for the advocates of the
underserved who is “extremely well-respected
by the industry, within the PUC and by
consumer advocates.”
But as The
San Francisco Examiner reported last month,
Lindh is hardly the only person who has
traveled between the industry and its
regulator: the last executive director now
is an energy consultant. The current
commission president is a former utility
executive. A former commissioner now is the
executive of another utility. One Arnold
Schwarzenegger-appointed director of
government relations was an industry
lobbyist before taking the position and went
directly back into lobbying afterward.
Judy
Nadler, a government ethicist at Santa Clara
University, called such interconnections a
“family tree syndrome — put everybody up
there and you could link them all, one way
or the other.”
She said
this can be particularly problematic for an
agency like the Public Utilities Commission,
which runs under the public radar until
something like the San Bruno tragedy occurs.
Revolving-door regulation?
As The San
Francisco Examiner reported last month,
critics have accused the California Public
Utilities Commission of being “too cozy”
with the energy industry it regulates. Here
are a handful of leaders who have leadership
positions from both the commission and the
industry on their résumés.
FRANK LINDH
Worked as an attorney for PG&E for 16 years
before being named general counsel of the
CPUC in 2008.
MICHAEL PEEVEY
Has served as president of CPUC since 2002.
Earlier in his career, he was president of
energy company NewEnergy Inc., and prior to
that led the utility Southern California
Edison.
DELANEY HUNTER
Worked as energy lobbyist before being
CPUC’s director of governmental affairs in
2005. Left commission in 2008 to return to
energy lobbying.
STEVE LARSON
Served as CPUC executive director from 2005
to 2007 and was director of its energy
division for eight years before that. Left
to become executive for a natural gas
company.
JESSIE KNIGHT JR.
Knight was appointed in 1993 to the CPUC,
where he served until 1999. Years later he
would go on to become the CEO and chairman
of San Diego Gas & Electric.
|
