The strong odor surrounding California’s most powerful regulatory commission this spring stems not only from corrupt-seeming decisions but also from fear. Fear that past and present members or top staffers of the state Public Utilities Commission might do jail time. Fear they could see personal fortunes decimated by legal fees while fending off state and federal criminal investigations.
How bad have things become at the PUC, which sets prices for privately-owned utilities like Pacific Gas & Electric, Southern California Edison and San Diego Gas & Electric?
Even the commission’s new president, Michael Picker, said the other day that when it comes to cleaning up his agency, “I think we have a long way to go.” Of course, over the last 17 months, he backed every questionable decision pushed by disgraced former PUC President Michael Peevey.
Like many outfits overcome by fear, the PUC has lately tried to cover up by claiming internal documents are “privileged” and by hiring top defense attorneys. The commission’s first contract with the SheppardMullin law firm was for $49,000, work to be done at a “discount” rate of $882 per hour. That deal fell just below the $50,000 level where state contracts for outside work must be approved by the Department of General Services.
But the Picker-led PUC has followed up by awarding SheppardMullin a contract for $5.2 million for the rest of this year. Both agreements may be illegal, even if the new one is approved by General Services.
Still, there is little doubt of that approval. All present PUC members were appointed by Gov. Jerry Brown, who also named all top officials of Department of General Services, so this is really the right hand approving what the left hand wants. What’s more, Brown’s chief of staff, Nancy McFadden, was PG&E’s chief lobbyist in Sacramento before joining him.
Asked under what authority it hired SheppardMullin, the PUC cited state government code section 995.8. That section says a public entity can only hire criminal lawyers to defend present or former officials if “The public entity determines that such defense would be in the best interests of the public entity…” The PUC would have to hold hearings to make such a circular determination, but it has not.
This makes the big-buck pacts appear illegal, no matter what the Department of General Services might rule.
The obvious question here is why state taxpayers should fund the defense of officials who may have conspired with big utilities to bilk them via decisions like the one forcing consumers to pay most costs for retiring the San Onofre Nuclear Generating Station.
Commission spokeswoman Terrie Prosper claims outside lawyers are needed because the PUC “does not have the expertise…or time to handle…the massive amount of work that needs to be done to…manage and cooperate with investigations.”
The SheppardMullin contract suggests that “managing investigations” includes stonewalling requests for documents while “assisting in public relations.” It says attorneys will also “develop and manage litigation strategies” and “assist and attend interviews of commission employees by investigators (including preparing witnesses).”
“This means the $5.2 million is for a cover-up,” says former San Diego City Attorney Michael Aguirre, who has sued to block the contracts. “They will restrain and restrict documents and the testimony of witnesses and use privilege to (try to) conceal crimes.”
Aguirre notes the commission never formally voted to spend the money, but PUC Executive Director Timothy Sullivan simply signed the new contract. Because the PUC itself cannot be indicted, it’s clear the money will be spent to help defend individuals – present or former commission officials.
Neither Sullivan nor any other PUC official responds to repeated inquiries about who SheppardMullin will defend. Nor would the PUC say why those officials should not fund their own defenses.
Aguirre suggests that if Picker really favors transparency, as he often claims, he would waive all privilege and open every commission document to press, public and investigators, saving the $5.2 million in legal fees.
But Picker repeatedly refuses to be interviewed and by the end of March, the commission had spent more than $2 million on outside lawyers to deny document requests during the last six months, all without a hearing.
So the smell of fear is plain at the PUC, and no one can predict the next major errors and cover-up attempts that might produce.