Under pressure from San Bruno city officials asking for a state probe of its actions and growing internal tensions, the California Public Utilities Commission (CPUC) on Wednesday reshuffled two key legal positions in the three consolidated penalty cases against Pacific Gas and Electric Co. (PG&E) for the 2010 natural gas transmission pipeline rupture and explosion in San Bruno.

Friction between the CPUC’s chief lawyer and staff attorneys assigned to the San Bruno pipeline cases has been simmering for weeks. It broke out in public earlier in June at a regulatory attorneys conference in San Francisco at which CPUC General Counsel Frank Lindh was one of the featured speakers. Lindh reassigned four attorneys on the pipeline penalty cases and a fifth resigned from the cases because of the internal friction over how the utility should be penalized.

Earlier in June, San Bruno Mayor Jim Ruane called for the California Attorney General’s Office and state lawmakers to investigate the CPUC’s replacement of the legal team investigating the explosion (see Daily GPI, June 7). The same day CPUC safety staff reiterated their rationale for a proposed $2.25 billion penalty against PG&E in a reply to the utility’s defense in the state regulatory penalty consideration cases.

On Wednesday, CPUC President Michael Peevey and Commissioner Mike Florio announced staffing changes in the penalty proceedings, including a move by Lindh to step out of the case. Lindh was an attorney at PG&E from 1996 to 1998 before coming to the CPUC and eventually being named to the top legal position five years ago.

Peevey and Florio acknowledged that there have been internal disagreements surrounding some legal assignment changes in the penalty cases and said they were making some changes as a result.

“Lindh informed us that he will recuse himself from his role as chief advisory attorney in the [penalty] cases.” In his place, the two commissioners said a retired former assistant general counsel at the CPUC, Arocles Aguilar, has agreed to assume the chief advisory legal role.

In addition, the two state regulators said another current assistant general counsel, Harvey Morris, has agreed to continue to lead the team of attorneys working with Jack Hagan, the director of the CPUC Safety and Enforcement Division (SED), which has made the multi-billion-dollar penalty recommendation. Morris was one of the four attorneys that Lindh had removed from the San Bruno cases.

The cases are now awaiting separate administrative law judge recommendations before the issue of penalties is taken up by the five-member CPUC late this summer.

“Both the SED and the Legal Division are seeking the same ultimate outcome, which is justice for the people of San Bruno and a safe PG&E pipeline system,” Hagan said.

Morris acknowledged that the CPUC staff had experienced “some internal misunderstandings,” and he reiterated that his lawyers were “committed to working with Hagan and SED.”

Earlier, Hagan had said “it’s time to throw the book at PG&E,” alleging that the giant San Francisco-based combination utility has shown signs of “no remorse” for the explosion, based on its earlier characterization of the multi-billion-dollar penalty proposal as “excessive” (see Daily GPI, May 29).

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