PUC plays by its own rules, hires outside lawyers

On Sept. 9, 2010, a massive fire set off by a PG&E gas pipeline roars through a mostly residential neighborhood in San Bruno. The inferno killed 38 people.
On Sept. 9, 2010, a massive fire set off by a PG&E gas pipeline roars through a mostly residential neighborhood in San Bruno. The inferno killed 38 people. Associated Press file

Imagine the outcry if the California Senate had used taxpayers’ money to hire criminal defense lawyers in 2013 when a leaked FBI affidavit detailed an investigation into then Sen. Ron Calderon.

What if the California Department of Parks and Recreation had hired a pricey defense counsel to fend off the 2013 investigations into how it hoarded $20 million while shuttering parks and pleading for donations?

The California Public Utilities Commission operates by a different set of rules.

Attorney General Kamala Harris’ office is investigating former President Michael Peevey, and perhaps other current and former commission employees, and the CPUC is paying an outside law firm, Sheppard Mullin, to represent it.

The commission downplayed the contract by claiming it was for $49,000; it since has ballooned to $5 million-plus.

The commission entered into the contract in November 2014, claiming it was for $49,000; the contract since has ballooned to $5 million-plus. Peevey, who stepped down in December, was president at the time, though he has his own attorneys.

The scope of the investigation into Peevey is not altogether clear. But internal PG&E emails show Peevey sought a $1 million PG&E donation to combat a ballot measure in 2010, while the commission considered issues related to PG&E, including the 2010 gas line explosion that killed eight people in San Bruno.

Southern California Edison disclosed that Peevey asked Edison and San Diego Gas & Electric to donate $25 million to fund a center at UCLA, as the commission was deciding how to apportion the $4.8 billion in costs of shutting the San Onofre nuclear power plant.

Timothy Sullivan, the commission’s executive director, told a Sacramento Bee editorial board member that the decision to hire the outside counsel was the “least crummy” option.

The attorney general can’t investigate and represent the commission simultaneously. The commission has its own attorneys, but they are steeped in the regulation of electric utilities, not the penal code.

Sheppard Mullin attorneys’ duties entail sorting through 4 million documents, and culling documents they think are not subject to release. The lawyers also appear with commission staffers when they meet with investigators, provide legal research and communicate with investigators.

Sen. Jerry Hill, a Democrat who represents San Bruno, has introduced Senate Bill 18, which seeks to limit the commission’s ability to hire outside counsel in criminal cases. The bill is pending in the Assembly.

Sheppard Mullin partner Raymond C. Marshall, a top criminal defense attorney, is billing $882 an hour. Good lawyers don’t come cheap.

But why does a public agency with nothing to hide need a team of criminal defense lawyers to represent it against another public agency that is seeking to determine whether there has been wrongdoing? What sort of precedent does this set?