By Todd Bloomstine, Bloomstine & Bloomstine
The Camp Fire devastated the Northern California town of Paradise during the morning hours of November 8, 2018. Nearly 19,000 structures were destroyed. Total damages are estimated at $20 billion. Most tragically, almost 90 people lost their lives in the fire. Three individuals are still reported missing. It’s assumed they perished in the fire and their remains have not yet been discovered.
The fire originated near Camp Creek Road under power lines owned by the Pacific Gas and Electric Co. (PG&E) While the origin of the fire is officially under investigation, it’s assumed that high winds caused the power lines to malfunction, creating the fire that devastated the Northern California community.
As a result of the fire and the impending liabilities associated with it, PG&E has disclosed it will seek bankruptcy protection.
There’s no question the wildfire was a tragic disaster. PG&E’s bankruptcy is also unfortunate. The media focus has, rightly, been centered on both the fire and PG&E’s apparent impending bankruptcy. But these stories have overshadowed a sinister and malicious practice by PG&E that has placed contractors and their workers at serious risk.
As most of you familiar with the construction industry know, contractors, and anyone who plans to dig into the ground, are supposed to call 811 at least two business days before excavation begins. The service to 811 dispatches all the utilities that may have underground infrastructure in the excavation area, and they locate and mark the underground utilities so contractors (or anyone excavating, for that matter) can avoid damaging the utilities and, most importantly, injuring workers. This area of the law refers to an “excavator” as a person or company planning to dig in the ground. It could be an operator on a backhoe, property owner, or a contractor.
Twenty days after the Camp Fire was contained, and completely unrelated to it, the California Public Utilities Commission issued a formal Order Instituting an Investigation (OII) into PG&E’s locate-and-mark practices. The OII was accompanied by a 177-page investigative report from the Public Utilities Commission’s Safety and Enforcement Division. That report was supported by 2,500 pages of heavily redacted attachments.
The OII and SED reports are a condemnation of PG&E’s locate-and-mark practices. The Public Utilities Commission alleges PG&E falsified 50,000 811 tickets in order to conceal the company’s inability to locate and mark within two business days. It did this because PG&E management issued a “zero late ticket” policy.
There’s nothing wrong with a company issuing a zero-tolerance policy on its practices. But there is a problem when it exploits the law and the process to achieve it. However, concealment is only part of the problem. The reason for the zero late ticket policy is the source of the malice.
PG&E enacted the zero late ticket policy because it wanted to avoid legal liabilities and civil penalties if an excavator struck one of their lines. But rather than ensure the locate-and-mark program was staffed adequately to meet the zero late ticket policy, PG&E willfully exploited and abused a loophole in the law.
Government Code Section 4216.2 (b) authorizes a utility company and excavator to “mutually agree to a different notice and start date” in order to give the utility more time to locate and mark underground lines. In order to comply with its zero late ticket policy, PG&E instructed workers to contact the excavator to negotiate a start time after the two-day period. PG&E then determined that the simple act of contacting a contractor was prima facie compliance with the 4216.2 (b)’s mutually agreeable start date requirement. The SED report alleges that many excavators were, in fact, never notified and PG&E falsified records to indicate contact was made.
When damages to PG&E’s underground utilities occurred, this loophole allowed PG&E to allege that the excavator was in violation of the law since it did not receive positive confirmation. A formal PG&E employee deposition in the SED report designated as Attachment 32 clearly articulates the scenario:
“…a contractor would dig before positive confirmation and strike a PG&E asset that caused $5,000 in damage. PG&E would send a bill for $5,000. And the contractor would say, wait a second, you never showed up. And PG&E took the position, yeah, so what? You still broke the law by digging before positive confirmation. You owe us $5,000. And well we are both at fault. And they would settle out somewhere in the middle. So that is how PG&E would recover money.”
PG&E exploited a loophole in the law in order to increase the excavator’s liability and then bully them into a settlement though the fault was with PG&E for not responding in the appropriate time.
PG&E never intended to complete the 811 tickets. There was massive pressure from management to comply with the zero late ticket policy and instead of dedicating the appropriate resources to meet the ticket demand, PG&E lied and falsified records.
Attachment 32 describes one situation in which a locate-andmark technician was required to complete 100 811 tickets in a single day.
“My reference to locaters, I will tell you that would jump out at me as I got a phone call one day. A locater at a yard, I don’t remember where, was handed a folder with 100 USA [811 Underground Service Tickets] and told by the supervisor to accomplish a hundred USA locates today in one day, … which is just physically impossible.”
The desire to comply with the zero late ticket policy overwhelmed the locate-and- mark program. The intent and function of the “Call Before You Dig” law was lost. No longer was safety the primary concern. Compliance with management’s zero late ticket policy was the prime focus.
There are many allegations in the Public Utilities Commission’s SED report. One of the most telling comes from the same deposition:
“As I recall the data, we were finding that somewhere in the 20 to 40 percent [range] of the dig-ins they were responding to were actually the fault of PG&E. And those reasons for fault included a number of things. They mismarked the facility. They put the marks in the wrong spot. They never marked a facility. They determined that the asset that was hit by the excavator did not exist on a map.”
It’s troubling that 20 percent to 40 percent of PG&E’s dig-ins, defined as an incident where an underground utility was damaged, were PG&E’s fault. It’s safe to say that claims for damages were submitted to the excavators even though the damages may have been caused by a mismarked underground utility.
These are troubling allegations against PG&E, and they’ve attracted the attention of California legislators.
Senator Jerry Hill (D-San Mateo) authored legislation to enhance the 811 process in California back in 2016. From as early as 2013, he held private and public meetings working with contractors, utility companies and many other interested parties as he deliberated on legislative reforms. He commented in the San Francisco Chronicle shortly after the Public Utilities Commission’s SED report was made public:
“The sad part is that we’ve not had a period where you can look toward PG&E and say they’ve done a good job or they can be trusted,” Hill said. “There hasn’t been a period since San Bruno where we can say that, because there is always that next thing that happens.”
The Public Utilities Commission’s allegations contained in the SED report will have consequences for years to come. It’s clear that PG&E’s locate-and-mark services were completely overwhelmed and incapable of keeping pace with demand. The sheer magnitude of the problem created the potential for massive liabilities and penalties. Government Code 4216.6 (a) (2) creates a $50,000 civil penalty for every willful violation of the code. That civil penalty assessed on 50,000 falsified tickets is $2.5 billion. Fearing the worst, the company looked to minimize its liabilities.
But the worst part is that in their efforts to falsify records, exploit and abuse statutes, and force employees to undertake impossible tasks, they jeopardized the health and safety of California’s construction workers. That’s nearly unforgivable.
From a public policy perspective, legislators will take a close look at the allegations and begin to formulate more “Call Before You Dig” reforms. The hard questions will be asked.
Some of the most difficult are if falsifying documents is common from other utilities. For the construction industry, the key question will be what reasonable reforms can be made to ensure the timeliness and accuracy of marking underground utilities. Construction worker lives depend on it.
Todd Bloomstine is a California registered lobbyist. He is the owner of Bloomstine & Bloomstine LLC and has represented SCCA in Sacramento since 2001.