X. Edison's Defenses

A. Nondelegable Duty

In some instances where Edison has contracted its duties to comply with GOs to independent contractors, Edison argues that it is not liable for a violation of the GOs because it is not responsible for the failure of its contractor to properly perform contracted work. We disagree.

Edison is responsible for complying with these safety GOs and cannot escape this responsibility by delegating it to independent contractors. This responsibility is consistent with California law and Commission precedent.

In Snyder v. Southern California Edison Company (1955) 44 Cal.2d 793, the California Supreme Court held that the duty imposed on Edison by Pub. Util. Code § 702 and GO 95 could not be delegated to an independent contractor so as to insulate the utility from liability.

In Snyder, the plaintiffs were linemen and employees of the independent contractor J. W. Wilson Company, which Edison hired to repair and construct power lines. Plaintiffs were injured when the wire-supporting pole they had climbed fell to the ground. The pole was less than 6 ½ feet into the ground, while Rule 49.1C of GO 95 required the poles be set at least 6 ½ feet into the ground and even deeper where, as in this case, the soil was not firm.

The Court reasoned as follows:

"Utility companies, either electric, telephone or telegraph, are responsible for nearly all pole installations. In the law relating to such utilities there is no express provision that such duties may be delegated. The requirements in section 702 of the [Public] Utilities Code that the utility must do everything necessary to secure compliance with the law and rules by its agents and officers is nothing more than an additional precautionary measure to prompt the utilities with regard to compliance by those persons. It does not mean that it may evade the duty by the independent contractor device or limit the scope of its duties thereby. It does not negate the existence of a nondelegable duty." (Snyder, 44 Cal.2d at 801-802.¹²)

In reaching its holding, the Court relied on the common law principle to impose liability upon franchised common carriers, reasoning that the "effectiveness of safety regulations is necessarily impaired if a carrier conducts its business by engaging independent contractors over whom it exercise no control." (Snyder, 44 Cal.2d at 798.) The Court described another group of cases that predicate liability on the part of the employer of an independent contractor for the misconduct of the latter in the performance of certain "intrinsically dangerous" work. (Id. at 800.)

The Commission has similarly held that utilities have a nondelegable duty to comply with all applicable safety codes and regulations in certain instances. In D. 00-06-038, the Commission held that Southern California Gas Company has a nondelegable duty under state and federal law to comply with all applicable safety codes and regulations governing its gas lines and cannot avoid the duty of compliance by allowing independent contractors to install earthquake valves on the utility's side of the meter. The Commission reasoned that California case law, GOs, and federal law supported this result.

In summary, the safety GOs in question establish certain duties and standards that Edison must meet to ensure adequate service and safety. California case law and prior Commission precedent require that the responsibilities imposed by the GOs are nondelegable.

B. Employees' Violation of GOs

As a general matter, to the extent that Edison is liable for the violation of the GOs by its own employees, it is also liable for violations by the employees of Edison's independent contractors.

In some of the 37 accidents listed below, CPSD alleges Edison violated the "due care" rule, which requires owners and employees of electrical systems to reduce to a minimum the hazard of accidental injury to their own or fellow employees, to the public and to other utilities.¹³ Edison urges the Commission to adopt the "independent employee act defense," which Cal/OSHA recognizes when an employee is spontaneously negligent (i.e., a rogue employee).¹⁴ Edison argues that since it is liable under tort law to third parties who may be harmed by such employee conduct, it has the incentive to minimize the negligence of its workforce.

For purposes of the "due care" obligations in GO 95 and 128, if, despite Edison management's best efforts at achieving on-the-job safety as defined in the Cal/OSHA criteria listed above, an employee is spontaneously negligent, we would find no violation of the utility's "due care" obligations under these GOs. We apply this principle to the accidents described below.

C. GO 165 Does not Shield Edison from GO 95 or 128 Violations

GO 165 requires that utilities inspect their distribution facilities as often as necessary to ensure reliable, high-quality and safe operation, and establishes a minimum level of inspection frequency with which a utility must comply. A utility conducting only the minimum level of inspections required by GO 165, when more frequent inspections are necessary to ensure reliability, may be found to violate this GO because, under GO 165, utilities are required to use their judgment and conduct inspections as often as necessary to ensure a safe and reliable operation.¹⁵

Furthermore, the plain language of GO 165 states that the GO's requirements are "in addition to the requirements imposed upon utilities under GO 95 and 128 to maintain a safe and reliable electric system. Nothing in this GO relieves any utility from any requirements or obligations that it has under GO 95 and 128." Thus, nothing in GO 165 can shield a utility from a finding of a GO 95 or 128 violation.

D. Inspection Intervals

CPSD alleges Edison has violated GO 165 numerous times because the maximum period between certain inspections exceeds the time intervals specified in GO 165, Appendix A. For instance, according to Appendix A, the maximum period between patrol inspections of overhead conductors in urban areas is one year. CPSD believes that pursuant to this requirement, these inspections must occur every 12 months, i.e., no more than 12 months may elapse between inspections. CPSD argues that to interpret GO 165 to permit inspections in calendar years would allow Edison to conduct patrols almost 2 years apart, for example, on January 1, 2000 and December 31, 2001.

In contrast, Edison believes it is in compliance if the required inspections occur in successive calendar years, i.e., for a patrol conducted in 2000, the next patrol could be conducted anytime in 2001 consistent with the one-year requirement. Edison argues that it is reasonably interpreting the GO, that it is completing 93% of its circuit patrols with a 12 month period, as CPSD believes is required, and that some flexibility is necessary and customary in the industry to facilitate efficient workforce scheduling. For example, GO 165 permits circuit patrols to be carried out in the course of other company business. Edison argues that it would be more difficult to synchronize the circuit patrols with other company business if the Commission adopts CPSD's interpretation of GO 165. Moreover, Edison points out that the above example (where inspections occurred almost two years apart) could only occur once. To continue the example above, if Edison conducted its annual circuit patrol on December 31, 2001, its next annual inspection would have to occur no later than December 31 of the following year, or 12 months later.

In interpreting GO 165, we first look at the language of this GO. Appendix A sets forth a grid of the maximum allowable inspection intervals for certain parts of a utility's distribution facilities (i.e., overhead and underground transformers, wood poles, etc.). GO 165, Section IV states that each utility shall conduct inspections of its distribution facilities as necessary to assure reliable, high-quality, and safe operation, "but in no case may the period between inspections (measured in years) exceed the time specified in the attached table." (71 CPUC2d at 479) The key language of this GO is that the inspection intervals should be such as to insure "reliable, high quality and safe operation." Edison has operated for years with an understanding of this GO that permits it some flexibility in scheduling the lowest priority inspections. In a small number of instances, approximately 7% of inspections, actual inspections may be separated by more than 365 days. However, there is no evidence in the record that such intervals compromise the goals of system safety and reliability. Barring such a showing and recognizing that our historic practice has permitted this limited degree of flexibility in scheduling, we are not persuaded that a more restrictive interpretation of GO 165 does anything but add cost to the utility's compliance.

E. Subjectivity of CPSD Inspectors

Edison also argues it is unfair to require it to comply with all provisions of the GOs because these GOs are often subject to reasonable disagreement among CPSD inspectors. For instance, according to Edison, some CPSD inspectors find a cracked high voltage sign or ground molding to be a violation of GO 95 and others do not.

Although there may be some subjectivity among CPSD inspectors, the record also demonstrates subjectivity among Edison employees as to what constitutes compliance with the GOs. The record demonstrates this is not a pervasive problem, and Edison did not specifically protest CPSD's audit findings at the time they were made. We therefore do not excuse Edison's violations of the GOs based on this defense.

A. Former CPSD Staff's Interpretation of the GOs

Edison argues that it has not violated the GOs, in part, based on its understanding of former CPSD staff's interpretation of these GOs. Edison argues that the CPSD safety audit letters described Edison's conduct as "nonconforming conditions," "variances," or "noncompliances," but never as a GO "violation." According to Edison, past Commission settlements regarding tree-trimming cases permitted other utilities up to 14 days to resolve tree-trimming "nonconformities," and that therefore its conduct cannot be deemed a violation.¹⁶

We disagree in part and agree in part. As noted in Section VII of this opinion, failure to comply with a GO is a violation of that GO. Further, staff's interpretation of what constitutes a GO violation is not binding on the Commission, nor are past Commission-approved settlements.¹⁷ At the same time, as we have pointed out above, we have discretion not merely to impose or withhold fines, but also to provide Edison with notice and an opportunity to cure violations as an alternative to fines. This has been our informal practice for many years and by this decision we make it our explicit and formal practice.

G. Achievable Standards

Edison argues that the Commission should not find a failure to comply with these safety GOs a violation, because neither Edison, nor any other utility, can meet the "perfectionist" standard of maintaining its system in complete conformance with the GOs. According to Edison, at any given moment, on any electric distribution system of significant size, there will be scores of nonconforming conditions. Edison believes that when a standard cannot be met in the real world, it ceases to be a meaningful standard at all.

As discussed above, a failure to comply with a GO is a violation. At the same time, we recognize that 100% compliance with these GOs at all times is not realistic. The approach we take in this decision, incorporating notice or knowledge and an opportunity to cure, gives Edison an incentive to engage in maximally effective preventive maintenance.

The Commission resolves investigations on a case-by-case basis, and determining the appropriate penalty is situation specific, according to the criteria set forth in D.98-12-075. In this case, as more fully discussed below, we assess penalties for serious violations that Edison failed to cure on a timely basis. We also assess penalties where Edison failed to find GO safety violations in its detailed inspections, because we want to ensure that the detailed inspection programs are thorough and identify outstanding GO violations for repair.

For less serious GO violations, we do not assess penalties here. If CPSD brings similar enforcement actions in the future, we will expect it to demonstrate that such multiple lesser violations compromise the utility system's safety or reliability

H. GO Violations

1. The 37 Violations Involving Accidents

The 37 violations involving accidents are described in detail in Appendix B.¹⁸ In seven of the cases, we find no GO violation as alleged by CPSD. In the remaining cases, we find GO violations and impose fines because of Edison's failures to correct serious violations in a timely fashion. Our specific reasons for reaching these conclusions are set out in the discussions of the individual cases.

2. Violations of GO 95 and 128

Edison did not contest CPSD's findings of nonconformances with GO 95 and 128 at the time CPSD made them; in fact, once notified, Edison repaired these problems as required by CPSD. We applaud Edison for timely addressing these problems. Nonetheless, we find, based on CPSD's inspection results, 4,044 violations of GO 95 and 677 violations of GO 128.

We address below Edison's further arguments on whether it is appropriate to penalize Edison for these violations.

I. Violations of GO 165

1. Identification of Unsafe Conditions

CPSD states that it conducted a random audit comparing CPSD's and Edison's inspection results. CPSD found 94 GO 95 violations on 46 poles, whereas Edison found 12 violations on the same poles. CPSD therefore concludes that Edison committed 82 violations of GO 165 for failing to identify the unsafe conditions CPSD identified in its inspection.

Edison argues that this audit was not random, but rather that CPSD deliberately targeted Edison's earliest detailed inspections with the fewest findings and refused to conduct additional audits on later detailed inspections which Edison believes were more thorough. Edison's expert also testified that CPSD violated audit principles by allowing its inspectors to know in advance the Edison inspection results and denying Edison the right to comment on the audit. Edison also states this audit lacks context because CPSD did not conduct it on any other utility. Finally, Edison states it actively participated in the GO 165 audit, and its recorded results show far more poles inspected and far fewer discrepancies than CPSD's numbers. Edison believes the correct numbers should be 68 GO 95 violations on 70 poles inspected, instead of 94 violations on 46 poles.

Even under Edison's own numbers, a discrepancy between 68 and 12 violations is large. Although we realize this audit occurred on one of the areas where Edison first conducted its detailed inspection, Edison did not go back immediately and re-inspect this area once it refined its inspection techniques. The goal of GO 165 inspections is to make utilities find all matters needing corrective attention, including violations of GO 95 and GO 128. We expect such inspections to be thorough, deliberate, and detailed. We therefore find 56 violations of GO 165 (68 CPSD observed violations minus 12 Edison-observed violations).¹⁹

3. Period Between Inspections

As stated above, we reject CPSD's interpretation of GO 165' inspection interval requirement and find no violations of GO 165 for failure to comply with this requirement.

4. Scheduling and Performing Corrective Action

CPSD alleges Edison violated GO 165 for failing to perform corrective work in a timely fashion. CPSD argues that during 1998-2000, Edison assigned most of the GO 95 violations it found in annual patrols a low priority repair level, such that the violations were scheduled for repair on an opportunity basis (i.e., the next time Edison visits the facility to perform other work with no time period specified) or within five years. CPSD does not link any of these alleged violations with harm, or demonstrate how they adversely affected the safety or reliability of Edison's system.

As stated above, approval of Edison's maintenance prioritization system is beyond the scope of this investigation; however, Edison should refine its maintenance priority system. In the process of our adoption of GO 165, we stated that for the time being, "standards for maintenance, repair, or replacement should be based on performance, leaving greater management discretion and recognizing that this discretion does not render maintenance, repair, and replacement decisions beyond future regulatory reform or penalties." (D.96-11-021, 69 CPUC2d 224, 233.) Because CPSD has not demonstrated how the alleged GO 165 violations affect the safety or reliability concerns with the specific GO 165 allegations it alleges, and because GO 165 does not contain times certain by which Edison must repair or replace equipment, we find CPSD has not met its burden of proof in demonstrating the GO 165 violations pertinent to scheduling and performing corrective action.

B. Alleged Rule 1 Violations

CPSD alleges Rule 1 violations with respect to the June 21, 1998 accident in Lancaster and the May 26, 1998 accident in Newbury Park. Both accidents are summarized in Appendix B. CPSD's alleged Rule 1 violations are based on the belief that Edison gave incomplete or inaccurate information to staff during its investigation of the above accidents.

Rule 1 provides in pertinent part that persons transacting business with the Commission shall never mislead the Commission or its staff by an artifice or false statement of fact or law.²⁰ The Commission has recently held that Rule 1 violations require purposeful intent, recklessness, or gross negligence in regard to communications with the Commission. (See D.02-08-063, Application of Pacific Fiber Link, L.L.C., 2002 Cal.PUC LEXIS 533.) In D.94-11-018, 57 CPUC2d 176, the Commission recognized that a line of prior decisions held that situations involving a failure to correctly cite a proposition of law, a lack of candor or withholding information, and a failure to correctly inform and to correct mistaken information are potential Rule 1 violations, and clarified that a Rule 1 violation can result from such conduct if it is reckless or grossly negligent. 57 CPUC2d at 204.

With these standards in mind, we discuss the two allegations.

1. Lancaster

In this accident, a person was fatally injured when he climbed an Edison pole, allegedly to steal Edison property for salvage, and came in contact with an energized transformer fuse holder. CPSD alleges that Edison misled the Commission by stating that the idle transformer had not been removed because there was an outstanding new business meter order for service, when in fact there was no such order.

Edison stated that in this district, there was an outstanding new business order, but this order was created not in response to a new customer but simply to preserve account information for a particular address that might otherwise be lost when service is terminated. Edison states that new business orders were used for this purpose in this district.

We find confusion in Edison's communication practices, but do not find intentional, reckless, or grossly negligent failure to investigate the difference in meaning between the term "new business order" in the various districts.²¹ We therefore do not find a Rule 1 violation here.

2. Newbury Park

CPSD requested information regarding any instructions Edison provided to the subcontractor who was performing work on Edison's transformers in the Newbury Park area. Edison told CPSD that Edison was unaware the subcontractor was accessing the transformers because the main contractor retained the subcontractor without Edison's knowledge. CPSD alleges its further investigation revealed that an Edison employee testified in a deposition that Edison was aware that the subcontractor was repairing the transformers and that the contractor had been given access to work on the interior of the transformers.

Edison believes it gave CPSD accurate information. Edison states that the deposition testimony indicated that, several months prior to the Newbury Park accident, an Edison foreman from a different district provided the subcontractor with a key and cutaway locks for a repair job in Orange County (Newbury Park is not located in Orange County.) According to Edison, CPSD's conclusion is erroneous because, at the time of CPSD's inquiry, Edison did not know the contractor on the Newbury Park job subcontracted the job.

We find miscommunication occurred but, again, not the type of conduct to constitute a Rule 1 violation. There are no circumstances surrounding the accident that should have caused Edison to interview other districts before responding to CPSD's question.

Edison argues that it is also not required to update CPSD on the information it learned from the deposition, and such a requirement would be never-ending. We understand Edison's concern about updating the Commission in all instances, and we do not find a Rule 1 violation in this instance because of the specific facts of the case.²² However, as a general principle, in accident investigations, if Edison discovers that information it has communicated to the Commission in response to the Commission's inquiry is in error, Edison should promptly communicate with the Commission to make appropriate corrections.

¹² In tort law, this liability does not ordinarily extend to what the courts call "collateral" or "casual" negligence on the part of the contractor and its employees. (See Snyder, 44 Cal.2d at 801.) Snyder reads this exception narrowly to mean that the activity in question is not necessarily part of the duty imposed. Thus, in Snyder, the Court found that the construction and maintenance of lines, which includes poles, is not included within the exception because that activity is a necessary part of the utility's business. ¹³ See GO 95, Rule 31.1; GO 128, Rule 17.1. ¹⁴ Under the Cal/OSHA criteria, the employer may utilize the affirmative defense if it can show: (1) the employee was experienced in the job being performed; (2) the employer has a well-devised safety program which includes safety training; (3) the employer effectively enforces the safety program; (4) the employer sanctions employees who violate the safety program; and (5) the employee caused a safety violation and knew that it contravened the employer's safety program. See Mercury Service, Inc., Cal/OSHA App. 77-1133, Decision after Reconsideration (October 16, 1980.) ¹⁵ As stated in D.97-03-070, 71 CPUC2d 471, 476 (adopting GO 165): "[T]he standards we adopt today are maximum acceptable lengths for inspection cycles. In certain circumstances, it may be prudent to conduct more frequent inspections to assure high-quality service and safe operations. In those cases, the utilities are responsible to inspect facilities more frequently." ¹⁶ Edison cites D.99-07-029. ¹⁷ Rule 51.8 of the Commission's Rules of Practice and Procedure states that our approval of settlements does not constitute approval of, or precedent regarding, any principle or issue in the proceeding or in any future proceeding. ¹⁸ The accidents are set forth according to Edison's categorization of them: (a) No Nonconformance; (b) Nonconformance But No Causation; (c) Nonconformance, Causation, But No Inspection Violation; and (d) Nonconformance, Causation, and a Failure to Detect/Remedy. In Appendix B, we discuss the accidents in detail and reach our own conclusion as to whether Edison violated the GOs as alleged by CPSD. ¹⁹ Cumulatively, we find 4,808 GO violations by Edison, consisting of 30 accident-related violations, a total of 4,721 violations of GO 95 and 128, and 57 violations of GO 165. ²⁰ Rule 1 states that "any person who signs a pleading or brief, enters an appearance at a hearing, or transacts business with the Commission, by such act represents that he or she is authorized to do so and agrees to comply with the laws of this State; to maintain the respect due to the Commission, members of the Commission and its Administrative Law Judges; and never to mislead the Commission or its staff by an artifice or false statement of fact or law." ²¹ In our discussion of the Lancaster accident, we find a violation of GO 95, Rule 31, and determine that Edison did not make a reasonable inquiry within seven months to determine if the facilities were permanently abandoned. However, this behavior does not translate to a Rule 1 violation. ²² See discussion in Appendix B. The fact that the subcontractor may have had a key to the transformer was not the cause of the subcontractor's injury, since the key did not work in the transformer involved.