XIII. Appeal of Presiding Officer's Decision

Edison and CPSD²³ filed an appeal of the POD, and the California Cable and Telecommunications Association (CCTA), Pacific Gas and Electric Company (PG&E), and San Diego Gas & Electric Company (SDG&E) filed petitions to intervene and appeals. We grant the motions of the CCTA, PG&E, and SDG&E to intervene, and we consider their appeals.

The modified POD (MOD-POD) denied the appeals but made some modifications and clarifications to the POD. incorporate many of these modifications in this decision. The MOD-POD added language to strongly encourage CPSD to present more extensive information in certain areas delineated in the decision in future investigations. It also removed the POD's reporting requirement regarding future GO violations, and made the minor clarifications to the POD discussed below, and other changes to improve the discussion and to correct typographical errors.

E. Summary of the Appeals

1. Edison

Edison states that if it does not prevail in this appeal, it will challenge the Commission's jurisdiction to recover penalties. Edison argues that Pub. Util. Code § 2104 only permits the Commission to bring actions against utilities to recover penalties in the superior court, and not at the Commission.

Edison also alleges that the POD errs in calling a failure to comply with GO 95 and GO 128 a "violation," instead of a "nonconformance." Edison believes that this word choice is not merely semantics, and use of the term "violation" represents a change in Commission practice. Edison argues that GO 95 and GO 128 are limited to new construction standards, with only a few general "maintenance" requirements [GO 95, § 12.2, § 31.1; GO 128, § 12.2, § 17.1]. Edison also believes that the use of the term "violation" increases Edison's litigation risk because if evidence that Edison violated a safety standard is introduced in a lawsuit for a death or injury associated with the utility's facilities or operations, Edison will be assumed under Evidence Code § 669 to have been negligent. Furthermore, according to Edison, evidence of multiple violations could potentially be used to support a claim against Edison for exemplary or punitive damages under Pub. Util. Code § 2106 and Civil Code § 3294.

Edison also claims that: (a) the POD's criticism of Edison's maintenance priority program lacks support in the record; (b) the imposition of any penalties for 37 accidents was unfair since CPSD did not prove that Edison's actions or inactions were the legal cause of the accidents under civil law negligence principles; (c) the imposition of penalties for 56 GO 165 inspection failures was not justified since CPSD focused on areas where high numbers of violations were anticipated; (d) the POD's conclusion that GO 165's requirement for "yearly" inspections requires inspections each 365 days, rather in successive calendar years, is wrong, because utilities need more flexibility to schedule inspections efficiently and economically; (e) the POD provides insufficient guidance as to when future enforcement actions will be initiated, and when penalties may be imposed; and (f) issues such as the clarification of what constitutes a violation of GO 95 or GO 128, and how utilities are to report violations to the Commission as required by the POD, should not be addressed in this proceeding, but rather in a second phase of R.01-10-001.

2. CPSD

CPSD claims that the POD appears to create new, unwise, and unnecessary limitations on the Commission's future imposition of penalties for safety violations by stating that Edison will not be fined for 4,812 violations because CPSD failed to demonstrate that the number of violations exceeds the norm for utilities, or compromises the safety or reliability of Edison's system. CPSD states that GO 95 and 128 delineate the requirements of a safe system, and that violations are per se unsafe.

CPSD also believes the POD's determination not to impose penalties for most violations found in incident investigations, unless CPSD demonstrates a nexus, or relationship, between a given violation and an incident involving a fatality, injury, or property damage, is inconsistent with statements in the POD that one purpose of a penalty is to deter unlawful conduct. According to CPSD, the fact that no injury, death, or property damage was linked to the majority of Edison's 4,812 violations was a matter of luck, rather than an indication that the system is safe.

CPSD suggests that the POD be modified to note that the Commission will, in future proceedings, base penalties on the factors recited in D.98-12-075, and to eliminate provisions that may undercut the Commission's ability to enforce compliance with safety requirements. CPSD acknowledges that Commission may wish to refrain from imposing additional penalties here, given the unique circumstances of this first post-GO 165 review of Edison's system.

3. PG&E and SDG&E

Both PG&E and SDGE assert due process violations, claiming that the POD changes Commission practices in a way that affects utilities other than Edison, and that such changes should be made in a rulemaking. For the most part, PG&E and SDG&E's allegations of error mirror Edison's. A unique aspect of SDGE's appeal is its comment that, under GO 165, the Energy Division, not CPSD, governs many aspects of GO 165 inspections, and may approve more flexible inspection intervals. SDG&E states it has negotiated a more flexible schedule with the Energy Division that permits SDG&E to conduct inspections in successive calendar years, rather than once every 365 days.

4. CCTA

The CCTA primarily asserts that the POD's approach to violations may disrupt former relatively harmonious relations between utilities and staff. According to CCTA, staff inspectors are often accompanied by representatives of utilities whose facilities are being inspected, and the utility representatives often point out problems not noted by staff.

B. Discussion

5. Jurisdiction

We disagree with Edison's argument that the Commission lacks authority to impose penalties without bringing an action in superior court. As recently noted in D.03-01-087 at p. 12; 2003 Cal PUC LEXIS 67 *19-20:

"Other utilities have presented this argument to state appellate courts in recent years; those courts have all denied review. (See Pacific Bell v. CPUC, petition denied Nov. 27, 2002, No. A098039; FutureNet, Inc. v. CPUC, petition denied June 7, 2000; Conlin-Strawberry Water Co., Inc. v. CPUC, petition denied July 26, 2001, F 035333; Southern Calif. Edison Co. v. CPUC, petition denied Feb. 28, 2002, B156189.) As set forth in the Commission's briefs in those cases, the Commission construes Section 2104 to apply to the recovery of penalties, rather than the imposition of penalties. Qwest's argument that the Commission lacks authority to impose fines is without merit."

6. The Term "Violation"

Edison, SDG&E, and CCTA argue that it is unprecedented to term a failure to comply with a Commission GO a violation of that GO. We disagree.

Section VII sets forth the rationale why Edison's failure to comply with a GO is a violation thereof. Moreover, the Commission has in the past found the failure to comply with a GO a violation of that GO. In Resolution SU-44 (August 1, 1977) for example, the Commission referred to instances of noncompliance with GO 95 high voltage sign requirements as both "violations" and "infractions."²⁴ Similarly, D.95-08-054, 61 CPUC2d 207, 208, a decision accepting a settlement of a proceeding reviewing SDG&E's tree-trimming practices, quoted the Order Instituting Investigation issued by the Commission: "It appears that SDG&E has not fully complied with the Commission's Rule 35 of General Order 95. Accordingly, SDG&E may have violated and may be in continued violation of the Commission's General Order 95." (Emphasis added.)

Simply put, if the Commission establishes safety clearances or other safety standards in general orders, and Edison does not "conform" or "comply" with the standards, it violates the general orders.²⁵

7. New Construction Standards

Edison, SDGE, and PG&E believe that GO 95 and GO 128 provide only new construction standards and a few general directives to maintain facilities in a safe and reliable manner. Thus, these utilities argue that it is error in toehold that Go 95 and 128 contain maintenance, as well as construction standards.

We disagree. Section VI cites to sections of GO 95 and GO 128 that make clear that utilities are to maintain, as well as construct, their systems in conformity with the GO. For example, § 12.2 of GO 95 requires all lines and portions of lines to be maintained in such condition as to provide safety factors not less than those specified in § 44.2, and also requires all lines and portions of lines constructed or reconstructed after the effective date of the GO to be kept in conformity with the requirements of the GO. Section 12.2 of GO 128 contains a similar requirement.

In addition to those sections cited in Section VI above, GO 95 and 128 are replete with explicit references to mandatory maintenance obligations. The phrase "shall be maintained" is found, for example, in at least 40 separate sections and sub-sections of GO 95, most frequently in connection with detailed clearance and climbing space measurements.²⁶ Many other sections in the GO state that wires, hardware, etc. "shall have a clearance of," or "shall be separated by," or "shall clear" by, a specified number of inches.²⁷ These are minimum, not maximum, clearances, and GO 95 § 14 notes that "more ample spacing or clearances than herein specified may be desirable in some cases and may be provided ... if other requirements are not violated in doing so."²⁸ Still other sections mandate replacement of certain items, such as insulators, lines, and parts of lines, before safety factors have been reduced below a minimum level.²⁹ These provisions create mandatory requirements not tied to construction.³⁰ Thus, the plain language of GO 95 and GO 128 belies the claims of Edison and SDG&E that the GO creates only new construction standards and flexible maintenance rules.

8. Edison's Maintenance Priority System

Edison asserts that the POD's criticism of its 5-tiered priority maintenance and corrective action program is not warranted, because violations are not predictable, decreasing corrective action times will increase costs without increasing safety, and using inspectors to correct violations will significantly delay inspections.

Section VIII of the POD (and this decision) addresses the role of a maintenance priority system and makes clear that this proceeding is not the forum to approve Edison's system or to refine it with particularity. Section VIII directs Edison, in conjunction with CPSD, to refine Edison's maintenance priority system taking in to consideration some listed goals.

Edison objects to these listed goals. However, the goals are consistent with the GOs we seek to enforce in this investigation. We also clarify Section VIII so that Edison and CPSD can consider other appropriate issues in their discussion in addition to the goals listed in the POD. In other words, the list of goals in the POD should not limit the parties' discussion in improving Edison's system.

Several points associated with these goals deserve further clarification. The philosophy underlying our desire for Edison and CPSD to discuss more refined corrective action periods is primarily that corrective action periods should take into account both the seriousness of potential injuries that may be associated with failures to comply with safety standards, and the probability that an incident and its foreseeable consequences will occur. Short correction periods may be appropriate both when the magnitude of potential injury, or the frequency, is high. Furthermore, consistent with GO 165, Edison should be prepared to discuss a method to identify a date certain by which violations subject to "opportunity maintenance" under its current system will be corrected.

Section VIII's discussion goal that, to the extent possible, Edison use its inspectors to correct observed violations in the field at the time they are first noticed finds ample support in the direct testimony of Edison witness Dale Shull:

"Almost all of the nonconformances in the Public Level are repaired as found and do not require further corrective action. Our inspectors are equipped with tools and an inventory of parts and materials to enable them to make the majority of necessary repairs at the Public Level immediately.³¹ The remaining nonconformances in the Public Level require follow-up action by a qualified electrical worker or material not readily available to the inspector. These nonconformanaces are assigned an appropriate priority rating for follow-up action."³² (Exhibit 209 at p. 26.)

The intent of the suggestion was to encourage expansion of this existing practice to the extent practical. We clarify that, where inspectors are not qualified, or lack time to, make extensive repairs, the parties are encouraged to develop steps that Edison can take to safeguard the violation area to limit potentially dangerous contact during the period before corrective action can be taken.

9. Litigation Risk

Edison also argues that the Commission should not find its failure to comply with a GO a violation, because that finding could be used against Edison in potential future civil litigation support a finding of negligence per se.

We have discussed this objection at length in Section VII, above. We do not modify the holding that a failure to comply with a GO is a violation. To hold otherwise could adversely impact our regulatory efforts, since we expect compliance with our GOs.

10. GO 165 Inspection Intervals

Edison argues that the POD misconstrues GO 165 as requiring yearly patrol inspections to occur within 365 days of each other. Rather, Edison believes that the appropriate interpretation of GO 165 is that yearly patrol inspections should occur in each calendar year, so that the utility can obtain the needed flexibility to adjust inspection schedules to meet personnel or workload constraints.

Section X.D addresses Edison's argument. To elaborate briefly, the language of GO 165 refers to maximum inspection intervals, measured in years.. This language may be read either as applying to calendar years or to 365 day intervals. As explained in Section X.D, Edison argued that its interpretation would be consistent with the intent of GO 165 in having yearly inspections. While CPSD's example to the contrary demonstrates that inspections held in two calendar years could occur almost two years apart, CPSD introduced no evidence that Edison has in fact gamed the system in this fashion nor did it introduce evidence suggesting that Edison had any incentive to do so, given its overall obligation to maintain a safe, reliable system . Accordingly, we see no reason to adopt the strict interpretation called for by CPSD in place of the current more flexible practice. This conclusion is consistent with the flexible interpretation of GO 165 employed by the Energy Division and referenced by SDG&E in its appeal.

11. Penalties

Edison asserts the POD errs in imposing penalties for situations in which CPSD inspectors found violations that Edison inspectors did not find. We disagree. The POD properly notes that Commission expects high quality inspections, and that Edison's failure to identify nearly as many violations as CPSD may indicate quality failures by the utility.

Edison complains that the POD's discussion of a nexus between specific violations and incidents involving death, serious injury, or property damage was unclear, and did not take into account the fact that Edison may not have had an opportunity to find and correct the violation before the incident. Edison also believes that the POD should have made a formal determination of negligence as used in civil litigation before imposing penalties. Edison also complains that the concept of basing penalties in future situations on such factors as a comparison of Edison's violations to the "norm" for utilities, is not fair, largely because CPSD did not in this case present evidence of the results of inspections of other utilities.

CPSD criticizes the use of the "nexus" and "norm" language from a different perspective. CPSD asserts that requiring the finding of a relationship or nexus between a violation and an incident unnecessarily and unwisely undercuts efforts to enforce safety standards before such incidents occur. CPSD cites Pub. Util. Code § 2107, under which the Commission may impose a penalty for any violation, regardless of its relationship to an incident, or to any utility "norm."

The POD properly notes that the Commission may impose penalties of from $500 to $20,000 for any violation, and has used various factors outlined in D.98-12-075 to determine the size of penalty to be imposed in particular circumstances. The POD chose not to impose penalties for each of the over 4,000 violations found, but to focus instead on Edison's failure to identify as many violations as CPSD in the GO 165 inspections, and upon violations involving deaths or injuries. As we more fully discuss above, while we differ with the POD in our assessment of certain of the specific cases, we agree that it is reasonable to impose the maximum penalty for each incident involving injury, death or property damage where Edison failed to act in a timely manner.

As more fully discussed above, we reject the notion that a finding of negligence is required prior to the imposition of a penalty. Our inquiries into the reasonableness of a utility's conduct, and its compliance with relevant statutes and Commission orders, do not require a finding of legal negligence. In D.99-04-029 [Carey v. PG&E], 85 CPUC2d 682, 687, we noted that:

"the Commission is not faced with the question of whether PG&E's conduct was the legal cause of the 1996 Homestead fire. We are not awarding ... damages ... The Commission is required to determine whether the service or equipment of a public utility poses any danger to public safety, and if so, to prescribe corrective measures. That the facts of this incident also give rise to tort litigation does not transform this determination into a tort case. Indeed, we have rejected the application of tort law principles in reviewing utility conduct surrounding accidents." (Citations omitted, emphasis in the original.)³³

We do, however, clarify Section X.G to explain some of the key factors which influenced us in assessing penalties in this case, to provide future guidance for all utilities, and to strongly encourage CPSD to provide evidence on certain issues in future similar proceedings.

Edison and SDG&E also assert that the Commission's safety program is unconstitutionally vague. We disagree. The Commission need not state in advance every instance in which it will, and will not, impose a penalty for a violation of safety statutes or regulations, especially where the several hundred pages of safety rules set forth in GOs 95, 128, and 165 provide utilities with guidance as to what is required of them.

12. Due Process

SDG&E and PG&E also believe that they have been denied due process because this proceeding was not designated as a rulemaking, and its holdings (such as the holding that failure to comply with a GO is a violation of the GO) may be applicable to them as well. They object, for instance, when the decision addresses "a utility's," as opposed to "Edison's," obligation to comply with a general order, stating that generic findings and conclusions have no place in this investigation.

Both SDG&E and PG&E were placed on notice that this investigation concerned Edison's compliance with certain GOs. The penalties ordered by this decision are directed against Edison. To the extent the Commission is required to analyze and interpret the GOs in order to adjudicate this investigation, it has the authority to do so. Some statements of general principals are also appropriate in reaching a specific conclusion as to Edison. However, we clarify the discussion to refer more particularly to Edison where appropriate.

13. Rulemaking

Edison asserts that issues beyond possible revisions of high voltage sign requirements, such as the POD's requirement that utilities notify the Commission promptly regarding noncompliance with GOs 95 and 128, should be addressed in a second phase of the current rulemaking R.01-10-001, which is reviewing possible revisions to GOs 95 and 128. SDG&E and CCTA agree that a rulemaking would be an appropriate forum for considering issues raised in this proceeding that are of concern to other utilities.

We do not modify the POD to defer further issues to R.01-10-001. We eliminate the POD's requirement that Edison and other utilities provide additional routine reports regarding noncompliance to the Commission. However, we fully expect that Edison will cooperate with staff requests for information useful in reviewing safety issues.

²³ CPSD initially titled its timely filed pleading as a request for review, and a day later requested the Commission to accept its corrected appeal. We grant CPSD's motion and treat the initial document as an appeal, because there is no prejudice to any party and the corrections address the form, not substance, of the document. ²⁴ See, e.g., Resolution SU-44 (August 1, 1997), at pp. 1-2: "1. ... There were no high voltage signs posted. This is a violation of Rule 51.6A. 2. SDG&E has been remiss in insuring that high voltage signs are posted in rural areas. High voltage signs are important in warning unskilled persons about the hazards of electric lines. Finding 1: SDG&E was in violation of Commission GO 95, Table 1, and Rule 51.6-A. The violations were a significant contributing factor to the accident. 2. To resolve these infractions, SDG&E agreed to immediately inspect its district in which the accident occurred to correct inadequate line clearances and replace missing high voltage warning signs. ..." (Emphasis added.) ²⁵ See, e.g., D.93105 (1981) 6 CPUC2d 196, 205: "The Commission has the responsibility to `require every public utility to construct, maintain, and operate its ... system ... in such manner as to safeguard the health and safety of its employees, ..., customers, and the public...' (Pub. Util. Code § 768, see also §§ 761, 762.) GOs 26-D and 118 were adopted to protect the health and safety of railroad employees. GO 26-D provides the minimum clearance for a man's body on the widest authorized railroad car and a building or other obstruction. A violation of GO 26-D could result in a railroad employee's being killed or injured ..." (Emphasis added.) ²⁶ See, e.g., the following sections of GO 95: 20.6 [climbing space]; 31.1 [electric supply and communications systems]; 32.3 [collinear lines and crossing lines clearances]; 34-C2 [energized apparatus clearance]; 34-C3 [non-energized apparatus clearances]; 35 [vegetation clearances]; 51.6 [fencing distances] ; 54.4-C3b, D3, D6, D8, H1, I [conductor clearances]; 54.7 [climbing space]; 54.8-B3 [service drop clearances]; 54.9-B2 [climbing space], E [conductor clearances], E3, E4 [climbing space], F [climbing space]; 54.10-A [multiconductor cable clearances], F1 [climbing space]; 54.11-B2 [climbing space], E [conductor clearances], F [climbing space]; 54.12-B2 [climbing space], E [conductor clearances], F [climbing space]; 56.2 [guy tautness]; 56.4-C1, C2, D1 [guy and span clearances]; 58.4-C [traffic signal clearances]; 58.5-C [lead wire clearances]; 61.6B2 [fence clearances]; 74.4-C [trolley contact conductor clearances]; 84.7 [climbing space]; 86.2 [guy tautness]; 86.4-C [guy, span and conductor clearances]; and 93 [climbing space]. ²⁷ See, e.g., §§ 52.7-C [bond wire and ground wire clearances]; 52.7-D [hardware clearances]; 53.4-A, B [bond wire clearances]; 54.4-A [above ground clearances]; 54.4-C4b, C4c [conductor clearances]; 54.6-A, B [conductor clearances]; 54.8 [service drop clearances]; 56.4-A [guy clearances]. ²⁸ See also, GO 128, § 14, which includes identical language. ²⁹ GO 95, §§ 44.1 Table 4 [installation and reconstruction]; 44.2 [replacement]. ³⁰ See, e.g., GO 128, §17.2: "Systems shall be inspected by the operator frequently and thoroughly for the purpose of insuring they are in good condition and in conformance with all applicable requirements of these rules." ³¹ A footnote states that: "During 2001, approximately 100,000 repairs were completed at the time of the inspection." ³² See, e.g. Edison Witness Pearson, Transcript, Volume 9, p. 840, lines 16-27.

³³ See also, D.94-03-048, 53 CPUC2d 452, 480, fn. 11: "Commission decisions have not applied tort law principles, including professional negligence, in reviewing utility conduct surrounding accidents."