San Francisco Bay Guardian - April 2, 1997



Nevada County sues PG&E for millions – and the monopoly’s high-priced hired guns fire back to head off justice.


By Savannah Blackwell


NEVADA CITY, CALIF. – On a hot August afternoon nearly three years ago in a rural Gold Rush town called Rough and Ready, Gaylene Collins lay in bed recovering from knee surgery when she saw a puff of smoke waft through the window of her trailer.


As she dialed 911 from a telephone in her nearby workshop, Collins watched billowing smoke drift from the banks of a creek near her property. The she heard an explosion and watched in horror as an orange flame shot 40 feet toward the sky.


Last week, choking back tears, Collins told a jury convened in Nevada City’s old Boozy Rouge restaurant – recently converted into a courtroom – that she knew then that she had to flee.


Collins dragged herself from her workshop to her front gate, unlocked it, climbed up into her pickup truck, called for her dogs to jump in, and sped off as a raging fire swept toward her land. Within minutes the flames devoured the structures on her property, including a historic 1868 schoolhouse that she had planned to convert into a home.


Collins took the stand as part of Nevada County district attorney Michael Ferguson’s criminal case against the corporation responsible for what is now known as the Trauner Fire, which caused millions of dollars worth of damage and incinerated 500 acres of land, including 12 homes, in Rough and Ready, Nevada County. That corporation is Pacific Gas and Electric Co.


According to the California Department of Forestry and Fire Protection (CDF), the Trauner Fire started when an untrimmed oak tree branch made contact with a 21,000-volt PG&E electric power line. Ferguson has charged PG&E with 746 counts of violating state laws that require the utility to maintain safe clearances around power lines. The charges resulted from a random inspection conducted after the fire by CDF officials.


Ferguson and Deputy District Attorney Jenny Ross, who is trying the case, have charged PG&E with exhibiting a chronic and widespread pattern of negligence. They say the corporation willingly and knowingly violated the law to save millions of dollars in maintenance costs. From the late 1980s until 1995, when it finally increased funds for trimming trees, they argue, PG&E knew it was putting the public at risk of fire by not adequately funding its tree-trimming budget. Nevada County even has evidence proving that PG&E knew before the Trauner Fire that the very tree that sparked the fire needed trimming.


John Trauner, assistant sheriff of Nevada County, testified that he had called PG&E a year before the Aug. 7, 1994, blaze to tell the company he had heard a “buzzing” noise coming from an old oak tree on his property – a sign that a limb of the tree was brushing a PG&E power line. But PG&E did not trim the tree.


PG&E’s attorneys tried to discredit Trauner by pointing out that he could not recall exactly which PG&E number he had called and did not call PG&E just one day before the fire, he testified, when he said he heard the tell-tale buzzing sound again.


“Weren’t you afraid your kids would be electrocuted?” asked John T. Ward,a Tahoe City attorney for PG&E.


Far-reaching impact


This trial has far-reaching impact. District attorneys in other wildfire-prone counties are watching to see if it’s worth going after PG&E for other fires started by contact between untrimmed trees and PG&E power lines. And by mounting their case against PG&E, Ross and Ferguson are showing that the utility, which has enjoyed an illegal monopoly in San Francisco for decades, is not beyond the scope of the law.


The tone of the trial, which the Bay Guardian observed for three days last week, is highly combative. On one side is Jenny Ross, a determined and methodical prosecutor who spent several years working for San Francisco law firm Pillsbury Madison and Sutro as an environmental lawyer before heading north to Nevada City. On the other side is PG&E’s legal army, headed by experienced trial lawyer Joseph Russoniello, former U.S. Attorney for northern California.


Though PG&E has seemingly limitless funds to throw at the case (the company rented a Victorian building on Main Street to serve as PG&E’s defense-team headquarters for the four months the trial is expected to take), it lacks a solid defense.


As it is, PG&E is doing what it can to confuse the jury and bully and frustrate the prosecution. It has attempted to control, and in many cases has succeeded in controlling, several aspects of the trial, including whether key documents will be released to the public (the judge sided with PG&E in granting an order sealing evidence from the public). PG&E also convinced the judge to let it pay the expenses of, and arrange the transportation to and from the trial for, former and current PG&E employees who have been called by the prosecution to testify.


Ross generally maintains her composure but occasionally shows her frustration when she rolls her eyes at yet another objection from Russoniello.


Ross told the Bay Guardian that PG&E “is contesting everything.” PG&E has withheld documents despite her several subpoenas and threats of contempt. Documents PG&E has turned over have arrived incomplete, in disarray, and at the last minute, and its attorneys have even managed through legal maneuvering to keep jurors from seeing the written complaint containing the prosecutor’s detailed charges against PG&E, despite the fact that it is a public record. The utility has also refused to agree with the CDF about the cause of the fire.


And court sources say Russoniello loudly and vehemently protests each point he takes issue with in frequent discussions in the chambers of Judge Carlos Baker, a visiting judge from Kings County.


“They even argue over the dates of hearings and what the shape of the table should be,” Ferguson told the Bay Guardian. “It’s one of the most contentious pieces of litigation I’ve ever been involved in.”


Jenny v. Goliath


Trial watchers are calling this one Jenny v. Goliath, a trial being played out in the Boozy Rouge courtroom (complete with lace curtains, pink walls, and Gold Rush-era framed photographs). Ross sits straight up, with a stack of exhibits always within reach. At the defense table sit Ward and Russoniello, with PG&E in-house counsel William Cosden seated behind them.


“It’s kind of a David and Goliath situation,” David LeMay, CDF”s deputy chief of fire prevention, told the Bay Guardian. “You’ve got Jenny sitting there doing her thing, and three to six corporate lawyers on the other side.”


Ward and Russoniello take turns questioning witnesses, though Russoniello clearly is in charge. He whispers questions for Ward to ask, and Cosden was once overheard apologizing for being in the bathroom when Russoniello wanted to use the facilities.


“Who’s in there?” Russoniello bellowed. “Oh, it’s you.”


“Sorry,” Cosden muttered.


Confident and full of bluster, Russoniello objected even during Ross’s opening statement (such an objection is considered unusual in the courtroom). He was particularly vehement when she repeated the allegation that PG&E had diverted $80 million in ratepayers money from tree-trimming to budgets for other purposes.


He brought up his experience as U.S. Attorney when arguing that the CDF should respond to a last-minute subpoena from PG&E for thousands of pages of documents. He rattled off Latin as he described how CDF reminded him of Caesar’s empire. He sneered when Deputy Attorney General William Cunningham spoke on behalf of the CDF. “I wouldn’t expect Mr. Cunningham to know what’s going on in this court,” he said snidely.


When Ross is questioning witnesses, Russoniello often shakes his head and mutters, “Amazing.” According to Ferguson, he once asked Ross in a settlement conference, “Who do you think you are, Joan of Arc?”


“He did not mean it as a compliment,” Ferguson added. “He meant it as: ‘No other D.A. has gone after PG&E. You’re all wet and this case should never have been brought to court.’”


Indeed, Ross and PG&E were set to settle the case last August. But at the last minute PG&E CEO Stanley Skinner chose to renege on a plea bargain and go forward with a trial. PG&E faces a maximum fine of $2 million if convicted on all counts.


It could get off with probation; the jury could also find the utility not guilty.

“It’s not the money – they have plenty of that,” Ferguson told the Bay Guardian. “It’s about their public relations, their stature. And they want to send a message to other district attorneys not to take them on.”


As Sonoma County assistant district attorney Jeffrey Holtzman – who got PG&E to settle for $10,000 on charges of violating state power-line clearance laws in Sonoma in 1990 – put it, “Jenny’s our hero.”


In her opening statement last week, Ross alleged that top PG&E officials knew the company had an ongoing and deliberate pattern of not complying with state laws regarding power-line clearances. They knew they weren’t spending enough money to provide safe service, she told jurors, but they did nothing about it because they were interested in saving money for other purposes. They downsized and cut services, diverting the profit increases to shareholders and CEO salaries. Ross told the jury that witnesses employed by PG&E’s tree-trimming contractor in the area would tell them about hearing PG&E managers say it was cheaper to pay claims resulting from fires than to comply with the law.


There are plenty of documents to support Ross’s allegations. The Bay Guardian obtained from a legal source not doing work on the Nevada County case an internal PG&E “Tree Trimming Efficiency Report” from 1991 that found that PG&E’s underfunded maintenance crews were resorting to “hot-spot trimming” – instead of systematically checking lines, they would only go to known problem areas, a practice that is not effective at guaranteeing safety. The report also noted that more fines could be expected due to “CDF frustration over what it views as wanton neglect by PG&E of an important fire safety regulation.” It stated that “further budget reductions will expose PG&E to serious fire and service liability.”


Interviewed tree trimmers noted that “upper management does not recognize the importance of the tree trimming program.”


In a 1993 budget request from PG&E’s Sierra Division (which includes Nevada Country), division operators stated, “Our system is an increasing threat to life and property.”


Gentleman’s agreement


PG&E’s defense boils down to this: The company is alleging that it had a “gentleman’s agreement” with CDF that it would not receive criminal citations from the department.


Even if such an agreement existed, a point that state and county officials have described as “wishful thinking” and “fictional,” it does not make for a solid defense.


“That’s not much of a defense,” Jeff Brown, San Francisco’s public defender, told the Bay Guardian. “I think that’s kind of stretching it.”


Indeed, it frequently appears that PG&E is fishing for any kind of defense. It requested from CDF all documents from 1990 through 1996 regarding vegetation-management policies. Russoniello admitted that the company had completed damning internal studies of its tree-trimming programs – but insisted those studies were done only to determine the best course to follow.


But as late as 1995, the California Public Utilities Commission’s Office of Ratepayers’ Advocates found that PG&E’s “piecemeal approach to reliability” was not effective and that budget considerations were emphasized “over any real measure of system performance.”


A report Andersen Consulting did for PG&E underscored that finding. “The ‘cut cost at any cost or we’ll find someone who will’ philosophy may have created the single biggest barrier to effective upward communication,” the report concluded.

PG&E is trying to distract the jury from the charges and focus attention instead on its indispensable service and “citizenship” in Nevada City. Over the objections of Ross, Russoniello talked in his opening statement of the days following the Gold Rush, when an early forerunner of PG&E set up a water wheel to provide power to the burgeoning town.


“The prosecutor would have you believe this corporation is callous,” Russoniello told the jury. “But we have people who are committed to Nevada County.”


In perhaps PG&E’s most audacious argument, its attorneys contended that Ferguson wouldn’t even have been able to mount his case without the good services provided by the utility.


“The Nevada County district attorney has been able to file misdemeanor counts against PG&E only because PG&E has supplied him with enough power to keep his building warm, his office well lit, and his word processors humming,” Ward wrote in response to Nevada County’s unsuccessful attempt to submit evidence of hundreds of other fires that were found by the CDF to be the result of PG&E’s lax tree-trimming practices, and thousands of other violations of power-line clearance laws. “Without the energy which PG&E delivers to his workplace very day, he would be unable to function efficiently – if at all.”


To which Ferguson responded to the Bay Guardian, “That just shows you how arrogant they are.” ■



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