1

Filed 6/16/15

CERTIFIED FOR PUBLICATION

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

FIRST APPELLATE DISTRICT

DIVISION TWO

PACIFIC GAS AND ELECTRIC 

COMPANY,

Petitioner,

v.

PUBLIC UTILITIES COMMISSION,

Respondent;

CITY OF SAN BRUNO et al.,

Real Parties in Interest.

 A142127

 (Cal. PUC Decision Nos. 13-12-053 & 

 14-05-034) 

Pursuant to its statutory authority to adopt ―rules of practice and procedure‖ (Pub. 

Util. Code, § 1701, subd. (a)1), the Public Utilities Commission (PUC or Commission) 

promulgated Rule 1.1, which provides in pertinent part: ―Any person who . . . transacts 

business with the Commission . . . agrees . . . never to mislead the Commission or its staff 

by an artifice or false statement of fact or law.‖ (Cal. Code Regs., tit. 20, § 1.1 (Rule 

1.1).)

In the aftermath of a massive 2010 explosion of an underground gas pipeline 

owned and operated by Pacific Gas and Electric Company (PG&E), the PUC imposed a 

series of reforms to be instituted by PG&E. One of those reforms was that PG&E 

improve its recordkeeping and information technology capabilities. PG&E was directed 

to keep the PUC informed of any reported pipeline leaks and any discovered information 

regarding the safety of continuing pipeline operations. Thereafter, following discovery of 

 

1

Statutory references are to the Public Utilities Code unless otherwise indicated.
2

a pipeline leak, PG&E also discovered that some information it had provided to the PUC

concerning the internal pressure at which certain pipelines could be safely operated might 

not be correct. Approximately seven months after discovery of this mistake was 

internally verified by PG&E, it was communicated to the PUC via a written ―Errata‖ to a 

previous filing. Following extensive hearings, the PUC deemed this filing both a 

substantive and a procedural violation of Rule 1.1, which the Commission determined 

had the effect of misleading the Commission. For this dual violation of Rule 1.1, the 

Commission imposed civil penalties totaling $14,350,000.

We granted PG&E‘s petition for a writ of review to consider: (1) whether the 

penalties were validly imposed in the belief that Rule 1.1 does not invariably demand a 

scienter requirement; (2) whether the Commission correctly treated PG&E‘s act and 

omission as ―continuing‖ violations; (3) whether the PUC‘s order to show cause provided 

sufficient notice of the grounds for which PG&E might be penalized; and (4) whether the 

penalties authorized by sections 2107 and 2108 are constitutionally excessive. With 

appropriate consideration for the unique powers of the PUC, we conclude that none of 

PG&E‘s contentions has merit. We therefore affirm the decisions of the PUC imposing 

the penalties and denying PG&E‘s request for rehearing.

BACKGROUND

The Nature, Duties, and Powers of the PUC

Our Supreme Court has described the PUC as ―a state agency of constitutional 

origin with far-reaching duties, functions and powers. (Cal. Const., art. XII, §§ 1–6.)

The Constitution confers broad authority on the commission to regulate utilities,

including the power to fix rates, establish rules, hold various types of hearings, award 

reparation, and establish its own procedures. (Id., §§ 2, 4, 6.) The commission‘s powers, 

however, are not restricted to those expressly mentioned in the Constitution:  ̳The 

Legislature has plenary power, unlimited by the other provisions of this constitution but 

consistent with this article, to confer additional authority and jurisdiction upon the 

commission . . . .‘ (Cal. Const., art. XII, § 5.)
3

―Pursuant to this grant of power the Legislature enacted Public Utilities Code

section 701, conferring on the commission expansive authority to  ̳Do all things, whether 

specifically designated in [the Public Utilities Act] or addition thereto, which are 

necessary and convenient‘ in the supervision and regulation of every public utility in 

California. (Italics added.) The commission‘s authority has been liberally construed.‖ 

(Consumers Lobby Against Monopolies v. Public Utilities Com. (1979) 25 Cal.3d 891, 

905.) That authority amounts to ―comprehensive jurisdiction over questions of public 

health and safety arising from utility operations,‖ and ―includes not only administrative 

but also legislative and judicial powers.‖ (San Diego Gas & Electric Co. v. Superior 

Court (1996) 13 Cal.4th 893, 915, 924.)

The Legislature has also provided the PUC with extensive enforcement powers, 

including the imposition of monetary civil penalties: ―Any public utility that violates or 

fails to comply with any provision of the Constitution of this state or of this part, or that 

fails or neglects to comply with any part or provision of any order, decision, decree, rule, 

direction, demand, or requirement of the commission, in a case in which a penalty has not 

otherwise been provided, is subject to a penalty of not less than five hundred dollars 

($500), nor more than fifty thousand dollars ($50,000) for each offense.‖ (§ 2107.) ―In 

determining the amount of such penalty, . . . the appropriateness of such penalty to the 

size of the business charged, the gravity of the violation, and the good faith of the person 

charged . . . shall be considered.‖ (§ 2104.5.) ―Every violation . . . is a separate and 

distinct offense, and in case of a continuing violation each day‘s continuance thereof shall 

be a separate and distinct offense.‖ (§ 2108.)

Among the Commission‘s duties is administering the regulatory authority over the 

intrastate ―production, generation, transmission, delivery, underground storage, or 

furnishing of gas, natural or manufactured, except propane, for light, heat, or power.‖ 

(§ 221; see also §§ 216, 222, 328.2, 2771–2775.6.) It is also authorized to exercise a 

measure of federal interstate power under the Pipeline Safety Act. (49 U.S.C. 

§§ 60104(c), 60105(b)(2), 60106(b); Olympic Pipe Line Co. v. City of Seattle (9th Cir. 

2006) 437 F.3d 872, 878 [―a state authority may enter into a pipeline safety agreement 
4

with the DOT [Department of Transportation], through which the DOT authorizes the 

state authority to participate in the oversight of interstate pipeline facilities‖].) ―The 

Commission in this capacity applies the federal pipeline safety regulations contained in 

49 Code of Federal Regulations (CFR) Part 192, et seq. The Commission adopted 

General Order (GO) 112-C in 1971, which adopted in their entirety the federal pipeline 

safety rules in 49 C.F.R Part 192, also adopted in 1971.‖ (Cal.P.U.C. Order 12-01-007 

(Jan. 12, 2012) [Slip Opn., p. 7].)

The San Bruno Pipeline Explosion

This proceeding traces back to what is commonly known as the San Bruno 

pipeline explosion, the salient details of which were described in a PUC report as 

follows:

―On September 9, 2010, at approximately 6:11 pm, a 30-inch diameter natural gas 

transmission pipeline owned and operated by PG&E ruptured in San Bruno, California.

Gas escaping from the rupture ignited resulting in the loss of eight lives, injuries to 58 

people, destruction of 38 homes, moderate to severe damage to 17 homes and minor 

damage to 53 homes.

―The section of pipeline involved was Segment 180, . . . located at the intersection 

of Earl Avenue and Glenview Drive . . . [¶] . . . [¶] Energy released from the rupture 

created a crater about 72 feet long by 26 feet wide. A 28-foot long section of pipe 

weighing approximately 3,000 pounds was ejected from the crater and landed 

approximately 100 feet from the crater in the middle of Glenview Drive.‖

―During the 50 hours following the incident, about 600 firefighting (including 

emergency medical service) personnel and 325 law enforcement personnel responded. 

Fire crews and police officers conducted evacuations and door-to-door searches of houses 

throughout the response. In total, about 300 homes were evacuated.‖ (Incident 

Investigation Report September 9, 2010 PG&E Pipeline Rupture in San Bruno, California 

(Cal.P.U.C., Jan. 12, 2012) (Investigation Report) [Slip Opn., pp. 7–8, 13].) ―The rupture 

released about 47.6 million standard cubic feet of natural gas.‖ (Cal.P.U.C. Decision 11-

02-016 (Feb. 24, 2011) [Slip Opn., p. 3].) 
5

At the time of the explosion, the pipeline had been authorized to maintain a 

maximum allowable operating pressure (MAOP) of 400 psig, but it had an effective 

MAOP of 375 psig.

2

 (Investigation Report, supra [Slip Opn., pp. 7, 22].) Four days after 

the explosion, the Commission‘s Executive Director directed PG&E to reduce the

operating pressure of the affected pipeline by 20 percent ―until such time as the 

Commission allows PG&E to return to . . . normal operating pressure,‖ and also to

―Conduct an accelerated leak survey of all transmission lines in PG&E‘s service 

territory . . . and take corrective action as required and report the results . . . on or before 

October 12, 2010.‖ (Cal.P.U.C. Res. No. L-403 (Sept. 23, 2010) [Slip Opn., p. 3].) And 

the PUC issued a press release that it would direct PG&E to ―Report immediately . . . and 

provide specific data on all leak reports.‖ (Cal. Pub. Util. Com., Press Release, CPUC 

Orders PG&E to Take Specific Action Related to San Bruno Explosion, Including 

Inspection of Natural Gas System (Sept. 12, 2010)

<http://docs.cpuc.ca.gov/PUBLISHED/NEWS_RELEASE/123315.htm> [as of June 14, 

2015].)

The PUC Begins to Investigate

Two weeks after the explosion, on September 23, 2010, the Commission ordered 

an investigation into the causes of ―the San Bruno explosion,‖ which ―may be the largest 

transmission pipeline explosion in an urban/suburban setting in U.S. history, certainly the 

most catastrophic in California history.‖3 (Cal.P.U.C. Res. No. L-403, supra [Slip Opn., 

p. 2].) The Commission adopted certain ―mandates‖ to PG&E ordered by the 

Commission‘s Executive Director, thus ratifying the 20 percent reduction of pipeline 

operating pressure, and reiterating that PG&E had to, among other things: ―7) Preserve 

all records related to the incident, including work at the Milpitas Terminal during the 

 

2

PG&E advises that the second abbreviation stands for ―pounds per square inch 

gauge, indicating pressure relative to atmospheric pressure.‖ The methods for calculating 

the MAOP for natural gas pipeline transmission can be found at 49 C.F.R. §§ 192.619–

192.620 (2008).

3 A federal investigation had already been commenced by the National 

Transportation Safety Board (NTSB).
6

month of September 2010; [¶] 8) Preserve all records related to the maintenance or 

modification of Line 132 by PG&E and/or its contractors performed within the City of 

San Bruno over the past ten (10) years; [and] [¶] 9) Review the classification of natural 

gas transmission lines and determine if the classification has changed since the initial 

designation and report the results to the Executive Director.‖ (Id. [Slip Opn., pp. 3–4].)

After conducting an extensive investigation into the pipeline explosion, the 

Commission‘s Consumer Protection and Safety Division concluded: ―[T]he San Bruno 

incident was caused by a combination of multiple contributing factors: [¶] 1. PG&E‘s 

failure to follow accepted industry practices when it constructed Segment 180 in 1956; 

[¶] 2. PG&E‘s failure to comply with the integrity management requirements; [¶] 3. 

PG&E‘s inadequate record keeping practices; [¶] 4. Deficiencies in PG&E‘s SCADA 

system and inadequate procedures related to the work at the Milpitas Terminal[4]and 

PG&E‘s failure to comply with its own procedures; [¶] 5. PG&E‘s deficient emergency 

response after the incident; and [¶] 6. PG&E‘s corporate culture emphasizing profits over 

safety.‖ (Investigation Report, supra [Slip Opn., p. 3].) Some of the supporting details 

were as follows:

 

4

―SCADA‖ is an acronym for Supervisory Control And Data Acquisition. It is 

described in the PUC investigation report as ―the use of computers and communications 

networks to gather field data from numerous remote locations, perform numerical 

analysis, and generate trends and summary reports. . . . SCADA systems make it possible 

to control a process that is distributed over a large area with a small group of people 

located in a single room.‖ PG&E‘s SCDA system was called ―one of the largest in the 

U.S., providing remote control of 6,438 miles of transmission pipeline.‖ (Investigation 

Report, supra [Slip Opn., pp. 70–71].)

The Milpitas Terminal appears to be something like a district center responsible 

for, among other things, administration, maintenance, and emergency response for its 

vicinity. It was the nearest such center and the epicenter of PG&E activity before and 

during the explosion. It was also a terminus for intrastate gas transmission pipelines, and 

the junction for routing gas north to San Francisco. (Incident Investigation, supra [Slip. 

Opn., pp. 7, 72, 74–76, 86, 95–97]; Cal.P.U.C. Order 12-01-007, supra [Slip Opn., p. 2.) 

According to the Commission: ―Gas coming into Milpitas Terminal supplies the vast 

majority of customers along the San Francisco peninsula.‖ (Cal.P.U.C. Decision 11-09-

006 (Sept. 8, 2011) p. 1.) 
7

―In 1956, when PG&E constructed the section of pipe that failed in San Bruno, it

did not follow accepted good industry practice existing at the time. PG&E‘s failure to 

identify deficiencies in pipe manufacturing through inspection and testing at the time of 

construction resulted in the installation of defective pipe in the ground.‖ ―PG&E was 

unable to produce records demonstrating that a strength test was performed on segment 

180 at the conclusion of its construction, and before the segment was placed in 

operation.‖ (Incident Investigation Report, supra [Slip Opn., pp. 15, 22].)

―The investigation found that PG&E did not comply with certain integrity 

management requirements in the federal pipeline safety regulations. Significant 

deficiencies were found in data gathering and integration, threat identification, risk 

assessment, and assessment.‖ (Incident Investigation Report, supra, [Slip Opn., p. 25].)

―The investigation found that, at the time of the incident, PG&E transmission 

pipeline records were not accurate, complete, or verifiable. PG&E‘s records showed 

inaccurate information of Segment 180 . . . and PG&E could not identify the 

manufacturer of Segment 180 or locate its as-built drawings, alignment sheets, 

specifications and other design, material, construction, inspection, and testing records. . . . 

[¶] PG&E failed to follow the record keeping standards . . . which were applicable at the 

time Segment 180 was constructed and, in turn, violated the Public Utilities Code, 

Section 451 by operating its system unsafely by lacking accurate and locatable records 

essential for safe pipeline operation.‖ ―PG&E‘s transfer of data from hard copies to 

electronic format was not performed adequately. Some data was not transferred 

accurately or was completely missed due to human error or varying software versions and 

file format incompatibilities.‖ (Incident Investigation Report, supra [Slip Opn., pp. 62, 

64].)

In February 2011, the PUC, noting that the NTSB had already publicly expressed 

―concern about the safety implications of the PG&E record-keeping deficiencies the 

NTSB [had] uncovered in the San Bruno investigation,‖ decided to commence an 

expansive investigation of PG&E‘s recordkeeping practices, not limited to the immediate 
8

time before the explosion—indeed, not limited to the San Bruno pipeline.

5

 (Cal.P.U.C, 

Order 11-02-016 (Feb. 24, 2011) [Slip Opn. p. 7].) PG&E was warned that ―The 

Commission is prepared to impose very significant fines [and  ̳statutory penalties 

pursuant to Section 2107‘] if the evidence adduced at the hearing establishes that

PG&E‘s recordkeeping policies and practices contributed to the loss of life and injuries 

that occurred at San Bruno.‖ (Id. [Slip Opn., pp. 11–12].) ―PG&E is therefore directed 

to . . . provide a report . . . to identify all reasons of law and fact currently known to 

PG&E to establish that the company has committed no violation of law with respect to its 

recordkeeping of data needed and appropriate for safety engineering.‖ (Id., [Slip Opn., 

pp. 16, 20].)

 

5

The investigation was described as follows: ―The Commission will investigate 

and decide whether PG&E‘s recordkeeping pertaining to the gas transmission lines, 

including San Bruno, has violated good and accepted engineering standards and 

practices, and thus whether PG&E violated Section 451of the Public Utilities Code or 

other laws and regulations. [¶] . . . [¶] In this investigation, the Commission intends to 

ascertain the adequacy of PG&E‘s recordkeeping for the entire life of the San Bruno 

pipeline that ruptured on September 9, 2010, under both state and federal standards and 

law that the Commission is specifically empowered to enforce. We also intend to 

ascertain recordkeeping adequacy for all PG&E gas transmission pipelines. [¶] . . . [¶] 

We consider this quite a broad subject . . . because we will review evidence to determine 

whether deficient recordkeeping may adversely affect and reduce safety in design, 

construction, operations, testing, maintenance, inspection, risk assessment, and pipe 

replacement.‖ (Cal.P.U.C, Decision 11-02-016 (Feb. 24, 2011) [Slip Opn., pp. 8–10], 

italics added.)

The explosion also produced a flurry of responsive activity from the Legislature. 

(See Stats. 2011, chs. 519 [adding §§ 956.5, 957, 958.5, 959. 969, requiring every gas 

corporation to meet annually with local fire departments, install automatic shutoff valves, 

to ―prepare and submit to the commission a proposed comprehensive pressure testing 

implementation program for all intrastate transmission lines,‖ to file biannual ―a gas 

transmission and storage safety report,‖ and directing that ―[a] gas corporation shall not 

recover any fine or penalty in any rate approved by the commission‖]; 522 [adding 

§§ 961, 963, requiring every gas corporation to ―develop a plan for the safe and reliable 

operation of its commission-regulated gas pipeline,‖ get it approved by the PUC, and 

implement it]; 523 [adding § 969 directing the PUC to require an account ―for the 

maintenance and repair of transmission pipelines‖; and amending § 2107 to increase the 

maximum penalty from $20,000 to $50,000].)
9

In September 2011, the PUC denied PG&E‘s ―motion . . . to delegate authority to 

the Executive Director to approve requests to lift operating pressure limitations,‖ but 

―instead adopt[ed] an expedited hearing process for Commission consideration of such 

requests.‖ (Cal.P.U.C. Decision 11-09-006 (Sept. 8, 2011) [Slip Opn., p. 1].) The 

Commission reasoned that ―the process proposed by PG&E is inadequate to discharge 

our Constitutional and statutory duties. The public interest in PG&E‘s natural gas 

operations is intense. Restoring MAOP in PG&E‘s transmission pipelines has significant 

implications for public safety. The public deserves to be informed about PG&E‘s 

proposed MAOP restoration and to have an opportunity to assess PG&E‘s evidence in 

support of the request. Moreover, PG&E‘s proposed delegation, particularly in light of 

the unspecified supporting analysis, goes well beyond the scope of ministerial matters for 

which the Commission may properly delegate its authority. The Commission ordered the 

operating pressure reductions . . . and the Commission should consider whether these 

ordered reductions should be lifted.‖ (Id. at p. 7].) And, PG&E was cautioned, it ―must 

be fully accountable for the pressure test and the assertion that the line can be safely 

operated at the restored MAOP.‖ (Id. at p. 11.)

In December 2011, after PG&E had conducted the pressure test, the PUC 

authorized PG&E ―to operate Lines 101, 132A, and 147 at a pressure no higher than 365 

pounds per square inch gauge.‖6(Cal.P.U.C. Decision 11-12-048 (Dec. 15, 2011) [Slip 

Opn., pp. 1, 7, 10].) Doing so, the Commission made two findings of fact that are 

significant: 

 

6

The decision describes Line 101 as follows: ―Located along the San Francisco 

Peninsula, Line 101 runs 34 miles from Milpitas Terminal in Santa Clara County to the 

San Francisco Gas Load Center in San Francisco . . . Line 101 approximately follows the 

alignment of Highways 237 and 101. At the Lomita Park Meter Station, located across 

the freeway from the San Francisco Airport, the pressure on Line 101 is reduced as the 

gas supply moves toward San Francisco.‖ Lines 132A and 147 are ―cross-ties‖ to Line 

101, measuring 1.5 and 3.8 miles in length, respectively. (Cal.P.U.C. Decision 11-12-

048 (Dec. 15, 2011) [Slip Opn., pp. 1–2].) 
10

―PG&E‘s Vice President of Gas Transmission, Maintenance, and Construction, 

verified that PG&E has validated the engineering and construction of, and performed 

pressure tests in accordance with 49 CFR 192 Subpart J or the pressure test requirements

then in effect, on all segments of Lines 101, 132A, and 147 that will be operating at or 

above 20% of specified minimum yield strength [see fn. 2, ante], and concluded that 

these pipelines could be safely operated at the increased maximum operating pressure of 

365 psig.

―CPSD [the Commission‘s Consumer Protection and Safety Division] reviewed 

PG&E‘s supporting information and concluded that the information presented was 

adequate to support the conclusion that pressure on the lines could be safely increased to 

365 psig.‖ (Cal.P.U.C. Decision 11-12-048, supra [Slip Opn., pp. 9–10].) 

Again, PG&E was cautioned that it ―must be fully accountable for . . . the

assertion that the line can be safely operated at the restored [MAOP].‖ (Cal.P.U.C. 

Decision 11-12-048 , supra [Slip Opn., p. 6].)

Meanwhile, the previous month, November 2011, the PUC—noting that ―PG&E 

appears to have failed to comply with federal regulations concerning the protection of 

persons and property in areas with higher concentrations of human occupancy and 

activity‖—formally opened an investigation into the San Bruno explosion. (Cal.P.U.C. 

Investigation Order 11-11-009 (Nov. 10, 2011) [Slip. Opn., pp. 1, 5, 13.) It began on 

January 12, 2012, when the PUC commenced a new, separate, and wide-ranging 

investigation: ―This investigation will not be solely limited to the events that took place 

on September 9, 2010, but shall include all past operations, practices, and other events or 

courses of conduct that could have led to or contributed to the San Bruno explosion and 

fire. We will specifically consider what monetary fines and other remedies are 

appropriate to ensure that a catastrophe of this type does not occur again.‖ (Cal.P.U.C. 

Order 12-01-007 (Jan. 12, 2012) [Slip Opn., pp. 2–3].)

In its petition, PG&E provides its explanation of what happened next: 
11

―On October 18, 2012, a PG&E employee discovered that a portion of the pipe on 

Line 147 appeared to be of a different specification than that described in PG&E reports.7 

Whereas the records indicated that the particular portion of the pipeline was of a type 

known as a  ̳Double Submerged Arc Weld,‘ the employee believed based on his visual 

field inspection that the pipe was instead of a type known as  ̳A.O. Smith.‘ The 

employee shared the apparent discrepancy with others at PG&E for further investigation 

and confirmation. Over the next several months, PG&E employees confirmed the Line 

147 included  ̳A.O. Smith‘ pipe.

―PG&E employees determined, based on the newly-discovered specification 

information, that the proper MAOP of Line 147 should be 330 psig rather than 365 psig. 

However, . . . Line 147 was already operating at a reduced pressure of 330 psig or less, 

no further reduction in operating pressure was necessary . . . . 

―Over the next several months, PG&E investigated how some of the Line 147 pipe 

had been incorrectly identified in the records, reviewed all other specifications, rereviewed the information obtained from construction activities on the entire Line 147, 

performed field examinations on the pipe, performed what is known as  ̳destructive 

testing‘ on a portion of the pipe, and reviewed the records pertaining to the other 

pipelines affected by the Commission‘s [Decision] 11-02-048. 

―Over the same period, PG&E employees found that certain federal pipeline 

regulations had been incorrectly applied to a portion of Line 101, another pipeline whose 

pressure had been restored by D.11-02-048. Whereas PG&E had previously relied on 

tests conducted in 1989 to determine the MAOP for that pipeline, employees concluded 

that under the regulations an earlier test conducted prior to 1974 should have been used 

for this purpose.

‖PG&E employees determined, based on the change in regulatory classification, 

that the proper MAOP of that portion of Line 101 should be 330 psig rather than 365 

 

7 One detail PG&E does not include in this narrative is that it discovered the 

―specification‖ discrepancy only because Line 147 was being examined to halt a gas leak.
12

psig. However, . . . [as] Line 101 was already operating at a reduced pressure of 330 psig 

or less, no further reduction in operating pressure was necessary . . . .

―On February 22, 2013, PG&E contacted the Commission‘s staff to arrange a 

meeting or teleconference to repeat these findings. A teleconference was held on March 

20, 2013, during which PG&E employees discussed with the Commission‘s staff the 

corrected information relating to Lines 101 and 147. In response to requests by 

Commission staff during that teleconference, on May 2 and May 8, 2013, PG&E 

provided the staff with validation reports and other materials concerning Lines 101 and 

147, and further advised that PG&E was continuing its review of records relating to these 

and other lines.‖8

PG&E Files the Errata and the PUC Response

On July 3, 2013, PG&E submitted for filing a document entitled ―Errata to Pacific 

Gas and Electric Company‘s Supporting Information for Lifting Operating Pressure 

Restrictions on Lines 101 and 147.‖ The document represented to the Commission that 

―After receiving Decision 11-02-048, PG&E identified errors in some of the supporting 

information for Lines 147 and 101. [¶] The errors do not raise a safety issue, as each 

affected segment has been successfully hydro tested to a pressure that supports the 

MAOP. However, after correcting these errors the affected segments will have a lower 

MAOP than approved in Decision11-02-048. Both segments are currently operating 

below the new, lower MAOP.‖ The ―Errata‖ concluded with this: ―[T]he operating 

pressure of Line 101 has been limited to 300 psig since April 2013 and PG&E is revising 

the MAOP of this segment of Line 101 from 365 psig to 330 psig . . . . In addition to 

revising the MAOP of this segment, PG&E has accelerated plans to replace it. PG&E is 

currently planning to replace the affected portion of Line 101 in 2014–2015.‖ 

PUC staff refused to accept this document for filing. On August 19, the PUC 

issued an order for PG&E to show cause (OSC) why it should not be sanctioned for 

violating Rule 1.1. The OSC recited that the Errata was ―rejected . . . as untimely to the 

 

8 Actually, PG&E spoke with only a single staff member of the PUC. 
13

extent that it sought to make a substantive change to issues‖ previously resolved by the 

Commission. And under the heading ―Issues Revealed in PG&E‘s July Document,‖ the 

OSC read as follows: 

―PG&E‘s July document raises procedural and substantive issues. Procedurally, 

parties are not allowed to file pleadings for the purpose of correcting minor typographical 

or computational errors in previously filed applications. Parties are allowed to file 

pleadings for the purpose of making substantive changes to a previously filed application, 

and such filing triggers the opportunity for other parties to file a responsive pleading 

(unless limited or prohibited . . . ). Here, PG&E appears to be revealing a substantial 

error in an application upon which the Commission has relied in issuing a decision. 

Attempting to correct an application eighteen months after the Commission issued a 

decision appears to be an unreasonable procedural choice and could be interpreted as 

attempting to create an inaccurate impression of a routine correction. The timing of the 

attempted filing, the day before a summer holiday weekend, also raise questions. 

―Substantively, as the record shown in this proceeding and others, the accuracy of 

PG&E‘s natural gas transmission pipeline records has been and remains an 

extraordinarily controversial issue in which the public has an intense interest. The facts 

stated in PG&E‘s July filing appear to directly implicate this issue, particularly the 

continuing inaccuracy of PG&E‘s records and the happenstance means by which this 

most recent instance of erroneous records was discovered. Submitting this provocative 

information in a routine-appearing document could be seen as an attempt to mislead the 

Commission and the public on the significance of this new information.‖

On August 30, 2013, PG&E filed a ―Verified Statement‖ by M. Kirk Johnson, its 

Vice-President for Gas Transmission, Maintenance and Construction, explaining how the 

―discrepancies‖ in Lines 101 and 147 were discovered and how PG&E responded.

The OSC Hearing

The OSC was the subject of a hearing held on September 6, 2013 before three 

PUC Commissioners (Ferron, Florio, and Sandoval) and two administrative law judges
14

(ALJ), including the chief judge.

9

 The sole witness was Joseph M. Malkin, PG&E‘s lead 

counsel, who had practiced before the Commission for 28 years, the last three years of 

which was devoted exclusively to representing PG&E before the Commission.

10

 In 

addition to questioning by the Commissioners and ALJs, Lead Counsel was questioned 

by counsel for the City of San Bruno, the Commission‘s Safety and Enforcement 

 

9

The practice of the PUC is to ―assign one or more commissioners to oversee the 

case and an administrative law judge where appropriate.‖ (§ 1701.1, subd. (b); see Cal. 

Const., art. XII, § 2 [―Any commissioner as designated by the commission may hold a 

hearing or investigation or issue an order subject to commission approval‖].) If a hearing 

is required, the issues to be examined and procedures to be followed are spelled out in a 

―scoping memo.‖ (§ 1701.2, subd. (a); Cal. Code Regs., tit. 20, §§ 1.3(f), 13.2(a).) A 

decision must be made within 60 days of the hearing, and can be appealed to the full 

commission within 30 days. (§ 1701.2, subd. (a).) These procedures govern regardless 

of whether the hearing concerns a quasi-legislative, an adjudicatory, or a ratesetting 

hearing. (§§ 1701.1, subd. (a), 1701.2, subd. (a), 1701.3, subd. (a), 1701.4, subd. (a).) A 

case where the Commission considers imposing monetary penalties is an adjudicatory 

matter. (See § 1701.2, subd, (e); Pacific Bell Wireless, LLC v. Public Utilities Com. 

(2006) 140 Cal.App.4th 718, 739–740; 53 Cal.Jur.3d (2012) Public Utilities, § 96, pp. 

130–132.)

The presence of two ALJs was explained in the OSC: ―Ensuring that parties 

understand the importance of complying with the letter and spirit of the Commission‘s 

Rules of Practice and Procedure is a duty of the Chief Administrative Law Judge. The 

facts of this matter appear to implicate the core principles upon which the Rules are 

based. For that reason, the undersigned Chief Administrative Law Judge is taking the 

unusual step of co-presiding with the assigned Administrative Law Judge at this 

important hearing.‖ 

10 Because it appears at many points in the Commission‘s decisions under review, 

we adopt the Commission‘s usage of referring to Mr. Malkin as ―Lead Counsel.‖

Section 2109 provides: ―In construing and enforcing the provisions of this part 

relating to penalties, the act, omission, or failure of any officer, agent, or employee of any 

public utility, acting within the scope of his official duties or employment, shall in every 

case be the act, omission, or failure of such public utility.‖ In other words, by signing the 

Errata and representing PG&E at the hearing, Lead Counsel was PG&E, and everything 

he did and said is fully attributable to PG&E. We do not understand PG&E to argue 

otherwise.
15

Division (SED)11, and The Utility Reform Network (TURN). The gist of Lead Counsel‘s 

testimony was that the Errata was filed on his responsibility, with no intent to mislead, 

but only to correct erroneous information previously provided to the PUC in good faith, 

in ―a completely unique situation‖ that unquestionably had to be brought to the 

Commission‘s attention. As for the matter of the timing of submission of the Errata for 

filing, Lead Counsel explained that the submission before the start of a long Fourth of 

July weekend was not done to escape attention, but was motivated by nothing other than 

his belief ―we should file as quickly as we could once we had everything nailed down.‖ 

Directly asked by another attorney for PG&E ―did you at any time in connection with the 

preparation, the titling, or the filing of the errata intend to mislead the Commission, the 

parties, or the public?‖, Lead Counsel replied, ―Absolutely not.‖ 

Counsel for TURN asked ―Can you tell us why this pleading [i.e., the Errata] does 

not include the fact that this discovery was made eight to nine months prior to the date of 

the pleading?‖ Lead Counsel answered, ―For purposes of this pleading, which was to 

provide notice to the Commission and the parties that there were errors and how they 

were corrected, that seems to me like way too much information.‖ And responding to a 

question from a commissioner, Lead Counsel testified that PG&E was not ―trying . . . to 

sneak something below the radar.‖ 

Thereafter the Commission received written submissions. PG&E filed 

―comments,‖ which for the first time raised the issue of whether a violation of Rule 1.1 

required a mental state related to misleading the Commission, and arguing that PG&E 

had not ―acted with any intent to mislead in connection with the submission of [the 

Errata],‖ nor with recklessness or gross negligence. PG&E further argued that ―[n]o 

evidence supports a Rule 1.1 violation based on the July 3rd service date.‖ 

The City of San Bruno argued that the Errata ―was submitted to the Commission 

as [a] mere artifice to mislead all parties in order to minimize PG&E‘s responsibility for 

 

11 At some point in 2013 not shown in the record, the Commission‘s Consumer 

Protection and Safety Division had been renamed the Safety and Enforcement Division. 
16

past and ongoing deficiencies in its records.‖ In its words: ―PG&E obscured the 

significance of its Line 101 and 147 errors via the artifice of an  ̳errata‘ filing precisely 

because the circumstances surrounding the faulty records for and operation of Lines 101 

and 147 are identical to those that precipitated the disaster in San Bruno. After spending 

hundreds of millions of dollars . . . PG&E‘s records are still dead wrong. Those 

inaccuracies, along with the fact that PG&E tried to camouflage its ongoing problems 

with an obscure regulatory filing rather than be forthcoming ought to scare this 

Commission, Commission staff, and every customer in PG&E territory because PG&E‘s 

behavior is still dangerous. [¶] . . . [¶] Not only does bad data for Lines 147 and 101 

demonstrate that the Commission cannot trust PG&E‘s records system, it also 

demonstrates that the Commission . . . cannot trust PG&E to uphold its Rule 1.1 

obligations to be forthcoming, truthful and complete with its regulators.‖ 

SED‘s opening brief was uncompromising: PG&E misled the Commission. 

Specifically:

―PG&E‘s misleading information permitted PG&E to unsafely raise its MAOP 

throughout the system, in violation of the Commission‘s directives and standards. PG&E 

failed to timely and accurately inform the Commission of errors and incompleteness in its 

MAOP validation process violating Decision . . . 11-12-048. The decision lifted MAOP 

restrictions based on PG&E‘s assurances that the MAOP validation process was subject 

to careful quality assurance procedures and had been completed.

―PG&E first learned of possible errors in its MAOP validation process on October 

18, 2012 but failed to inform the Commission until July 3, 2013, more than eight months 

after PG&E . . . learned of these errors. When PG&E finally disclosed this information to 

the Commission, the utility further misled the Commission by attempting to deemphasize and in effect hide errors in the validation process through an  ̳Errata‘ rather 

than a petition for modification of . . . [Decision] 11-02-016 for information concerning 

possible errors in PG&E‘s MAOP validation process.
17

―SED contends that PG&E‘s conduct in this proceeding regarding critical 

maximum pressure on segments in its transmission system warrants penalties for 

violations of Rule 1.1 because:

―PG&E knew as early as October 18, 2012, that errors and records insufficiencies 

existed in its Pipeline Features List used to validate maximum segment pressures;

―Rather than advising the Commission as a regulatory body in writing of these 

errors, PG&E first chose to communicate with a Commission staffer, who acted in an 

advisory capacity only. SED advocacy staff did not learn of PG&E‘s contact with this 

individual until after the initiation of this Order to Show Cause;

―PG&E failed to provide this staffer with requested documents and information 

concerning the errors until the end of May 2013, and further misrepresented to the 

Commission in this OSC proceeding the contact‘s reaction to the information provided by 

PG&E (no staff personnel has ratified or approved PG&E‘s submissions);

―PG&E delayed notifying the Commission and parties of the potential errors in its 

MAOP validation process until July 3, 2013, some eight months after PG&E first 

recognized the potential error in its validation process;

―PG&E was aware of SED‘s continuing data request concerning potential errors in 

PG&E‘s MAOP Validation process but failed to notify SED; and

―Using an Errata to notify the Commission of errors in the pipeline features list 

used in PG&E‘s critical MAOP Validation process—effectively disguising rather than 

clearly identifying the serious errors in its MAOP calculations.‖ (Footnote omitted.)

SED also scoffed at PG&E‘s defense: ―PG&E contends that using the term 

 ̳errata‘ is nothing more than  ̳[lead] counsel‘s good faith selection of a word that 

conveyed that the pleading was reporting errors . . . such as ―an error in printing or 

writing.‖ ‘ . . . SED strongly disagrees. The errors in PG&E‘s PFL [pipeline features 

list], and the questions such errors pose for PG&E‘s MAOP validation process of the 

2,088 segments that were reviewed, raise serious concerns regarding the safety of 

segments hydro tested blindly without sufficient knowledge . . . .‖ ―Hydro tests 

performed at too high a pressure can result in failure or worse, a pinhole leak or crack 
18

that may expand in time causing a rupture. PG&E‘s discovery of MAOP validation 

errors in its PFL should have been reported shortly after discovery . . . . [¶] . . . PG&E 

failed to provide the Commission with notice of errors in its PFL in a reasonable period 

of time after discovery. As a result, the Commission was led to believe that hydro tests 

on PG&E‘s . . . [gas] lines had been performed in a safe manner, using accurate . . . data, 

when, in fact, the data was inaccurate leading to the possible over pressuring of lines 

during hydro tests.‖ 

A crucial point of SED‘s brief was that it treated each day of the eight months 

between October 18, 2012 and July 2, 2013 as part of a continuing violation. TURN 

made the same point in its brief: ―PG&E should be required to pay the maximum

$50,000 fine for each day of its Rule 1.1 violation. A continuing violation from 

October 24, 2012 to July 3, 2013, a total of 253 days, multiplied by the maximum 

$50,000 per violation yields a fine of $12,650,000.‖ 

The assigned ALJ‘s proposed decision concluded that PG&E ―violated Rule 1.1 of 

the Commission‘s Rules of Practice and Procedure by not correcting promptly a material 

misstatement of fact in a pleading filed with the Commission and by mischaracterizing 

the correction when filed as a routine and non-substantive correction. PG&E is fined 

$6,750,000 for these violations.‖ The fine, which treated both violations as continuing 

and deserving of the maximum $50,000 per day, was calculated as follows: ―We begin 

the tabulation at the day PG&E first became obligated to inform the parties of the error in 

its representations to the Commissions, March 20, 2013 [the date PG&E ―informed 

Commission staff of its error and . . . correction of the pipeline features calculation‖], a 

delay of 105 days. We assess the maximum statutory fine of $50,000 per day for this 

continuing violation . . . . The resulting fine is $5,250,000. [¶] For submitting a 

misleadingly entitled document, $50,000 per day for 30 days it remained pending at the 

Commission, when PG&E could have retrieved and corrected it=$1,500.000.‖ 

Commissioner Ferron submitted an alternate proposed decision. He disagreed 

with the assigned ALJ only in the manner he believed PG&E should be sanctioned. 

Commissioner Ferron would run the $50,000 per day penalty for not revealing the 
19

discovered information from November 16, 2012 (the date on which ―senior management

of PG&E‖ became aware of the situation) to August 30, 2013 (the date on which PG&E 

filed the Verified Statement of its Vice-President of Gas Transmission, Maintenance and 

Construction). This was a total of 287 days, making the penalty for this violation 

$14,350,000. He would add a penalty for ―submitting a misleadingly titled and factually 

incomplete document, $50,000 per day for the 58 days it remained uncorrected at the 

Commission=$2,900,000.‖ 

The Full Commission Hearing

The matter was then considered by the full Commission (Commissioners Ferron, 

Florio, Peevey, Peterman, and Sandoval), which heard arguments at a public hearing on 

December 2, 2013. PG&E‘s initial argument was given by Tony Earley, its Chairman 

and CEO, to ―underscore[] how seriously we take the issues at hand today.‖ According 

to him, ―looking back from a safety standpoint, I think that our staff did all the right 

things. I found no action that constituted an intentional effort to mislead the 

Commission.‖ Earley was followed by Nick Stavropoulos, PG&E‘s Executive Vice 

President of Gas Transmission, Maintenance and Construction, who, like Earley, had 

joined PG&E two years before, and who emphasized the ―safety culture we are nurturing 

at PG&E.‖ The Commission then heard from representatives of San Bruno and the SED, 

and final arguments by Earley and Stavropoulos. 

On December 19, 2013, the Commission filed Decision 13-12-053, concluding 

that PG&E ―violated Rule 1.1 of the Commission‘s Rules of Practice and Procedure by 

not correcting promptly a material misstatement of fact in a pleading filed with the 

Commission and by mischaracterizing the correction submitted for filing on July 3, 2013 

as a routine and non-substantive correction. PG&E is fined $14,350,000 for these 

violations.‖

Concerning what it called ―Delay in Correcting Record,‖ the Commission stated: 

―[T]he admissions by PG&E‘s Vice President [of Gas Transmission, Maintenance and 

Construction], coupled with the serious nature of the discrepancies, the widespread 

knowledge throughout the gas division of this discovery, and the additional steps taken to 
20

address this problem, lead us to conclude that senior management either knew or should 

have known about the serious records discrepancies and pipeline flaws shortly after they 

were discovered and that this was a significant safety matter in the public‘s interest.‖ 

Adopting a phrase that appeared in the proposed decision of both the assigned ALJ and 

Commissioner Ferron, the Commission found: ―It is not credible that PG&E‘s engineers 

and executives did not recognize the provocative nature of these facts in light of the 

intense public interest in natural gas pipeline safety. This is particularly true where, as 

here, Line 147 had been the subject of a pressure increase proceeding at the Commission 

the previous year.‖ 

The Commission continued: 

―The date when PG&E‘s top management became aware of the true nature of the 

pipeline is not determinative of whether PG&E should be accountable for its failure to 

inform the Commission promptly of the erroneous information underlying [Decision] 11-

12-048. Given the importance of ensuring the integrity and safety of the transmission 

system, PG&E should have had internal procedures in place to ensure that incidents such 

as the discovery of record discrepancies for Line 147 would be relayed promptly to top 

management and reported to the Commission. [¶] . . . [¶]

―When the Commission has issued a decision in a formal proceeding where a key 

Ordering Paragraph sets a safety standard that relies on material information later found 

to be erroneous, the proper method for a party to bring this to the Commission‘s attention 

would be through a prompt filing in the proceeding, which could be a motion to reopen 

the record or a petition for modification of the decision, depending on the circumstances. 

Since PG&E became aware of record discrepancies beginning on October 18, 2012, we 

find that PG&E should have prepared and submitted a filing to inform the Commission of 

this significant and material discovery no later than November 16, 2012. [¶] . . . [¶] . . . 

Once PG&E had knowledge of material errors in its filed Supporting Information that the 

Commission relied upon to set a safety standard in [Decision] 11-12-048, PG&E should 

have brought the record discrepancies to the Commission‘s attention through an 

appropriate filing while it investigated . . . . By omission, PG&E‘s failure to promptly 
21

make such a filing misled the Commission by allowing a  ̳false statement of fact‘ within 

the meaning of Rule 1.1 to remain uncorrected after PG&E had the knowledge to correct 

it. [¶] . . . 

―Instead of informing the Commission promptly, PG&E waited over seven months 

to correct information that it knew to be incorrect and that it knew the Commission had 

relied upon in issuing [Decision] 11-12-048. PG&E did not attempt to correct the record 

. . . or inform the parties until July 3, 2013, when it submitted the Errata document for 

filing and served the parties.‖

―To summarize, we find that PG&E‘s obligation to inform the Commission of the 

errors in its 2011 Supporting Information that was relied on in Ordering Paragraph 1 

setting a safety standard in [Decision] 11-12-048 began no later than November 16, 2012. 

PG&E did not attempt to inform the Commission of the errors until July 3, 2013, a delay 

of 229 days. This unreasonable delay misled the Commission by allowing a  ̳false 

statement of fact‘ to persist uncorrected and was a violation of Rule 1.1. We find that 

this constitutes a continuing violation within § 2108. Thus, we conclude that this Rule 

1.1 violation persisted for 229 days.‖

The Commission then turned to a discussion of the ―Errata‖:

Concerning the ―Title, Content, and Submission Date of the  ̳Errata‘ Document,‖ 

the Commission first noted that such a document was prohibited by Rule 1.12(c). It then 

reasoned: ―The record on Line 147 had been closed and the Commission decision issued. 

At a minimum, in light of the circumstances here, the record needed to be re-opened and 

corrected, and for a more complete resolution. [Decision] 11-12-048 should have been 

modified to reflect the correct maximum allowing operating pressure.‖ Lead Counsel‘s 

testimony why ―he rejected using an Amendment . . . [¶] . . . is not credible because it is 

not logical. The Lead Counsel, with decades of experience, admits that notice of the 

corrections was  ̳absolutely required.‘ Then, he dismissed use of an amendment because 

the record was closed; but the record was equally closed for the errata. No explanation 

was offered for this flawed logic.‖
22

―Further, the  ̳Errata‘ submitted for filing is a short document with only one page 

devoted to a brief description of the errors in the MAOP validation records submitted 

previously for Line 147 and the resulting need to reduce the MAOP from the 365 psig 

authorized by [Decision] 11-12-048 to 330 psig. The  ̳Errata‘ did not disclose, for 

example, when or how PG&E became aware of the errors, the reasons for the errors, or 

corrective actions that were being taken following discovery of the errors.‖

―In sum, the Lead Counsel chose to submit for filing a document which, while not 

provided for in the Rules of Practice and Procedure, is typically used to inform parties of 

minor changes and corrections in documents, most commonly prior to the original 

document being offered for the record, but in any event before the Commission issues its 

decision. This submission had the effect of concealing from the Commission and the 

parties the actual nature of the document. [¶] . . . In addition to not being timely, . . . we 

find that PG&E‘s attempted July 3rd filing of the  ̳Errata‘ was not forthright, both 

because of the title and the incomplete content.‖ 

―Because the document presented by PG&E for filing with the Commission on 

July 3, 2013 did not clearly convey the nature or significance of the facts set forth within, 

we find that it was an artifice, as that term is used in Rule 1.1, and misled the 

Commission. The misleading nature was exacerbated by the submission date of July 3, 

before a holiday weekend. [¶] We conclude that PG&E‘s submission of the  ̳Errata‘ 

document was a separate violation of Rule 1.1.[12] This shortcoming remained 

uncorrected until PG&E filed and served the Verified Statement of its Vice President of 

 

12 At this point the Commission dropped a footnote which reads: ―In its brief, 

PG&E argues that we must find specific intent to violate Rule 1.1. The Commission 

addressed that issue in [Decision] 01-08-019 and found that intent should be considered 

as an aggravating factor in determining the range of the fine. However, the unique 

factual history of this matter—the worst tragedy in Commission history, a specific 

directive for forthright and timely information, and an admitted need for notice—leads us 

to put the fine at the highest levels. Thus, while the Lead Counsel has admitted that the 

choice of title was intentional, that is, he intended to and did title the document errata, we 

need not and do not consider whether specific intent was an aggravating factor in this 

instance.‖ 
23

Gas Transmission Maintenance and Construction on August 30, 2013. We find that this 

constitutes a continuing violation within § 2108. Thus, we conclude that this Rule 1.1 

violation persisted for 58 days.‖

This is how the Commission fixed the penalty:

―[T]he facts of this proceeding require that we impose the maximum fine. Natural 

gas transmission system safety by this operator has been one of the Commission‘s 

highest priorities for three years. The management and legal decision-making regarding 

the treatment of the discovery of errors in the Line 147 Supporting Information, as 

reflected in this record, is profoundly disheartening in that it reflects a lack of candor and 

appreciation of the public interest and the regulatory process.

―Therefore we calculate the fine as follows: For delay in submitting a filing to 

disclose information regarding errors in pipeline specifications for Line 147, we impose 

the maximum amount of $50,000 per day as a continuing violation aggravated by the 

severity of this safety-related offense and the conduct of the utility. We begin the 

calculation on November 16, 2012, the date by which we find that PG&E should have 

prepared and submitted a filing to inform the Commission of the significant and material 

discovery of the records discrepancy and end the calculation on the date that PG&E 

submitted its Errata document for filing, July 3, 2013, a delay of 229 days. We assess the 

maximum statutory value [sic] of $50,000 per day for this continuing violation based on 

the history of this proceeding as set forth above. The resulting fine is $11,450,000.

―For submitting a misleadingly titled and factually incomplete document on 

July 3, 2013, $50,000 per day for the 58 days while this shortcoming remained 

uncorrected = $2,900.000. Total fine = $14,350,000.‖ (Italics added.) 

The Commission then made some ―Comments on [the] Alternate Decision‖ of 

Commissioner Ferron, one of which is especially germane: ―PG&E . . . argues that the 

Commission must show that PG&E intentionally misled the Commission. However, 

there is no  ̳intent‘ element to a Rule 1.1 violation, either implicitly or explicitly. We 

have previously held that Rule 1.1 violations have occurred where there has been a lack 
24

of candor, withholding of information, or failure to correct information or respond fully 

to data requests. [Fn. to four PUC decisions.]‖ 

In Decision 14-05-034, the Commission denied PG&E‘s request for rehearing, 

rejecting PG&E‘s arguments that: (1) ―The Commission erred in finding violations of 

Rule 1.1 without proof that PG&E intended to misled the Commission‖; (2) ―The 

Commission erred in finding  ̳continuing violations‘ of Rule 1.1 without proof that any 

misconduct was continuing‖; and (3) the penalty imposed violated the prohibitions 

against excessive fines in the United States and California constitutions, and also violated 

the due process clauses of those documents. These are the issues PG&E brings for 

review.

ANALYSIS

The Scope of Our Review

―Within 30 days after the commission issues its decision denying the application 

for a rehearing, . . . any aggrieved party may petition for a writ of review in the court of 

appeal . . . for the purpose of having the lawfulness of the original order or decision or of 

the order or decision on rehearing inquired into and determined.‖ (§ 1756.)

―[T]he review by the court shall not extend further than to determine, on the basis 

of the entire record . . . , whether any of the following occurred: [¶] (1) The commission 

acted without, or in excess of, its powers or jurisdiction. [¶] (2) The commission has not 

proceeded in the manner required by law. [¶] (3) The decision of the commission is not 

supported by the findings. [¶] (4) The findings in the decision of the commission are not 

supported by substantial evidence in light of the whole record. [¶] . . . [¶] (6) The order 

or decision of the commission violates any right of the petitioner under the Constitution 

of the United States or the California Constitution.‖ (§ 1757, subd. (a).)

―Notwithstanding Section . . . 1757 . . . , in any proceeding wherein the validity of 

any order or decision is challenged on the ground that it violates any right of petitioner 

under the United States Constitution or the California Constitution, the Supreme Court or 

court of appeal shall exercise independent judgment on the law and the facts, and the 
25

findings or conclusions of the commission material to the determination of the 

constitutional question shall not be final.‖ (§ 1760.)

Thus, when no constitutional issue is presented, a PUC decision has the same 

standing as a judgment of the superior court: it is presumed correct, and any party 

challenging the decision has the burden of proving that it suffers from prejudicial error. 

(City and County of San Francisco v. Public Utilities Com. (1985) 39 Cal.3d 523, 530; 

Toward Utility Rate Normalization v. Public Utilities Com. (1978) 22 Cal.3d 529, 537; 

Southern California Edison Co. v. Public Utilities Com. (2014) 227 Cal.App.4th 172, 

185.) Indeed, our Supreme Court has repeatedly called the presumption in favor of the 

Commission‘s decision a ―strong‖ one. (Greyhound Lines, Inc. v. Public Utilities Com. 

(1968) 68 Cal.2d 406, 410 [―There is a strong presumption in favor of the validity of the 

commission‘s decisions‖]; Pacific Tel. & Tel. Co. v. Public Util. Com. (1965) 62 Cal.2d 

634, 647 [―strong presumption of the correctness of the findings . . . of the commission, 

which may choose its own criteria or method of arriving at its decision‖].)

But even the presence of a constitutional dispute does not require the reviewing 

court to adopt de novo or independent review. Even there, ―the question of the weight of 

the evidence in determining issues of fact lies with the commission acting within its 

statutory authority; the  ̳judicial duty to exercise an independent judgment does not 

justify disregard of the weight which may properly attach to findings upon hearing and 

evidence.‘ ‖ (Pacific Tel. & Tel. Co. v. Public Util. Com., supra, 62 Cal.2d 634, 646.) In

other words, judicial reweighing of evidence and testimony is ordinarily not permitted. 

(See, e.g., Toward Utility Rate Normalization v. Public Utilities Com., supra, 22 Cal.3d 

529, 538 [―  ̳When conflicting evidence is presented from which conflicting inferences 

can be drawn, the commission‘s findings are final‘ ‖]; Pacific Tel. & Tel. Co. v. Public 

Util. Com., supra, at p. 647 [findings which are final include those involving ―conflicting 

evidence [or] undisputed evidence from which conflicting inferences may reasonably be 

drawn‖]; Cal. Portland Cement Co. v. Public Util. Com. (1957) 49 Cal.2d 171, 175 [―The 

weighing of whatever factors may have tended [to support an implied finding by the 

PUC] . . . was a matter within the exclusive jurisdiction of the commission]; The Utility 
26

Reform Network v. Public Utilities Com. (2014) 223 Cal.App.4th 945, 959; In re 

Groundwater Cases (2007) 154 Cal.App.4th 659, 681; cf. SN Sands Corp. v. City and 

County of San Francisco (2008) 167 Cal.App.4th 185, 191 [same approach taken to 

review of county public utilities commission].) The only exception is those findings or 

conclusions ―drawn from undisputed evidence . . . from which conflicting inferences may 

not reasonably be drawn [and therefore] present questions of law.‖ (Pacific Tel. & Tel. 

Co. v. Public Util. Com., supra, at p. 647.)

To accomplish the overturning of a Commission finding for lacking the support of 

substantial evidence, the challenging party must demonstrate that based on the evidence 

before the Commission, a reasonable person could not reach the same conclusion. (Clean 

Energy Fuels Corp. v. Public Utilities Com. (2014) 227 Cal.App.4th 641, 649; The Utility 

Reform Network v. Public Utilities Com., supra, 223 Cal.App.4th 945, 959.) It is for this 

reason that the Commission‘s factual findings are almost always treated as 

―  ̳conclusive‘ ‖ (American Toll Bridge Co. v. Railroad Com. (1938) 12 Cal.2d 184, 192), 

―final and not subject to review.‖ (City and County of San Francisco v. Public Utilities 

Com., supra, 39 Cal.3d 523, 530.)

The special respect accorded the PUC as a constitutional entity also appears in the 

considerable deference extended to what might otherwise appear purely judicial 

functions. Courts have long accepted the principle that ―the commission‘s interpretation 

of the Public Utilities Code should not be disturbed unless it fails to bear a reasonable 

relation to statutory purposes and language . . . .‖ (Greyhound Lines, Inc. v. Public 

Utilities Com., supra, 68 Cal.2d 406, 410–411;

13 accord, Southern California Edison Co. 

 

13 One of the sources for this conclusion was Netterville, Administrative 

“Questions of Law” and the Scope of Judicial Review in California (1956) 29 So.Cal. L. 

Rev. 434, 451–453. The relevant discussion on page 453 ends with the following: 

―[T]he agency‘s choice of a set of legal inferences and legal conclusions from among a 

number of possible choices can rarely be said to be an abuse of discretion. It is, on the 

contrary, an exercise of the most useful kind of discretion which any agency could 

exercise. As long as the agency‘s choice has evidentiary support in the record and the 

legal inferences and conclusions drawn therefrom show a reasonable relation to its task of 

effectuating the broad statutory purposes, the court will not interfere. The commission, in 
27

v. Peevey (2003) 31 Cal.4th 781, 796; PG&E Corp. v. Public Utilities Com. (2004) 118 

Cal.App.4th 1174, 1194.) This judicial deference acknowledges a role for the 

Commission‘s administrative expertise: ―[W]e give presumptive value to a public 

agency‘s interpretation of a statute within its administrative jurisdiction because the 

agency may have  ̳special familiarity with satellite legal and regulatory issues,‘ leading to 

expertise expressed in its interpretation of the statute.‖ (Pacific Bell Wireless, LLC v. 

Public Utilities Com. (2006) 140 Cal.App.4th 718, 729; accord, Southern California 

Edison. Co. v. Public Utilities Com., supra, 227 Cal.App.4th 172, 185; SFFP, L.P. v. 

Public Utilities Com. (2013) 217 Cal.App.4th 784, 794.)

The deference may, if anything, be even greater with regulations promulgated by 

the agency. ―[T]he PUC‘s interpretation of its own regulations and decisions  ̳is entitled 

to consideration and respect by the courts. [Citation.] . . . ―  ̳A court is more likely to 

defer to an agency‘s interpretation of its own regulation than to its interpretation of a 

statute, since the agency is likely to be intimately familiar with regulations it authored, 

and sensitive to the practical implications of one interpretation over another.‘ ‖ 

[Citation.]‘ ‖ (Clean Energy Fuels Corp. v. Public Utilities Com., supra, 227 

Cal.App.4th 641, 649; see The Utility Reform Network v. Public Utilities Com., supra, 

223 Cal.App.4th 945, 958 [―The Commission‘s interpretation of its own rules and 

regulations  ̳is entitled to consideration by the courts.‘ ‖].)

All that being said, with either statute or regulation, the ultimate decision is with 

the courts. (Yamaha Corp. of America v. State Bd. of Equalization (1998) 19 Cal.4th 1, 

11–12; Carmona v. Division of Industrial Safety (1975) 13 Cal.3d 303, 310; PG&E Corp. 

v. Public Utilities Com., supra, 118 Cal.App.4th 1174, 1194–1195.)

 

such a case is in as good, if not better position than the court, to make the choice from 

among the possible and reasonable choices available.‖
28

The Issues Presented

As shown by the captions in its petition, this is how PG&E frames the issues for 

decision: (1) ―The Commission Erred in Holding That a Violation of Commission Rule 

1.1 Does Not Require Proof of an Intent to Mislead the Commission‖; (2) ―The 

Commission Erred in Holding That Continuing Violations of Rule 1.1 May Be Found 

Without Proof of Continuing Misconduct‖; and (3) ―The Commission‘s Decision 

Violates PG&E‘s Rights Under the California and United States Constitution,‖ 

specifically: ―The Commission found PG&E guilty of Rule 1.1 violations that the 

Commission failed to identify in advance of the hearing, in contravention of the Due 

Process Clause, and imposed fines of millions of dollars for unintentional reporting and 

filing errors that caused no harm and were not accompanied by any improper intent, in 

violation of the Excessive Fines Clause.‖ 

The Commission Can Find a Rule 1.1 Violation Without Requiring

a Mental State to Mislead 

PG&E‘s opening contention attacks the PUC‘s conclusion that ―there is no  ̳intent‘ 

element to . . . Rule 1.1.‖ PG&E asserts that this conclusion suffers from numerous 

defects, in connection with which PG&E advances five supporting arguments, which will 

hereafter be referred to as ―subarguments.‖ The subarguments are these: One, the 

Commission neglected to recognize ―[t]hat Rule 1.1 incorporate[d] an intent element is 

. . . mandated by the language of the Rule itself,‖ because ―[a]ll of the key terms in its 

provision— ̳to mislead,‘  ̳artifice,‘ and  ̳false statement‘—denote purposefully deceptive 

conduct.‖ Two, PUC‘s conclusion ―breaks from the Commission‘s own prior decisions.‖ 

Three, ―The Commission‘s interpretation . . . also conflicts directly with decisions 

interpreting identical language in provisions of the California Rules of Professional 

Conduct and [the] Business and Professions Code.‖ Four, ―Interpreting Rule 1.1 to 

include an intent element is further supported by the presumption against strict liability,‖ 

which ―holds that a statute or regulation defining an offense is generally presumed to 

require proof of intent, even when no mens rea element is specifically stated.‖ And five, 

PUC‘s construction of Rule 1.1 ―opens the door to new and significant risks of liability 
29

for all parties appearing before the Commission, given the ever-present possibility that a 

particular filing may be deemed to be procedurally improper or to have somehow 

 ̳misled‘ the Commission or its staff, potentially allowing for the imposition of fines in 

the millions of dollars for representations made by a party in complete good faith.‖ 

It is clear from some of the language used by PG&E (―offense,‖ ―strict liability,‖ 

―mens rea‖), its copious citation of criminal authorities, and its invocation of 

constitutional provisions linking excessive fines to cruel and/or unusual punishment,

14

that PG&E is trying to insinuate that Rule 1.1 be treated as a species of penal statute.

15

From this premise PG&E hopes to have a mental state element implied to avoid having a 

Rule 1.1 violation treated as a strict liability offense. These efforts must be disappointed.

It is true that, according to repeated pronouncements from our Supreme Court, 

―[t]he prevailing trend in the law is against imposing criminal liability without proof of 

some mental state where the statute does not evidence the Legislature‘s intent to impose 

strict liability.‖ (In re Jennings (2004) 34 Cal.4th 254, 267; accord, Stark v. Superior 

Court (2011) 52 Cal.4th 368, 393; People v. Simon (1995) 9 Cal.4th 493, 521.) But this 

trend does not apply to statutes imposing civil penalties for noncompliance with measures 

intended to protect the public health and safety. These penalties are not penal offenses, 

as is also shown by decisions by our Supreme Court. 

 

14 ―Excessive bail shall not be required, nor excessive fines imposed, nor cruel and 

unusual punishment inflicted.‖ (U.S. Const., 8th Amend.) ―Cruel or unusual punishment 

may not be inflicted or excessive fines imposed.‖ (Cal. Const., art. I, § 17.)

15 Of course, Rule 1.1 is not a statute, but a regulation promulgated by the PUC. 

But Rule 1.1 cannot be divorced from section 2107, for the statute—together with the 

very broad enabling power to ―do all things . . . which are necessary and convenient‖ 

granted by section 701—is the source of the authority to impose monetary sanctions for 

violation of the rule. The rule is an organic extension of the statute, and the validity of 

the rule cannot be considered while ignoring the statute. Section 2107 and Rule 1.1 are 

clearly in pari materia and are to be construed together, along with section 701. (See 

Hoitt v. Department of Rehabilitation (2012) 207 Cal.App.4th 513, 523–524; Mittelman 

v. Seifert (1971) 17 Cal.App.3d 51, 77–78.) This conjunction is implicit in our analysis, 

and references to Rule 1.1 are to be understood as also referencing sections 2107 and 

701.
30

―  ̳While . . . civil penalties may have a punitive or deterrent aspect, their primary 

purpose is to secure obedience to statutes and regulations imposed to assure important 

public policy objectives.‘ ‖ (California Assn. of Health Facilities v. Department of 

Health Services (1997) 16 Cal.4th 284, 294–295, quoting Kizer v. County of San Mateo

(1991) 53 Cal.3d 139, 147–148, italics added.) ―It is . . . well accepted that a state may 

impose reasonable penalties as a means of securing obedience to statutes validly enacted 

under the police power . . . . Imposition of civil penalties has, increasingly in modern 

times, become a means by which legislatures implement statutory policy.‖ (Hale v. 

Morgan (1978) 22 Cal.3d 388, 398.) ―[T]he legislature may constitutionally impose 

reasonable penalties to secure obedience to statutes enacted under the police power, so 

long as those enactments are procedurally fair and reasonably related to a proper 

legislative goal.‖ (Kinney v. Vaccari (1980) 27 Cal.3d 348, 352.)

Without question, the PUC operates pursuant to the state‘s police power. (E.g., 

Gt. Northern Ry. v. Washington (1937) 300 U.S. 154, 159; Sutter Butte Canal Co. v. R. R. 

Comm’n. (1929) 279 U.S. 125, 139; Pacific Tel. & Tel. Co. v. Superior Court (1963) 60 

Cal.2d 426, 428.) And PG&E does not dispute that the Commission has the authority to 

impose monetary sanctions for disobedience of its orders made pursuant to the state‘s 

police power.

When the Legislature meant to criminalize a violation of the Commission‘s 

authority, it knew how to do so in unmistakable language.16 When the Legislature meant 

 

16 ―Every public utility and every officer, agent, or employee of any public utility, 

who violates or fails to comply with, or who procures, aids, or abets any violation by any 

public utility of any provision of the California Constitution or of this part, or who fails to 

comply with any part of any order, decision, rule, direction, demand, or requirement of 

the commission, or who procures, aids, or abets any public utility in the violation or 

noncompliance in a case in which a penalty has not otherwise been provided, is guilty of 

a misdemeanor and is punishable by a fine not exceeding five thousand dollars ($5,000), 

or by imprisonment in a county jail not exceeding one year, or by both fine and 

imprisonment.‖ (§ 2110.)

―Every person who, either individually, or acting as an officer, agent, or employee 

of a corporation other than a public utility, violates any provision of this part, or fails to 
31

to require a mental state for an act committed before the Commission, it knew how to do 

so in plain language.17 And when the Legislature meant a party‘s good faith to be 

 

comply with any part of any order, decision, rule, direction, demand, or requirement of 

the commission, or who procures, aids, or abets any public utility in such violation or 

noncompliance, in a case in which a penalty has not otherwise been provided for such 

person, is guilty of a misdemeanor, and is punishable by a fine not exceeding one 

thousand dollars ($1,000), or by imprisonment in a county jail not exceeding one year, or 

by both such fine and imprisonment.‖ (§ 2112.)

―Any public utility on whose behalf any agent or officer thereof who, having taken 

an oath that he will testify, declare, depose or certify truly before the commission, 

willfully and contrary to such oath states or submits as true any material matter which he 

knows to be false, or who testifies, declares, deposes, or certifies under penalty of perjury 

and willfully states as true any material matter which he knows to be false, is guilty of a

felony and shall be punished by a fine not to exceed five hundred thousand dollars 

($500,000).‖ (§ 2114.)

17 ―Every corporation or person, other than a public utility and its officers, agents, 

or employees, which or who knowingly violates or fails to comply with, or procures, aids 

or abets any violation of any provision of the California Constitution relating to public 

utilities or of this part, or fails to comply with any part of any order, decision, rule, 

direction, demand, or requirement of the commission, or who procures, aids, or abets any 

public utility in the violation or noncompliance, in a case in which a penalty has not 

otherwise been provided for the corporation or person, is subject to a penalty of not less 

than five hundred dollars ($500), nor more than fifty thousand dollars ($50,000) for each 

offense.‖ (§ 2111, italics added.)

―Any public utility on whose behalf any agent or officer thereof who, having taken 

an oath that he will testify, declare, depose or certify truly before the commission, 

willfully and contrary to such oath states or submits as true any material matter which he 

knows to be false, or who testifies, declares, deposes, or certifies under penalty of perjury 

and willfully states as true any material matter which he knows to be false, is guilty of a 

felony and shall be punished by a fine not to exceed five hundred thousand dollars 

($500,000).‖ (§ 2114, italics added.)

―Any public utility which does, causes to be done, or permits any act, matter, or 

thing prohibited or declared unlawful, or which omits to do any act, matter, or thing 

required to be done, either by the Constitution, any law of this State, or any order or 

decision of the commission, shall be liable to the persons or corporations affected thereby 

for all loss, damages, or injury caused thereby or resulting therefrom. If the court finds 

that the act or omission was wilful, it may, in addition to the actual damages, award 

exemplary damages. . . .‖ (§ 2106, italics added.)
32

considered, it knew how to say so without ambiguity.18 The Legislature‘s decision not to 

include such qualifying words as ―willfully‖ or ―knowingly‖ when enacting section 2107 

indicates that it did not mean to impose a scienter requirement for a violation of ―any part 

or any provision of any order, decision, decree, rule, direction, demand, or requirement of 

the commission.‖ We are not authorized to insert such a requirement ―  ̳to conform to an 

assumed intention which does not appear from its language.‘ ‖ (Napa Valley Wine Train, 

Inc. v. Public Utilities Com. (1990) 50 Cal.3d 370, 381.)19

The absence of such language in section 2107 compels the conclusion that a civil 

penalty imposed under that statute is not a penal offense—and the rule of strictly 

construing penal statutes intimated by PG&E has no application. Indeed, the opposite is 

true: ―  ̳[S]tatutes which prescribe only civil monetary penalties‘ . . .  ̳for the protection 

 

18 ―Any penalty for violation of any provision of this act, or of any rule, regulation, 

general order, or order of the commission, involving safety standards for pipeline 

facilities or the transportation of gas in the State of California may be compromised by 

the commission. In determining the amount of such penalty, or the amount agreed upon 

in compromise, the appropriateness of such penalty to the size of the business of the 

person charged, the gravity of the violation, and the good faith of the person charged in 

attempting to achieve compliance, after notification of a violation, shall be 

considered. . . .‖ (§ 2104.5, italics added.)

19 We would reach the same result if we examined Rule 1.1 without reference to 

section 2107. As stated at the start of this opinion, Rule 1.1 was promulgated by the 

Commission pursuant to its power under section 1701 to adopt ―rules of practice and 

procedure.‖ When the PUC intends to require that an act or omission be done with a 

specified mental state, it knows how to frame regulations expressing that intent. (See, for 

example, Cal. Code Regs., tit. 20, §§ 1672(m) [entities performing home energy ratings 

or audits ―shall not knowingly provide untrue, inaccurate, or incomplete rating 

information or report rating results‖]; 1674 [entity that applies to be certified as a home 

energy rating provider must furnish ―A statement that the [entity] . . . will not knowingly 

fail to comply with the requirements of these regulations‖]; and 2841(c)(1) [PUC ―may 

rescind approval of a Registry Service Provider‖ if the provider ―is guilty of . . . gross 

negligence‖].) The Commission did not do so when it promulgated Rule 1.1. In that the 

same rules of construction govern both statutes and regulations promulgated by an 

administrative agency (Guzman v. County of Monterey (2009) 46 Cal.4th 887, 898; Cal. 

Drive-In Restaurant Assn. v. Clark (1943) 22 Cal.2d 287, 292), we are no less precluded 

from reading such a requirement into Rule 1.1 as we are from inserting it into section 

2107.
33

of the public are . . . broadly construed in favor of that protective purpose.‘ ‖ (Smith v. 

Superior Court (2006) 39 Cal.4th 77, 92, quoting People ex rel. Lungren v. Superior 

Court (1996) 14 Cal.4th 294, 312–313.)

PG&E characterizes the Errata as an innocent mistake ―made . . . in complete good 

faith,‖ which ―did not cause any harm and did not pose any risk to the Commission, its 

staff, any party, or the public.‖ This completely misperceives what the PUC believed 

was at issue.20 Statutes such as section 2107 would have virtually no deterrent impact if 

the utility were penalized only upon the actual occurrence of the substantive harm the 

Commission was trying to avoid. (See State of California v. City and County of San 

Francisco (1979) 94 Cal.App.3d 522, 531.) And the idea that the Commission could not 

employ that authority to prevent a recurrence of the September 9, 2010 explosion is too 

preposterous to be entertained. The Commission was not powerless until another 

explosion launched another segment of underground pipe into Glenview Drive. To 

validate such an extreme consequence is something we must avoid if at all possible. 

(See, e.g., Eel River Disposal & Resources Recovery, Inc. v. County of Humboldt (2013) 

221 Cal.App.4th 209, 227; Reliable Tree Experts v. Baker (2011) 200 Cal.App.4th 785, 

796–797; Friends of Bay Meadows v. City of San Mateo (2007) 157 Cal.App.4th 1175, 

1191.)

As we have noted in refusing to accept an argument such as PG&E makes here: 

―[T]he legitimate police power device of  ̳securing obedience‘ . . . requires more than 

 

20 That said, we cannot indulge the factual predicate of PG&E‘s argument—that 

the contents of the Errata and the timing of its submission to the Commission—was 

―innocent.‖ That predicate is, in turn, founded upon a positive interpretation of Lead 

Counsel‘s testimony. But the Commission was clearly of the opinion that Lead Counsel 

and his testimony were not credible. The Commission went to the trouble of stating this 

determination explicitly in its analysis quoted above, then restating it as a conclusion of 

law, and implicitly adopting it as a ―finding of fact‖ (―The explanation . . . by Lead 

Counsel . . . is logically flawed‖). Such a fact-specific issue as an individual credibility 

determination—and the corollary issues of deducible inferences—could not be examined 

here without a wholesale violation of the standards governing our limited scope of 

review.
34

compensation of [actual] losses, a penalty that might achieve little or no compliance.‖21 

(City and County of San Francisco v. Sainez (2000) 77 Cal.App.4th 1302, 1315.) Our 

Supreme Court is equally unreceptive to challenges to the Commission‘s powers to 

impose deterrent penalties: ―Civil penalties under [section 2107] . . . require no showing 

of actual harm,‖ ―are imposed . . . irrespective of actual damage suffered,‖ ―without 

regard to motive,‖ and ―require no showing of malfeasance or intent to injure.‖ (Kizer v. 

County of San Mateo, supra, 53 Cal.3d 139, 147.)

This mirrors the position of the Commission. In language especially pertinent to 

our inquiry, since at least 1998 the Commission has taken the position that ―The purpose 

of a fine is to go beyond restitution to the victim and to effectively deter further violations 

. . . . [¶] Effective deterrence . . . is particularly important against violations which could 

result in public harm, and particularly against those where severe consequences could 

result.‖ (Enforcement Rules, supra, 84 Cal.P.U.C.2d 167, 188.) Nor is ―harm‖ narrowly 

restricted to ―the victim‖—or even the general ―public‖: ―Many potential penalty cases 

before the Commission do not involve any harm to consumers but are instead violations 

of reporting or compliance requirements. In these cases, the harm may not be to

consumers but rather to the integrity of the regulatory processes. . . . [¶] . . . [¶] Such 

compliance is absolutely necessary to the proper functioning of the regulatory process.‖ 

(Ibid.)

Based on the above, we must reject PG&E‘s subarguments one and four. We 

reject subargument one because it is not so much the plain language of Rule 1.1 that 

 

21 PG&E argues that ―it is difficult to see how the fines here will have any real 

additional deterrent effect, since by the Commission‘s own holding they could be 

imposed for violations that are  ̳inadvertent or unintentional.‘ ‖ The answer is obvious: 

if a utility pays closer attention to PUC directives, and how it responds to those 

directives, the utility will avoid paying a multi-million dollar penalty, and also escape the 

public embarrassment of trying to explain why it was penalized. (See Final Opinion 

Adopting Enforcement Rules (1998) 84 Cal.P.U.C.2d 167, 188 (Enforcement Rules) 

[―Effective deterrence creates an incentive for public utilities to avoid violations. 

Deterrence is particularly important against violations which could result in public harm, 

and particularly against those where severe consequences could result.‖ Italics added.].)
35

governs, but the language of section 2107 which, together with sections 701 and 1701, is 

the head source authority for Rule 1.1. (See fn. 15, ante.) The language of section 2107, 

by itself and when examined with other statutes, establishes that no intent element is 

―mandated‖ by that language. And contrary to PG&E‘s subargument four, section 2107 

is not a penal provision requiring strict construction, but is instead a provision that allows 

for the PUC, in the exercise of its unquestionably legitimate regulatory jurisdiction, to 

impose civil penalties.

The same reasoning dooms PG&E‘s subargument three, with its reference to the 

California Rules of Court and the Business and Professions Code. (See fn. 22, post.) The 

Commission‘s power to impose monetary deterrent sanctions to ensure compliance with 

such an unquestionably valid jurisdictional power cannot be overcome by PG&E‘s 

reliance upon arguments based on supposedly analogous statutes. PG&E is correct that 

the statutory tort of deceit does have a scienter requirement. (Civ. Code, § 1710; Lazar v. 

Superior Court (1996) 12 Cal.4th 631, 638; 5 Witkin, Summary of Cal. Law (10th ed. 

2005) Torts, §§ 800–807, pp. 1157–1163.) But that requirement is not invariable, and 

does not exclude the existence of actionable fraud that does not require a mental element. 

Our State‘s Unfair Competition Law (Bus. & Prof. Code, § 17200 et seq.) is one example 

that comes to mind. (See Cortez v. Purolator Air Filtration Products Co. (2000) 23 

Cal.4th 163, 181 [―the plaintiff need not show that a UCL defendant intended to injure 

anyone through its unfair or unlawful conduct. The UCL imposes strict liability when 

property or monetary losses are occasioned by conduct that constitutes an unfair business 

practice‖]; Hewlett v. Squaw Valley Ski Corp. (1997) 54 Cal.App.4th 499, 520 [same].) 

―Moreover, tort law recognizes a claim for negligent misrepresentation, which allows 

recovery in the absence of scienter or intent to defraud (Civ. Code, § 1710, subd. 2; Small 

v. Fritz Companies, Inc. (2003) 30 Cal.4th 167, 173–174) and attaches liability to  ̳[t]he 

suppression of a fact, by one who is bound to disclose it, or who gives information of 

other facts which are likely to mislead for want of communication of that fact.‘ (Civ.

Code, § 1710, subd. 3.) And tort law also recognizes that a party having exclusive 

knowledge of information materially affecting the value of a transaction may have a duty 
36

to disclose that information to the other party even in the absence of a fiduciary 

relationship. (5 Witkin, Summary of Cal. Law (10th ed. 2005) Torts, § 796, pp. 1151–

1152.)‖ (Los Angeles Unified School Dist. v. Great American Ins. Co. (2010) 49 Cal.4th 

739, 750, fn. 5.)

This approach has found wide acceptance when construing statutes intended to 

protect the public, even when noncompliance is treated as a misdemeanor. (E.g., In re 

Marley (1946) 29 Cal.2d 525, 528–530; Hypertouch, Inc. v. ValueClick, Inc. (2011) 192 

Cal.App.4th 805, 821–822; Khan v. Medical Board (1993) 12 Cal.App.4th 1834, 1844–

1845; People ex rel. Van de Kamp v. Cappuccio, Inc. (1988) 204 Cal.App.3d 750, 761; 

Brodsky v. California State Board of Pharmacy (1959) 173 Cal.App.2d 680, 688.) It is 

only when the violation elevates to felony, and is accompanied by harsher consequences,

that an intent element is implied. (See In re Jorge M. (2000) 23 Cal.4th 866, 879–880; 

People v. Coria (1999) 21 Cal.4th 868, 876–878.) 

As no misdemeanor or felony prosecution confronts PG&E, we conclude the 

public protection approach furnishes a more useful and reliable analogue than one aspect 

of statutory tort law. The Commission is not concerned with redressing a private wrong 

to an individual, but with protecting the safety of the general public—not to mention the 

integrity of the state-wide regulatory authority exercised by the Commission.

22

The matter of PG&E‘s subargument two, which is based on the PUC‘s own prior 

 

22 PG&E‘s citation of one California statute and a rule of professional conduct, 

neither of which address public safety, and a handful of irrelevant cases from other 

jurisdictions, are hardly contrary.

PG&E cites Business and Professions Code section 6068, subdivision (d)—―It is 

the duty of an attorney to . . . [¶] . . .[¶] . . . never to seek to mislead the judge or any 

judicial officer by an artifice or false statement or fact of law‖—and rule 5-200(B) of the 

Rules of Professional Conduct—―In presenting a matter to a tribunal, a member: 

[¶] . . . [¶] . . . Shall not seek to mislead the judge, judicial officer, or jury by an artifice or 

false statement of fact or law.‖ PG&E also cites a selective survey of decisions from 

other states, i.e., the attorney discipline cases of In re Discipline of Eicher (S.D. 2003) 

661 N.W.2d 354, In re Leonhardt (Ore. 1997) 930 P.2d 844, and In re Norton (Utah 

1944) 146 P.2d 899, and one criminal decision. (Turner v. State (Mo.Ct.App. 1998) 979 

S.W.2d 222.) None of it is pertinent.
37

decisions, is more problematic. PG&E tells us: ―[T]he Commission itself has in prior 

decisions, contrary to its holding in this case, refused to find a violation of Rule 1.1 or 

impose sanctions when the alleged misstatement  ̳was an oversight rather than a 

deliberate attempt to mislead us,‘ [citation] or when the record did not  ̳demonstrate an 

intent to mislead the Commission.‘ ‖

The Commission responds that its prior applications of Rule 1.1 (and its 

predecessor version, Rule 1) furnish additional support for concluding that scienter is not 

a sine qua non.

23

 The Commission views its past adjudicatory decisions as illustrating the 

principle that intent has never been deemed essential to finding a violation of the rule 

against misleading the Commission. In the Commission‘s words, it ―has never held that 

intent is an absolute prerequisite to finding a Rule 1 violation. A violation may also be 

established where the utility demonstrates lack of candor, withholds information, or fails 

to correctly inform or correct mistaken information. [Citations.] [¶] The Commission 

has also explained that Rule 1 inquiries look to the reasonableness of a utility‘s conduct, 

including its compliance with relevant statutes and decisions. [Citation.] In some 

instances, even inadvertent or unintentional conduct may result in a violation if the effect 

is to mislead the Commission. . . . [¶] That is not to say intent is not considered at all. 

However, it goes to the weight to be assigned to a violation. [Citation.] That is, it may 

be weighed as an aggravating or mitigating factor.‖ 

Although the Commission maintains that the line of its decisions is unbroken and 

 

23 The complete text of Rule 1.1 reads: ―Any person who signs a pleading or brief, 

enters an appearance, offers testimony 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.‖

Rule 1.1 derives from the former Rule 1, which was adopted by the PUC in 1950. 

(Public Utilities Commission Rules of Practice and Procedure (1950) 49 Cal.P.U.C. 536, 

541.) When renumbered Rule 1.1 in 2006, the only difference was addition of the words 

―or she.‖ (Cal.P.U.C. Decision 06-07-006 (July 20, 2006), Appen., p. 7.) We appreciate 

amici providing us with this information. 
38

true, and therefore entitled to deference, we cannot agree. The nonsystematic 

examination we have made, based on the decisions cited by the parties and amici, leaves

us with the impression that the Commission‘s applications of Rule 1.1 are hardly linear. 

One illustration from the matter before us will illustrate the point.

When the Commission denied PG&E‘s application for rehearing, it made the 

categorical statement that ―we have never held that a purposeful intent is a prerequisite to 

impose Rule 1.1 sanctions.‖ Amici responds with a 2002 decision where the 

Commission made the equally categorical pronouncement that ―Rule 1 violations require 

purposeful intent, recklessness, or gross negligence in regard to communications with the 

Commission.‖ (Cal.P.U.C. Decision 02-08-063 (Aug. 22, 2002) [Slip Opn., p. 20].)24 

Yet, in that very same 2002 decision the Commission also cited a 1994 decision in which 

the Commission had referred to ―a line of Commission decisions which holds that 

situations involving a failure to correctly cite a proposition of law, a lack of candor or 

withholding of information, and a failure to correctly inform and to correct the mistaken 

information,‖ which the Commission viewed as ―support[ing] the proposition that a 

violation of Rule 1 can result from a reckless or grossly negligent act.‖ (Id., citing 

Cal.P.U.C. Decision 94-11-018 (Nov. 9, 1994 [57 CPUC2d 204], italics added.)

All of this was reiterated in a 2004 decision: ―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 . . . .) 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 

 

24 But at an earlier point in the 2002 decision the Commission made a statement 

that can hardly bring comfort to PG&E: ―This decision should not be interpreted to 

suggest that parties that transact business with the Commission may rely on oral 

discussions with Commission employees as a basis for providing in their written 

submissions and pleadings anything less than the complete and candid disclosure of 

information that is required by Rule 1.‖ (Cal.P.U.C. Decision 02-08-063, supra [Slip 

Opn., p. 19].) This appears to be the basis for disregarding the discussion between PG&E 

employees and the PUC staffer following the October 2012 discovery of the misidentified 

pipe in Line 147. (See fn. 8, ante.)
39

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.‖ (Cal.P.U.C. Decision 04-04-065 

(April 22, 2004) [Slip Opn., pp. 35–36].)

Although it may be literally correct that the Commission has never expressly held 

that Rule 1.1 cannot be violated unless there is intent, recklessness, or gross negligence, 

one could conclude that it had. That conclusion would only be fortified by considering 

decisions where the Commission had—most recently during the period while PG&E‘s 

application for rehearing was pending—declined to impose Rule 1.1 sanctions because a 

utility‘s misstatement was treated as ―an oversight rather than a deliberate attempt to 

mislead.‖ (Cal.P.U.C. Decision 14-02-041 (Feb. 27, 2014) [Slip Opn., p. 9, fn. 18]; see 

Cal.P.U.C. Decision 03-11-023 (Nov. 13, 2003) [Slip Opn., p. 28] [common carrier not 

sanctioned because evidence did not establish that carrier ―knowingly and willfully filed 

false quarterly reports that understated revenue‖]; Cal.P.U.C. Decision 84-08-031(Aug. 1, 

1984) [16 CPUC2d 29]), or an ―honest mistake.‖ (Cal.P.U.C. Decision 09-01-017 (Jan. 

29, 2009) [Slip Opn., p. 6].) But against these comments is the 2009 decision in which 

the Commission determined that a utility ―is subject to a penalty for its violation of Rule 

1.1, even if the violation was inadvertent.‖ (Cal.P.U.C. Decision 09-04-009 (April 16, 

2009) [Slip Opn, p. 15].)

Then there are decisions from 1990, 1992, and 2001 that hardly clarify things. In 

the 1990 decision, attorneys for a utility sent to the Commission a number of letters 

containing false information. What the utility tried to dismiss as a simple mistake, the 

PUC denounced as ―sharp dealing,‖ sanctionable under Rule 1: ―U.S. West, by its 

attorney‘s letters . . . , misled the Commission and its staff, leading to the approval of 

Resolution T-13052, approving Advice Letter 8-A. U.S. West took full advantage of the 

 ̳mistake‘ it had implanted, and by failing within a reasonable time . . . to bring this 

 ̳mistake‘ and the resulting language ambiguity to the attention of the Commission, 

persisted in further sharp dealing.‖ (Cal.P.U.C. Decision 90-01-013 (Dec. 6, 1990) [38 

CPUC2d 420–421].)
40

In the 1992 decision, the Commission determined that a gas pipeline utility had 

improperly assigned certain gas pipeline capacity rights to an affiliate, further 

determining that the utility had violated Rule 1 by misrepresenting the status of the 

affiliate‘s ―transportation rights ‖in a report filed with the Commission. (Cal.P.U.C. 

Decision 92-03-042 (March 11, 1992) [43 CPUC2d 501–502].) The Commission denied 

the utility‘s application for rehearing on the issue of whether it had violated Rule 1. The 

language used in doing so merits quotation at length:

―There is sufficient evidence and legal basis to support our determination that 

SoCalGas violated Rule 1 by misleading the Commission as to the status of the PITCO 

transportation arrangements in the report it filed with the Commission on December 31, 

1991. SoCalGas executed the capacity assignment on December 26, 1991, but did not 

make this fact known to the Commission in the report it filed on December 31, 1991. 

Rather, SoCalGas incorrectly informed the Commission that it was  ̳contemplating‘ such 

an assignment. . . . Even after the assignment became effective on January 1, 1992, 

SoCalGas failed on its own to advise the Commission of the assignment, despite the 

claims that  ̳[a]s a business matter, [SoCalGas] always communicate[s] closely with the 

pertinent staff on these matters whether or not there is a formal requirement that 

[SoCalGas] . . . submit a filing.‘ . . . Apparently, . . . the assignment was discovered by 

accident during the course of the implementation proceedings . . . .

―Thus, from the record, a strong evidentiary inference can be drawn that SoCalGas 

did not intend to inform the Commission about the assignment of interstate capacity to an 

affiliate . . . . [¶] Interestingly, SoCalGas also did not address the assignment in its 

testimony [before the PUC] . . . Absent the Commission‘s accidental discovery of this 

illegal assignment, the inaccurate language in the . . . report constituted a continuing

misrepresentation of the true facts . . . and would have misled the Commission that the 

assignment was only being contemplated. [¶] Therefore, by failing to provide the correct 

information in its report, and in not informing the Commission of the actual assignment, 

SoCalGas misrepresented and misled the Commission . . . .
41

―Such a conclusion is supported by [the 1990 decision]. In this decision, the 

Commission found a Rule 1 violation against a cellular telephone company for taking 

advantage of a  ̳mistake‘ it had introduced and for failing to bring this  ̳mistake‘ to the 

attention of the Commission within a reasonable time.‖ (Cal.P.U.C. Decision 92-07-084 

(July 22, 1992) [45 CPUC2d 242], citations omitted.) 

The 2001 decision involved the failure to disclose relevant information to the 

Commission. The PUC refused to accept the utility‘s claim that this was an innocent 

oversight:

―There is no dispute that Sprint PCS failed to disclose the information sought by 

the staff . . . . Sprint PCS‘ major argument is that the omission was purely unintentional 

and as such, does not qualify as a Rule 1 violation. . . . [¶] Even to the extent we were to 

presume that Sprint PCS did not intentionally set out to deceive the staff, the results of its 

actions did have the effect of misleading the staff.‖ (Cal.P.U.C. Decision 01-08-019 

(Aug. 2, 2001) [Slip Opn., pp. 7–8].)

―Merely because a party initially withholds information . . . and then later 

discloses the information . . . does not necessarily mean that the initial nondisclosure was 

purely unintentional. The timing or manner in which information is disclosed could 

potentially have a material effect on the outcome . . . . If a party is able to simply claim 

ignorance of the initial omission, the party would . . . escape any sanctions or penalties.

[¶] In any event, the question of intent to deceive merely goes to the question of how 

much weight to assign to any penalty that may be assessed. The lack of direct intent to 

deceive does not necessarily, however, avoid a Rule 1 violation.‖ (Cal.P.U.C. Decision 

01-08-019, supra [Slip Opn., pp. 7–9].)

In sum, that both the Commission and PG&E can point to seemingly contradictory 

expressions on the predicate for Rule 1.1 liability is enough to establish that the 

Commission‘s expressions on this issue have not been uniform. Put conversely, if the 

Commission has a fixed position on Rule 1.1 liability, its inconsistent expressions make it 

difficult to discern. We have said that judicial deference is not given to an administrative 

interpretation that is inconsistent, transitory, or ―  ̳ ―vacillating.‖ ‘ ‖ (State Building & 
42

Construction Trades Council of California v. Duncan (2008) 162 Cal.App.4th 289, 303.) 

But we went on to state: ―Nevertheless, the opinion of an administrative agency as to a 

statute‘s meaning may be helpful even if it is  ̳not binding or necessarily even 

authoritative.‘ [Citations.]  ̳Courts must, in short, independently judge the text of the 

statute, taking into account and respecting an agency‘s interpretation of its meaning, of 

course, whether embodied in a formal rule or less formal representation. Where the 

meaning and legal effect of a statute is the issue, an agency‘s interpretation is one among 

several tools available to the court. Depending on the context, it may be helpful, 

enlightening, even convincing. It may sometimes be of little worth.‘ ‖ (Id. at p. 304, 

quoting Yamaha Corp. of America v. State Bd. of Equalization, supra, 19 Cal.4th 1, 7–8.) 

And in the 1998 decision we were quoting, our Supreme Court stated: ―Whether judicial 

deference to an agency‘s interpretation is appropriate and, if so, its extent—the  ̳weight‘ 

it should be given— is thus fundamentally situational. A court assessing the value of an 

interpretation must consider a complex of factors material to the substantive legal issue 

before it, the particular agency offering the interpretation, and the comparative weight the 

factors ought in reason to command.‖ (Yamaha Corp. of America v. State Bd. of 

Equalization, supra, at p. 12.)

Based on the above, the quantum of deference owed to the PUC‘s interpretation of 

Rule 1.1 might be described as minimal. (See Yamaha Corp. of America v. State Bd. of 

Equalization, supra, 19 Cal.4th 1, 12–13 [―A court is more likely to defer to an agency‘s 

interpretation of its own regulation . . . [if] the agency  ̳has consistently maintained the 

interpretation in question, especially if [it] is long-standing‘ ‖].) But even so, this does 

not mean that the Commission‘s interpretation is be ignored. It still rates consideration 

and respect. (Id. at pp. 7–8; Clean Energy Fuels Corp. v. Public Utilities Com., supra,

227 Cal.App.4th 641, 649.) As we have taken pains to establish, we cannot look just to 

Rule 1.1, we must also account for its statutory ancestry (see fn. 15, ante), statutes that 

are part of the extensive regulatory scheme entrusted to the Commission‘s administration. 

And that responsibility requires us to give some weight to the PUC‘s interpretation of 

those statutes, if that interpretation bears a reasonable relation to the statutes‘ language 
43

and purposes. (Southern California Edison Co. v. Peevey, supra, 31 Cal.4th 781, 796; 

Greyhound Lines, Inc. v. Public Utilities Com., supra, 68 Cal.2d 406, 411; Pacific Bell 

Wireless, LLC v. Public Utilities Com., supra, 140 Cal.App.4th 718, 729 [―we give 

presumptive value to a public agency‘s interpretation of a statute within its administrative 

jurisdiction‖].)

So, even if the interpretation of sections 1701 and 2107, together with Rule 1.1, is 

not a subject to which the PUC brings a technical expertise derived from its regulatory 

functions, the Commission is nevertheless entitled to its opinion concerning the practical 

realities. Certainly no court can hope to equal the PUC‘s knowledge of what will 

―mislead‖ it. No court can have an institutional memory of what constitutes ―an artifice‖ 

gained from familiarity with the practices and procedures before the PUC. This case 

furnishes a perfect illustration: How can this court presume to think it knows better than

the Commission when use of an ―Errata‖ is, or is not, justified and in compliance with the 

Commission‘s Rule 1.12(c)? This is a ―situational‖ factor working in favor of the 

Commission‘s interpretation of the rule. (See Yamaha Corp. of America v. State Bd. of 

Equalization, supra, 19 Cal.4th 1, 12; Clean Energy Fuels Corp. v. Public Utilities Com., 

supra, 227 Cal.App.4th 641, 649.) And the means chosen by the Commission to fulfill 

its constitutional and statutory authority are to receive a liberal construction (San Diego 

Gas & Electric Co. v. Superior Court, supra, 13 Cal.4th 893, 915), which, we believe, 

reasonably translates as a measure of judicial deference to what the PUC deems 

appropriate to police its jurisdiction.

True, the PUC‘s interpretation of Rule 1.1 may have been shrouded in a haze of 

divergent and even differing formulations. Yet the subject addressed by the rule—

ensuring the transmission of truthful information to the Commission—is obviously 

central to the proper discharge of the PUC‘s responsibilities. The Commission‘s history 

of inexactitude or infelicitously expressing what will be deemed a violation of Rule 1.1 

cannot be used to vitiate a vital deterrent. And thus we reject PG&E‘s subargument two. 

That leaves PG&E‘s speculative subargument five, which rests upon the 

assumption that the PUC has used Rule 1.1 to penalize ―representations made by a party 
44

in complete good faith.‖ As previously shown, the factual predicate of that assumption 

cannot be indulged ―without a whole violation of the standards governing our limited 

scope of review.‖ (See fn. 20, ante.) Another erroneous underlying assumption is the 

unduly narrow view of the Commission‘s legitimate deterrence powers. The remainder 

of subargument five will be addressed while analyzing PG&E‘s contentions that the 

Commission used an improper concept of what constitutes a continuing violation, and 

that the aggregate amount of the penalties imposed violates the excessive fine 

prohibitions of the United States and California constitutions.

We restate our conclusions:

The operative statutory language is the plain language of section 2107. The 

Legislature knows how to specify how a mental state shall be required for an act or 

omission to warrant a financial consequence, and its decision not to include such 

qualifying words as ―willfully,‖ or ―knowingly‖ when that statute was enacted indicates

that it did not mean to impose a scienter requirement for a violation of ―any part or 

provision of any order, decision, decree, rule, direction, demand, or requirement of the 

commission.‖ This court must respect that omission, ―not rewrite the statute to conform 

to an assumed intention which does not appear from its language.‖ (Stop Youth 

Addiction, Inc. v. Lucky Stores, Inc. (1998) 17 Cal.4th 553, 573.) 

Section 2107 is not a penal statute that is to receive strict construction. It is 

instead a statute authorizing a monetary civil penalty in the exercise of the state‘s 

unquestioned police power that it has constitutionally delegated to the PUC. Just as 

firmly established is that the regulatory police power encompasses the imposition of 

deterrent civil penalties to protect the public interest that do not depend upon actual loss.

By itself, the diffuse and meandering construction the Commission has given to 

Rule 1.1 might deserve only the merest modicum of deference. Yet that construction 

exists within the context of the Commission operating under the broad license of section 

701, and exercising its ―comprehensive jurisdiction over questions of public health and 

safety arising from utility operations.‖ (San Diego Gas & Electric Co. v. Superior Court, 

supra, 13 Cal.4th 893, 924.) The means chosen by the Commission to police that 
45

expansive domain, and enforce control of proceedings before it, is unquestionably a 

matter that bears a reasonable relation to the purposes and language of the statutes under 

which the PUC operates, and should receive a measure of judicial recognition and 

consideration, founded upon appreciation of the practical realities of the Commission 

administering its vast and variegated jurisdiction. 

In any event, our purely independent review would bring us to the same 

conclusion. Without any input from the Commission, and looking solely at the relevant 

statutory language, we cannot discern an unmistakable legislative desire for a scienter 

requirement.

For each and all of these reasons, we conclude the Commission did not exceed its 

jurisdiction or fail to proceed according to law (§ 1757, subd. (a)) when it invoked Rule 

1.1 in its present form as the justification and basis for the imposition of civil penalties on 

PG&E.

A “Continuing” Violation Does Not

Require “Proof Of Continuing Misconduct”

PG&E‘s second contention, under the heading ―The Commission Erred in Holding 

that Continuing Violations of Rule 1.1 May be Found Without Proof of Continuing 

Misconduct,‖ proceeds as follows:

―Having found that PG&E‘s reporting and filing errors constituted a violation of 

Rule 1.1 despite the lack of any direct proof of intent to mislead, the Commission then 

held that those violations should be deemed  ̳continuing‘ under . . . § 2108, warranting a 

cumulative penalty of $50,000 per day. . . . In particular, it determined that PG&E‘s 

failure to disclose the corrected pipeline information represented a  ̳continuing violation‘

from November 16, 2012 (a month after PG&E first discovered the apparent 

inconsistency in the specifications for Line 147), through July 3, 2013 (when PG&E filed 

the Errata); and that the filing of the Errata gave rise to another continuing violation from

July 2, 2013 through August 30, 2013 (when PG&E filed a verified statement describing 

the timeline of events in detail). . . . Those holdings reflect a fundamental misconception 

of the meaning of  ̳continuing violation.‘
46

―A  ̳continuing violation‘ occurs, by definition, only when a party has engaged in 

 ̳a continuing course of unlawful conduct‘ over a period of time. Richards v. CH2M Hill, 

Inc., 26 Cal.4th 798, 823 (2001). This principle, affirmed in scores of cases from the 

California Supreme Court and others, requires that the party be shown to have engaged in 

a course of repeated or ongoing misconduct, such that the provision in question is 

continually violated over a certain period of time. Id.; see also Flowers v. Carville, 310 

F.3d 1118, 1126 (9th Cir. 2002); Ward v. Caulk, 650 F.2d 1144, 1147 (9th Cir. 1981); 

Birschtein v. New United Motor Mfg., Inc., 92 Cal.App.4th 994, 1005 (2001). In other 

words, for a  ̳continuing violation‘ to be found, the party must have  ̳continually‘ violated 

the provision at issue, from an identifiable start date through an identifiable end date.

―The Commission misunderstood, and as a result misapplied, this basic concept. 

It held that a  ̳continuing violation‘ may exist over any period of time that a party, once 

adjudged to have violated a rule, fails to fully and completely correct the breach. . . . On 

that basis, it determined that in this case PG&E‘s failure to correct the inaccurate pipeline 

information was  ̳continuing‘ throughout the period that PG&E might have but did not 

remedy the error through a formal notification to the Commission. [Citation.]

―That conclusion cannot be reconciled with the cases discussed above, which 

recognize that a  ̳continuing violation‘ is characterized by  ̳a continuing course of 

unlawful conduct,‘ Richards, 26 Cal.4th at 823, not  ̳by continual ill effects from the 

original violation,‘ Ward, 650 F2.d at 1147. Thus, neither  ̳the lingering effect of an 

unlawful act‘ nor  ̳the mere failure to right a wrong‘ constitutes a continuing violation. 

Earle v. D.C., 707 F.3d 299, 306 (D.C. Cir. 2012); see also Garcia v. Brockway, 526 F.3d

456, 462 (9th Cir. 2008) (en banc); Cowell v. Palmer Twp., 263 F.3d 286, 293 (3d Cir. 

2001). Here, even assuming that the Commission was  ̳misled‘ by the inaccurate 

information concerning the pipeline specification, the violation occurred and was 

completed at the time the inaccuracy was discovered. While the effect of the violation 

might arguably have  ̳linger[ed]‘in some sense until PG&E communicated with 

Commission staff in early 2013 or even until it filed the Errata, PG&E‘s failure to 

communicate with the Commission sooner did not  ̳mislead‘ the Commission any further 
47

than what had already occurred, and could not be deemed a continuing or repeated series 

of unlawful acts. See Garcia, 526 F3d at 462. At most, this course of conduct 

represented a  ̳failure to right a wrong‘—which, as the cases above state, does not 

constitute a  ̳continuing violation.‘ Earle, 707 F.3d at 306; accord Alston v. Hormel 

Foods Corp., 730 N.W.2d 376, 381 (Neb. 2007).‖ 

PG&E‘s reasoning was quoted at length to demonstrate why it must be rejected.

The decisions cited by PG&E deal with the idea of a ―continuing violation‖ as a 

judicially created doctrine that will toll the statute of limitations, specifically in

anti-discrimination actions. This is shown by the full quotation from the decision of our 

Supreme Court instanced by PG&E as the definitional exemplar of what constitutes a 

―continuing violation‖: ―Thus, when an employer engages in a continuing course of 

unlawful conduct under the FEHA by refusing reasonable accommodation of a disabled 

employee or engaging in disability harassment, and this course of conduct does not 

constitute a constructive discharge, the statute of limitations begins to run, not necessarily 

when the employee first believes that his or her rights may have been violated, but rather, 

either when the course of conduct is brought to an end, as by the employer‘s cessation of 

such conduct or by the employee‘s resignation, or when the employee is on notice that 

further efforts to end the unlawful conduct will be in vain.‖ (Richards v. CH2M Hill, 

Inc., supra, 26 Cal.4th 798, 823.)

PG&E again fails to recognize that we are dealing with a statute. And that 

statute—namely, section 2108, enacted in 1951 with the Public Utilities Code 

(Stats. 1951, ch. 764, § 2108, p. 2098)— expressly codifies the concept of a continuing 

violation of ―any order, decision, decree, rule, direction, demand, or requirement‖ of the 

Commission. Not only that, it specifies that such a violation may continue on a daily 

basis. Instead of tackling this statutory language, PG&E relies on a common law doctrine 

that has no connection to administrative law—or the authority of a regulatory agency to 

impose monetary penalties for persistent noncompliance with its orders.

Section 2108 is no outlier. ―[M]any statutes expressly authorize penalties for 

continuing violations.‖ (Boorstein v. CBS Interactive, Inc. (2013) 222 Cal.App.4th 456, 
48

470, fn. 3.) Numerous codes have such provisions, specifying that a continuing violation 

may occur on a daily basis. (See, e.g., Bus. & Prof. Code, § 13610; Corp. Code, § 28900; 

Fin. Code, §§ 2151.1, 5310, subd. (b)(2), 18349.5, subd. (i)(3), 31900; Gov. Code, 

§ 8670.66, subd. (b), 8670.67, subd. (b); Health & Saf. Code, §§ 17061, subd. (c), 

17061.5, subds. (a), (b), (c)(1), (d); Ins. Code, §§ 728, subd. (h)(2), (h)(3), 1748.5, 

subd. (h)(3); Pub. Resources Code, §§ 14591.1, subds. (b), (c), 42850, subd. (a); Veh. 

Code, §§ 32053, subd. (a), 34660, subd. (b); Wat. Code, § 6425.) Indeed, section 2108 is 

not unique in the field of public utilities, being one of four such statutes governing 

continuing violations in various aspects of the PUC‘s extensive jurisdiction. (See 

§§ 1013, subd. (j) [applicable to telephone and telegraph corporations], 5315 [household 

goods carriers], and 5415 [charter-party passenger carriers].) 

Moreover, it is clear from section 2108 and the other penalty-related statutes that 

the Legislature left it to the Commission to decide what amounts to a violation of ―any 

order, decision, decree, rule, direction, demand, or requirement of the commission.‖ (See 

§ 2101 [―The Commission shall see that . . . statutes . . . affecting public utilities . . . are 

enforced and obeyed, and that violations thereof are promptly prosecuted and penalties 

due . . . recovered and collected‖].) The statutory scheme clearly accepts that the PUC 

will be able to identify when a violation amounts to a continuing one. How the 

Commission does so would clearly be another matter. (See Southern California Edison 

Co. v. Peevey, supra, 31 Cal.4th 781, 796; Greyhound Lines, Inc. v. Public Utilities 

Com., supra, 68 Cal.2d 406, 410–411.) As such, it is entitled to considerable deference 

by a reviewing court.

PG&E‘s proffered definition of a continuing violation would apply only to 

instances of positive acts, and not cover a persistent failure to act, such as the 

Commission found here. If accepted, PG&E‘s ―failure to correct a wrong‖ approach 

would eviscerate the Commission‘s power to require continual self-reporting by virtually 

destroying the Commission‘s power to sanction noncompliance. It amounts to another 

attempt to gut the PUC‘s vital deterrent power of enforcing compliance with its orders. 

Instead of treating a violation as occurring daily, as expressly authorized by section 2108, 
49

PG&E would truncate that power by rewriting the statute to make the maximum penalty 

$50,000 (or in this case, $100,000 for the two violations found by the Commission). 

Indeed, PG&E‘s definition would constitute such a severe restriction on the PUC‘s power 

to enforce compliance with its orders that it would produce another result by rewarding 

parties who succeed in misleading the Commission by their continued noncompliance but 

who, as PG&E would have it, ―[do] not  ̳mislead‘ the Commission any further than [has] 

already occurred.‖ This is another outlandish outcome we must reject. (Eel River 

Disposal & Resource Recovery, Inc. v. County of Humboldt, supra, 221 Cal.App.4th 209, 

227; Reliable Tree Experts v. Baker, supra, 200 Cal.App.4th 785, 796–797; Friends of 

Bay Meadows v. City of San Mateo, supra, 157 Cal.App.4th 1175, 1191.) Were all this 

not enough, we note that had the Legislature intended such a result, it knew how to have

employed language to accomplish it. (See Pub. Resources Code, § 4601.1, subds. (a)(1), 

(b) [―damage that occurs over multiple days that results from a single action shall not be 

considered a continuing violation‖].) Again, it is not our function to remedy that 

omission. (Napa Valley Wine Train, Inc. v. Public Utilities Com., supra, 50 Cal.3d 370, 

381.)

Once it is established that PG&E was under a continuing duty to advise the 

Commission of the information concerning Lines 101 and 147, the Commission could 

treat PG&E‘s violation as a continuing one for each of the 229 days that duty remained 

unsatisfied. And once it is established that PG&E was under a duty to correct the 

―misleadingly titled and factually incomplete‖ Errata, the Commission could treat 

PG&E‘s violation as a continuing one for each of the 58 days until PG&E finally 

satisfied that duty.25 The Commission was obviously following the reasoning noted by 

 

25 We certainly do not agree with PG&E‘s characterization as ―arbitrary‖ of the 

dates selected by the Commission to start and end each of the violations. If anything, the 

Commission may have been generous in fixing November 16, 2012, almost a month after 

the October 18 discovery of the Line 147 problem, as ―the date by which . . . PG&E 

should have prepared and submitted a filing to inform the Commission of the significant 

and material discovery of the records discrepancy‖ with Line 147. If, as PG&E asserts, 

―this date was apparently plucked from thin air,‖ it nevertheless amounted to giving 
50

this court in 2000, that PG&E ―had it within [its] control first to prevent and then to stop 

the accumulation of penalties‖ (City and County of San Francisco v. Sainez, supra, 77 

Cal.App.4th 1302, 1316), an approach well-established in the context of a continuing 

nuisance. (See, e.g., Baker v. Burbank-Glendale-Pasadena Airport Authority (1985) 39 

Cal.3d 862, 869 [―if a nuisance is a use which may be discontinued at any time, it is 

considered continuing‖]; Phillips v. City of Pasadena (1945) 27 Cal.2d 104, 107 [―if the 

nuisance may be discontinued at any time it is considered continuing‖].) Last, but by no 

means incidentally, we note that our Supreme Court has on two occasions pointed to 

section 2107 as allowing penalties to accumulate on a daily basis. (Hale v. Morgan, 

supra, 22 Cal.3d 388, 401; People v. Western Air Lines, Inc. (1954) 42 Cal.2d 621, 642.)

 

PG&E a month‘s grace period, something we would not normally think would elicit 

complaint from the party benefitted. And as to the end date, the penalty stopped with the 

filing of a ―verified statement‖ by PG&E‘s Vice-President of Gas Transmission, 

Maintenance and Construction explaining how the ―discrepancies‖ in Lines 101 and 147 

were discovered and how PG&E responded. There is nothing arbitrary about this 

reasoning.

PG&E maintains the penalty should have halted when ―PG&E actually disclosed 

the corrected information to Commission staff in March 2013,‖ and thus, ―at least as of 

that time, PG&E was neither withholding the information nor  ̳misleading‘ the 

Commission.‖ However, as previously noted, PG&E failed to provide staff with 

requested documents and information concerning the errors until the end of May 2013. 

Thus, at best, there was only a partial, or attempted, disclosure. More significantly, as the 

Commission stated in its decision denying rehearing and rejecting this very argument: 

―The Commission has consistently rejected utility efforts to rely on communications with 

staff [in] satisfying their obligation to formally inform the Commission and parties in the 

applicable proceeding. [Footnote.] For that reason, the [initial] Decision reminded 

PG&E that conversations with staff do not substitute for such notification.‖ (Italics 

added.) In its initial decision the PUC stated: ―Rule 1.1 does not treat the Commission 

and its staff as synonymous.‖ It should be obvious why the Commission would not wish 

to encourage parties to believe that an informal discussion, in this case a conference call 

with a single staff member, would substitute for the formal written amendment the 

Commission took such pains to identify as the proper means to inform the Commission, 

and the dozens of interested parties who would also be notified of the amendment. 
51

PG&E Received Constitutionally Adequate

Notice of the Potential Fines

The first of PG&E‘s two constitutional claims proceeds as follows: ―Due process 

requires, at its most basic, that a party be given fair notice of allegations of misconduct 

prior to any adjudicatory hearing. . . . [¶] That essential requirement was flouted here. 

The Show Cause Order in this matter gave notice of two specific alleged violations of 

Rule 1.1: (i) whether PG&E attempted to mislead the Commission by titling its 

disclosure filing as an  ̳Errata‘ and (ii) whether PG&E attempted to mislead the 

Commission by filing on July 3, 2013,  ̳the day before a summer holiday weekend.‘ 

[Citation.] Nothing in the Order indicated that the Commission would also consider 

whether PG&E had separately violated Rule 1.1 by failing to disclose the corrected 

pipeline specification information a month after the first preliminary information was 

discovered, or that PG&E might face continuing violation sanctions based on any breach 

of disclosure or filing obligations.‖ This portrayal of PG&E as the victim of bureaucratic 

bushwhacking is unsound.

In conducting an adjudicatory hearing, the PUC is not governed by the 

Administrative Procedure Act (Gov. Code, § 11340 et seq.), but is allowed to establish its 

own procedures (§§ 1701, 1701.2), subject, of course, to the constitutional obligation to 

satisfy due process, as to which Justice Robert Jackson stated the classic formulation: 

―An elementary and fundamental requirement of due process in any proceeding which is 

to be accorded finality is notice reasonably calculated, under all the circumstances, to 

apprise interested parties of the pendency of the action and afford them an opportunity to 

present their objections.‖ (Mullane v. Central Hanover Tr. Co. (1950) 339 U.S. 306, 

314.) Four years later, our Supreme Court ruled on the application of this principle to the 

PUC: ―Due process as to the commission‘s . . . action is provided by the requirement of 

adequate notice to a party affected and an opportunity to be heard before a valid order can 

be made.‖ (People v. Western Air Lines, Inc., supra, 42 Cal.2d 621, 632.)

The centrality of notice is indisputable. ―Engrained in our concept of due process 

is the requirement of notice. Notice is sometimes essential so that the citizen has the 
52

chance to defend charges. Notice is required before property interests are disturbed, 

before assessments are made, before penalties are assessed.‖ (Lambert v. California

(1957) 355 U.S. 225, 228.) But satisfying the obligation of due process does not have to 

be onerous. 

To begin with, due process does not require any particular form of notice. 

(Lusardi Construction Co. v. Aubry (1992) 1 Cal.4th 976, 990; Drummey v. State Bd. of 

Funeral Directors (1939) 13 Cal.2d 75, 80; see Litchfield v. County of Marin (1955) 130 

Cal.App.2d 806, 813 [―there is no constitutional mandate . . . which makes specific how 

. . . notice is to be given or which form it must take‖].) The details can be flexible, 

―depend[ing] on the circumstances . . . var[ying] with the subject matter and the 

necessities of the situation.‖ (Sokol v. Public Utilities Commission (1966) 65 Cal.2d 247, 

254; see Haas v. County of San Bernardino (2002) 27 Cal.4th 1017, 1037 [―The 

requirements of due process are flexible, especially where administrative procedure is 

concerned‖].) All that is required is that the notice be reasonable. (Jonathan Neil & 

Assoc., Inc. v. Jones (2004) 33 Cal.4th 917, 936, fn. 7; Drummey v. State Bd. of Funeral 

Directors, supra, at pp. 80–81.) 

As PG&E sees it, the Commission‘s OSC alerted PG&E only to the distinctly 

minor offenses of choosing the wrong title for the document it submitted, and making 

that submission on the eve of a major summer holiday. This characterization is 

inaccurate. The OSC told PG&E that its attempted filing of the Errata ―raises procedural 

and substantive issues,‖ which the Commission called ―serious issues.‖ The OSC

notified PG&E that the Errata was procedurally improper because it went beyond 

―correcting minor typographical or computational errors‖ and ―could be interpreted as 

attempting to create an inaccurate impression of a routine correction.‖ The OSC also 

notified PG&E that the Errata was perceived by the Commission as ―making substantive 

changes to a previously filed application‖ by ―revealing a substantial error in an 

application upon which the Commission has relied in issuing a decision.‖ In sum, a fair 

reading of the OSC discloses that the PUC was not merely concerned with how the filing 

was titled. 
53

What did attract the Commission‘s attention was the substance of the document. 

The Commission‘s language—referring to ―substantive issues,‖ ―substantive changes to a 

previously filed application,‖ and ―revealing a substantial error in an application upon 

which the Commission has relied in issuing a decision‖—goes far beyond the single word 

chosen for a caption. The Commission was obviously paying close attention to the 

contents of PG&E‘s document. And the wording of the OSC leaves no room for doubt 

on this point: ―Attempting to correct an application eighteen months after the 

Commission issued a decision appears to be an unreasonable procedural choice and could 

be interpreted as attempting to create an inaccurate impression of a routine correction. 

The timing of the attempted filing, the day before a summer holiday weekend, also raises

questions. [¶] Substantively, as the record shows in this proceeding and others, the 

accuracy of PG&E‘s natural gas transmission pipeline records has been and remains an 

extraordinarily controversial issue in which the public has an intense interest. The facts 

stated in PG&E‘s July filing appear to directly implicate this issue, particularly the 

continuing inaccuracy of PG&E‘s records and the happenstance means by which this 

most recent instance of erroneous records was discovered. Submitting this provocative 

information in a routine-appearing document could be seen as an attempt to mislead the 

Commission and the public on the significance of this new information.‖ As for the 

timing of the Errata, that merited only the single sentence just quoted.

The OSC advised PG&E that it may have violated Rule 1.1, thus exposing it to the 

financial consequences specified in section 2107. It is true that the OSC did not cite 

section 2108, or tell PG&E that ―each offense, if found to be supported by evidence at the 

hearing,‖ might be treated as a continuing offense.

26

 But section 2108 does not define a 

substantive offense, but merely states how such an offense may be ―a separate and 

distinct offense, and . . . a continuing violation.‖ PG&E cites to no authority that due 

 

26 We cannot claim to have made a systematic study, but it is our impression that 

the PUC does not makes it a practice to cite section 2108 in OSC‘s for matters that are 

subsequently penalized as continuing violations. Given the minimal effort this would 

entail, the PUC might wish to revise this practice.
54

process demands that the full and complete possible adverse consequences be spelled out 

in the notice. The OSC did advise PG&E that it was accused of violating Rule 1.l, and 

that appears to be the most consequential detail.27 (Cf. Margarito v. State Athletic Com. 

(2010) 189 Cal.App.4th 159, 171 [―the Commission‘s letter informed Margarito of the 

specific violation of which he was accused—hand wraps that violated rule 323‖].) And 

the Commission makes a cogent point in its answer to PG&E‘s petition: ―[I]t is neither 

surprising nor improper that the OSC could not identify the ultimate timing issue . . . . 

The Errata that triggered the OSC did not disclose that PG&E had discovered new 

information months before it notified the Commission. That fact was not revealed until 

PG&E was told to provide a complete explanation of the events‖—which did not occur 

until PG&E filed the ―Verified Statement‖ 11 days after the OSC issued. 

Moreover, our inquiry does not have to end with the OSC. As already recounted, 

the briefs filed by SED and TURN prior to the Commission‘s initial decision show that 

those entities construed the OSC as putting PG&E on notice as to whether it had failed to 

comply with a standing order that the Commission be promptly notified of matters 

relating to pipeline safety, and whether PG&E‘s delay in complying with that directive 

constituted a continuing violation within the plain scope of section 2108. So did each of 

the proposed decisions submitted by Commissioner Ferron and the ALJ. Following the 

Commission‘s initial decision, PG&E identified the supposed lack of notice as one of the 

grounds for which it sought a rehearing. The point was contested by TURN, the SED, 

and the cities of San Bruno and San Carlos in the written opposition to PG&E‘s request. 

The Commission held a hearing on PG&E‘s request, at which it heard PG&E‘s Chairman 

 

27 When it denied PG&E‘s request for rehearing, the PUC took the position that 

―penalties are considered in the context of the entire statutory scheme governing 

 ̳Violations‘ under the Public Utilities Code [ ̳specifically Pub. Util. Code, §§ 2100–

2119‘]. Section 2108, involving continuing violations, is part of that statutory scheme.‖ 

Given that PG&E was being advised by experienced counsel (see text accompanying fn. 

10, ante), it is difficult to credit that the concept of a continuing violation was unknown 

or could not reasonably be anticipated at being at issue. Put another way, we think it 

exceedingly unlikely that PG&E believed it was facing a penalty of no more than 

$100,000.
55

and Chief Executive Officer and its Vice-President of Gas Transmission, Maintenance 

and Construction earnestly assert PG&E‘s good faith and complete lack of intent to 

mislead the commission.

Administrative proceedings ―  ̳are not bound by strict rules of pleading . . . . So 

long as the respondent is informed of the substance of the charge and afforded the basic, 

appropriate elements of procedural due process, he cannot complain of a variance 

between administrative pleadings and proof.‘ ‖ (Smith v. State Bd. of Pharmacy (1995) 

37 Cal.App.4th 229, 241, quoting Stearns v. Fair Employment Practice Com. (1971) 6 

Cal.3d 205, 213.) In other words, ―  ̳[a] variance between the allegations of a pleading 

and the proof will not be deemed material unless it has actually misled the adverse party 

to his prejudice in maintaining his action or defense on the merits, and a variance may be 

disregarded when the action has been as fully and fairly tried on the merits as though the 

variance had not existed.‘ [Citations.]‖ (Cooper v. Board of Medical Examiners (1975) 

49 Cal.App.3d 931, 942, italics added.)

The situation here is not a true variance situation because there is no real 

divergence between pleading and proof, but at most a divergence between how the OSC 

can be read. No one was obliged to take PG&E‘s word that the notice provided by the 

OSC was inadequate. Certainly the PUC did not, nor did the real parties in interest. And

when PG&E sought rehearing, it did not claim that its ability to present a defense had 

been compromised. It made nothing akin to an offer of proof, identifying no testimony or 

other evidence it would have presented had it realized the full scope of what the OSC 

entailed. Nor does PG&E attempt to do so in its petition. With due regard for the totality 

of these circumstances, we conclude that any imprecision in the OSC did not prejudice 

PG&E in presenting its defense. (Stearns v. Fair Employment Practice Com., supra, 6 

Cal.3d 205, 213; Cooper v. Board of Medical Examiners, supra, 49 Cal.App.3d 931, 942; 

Yanke v. State Dep’t of Public Health (1958) 162 Cal.App.2d 600, 603.)28

 

28 Citing FCC v. Fox TV Stations, Inc. (2012) ---U.S. --- [132 S.Ct. 2307], PG&E 

argues that the OSC was ―so broad and so vaguely worded that it did not . . . in any 

meaningful way limit the scope of allegations against which PG&E must defend, or 
56

The Fines Are Not Constitutionally Excessive

PG&E‘s final contention is based on the application of the excessive fine 

prohibitions of the United States and California constitutions (quoted at fn. 14, ante) to 

civil penalties imposed by an administrative agency. (See People ex rel. Lockyer v. R.J. 

Reynolds Tobacco Co. (2005) 37 Cal.4th 707, 727–729; Ojavan Investors, Inc. v. 

California Coastal Com. (1997) 54 Cal.App.4th 373, 396–397.) 

In December 1998, the PUC promulgated detailed guidelines for the process of 

calculating fines. (See Enforcement Rules, supra, 84 Cal.P.U.C.2d 167, 188–190.) 

―[T]he two general factors used by the Commission in setting fines are: (1) severity of 

the offense and (2) conduct of the utility.‖ (Id. at p. 188.) The ―conduct of the utility‖ 

includes its actions to ―Prevent a Violation,‖ ―Detect a Violation,‖ and ―Disclose and 

Rectify a Violation.‖ (Id. at p. 189.) The Commission will also consider the ―Financial 

Resources of the Utility‖ and the ―Totality of the Circumstances in Furtherance of the 

Public Interest.‖ (Ibid.) ―In all cases, the harm will be evaluated from the perspective of 

the public interest.‖ (Ibid.)

 

restrict the Commission‘s ability to sua sponte expand the investigation to address new 

issues . . . without any prior notice to PG&E.‖ Also citing FCC v. Fox, amici appear to 

invoke the void-for-vagueness doctrine and apply it to Rule 1.1 in light of the 

Commission‘s ―inconsistency‖ regarding whether scienter is required. We doubt whether 

either PG&E or amici genuinely mean to assert that Rule 1.1 is truly void on its face, and 

thus incapable of any constitutionally valid application in its current form. (See FCC v. 

Fox TV Stations, Inc. (2012) ---U.S. --- [132 S.Ct. 2307, 2316 [notice component of due 

process ―requires the invalidation of laws that are impermissibly vague‖]; People ex rel. 

Gallo v. Acuna (1997) 14 Cal.4th 1090, 1116 [―a claim that a law is unconstitutionally 

vague can succeed only where the litigant demonstrates . . . that the law is . . . 

 ̳impermissibly vague in all of its applications.‖].) Regardless, the issue is not properly 

before us. In reviewing a PUC decision on a writ of review, ―the petitioner may not raise 

in court a matter not included in its application for rehearing‖ to the PUC of its decision. 

(Utility Consumers’ Action Network v. Public Utilities Com. (2010) 187 Cal.App.4th 688, 

696.) The word  ̳vagueness‖ was not mentioned in PG&E‘s application for rehearing. 

And we will not let amici argue what PG&E cannot. (California Assn. for Safety 

Education v. Brown (1994) 30 Cal.App.4th 1264, 1275.)
57

In the only decision by our Supreme Court on this point, it appears to have 

adopted the approach of the United States Supreme Court that ―  ̳[t]he touchstone of the 

constitutional inquiry under the Excessive Fines Clause is the principle of 

proportionality,‘ ‖ including these factors: ―(1) the defendant‘s culpability; (2) the 

relationship between the harm and the penalty; (3) the penalties imposed in similar 

statutes; and (4) the defendant‘s ability to pay.‖ (People ex rel. Lockyer v. R.J. Reynolds 

Tobacco Co., supra, 37 Cal.4th 707, 728 [citing and quoting United States v. Bajakajian

(1998) 524 U.S. 321, 334, 337–338], 720–721.) 

We have encountered a number of decisions where the PUC systematically 

discussed various of these factors in calculating fines. (E.g., Cal.P.U.C. Decision 13-09-

028 (Sept. 19, 2009); Cal.P.U.C. Decision 08-09-038 (Sept. 18, 2008); Cal.P.U.C. 

Decision 04-04-065 (April 22, 2004); Cal.P.U.C. Decision 01-08-019, supra; Cal.P.U.C. 

Decision 95-04-43, supra.) The Commission did not follow that process here, but PG&E 

does not contend that this omission makes the fine order invalid.29

Adverting generally to these considerations, PG&E‘s argument runs as follows: 

―[The Excessive Fines] Clauses prohibit fines that are  ̳grossly disportiona[te]‘ to the 

underlying violation. United States v. Bajakajian, [(1998)] 524 U.S. 321, 324 . . . . 

Whether a fine is  ̳grossly disproportional‘ is determined by (i) the extent of the harm 

caused, (ii) the gravity of the offense relative to the fine, (iii) the relationship of the 

violation to other illegal activity, and (iv) the availability of other penalties and the 

maximum penalties that could have been imposed. [Citation]; People v. R.J. Reynolds 

Tobacco Co., 37 Cal.4th 707, 728 (2005) . . . . Of perhaps greater importance, however, 

is the disparity between the fine and any actual damages resulting from the underlying 

offense: where the amount of the fine is many multiples greater than actual damages, the 

penalty is more likely unconstitutional. [¶] The fines imposed by the Commission in this 

case . . . are the largest ever imposed by the Commission for such a violation of Rule 1.1, 

 

29 We mention this because such an explication of the Commission‘s reasoning 

would considerably assist subsequent judicial review.
58

and yet none of the factors relevant to the  ̳grossly disproportionate‘ analysis supports

such a massive penalty.

―First, the adjudicated violations did not cause any harm and did not pose any risk 

to the Commission, its staff, any party, or the public. [Citation.] The Commission can 

point only to a generalized  ̳potential for harm,‘ that cannot by itself support such an 

excessive fine, especially where, as here, the potential risk never materialized . . . .

―Second, although  ̳misleading‘ a regulatory body is certainly a serious matter in 

general, in this case PG&E did not act with any intent to deceive, or indeed with any 

culpable intent whatsoever. . . . 

―Third, the violations here did not contribute to or result from any other illegal 

activity. To the contrary, the pipeline information was discovered while PG&E was 

performing safety-related inspections—conduct undeniably intended to advance public 

safety. [Citation.]

―Finally, the fines in this case represented not merely the maximum allowed under 

state law, but in fact were greater than that permitted by statute because of the 

Commission‘s erroneous interpretation of what constitutes a  ̳continuing violation.‘ 

[Citation.] Particularly given the vast disparity between the damages caused by the 

violations (at most, the costs associated with additional Commission proceedings) and the 

nearly $15 million fines, those fines cannot be reconciled as consonant with the 

Excessive Fines Clauses of either the California or Federal Constitution[s].‖ 

Much of this is familiar. PG&E‘s argument that ―the adjudicated violations did 

not cause any harm and did not pose any risk to the Commission, its staff, any party, or 

the public‖ is literally true, but it completely misperceives what was at issue. ―No harm 

no foul‖ may work in the schoolyard, but it is no principle for the maintenance of public 

safety. Given the context here, PG&E‘s emphasis on ―actual damages‖ is dismaying, 

antithetical to the entire concept of deterrence. The Commission takes a very dim view 

of denying it information, treating it as a factor in aggravation when its comes to fixing 

penalty. (See Cal.P.U.C. Decision 13-09-028, supra [Slip Opn., p. 36] [―The withholding 

of relevant information causes substantial harm to the regulatory process, which cannot 
59

function effectively unless participants act with integrity at all times. . . . [T]his criterion 

weighs in favor of a significant fine.‖].) 

We have already determined that virtually denuding the Commission‘s jurisdiction 

would be a consequence of the way PG&E wants to have Rule 1.1, as well as sections 

2107 and 2108, interpreted. The notion that a civil penalty cannot be imposed if ―the

potential risk never materialized‖ would encourage utilities not to self-report, and, by 

stripping the Commission‘s sanction power, would make a Commission order to selfreport essentially meaningless—indeed, reward defiance of the Commission. PG&E will 

not prevail in its attempt to repackage in constitutional wrapping the same intent-based 

arguments we have already rejected.

PG&E‘s last argument (the ―Third‖ one quoted above) is phrased in a manner the 

PUC could regard as a masterpiece of tendentious wording. The ―safety-related 

inspection‖ PG&E casts in such a favorable light was exactly the type of event, i.e., a gas 

leak, that the Commission could view as covered by PG&E‘s self-reporting obligation. 

Moreover, the fact that PG&E neglected that obligation for nine months—and then only 

imperfectly attempted to correct—was one the Commission viewed as ―profoundly 

disheartening,‖ precisely because ―[n]atural gas transmission system safety by this 

operator has been one of the Commission‘s highest priorities for three years.‖ (Italics 

added.) The Commission was understandably dismayed at learning that Line 147 could 

have been operated in an unsafe manner, and yet within the authorized MAOP, because 

the Commission made that authorization on the basis of inaccurate information furnished 

by PG&E. That dismay was only aggravated by being advised of ―this provocative 

information in a routine-appearing document.‖ 

According to the Commission‘s Enforcement Rules—which, not incidentally, are 

never mentioned by PG&E—PG&E was on notice that a violation of Rule 1.1 that did 

not cause actual physical harm to people or property would be treated almost as severely 

as one that did. (See Enforcement Rules, supra, 84 Cal.P.U.C.2d 167, 188.) The PUC 

here was confronting a violation of its order—a violation that, beyond disputing the 

mental state issue, PG&E makes no real attempt to deny—concerning the safe operating 
60

pressure of a pipeline transmitting gas through heavily inhabited urban areas. PG&E 

argued that the violation was inadvertent. The Commission found that explanation, 

delivered through Lead Counsel, lacked credibility. That determination, together with its 

decision to impose penalties, evidence the Commission‘s conclusion that PG&E had not 

acted in good faith. 

At the end of this proceeding, PG&E‘s Chief Executive Earley told the 

Commission: ―The fact that I‘m here today means that we failed to meet your 

expectations in how we communicated with you.‖ In the exercise of its ―comprehensive 

jurisdiction over questions of public health and safety arising from utility operations‖ 

(San Diego Gas & Electric Co. v. Superior Court, supra, 13 Cal.4th 893, 915, 924), the 

Commission determined that that failure was sufficiently egregious to warrant a sanction 

of $14,350,000. That determination comes to us with a strong presumption of 

correctness, a presumption that extends to all factual determinations, and to the 

Commission‘s construction of sections 2107 and 2108, and Rule 1.1, all of which deal 

with the conduct of regulatory practices and practicalities concerning which the 

Commission is more familiar and more expert.

30

 Although the amount is large, so is the 

real and potential harm caused by PG&E‘s inaction. And PG&E does not argue that it 

lacks the ability to pay the fine. (Id.; § 2104.5; see Cal.P.U.C. Decision 11-11-001 (Nov. 

1, 2011) [Slip. Opn. p. 40] [―PG&E reported 2010 operating revenues of $13.841 

billion.‖].) 

Exercising our independent judgment as specified by section 1760, the penalties 

imposed do not strike us as ―grossly disproportional to the gravity‖ of PG&E‘s tardiness 

 

30 ―Effective deterrence also requires that the Commission recognize the financial 

resources of the public utility in setting a fine which balances the need for deterrence 

with the constitutional limitations on excessive fines. . . . The Commission intends to 

adjust fine levels to achieve the objective of deterrence, without becoming excessive, 

based on each utility‘s financial resources.‖ (Enforcement Rules, supra, 84 Cal.P.U.C.2d 

167, 189.) ―[T]he two general factors used by the Commission in setting fines are: (1) 

severity of the offense and (2) conduct of the utility. These help guide the Commission 

in setting fines which are proportionate to the violation.‖ (Id. at p. 188.)
61

in self-reporting information that the Commission and the public were entitled to know. 

(United States v. Bajakajian, supra, 524 U.S. 321, 324, italics added.) ―We cannot 

conclude that the unconstitutionality of the penalty [imposed by the PUC] clearly, 

positively and unmistakably appears.‖ (City and County of San Francisco v. Sainez, 

supra, 77 Cal.App.4th 1302, 1321.) PG&E has failed to demonstrate a violation of the 

Excessive Fine provisions of either the United States or the California Constitutions.

DISPOSITION

Decisions 13-12-053 and 14-05-034 are affirmed.
62

_________________________

Richman, J.

We concur:

_________________________

Kline, P.J.

_________________________

Miller, J.

A142127, Pacific Gas and Electric v. Public Utilities Commission
63

Pacific Gas and Electric Company v. Public Utilities Commission of California 

(A142127P)

Attorneys:

Sidley Austin LLP: Marie L. Fiala, Carter Phillips, and Quin M. Sorenson

Attorneys for Petitioner

Karen Valentia Clopton and Pamela Nataloni

Attorneys for Respondent

Meyers, Nave, Riback, Silver & Wilson: Steven Robert Meyers and Harry W. 

Chamberlain II

Attorneys for Real Party in Interest, City of San Bruno

Thomas John Long

Attorney for Real Party in Interest, The Utility Reform Network

Jones Day: Charles Churchill Read and Haley Melisse McIntosh

Attorneys for Real Parties in Interest, American Gas Association et al.