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BAKER 

&

HOSTETLER LLP

ATTORNEYS AT LAW SAN FRANCISCO 

EXHIBIT G

Case: 19-30088 Doc# 2028-10 Filed: 05/15/19 Entered: 05/15/19 16:58:06 Page 1

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 Pages 1 - 15 

UNITED STATES DISTRICT COURT 

NORTHERN DISTRICT OF CALIFORNIA 

BEFORE THE HONORABLE WILLIAM H. ALSUP 

UNITED STATES OF AMERICA, )

 ) 

 Plaintiff, ) 

 ) 

 vs. ) No. CR 14-0175 TEH 

 ) 

PACIFIC GAS & ELECTRIC COMPANY, )

 ) San Francisco, California 

 Defendant. ) Tuesday 

 ) May 7, 2019 

___________________________________) 9:00 a.m. 

TRANSCRIPT OF PROCEEDINGS

APPEARANCES:

For Plaintiff: DAVID ANDERSON 

 United States Attorney 

 450 Golden Gate Avenue 

 San Francisco, California 94102 

 BY: HALLIE HOFFMAN 

 JEFF SCHENK 

 ASSISTANT UNITED STATES ATTORNEYS 

For Defendant: JENNER & BLOCK 

 353 North Clark Street 

 Chicago, Illinois 60654 

 BY: REID JOSHUA SCHAR, ESQ.

 CLARENCE DYER & COHEN, LLP 

 899 Ellis Street 

 San Francisco, California 94109 

 BY: KATE DYER, ESQ.

 

(APPEARANCES CONTINUED ON FOLLOWING PAGE) 

Reported By: Debra L. Pas, CSR 11916 Reported By: Debra L. Pas, CSR 11916, CRR, RMR, RPR CRR, RMR, RPR

 Official Reporter - US District Court

 Computerized Transcription By Eclipse

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APPEARANCES (Continued):

For Defendant: CRAVATH, SWAINE AND MOORE LLP 

 825 Eighth Avenue

 New York, New York 10019 

 BY: KEVIN ORSINI, ESQ.

Also Present: Jennifer Hutchings - USPO 

 Mark Filip.

 - Federal Monitor

 Bill Johnson 

 - Chief Executive Officer of PG&E

 Mark Zafferano 

 - San Bruno City Attorney

 Connie Jackson.

 - Former San Bruno City Manager 

_ _ _ 

 

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P R O C E E D I N G S

May 7, 2019 9:02 a.m.

---000--- 

THE CLERK: Calling Criminal Action 14-174, United

States versus Pacific Gas and Electric Company.

Counsel, please step forward and state your appearances

for the record.

MS. HOFFMAN: Good morning.

MR. SCHENK: Hallie Hoffman and Jeff Schenk for the

United States. Good morning.

THE COURT: Welcome.

MR. BAUER: Good morning, your Honor. Jennifer

Hutchings on behalf of Probation.

THE COURT: Welcome to you.

MR. SCHAR: Good morning, Your Honor. Reid Schar on

behalf of PG&E.

I will note that we're joined today by Bill Johnson, who

is the Chief Executive Officer --

THE COURT: I'm sorry. I couldn't hear. Somebody

was coughing.

MR. SCHAR: Joined by Bill Johnson, who is in the

front row seat, Chief Executive Officer of PG&E.

THE COURT: Welcome to the problem.

MR. JOHNSON: Thank you, Your Honor.

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MS. DYER: Good morning, Your Honor. Kate Dyer for

PG&E.

MR. ORSINI: Good morning, Your Honor. Kevin Orsini

for PG&E.

THE COURT: Any Board members here? Anybody here who

is a Board member?

(No response.)

THE COURT: I guess not. All right.

MR. JOHNSON: I'm a putative Board member. Not quite

yet, but no other ones are here, Your Honor.

THE COURT: All right.

So we're here for sentencing on the Form 12. I didn't get

any sentencing memos. I assume that -- but let me know, did

anyone submit one?

MR. SCHAR: No, Your Honor.

MS. HOFFMAN: No.

THE COURT: You were entitled to, but you didn't have

to. So, all right.

So I have some thoughts about what should be done, but I

want to hear from you, give everyone your say.

Let's start with PG&E first.

MR. SCHAR: Sure. Thank you, Your Honor. And I'll

be brief.

PG&E fully accepts responsibility for the reporting

violation at issue at this sentencing. We appreciate we did

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not meet Your Honor's expectation. We did not meet the

Probation Officer's expectation.

What I would like to very briefly do though is explain

what we have done to reset that in the wake of the January 30th

violation.

On February 8th, basically the week after that finding,

PG&E met with the Probation Officer in person to make sure

everyone was aligned in terms of what the Probation Officer's

expectations were, what she expected from us and how we could

communicate with her in a more robust way.

Since that time the Probation Officer has now been invited

into weekly phone calls that occur with the Monitor team.

Every single week those calls occur in which new

investigations, to the extent any exist, are discussed.

Updates on ongoing investigations are discussed and, frankly,

just general issues of relevancy to PG&E and the Monitorship

are discussed.

In addition, we have increased the amount of email

communication. When anything in our view that meets the

requirements and, frankly, beyond the requirements of the terms

of probation were to occur, we're trying to make sure we very

timely email and report that, if not in a phone call in an

email at least with the attachment that would be particularly

relevant to the issue that's in play. So we have increased, in

our view, significantly and invited the Probation Officer into

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these weekly calls.

We believe these efforts, hopefully, have addressed the

concerns that were raised here. We, of course, are willing to

work further with Your Honor and the Probation Officer in any

additional ways in which you would like to see increased

reporting.

It's our view that other than the Form 12 that's at issue

here, we have met the terms of probation. And because we

believe we've addressed the issue, it's our position we don't

think new terms are needed.

However, to the extent Your Honor disagrees, what we would

ask is those terms be specific to the issue that's a violation

here, and that is the reporting issue and scoping terms around

the robust reporting.

THE COURT: I'm going to come to the Government, but

I forgot to ask, is anyone here from San Bruno?

MR. ZAFFERANO: Yes, Your Honor. Mark Zafferano.

I'm the City Attorney.

MS. JACKSON: Connie Jackson, former City Manager. 

THE COURT: Thank you very much. Welcome.

And, also, I'd like to recognize our Monitor, let him make

his appearance, please.

MR. FILIP: Good morning, your Honor. Mark Filip

Monitor.

THE COURT: Ms. Hoffman.

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MS. HOFFMAN: Mr. Schenk is going to handle this.

MR. SCHENK: Your Honor, the Court found at our last

hearing that PG&E violated Special Condition No. 8. That was

the condition that directed PG&E to have communication with its

Probation Officer when certain conditions are met.

PG&E failed to meet that requirement and after taking

testimony from the Probation Officer, this Court found a

violation.

So when the Government was thinking about what an

appropriate sentence would be for that conduct, we focused on

the conduct at issue; that is, communication between PG&E and

the Probation Officer.

While the Government doesn't have a lot of insight, we

don't participate in those dialogues, meetings, events, we

understand, at least, from the Probation Officer that she is

happy with the level of communication. 

As a result, the Government doesn't have a significant

level of insight into what other remedies would be necessary to

prevent that type of violation from occurring in the future,

but we think that a sentence that is focused on that type of

conduct, on that type of violation is the appropriate sentence

in this case and we would support a request from Probation or

the Court that is tailored to remedy that particular violation.

We understand the Court received briefing from the

parties. We submitted some on the extension question, whether

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the Court can extend probation beyond five years, on the issue

of public disclosure of the Monitor reports. We're happy to

address issues, but it doesn't seem like there is a lot of

disagreement among the parties on those two topics.

So we understand the Court's focus now to be on the

question of the sentence for the Form 12 violation.

THE COURT: So how long has Mr. Johnson been on

Board?

MR. JOHNSON: This is the beginning of my fourth day,

Your Honor.

THE COURT: Okay. Why don't you come up here for a

second?

(Mr. Johnson approaches the podium.)

THE COURT: You were with TVA before. What was your

role before this? I read some things in the paper, but it

might have been wrong.

MR. JOHNSON: That happens occasionally.

Yes, sir. I was the CEO of TVA starting in January of

2013 until last Wednesday.

THE COURT: Are you from California?

MR. JOHNSON: No, sir. I grew up in northwestern

Pennsylvania, but I've lived in North Carolina and Tennessee

for the last 45 or 50 years. So I believe I have picked up

some of the inflection and the idiom.

THE COURT: That's a big operation, TVA. And you

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were in charge of that for a long time? How long were you in

charge of the TVA?

MR. JOHNSON: Almost six and a half years.

THE COURT: Well, you have your hands full here.

MR. JOHNSON: Yes, sir.

THE COURT: You do.

Okay. Well, do you have anything you want to say? You

don't -- you don't have to, but if you would like to say

something, I would be happy to hear it.

MR. JOHNSON: Your Honor, I thought I might tell you

why I came to California.

THE COURT: Let's hear that.

MR. JOHNSON: I have been in the industry a long

time. It's treated me well and I think it's an important

industry for the country and I really feel like the outcomes

here have to be better; the outcomes by PG&E, the outcomes for

customers, for fire victims, for everybody. And so at an

advanced stage, and really post career, I have come here to

just see if I could help make outcomes better. That's why I'm

here.

THE COURT: Where are you going to live?

MR. JOHNSON: Somewhere in the city. It's not quite

been determined yet, but pretty close to the office because I

intend to be there quite frequently.

THE COURT: Okay. Are you up to speed on what's

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happened in this Court the last -- since the San Bruno case and

the trial and the verdict and all of that?

MR. JOHNSON: Yes, Your Honor. I have read the

sentences. I've kept up and fully briefed. I've read a lot of

material about what is happening in this courtroom.

THE COURT: Well, we have a common problem and I

think sometimes the lawyers think I'm their enemy, but the

truth is I'm trying to -- we're all trying to get to the common

goal.

I don't care really how much money PG&E makes, but I do

care about the safety of the people who live in California.

And one of the biggest problems we've had is that PG&E has been

starting a lot of fires, and they had that horrible explosion

in San Bruno, and I just don't think PG&E has put safety first.

The ads all say it does, but I think if you look at the record,

PG&E has allowed things to slide on the safety front,

particularly on the fire part, cutting those trees or trimming

those trees that could fall onto the lines, all the

uninsulated. There is nothing wrong with that as long as the

trees can't reach them, but then they spark.

One thing you're going to see out here that's vastly

different than Tennessee and North Carolina is the long

summers. We have six to seven months of no rain. And you

can't blame it on global warming because I have been here a

long time and it's been that way every summer. 

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So one little spark from a power line in the month of

August, say, will fall down 40 feet and hit the grass, all dry

as can be. That starts a fire. No one is around, can't be

around. It's out in the middle of nowhere. Within two minutes

it's up to the brush. That brush has got a resin in it that is

highly flammable. You don't -- I don't think you have this

kind of brush in Tennessee. And that brush catches on fire

like gasoline and then that catches the trees on fire and

within 30 minutes there is a forest fire going, a wildfire.

It's impossible sometimes to stop.

So your company admitted that it started 17 of those fires

in 2017 just in the Wine Country. This wildfire season, they

get hotter and hotter, but we have always had hot summers that,

in my view, starts about June 21 and runs through the first big

rain in the November or December.

After the rains, it's okay if there is a spark because it

won't go anywhere, but in the middle of the wildfire season it

can burn hundreds of thousands of acres and kill lots of

people.

So as much as we need the electricity, it has got to come

to us safely and we need an infrastructure where PG&E is on top

of this and is providing it to us safely. Anyway, that's my

little welcome speech to you.

But here is what I think we should do for the remedy on

the Form 12. I'm going to change subjects now a little bit.

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I have two ideas and they are tied to Butte County. I'm

going to direct the Federal Monitor and Probation to facilitate

meetings between the PG&E -- I'm going to come back to what I

mean by that -- PG&E directors and PG&E senior executive

leadership and local officials in Paradise, California and San

Bruno, including tours of those communities, so that the

leadership can see the gravity of what happened up there. And

I want -- we can get a bus. I think I'm going to go on this

tour, too. All lawyers can go, but the Board of Directors

ought to see firsthand the devastation.

The second is to direct that the Board of Directors have a

committee -- it could be an existing committee, like the

Compliance Committee -- who will track the progress or lack of

progress by the utility in meeting its own wildfire mitigation

plan and the conditions of probation and to report in writing

to the Board for each meeting and verbally present at each

meeting what the progress and shortfalls have been and how to

come into compliance.

So those are the two ideas, the two sentences.

Now, what I want to do is give you the flexibility to

work -- to fix up my language. So I don't want to impose an

untoward burden. I would like the tour to be done by the

middle of July. So I know these are important people on your

Board, so it may take a while to find a date that will work.

The Monitor is going to go as well.

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So if you don't like the language that I have just given

you, you all can tinker with it and work out the kinks. But if

you don't come to an agreement that I'm good with, then we'll

just go with what I've -- something very close to what I just

said.

So in summary, the first one is communications with those

two affected communities, Paradise and San Bruno, with an

on-scene in-person conversation with victims, with fire chiefs

and looking at it firsthand. Not on TV. Not on a video. But

being up there in person.

And the second is having a committee of the Board that is

dedicated to compliance with the wildfire mitigation plan and

the conditions of probation.

Okay. Anyone want to argue with me about that?

MR. SCHAR: No, Your Honor.

THE COURT: Okay.

MS. HOFFMAN: No, Your Honor.

PROBATION OFFICER: No, Your Honor.

THE COURT: Well, do you want -- I'll tell you what.

I'll wait a few days and let you think about the language and

submit to me better language than I just used.

So maybe we'll all have a bus ride on July 15th or so or

sometime before the middle of July.

This is -- I want to end by just saying how serious this

problem is and we are right on the cusp now of a new wildfire

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season. It will start in six weeks. And I will lose sleep

over it, over did I do enough to help PG&E stop these fires.

Now, I want to be very clear. Many fires get started that

PG&E has nothing to do with, but I think PG&E is the number

one -- no one has started more fires than PG&E. So you're at

the top of the list, but there are a lot of other causes, I

acknowledge that. So we would still have some fires even

without PG&E. I want to help PG&E get to where we all need to

be. 

And I know that's what you want to do, Mr. Johnson. So

welcome aboard. I appreciate your help.

Okay. Are we done for today? Was there anything else I

needed to go over. Jennifer?

PROBATION OFFICER: No, Your Honor.

THE COURT: Okay.

Anything else?

MR. JOHNSON: Thank you, your Honor. 

THE COURT: I want to just say I'm not going to rule

on whether or not I have the authority to extend probation. I

see the arguments. I'm going to leave that in abeyance because

I don't think it's the right answer in this case anyway. For

the Form 12 we're dealing with, it was not the right answer.

So what is the right answer is what I have asked you to

do. Okay?

MS. HOFFMAN: Thank you, Your Honor.

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MR. JOHNSON: Thank you, Your Honor.

MR. SCHAR: Thank you, Your Honor.

THE COURT: Have a good day.

(Proceedings adjourned.)

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CERTIFICATE OF OFFICIAL REPORTER

I certify that the foregoing is a correct transcript from

the record of proceedings in the above-entitled matter. 

 __________________________________

Debra L. Pas, CSR 11916, CRR, RMR, RPR 

 Tuesday, May 7, 2019 

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