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STATEMENT OF FEDERAL MONITOR 

R. Alexander Pilmer (State Bar No. 166196) 

KIRKLAND & ELLIS LLP 

555 California Street 

San Francisco, CA 94104 

Telephone: (415) 439-1400 

Facsimile: (415) 439-1500 

Email: alexander.pilmer@kirkland.com 

Stephen E. Hessler, P.C. (pro hac vice forthcoming)

KIRKLAND & ELLIS LLP 

601 Lexington Avenue 

New York, NY 10022 

Telephone: (212) 446-4800 

Facsimile: (212) 446-4900 

Email: stephen.hessler@kirkland.com 

Marc Kieselstein, P.C. (pro hac vice forthcoming)

KIRKLAND & ELLIS LLP 

300 North LaSalle 

Chicago, Illinois 60654 

Telephone: (312) 862-2000 

Facsimile: (312) 862-2200 

Email: marc.kieselstein@kirkland.com 

Attorneys for the FEDERAL MONITOR 

UNITED STATES BANKRUPTCY COURT 

NORTHERN DISTRICT OF CALIFORNIA 

SAN FRANCISCO DIVISION 

In re: 

PG&E CORPORATION, et al.,

1

 Debtors. 

 CASE NO. 19-30088 

(Joint Administration Requested) 

STATEMENT OF THE PACIFIC GAS 

AND ELECTRIC COMPANY 

FEDERAL MONITOR REGARDING 

SCOPE AND CONTINUATION OF 

MANDATE 

Judge: Honorable Dennis Montali 

 

1

 The Debtors in these chapter 11 cases, along with the last four digits of each Debtor’s federal tax identification number, 

are PG&E Corporation [4914] and Pacific Gas and Electric Company [2640]. The location of the Debtors’ corporate 

headquarters is 77 Beale Street, P.O. Box 770000, San Francisco, California 94177.

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STATEMENT OF FEDERAL MONITOR 2 

I. INTRODUCTION 

1. As described in more detail below, on January 26, 2017, the United States District 

Court for the Northern District of California (the “District Court”) appointed a monitor (the “Federal 

Monitor”) as a condition of the Pacific Gas and Electric Company’s (“PG&E”) probationary sentence 

for its criminal convictions in the wake of a 2010 gas pipeline explosion. 

2. Consistent with the Bankruptcy Code’s hallmarks of transparency and coordination, 

the Federal Monitor submits this summary statement to assist the Court and all stakeholders in 

understanding the Federal Monitor’s mandate, the circumstances giving rise to his appointment, and 

the manner in which the Federal Monitor intends to continue to fulfill that mandate throughout these 

chapter 11 cases. 

II. BACKGROUND 

2. On September 9, 2010, a natural gas pipeline owned and operated by PG&E ruptured 

in a residential neighborhood in San Bruno, California. The tragic explosion and fire that ensued 

caused eight deaths, 58 injuries, and the damage or destruction of 108 homes. Subsequently, the 

National Transportation and Safety Board (the “NTSB”) and the California Public Utilities 

Commission (the “CPUC”) launched investigations into, and both regulators ultimately identified 

deficiencies within, PG&E’s gas pipeline integrity management program. 

3. On April 1, 2014, PG&E was indicted on criminal charges related to the investigation 

of the 2010 pipeline explosion and fire and also for various regulatory felonies. The United States, 

represented by the United States Attorney’s Office for the Northern District of California (the 

“USAO”), charged PG&E with one count of obstructing the NTSB’s investigation in violation of 18 

U.S.C. § 1505 and 27 counts of violating the Natural Gas Pipeline Safety Act as set forth in 49 U.S.C. 

60123. 

4. On August 9, 2016, after an eight-week jury trial, PG&E was convicted on one count 

of obstructing the NTSB’s investigation and five counts of violating the Natural Gas Pipeline Safety 

Act. 

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STATEMENT OF FEDERAL MONITOR 3 

5. On January 31, 2017, the District Court entered its judgment (the “Judgment”)2 on the 

six counts and sentenced PG&E to five years of probation, the conditions of which included a 

$3 million fine, requirements to publish the details of the sentence in local and national newspapers 

and television commercials, 10,000 hours of community service, and a number of other requirements 

related to future compliance with public health and safety standards. 

6. Most relevant for present purposes, the Judgment required PG&E to retain a third-party 

monitor, and the District Court attached to the Judgment an order outlining the goals and scope of the 

monitorship (the “Monitor Order”). As set forth therein: 

The goal of the Monitorship shall be to prevent the criminal conduct 

with respect to gas pipeline transmission safety that gave rise to the 

Superseding Indictment filed in this matter. To that end . . . the 

Monitor’s goal is to help ensure [PG&E] takes reasonable and 

appropriate steps to maintain the safety of the gas transmission pipeline 

system, performs appropriate assessment testing on gas transmission 

pipelines, and maintains an effective ethics and compliance program 

and safety related incentive program. 

The Monitor Order also specified the following 15 requirements on which the Federal Monitor was 

ordered to focus as part of the terms of PG&E’s probationary sentence: 

(i) Implementation of policies and procedures sufficient to comply with 

CPUC Decision 16-09-055 (effective Sept. 30, 2016) relating to the 

handling of safety citations and timely reporting of self-identified 

potential violations. 

(ii) Completion of the collection and organization of the necessary pipeline 

strength test records and pipeline features information for validation of 

the Maximum Allowable Operating Pressure for PG&E's gas 

transmission pipeline, consistent with the NTSB's recommendations for 

maintaining asset records to a “traceable, verifiable, and complete” 

requirement, and in accordance with CPUC Resolution L-410 (Jan. 13, 

2011), Decision 11-06-017, and Decision 12-12-030. 

(iii) Confirmation of satisfactory strength testing of at least 500 miles of gas 

transmission pipelines in 2017 and 2018. 

(iv) Upgrading and/or retrofitting approximately 300 miles of gas 

transmission pipelines to accommodate in-line inspection tools in 2017 

and 2018. 

 

2

 See Judgment in a Criminal Case, dated as of January 26, 2017 and attached hereto as Exhibit A, to which the Monitor 

Order (defined below) is attached beginning on page 6; see also transcript of the sentencing hearing, dated as of 

January 26, 2017 and attached hereto as Exhibit B. 

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STATEMENT OF FEDERAL MONITOR 4 

(v) Consistent with CPUC Decision 15-04-024, Appx E at 1 (San Bruno

OII Remedy 4), implementation of Integrity Management procedures 

that ensure where data is missing, direct the Company to use 

conservative, supportable assumptions as required by ASME B31.8S. 

(vi) Consistent with CPUC Decision 15-04-024, Appx E at 1 (San Bruno

OII Remedy 3), completion of records search to include gas 

transmission pipeline historical leak data into a single database of 

transmission leak record data. 

(vii) Consistent with CPUC Decision 15-04-024, Appx. E at 1 (San Bruno 

OII Remedy 2), implementation of Integrity Management procedures 

sufficient to ensure that the data gathering processes, the data elements 

collected and reviewed, and company data sources meet the 

requirements of 49 CFR Part 192.917(b) and ASME B31.8S. 

(viii) Consistent with NTSB Recommendation P-11-29, implementation of 

Integrity Management revisions to include (1) a revised risk model, 

reflecting actual recent data on leaks, failures, and incidents; (2) 

consideration of defect and leak data for the life of each pipeline; (3) 

revised risk methodology to ensure assessment methods are selected for 

each pipeline segment; and (4) improved self-assessment that 

adequately measures whether the program is effectively assessing and 

evaluating the integrity of each covered segment. 

(ix) Implementation of policies and procedures that address threats caused 

by vegetation and structural encroachments on gas transmission 

pipelines. 

(x) Implementation of processes and procedures that for each segment of 

gas transmission line in High-Consequence Areas, enable PG&E to

calculate the expected life of the pipe using a fracture control analysis 

that (1) estimates maximum flaw sizes remaining after inspections 

and/or strength testing; (2) estimates potential crack growth rate based 

on the past history of and potential pressure cycles; (3) assesses the 

remaining life calculations; and (4) determines appropriate methods of 

reassessment and frequency of reassessment of each such segment. 

(xi) Consistent with CPUC Decision 15-04-024, Appx. E at 2 (San Bruno 

OII Remedy 6), implementation of policies and procedures such that 

relevant data is incorporated in threat identification and assessment 

procedures for both covered and non-covered segments, including but 

not limited to potential manufacturing and construction threats, and leak 

data. 

(xii) Consistent with CPUC Decision 15-04-024, Appx. E at 2 (San Bruno 

OII Remedy 9), implementation of threat identification and assessment 

procedures such that High-Consequence Areas are prioritized consistent 

with 49 CFR Part 192.917(e)(3)-(4). 

(xiii) Implementation of policies designed to incorporate changed 

circumstances into assessment methodologies and prioritization,

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STATEMENT OF FEDERAL MONITOR 5 

including Risk Management Procedure 16 (“Threat Identification"”) 

and TD 4810B-001 (“Changes to Integrity Management Pressure 

Testing Requirements for Unstable Manufacturing Threats”), consistent 

with ASME B31.8S. 

(xiv) Consistent with CPUC Decision 15-04-024, Appx. E at 2 (San Bruno 

OII Remedy 8), cessation of regularly increasing pipeline pressure up to 

a “system MAOP” to eliminate the need to consider manufacturing and 

construction threats, and analysis of segments that were subjected to the 

planned pressure increases to determine the risk of failure from 

manufacturing threats under 49 CRF Part 192.917(e)(3), including 

review of strength-testing of all segments identified as having an 

unstable manufacturing threat. 

(xv) Consistent with CPUC Decision 15-04-024, Appx. E at 2 (San Bruno 

OII Remedy 10), implementation of threat identification and assessment 

policies and procedures such that cyclic fatigue and other loading 

conditions are incorporated into segment-specific threat assessments 

and risk ranking algorithm, including review of risk management

procedures for appropriate treatment of cyclic fatigue and loading. 

7. With the consent of PG&E and the USAO, Mark Filip, a partner at Kirkland & Ellis 

LLP, was engaged as the Federal Monitor on April 11, 2017.3

 The Federal Monitor has established 

and continues a regular cadence of meetings, field visits, interviews, and data audits with multiple 

lines of business at PG&E. 

8. In late 2017, following the “Wine Country” wildfires, the Federal Monitor, also started 

to include the review and aspect of certain aspects of PG&E’s electric distribution system.4 To be 

clear, the Federal Monitor’s role on this front is forward-looking—the Federal Monitor has not 

attempted to determine the cause of any wildfires or whether any federal or state laws or regulations 

 

3

 Mr. Filip previously served as Acting United States Attorney General, Deputy United States Attorney General, and 

United States District Court Judge for the Northern District of Illinois. 

4

 See transcript of status conference hearing, dated as of December 7, 2017 and attached hereto as Exhibit C, beginning 

at page 8; letter from the Federal Monitor to the District Court, dated as of December 31, 2018 and attached hereto as 

Exhibit D. 

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STATEMENT OF FEDERAL MONITOR 6 

have been violated, issues which are the subject of extensive, ongoing civil and governmental 

proceedings. 

9. Most recently, on January 9, 2019, the District Court issued an order to show cause 

(the “Show Cause Order”) as to why the conditions of PG&E’s probation should not be modified.5 

The modified terms proposed by the District Court in the Show Cause Order could impose on PG&E 

additional inspection and compliance obligations related to its electric transmission system—and add 

corresponding oversight and assessment obligations of the Federal Monitor. As of the filing of this 

Statement, the District Court has not issued a further ruling on its Show Cause Order, with a hearing 

scheduled for January 30, 2019. 

III. CONTINUATION OF MANDATE DURING THESE CHAPTER 11 CASES 

10. Pursuant to the Judgment, and in continuation of the final resolution of the criminal 

proceeding against PG&E, the Federal Monitor intends to fulfill his duty through the remainder of 

PG&E’s probation (i.e., at least through early 2022). To that end, since PG&E announced it would 

commence these chapter 11 cases, the Federal Monitor has engaged with the USAO and PG&E—and 

it is the Federal Monitor’s understanding that the USAO and PG&E concur with the Federal Monitor’s 

view of this continued mandate.6

 

[Remainder of page intentionally left blank.] 

 

5

 See Order to Show Cause why PG&E’s Probation Should Not be Modified, dated as of January 9, 2019 and attached 

hereto as Exhibit E. 

6

 Further to this end, counsel for the Federal Monitor also has been engaging recently with the Office of the United 

States Trustee for the Northern District of California. 

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STATEMENT OF FEDERAL MONITOR 

DATED: January 29, 2019 

/s/ R. Alexander Pilmer 

R. Alexander Pilmer 

R. Alexander Pilmer (State Bar No. 166196) 

KIRKLAND & ELLIS LLP 

555 California Street 

San Francisco, CA 94104 

Telephone: (415) 439-1400 

Facsimile: (415) 439-1500 

Email: alexander.pilmer@kirkland.com 

Stephen E. Hessler, P.C. (pro hac vice forthcoming)

KIRKLAND & ELLIS LLP 

601 Lexington Avenue 

New York, NY 10022 

Telephone: (212) 446-4800 

Facsimile: (212) 446-4900 

Email: stephen.hessler@kirkland.com 

Marc Kieselstein, P.C. (pro hac vice forthcoming)

KIRKLAND & ELLIS LLP 

300 North LaSalle 

Chicago, Illinois 60654 

Telephone: (312) 862-2000 

Facsimile: (312) 862-2200 

Email: marc.kieselstein@kirkland.com 

Attorneys for the FEDERAL MONITOR 

Case: 19-30088 Doc# 53 Filed: 01/29/19 Entered: 01/29/19 12:05:04 Page 7 of 62
Exhibit A 

Case: 19-30088 Doc# 53 Filed: 01/29/19 Entered: 01/29/19 12:05:04 Page 8 of 62
2AO 245E (Rev. 12/03) Judgment in a Criminal Case for Organizational Defendants

Sheet 1

UNITED STATES DISTRICT COURT

District of

UNITED STATES OF AMERICA JUDGMENT IN A CRIMINAL CASE

V. (For Organizational Defendants)

CASE NUMBER:

THE DEFENDANT ORGANIZATION:

Defendant Organization’s Attorney

G pleaded guilty to count(s)

G pleaded nolo contendere to count(s)

which was accepted by the court.

G was found guilty on count(s)

after a plea of not guilty.

The organizational defendant is adjudicated guilty of these offenses:

Title & Section Nature of Offense Offense Ended Count

The defendant organization is sentenced as provided in pages 2 through of this judgment.

G The defendant organization has been found not guilty on count(s)

G Count(s) G is G are dismissed on the motion of the United States.

It is ordered that the defendant organization must notify the United States attorney for this district within 30 days of any change of name, principal business address, or mailing address until all fines, restitution, costs, and special assessments imposed by this judgment are fully paid. If ordered to pay restitution, the defendant organization must notify the court and United States attorney of material

changes in economic circumstances.

Defendant Organization’s

Federal Employer I.D. No.:

Date of Imposition of Judgment

Defendant Organization’s Principal Business Address:

Signature of Judge

Name of Judge Title of Judge

Date

Defendant Organization’s Mailing Address:

Northern California

PACIFIC GAS AND ELECTRIC COMPANY 0971 3:14CR00175-001 TEH

Steven Bauer, Sean P.J. Coyle, James Scott, 

✔ 1, 2, 5, 6, 7, and 8 of the Superseding Indictment.

18 U.S.C. § 1505 Obstruction of a National Transportation Safety Board Investigation 9/30/2011 1

49 U.S.C. § 60123 Natural Gas Pipeline Safety Act 9/9/2010 2, 5, 6, 7, 8

18

✔ 3, 4, and 9-12

94-0742640

77 Beale Street, P.O. Box 770000 

San Francisco, CA 94177

77 Beale Street, P.O. Box 770000 

San Francisco, CA 94177

1/26/2017

The Honorable Thelton E. Henderson Senior U.S. District Judge

.DWH'\HU%HQMDPLQ:LOOLDP6Q\GHUDQG

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Reid J. Schar,

13 1/31/2017

Case 3:14-cr-00175-WHA Document 922 Filed 01/31/17 Page 1 of 18

Case: 19-30088 Doc# 53 Filed: 01/29/19 Entered: 01/29/19 12:05:04 Page 9 of 62
AO 245E (Rev. 12/03) Judgment in a Criminal Case for Organizational Defendants

Sheet 2 — Probation

Judgment—Page of DEFENDANT ORGANIZATION:

CASE NUMBER:

PROBATION

The defendant organization is hereby sentenced to probation for a term of :

The defendant organization shall not commit another federal, state or local crime.

If this judgment imposes a fine or a restitution obligation, it is a condition of probation that the defendant organization pay in accordance with the Schedule of Payments sheet of this judgment.

 The defendant organization must comply with the standard conditions that have been adopted by this court as well as with any

additional conditions on the attached page (if indicated below).

STANDARD CONDITIONS OF SUPERVISION

1) within thirty days from the date of this judgment, the defendant organization shall designate an official of the organization to act

as the organizations’s representative and to be the primary contact with the probation officer;

2) the defendant organization shall answer truthfully all inquiries by the probation officer and follow the instructions of the probation officer;

3) the defendant organization shall notify the probation officer ten days prior to any change in principal business or mailing address;

4) the defendant organization shall permit a probation officer to visit the organization at any of its operating business sites;

5) the defendant organization shall notify the probation officer within seventy-two hours of any criminal prosecution, major civil

litigation, or administrative proceeding against the organization;

6) the defendant organization shall not dissolve, change its name, or change the name under which it does business unless this judgment and all criminal monetary penalties imposed by this court are either fully satisfied or are equally enforceable against the

defendant’s successors or assignees; and

7) the defendant organization shall not waste, nor without permission of the probation officer, sell, assign, or transfer its assets.

2 18

PACIFIC GAS AND ELECTRIC COMPANY

0971 3:14CR00175-001 TEH

Five (5) years. This term consists of five years on each of Counts 1, 2, 5, 6, 7, and 8, all counts to run concurrent.

Case 3:14-cr-00175-WHA Document 922 Filed 01/31/17 Page 2 of 18

Case: 19-30088 Doc# 53 Filed: 01/29/19 Entered: 01/29/19 12:05:04 Page 10 of

 62
AO 245E (Rev. 12/03) Judgment in a Criminal Case for Organizational Defendants

Sheet 2B — Probation

Judgment—Page of DEFENDANT ORGANIZATION:

CASE NUMBER:

SPECIAL CONDITIONS OF SUPERVISION

3 18 PACIFIC GAS AND ELECTRIC COMPANY

0971 3:14CR00175-001 TEH

1. While on probation, PG&E shall not commit another Federal, State, or local crime. 

2. PG&E shall comply with the separately entered order concerning a third-party monitor (see attached order on 

pages 6 through 18 of the judgment). 

3. Within six months of the date of the judgment, PG&E shall develop and submit to the Court an effective compliance and 

ethics program consistent with § 8B2.1 of the Sentencing Guidelines. The submission shall include a schedule for 

implementation. PG&E shall revise the program and file updates with the Court whenever deemed appropriate by the 

third-party monitor. 

4. Within 60 days of the date of the judgment, PG&E shall place one full-page advertisement in both the Wall Street 

Journal and San Francisco Chronicle publicizing the nature of the offenses committed, the convictions, the nature of the 

punishment imposed, and the steps that will be taken to prevent the recurrence of similar offenses. 

5. For three months beginning no later than 60 days after sentencing, and to the greatest extent possible replicating the 

same channels and air times that PG&E used before and/or during trial in this case in 2016, PG&E will air television 

commercials which publicize the nature of the offenses committed, the convictions, the nature of the punishment imposed, 

and the steps that will be taken to prevent the recurrence of similar offenses. PG&E will air such commercials up to the 

cost of $3,000,000 less the cost of the print advertisements referred to in (4) above. The cost of advertising does not 

constitute a monetary penalty. PG&E estimates that this will result in approximately 12,500 commercials of approximately 60 

seconds in duration across broadcast and cable outlets over the three-month period. PG&E will not include language 

regarding the conviction as part of the company's public service safety announcements, including what actions the public 

should take in the event of wires down, gas leaks or other emergencies, and which typically run on radio and digitally given 

time sensitivity, because such information could cause the public to fail to take the needed safety actions in a timely 

fashion.

6. PG&E shall submit to: (A) a reasonable number of regular or unannounced examinations of its books and records at 

appropriate business premises by the probation officer or experts engaged by the Court; and (B) interrogation of 

knowledgeable individuals within the organization. Compensation to and costs of any experts engaged by the Court shall 

be paid by the organization. The probation officer and any Court-engaged experts shall work with the third-party monitor to 

minimize duplication of efforts. 

7. PG&E shall perform 10,000 hours of community service. At least 2,000 of these hours shall be performed by high-level 

personnel, as defined in the commentary to § 8A1.2 of the Sentencing Guidelines. PG&E shall provide the prospective 

community service workers’ names and titles to the probation officer to ensure compliance with this condition. The location 

and type of community service must be preapproved by the probation officer and to every extent possible be in the City of 

San Bruno. The intent of this condition is to require 10,000 hours of community service that PG&E would not otherwise 

have done, and the probation officer shall therefore consider as part of the approval process the extent to which the 

proposed projects can be tied to existing service initiatives by PG&E. The community service shall be geared toward giving 

back to communities affected by PG&E’s negligence, with special emphasis on the City of San Bruno, as directed by the 

probation officer. 

8. PG&E shall notify the probation officer and monitor immediately upon learning of (A) any material adverse change in its 

business or financial condition or prospects, or (B) the commencement of any bankruptcy proceeding, major civil litigation, 

criminal prosecution, or administrative proceeding against the organization, or any investigation or formal inquiry by 

governmental authorities regarding the organization. 

9. PG&E shall pay the fine and special assessment in a lump sum within 60 days of the date of this judgment. Any fines 

and special assessment payment is not to be passed off to the ratepayers. 

Case 3:14-cr-00175-WHA Document 922 Filed 01/31/17 Page 3 of 18

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 AO 245E (Rev. 12/03) Judgment in a Criminal Case for Organizational Defendants 

Sheet 3 — Criminal Monetary Penalties

Judgment — Page of DEFENDANT ORGANIZATION:

CASE NUMBER:

CRIMINAL MONETARY PENALTIES

The defendant organization must pay the following total criminal monetary penalties under the schedule of payments on Sheet 4.

Assessment Fine Restitution

TOTALS $ $$

G The determination of restitution is deferred until . An Amended Judgment in a Criminal Case (AO 245C) will be

entered after such determination.

G The defendant organization shall make restitution (including community restitution) to the following payees in the amount listed

below.

If the defendant organization makes a partial payment, each payee shall receive an approximately proportioned payment, unless specified otherwise in the priority order or percentage payment column below. However, pursuant to 18 U.S.C. § 3664(i), all nonfederal victims must

be paid before the United States is paid.

Name of Payee Total Loss* Restitution Ordered Priority or Percentage

TOTALS $ $

G Restitution amount ordered pursuant to plea agreement $

G The defendant organization shall pay interest on restitution or a fine of more than $2,500, unless the restitution or fine is paid in full

before the fifteenth day after the date of the judgment, pursuant to 18 U.S.C. § 3612(f). All of the payment options on Sheet 4 may

be subject to penalties for delinquency and default, pursuant to 18 U.S.C. § 3612(g).

G The court determined that the defendant organization does not have the ability to pay interest, and it is ordered that:

G the interest requirement is waived for the G fine G restitution.

G the interest requirement for the G fine G restitution is modified as follows:

* Findings for the total amount of losses are required under Chapters 109A, 110, 110A, and 113A of Title 18 for offenses committed on or after

September 13, 1994, but before April 23, 1996.

4 18 PACIFIC GAS AND ELECTRIC COMPANY

0971 3:14CR00175-001 TEH

2,400.00 3,000,000.00 None

0.00 0.00

Case 3:14-cr-00175-WHA Document 922 Filed 01/31/17 Page 4 of 18

Case: 19-30088 Doc# 53 Filed: 01/29/19 Entered: 01/29/19 12:05:04 Page 12 of

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AO 245E (Rev. 12/03) Judgment in a Criminal Case for Organizational Defendants 

Sheet 4 — Schedule of Payments

Judgment — Page of DEFENDANT ORGANIZATION:

CASE NUMBER:

SCHEDULE OF PAYMENTS

Having assessed the organization’s ability to pay, payment of the total criminal monetary penalties are due as follows:

A G Lump sum payment of $ due immediately, balance due

G not later than , or

G in accordance with G C or G D below; or

B G Payment to begin immediately (may be combined with GC or G D below); or

C G Payment in (e.g., equal, weekly, monthly, quarterly) installments of $ over a period of

(e.g., months or years), to commence (e.g., 30 or 60 days) after the date of this judgment; or

D G Special instructions regarding the payment of criminal monetary penalties:

All criminal monetary penalties are made to the clerk of the court.

The defendant organization shall receive credit for all payments previously made toward any criminal monetary penalties imposed.

G Joint and Several

Defendant and Co-Defendant Names and Case Numbers (including defendant number), Total Amount, Joint and Several Amount, and

corresponding payee, if appropriate.

G The defendant organization shall pay the cost of prosecution.

G The defendant organization shall pay the following court cost(s):

G The defendant organization shall forfeit the defendant organization’s interest in the following property to the United States: 

Payments shall be applied in the following order: (1) assessment, (2) restitution principal, (3) restitution interest, (4) fine principal,

(5) fine interest, (6) community restitution, (7) penalties, and (8) costs, including cost of prosecution and court costs.

5 18 PACIFIC GAS AND ELECTRIC COMPANY

0971 3:14CR00175-001 TEH

✔ 3,002,400.00

✔ ✔

✔

Any monetary penalties shall be paid within 60 days of this judgment in a lump sum payment. Payments shall be made 

to the Clerk of U.S. District Court, Attention: Financial Unit, 450 Golden Gate Ave., Box 36060, San Francisco, CA 

94102.

Case 3:14-cr-00175-WHA Document 922 Filed 01/31/17 Page 5 of 18

Case: 19-30088 Doc# 53 Filed: 01/29/19 Entered: 01/29/19 12:05:04 Page 13 of

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Judgment - Page 12 of 18

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Exhibit B 

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 Pages 1 - 11

UNITED STATES DISTRICT COURT 

NORTHERN DISTRICT OF CALIFORNIA 

Before The Honorable Thelton E. Henderson, Judge 

UNITED STATES OF AMERICA, ) 

 ) 

 Plaintiff, ) 

 ) 

 VS. ) NO. CR 14-00175 TEH 

 ) 

PACIFIC GAS and ELECTRIC )

COMPANY, )

 ) 

 Defendants. )

_______________________________) 

 San Francisco, California 

 Thursday, January 26, 2017 

TRANSCRIPT OF PROCEEDINGS

APPEARANCES:

For Plaintiff: 

 BRIAN J. STRETCH 

 United States Attorney 

 450 Golden Gate Avenue 

 San Francisco, California 94102 

 BY: HALLIE HOFFMAN

 HARTLEY WEST 

 JEFFREY BENJAMIN SCHENK

 ASSISTANT UNITED STATES ATTORNEYS

For Defendant: 

 LATHAM & WATKINS 

 505 Montgomery Street - Suite 1900 

 San Francisco, California 94111 

 BY: STEVEN MARK BAUER

 KATE DYER 

 MARGARET TOUGH 

 SEAN COYLE

 ATTORNEYS AT LAW 

Also present: Jill Spitalieri, Probation 

Reported By: Rhonda L. Aquilina, CSR #9956, RMR, CRR 

 Official Court Reporter 

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Thursday - January 26, 2017 10:07 a.m.

P R O C E E D I N G S

---000---

THE CLERK: Calling criminal action 14-175, USA versus

Pacific Gas & Electric Company.

Counsel, please approach the podium and state your

appearances.

MS. HOFFMAN: Good morning, Your Honor. Hallie

Hoffman.

MS. WEST: Hartley West.

MR. SCHENK: And Jeff Schenk for the United States.

Good morning.

MR. BAUER: Good morning, Your Honor. Steve Bauer,

Kate Dyer, and Margaret Tough, and Sean Coyle for the

defendant.

THE COURT: Good morning.

PROBATION OFFICER: Good morning, Your Honor. Jill

Spitalieri for Probation.

THE COURT: Okay. Good morning. You may stand or be

seated.

Okay. I've now had a chance to consider all of the

comments made at Monday's hearing, and I also consulted with

our probation officer in the interim, and in addition, I have

reviewed a letter from the Government delivered to my chambers

this morning, and we'll address that in a few moments. But I'm

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now ready to impose a sentence.

Before I do so, let me say that a lot of the victim impact

statements that were filed indicated a desire for PG&E's now

retired leaders to be held responsible, and I want to point out

that the Government brought this case only against PG&E, the

corporation, the company, and not against any particular

individuals, and so this proceeding is limited to determining a

fair and just sentence for the company as a whole, and whether

any specific individuals deserve punishment is not before the

Court and never has been. I just want to make that

clarification for the victims and anyone else who may be

thinking about that.

As I stated when we were last here, I find the crimes at

issue to be very serious and to pose great risk to the public

safety, and that's why I am going to impose the maximum

possible fine and maximum possible probation term allowable

under the law.

Turning to the issues that we discussed last time, I find

that a probation condition concerning a bonus compensation

program would be improper, because it's not necessary to

file -- to fill the goal of sentencing. The Government

asserted that even if PG&E's bonus structure had improved by

giving a greater emphasis to safety, a 2014 explosion in Carmel

indicates that more must be done. But nothing in the record

before me for me to consider indicates that emphasizing profits

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over safety caused that explosion.

In addition, I conclude that all of the other conditions

of probation that are being imposed are sufficient to deter

PG&E employees, including the executives, from putting

financial considerations before safety.

Regarding advertising, I understand that the parties have

reached an agreement, as described in the letter delivered this

morning, but let me clarify, because it was only signed by

Government's counsel. Is that correct, counsel, that there is

an agreement?

MR. BAUER: There is, and it's accurately reflected in

that letter.

THE COURT: Okay. Thank you.

Okay. I'm delighted that you were able to reach agreement

on that important subject, and I'll adopt that joint request.

I note that the agreement doesn't include the Government's

proposed condition to establish a hotline to report unsafe

conditions. I'm not going to add that condition, because I

don't find it necessary to fulfill the purposes of sentence. I

nevertheless mention it here, because I just want to observe

that if PG&E truly wants to demonstrate a commitment to safety

and does not already have such a hotline in place, it would

seem to behoove the company to consider one very seriously.

I'm going to impose probation's proposed condition

number 6 concerning access to records and personnel by the

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probation officer, and court experts, but I'll add a provision

that these individuals work with the monitor so as not to

duplicate efforts. This should alleviate the concerns that

have been expressed by PG&E. I don't currently anticipate the

need for court experts, but I want to leave that option open if

circumstances later warrant it.

Finally, on probation's proposed condition 8 concerning

disclosures, I'm going to leave that in with one modification,

that notifications be provided to both the probation officer

and the monitor. PG&E argued that it already discloses such

information to the CPUC and the SEC, so this condition should

not be burdensome, and I find that it's consistent with the

monitoring scheme that will be established in this case.

So after assessing the particular facts of this case, in

light of the relevant section 3553(a) factors, including the

Sentencing Guidelines, I hereby impose the following sentence:

First, PG&E shall pay to the United States a fine of

$500,000 on each count for a total fine of $3 million. Given

the dismissal of allegations under the Alternative Fines Act,

this is the maximum fine I'm allowed to impose by statute.

PG&E shall also pay to the United States a special

assessment in the amount of $2,400.

PG&E is placed on probation for a term of five years on

each count with all counts to run concurrently. While on

probation, PG&E will be subject to the following conditions:

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1) PG&E shall not commit any federal, state, or local

crime;

2) PG&E shall comply with the separately entered Order

concerning a third party monitor. I will sign the party's

proposed order at the conclusion of this sentencing. And the

only modification is that I will clarify the reference on

page 5, the reference to paragraph 8A as referring to paragraph

D(8)(a).

3) Within six months of the date of the Judgment, PG&E

shall develop and file with the Court an Effective Compliance

and Ethics Program consistent with section 8B2.1 of the

Sentencing Guidelines. The submission shall include a schedule

for implementation. PG&E shall revise the Program and file

updates with the Court whenever deemed appropriate by the third

party monitor.

4) Within 60 days of the date of Judgment, PG&E shall

place one full-page advertisement in both the Wall Street

Journal and the San Francisco Chronicle publicizing the nature

of the offenses committed, the convictions, the nature of the

punishment imposed, and the steps that will be taken to prevent

the recurrence of similar offenses. 

5) Beginning no later than 60 days after the date of the

Judgment, and to the greatest extent possible, replicating the

same channels and air times that PG&E used before and/or during

trial in this case in 2016, PG&E shall, for three months, air

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television commercials that publicize the nature of the

offenses committed, the convictions, the nature of the

punishment imposed, and the steps that will be taken to prevent

the recurrence of similar offenses. PG&E will air such

commercials up to the costs of $3 million less the cost of the

print advertisements referred to in the above condition. It's

PG&E's estimate that this will result in approximately 12,500

commercials of approximately 60 seconds in duration across

broadcast and cable outlets over this three-month period. PG&E

will not include language regarding the conviction as part of

the company's public service safety announcements, including

what actions it should take in the event of wires down, gas

leaks, or other emergencies, and which typically run on radio

and digitally, given time sensitivity, because such information

could cause the public to fail to take the needed safety

actions in a timely fashion.

6) PG&E shall submit to a reasonable number of regular or

unannounced examinations of its books and records at

appropriate business premises by the probation officer or

experts engaged by the Court and; (B) interrogation of

knowledgeable individuals within the organization.

Compensation to and costs of any experts engaged by the Court

shall be paid by the organization. The probation officer and

any court engaged experts shall work with the third party

monitor to minimize duplication of efforts.

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7) PG&E shall perform 10,000 hours of community service.

At least 2,000 of these hours shall be performed by high level

personnel as defined in the commentary to section 8A1.2 of the

Sentencing Guidelines. PG&E shall provide the prospective

community service workers' names and titles to the probation

officer to ensure compliance with this condition. The location

and type of community service must be approved -- pre-approved

by the probation officer. And I strongly recommend that this

service be in the town of San Bruno to every extent possible.

The intent of this condition is to require 10,000 hours of

community service that PG&E would not otherwise have done, and

the probation officer shall therefore consider as part of the

approval process the extent to which the proposed projects can

be tied to existing service initiatives by PG&E. The community

service shall be geared toward giving back to communities

affected by PG&E's negligence with special emphasis on the city

of San Bruno, as directed by the probation officer.

8) PG&E shall notify the third party monitor and

probation officer immediately upon learning of (A) any material

adverse change in its business or financial condition or

prospects, or (B) the commencement of any bankruptcy

proceedings, major civil litigation, criminal prosecution, or

administrative proceeding against the organization, or any

investigation or formal inquiry by government authorities

regarding the organization.

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9) PG&E shall pay the fine and special assessment as a

lump sum within 60 days of the date of Judgment.

Those are -- that is the sentence.

Let me ask counsel, are there any reasons, other than

those already argued and on the record, as to why this sentence

should not be imposed as just stated?

MS. WEST: No. However, there is a point of

clarification that I would like to make with regard to the

advertising conditions that the Court articulated on the

record.

THE COURT: Okay.

MS. WEST: And that is, as we had explained to the

Court, but just to be clear, we have spoken to new counsel

hired by PG&E, that is attorneys from the Jenner and Block

firm, about reaching an agreement that satisfied all of the

requests by the Government and by probation with regard to this

condition. PG&E did agree to those, and that is what we

provided to the Court in the letter. However, there was an

argument made by Latham & Watkins on behalf of PG&E in the

Sentencing Memoranda regarding the cost of compliance with

advertising constituting an improper fine. And so I have --

THE COURT: The cost of what?

MS. WEST: Of complying with that advertising,

constituting an improper fine. And I've spoken with attorneys

from Jenner and Block on behalf of PG&E about that, and I want

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to put our understanding on the record, so there is no

confusion subsequently. And that is the parties both agree,

including PG&E agrees, that the $3 million cost of advertising

is not a fine. It does not constitute a monetary penalty. It

is simply just valuation of the compliance of the condition of

probation, which they agree is appropriate, and that PG&E

waives any right to appeal on that issue.

THE COURT: Is that correct?

MR. BAUER: It's correct that we've waived any right

to appeal on that issue. We agreed, and that's why they sent

the letter.

THE COURT: Okay. Then I will adopt that

understanding.

MS. WEST: Thank you.

THE COURT: Thank you.

MR. BAUER: And otherwise, to answer your other

question, Your Honor, we'll submit on the papers. No further

objection.

THE COURT: Okay. Thank you, counsel.

Okay. The sentence as stated will now be imposed, and

Judgment will be entered. 

And PG&E, of course, as you know, has the right to appeal

its convictions, and the right to appeal any sentence it

believes was illegally or incorrectly imposed. And any notice

of appeal must be filed within 14 days of the entry of Judgment

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or within 14 days of the filing of a notice of appeal by the

Government.

And if there are no other matters to resolve, the Court

will be adjourned.

MS. HOFFMAN: Your Honor, can I just have one minute?

THE COURT: Okay.

(pause in proceedings.) 

MS. HOFFMAN: Your Honor, the Government would just

like to point out that the probation officer specifically asks

that these fines that are imposed and any costs that come out

of this sentence not be passed off to the ratepayers. And

insomuch as that is possible to be part of the Court's

sentence, we would ask that the Court adopt that recommendation

of probation.

THE COURT: I will adopt that recommendation.

MS. HOFFMAN: Thank you, Your Honor.

THE COURT: Okay. Thank you, counsel.

Court is adjourned.

THE CLERK: All rise.

(Proceedings adjourned at 10:25 a.m.) 

---oOo--- 

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CERTIFICATE OF REPORTER

 I certify that the foregoing is a correct transcript 

from the record of proceedings in the above-entitled matter. 

DATE: Friday, February 3, 2017 

_________________________________________ 

Rhonda L. Aquilina, CSR No. 9956, RMR, CRR 

 Court Reporter 

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Exhibit C 

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 Pages 1 - 12 

UNITED STATES DISTRICT COURT 

NORTHERN DISTRICT OF CALIFORNIA 

BEFORE THE HONORABLE WILLIAM H. ALSUP 

UNITED STATES OF AMERICA, )

 ) 

 Plaintiff, ) 

 ) 

 vs. ) No. CR 14-0175 WHA 

 ) 

PACIFIC GAS AND ELECTRIC COMPANY, )

 ) San Francisco, California 

 Defendant. ) Tuesday 

 ) December 5, 2017 

___________________________________) 2:00 p.m. 

TRANSCRIPT OF PROCEEDINGS

APPEARANCES:

For Plaintiff: BRIAN STRETCH 

 United States Attorney 

 450 Golden Gate Avenue 

 San Francisco, California 94102 

 BY: JEFFREY BENJAMIN SCHENK 

 ASSISTANT UNITED STATES ATTORNEY

For Defendant: CLARENCE DYER & COHEN, LLP 

 899 Ellis Street 

 San Francisco, California 94109 

 BY: KATE DYER, ESQ.

 

 JENNER & BLOCK 

 353 North Clark Street 

 Chicago, Illinois 60654 

 BY: REID J. SCHAR, 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 Federal Monitor: KIRKLAND & ELLIS, LLP 

 555 California Street 

 San Francisco, California 94104 

 BY: CHRISTOPHER KEEGAN, ESQ.

 

Also Present: Jennifer Hutchings

 U.S. Probation Department

_ _ _ 

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P R O C E E D I N G S

December 5, 2017 2:11 p.m.

---000--- 

THE CLERK: Calling Criminal Action 14-175. USA

versus Pacific Gas & Electric Company.

Counsel, please approach the podium and state your

appearances for the record.

MR. SCHENK: Good afternoon, your Honor. Jeff Schenk

on behalf of the United States.

THE COURT: Welcome.

THE PROBATION OFFICER: Good afternoon, your Honor.

Jennifer Hutchings on behalf of Probation.

MR. KEEGAN: Good afternoon, your Honor. Chris Keegan

on behalf of the Federal Monitor, Mark Filip.

MR. SCHAR: Good afternoon, your Honor. Good

afternoon, your Honor. Reid Schar on behalf of PG&E.

MS. DYER: Good afternoon, your Honor. Kate Dyer on

behalf of PG&E.

THE COURT: All right. Welcome to all of you. Are

any PG&E representatives actually here?

MR. SCHAR: Yes, your Honor.

THE COURT: Why don't you introduce them?

MR. SCHAR: Julie Kane and Alex Vallejo are both

here. Both are in the Compliance Department.

THE COURT: Good. Sit up here at counsel table, if

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you will.

So let's hear the report. Let's start with Ms. Hutchings.

PROBATION OFFICER: Yes, your Honor. 

The report on the update for -- with regards to community

service is that specifically 2,271.25 hours have been

completed.

THE COURT: How many? Say that number again.

PROBATION OFFICER: 2271.25 hours have been

completed, of which 1,064 hours were completed by officers and

directors.

So PG&E now has an automated system, check-in/check-out

system that they have shown me in person. When individuals

come to do the community service, they use an I.D. They log

in. They check out. So it's very specific as to when they

start work and when they leave, almost like a time card.

THE COURT: Okay. So those hours seem like they --

that's big progress since the last time you were here; is that

right?

PROBATION OFFICER: I would agree. Absolutely.

THE COURT: And if we did the extrapolation, how many

hours would that -- how soon would the 10,000 hours be used up?

PROBATION OFFICER: It's my understanding that they

planned on being, hopefully, done within the first three years

of supervision is the goal. Correct me if I'm wrong, but I

believe that was the goal.

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THE COURT: Would that get us there? 2,000 a year?

PROBATION OFFICER: Well, it won't, but it did take

some time to get rolling in the very beginning. We had to meet

with the city, find out what projects they wanted. It look a

little bit of time, but I feel like that train is rolling and

now as we go into 2018, I think they will be ahead of the curve

as far as -- 

THE COURT: Ms. Hutchings sent me some photographs

yesterday, which I looked at. Thank you for that.

Why don't you describe on the record what those

photographs were?

PROBATION OFFICER: Sure.

PG&E graciously invited me last week to their officer and

director's meeting, which I went to, and I was able to view

firsthand the morning session, which had to do with a lot of

community service projects that all the individuals there were

working on.

And the photographs that I sent your Honor were of the

different rooms where different projects were being done for

various organizations in San Mateo.

THE COURT: These were what level people in the

company?

PROBATION OFFICER: Officers and directors. All

levels, your Honor, even up to the very, very top.

THE COURT: CEO?

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PROBATION OFFICER: Yes.

THE COURT: Chairman of the Board?

PROBATION OFFICER: They were there making onesies

for the shelters. So, yes.

THE COURT: Well, good for them.

Okay. Just on the subject of community service, is there

more to say on the subject of community service?

PROBATION OFFICER: I don't believe so, unless your

Honor has any specific questions.

THE COURT: Is a book of some sort or something that

would capture in one place all of the work done in place? I

mean, at a school or playground, wherever it gets done. Is

there some book of photographs that document the work that's

being done?

PROBATION OFFICER: I can't speak to the photographs,

your Honor. But they provide me with a summary in advance of

the projects that are planned for the upcoming month and any

post-summary report as well.

If the Court would like those sent to you on a monthly

basis, I'm more than happy to do that.

THE COURT: I do want them sent to me, but what I

think we should do is accumulate the story in one booklet form

so that it will go into the archives of history. And when

we're all gone and there are other people here, they can look

at the book and see what happened in this case.

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So maybe you could work on that. Maybe get PG&E to do

that, put that booklet together.

PROBATION OFFICER: I'm sure they would be happy to.

THE COURT: All right. How about the United States?

Just on the subject of the community work, what does the United

States have to say?

MR. SCHENK: We don't have anything to add. We're

happy with the progress.

Judge Henderson's order was 10,000 hours by the end of

five years. In speaking with counsel for PG&E, I do understand

that there was a bit of time required after the order came in

place in late January to get the project rolling, and it seems

that they are well on their way to meeting that mark and it, in

fact, looks like they will finish early.

THE COURT: That's great. On that subject, what

would you two like to say?

MR. SCHAR: Your Honor, I don't think we have

anything to add. The Probation Officer, I think, has done a

very thorough job.

We will work on accumulating the information that you

requested.

THE COURT: Yeah. I think it would be good for the

history books.

Okay. What does -- let's go to what the Monitor has been

working on. Give us the Monitor report.

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MR. KEEGAN: Sure, your Honor.

Monitorship is progressing. There has been a lot of

activity since we were here before.

A couple of updates on some things we have ongoing. We

participate in the very top level strategic discussions,

business discussions on a quarterly basis. We have been

invited to those meetings by PG&E with a focus on gas

operations.

We have a very regular cadence of meetings in San Ramon

with the engineers, the Integrity Management Group and the

people who are responsible for the transmission planning are

subject matter experts, and our team members are there pretty

much every week for various meetings.

Currently we have people in the field, and that's

something that we've recently started. We're sending people

out to the yards and going to do -- observe and monitor the

work that's happening by the workers in the field to try and

get an understanding of what their view of the company is and

how the different compliance and ethics and safety and training

and education filters down to the people who are doing the

work.

Some examples of specific numbers we're working on right

now -- there is a lot more than this, but just a few examples.

Two of our experts and other team members have been down in the

field on transmission integrity management projects in the

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Mojave.

THE COURT: Is this gas transmission?

MR. KEEGAN: Yes, gas transmission. The big -- the

backbone transmission lines across the state. Those projects

in the Mojave involved hydro testing, the strength testing

that's included in the order, making those lines capable of

in-line inspection or to make piggable projects. So we have

some very experienced subject matter experts who are down there

observing and reporting back as to how that work is

progressing.

We are working with our technical experts and our team

members as PG&E is engaged in updating their Integrity

Management planning. That's an annual cycle that they do. 

So we are meeting with the engineers to really understand

and evaluate the types of information that they are collecting,

the QC and QA of that information, what formula that

information gets filtered through, and what the ultimate risk

ranking for each segment of pipeline is, and then understanding

how that risk ranking turns into a forward-looking operational

plan.

So that's really a core aspect of what we're doing.

THE COURT: So your work, is it -- is it limited to

gas or do you also get off into electricity?

MR. KEEGAN: The specific requirements, the technical

requirements are focused on gas operations.

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The compliance and ethics piece and the safety and the

culture of the company is a little bit more overarching

enterprise wide. So we look at that as sort of across all of

the specific lines of business.

THE COURT: So that would include electricity?

MR. KEEGAN: It does, as far as compliance and the

safety culture.

THE COURT: Do you have any responsibility or

jurisdiction over inquiry into the North Bay fires, as to what

went wrong there, if anything, by PG&E?

MR. KEEGAN: Your Honor, I think responsibility and

jurisdiction is a question for you, as well as anyone.

When the fires came about, we were involved in the

emergency response. We were observing the emergency response

activities. They had a camp set up to get people electricity

back and get gas set up. We participated in twice daily

emergency operations calls.

But as far as what caused the fire or fire investigation,

I think that's Cal Fire. I think that's the State Attorney

general, and I think that sort of cause investigation is

something they would be evaluating and looking at.

THE COURT: Okay. What else would you like to add?

MR. KEEGAN: I think I've gone through the full list

of bullets I have here, your Honor, unless you have any

questions.

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THE COURT: Not yet.

Ms. Hutchings, do you have anything to add to what the

Monitor said?

PROBATION OFFICER: I do not, your Honor.

THE COURT: The Government?

Mr. SCHENK: No, your Honor. Submitted.

THE COURT: How about you two?

MR. SCHAR: No, your Honor. Mr. Keegan has, I think,

accurately described a fairly thorough process. The company is

trying to be as responsive as it can be to the Monitor's

requests. 

THE COURT: So what other subjects should we go into

today in assessing the status of supervised release -- I mean,

probation?

PROBATION OFFICER: I don't believe there is anything

we need to go over today, your Honor. Between myself

monitoring certain activities and the monitorship monitoring

other activities, all of us are in communication frequently.

PG&E is very communicative with me and always updating me on

even what's going on on the Monitor's side. So I feel like the

communication is excellent.

THE COURT: Good. How about the Government?

Mr. SCHENK: Nothing further, your Honor.

THE COURT: How about you two?

MR. SCHAR: No, your Honor. Nothing else.

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THE COURT: What's our next step?

Mr. SCHENK: I think we would defer to the Court. 

The Court, I think, set this originally to make sure that

PG&E's community service hours improved and we got to a place

where they -- 

THE COURT: It seems like that worked. So how about

six months from now, come back in six months?

PROBATION OFFICER: Sure.

THE COURT: What would that be, Angie?

THE CLERK: June 12th, your Honor.

THE COURT: June 12?

Mr. SCHENK: Yes. Yes, your Honor.

MR. KEEGAN: Yes, your Honor.

THE COURT: It will be summertime. The flu will be

gone. Leaves will be green.

Okay. Thank you for the good report. I appreciate all of

your cooperation and assistance. See you then.

MR. KEEGAN: Thank you, your Honor.

PROBATION OFFICER: Thank you, your Honor.

Mr. SCHENK: Thank you, your Honor.

MR. SCHAR: Thank you, your Honor.

(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 

 Thursday, December 7, 2017 

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Exhibit D 

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o

Mark Filip, P.C.

To Call Wrtter Directly:

+1 312 862 2192

mark.filip@kirkland.com

VIA EMAIL

KIRKLAND 8. ELLIS LLP AND AFFILIATED PARTNERSHIPS

300 North LaSalle

Chicago, IL60654

United States

->-1 312 862 2000

www.kirkland.com

December 31, 2018

JAN-3 2019

SUSAN YSOONG

CLERK. U.S. DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

Facsimile:

+1 312 862 2200

Honorable William Alsup

United States District Court

Northern District ofCalifornia

450 Golden Gate Avenue, Courtroom 12

19th Floor

San Francisco, CA 94102

Re: Federal Monitor Submission Pursuant to November 27, 2018 Notice

Dear Judge Alsup:

Please find below the response of the federal monitor ("Federal Monitor") to the third

question in the Court's November 27, 2018 Notice re: California Wildfires.

3. What specific steps has the monitor herein taken to monitor and improve

PG&E safety and reporting with respect to power lines and wildfires?

The Federal Monitor position, and associated team of attorneys and outside experts (the

"Monitorteam"),was createdas a resultofthe guiltyverdict in UnitedStatesofAmericav. Pacific

Gas and Electric Company, Case No. 3:14-cr-00175. The Monitor team began its work in the

spring of 2017 and has been assessing and evaluating certain aspects of PG&E's operations and

culture since that time. Overall, the Monitorteam works to identify areas within the scope ofthe

monitorship order associated with the guilty verdict("Monitorship Order") where PG&Ehas gaps

in its practices, areas that need improvement, or issues that need to be addressed. In order to

discharge those responsibilities, the Monitorteam has met and interacted with representatives of

the Justice Department, local law enforcement, the California Public Utilities Commission

("CPUC"), and San Bruno city leaders. The Monitor team has also met and interacted with

employees at all levels of PG&E. Additionally, the Monitor team has access to PG&E's

documents, procedures, databases, and other requested information. The original scope of the

Monitorship is set forth in the Monitorship Order and includes fifteen individual requirements,

primarily focused on assessing PG&E's gas operations and gastransmission system, its corporate

Compliance and Ethics program, and safety at PG&E. That is where the bulk of the Monitor

team's work has focused.

Beijing Boston Dallas Hong Kong Houston London Los Angeles Munich New York PaloAlto San Frandsco Shanghai Washington, D.C.

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Exhibit E 

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United States District Court

For the Northern District of California

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IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

UNITED STATES OF AMERICA,

Plaintiff,

 v.

PACIFIC GAS AND ELECTRIC

COMPANY,

Defendant. /

No. CR 14-0175 WHA

ORDER TO SHOW CAUSE

WHY PG&E’S CONDITIONS

OF PROBATION SHOULD

NOT BE MODIFIED

In 2016, a jury convicted PG&E on six felony counts of knowingly and willfully

violating safety standards and obstructing an investigation by the National Transportation

Security Board arising out of the San Bruno explosion of a PG&E gas pipeline that killed eight

and destroyed 38 homes. A corporation cannot go to prison, so the criminal judgment imposed

the largest fine allowed by law and several conditions of probation. Recently, CAL FIRE has

determined that PG&E caused eighteen wildfires in 2017, twelve of which CAL FIRE referred

for possible criminal prosecution. (CAL FIRE continues its investigation into the more recent

Camp Fire in Butte County in which 86 people lost their lives.) 

In order to protect the public from further wrongs by the offender, to deter similar

wrongs by other utilities, and to promote the rehabilitation of the offender among other goals of

18 U.S.C. §§ 3553(a)(1) and (a)(2), the Court proposes to add the following new conditions of

probation pursuant to 18 U.S.C. § 3563(c): 

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United States District Court

For the Northern District of California

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1. In light of PG&E’s history of falsification of inspection reports,

PG&E shall, between now and the 2019 Wildfire Season, re-inspect all of its

electrical grid and remove or trim all trees that could fall onto its power lines,

poles or equipment in high-wind conditions, branches that might bend in high

wind and hit power lines, poles or equipment, and branches that could break off in

high wind and fall onto power lines, poles or equipment; shall identify and fix all

conductors that might swing together and arc due to slack and/or other

circumstances under high-wind conditions; shall identify and fix damaged or

weakened poles, transformers, fuses and other connectors; and shall identify and

fix any other condition anywhere in its grid similar to any condition that

contributed to any previous wildfires. The trees and branches to be removed are

not limited to those within the distances prescribed by the California Public

Resources Code but extend farther to any tree or branch posing the dangers

described above. As used herein, the 2019 Wildfire Season means June 21, 2019,

through the first region-wide rainstorm in November or December. 

2. For each segment of its electrical grid, PG&E shall document the

foregoing inspections and the work done and shall rate each segment’s safety

under various wind conditions (from little wind to high wind). PG&E must

designate one or more qualified engineers to make these safety determinations

and the rating must be certified under oath by the engineer in writing. In light of

PG&E’s history of false reporting, PG&E may not rely upon its earlier inspection

reports as substitutes for the new inspections. PG&E shall follow all

requirements of law as well as those in this order, shall follow all guidance

provided by the Monitor, and shall be complete and truthful. If a power line

happens to comply with all of the requirements of state law but nevertheless poses

a safety issue under the circumstances, then the line may not be rated as safe until

the safety issue is resolved. 

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United States District Court

For the Northern District of California

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3. At all times during the 2019 Wildfire Season (and thereafter),

PG&E may supply electricity only through those parts of its electrical grid it has

determined to be safe under the wind conditions then prevailing. Conversely,

PG&E must de-energize any part of its grid not yet rated as safe by PG&E for

the wind conditions then prevailing until those conditions have subsided. For

example, if Santa Ana winds of up to thirty miles per hour are expected in a given

county and if PG&E has not yet rated those power lines as safe for such winds,

then PG&E must de-energize those lines during the wind event and beforehand

notify affected customers that those lines will be de-energized. In determining

safety, PG&E may not take into account the need for reliability of service, the

inconvenience to customers resulting from interruption in service, or its impact

upon PG&E’s revenues and profits. Reliability is important but safety must come

first. Profits are important but safety must come first. Only safe operation will be

allowed. 

These conditions of probation are intended to reduce to zero the number of wildfires

caused by PG&E in the 2019 Wildfire Season. This will likely mean having to interrupt service

during high-wind events (and possibly at other times) but that inconvenience, irritating as it will

be, will pale by comparison to the death and destruction that otherwise might result from

PG&E-inflicted wildfires. PG&E shall promptly advise law enforcement, hospitals and other

emergency personnel and the public at large in its service area to consider arranging for back-up

emergency generators as a hedge against interruption of power. 

The Monitor shall promptly spot-check the inspections (with field inspections of his

own), promptly spot-check the safety ratings, and otherwise monitor compliance with this order,

providing a monthly report to the Court that plainly and prominently identifies any weaknesses

in PG&E’s compliance. PG&E shall immediately notify Probation and the Monitor of any

violations.

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United States District Court

For the Northern District of California

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By NOON ON JANUARY 23, 2019, all parties are ORDERED TO SHOW CAUSE why PG&E’s

conditions of probation should not be modified as stated above. A hearing on this matter will be

held on JANUARY 30, 2019, AT 9:00 A.M.

PG&E and the government shall transmit a copy of this order to the California Public

Utilities Commission. If the CPUC (or the California legislature) comes up with a better plan for

insuring the safety of California before the 2019 Wildfire Season, the Court will consider

conforming its proposed conditions to any such plan. The CPUC is hereby invited to comment

by JANUARY 25, and to attend the hearing on JANUARY 30.

PG&E and the government shall also transmit a copy of this order to CAL FIRE. The

Court requests input from CAL FIRE concerning its investigation into the specifics of wildfires

caused by PG&E and on what operating restrictions going forward might be adopted by the

Court as a condition of probation to maximize the safety of California. CAL FIRE is hereby

invited to the hearing on JANUARY 30, and is requested to file a public statement by JANUARY

25. 

IT IS SO ORDERED.

Dated: January 9, 2019. WILLIAM ALSUP

UNITED STATES DISTRICT JUDGE

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