The report is a serious attempt of the CHSRA to let the California Legislature know the true status of the program. It includes four pages of “Issues” and 13 pages of “Risks.”

The CHSRA highlighted the project’s groundbreaking, which occurred on Jan. 6:

“The event highlighted the work that is already underway in the Central Valley on Construction Package 1 (CP 1), and underscored the Authority’s commitment to advancing the program on multiple project sections concurrently in order to deliver statewide mobility and environmental benefits sooner.”

However, as CalWatchdog.com noted at the time, the groundbreaking was more appearance than reality, as progress on the project continues at a slow pace. 

The report was enthusiastic. “Crucial to the start of heavy construction, 105, or 28 percent, of necessary parcels have been delivered to the DB [Design Build] contractor,” it said. But that also means 72 percent of the parcels still have not been delivered.

The March 3 Los Angeles Times also reported, “The contractor building the first segment of the California bullet train system said Monday it is seeking compensation for delays in the project and is not likely to start any major construction until June or July — months later than state officials said just weeks ago.”

Lawsuits

The report took up the lawsuits against the project:

• “In December 2014, the Authority and the City of Bakersfield announced that they had reached a settlement agreement to dismiss the city’s California Environmental Quality Act (CEQA) lawsuit.”

• “In February 2015, the Authority announced that it had also reached a settlement agreement with Coffee-Brimhall LLC, a developer entity that owns land in Bakersfield.”

• The CHSRA acknowledged the five remaining lawsuits concerning the Fresno to Bakersfield segment: “While the Authority continues to work with its stakeholders and partners through the remaining CEQA lawsuits, the Surface Transportation Board’s approval of the project section’s environmental document in July 2014 allows the Authority to move forward with construction-related activities within the project section up to 7th Standard Road.”

The future of these lawsuits and other CEQA cases may be determined by a case before the California Supreme Court called Friends of Eel River v. North Coast Railroad Authority. The Legislative Report explained:

“A stay is requested to allow time for the California Supreme Court to decide the Friends of Eel River v. North Coast Railroad Authority case which is currently under review. In Eel River the Court will decide whether CEQA is preempted for a publically owned railroad that is under the jurisdiction of the Surface Transportation Board. Eel River will have implications in the CEQA cases filed against the Authority.”

Electrical connectivity    

Another issue involved the California Public Utilities Commission. The matter was included in the Legislative Report’s lawsuits section, but not in all aspects. According to the CHSRA:

“On March 21, 2013, the PUC issued the Order Instituting Rulemaking (OIR), at the request of the Authority, which initiated a rulemaking proceeding. The stated goal of the OIR was to ‘determine whether to adopt, amend or repeal regulations governing safety standards for the use of 25kv electric lines to power high-speed trains.’”

Under actions taken, the CHSRA wrote:

“The Authority has reached agreement with all parties to the proceeding on all terms of the General Order. The Authority presented the settlement General Order to the PUC on January 26, 2015. The General Order is currently pending adoption by the PUC, with an anticipated adoption at the March 2015 PUC Commissioners meeting.”

However, the CPUC must conduct an environmental report for electrifying the project, which could in fact have implications for the project.  Permits at the earliest are not expected until 2017.  According to the CPUC Report:

“The Initial Operating Segment of the High Speed Rail line is Madera to Bakersfield with a targeted operation date of 2022. This requires electrical connectivity at least 2 years prior, with permits to construct facilities by 2017. To grant such permits, the Energy Division needs to start work no later than 2014-2015 to complete environmental review (usually takes at least a year) and permit review by mid-2017” 

It is not a simple process. The CPUC report described the required involvement of the CPUC, Pacific Gas & Electric, Southern California Edison and the CHSRA for the purpose of carrying out environmental review.

New lawsuit

Absent from the CHSRA’s Legislative Report is the newest suit, filed on Feb. 9, against CalTrain, the Bay Area commuter system. The suit was filed by the city of Atherton, the Transportation and Education Defense League and the Community Coalition on High-Speed Rail.

Among other things, the lawsuit, as CalWatchdog.com reported at the time:

• Seeks to force the board to acknowledge the impacts CalTrain’s project, and the closely associated high-speed rail project, will have on the San Francisco Peninsula. Specifically, it questions the effect of electrification for the high-speed rail project will have on the peninsula.
• Asserts that, by 2040, CalTrain will not be able to accommodate more passengers. Surplus capacity that would otherwise be available to run more CalTrain trains would instead be committed to the high-speed rail project.

Kit Fox

The CHSRA Legislative Report also did not include its alleged violation of the National Endangered Species Act involving the San Joaquin Kit Fox, at least not directly. As CalWatchdog.com reported last month:

“The environmentalist group Defenders of Wildlife labels it ‘one of the most endangered animals in California.’ 

“On Jan. 26, the Sacramento office of the Fish and Wildlife Service of the U.S. Department of the Interior sent the CHSRA a letter about the kit fox’ habitat in the project’s 29-mile-long Construction Package 1. The letter charged the CHSRA and the Federal Railroad Authority with causing ‘the loss of nine acres of suitable habitat for the San Joaquin kit fox, located outside the project footprint … and the destruction of a potential San Joaquin kit fox den.’”

Although not addressing the Kit Fox directly, the CHSRA’s Legislative Report said as a retroactive response:

“The Authority released an RFP for Habitat Mitigation Services in January 2015. The habitat mitigation services will satisfy environmental approvals and federal and State permit requirements related to habitat for federally and State-listed endangered or threatened wildlife and wetlands and waters of the United States…. With the habitat mitigation services contract in place, anticipated in spring 2015, the federal and state regulatory agencies will have the mitigation assurances needed to issue permits for CP 2-3 and CP 4.” 

Cap-and-trade

Finally, the lawsuit over using $250 million of cap-and-trade money to build the high-speed rail project also was not disclosed in the Legislative Report. As CalWatchdog.com reported:

“TRANSDEF charged that cap-and-trade revenues, according to AB32, only can go to reduce greenhouse-gas emissions. TRANSDEF President David Schonbrunn said in the statement, ‘The claimed GHG [greenhouse gas] emissions reductions are a very expensive fantasy,’ because the California High-Speed Rail Authority depends ‘on $30 billion of project funding that the Authority doesn’t have and can’t get.'” 

In sum, although the CHSRA included a great deal in its latest Legislative Report, it also did not include some important information. However, outside the report, it is lawsuits, the state’s financial position and the facts on the ground that will determine the project’s fate.

Kathy Hamilton is the Ralph Nader of high-speed rail, continually uncovering hidden aspects of the project and revealing them to the public.  She started writing in order to tell local communities how the project affects them and her reach grew statewide.  She has written more than 225 articles on high-speed rail and attended hundreds of state and local meetings. She is a board member of the Community Coalition on High-Speed Rail; has testified at government hearings; has provided public testimony and court declarations on public records act requests; has given public testimony; and has provided transcripts for the validation of court cases. 

Late on a September afternoon in 2010, the big orange California sun was dropping toward Sweeney Ridge just east of the blue-collar town of San Bruno on the San Francisco Peninsula. Families were preparing dinner and catching up on the day’s activities when, at 6:11 p.m., a section of pipe in a 30-inch-diameter intrastate natural gas pipeline owned by Pacific Gas & Electric ruptured near the corner of Glenview Drive and Earl Avenue.

A half-million cubic feet of natural gas gushed out of the pipeline in the first minute after the rupture, and for 94 minutes thereafter, until PG&E finally was able to shut down the flow of natural gas.  Almost instantly after the first highly explosive molecules escaped the pipeline’s confines, something ignited it — quite possibly a gas stove heating up dinner in one of the nearby homes.

The resulting explosion and inferno obliterated that home and 37 others and killed eight people.  It created a crater, long since filled in, that was big enough to swallow any of the houses destroyed in the explosion.  The twisted remains of the ruptured section of pipe, weighing 3,000 pounds and about as long as three elephants lined up nose-to-tail, lay smoking where the explosion hurled it, 100 feet away.

Worse news

The tragic San Bruno pipeline explosion on September 9, 2010 was hardly the worst man-made disaster in California — that dubious honor goes to the failure of the St. Francis Dam in 1928, which killed about 600 people — but it stands as a monument to the longstanding ineptitude of California’s bureaucracies and state Legislature. And last week, two and a half years after explosion, the story of San Bruno’s catastrophe and California’s ineptitude got even worse.

On Tuesday, staffers at the California Public Utilities Commission unveiled their proposed punishment for PG&E: a $2.25 billion fine, the largest ever imposed by the PUC. It includes $300 million that will go directly to the California treasury to be spent on who knows what, and $1.95 billion of required safety upgrades to PG&E’s natural gas distribution system.

The five appointed — not elected — board members of the PUC will decide on the staff proposal this fall, possibly coinciding with the explosion’s third anniversary. They are expected to approve the recommendation, or something close to it. But they are not expected to do anything about who’s just as much at blame as PG&E, because missing from the recommendation is a similarly sized fine for the state of California.

The actions of the state and the PUC are in fact the root cause of the catastrophe, according to the National Transportation Safety Board, which, as the federal regulator of pipelines, investigated the incident. Its accident report found 28 contributing factors to the explosion, two of which stand out.

The first is that the section of pipe that ruptured had defects so pronounced they should have been visible to the PG&E work crews and state inspectors when the pipe was installed in 1954.  The second is that, when the PUC adopted new pipeline inspection standards in 1961, it decided against all logic not to apply them to pipelines that were in place prior to that year. All pre-1961 natural gas pipelines in the state, including the one laid seven years earlier under San Bruno, would be grandfathered.

PUC decision

If not for this half-century-old PUC decision, PG&E’s pipeline would have undergone hydrostatic pressure tests that very likely would have revealed the defect under San Bruno. Obviously, industry lobbying, not safety concerns, were behind that decision, because the NTSB report states: “There is no safety justification for the grandfather clause exempting … pipelines from the requirement for post-construction hydrostatic pressure testing.”

The grandfathering happened long before most current legislators and regulators were born, but they’re still not off the hook, because they got a wake-up call less than two years before the San Bruno catastrophe. On Christmas Eve 2008, another PG&E gas pipeline exploded in the Sacramento suburb of Rancho Cordova and killed one person, injured five others and caused severe damage to two homes. Even after that, neither the legislature nor the PUC thought to revisit the grandfathering of the state’s natural gas pipelines.

Clearly, California is culpable for much of the blame for this great tragedy, but it has let itself off the hook — just as it always lets itself off the hook for all the mistakes, missteps and crazily expensive, profoundly useless regulatory crusades it routinely subjects its citizens to.

What a shame.

Laer Pearce, a veteran of three decades of California public affairs, is the author of “Crazifornia: Tales from the Tarnished State.”

Editor’s Note: This is Part 2 of two. Part 1 is here. 

Nov. 27, 2012

By Katy Grimes

PG&E has openly misled about rate increases. In February 2011, PG&E announced the utility expected its electric rate to remain steady into 2011. Then it was revealed that PG&E’s 2011-2013 General Rate Case would bring more rate increases.

As I wrote in February, “The game was clever: While decreasing the rates by 0.8 percent on January 1, 2011, and increasing rates again by 1.5 percent on March 1, the net result was an increase of 0.7 percent. PG&E got its rate increase.”

Every three years, General Rate Cases provide the California Public Utilities Commission a chance to perform an exhaustive review of utility company revenues, expenses, and investments into utility infrastructure.

And every three years, PG&E requests rate increases, and the CPUC approves them.

Remember that PG&E charged its customers $5 million to fix a gas pipeline under San Bruno, Calif. in 2009, but delayed the work, citing other priorities. The company then spent $5 million on executive bonuses. The subsequent 2010 San Bruno gas pipeline explosion killed eight, injured more than 100 and destroyed 38 homes.

High rates

PG&E’s rates are already among the highest in the United States and are higher than almost all municipal providers. In General Rate Cases, PG&E has repeatedly double-dipped, and tried to charge customers millions in deferred maintenance, on which repairs may or may not be done.

The CPUC has failed miserably at any oversight of the utility giant, as well as at the enforcement of necessary maintenance to gas lines.

According to the Independent Review Panel report following the deadly San Bruno gas pipeline explosion, PG&E management had focused primarily on compensation and investments, instead of leading pipeline safety and integrity in the industry, despite warnings.

The damning report also identified several factors contributing to a dysfunctional culture at PG&E: excessive levels of management, lack of expertise within management, appearance-led strategy setting, insularity and overemphasis on financial performance.

It would appear to anyone that the CPUC has allowed PG&E to operate with little accountability, and perhaps only cursory oversight. State government has not applied its own laws, rules and regulations evenly, and appears to have allowed the largest utilities to get away with gross negligence.

Whose charity?

PG&E not only pays counties hefty property taxes. The utility also makes charitable contributions to local food banks, chambers of commerce, health programs, and “underserved communities.”

In 2011, PG&E made more than $23 million in charitable contributions. According to PG&E, “More than 75 percent of PG&E’s community investments provided assistance to underserved communities in 2010. This funding supported projects and organizations assisting people with low incomes, communities of color, women, veterans, senior citizens, people with disabilities, and members of the lesbian, gay, bisexual and transgender community.”

“[PG&E] officers sit on the boards of a diverse group of nonprofits, such as California State Parks Foundation, United Negro College Fund and Leadership California.”

Also, “We worked with the Association of Bay Area Governments, Association of Monterey Bay Area Governments, Great Valley Center and Sierra Business Council to help compile greenhouse gas inventories for more than 60 local governments. These are expected to be completed in 2011 and we plan to get started on roughly 60 more.”

The counties become news when agencies spoke out in favor of PG&E’s corporate interests. But ratepayers shouldn’t have to fund any of PG&E’s charitable or political spending. Ratepayers can choose to make such contributions on their own.

Ratepayers pay

PG&E has argued that the shareholders pay for these expenditures. But all of PG&E’s revenues first come from ratepayers. Shareholders make their money off of the ratepayers.

The CPUC looked at PG&E’s last rate hike request and apparently had a difficult time with the justification, according to one utility expert who asked to remain anonymous. He said the dividends paid to shareholders should be closer to 5 to 7 percent, as for most utilities, not more than 11 percent.

“Going back five years, PG&E never reduced the dividends, even as rates were increased,” said the utility expert.

The CPUC has historically allowed utility companies continually to increase rates, resulting in California becoming the most expensive state in the entire country for utility rates.