In a nearly empty courtroom on Tuesday, the chief executive of Pacific Gas & Electric stood in front of a judge and said the same three words more than 80 times: “Guilty, your honor.”
Family members of the 84 people killed in California’s most devastating wildfire, in 2018, watched on YouTube as the executive, Bill Johnson, said that he had heard their “pain and anguish.”
“I’m here today on behalf of the 23,000 men and women of PG&E to take responsibility for the fire that killed these people,” Mr. Johnson told Judge Michael R. Deems of Butte County Superior Court. “No words from me can ever reduce the magnitude of that devastation,” he added.
The company has agreed to pay a $3.5 million fine as part of the criminal plea, the culmination of a two-year ordeal.
It was a rare acknowledgment of corporate wrongdoing that nonetheless seemed inadequate to many families of victims and survivors of the Camp Fire, which destroyed the town of Paradise.
PG&E, which had repeatedly failed to maintain a transmission line that broke from a nearly-100-year-old tower even though it cut through a forested and mountainous area known to experience strong winds, pleaded guilty to 84 counts of involuntary manslaughter and one count of illegally setting a fire.
The Camp Fire devastated lives and wreaked billions of dollars in property damage, and left PG&E struggling to survive while it fends off creditors in bankruptcy court, a public furious about the company’s history of accidents and power outages and a governor who at one point threatened a state takeover. The company, California’s biggest utility, is expected to receive a judge’s approval soon for its plan to exit bankruptcy. Under that plan, the company will pay $13.5 billion to people who lost homes and businesses from wildfires started by its equipment, including the Camp Fire.
It is unusual for corporations to plead guilty to felonies and acknowledge that their negligence caused the deaths of dozens of people. What is perhaps even stranger is that this is not the first time in recent years that PG&E has pleaded to or been found guilty of serious crimes. But the relatively small size of PG&E’s financial penalties could rekindle concerns that large corporations often escape appropriate punishment for their actions.
A felony conviction can deal a mortal blow to certain kinds of businesses. Arthur Andersen, an accounting giant, went out of business after it was found guilty in 2002 for obstruction of justice. Clients stopped doing business with the firm and employees left, although the Supreme Court later overturned the conviction. But PG&E is a state-regulated monopoly and most of its customers cannot switch to another provider of electricity and gas.
“The reputational response is even more muted with an entity like PG&E, because it is pretty much the sole supplier,” said Jennifer H. Arlen, a law professor at New York University.
As part of the plea agreement with the Butte County district attorney, PG&E will also pay $500,000 to cover the cost of the county’s investigation. Judge Deems has to approve that deal. Wall Street firms have paid much larger fines and penalties when settling cases stemming from the financial crisis of 2008.
In 2016, a federal jury convicted PG&E of safety violations and obstruction of an investigation into a gas pipeline explosion that killed eight people in 2010 in San Bruno, a town south of San Francisco. The company is still under probation for those convictions.
Judge Deems has set aside time for people who lost loved ones in the Camp Fire to make statements in court starting on Wednesday. About 40 statements are expected, the district attorney, Michael R. Ramsey, said.
Some survivors have criticized the plea agreement as a slap on the wrist for PG&E. They said local and state officials have repeatedly failed to hold the company, which serves about 16 million people in Northern and Central California, accountable for its failings because PG&E wields enormous economic and political clout in the state.
Tommy Wehe’s mother, Marie, was burned to death in her truck as she tried to escape the Camp Fire. In a prepared statement that he planned to read to the court, Mr. Wehe said that the last time he and his wife heard from her was the night before the fire, when his mother, who was a widow and cancer survivor, called to say PG&E was cutting off her power. Mr. Wehe said the company had dragged its feet when it came to settling claims with those who lost homes and loved ones in fires started by its equipment and, later, sought to chip away at the compensation it did agree to.
“They have put profits over people year after year and the state of California just keeps letting it happen,” Mr. Wehe said. “The company’s acceptance of guilt is inconsequential if the appropriate safety measures are not enacted to prevent the future loss of life and property.”
Some survivors and their lawyers pointed out that even Mr. Johnson’s statement in court on Tuesday echoed an apology one of his predecessors offered in 2015 for the San Bruno explosion. (Mr. Johnson joined PG&E last year and is expected to leave at the end of this month.)
The California Public Utilities Commission separately fined PG&E almost $2 billion for causing wildfires in 2017 and 2018, including the Camp Fire. And the company could face additional penalties for violating the probation it was placed on after its six convictions for the San Bruno explosion. No company employees or executives are expected to face prison time.
California law limited how much the district attorney could try to extract from PG&E for each manslaughter charge. And larger fines from regulatory agencies might have placed too large a financial burden on the company as it races to emerge from bankruptcy. “They are very much constrained by the need to keep a bankruptcy reorganization feasible,” said John C. Coffee Jr., a law professor at Columbia.
Many individuals making wildfire-related claims against PG&E could have used the details of the Camp Fire case to bolster their cases against the company. But when PG&E filed for bankruptcy, wildfire claimants had to get in line with other creditors, which is why they chose to agree to a settlement.
PG&E filed for bankruptcy protection in January last year after the utility’s equipment was implicated in several fires in 2017 and 2018. The company estimated its wildfire liability at $30 billion, much of it for the Camp Fire. The bankruptcy is PG&E’s second in about two decades.
About half of the $13.5 billion in compensation PG&E is paying wildfire victims will be in the form of company stock, leaving roughly 70,000 of them owning a little more than 22 percent of PG&E once it leaves bankruptcy. The company also plans to pay off its bond debt in full and its existing shareholders will continue to own a big chunk of PG&E, an unusual outcome in Chapter 11 bankruptcy cases like this one.
When a company shows a pattern of making serious missteps, lawmakers and regulators may opt for drastic responses, like breaking it up or selling it to stronger operator. Some mayors in California favored turning PG&E into a cooperative owned by its customers and San Francisco officials wanted to take control of PG&E’s operations in their area.
But in the end, Gov. Gavin Newsom stuck with a plan in which PG&E remains an investor-owned utility, in part because the company will need to regularly raise money in the stock and bond markets. He did, however, require an overhaul of the company’s board, replacement of the chief executive and an agreement that the state could take over the utility if it did not fulfill its obligations under the bankruptcy plan.
PG&E has pledged to improve its practices and reduce the risk of fires by, among other things, trimming and cutting trees along its power lines. Last year, the company also started turning off large parts of its electrical system during windy and hot days to prevent fires. But many Californians and elected leaders criticized the company for bungling its handling of the shut offs and leaving millions of people without electricity for days on end.
Last year, state lawmakers moved to make it less likely that PG&E or another California utility would have to seek bankruptcy for wildfire damages. Governor Newsom signed a bill to create a $20 billion fund that will help cover the costs of future fires. The fund is financed with money from PG&E and two other large utilities and from ratepayers.
PG&E has complied with many of the governor’s requirements, but it is not clear how far it has gone in reducing the risk that its equipment will set another fire. California’s wildfire season, which started this month, is expected to be longer and more intense this year, state officials have said.
There were 85 deaths in the Camp Fire; one was ruled a suicide and not included among the 84 to which PG&E pleaded guilty.