The cities of San Francisco and San Bruno asked the state’s hand-picked mediator in the deadly San Bruno pipeline explosion settlement talks―DLA Piper, the law firm of famed negotiator and former Senate Majority Leader George Mitchell―to step down Tuesday because of an alleged conflict of interest.

A letter from the two cities and a couple of utility watchdogs—all formal parties to the negotiations—said the law firm lacked impartiality because it represented an insurer of Pacific Gas & Electric (PG&E), the owner of the pipeline that exploded, leveled a neighborhood and killed eight people in 2010. The letter argued that the insurer could potentially benefit from the outcome of the settlement. Questions were also raised about possible private communications to Mitchell that might have improperly revealed confidential  negotiating positions.

Critics of PG&E’s handling of the pipeline explosion were not happy when the state Public Utilities Commission (PUC) suspended public hearings on the incident a few weeks ago, and initiated private talks to hammer out a settlement of fines that could easily exceed $200 million.

They argued for more investigation and information gathering to assess PG&E’s role in the blast. Some said it smacked of backroom deal-making.

The Utility Reform Network and the PUC’s own Division of Ratepayer Advocates, both parties to the letter to Mitchell, expressed shock when the hearings were halted, pointing out that all sides to a negotiation are generally consulted in the selection of a mediator in order to avoid unnecessary distrust and acrimony. PG&E hailed the decision to pick Mitchell.

A few days later, on October 15, the PUC picked Mitchell as mediator. Mitchell has a long history of mediating important, if not historic, settlements. He helped negotiate peace in Northern Ireland, was a special Mideast envoy for President Obama and investigated steroid use in Major League Baseball (MLB).

The 409-page report to MLB in 2007 was controversial and named a number of baseball players as steroid users. Cynics questioned the absence from the report of Boston Red Sox stars Manny Ramirez and David Ortiz, later implicated in steroid scandals, because Mitchell was a director of the ballclub at the time. At least five prominent arch-rival New York Yankees were named in the report.

Last Friday, PUC President Michael R. Peevey reportedly called criticism of Mitchell “unfair” and “crazy.” But it’s hard in an industry where regulators and the regulated have been historically cozy, and criticized for it, to avoid the appearance of something hinky going on when business is conducted behind closed doors. Peevey, who has been PUC president for a decade, was also president of Southern California Edison, a company that has been represented by Mitchell and DLA Piper.  

–Ken Broder

To Learn More:

San Bruno Officials Call on George Mitchell to Quit PG&E Fine Mediation (by Joshua Melvin, Bay Area Newsgroup)

San Bruno: Mediator Linked to PG&E Insurer (by Jaxon Van Derbeken, San Francisco Chronicle)

Red Sox Included in Mitchell's Findings (by Ian Browne, MLB.com)

Public San Bruno Blast Hearings Halted to Let PG&E and State Negotiate in Private (by Ken Broder, AllGov California)