BILL ANALYSIS Ó
SB 965
SENATE COMMITTEE ON ENVIRONMENTAL QUALITY
Senator S. Joseph Simitian, Chairman
2007-2008 Regular Session
BILL NO: SB 965
AUTHOR: Wright
AMENDED: March 28, 2012
FISCAL: Yes HEARING DATE: April 23, 2012
URGENCY: No CONSULTANT: Rachel Wagoner
SUBJECT : STATE WATER RESOURCES CONTROL BOARD AND CALIFORNIA
REGIONAL WATER QUALITY CONTROL BOARDS: EX PARTE
COMMUNICATIONS
SUMMARY :
Existing law :
1) Under the fifth and 14th Amendments of the United States
Constitution, guarantees due process whenever an adjudicative
governmental action deprives a person of life, liberty or
property. The core requirements for meeting due process are:
a) Effective notice to directly affected parties;
b) A meaningful opportunity to participate in the process;
c) Decision makers who are as unbiased as possible.
2) Under the federal Administrative Procedure Act, defines:
a) Ex parte contacts as "oral or written communication not
on the public record with respect to which reasonable
prior notice to all parties is given." In formal
rulemaking or adjudication, ex parte contacts are
forbidden; any such communication must be placed in the
public record.
b)Rulemaking as "an agency process for formulating, amending,
or repealing a rule."
i) A rule in turn is "the whole or a part of an
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agency statement of general or particular
applicability and future effect designed to
implement, interpret, or prescribe law or policy;"
c)Adjudication as "an agency process for the formulation of
an order;"
i) An order in turn is "the whole or part of a
final disposition ... of an agency in a matter other
than rulemaking but including licensing;"
3) Under the California Administrative Procedure Act (APA):
a) "Prohibits any communication, direct or indirect, to a
presiding officer in an adjudicatory proceeding from any
party, unless there is notice and an opportunity for all
parties to participate in the communication." As defined
by the APA "presiding officer" means "agency head, member
of the agency, administrative law judge, hearing officer
or other person who presides in the adjudicative
proceedings." Exceptions are allowed for communications
concerning matters of procedure or practice. If a
presiding officer receives a communication in violation of
the ex parte prohibition, the officer must make full
written disclosure, notify all parties, provide an
opportunity for the opposing party to address the
communication and reopen the hearing at the officer's
discretion. Receipt of an ex parte communication is
grounds for disqualifying the presiding officer.
(Government Code §§11405.10-11430.80). The California
Coastal Commission, the former Integrated Waste Management
Board and the Public Utilities Commission (PUC) were
statutorily exempted from the APA's prohibition on ex
parte communications, among other state agencies. These
requirements do not cover quasi-legislative proceedings.
b) Defines "adjudicatory proceeding" as "an evidentiary
hearing for determination of facts pursuant to which an
agency formulates and issues a decision."
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4) Requires the State Water Resources Control Board (SWRCB) and
the California regional water quality control boards
(regional boards) to implement the Federal Water Pollution
Control Act and the Porter-Cologne Water Quality Control Act
by prescribing waste discharge requirements for discharges to
the waters of the state, as specified. The SWRCB and
regional boards may hold hearings necessary for carrying out
their duties, as specified. The SWRCB and regional boards
are governed by the APA ex parte requirements.
This bill :
1) Exempts specified proceedings of the SWRCB or a regional
board from the ex parte communications provisions of the APA.
2) Prohibits a state board, regional board member, or a person,
other than a board staff member acting in his or her official
capacity, who intends to influence the decision of a board
member on a matter before the board, from conducting an ex
parte communication, except:
a) If an ex parte communication occurs, the board member
shall notify the interested party that a full disclosure
of the ex parte communication shall be entered in the
board's record.
b) Communications cease to be a prohibited ex parte
communication if either of the following occurs:
i) The communication is fully disclosed and a
request is made that the communication be placed in
the board's official record of the proceeding.
ii) Two or more board members receive substantially
the same written communication from the same party,
which is fully disclosed by a single board member.
COMMENTS :
1) Purpose of Bill . According to the author, there is no
existing statute governing ex parte communications at
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proceedings of the SWRCB or regional boards. The author
states that board staff believe that state and regional water
board members and staff must follow ex parte rules similar to
rules that must be followed by judges, defendants and
plaintiffs in courts. The author argues that all
administrative avenues have been exhausted, in that the board
staff and counsel have heretofore resisted calls to conform
the ex parte regulations of the boards to be consistent with
those used by other regulatory agencies within and outside of
CalEPA. According to the author, the Little Hoover
Commission, the Department of Water Resources and other
public and private entities and individuals have strongly
suggested the board staff modify its rules.
2) Ex parte rules for boards and commissions. Ex parte
communications are made in private between an interested
party in a decisionmaking process and an official in a
decisionmaking position. Because they can introduce an
element of bias in a decisionmaking process federal and state
law as well as agency policy prescribe requirements for ex
parte communications for specified proceedings. Because
boards and commissions can vary in the type of proceedings
held, the process of each may vary for each board or
commission.
a) SWRCB . SWRCB regulations (Title 23 California Code of
Regulations, Section 648) conform to the APA relative to
adjudicatory proceedings, including the limitations on ex
parte communications. Should a prohibited ex parte
communication be received during an adjudicatory
proceeding, the board member must disclose the
communication on the record. Disclosure requires either
1) including a written ex parte communication in the
record, along with any response from the board member, or
2) memorializing an oral communication by including a
memorandum in the record stating the substance of the
communication, identifying who was present at the time of
the communication and any response from the member. The
board member must notify all parties of the ex parte
disclosures.
b) The former California Integrated Waste Management Board
(CIWMB) . The former CIWMB was statutorily exempted from
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the APA's provisions regarding ex parte communication in
adjudicatory proceedings and instead was governed by
former provisions in the Public Resources Code. The CIWMB
held only two or three adjudicatory proceedings every
year. All other matters were quasi-legislative.
Public Resources Code §40412 defined ex parte
communications for CIWMB as "? any oral or written
communication concerning maters, other than purely
procedural matters, under the board's jurisdiction which
are subject to a rollcall vote?"
The statute provided that no board member or person
(except a staff member of the board acting in an official
capacity) may conduct an ex parte communication. However
if an ex parte communication occurred, the board member
was to notify the interested party that a full disclosure
of the communication would be entered into the board's
record. The statute also provided that once a board
member disclosed the ex parte communication in writing and
requested that it be entered into the board's official
record of the proceeding, it was no longer considered an
ex parte communication.
Any person who violated the ex parte statute governing
CIWMB was punishable by a fine of not more than $50,000 or
by imprisonment for not more than a year. Furthermore,
upon the request of any person, the Attorney General could
file a civil complaint in the superior court of the
country in which the board has its principal office
alleging that a board member has knowingly violated the ex
parte law. If found guilty, the board member was to be
removed from office.
The process adopted under SB 965 is modeled after the
former CIWMB's process with the exception of the
enforcement provisions. SB 965 does not include any of
the enforcement provisions related to the fine,
imprisonment or enforcement action brought by the Attorney
General.
c) The California Air Resources Board (ARB) . The ARB,
like SWRCB, falls under the provisions of the APA.
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Regulations regarding ex parte communications during
adjudicatory proceedings are found in the California Code
of Regulations, Title 17, Division 3, Article 2,
Subarticles 3 and 4, prohibiting a hearing officer and the
executive officer from participating in "any
communications with any party, representative of party, or
any person who has a direct or indirect interest in the
outcome of the proceedings about the subject matter or
merits of the case at issue, without notice and
opportunity of all parties, to participate in
communication? No pleading, letter, document or other
writing shall be filed unless service of a copy
therefore?is made on all parties to a proceeding."
The regulations require that if a hearing officer or the
executive officer receives a communication in violation of
the ex parte prohibition, the officer is required to
promptly disclose the contents on the record and give all
parties the opportunity to address it. The officer has
the discretion to reopen a hearing to allow all parties
the opportunity to present evidence regarding the subject
of the ex parte communication. Receipt of ex parte
communications may be grounds for disqualification.
As noted previously, the APA does not require disclosure
of ex parte communications in rulemaking
proceedings/quasi-legislative proceedings that consider
board policy questions. However, it is ARB's policy to
disclose those communications.
d) The California Coastal Commission (CCC). The CCC is
statutorily exempted from the APA provisions regarding ex
parte communications and instead is governed by provisions
in Public Resources Code §§30300-30320. In general, ex
parte communications to CCC commissioners are prohibited
unless disclosed. The Coastal Act requires the CCC to
conduct its business in an "?open, objective and impartial
manner free from undue influence and the abuse of power
and authority." (§30320).
Public Resources Code §30321 broadly defines the
jurisdiction of the CCC for the purposes of the ex parte
prohibition as, "?any permit action, federal consistency
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review, appeal, local coastal program port master plan,
public works plan, long-range development plan,
categorical or other exclusions from coastal development
permit requirements, or any other quasi-judicial matter
requiring commission action, for which an application has
been submitted" to the CCC.
CCC Commissioners must disclose and make public ex parte
communication from an interested person by providing a
full report to the executive director within 7 days. The
report is to be placed in the public record. If
communication occurs within seven days of the next
commission meeting, the disclosure must be made to the
full Commission on the record of the proceedings at that
hearing. Once disclosed and placed in the Commission's
official record, a communication ceases to be an ex parte
communication.
The statute limits disclosure of advocates paid to
influence matters before the CCC.
e) The Public Utilities Commission (PUC) . The Public
Utilities Act governs the PUC's procedures for hearings
and judicial review. The PUC holds three types of
hearings: quasi-legislative, adjudicative and rate
setting, each with different ex parte requirements.
Adjudication cases: Ex parte communications are prohibited
in adjudication cases.
Rate setting cases: Ex parte communication is also
prohibited in rate setting cases.
The ex parte prohibition is qualified for rate setting
cases as "?oral ex parte communications may be permitted
at any time by any commissioner if all interested parties
are invited and given not less than three days' notice.
Written ex parte communications may be permitted by any
party provided that copies of the communication are
transmitted to all parties on the same day." The statute
further specifies that if an individual ex parte meeting
is granted, all parties must be granted substantially
equal periods of time and given three days' notice. The
PUC may establish a period not to exceed 14 days in which
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ex parte communications are not permitted and may meet in
closed session during that time.
Quasi-legislative cases: In quasi-legislative proceedings,
ex parte communications are "?allowed without restriction
or reporting requirement."
For the PUC's purposes, Public Resources Code
§1701.1(c)(4) defines ex parte communication as, "any oral
or written communication between a decision maker and a
person with an interest in a matter before the PUC
concerning substantive, but not procedural issues, that
does not occur in a public hearing workshop, or other
public proceeding or on the official record of the
proceeding on the matter."
3) Arguments in support . Supporters argue that SB 965 would
make members of SWRCB more accessible to the public,
including stakeholders that are regulated by the SWRCB and
regional boards. The supporters argue that access to
decision makers is critical to ensuring effective and
balanced public policy.
Supporters state that several years ago, the staff of the
SWRCB determined that the process of the adoption of
standards and permits was a quasi-judicial process, despite
the fact that many storm water permits and other actions
taken by SWRCB clearly do not fall within that category. As
a result of this interpretation board members are prohibited
from communicating with stakeholders in developing permits
and policies, even though these permits may often apply to
large groups of stakeholders in the regulated community. The
supporters argue that this restriction on communication, or
ex parte rules limit the regulated entities' ability to
discuss important and complex issues with board members
despite the profound fiscal impact board decisions can have
on these regulated entities. Supporters believe that the
current process diminishes the ability of local governments,
businesses and other stakeholders to provide valuable
information to the water boards since their opportunity to
comment is often limited to a few minutes of testimony during
a formal hearing.
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4) Arguments in opposition . Opposition argues that SB 965 will
compromise the transparency of the SWRCB and regional board
proceedings as well as put in jeopardy the due process of all
interested parties by allowing ex parte communications on
permit, conditional waiver and some enforcement matters. SB
965 would allow for closed door meetings to occur between the
board members and stakeholders. This bill will create an
uneven playing field when it comes to the decision making
process on important issues before the water boards. The
bill does not require that board members provide the
opportunity for all interested parties to meet with members.
Because of time constraints or a lack of willingness, board
members could meet with one side of an issue and not with the
other, leading to a bias of the board member. While SB 965
provides that full disclosure of the communication must be
entered into the board record it does not allow for
stakeholders on the opposing side of a matter to respond to
the communication. Additionally, the opposition states that
different communications to different members of the board
may serve to convolute the discussion at the public board
meeting because different board members will have received
different information. For these reasons, it is not in the
interest of a full and open process that the changes to ex
parte communications suggested in SB 965 be enacted.
5) May violate due process requirements of the United States
Constitution . The courts have generally regarded ex parte
communication prohibitions to apply to enforcement
proceedings. SB 965 applies to matters "under the
jurisdiction of the state board or regional board pursuant to
Article 4 (commencing with Water Code Section 13260) or
Chapter 5.5 (commencing with Water Code Section 13370).
"This article and chapter include the issuance of waste
discharge requirements, conditional waivers and waste
discharge requirements that serve as National Pollutant
Discharge Elimination System (NPDES) permits. However they
also place other matters "under the jurisdiction of the state
board or regional board," including civil liability for
non-payment of fees (Water Code Section 13261), civil
liability for certain discharges (Water Code Section 13265),
investigative orders (Water Code Section 13267), civil
liability for failure to furnish reports (Water Code Section
3268) and civil liability for discharge to waters of the
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United States (Water Code Sections 13385 and 13385.1). These
are enforcement matters of the boards, and under the
provisions of this bill an ex parte communication may violate
the due process provisions of the United States Constitution.
6) Are SWRCB and regional board conditional waivers and permits
adjudicative proceedings or quasi-legislative proceedings ?
Supporters of SB 965 argue that "water board staff determined
that" conditional waivers and permits are adjudicative
proceedings. The Chief Counsel of SWRCB opined that the APA
requires that permits and conditional waivers be treated as
adjudicatory proceedings because the requirements of the
conditional waiver or general waste discharge permit are
directly enforceable against the discharger; the water boards
adopt the requirements following the same procedures as for
other permitting decisions and the permit and conditional
waiver requirements are subject to the same judicial review
standards as other permits. In function and form, the
issuance of general waste discharge requirements and
conditional waiver requirements are adjudicative actions.
The Chief Counsel further offered that case law
"distinguishing between quasi-judicial and quasi-legislative
are based on function performed rather than the procedure
followed."
7) Impact to regional board members . The regional water board
members are volunteers who give their time to participate in
multi-day board meetings and spend many hours preparing for
those meetings. Many of these members have other full-time
employment obligations. The changes to the SB 965 ex parte
rules will result on additional time pressure for board
members that may result in an ability to meet with all
interested parties on a matter before the board, resulting in
an inadvertent bias on the part of members that met with some
but not all interested parties or an imbalanced decision on
the part of the board because some members may meet with all
interested parties, others may meet with some or none of the
interested parties prior to the hearing.
8) Maintaining transparency -What needs to be said in private
that cannot be said in a public setting ? Bias can occur when
a decision maker receives information relative to a decision
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that not all of the directly affected parties have had an
equal opportunity to hear or challenge. Ex parte
communications are a particular concern because they involve
an opportunity for one party to influence a decision maker
outside the presence of other parties. Current rules allow
for interested parties to submit written information to the
board without limitation, they also allow for meetings with
staff. Additionally, the water boards conduct numerous
public workshops in the development of the permits and
waivers. Is there a specific reason that interested parties
need to meet with board members in private? What needs to be
said behind a closed door without other interested parties
there to discuss?
9) This is not the appropriate rule . Modeling ex parte law for
the SWRCB after the CIWMB's ex parte rule is not the
appropriate rule. The CIWMB dealt with 2 or 3 adjudicative
matters a year and the quasi-legislative matters that came
before the board were not similar to waste discharge permits
and waivers granted by the regional boards. Additionally,
CIWMB was a state body, where the water boards are both state
and regional. Because the CCC is also a state commission and
the permits issued by the commission are specific to one
project at a time, the CCC model also lacks the appropriate
opportunity for full participation of all interested parties.
Suggested Amendment : Should the committee agree with
supporters that the APA ex parte rules do not provide
sufficient opportunity for interested parties to communicate
complex issues in water board proceedings, then the bill
should be amended to craft an ex parte statute for the water
boards that provides the greatest level of transparency for
the specific type of proceeding while providing more access
to communication with board members.
The ex parte rule governing the PUC's ratesetting proceedings
offer a greater level of communication between board members
and stakeholders while preserving the highest level of
transparency. By allowing ex parte communications to occur
in a way that all interested parties are invited to
participate and receive the same information, would allow the
water boards' members to have conversations about complex
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issues that are before the board, but in a way that steers
clear of bias and is fully transparent. The bill should be
amended to adopt a similar process.
10)Governor's reorganization of the water boards . Governor
Brown has proposed and the Legislature is currently
considering a reorganization of the state and regional water
boards that would change the constitution, qualifications and
compensation of board members among other things. Is it more
appropriate to consider rules governing communication as part
of the reorganization discussion than as a separate matter?
11)Technical amendment needed . SB 965's definition of ex parte
communication refers to communications "other than purely
procedural matters," drawn from the former CIWMB's statute in
the Public Resources Code. Because other adjudicative
matters before the water boards will continue to rely on the
APA's adjudicative proceedings requirements, for consistency,
the bill should use the APA's language of "a matter of
procedure or practice, including a request or a continuance,
that is not in controversy."
SOURCE : Senator Wright
SUPPORT : Arroyo Grande City Manager Steven Adams, Artesia
Mayor John P. Lyon, Atlas Pacific Corporation,
Auburn Director of Public Works, Bazz Houston
Company, Bellflower Mayor Scott A. Larsen, Buddy
Bar Casting, California Building Industry
Association, California Cement Manufacturers
Environmental Coalition, California Chamber of
Commerce, California Contract Cities Association,
California Grocers Association, California League
of Food Processors, California Manufacturers &
Technology Association, California Metals
Coalition, California Precast Concrete
Association, California Refuse Recycling Council,
California State Association of Counties,
Carmel-by-the-Sea City Administrator Jason
Stilwell, CASTCO, Cast Aluminum Corporation,
Ceres City Engineer Toby Wells, Chemical Industry
Council of California, Coalition for Adequate
School Housing, Commerce Mayor Joe Aguilar,
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Covina Manager Daryl Parrish, Department of
Defense Regional Environmental Coordinator Region
9, Family Winemakers of California, Golden State
Builders Exchanges, Goleta Mayor Edward Easton,
Inland Empire Disposal, Institute of Scrap
Recycling Industries California Chapters,
Kingsburg Mayor Bruce Blayney, Lakewood Mayor
Diane DuBois, League of California Cities, LKQ
Corporation, Lodi Iron Works, Inc., Los Angeles
County Waste Management Association, Lumber
Association of California & Nevada, Magnesium
Alloy Products Company, Inc., Monterey Mayor
Chuck Della Sala, National Federation of
Independent Business, Orange County Board of
Supervisors, Pacific Alloy Casting Company, Inc.,
Pacific Grove Mayor Carmelita Garcia, Pacific
Merchant Shipping Association, Pismo Beach Mayor
Dwayne Chisam, Placerville Manager Cleve Morris,
Rangers Die Casting Company, Redding Mayor Dick
Dickerson, Rio Tinto Minerals, Rocklin Mayor
Brett Storey, Roseville Mayor Pauline Roccucci,
Roseville Police Officers Association, Sacramento
Stormwater Quality Partnership, San Bernardino
County Stormwater Program, San Gabriel Valley
Council of Governments, San Juan Water District,
Santa Maria Mayor Larry Lavagnino, Signal Hill
Mayor Larry Forester, Solano Economic Development
Corporation, Solid Waste Association of Orange
County, SSA Marine, Standard Metals Recycling,
State of California Auto Dismantlers Association,
Thorock Metals, Inc.,TST, Inc., United
Contractors, Vernon City Administrator Mark
Whitworth, Western Growers Association, Western
Wood Preservers Institute, Wine Institute, Yreka
Mayor David Simmen
OPPOSITION : California Coastkeeper Alliance, Clean Water
Action, Environment California, Seventh
Generation Advisors, Sierra Club California
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