BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                  SB 965
                                                                  Page  1

          Date of Hearing:   June 28, 2012

                   ASSEMBLY COMMITTEE ON GOVERNMENTAL ORGANIZATION
                                 Isadore Hall, Chair
                     SB 965 (Wright) - As Amended:  June 21, 2012

           SENATE VOTE  :   33-1
           
          SUBJECT  :   Water Resources Control Board: ex parte 
          communications

           SUMMARY  :   Establishes a statutory framework for allowable ex 
          parte communications with the State Water Resources Control 
          Board (SWRCB) and Regional Water Quality Control Board (RWQBC) 
          members.  Specifically,  this bill  :   

          1)Defines "ex parte communication" as an oral or written 
            communication with one or more board members concerning 
            matters, other than a matter of procedure or practice that is 
            not in controversy, under the jurisdiction of a board, 
            regarding an action of the board, as specified.

          2)Defines "interested person" as either of the following:

             a)   Any person who will be required to enroll or file 
               authorization to discharge pursuant to the action or with a 
               financial interest in a matter at issue before a board, or 
               that person's agents or employees, including persons 
               receiving consideration to represent that person.

             b)   A representative acting on behalf of any formally 
               organized civic, environmental, neighborhood, business, 
               labor, trade, or similar association who intends to 
               influence the decision of a board member on a matter before 
               the board. 

          3)Provides that ex parte communications provisions of the 
            Administrative Procedure Act (Act) do not apply to actions of 
            the SWRCB and RWQCB members concerning waste discharge 
            requirements, conditions of water quality certification, or 
            conditional waiver waste discharge requirements.

          4)Allows ex parte communications as follows:

             a)   Oral ex parte communications may be permitted at any 








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               time by any board member provided that the board member 
               involved in the communication does each of the following:

               i)     Invites all interested persons to attend the meeting 
                 or sets up a conference call in which all interested 
                 persons may participate.

               ii)    Gives notice of the meeting or call as soon as 
                 possible, but no less than three days before the meeting 
                 or call.

             b)   Written ex parte communications may be permitted by any 
               interested person provided that the interested person 
               making the communication serves copies of the communication 
               on all other interested persons on the same day the 
               communication is sent to a board member or makes 
               arrangements with the board staff to ensure that all 
               interested persons have been provided copies of 
               communication.

             c)   If an individual ex parte communication meeting or call 
               is granted to any interested person, all other interested 
               persons shall also be granted individual ex parte meetings 
               of a substantially equal period of time with the board 
               member. The interested person requesting the initial 
               individual meeting shall notify the other interested 
               persons that its request has been granted, and shall file a 
               certificate of service of this notification at least three 
               days before the meeting or call.

          5)Provides that a board may prohibit ex parte communications for 
            a period beginning not more than 14 days before the day of the 
            board meeting which the decision in the proceeding is 
            scheduled for board action. If the board continues the 
            decision, it may permit ex parte communications during the 
            first half of the interval between the originally scheduled 
            date and the date that the decision is calendared for final 
            decision, and may prohibit ex parte communications for the 
            second half of the period, provided that the period of 
            prohibition shall begin not more than 14 days before the day 
            of the board meeting to which the decision is continued.

          6)Requires ex parte communications made regarding a board action 
            shall be reported by the interested person, regardless of 
            whether the communication was initiated by the interested 








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            person. A notice of ex parte communication shall be filed with 
            the board within three working days of the communication. The 
            notice may address multiple ex parte communications in the 
            same proceeding, provided that the notice of each 
            communication identified therein is timely. The notice shall 
            include all of the following information:

             a)   The date, time, and location of the communication, and 
               whether it was oral, written, or both.

             b)   The identities of each board member involved, the person 
               initiating the communication, and any persons present 
               during the communication.

             c)   A description of the interested person's communication 
               and the content of this communication. A copy of any 
               written, audiovisual, or other material used for or during 
               the communication shall be attached to this description.

          7)If an interested person fails to provide notice, a board may 
            use the remedies available under the Act, including the 
            issuance of an enforcement order.  

           EXISTING LAW     

          1)Authorizes the SWRCB to hold any hearings it deems necessary. 
            All hearings held by the SWRCB or by any member shall be open 
            and public. 

          2)Requires a regional water quality control board, after any 
            necessary hearing, to prescribe waste discharge requirements 
            as to the nature of any proposed discharge, existing 
            discharge, or material change in an existing discharge.

          3)Directs the state water boards to issue waste discharge 
            requirements as required or authorized by the Federal Clean 
            Water Act, and directs that the state to act to ensure 
            consistency with the requirements for state programs 
            implementing the Federal Clean Water Act.

          4)Prohibits, under the Act, communications between the SWRCB or 
            RWQBC members and any other person about a pending, 
            quasi-judicial matter if such communications occur in the 
            absence of other parties to the matter without notice and an 
            opportunity for all parties to participate in the discussion. 








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            The Act provides that if the prohibition is violated, the 
            presiding officer shall promptly disclose the content of the 
            communication and give all parties the opportunity to address 
            the communication. The Act also provides that a violation may 
            be grounds for disqualification of the officer who engaged in 
            the ex parte communication.

          5)Allows SCRCB or RWQCB members to have communications with the 
            public and governmental officials outside of a noticed public 
            meeting if the topic of discussion is a general issue within 
            the Board's jurisdiction or a rulemaking or other regulatory 
            proceeding.

           FISCAL EFFECT  :   Unknown

           COMMENTS  :   

           Purpose of the bill  : According to the author, the ex parte 
          communication rules of the SWRCB and RWQCB members should be 
          reformed to allow more communication between decision-makers and 
          stakeholders.  The regulated community should have greater 
          opportunity to talk with board members who have such significant 
          power to influence their activities. The boards should adopt 
          rules similar to those used by other state regulatory boards 
          such as the Air Resources Board and the California Coastal 
          Commission, which allow communication between regulators and the 
          regulated as long as it is disclosed at public meetings. 

           California Administrative Procedure Act  : The California 
          Administrative Procedure Act (APA) was significantly amended in 
          1995 after a seven year statutorily-mandated review by the Law 
          Revision Commission. About 95 percent of state adjudication 
          agencies are not directly covered by the APA and have their own 
          hearings practices, which must meet minimum standards 
          established in the APA.  The California Coastal Commission, the 
          Integrated Waste Management Board, and the Public Utilities 
          Commission are exempted from the APA's prohibition on ex parte 
          communications, among other state agencies.

          The APA 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. The APA covers adjudicatory 
          hearings and not proceedings that consider broader policy issues 
          or rulemaking proceedings to adopt or amend regulations. 








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          However, the APA requires that rulemaking proceedings be based 
          on a public record. Although not required by the APA, some 
          agencies advise that ex parte contacts made during a rulemaking 
          proceeding should be fully disclosed on the record and not 
          allowed after the record has been closed. 

           Purpose of limiting ex parte communications  : Rules regarding ex 
          parte communications have their roots in constitutional 
          principles of due process and fairness.  In public agencies, ex 
          parte rules serve as a critical function in providing 
          transparency to the public.  Ex parte communications may 
          contribute to public distrust and the notion that decisions are 
          based more on special access and influence than on the facts, 
          the laws, and the exercise of discretion to promote the public 
          interest.

          Ex parte communications are fundamentally offensive in 
          adjudicative proceedings because they involve an opportunity by 
          one party to influence the decision maker outside the presence 
          of opposing parties, thus violating due process requirements. 
          Such communications are not subject to rebuttal or comment by 
          other parties.  Ex parte communications can frustrate a lengthy 
          adjudicative process because certain decisive facts and 
          arguments would not be reflected in the record or in the 
          decisions.  Finally, ex parte contacts may frustrate judicial 
          review since the record would be missing such communications. 

           Little Hoover Commission  : In a 2009 report titled "Clearer 
          Structure, Cleaner Water: Improving Performance and Outcomes at 
          the State Water Boards," the Little Hoover Commission (LHC) 
          concluded that, "Ex parte rules must be reformed to allow more 
          communication between decision-makers and stakeholders. The 
          regulated community should have greater opportunity to talk with 
          board members who have such significant power to influence their 
          activities. The boards should adopt rules similar to those used 
          by other state regulatory boards such as the Integrated Waste 
          Management Board, which allow communication between regulators 
          and the regulated as long as it is disclosed at public 
          meetings."

           Ex Parte Model: CA Public Utilities Commission  : While many state 
          boards and commissions have ex parte communication rules and 
          regulations, these regulations vary widely.  SB 965 provides an 
          ex parte communication process similar to the provisions that 
          regulate the California Public Utilities Commission (CPUC) in 








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          which ex parte communications are allowed but regulated. For 
          example, for rate setting cases, the CPUC allows for oral ex 
          parte communications at any time by any commissioner if all 
          interested parties are invited and given not less than a three 
          days' notice. 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 CPUC may establish a period not to exceed 14 
          days in which ex parte communications are not permitted and may 
          meet in closed session during that time. 

           Is the CPUC Model an appropriate model?  : While various 
          organizations write in support of the concept of SB 965, they 
          claim that, "because the provisions of SB 965 are based on the 
          ex parte rules of the CPUC, this bill has significant 
          limitations in the contest of the State and regional water 
          quality control boards." They claim that many of the provisions 
          set forth by the bill would greatly limit the boards' ability to 
          learn firsthand about stakeholder issues.

           Double-Referral:  On June 19, 2012, this bill was approved by the 
          Assembly Environmental Safety and Toxic Materials Committee on a 
          9-0 vote.

           Related Legislation  : AB 2063 (Alejo), 2011-12 Legislative 
          Session.  The bill would allow between persons interested in 
          pending evidentiary hearings and a member of RWQCB or the SWQCB 
          in the absence of other parties to the matter, if disclosed 
          afterwards. (Pending in Senate Environmental Quality Committee)

           REGISTERED SUPPORT / OPPOSITION  :

           Support 
           
          Agricultural Council of California (if Amended)
          California Bean Shippers Association (if Amended)
          California Building Industry Association (if Amended)
          California Cement Manufacturers Environmental Coalition (if 
          Amended)
          California Chamber of Commerce (if Amended)
          California Grain and Feed Association (if Amended)
          California Grocers Association (if Amended)
          California League of Food Processors (if Amended)
          California Manufacturers & Technology Association (if Amended)
          California Metals Coalition (if Amended)








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          California Pear Growers Association (if Amended)
          California Precast Concrete Association (if Amended)
          California Seed Association (if Amended)
          California State Floral Association (if Amended)
          Chemical Industry Council of California (if Amended)
          City of Lakewood
          Coalition for Adequate School Housing
          Family Winemakers of California (if Amended)
          Golden State Builders Exchanges (if Amended)
          Institute of Scrap Recycling Industries (if Amended)
          LKQ Corporation (if Amended)
          Lumber Association of California &  Nevada (if Amended)
          National Federation of Independent Business (if Amended)
          Pacific Egg and Poultry Association (if Amended)
          Pacific Merchant Shipping Association (if Amended)
          Rio Tinto Minerals (if Amended)
          State of California Auto Dismantlers Association (if Amended)
          United Contractors (if Amended)
          Western Growers Association (if Amended)
          Western Wood Preservers Institute (if Amended)

           Opposition 
           
          None on file

           Analysis Prepared by  :    Felipe Lopez / G. O. / (916) 319-2531