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 SB 965 Page 2 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 SB 965 Page 3 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. SB 965 Page 4 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. SB 965 Page 5 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 SB 965 Page 6 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) SB 965 Page 7 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