BILL ANALYSIS Ó
AB 415
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Date of Hearing: April 8, 2013
ASSEMBLY COMMITTEE ON UTILITIES AND COMMERCE
Steven Bradford, Chair
AB 415 (Garcia) - As Amended: April 3, 2013
SUBJECT : Public Utilities Act violation: defense
SUMMARY : This bill specifies that evidence of a reasonable
good faith reliance upon advice staff of the California Public
Utilities Commission (PUC) is to be considered only for the
purposes of determining the appropriate penalty to impose in an
enforcement action by the commission PUC. Specifically, this
bill :
a)In an enforcement action, pursuant to an act or an order,
decision, rule, direction, demand, or requirement of the PUC,
evidence of a reasonable good faith reliance upon advice
directly provided by the PUC staff is to be considered by the
PUC only for the purposes of determining the appropriate
penalty to impose.
b) Defines 'reasonable good faith reliance" as a reasonable
belief that an entity is acting on the direction and advice of
the PUC staff consistent with direction and advice provided.
EXISTING LAW
1)Establishes that the PUC may appoint an attorney to represent
and appear for the PUC in all actions and proceedings
involving any question of the Public Utilities Code, order, or
act of the PUC and to commence, prosecute, and expedite final
determination of actions and proceedings except as directed by
a vote of the commission. (Public Utilities Code 307)
2)Establishes that whenever it is the opinion of the PUC that a
public utility is failing or omitting or about to fail or omit
to do anything required by law, order, decision, rule,
direction, or requirement of the PUC, it shall direct its
attorney to file an action or proceeding for appropriate
relief or injunction and seek appropriate penalties (Public
Utilities Code 2102, 2104)
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3)Establishes fines for failure to comply with violations of any
order, decision, rule, regulation, direction, demand, or
requirement (Public Utilities Code 2106 et seq.)
FISCAL EFFECT : Unknown
COMMENTS :
1)Author's Statement. "The PUC handles many complex and ever
evolving issues. The PUC staff professionals are relied upon
by the Commissioners as well as the business entities,
utilities and even consumer groups attempting to do business
in the state under the purview of the PUC. Whether
interpreting a new order from the Commissioners, issues with a
rate case or how to comply with a telecoms fee formula,
entities dealing with the PUC need direction. In fact, staff
routinely provides direction on how to calculate fee formulas
or how to implement a PUC mandated program. Under current
law, the PUC is all of the following on enforcement matters -
investigator, prosecutor, judge, jury, executioner. With this
much inherent authority, when entities rely upon staff
direction, they should not be subject to prosecution when
staff or commission interpretation changes. Commissioners
serve terms and are often replaced. Staff moves on. Entities
need to know that if they can rely upon direction of PUC staff
on these complex matters."
2)Telephone Service Surcharges . All telecommunications carriers
(carriers) or Voice Over Internet Protocol (VOIP) providers
offering telephone service to the public in California,
authorized by the PUC to operate in California, are required
to assess surcharges on their end-user Intrastate service
revenues and to remit the monies to the PUC. These surcharges
are collectively known as Universal Service Surcharges and are
used to fund:
a) California High Cost Fund A (CHCF-A)
b) California High Cost Fund B (CHCF-B)
c) California Lifeline (LifeLine)- (Formerly known as
Universal Lifeline Telephone Service or ULTS)
d) California Teleconnect Fund (CTF)
e) Deaf & Disabled Telecommunication Program (DDTP)
f) California Advance Service Funds (CASF)
Carriers must assess the surcharges on all of their revenues
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for intrastate telecommunications services except for the
following:
a) California LifeLine service revenue;
b) Charges to other certificated carriers for services
that are to be resold;
c) Coin sent paid telephone calls (coin in box) and
debit card calls;
d) Customer-specific contracts effective before
9/15/94;
e) Usage charges for coin-operated pay telephones;
f) Directory advertising; and
g) One-way radio paging
Carriers must assess and remit surcharges using a reasonable
method to determine intrastate revenues. The PUC suggests two
methods for carriers (FCC Safe Harbor or Traffic Study) but
does not limit carriers to these two methods.
1)Ongoing Tracfone Investigation. The bill could impact the
penalty phase of an ongoing enforcement proceeding
(I.09-12-016) where a company, Tracfone, had not been
remitting Universal Surcharge Funds in accordance with statute
and PUC decisions. Tracfone asserts that the PUC did not have
a method to calculate Universal Surcharge Funds from carriers
who utilize debit cards. According to Tracfone, they received
advice in 2003 from PUC staff that Tracfone should indicate
'zero' intrastate billing reports filed with the PUC. Entering
zero has the effect of not collecting or remitting any
Universal Surcharge Funds.
On March 13, 2013, the California Courts of Appeal denied
Tracfone's petition for writ of review. TracFone petitioned
the court for a writ of review of two Phase 1 decisions in
Investigation (I.) 09-12-016: D.12-02-032 which found that
TracFone is a telephone corporation operating as a public
utility providing prepaid wireless telephony services in
California, and also for review of D.12-10-018 which denied
TracFone's application for rehearing of D.12-02-032 and also
denied its motion to stay that decision. D.12-02-032
determined that TracFone violated provisions of the Public
Utilities Code and Commission orders and decisions in failing
to pay the user fees and public purpose program surcharges
required by its operating license/registration. TracFone was
ordered to immediately begin collecting and remitting the
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applicable surcharges and user fees; also, D.12-02-032 decided
that the amount of user fees and surcharges owed, if any, and
whether TracFone shall be subject to any penalties, would be
determined in Phase 2 of I.09-12-016.
2)It's a matter of opinion . The PUC has five Commissioners
appointed by the Governor. Those Commissioners meet regularly
to vote on policy, procedural, and legal matters. The PUC has
roughly 1,000 full-time personnel who routinely speak to the
entities regulate by the PUC, the customers of the regulated
entities, and the general public. The PUC has well-established
and publicly available Rules of Practice which guide any
interested party in how to effectively participate at the PUC.
At any time an individual or company can petition the PUC. A
decision on the petition would ultimately be voted on by the
Commissioners and would represent the opinion of the PUC.
Opinions offered by PUC staff, and even among Commissioners,
can vary until the Commissioners have voted on a matter.
AB 415 could have the effect of giving staff statements the
equivalence of a PUC decision.
3)Chilling effect . AB 415 could discourage informal
communications between PUC staff and the utilities and the
public. PUC staff may become less willing to provide informal
advice to utilities and the public, and would require the use
of more formal processes. Importantly, AB 415 applies to all
entities regulated by the PUC, including public electric and
gas utilities, electricity service providers, public water
utilities, transportation companies, and certain
telecommunication service providers.
4)Technical amendment. AB 415 includes a definition of
"reasonable good faith" The construction of the definition
does not specifically reference that an entity should rely on
advice from a person authorized by the PUC to give advice or
whether that advice should be consistent with commission
rules, orders, regulations, and decisions. The technical
amendment addresses this.
(b) For the purpose of this section, "reasonable good faith
reliance" means a reasonable belief that the action of an
entity, acting on the direction and advice of the staff of the
commission authorized to give direction and advice and
consistent with rules, orders, regulations, and decisions of
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the commission, is legal and consistent with the direction and
advice provided.
REGISTERED SUPPORT / OPPOSITION :
Support
Tracfone (Sponsor)
Opposition
California Public Utilities Commission (CPUC)
Consumer Attorneys of California (unless amended)
Consumer Federation of California
Division of Ratepayer Advocates (DRA)
Engineers and Scientists of California, IFPTE Local 20, AFL-CIO
The Teamsters
The Utility Reform Network (TURN)
Utility Workers Union of America, Local 132, AFL-CIO
Analysis Prepared by : Susan Kateley / U. & C. / (916)
319-2083