BILL ANALYSIS                                                                                                                                                                                                    Ó          1





                SENATE ENERGY, UTILITIES AND COMMUNICATIONS COMMITTEE
                                 ALEX PADILLA, CHAIR
          

          SB 636 -  Hill                     Hearing Date:  January 14,  
          2014                  S
          As Amended:              January 6, 2014          FISCAL       B
                                                                        
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                                     DESCRIPTION
           
           The California Constitution  establishes the California Public  
          Utilities Commission (CPUC) with five members appointed by the  
          Governor and approved by the Senate for staggered six-year terms  
          and grants the CPUC authority to regulate public utilities  
          subject to control by the Legislature.  (Cal. Const. Article II,  
          Section 1)

           Current law  requires the Governor to designate one of the  
          commissioners as president who is authorized to direct and  
          prescribe duties of an attorney (general counsel), executive  
          director, and other staff and preside at CPUC meetings.  (Public  
          Utilities Code 305)

           Current law  authorizes the commission to appoint a general  
          counsel to represent the CPUC in all actions, to commence,  
          prosecute or intervene in proceedings as directed by the  
          president, to advise the commission and each commissioner on all  
          matters, and to perform all duties that the president or a vote  
          of the commission may require. (Public Utilities Code 307)

           Current law  establishes within the CPUC an independent Office of  
          Ratepayer Advocates (ORA), to be staffed with attorneys from the  
          office of the CPUC general counsel (Legal Division), and  
          requires the CPUC to develop procedures and a code of conduct to  
          ensure that ORA advocates on a particular case or proceeding are  
          not advising decisionmakers on the same case or proceeding.  
          (Public Utilities Code 309.5)

           This bill  prohibits any CPUC employee or officer that is  











          assigned to prosecute, testify in, or supervise prosecution of,  
          an adjudication case from participating in, or advising the  
          commission on, the decision of that case or the decision of a  
          factually related proceeding. 

                                      BACKGROUND
           
          Due Process Requires Separation of Functions - The  
          constitutional guarantee of procedural due process includes the  
          right to have legal disputes and proceedings resolved by a  
          neutral, impartial and unbiased adjudicator and tribunal.  This  
          generally requires that a judge or other decisionmaker be  
          advised by an attorney who is different from the attorney  
          serving as prosecutor or advocate in a proceeding. A leading  
          California Supreme Court case is Morongo Band of Mission Indians  
          v. State Water Resources Control Board (45 Cal.4th 731 (2009),  
          which involved a board proceeding to revoke a water license  
          where an attorney prosecuting the case also served as advisory  
          counsel for the board in its decision on an unrelated matter.   
          The court held that contemporaneously serving as adviser to a  
          decisionmaker in one case while prosecuting an unrelated case  
          before that same decisionmaker does not by itself violate due  
          process as long as an agency's internal separation of functions  
          are observed.

          CPUC's Separation of Functions - The California Administrative  
          Procedures Act (APA) requires a state agency's adjudicative  
          function to be separated from the investigative, prosecutorial,  
          and advocacy functions (Sections 11425.10 and 11425.30 of the  
          Government Code).

          The CPUC, as an independent constitutional entity, has long been  
          exempt from the APA and instead is governed by provisions in the  
          Public Utilities Code.  These provisions do not require  
          separation of advocacy and advisory functions for all CPUC  
          employees or even all attorneys in the CPUC Legal Division.   
          Current law requires the general counsel, head of the Legal  
          Division, to both prosecute cases on behalf of the commission  
          and advise commissioners (Public Utilities Code 307).  However,  
          provisions governing ORA (which has attorneys assigned to it  
          from the Legal Division), requires the commission to develop a  
          code of conduct and procedures to ensure that an employee does  
          not both advocate and advise decisionmakers in the same case  
          (Public Utilities Code 309.5(d)).











          CPUC Guidelines and Practices - A 1997 memorandum from the CPUC  
          executive director to staff on "Conflict of Roles: Guidelines &  
          Procedures" requires separation of functions for CPUC staff  
          under the following general principle:

               "Commission staff who have been personally involved in  
               preparing or presenting an adjudicatory case shall not  
               serve in an advisory role in the same adjudicatory  
               proceeding, or any factually related adjudicatory  
               proceeding."

          But the memo emphasizes that its provisions are only guidelines  
          and also gives the executive director and general counsel  
          authority to waive the guidelines. The CPUC states that this  
          memo and its "current practice of keeping attorneys separated on  
          a case-by-case basis" complies with the California Supreme  
          Court's Morongo decision.  

          On January 7, 2014, the commissioners issued a memorandum to the  
          general counsel and Legal Division attorneys with a report from  
          an outside expert on ethical duties and responsibilities of CPUC  
          attorneys and a directive that legal ethics training will be  
          forthcoming.  The CPUC hired the outside expert in August 2013  
          after an internal dispute last summer involving CPUC attorneys  
          and supervisors working on an enforcement action against Pacific  
          Gas and Electric (PG&E) in connection with the San Bruno gas  
          pipeline explosion.
           
                                       COMMENTS
           
              1.   Author's Purpose  .  According to the author, this bill is  
               necessary to codify the requirement to separate advocacy  
               and advisory functions at the CPUC because the CPUC's  
               current policy requiring separation is not binding and can  
               be waived at the discretion of the general counsel and  
               executive director.  The author describes two incidents  
               demonstrating the need for this bill involving the general  
               counsel serving both as adviser to the commissioners and  
               directing the prosecuting attorneys to take specified  
               actions in the CPUC's penalty proceeding against PG&E for  
               the San Bruno gas pipeline explosion.

              2.   Making Separation of Functions Mandatory  . This bill  










               fills a gap in current law and CPUC practice by making  
               separation of advocacy and advisory functions mandatory.   
               Current law requiring separation of these functions at the  
               CPUC applies only to ORA and not to all CPUC attorneys or  
               the general counsel.  Moreover, the 1997 guidelines,  
               apparently developed to implement the ORA statutory  
               provisions, can be waived by the executive director and  
               general counsel.  

              3.   Conflict with General Counsel Statutory Duties  .  This  
               bill prohibits any employee who prosecutes a case, or  
               "supervises" the prosecution of a case from advising the  
               commission on that case or factually related proceeding.   
               Assuming the general counsel supervises all attorneys in  
               the Legal Division, including those assigned to prosecute  
               cases, this provision potentially conflicts with the  
               general counsel's statutory duty to advise each  
               commissioner on any matter.  Thus, given the author's  
               intent that this bill apply to the general counsel, the  
               author and committee may wish to consider amending the bill  
               to make its provisions notwithstanding Section 307 of the  
               Public Utilities Code.

              4.   Limit Advisory Role When "Personally Involved" in  
               Advocacy  . This bill prohibits an advisory role for any CPUC  
               "officer, employee, or agent of the commission that is  
               assigned to assist in the prosecution of, to testify in, or  
               to supervise the prosecution of an adjudication case."    
               Regarding SB 611 (Hill, 2013) with provisions substantially  
               similar to this bill, the CPUC stated that the bill was  
               "unnecessary and would result in duplicative bureaucracy  
               and unjustified expense." 

               The CPUC guidelines minimize the need for duplication by  
               limiting the advisory prohibition to staff who are  
               "personally involved" in the prosecution function, defined,  
               in relevant part, to mean "substantial involvement in the  
               case, and not merely marginal or trivial  
               participation?meaningful participation that is likely to  
               affect an individual with a commitment to a particular  
               result in the case."  Moreover, it is unclear whether  
               testifying in an adjudication case would always constitute  
               advocacy.  Thus, to help minimize the need for duplicative  
               staff and supervisors, the author and committee may wish to  










               consider amending the bill to apply the advisory  
               prohibition to any "officer, employee, or agent of the  
               commission that is personally involved in the prosecution  
               or the supervision of prosecution of an adjudication case."

              5.   Related Legislation  .  SB 611 (Hill, 2013), required CPUC  
               separation of advocacy and advisory functions, modified  
               power of CPUC president, gave the Division of Ratepayer  
               Advocates independent structure and budget process, and  
               made other changes to CPUC authority;  amended with  
               unrelated provisions and pending in the Assembly Committee  
               on Public Safety.


                                           


                                      POSITIONS
           
           Sponsor:
           
          Author

           Support:
           
          None on file.

           Oppose:
           
          None on file.

          






































          Jacqueline Kinney 
          SB 636 Analysis
          Hearing Date:  January 14, 2014