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 6 3 6 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