BILL ANALYSIS Ó AB 825 Page 1 Date of Hearing: April 28, 2015 ASSEMBLY COMMITTEE ON JUDICIARY Mark Stone, Chair AB 825 Rendon - As Amended: April 20, 2015 SUBJECT: Public Utilities Commission KEY ISSUES: 1)Should the Public Utilities Commission make more documents accessible to the public, including by posting non-confidential documents (or public versions of confidential documents) on an internet website? 2)Should a party aggrieved by a decision of the Public Utilities Commission be allowed to bring an action challenging that decision in the superior courts of Los Angeles or San Francisco, as opposed to existing law that only permits petitioning an appellate court? SYNOPSIS Most provisions in this bill seek greater transparency in the decision-making process of the California Public Utilities Commission (PUC) by, among other things, requiring the PUC to post various filings, reports, procurement contracts, and other AB 825 Page 2 documents on an Internet Web site and otherwise increase citizen access to information concerning PUC decisions. No doubt this bill reflects recent controversies surrounding former PUC President Michael Peevey, his ties to Pacific Gas & Electric and Southern California Edison, and how those ties allegedly affected PUC decisions relating to the San Bruno tragedy and the failed San Onofre nuclear plant. These controversies have raised questions about the PUC decision-making process and its relationship to the entities that it is charged with regulating. Many of the bill's transparency requirements were addressed in the analysis of the Assembly Committee on Utilities and Commerce, which approved the bill by a 14-0 vote. The bill was referred to this Committee because, as most recently amended, it changes the process of judicial review of PUC decisions. Although the state constitution gives the Legislature plenary authority to establish a process of judicial review of PUC decisions, statutes have long required petitions challenging PUC decisions to be directed to California Supreme Court or (since 1999) one of the California Courts of Appeal. What kinds of "decisions" must be challenged in an appellate court is open to debate; however, a California Court of Appeal recently suggested that a challenge to any decision of PUC would need to go to an appellate court. In that case, the court held that an action alleging that PUC violated the Bagley-Keene Open Meeting Act could not be brought in superior court. Prior to recent amendments, this bill responded to that decision by providing that a person could bring an action alleging a violation of either the Bagley-Keene Act or the California Public Records Act in superior court. As recently amended, however, the bill goes much further: it eliminates the long-standing requirement that challenges go to an appellate court and instead permits any party aggrieved by a decision of the PUC to obtain a review in the superior courts of either of San Francisco or Los Angeles. The bill is supported by labor, consumer, and environmental groups. SUMMARY: Imposes new requirements aimed at increasing the transparency of the decision-making of the California Public AB 825 Page 3 Utilities Commission (PUC) and fundamentally changes the process of judicial review of PUC decisions. Specifically, this bill: 1)Prohibits the commission from reassigning any staff member from a duty or activity authorized by statute to another duty or activity unless the Legislature has authorized personnel for that duty or activity. The bill would require the commission's internal auditor to report directly to the commission. 2)Deletes a requirement that reports of the inspections and audit and other pertinent information be furnished to the State Board of Equalization for use in the assessment of the public utilities and instead require that the inspections and audit and other pertinent information be posted on the commission's Internet Web site. 3)Requires each public utility that submits an application to change its rates to include in its application a summary of the application that can be understood by the utility's ratepayers, require the summary and the application be posted on the commission's Internet Web site and, if the utility has an Internet Web site, to be posted on the utility's Internet Web site along with the name and contact information of an utility official who can discuss the nature of the rate application. 4)Provides that if in a proceeding before the commission, a public utility, or subsidiary, affiliate, or holding company, seeks to file a pleading, report, or other document with the commission that preserves the confidentiality of information contained therein, it would be required to file a public version of the pleading, report, or other document that contains sufficient information for any other party to the AB 825 Page 4 proceeding to understand the nature of its contents. The bill would authorize any party to the proceeding to file a motion to make public a pleading, report, or other document filed under a claim of confidentiality. The bill would require an administrative law judge assigned to the proceeding or the assigned commissioner to hold a hearing on the motion and determine whether the pleading, report, or other document should be made public. 5)Requires the commission to post on its Internet Web site a summary of all electricity procurement contracts entered into by an electrical corporation during the previous 3 years, the expenses of which the commission has approved as being just and reasonable, and a list of all public utilities with rates-setting cases then pending before the commission with information, in summary form, as to the amount of any rate increase being sought, both in cumulative amount and by unit or other means billed to ratepayers. 6)Permits any party aggrieved by a decision or order issued by the PUC to obtain a review of the order in the superior court for the City and County of San Francisco or the County of Los Angeles, by filing in the court, within 60 days after the decision or order of the PUC upon the application of rehearing, a written petition praying that the order of the PUC be modified or set aside in whole or part. Specifies the following: a) No objection shall be considered by the court unless the objection had been urged upon the PUC in the application for rehearing. b) Requires that a copy of the petition be transmitted by the clerk of the court to the PUC and the PUC, upon receipt of the petition, shall file with the court the record upon AB 825 Page 5 which the decision or order complained of was entered. c) Specifies that until the record in the proceeding has been filed in the court, the PUC may at any time, upon reasonable notice and in any manner it determines is proper, modify or set aside, in whole or in part, any finding or order made or issued by it. d) Permits a party to apply to the court for leave to produce additional evidence, if the party shows that the additional evidence is material and there were reasonable grounds for failure to produce the evidence in the proceeding before the PUC, the court may authorize additional evidence in a manner and upon terms that the court deems proper. EXISTING LAW: 1)Requires the CPUC to adopt procedures to ensure confidentiality of market sensitive information submitted in an electrical corporation's proposed procurement plan or resulting from or related to its approved procurement plan, including, but not limited to, proposed or executed power purchase agreements, data request responses, or consultant reports, or any combination, provided that the Office of Ratepayer Advocates and other consumer groups that are nonmarket participants shall be provided access to this information under confidentiality procedures authorized by the CPUC. (Public Utilities Code 454.5 (g)) 2)Requires every public utility to provide information to the CPUC including specific answers to all questions posed by the AB 825 Page 6 CPUC. (Public Utilities Code 581) 3)Requires every public utility to deliver copies of any or all maps, profiles, contracts, agreements, franchises, reports, books, accounts, papers, and records in its possession or in any way relating to its property or affecting its business, and also a complete inventory of all its property (Public Utilities Code 582) 4)Provides that no information provided to the CPUC by a public utility or its subsidiary or affiliate shall be open to the public except on the order of the CPUC or a commissioner in the course of a hearing or proceeding. Also provides that any present or former officer or employee of the CPUC who divulges information is guilty of a misdemeanor. (Public Utilities Code 583) 5)Requires public utilities to furnish reports periodically, special, or both concerning any matter about which the CPUC is authorized to inquire or keep itself informed or which it is required to enforce. (Public Utilities Code 584) 6)Requires the public utilities to provide access to all computer models used by the public utility, in any rate proceeding, or any proceeding that may influence a rate, to the CPUC. (Public Utilities Code 585) 7)Provides that a public utility may provide personal customer information requested to a district attorney but that customer usages of services can only be provided pursuant to a court order or subpoena. (Public Utilities Code 588) AB 825 Page 7 8)Establishes an annual reporting requirement for the CPUC to disclose power purchase contract costs in an aggregated form categorized according to the year the procurement transaction was approved, the eligible renewable energy resource type, including bundled renewable energy credits, the average executed contract price, and average actual recorded costs for each kilowatt hour of production. (Public Utilities Code 911) 9)Allows an aggrieved party to a CPUC decision to petition for a writ of review in the court of appeal or the Supreme Court within 30 days of the CPUC's denying an application for rehearing. (Public Utilities Code 1756) 10)Allows an aggrieved party to a CPUC decision to petition for a writ of review in the court of appeal or the Supreme Court within 30 days of a CPUC decision following the grant of an application for rehearing. (Public Utilities Code 1756) 11)Prevents superior court from reviewing, reversing, correcting, or annulling any order or decision of the commission or suspending or delaying the execution or operation thereof, or enjoining, restraining, or interfering with the CPUC in the performance of its "official duties." (Public Utilities Code 1759) 12)States the public policy of this state that public agencies exist to aid in the conduct of the people's business and the proceedings of public agencies be conducted openly so that the public may remain informed. (Government Code 11120) AB 825 Page 8 FISCAL EFFECT: As currently in print this bill is keyed fiscal. COMMENTS: According to the author, recent media reports on the California Public Utilities Commission have lessened the public's trust in the Commission, in part, by showing that the Commission's decision-making process "lacked transparency, with some deals done in private meetings with investor-owned utility representatives." No doubt this bill reflects recent controversies surrounding former PUC President Michael Peevey, his ties to Pacific Gas & Electric and Southern California Edison, and how those ties allegedly affected PUC decisions relating to the San Bruno tragedy and the failed but costly San Onofre nuclear plant. These controversies have raised questions about the PUC decision-making process and its relationships with the entities that it is charged with regulating. However, in addition to these higher profile issues, the author also contends that since deregulation and the 2000 energy crisis the PUC has tended to designate more information as "confidential" and thus shielded from public scrutiny. The author believes that AB 825 will improve transparency and increase public trust. Transparency and Confidentiality Provisions: The transparency provisions of this bill fall roughly into two categories. First, the bill requires the PUC to post on its Website certain documents pertaining to, or submitted by, regulated entities. For example, existing law requires the PUC to periodically inspect and audit the books of regulated entities and submit reports of these investigations to the State Board of Equalization (BOE). This bill would instead require these reports to be posted on the PUC Website. This bill also provides that when a regulated entity submits an application for a rate change, the application shall be reduced to a AB 825 Page 9 plain-language summary and posted on the PUC Website. Second, the bill alters existing rules on documents submitted to the PUC under claims of confidentiality. For example, under this the bill, if a regulated entity seeks to preserve the confidentiality of a document, it must also file a "public version" of the document that contains sufficient information for any other party to understand the contents of the document. In addition, this measure allows any party to file a motion to make public any document filed under claim of confidentiality. An administrative law judge or commissioner considering the motion would hold a hearing and determine whether the document should be made public. Finally, the bill makes certain kinds of information presumptively public and not subject to confidentiality restrictions. These presumptively public documents would include contracts for goods and services executed by the PUC and information submitted by a government entity that is available to the public from that entity. Judicial Review Provisions: Of greatest interest to this committee is the bill's fundamental alteration of the manner in which a person may challenge an order or decision of the PUC. Existing law (Public Utilities Code Sections 1731-1768) sets forth the process of obtaining a review of PUC decisions and the grounds for, and scope of, that review. Before any review is sought in a court, a party that wishes to challenge a PUC decision must first ask the PUC for a rehearing. If, after the rehearing process is exhausted, the PUC decides to reverse or modify its decision, the challenging party may file a petition for a writ of review in either the Court of Appeal or the Supreme Court (but not in a superior court). The party filing the petition must file a record sufficient to allow the court to decide whether or not to grant a review. In other words, while the appellate court is not required to grant a review - that is, there is not appeal or review as a matter of right - it must at least consider the record and exhibits attached to the petition. AB 825 Page 10 If the court denies the petition, it is not required to write an opinion. However, the "summary denial" of the writ should not be confused with a "summary judgment" in a trial court. In a summary judgment, the case is dismissed without a consideration of the merits. However, a summary denial is, at least in theory, based on the merits as revealed in the record and exhibits submitted by the petitioner. (See James B. v. Superior Court (1995) 35 Cal. App. 4th 1014, 1018.) If the petition for review is accepted, the process is treated like any other appeal with full oral arguments before the court. A petitioner who loses in the Court of Appeal may appeal to the California Supreme Court, but such appeals are usually only accepted if necessary to establish uniformity in decisions or settle a disputed and important question of law. By the author's own reckoning, this bill would initiate a "fundamental change" in the long-standing judicial review process for PUC decisions. Instead of filing a petition with the Court of Appeal or the Supreme Court, which may or may not grant the petition of review, an aggrieved party could file a petition in the superior courts of San Francisco or Los Angeles asking the court to modify or set aside, in whole or in part, the decision of the PUC. The petition must be filed within 60 days of the challenged PUC decision. The bill would prohibit the court from considering, except as specified, any new issues that were not raised with the PUC in the rehearing. The PUC could at any time prior to the filing of the record modify or set aside the challenged decision. General Concerns Expressed to the Committee: Because the amendments affecting judicial review were made relatively late, AB 825 Page 11 and the change extensive, the Committee has not received formal letters of opposition that relate to judicial review provisions. However, while the Judicial Council has not taken a formal position, it has raised general and specific concerns that the Committee might wish to consider. At the most general level, the Committee should consider whether the existing system of petition to the Court of Appeal, which has been in place since 1999, is inadequate - or more importantly, whether review by the superior courts of San Francisco and Los Angeles will yield better results (depending on how one defines "better") than the existing process. On the other hand, the mere fact that the existing restriction on the superior courts hearing such matters is of long-standing is not necessarily a good reason for keeping it. As Justice Oliver Wendell Holmes put it, "It is revolting to have no better reason for a rule of law than that it was laid down in the time of Henry IV." [Holmes, "The Path of Law," Harvard Law Review (1897)] Surely the same could be said of a rule laid down in 1998, or for that matter in 1911 when the PUC was created. Whether it is good or bad policy to continue the existing method of judicial review, there is no question that the California Constitution gives the Legislature plenary power "to establish the manner and scope of review of commission action in a court or record." (California Constitution Article XII Section 5.) Procedural concerns that should be considered by the Committee: In addition to the larger substantive policy question, the Committee should also note that the bill in print raises a number of procedural questions as well. For example, the bill allows the aggrieved party may file a "written petition" to obtain a "review of the order." Existing law, Public Utilities Code Section 1759(b), specifies that the appropriate action is a "writ of mandamus" pursuant to Section 1085 of the Code of Civil Procedure. Also, existing Sections 1757 and 1757.1 set forth the scope of the appellate court's review. In AB 825 Page 12 short, if this bill moves forward, the author may wish to address both the form of action and the scope of review with greater specificity. Another issue which the Committee may wish to consider is the author's decision to restrict review to the superior courts of Los Angeles and San Francisco. The author's office has informed the Committee that these two courts are the largest and will most likely have judges with the expertise to hear these matters. However, the Judicial Council has expressed concern to the Committee that limiting the review to just these two courts may substantially increase the workload of each. Also, reliance on these two courts is more limited, geographically, than the four district Courts of Appeal. It is also unclear whether the author intends the San Francisco and Los Angeles Superior Courts to be the exclusive choice, or if a party challenging a PUC decision could still file a petition directly to one of the Courts of Appeal. Because the bill eliminates existing provisions setting forth the process for appealing to the Court of Appeal and the Supreme Court, then under the bill that would no longer be an option. But it is not entirely clear if that is the author's intent. Presumably, a party could appeal a superior court decision to the Court of Appeal, but the bill in print does not expressly provide for that. Author Indicates Willingness to Continue Working on Judicial Review Process: The author has informed the Committee that he recognizes that the bill in print needs to be fleshed out with more procedural details. If the bill moves forward, the author has indicated a willingness to continue working with the Judicial Council, this Committee, and other stakeholders. AB 825 Page 13 ARGUMENTS IN SUPPORT: According to the author, recent media reports "have revealed a lack of transparency in decisions by the California Public Utilities Commission. Transparency in how public agencies make decisions remains a fundamental principle in California law and government. Assembly Bill 825 seeks to increase transparency in Commission decisions in regulating public utilities." The author believes that the bill achieves this in three ways in particular. First, the bill "makes transparency a priority for commission activities, and gives the 'Public Advisor' responsibility for ensuring that transparency, with tools such as the commission website. The website will include certain summary information on energy procurement and utility rate increase applications." Second, the author will require "the commission to re-examine its confidentiality policies in light of the statutory priority for transparency. It also recognizes that certain information that already is public cannot be presumed confidential." Third, the author argues that "AB 825 accomplishes fundamental change in the way that courts review commission decisions, by allowing lawsuits against the commission in the Superior Court in either San Francisco or Los Angeles, instead of just in appellate courts as the law now provides." The bill is supported by labor, consumer, and environmental groups for substantially the same reasons, though these bills have not weighed in on the changes in the judicial review process. AB 825 Page 14 TURN (The Utility Reform Network) supports this bill for many of the above reasons; however, it seeks an amendment that would apply the confidentiality provisions to any party involved in the electricity market or other utility service, not just the regulated utilities. Letter of Concern: Although the California Cable & Telecommunications Association (CCTA) does not oppose this bill, it has submitted a letter expressing concern and requesting amendments. In particular, CCTA believes that some of the changes that this bill proposes as to how the PUC handles confidential information is problematic, especially as to "competitively sensitive" information that may be contained in audit reports. For example, CCTA argues that an Administrative Law Judge or commissioner should not require, as this bill seems to do, "a hearing on every motion for release of confidential information if a review of the information clearly shows that the information on its face is confidential." CCTA argues that the burden of proof should be on the person claiming that the document shall not be maintained as confidential. REGISTERED SUPPORT / OPPOSITION: Support AB 825 Page 15 California Teamsters Public Affairs Council Citizens Oversights Projects Engineers & Scientists of California IFPTE Local 20 AFL-CIO Utility Workers Union of America, AFL-CIO Sierra Club TURN (The Utility Reform Network) (If amended) Concern California Cable & Telecommunications Association Opposition None on file AB 825 Page 16 Analysis Prepared by:Thomas Clark / JUD. / (916) 319-2334