Amended in Senate August 10, 2016

California Legislature—2015–16 Regular Session

Assembly Bill No. 2903

Introduced by begin delete Committee on Utilities and Commerce end delete begin insert Assembly Member Gatto end insert

March 3, 2016

An act to amend Sections begin delete 25301, 25302, 25417.5, and 25534 of the Public Resources Code, and to amend Section 343 of, to repeal Sections 619 and 623 of, and to repeal Division 1.5 (commencing with Section 3300) of, end delete begin insert 303 and 309 of, and to add Sections 307.5, 307.6, 309.2, 314.6, 321.5, 910.7, 912.3, 1712, and 8331 to, end insert the Public Utilities Code, relating to begin delete public utilities. end delete begin insert the Public Utilities Commission, and declaring the urgency thereof, to take effect immediately. end insert

LEGISLATIVE COUNSEL’S DIGEST

AB 2903, as amended, begin delete Committee on Utilities and Commerce end delete   begin insert Gatto end insert . begin delete Wharfingers: warehouseman: California Consumer Power and Conservation Financing Authority: energy crisis litigation. end delete begin insert Public Utilities Commission: duties and responsibilities: governance. end insert

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(1) Existing law establishes the Public Utilities Commission, with regulatory jurisdiction and authority over public utilities, including common carriers, electrical corporations, gas corporations, telephone corporations, and water corporations. Existing law prohibits a commissioner from holding an official relation to or having a financial interest in a person or corporation subject to regulation by the commission and requires the commission to adopt an updated conflict of interest code and statement of incompatible activities by February 28, 1998.

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This bill would prohibit an executive of a public utility from serving as a commissioner within 2 years after leaving the employment of the utility. The bill would require the commission to maintain an updated conflict of interest code and statement of incompatible activities.

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(2) Existing law requires the office of the commission to be in the City and County of San Francisco.

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This bill would require the commission to report, as specified, to the relevant policy and fiscal committees of the Legislature by March 31, 2017, on options to locate operations and staff outside of the commission’s San Francisco headquarters.

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(3) Existing law requires the Governor to designate the president of the commission from among its members and requires the president to direct the executive director, the attorney, and other staff of the commission, except for the independent Office of Ratepayer Advocates. Existing law authorizes the executive director to employ those officers, administrative law judges, experts, engineers, statisticians, accountants, inspectors, clerks, and employees as the executive director deems necessary to carry out the provisions of the Public Utilities Act or to perform the duties and exercise the powers conferred upon the commission by law.

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This bill would authorize the executive director to authorize commission employees to undertake temporary training and development assignments with other agencies, departments, and commissions that undertake coordinated activities with the commission, including the State Energy Resources Conservation and Development Commission, the State Air Resources Board, and the Division of Oil, Gas, and Geothermal Resources. The bill would require the executive director to work with the University of California, the California State University, and other postsecondary educational institutions to develop curriculum and training necessary or useful to candidates for employment with the commission. The bill would require the commission to appoint a chief administrative law judge and an internal auditor, to hold office at the pleasure of the commission and to perform specified functions.

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(4) Existing law places various responsibilities upon the commission to ensure that public utility services are provided in a manner that protects the public safety and the safety of utility employees.

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This bill would require the commission to appoint a Deputy Executive Director for Safety to hold office at its pleasure. The deputy executive director would have primary responsibility for implementing the authority of the commission to initiate an investigation into a safety-related matter and to exercise the emergency authority of the commission to ensure the safety of the public.

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(5) The California Constitution authorizes the commission to establish rules, examine records, and prescribe a uniform system of accounts for all public utilities. The Public Utilities Act requires the commission to inspect and audit the books and records of electrical corporations, gas corporations, heat corporations, telegraph corporations, telephone corporations, and water corporations for regulatory and tax purposes.

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This bill would authorize the commission to conduct financial and performance audits of any entity or program created by any order, decision, motion, settlement, or other action of the commission. If the commission undertook an audit pursuant to this authority, the bill would require the commission to transmit a copy of the audit report to the Legislature and to the Governor immediately upon completion of the audit and to make the report available to the public.

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(6) This bill would require the commission to appoint an independent ombudsman for ethics who would be required to receive complaints and comments from employees of the commission and members of the public concerning how the commission is carrying out its functions. The ombudsman, or staff under the direction of the ombudsman, would be responsible for instituting a program of enhanced ethics training for all commissioners and employees of the commission, including training concerning the commission’s conflict of interest code, statement of incompatible activities, and limitations upon ex parte communications.

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(7) The California Constitution authorizes the commission to establish its own procedures, subject to statutory limitations or directions and constitutional requirements of due process. The Public Utilities Act requires the commission to determine whether a proceeding requires a hearing and, if so, to determine whether the matter requires a quasi-legislative, an adjudication, or a ratesetting hearing. The act sets forth certain procedural requirements for the conduct of proceedings.

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This bill would authorize reports and analyses by local, state, and federal administrative agencies to be admitted into the evidentiary record of a proceeding if proffered by a party and if specified conditions were met.

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(8) The Nuclear Facility Decommissioning Act of 1985 requires the commission to undertake certain steps relative to the decommissioning of a nuclear powerplant by an electrical corporation.

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This bill would require the commission to advocate before the federal Nuclear Regulatory Commission for expedited relocation of any spent fuel stored at the San Onofre nuclear generating station, the Diablo Canyon Units 1 and 2 powerplant, and the Humboldt Bay Unit 3 powerplant to an independent, offsite spent fuel storage installation.

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(9) This bill would state the intent of the Legislature to transfer the duties and responsibilities of the commission over passenger stage corporations, charter-party carriers of passengers, transportation network companies, household goods carriers, vessel common carriers, private carriers, for-hire vessels, and commercial air operators to state departments within the Transportation Agency in a manner consistent with Article XII of the California Constitution and would require the Governor, by January 31, 2018, to propose the specific budget and statutory changes needed to complete the transfer of the duties and responsibilities to the Transportation Agency by no later than July 1, 2018.

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(10) This bill would require the California Research Bureau in the California State Library, by January 1, 2018, to conduct a study of telecommunications service governance to determine what regulatory structure would provide the appropriate regulatory oversight of telecommunications services and to assess the overarching goals of the various programs carried out by the commission, including a discussion of whether the commission, as a whole, is strategically aligned towards a clearly articulated public goal. The bill would require the study to review specified matters and to take into account the history of telecommunications service regulation in the state and changes in technology to make recommendations for guiding principles that clearly define California’s goals for the regulation of the telecommunications industry.

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(11) This bill would declare that it is to take effect immediately as an urgency statute.

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Existing law, until January 1, 2018, requires the Attorney General to represent the Department of Finance and to succeed to all rights, claims, powers, and entitlements of the Electricity Oversight Board in any litigation or settlement to obtain ratepayer recovery for the effects of the 2000-02 energy crisis. Existing law additionally prohibits the Attorney General from expending the proceeds of any settlements of those claims, except as specified.

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This bill would additionally require the Attorney General to represent the Department of Finance and to succeed to all rights, claims, powers, and entitlements of the California Consumer Power and Conservation Financing Authority in any litigation or settlement to obtain ratepayer recovery for the effects of the 2000-02 energy crisis and prohibit the Attorney General from expending the proceeds of any settlements of those claims, except as specified.

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Existing law authorizes the Public Utilities Commission to supervise and regulate every public utility in the state. Chapter 1063 of the Statutes of 1980 deleted warehouseman as a category of public utility under the Public Utilities Act, but did not delete the stated authority granted a warehouseman under the act to condemn property necessary for the construction and maintenance of facilities for storing property. Chapter 369 of the Statutes of 1987 deleted wharfingers as a category of public utilities under the Public Utilities Act, but did not delete the stated authority granted to a wharfinger under the act to condemn property necessary for the construction and maintenance of facilities for the receipt or discharge of freight or passengers. However, the authority to condemn property under the act is applicable only to a corporation that is a public utility.

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This bill would repeal the stated authority of a wharfinger or warehouseman to condemn property.

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Existing law enacted during the 2000-02 energy crisis creates the California Consumer Power and Conservation Financing Authority, with prescribed powers and responsibilities, including the power to issue revenue bonds, for the purposes of augmenting electrical generating facilities to ensure a sufficient and reliable supply of electricity, financing incentives for investment in cost-effective, energy-efficient appliances and energy demand reduction, achieving a specified energy capacity reserve level, providing financing for the retrofit of inefficient electrical powerplants, renewable energy and conservation, and, where appropriate, developing strategies for the authority to facilitate a dependable supply of natural gas at reasonable prices to the public. Existing law prohibits the authority from approving any new program, enterprise, or project, on or after January 1, 2007, unless authority to approve such an activity is granted by statute enacted on or before January 1, 2007.

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This bill would repeal the act establishing the authority and make other conforming changes.

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Vote:  begin delete majority end delete begin insert ²⁄₃ end insert . Appropriation: no. Fiscal committee: yes. State-mandated local program: no.

The people of the State of California do enact as follows:

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begin insert SECTION 1. end insert   

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(a) The Legislature finds and declares both of
the following:

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(1) The Public Utilities Commission has played a vital and
important oversight function protecting consumers by regulating
public utilities.

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(2) Ensuring that oversight function is transparent and
accountable to Californians, and ensuring that oversight function
is focused on the safety of our communities, may require relocating
or augmenting the Public Utilities Commission’s responsibilities.

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(b) By January 1, 2018, the California Research Bureau in the
California State Library shall conduct a study of
telecommunications service governance to determine what
regulatory structure would provide the appropriate regulatory
oversight of telecommunications services. The study shall assess
the overarching goals of the various programs carried out by the
Public Utilities Commission and include a discussion of whether
the commission, as a whole, is strategically aligned towards a
clearly articulated public goal. This portion of the study shall take
into account the history of telecommunications service regulation
in the state and changes in technology to make recommendations
for guiding principles to clearly define California’s goals for the
regulation of the telecommunications industry. The study shall
review all of the following:

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(1) The relative scope of state and federal jurisdiction over
telecommunications services and telecommunications service
providers.

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(2) The extent to which changes in state and federal jurisdiction
may have affected the ability of the Public Utilities Commission
to perform the following functions:

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(A) Processing and resolving consumer service complaints,
including those about voice and broadband service.

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(B) Maintaining and overseeing a fully functional and responsive
911 system.

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(C) Maintaining and overseeing physical facilities, including
trunks, poles, and towers used to provide voice and broadband
service, including 911 service.

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(3) What gaps, if any, exist in the state’s regulatory authority
that are not otherwise addressed by federal law or regulation over
telecommunications services, including, but not limited to,
consumer protection and safety.

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(4) The state and local agencies in addition to the Public
Utilities Commission that provide consumer protection and ensure
the safety of telecommunication services.

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(5) How to enhance the processing and resolving of consumer
complaints about telecommunications service.

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(6) How to enhance consumer protection from abusive practices,
including those regarding voice and broadband service.

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(7) The extent to which the Federal Communication Commission
and the Public Utilities Commission provide consumer protection
related to telecommunications services, particularly in low-income
and disadvantaged communities, specifically addressing each of
the following:

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(A) Unjustified payments or disconnection over legitimate billing
disputes.

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(B) Extended service outages that can be life-threatening for
sick and elderly citizens and can jeopardize the survival of small
and medium-sized businesses that depend on telecommunications
services to function.

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(C) Disruption to, or poor quality of, 911 service.

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(D) The effect on customers of small local telecommunications
service providers.

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(8) How to ensure the public can reach first responders in an
emergency, including maintaining and overseeing a fully functional
and responsive 911 system.

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(9) How to ensure that the physical facilities used to provide
voice and broadband services, including 911 service, are
adequately maintained, including trunks, poles, and towers.

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(10) The extent to which it is necessary for utility pole safety
regulation to be governed by one regulatory structure regardless
of the type of utility attachment.

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(11) How to ensure the commission is effectively managing the
state’s universal service programs funded through the California
High-Cost Fund-A Administrative Committee Fund, California
High-Cost Fund-B Administrative Committee Fund, Universal
Lifeline Telephone Service Trust Administrative Committee Fund,
Deaf and Disabled Telecommunications Program Administrative
Committee Fund, California Teleconnect Fund Administrative
Committee Fund, and California Advanced Services Fund (Chapter
1.5 (commencing with Section 270) of the Public Utilities Code).

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(12) How to ensure the effective administration of the Digital
Infrastructure and Video Competition Act of 2006 (Division 2.5
(commencing with Section 5800) of the Public Utilities Code).

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(13) The extent to which changes in state and federal jurisdiction
may have affected the ability of the Public Utilities Commission
to perform any of the aforementioned functions.

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(14) The extent to which competitive telecommunications
services are available in California and to what extent there are
regions within California that lack competitive alternatives.

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(15) The extent to which competitive telecommunications
services create a gap, if any, in regulatory oversight.

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(16) How other states are governing telecommunications
services.

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(17) The role of the Public Utilities Commission in regulating
the wholesale telecommunications market.

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(18) The extent to which current in-state telecommunications
jobs are affected by the transition to new technologies that provide
telecommunications services.

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(19) The extent to which there is a regulatory nexus between
the provision of water, energy, and telecommunications services.

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begin insert

begin insert SEC. 2. end insert   

end insert

begin insert Section 303 of the end insert begin insert Public Utilities Code end insert begin insert is amended
to read: end insert

303.  

(a) A public utilities commissioner may not hold an
official relation to, nor have a financial interest in, a person or
corporation subject to regulation by the commission. If any
commissioner acquires a financial interest in a corporation or
person subject to regulation by the commission other than
voluntarily, his or her office shall become vacant unless within a
reasonable time he or she divests himself or herself of the interest.

begin insert

(b) No executive of a public utility may serve as commissioner
within two years after leaving the employment of the utility.

end insert begin delete

(b)

end delete

begin insert (c) end insert  The commission shall begin delete adopt end delete begin insert maintain end insert an updated begin delete Conflict
of Interest Code and Statement of Incompatible Activities, by
February 28, 1998, end delete begin insert conflict of interest code and statement of
incompatible activities end insert in a manner consistent with applicable law.

begin insert

begin insert SEC. 3. end insert   

end insert

begin insert Section 307.5 is added to the end insert begin insert Public Utilities Code end insert begin insert , to
read: end insert

begin insert

begin insert 307.5. end insert   

(a) The commission shall appoint a chief administrative
law judge, who shall hold office at the pleasure of the commission.

(b) The chief administrative law judge shall be responsible for
the oversight of the administrative law judge division and shall
organize, coordinate, supervise, and direct the operations of the
division as directed by the commission, consistent with commission
policies and priorities.

(c) The chief administrative law judge shall keep a full and true
record of all proceedings of the commission.

end insert

begin insert

begin insert SEC. 4. end insert   

end insert

begin insert Section 307.6 is added to the end insert begin insert Public Utilities Code end insert begin insert , to
read: end insert

begin insert

begin insert 307.6. end insert   

(a) The commission shall appoint an internal auditor,
who shall hold office at the pleasure of the commission.

(b) The internal auditor shall be responsible for the oversight
of the internal audit unit and shall plan, initiate, and perform
audits of key financial, management, operational, and information
technology functions within the commission to improve
accountability and transparency to executive and state
management.

(c) The internal auditor shall report his or her findings and
recommendations directly to an audit subcommittee of the
commission.

end insert

begin insert

begin insert SEC. 5. end insert   

end insert

begin insert Section 309 of the end insert begin insert Public Utilities Code end insert begin insert is amended
to read: end insert

309.  

begin insert (a) end insert begin insert   end insert The executive director may employ such officers,
administrative law judges, experts, engineers, statisticians,
accountants, inspectors, clerks, and employees as the executive
director deems necessary to carry out the provisions of this part
or to perform the duties and exercise the powers conferred upon
the commission by law. All officers and employees shall receive
such compensation as is fixed by the commission.

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(b) The executive director may authorize commission employees
to undertake temporary training and development assignments
with other agencies, departments, and commissions that undertake
coordinated activities with the commission, including the Energy
Commission, the State Air Resources Board, and the Division of
Oil, Gas, and Geothermal Resources.

end insert begin insert

(c) The executive director shall work with the University of
California, the California State University, and other
postsecondary education institutions to develop curriculum and
training necessary or useful to candidates for employment with
the commission.

end insert

begin insert

begin insert SEC. 6. end insert   

end insert

begin insert Section 309.2 is added to the end insert begin insert Public Utilities Code end insert begin insert , to
read: end insert

begin insert

begin insert 309.2. end insert   

The commission shall appoint a Deputy Executive
Director for Safety, who shall hold office at its pleasure. The deputy
executive director shall have primary responsibility for
implementing the authority of the commission to initiate an
investigation into a safety-related matter and to exercise the
emergency authority of the commission to ensure the safety of the
public.

end insert

begin insert

begin insert SEC. 7. end insert   

end insert

begin insert Section 314.6 is added to the end insert begin insert Public Utilities Code end insert begin insert , to
read: end insert

begin insert

begin insert 314.6. end insert   

(a) The commission may conduct financial and
performance audits of any entity or program created by any order,
decision, motion, settlement, or other action of the commission.

(b) The commission shall complete any audit in a timely manner
consistent with the Generally Accepted Government Auditing
Standards developed by the United States Government
Accountability Office.

(c) After performing an audit pursuant to this section, the
commission may conduct additional followup work that is related
to any findings and recommendations related to the audit.

end insert

begin insert

begin insert SEC. 8. end insert   

end insert

begin insert Section 321.5 is added to the end insert begin insert Public Utilities Code end insert begin insert , to
read: end insert

begin insert

begin insert 321.5. end insert   

(a) The commission shall appoint an independent
ombudsman for ethics. The ombudsman shall receive complaints
and comments from employees of the commission and members
of the public concerning how the commission is carrying out its
functions. The ombudsman shall maintain the confidentiality of
an employee’s identity unless the employee expressly indicates a
desire to communicate his or her identity to the commission.

(b) The ombudsman, or staff under the direction of the
ombudsman, shall be responsible for instituting a program of
enhanced ethics training for all commissioners and employees of
the commission, including training concerning the commission’s
conflict of interest code, statement of incompatible activities, and
limitations upon ex parte communications.

end insert

begin insert

begin insert SEC. 9. end insert   

end insert

begin insert Section 910.7 is added to the end insert begin insert Public Utilities Code end insert begin insert , to
read: end insert

begin insert

begin insert 910.7. end insert   

(a) By March 31, 2017, the commission shall report to
the relevant policy and fiscal committees of the Legislature on
options to locate operations and staff outside of the commission’s
San Francisco headquarters. The report shall explore options for
leveraging additional facilities in areas of the state, including
Sacramento, that would allow the commission to collaborate with
other state entities and provide staff more opportunities for
training, career development, and exchange placements with other
state entities. The report shall do both of the following:

(1) Consider categories of operations in different offices.

(2) Analyze recruitment and retention, salary disparities by
location based on duty statements, and costs associated with using
locations outside of San Francisco with no, or minimal, disruption
of current commission employees.

(b) The commission shall conduct one or more public workshops
to obtain suggestions, concerns, ideas, and comments from
stakeholders and interested members of the public in furtherance
of the purpose of the report.

(c) Pursuant to Section 10231.5 of the Government Code, this
section is repealed on March 31, 2021.

end insert

begin insert

begin insert SEC. 10. end insert   

end insert

begin insert Section 912.3 is added to the end insert begin insert Public Utilities Code end insert begin insert ,
to read: end insert

begin insert

begin insert 912.3. end insert   

Immediately upon completion of an audit of any entity
or program created by any order, decision, motion, settlement, or
other action by the commission conducted pursuant to Section
314.6, the commission shall transmit a copy of the audit report to
the Legislature, including to the appropriate policy and fiscal
committees or subcommittees of the Legislature, and to the
Governor. Once the audit report has been transmitted to the
Legislature and the Governor, the report shall be made available
to the public.

end insert

begin insert

begin insert SEC. 11. end insert   

end insert

begin insert Section 1712 is added to the end insert begin insert Public Utilities Code end insert begin insert ,
to read: end insert

begin insert

begin insert 1712. end insert   

(a) Reports and analyses by local, state, and federal
administrative agencies may be admitted into the evidentiary
record if proffered by a party and both of the following apply:

(1) The reports or analyses have been adopted or approved by
a vote of the governing body of the agency, approved by the
director or head of the agency, or published in a peer-reviewed
academic publication.

(2) The commission provides an opportunity, consistent with
due process, for other parties and the public to analyze and
respond to any facts asserted by the reports or analyses.

(b) Unless a witness representing the agency is able to respond
to questions relating to the content of the reports or analyses, and
is available for cross-examination, the reports or analyses shall
not serve as the basis for any findings of fact or conclusions of
law.

end insert

begin insert

begin insert SEC. 12. end insert   

end insert

begin insert Section 8331 is added to the end insert begin insert Public Utilities Code end insert begin insert ,
to read: end insert

begin insert

begin insert 8331. end insert   

The commission shall advocate before the federal
Nuclear Regulatory Commission for expedited relocation of any
spent fuel stored at the San Onofre Nuclear Generating Station,
the Diablo Canyon Units 1 and 2 powerplant, and Humboldt Bay
Unit 3 powerplant to an independent, offsite spent fuel storage
installation.

end insert

begin insert

begin insert SEC. 13. end insert   

end insert begin insert

(a)  For purposes of this section, the following terms
have the following meanings:

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(1) “Charter-party carrier of passengers” has the same meaning
as defined in Section 5360 of, subject to the exclusions in Section
5353 of, the Public Utilities Code.

end insert begin insert

(2) “Commercial air operator” has the same meaning as defined
in Section 5500 of the Public Utilities Code.

end insert begin insert

(3) “For-hire vessel” has the same meaning as defined in
Section 4661 of the Public Utilities Code.

end insert begin insert

(4) “Household goods carrier” has the same meaning as defined
in Section 5109 of the Public Utilities Code.

end insert begin insert

(5) “Passenger stage corporation” has the same meaning as
defined in Section 226 of the Public Utilities Code.

end insert begin insert

(6) “Private carrier” has the same meaning as defined in
Section 4001 of the Public Utilities Code.

end insert begin insert

(7) “Transportation network company” has the same meaning
as defined in Section 5431 of the Public Utilities Code.

end insert begin insert

(8) “Vessel common carrier” means those persons and
corporations that are a common carrier pursuant to subdivision
(b) of Section 212 of the Public Utilities Code.

end insert begin insert

(b) It is the intent of the Legislature to transfer the duties and
responsibilities of the Public Utilities Commission over passenger
stage corporations, charter-party carriers of passengers,
transportation network companies, household goods carriers,
vessel common carriers, private carriers, for-hire vessels, and
commercial air operators to state departments within the
Transportation Agency in a manner consistent with Article XII of
the California Constitution. By January 31, 2018, the Governor
shall propose the specific budget and statutory changes needed to
complete the transfer of the duties and responsibilities to the
Transportation Agency by no later than July 1, 2018.

end insert begin insert

(c) It is the intent of the Legislature to make conforming changes
to this code and the other codes of this state to effectuate
subdivision (b) by July 1, 2018.

end insert begin insert

(d) It is the intent of the Legislature to evaluate methods for
ensuring that rail crossings inspected by the Public Utilities
Commission and rail transit approved by the Public Utilities
Commission are in coordination with the Transportation Agency.

end insert begin insert

(9) This act is an urgency statute necessary for the immediate
preservation of the public peace, health, or safety within the
meaning of Article IV of the Constitution and shall go into
immediate effect. The facts constituting the necessity are:

end insert begin insert

In order for the provisions of this act to be applicable as soon
as possible in the 2017-18 fiscal year and thereby facilitate the
orderly transition of duties and responsibilities at the earliest
possible time, it is necessary that this act take effect immediately.

end insert

All matter omitted in this version of the bill appears in the bill as introduced in the Assembly, March 3, 2016. (JR11)