Amended in Senate August 17, 2016

Amended in Senate August 10, 2016

California Legislature—2015–16 Regular Session

Assembly BillNo. 2903


Introduced by Assembly Member Gatto

March 3, 2016


An act to amend Sectionsbegin delete 303 and 309end deletebegin insert 303, 308, 309, and 321end insert of, and to add Sections 307.5, 307.6, 309.2, 314.6, 321.5,begin delete 910.7,end deletebegin insert 910.8,end insert 912.3,begin delete 1712,end delete and 8331 to, the Public Utilities Code, relating to the Public Utilities Commission, and declaring the urgency thereof, to take effect immediately.

LEGISLATIVE COUNSEL’S DIGEST

AB 2903, as amended, Gatto. Public Utilities Commission: duties and responsibilities: governance.

(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.

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.

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

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.

(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.

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.begin insert The bill would shift responsibility for keeping a full and true record of all proceedings of the commission from the executive director to the chief administrative law judge.end insert

(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.

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.

(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.

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.

(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.

begin delete

(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.

end delete
begin delete

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.

end delete
begin insert

(7) Existing law requires the commission to establish an office of the public advisor and requires the office of the public advisor to assist members of the public and ratepayers who desire to testify before or present information to the commission in any hearing or proceeding of the commission.

end insert
begin insert

This bill would require the public advisor to receive complaints and comments from members of the public concerning how the commission is carrying out its functions and to compile, no less than once annually, and make public on the commission’s Internet Web site the number and nature of complaints and comments from members of the public. The public advisor would be required to maintain the confidentiality of the identity of a member of the public who makes a complaint or comment unless the member of the public expressly indicates a desire to communicate his or her identity to the commission.

end insert

(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.

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.

(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.

(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 bybegin insert federal and state agencies, includingend insert thebegin delete commission, includingend deletebegin insert commission. The bill would require the bureau to includeend insert a discussion of whether the commission, as a whole, is strategically aligned towards a clearly articulated public goal. The bill would require the studybegin delete to review specified matters andend delete 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.

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

Vote: 23. Appropriation: no. Fiscal committee: yes. State-mandated local program: no.

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

P5    1

SECTION 1.  

(a) The Legislature finds and declares both of
2the following:

3(1) The Public Utilities Commission hasbegin insert historicallyend insert played a
4vital and important oversight function protecting consumers by
5regulatingbegin insert monopolyend insert public utilities.

6(2) Ensuring that oversightbegin delete functionend delete is transparent and
7accountable tobegin delete Californians,end deletebegin insert Californiansend insert andbegin delete ensuring that
8oversight functionend delete
is focused on the safety of ourbegin delete communities,end delete
9begin insert communitiesend insert may requirebegin delete relocating or augmentingend deletebegin insert reforming end insertbegin insertthe
10responsibilities ofend insert
the Public Utilitiesbegin delete Commission’s
11responsibilities.end delete
begin insert Commission.end insert

12(b) By January 1, 2018, the California Research Bureau in the
13California State Library shall conduct a study of
14telecommunications service governance to determine what
15regulatory structure would provide the appropriate regulatory
16oversight of telecommunications services. The study shall assess
17the overarching goals of the various programs carried out bybegin insert federal
18and state agencies, including the Federal Communications
19Commission andend insert
the Public Utilitiesbegin delete Commissionend deletebegin insert Commission,end insert
20 and include a discussion of whether the commission, as a whole,
21 is strategically aligned towards a clearly articulated public goal.
22begin delete This portion of theend deletebegin insert Theend insert study shall take into account the history
23of telecommunications service regulation in the state and changes
24in technology to make recommendations for guiding principles to
25clearly define California’s goals for the regulation of the
26telecommunications industry.begin delete The study shall review all of the
27following:end delete

begin delete

28(1) The relative scope of state and federal jurisdiction over
29telecommunications services and telecommunications service
30providers.

P6    1(2) The extent to which changes in state and federal jurisdiction
2may have affected the ability of the Public Utilities Commission
3to perform the following functions:

4(A) Processing and resolving consumer service complaints,
5including those about voice and broadband service.

6(B) Maintaining and overseeing a fully functional and responsive
7911 system.

8(C) Maintaining and overseeing physical facilities, including
9trunks, poles, and towers used to provide voice and broadband
10service, including 911 service.

11(3) What gaps, if any, exist in the state’s regulatory authority
12that are not otherwise addressed by federal law or regulation over
13telecommunications services, including, but not limited to,
14consumer protection and safety.

15(4) The state and local agencies in addition to the Public Utilities
16Commission that provide consumer protection and ensure the
17safety of telecommunication services.

18(5) How to enhance the processing and resolving of consumer
19complaints about telecommunications service.

20(6) How to enhance consumer protection from abusive practices,
21including those regarding voice and broadband service.

22(7) The extent to which the Federal Communication Commission
23and the Public Utilities Commission provide consumer protection
24related to telecommunications services, particularly in low-income
25and disadvantaged communities, specifically addressing each of
26the following:

27(A) Unjustified payments or disconnection over legitimate
28billing disputes.

29(B) Extended service outages that can be life-threatening for
30sick and elderly citizens and can jeopardize the survival of small
31and medium-sized businesses that depend on telecommunications
32services to function.

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

34(D) The effect on customers of small local telecommunications
35service providers.

36(8) How to ensure the public can reach first responders in an
37emergency, including maintaining and overseeing a fully functional
38and responsive 911 system.

P7    1(9) How to ensure that the physical facilities used to provide
2voice and broadband services, including 911 service, are adequately
3maintained, including trunks, poles, and towers.

4(10) The extent to which it is necessary for utility pole safety
5regulation to be governed by one regulatory structure regardless
6of the type of utility attachment.

7(11) How to ensure the commission is effectively managing the
8state’s universal service programs funded through the California
9High-Cost Fund-A Administrative Committee Fund, California
10High-Cost Fund-B Administrative Committee Fund, Universal
11Lifeline Telephone Service Trust Administrative Committee Fund,
12Deaf and Disabled Telecommunications Program Administrative
13Committee Fund, California Teleconnect Fund Administrative
14Committee Fund, and California Advanced Services Fund (Chapter
151.5 (commencing with Section 270) of the Public Utilities Code).

16(12) How to ensure the effective administration of the Digital
17Infrastructure and Video Competition Act of 2006 (Division 2.5
18(commencing with Section 5800) of the Public Utilities Code).

19(13) The extent to which changes in state and federal jurisdiction
20may have affected the ability of the Public Utilities Commission
21to perform any of the aforementioned functions.

22(14) The extent to which competitive telecommunications
23services are available in California and to what extent there are
24regions within California that lack competitive alternatives.

25(15) The extent to which competitive telecommunications
26services create a gap, if any, in regulatory oversight.

27(16) How other states are governing telecommunications
28services.

29(17) The role of the Public Utilities Commission in regulating
30the wholesale telecommunications market.

31(18) The extent to which current in-state telecommunications
32jobs are affected by the transition to new technologies that provide
33telecommunications services.

34(19) The extent to which there is a regulatory nexus between
35the provision of water, energy, and telecommunications services.

end delete
36

SEC. 2.  

Section 303 of the Public Utilities Code is amended
37to read:

38

303.  

(a) A public utilities commissioner may not hold an
39official relation to, nor have a financial interest in, a person or
40corporation subject to regulation by the commission. If any
P8    1commissioner acquires a financial interest in a corporation or
2person subject to regulation by the commission other than
3voluntarily, his or her office shall become vacant unless within a
4reasonable time he or she divests himself or herself of the interest.

5(b) No executive of a public utility may serve as commissioner
6within two years after leaving the employment of the utility.

7(c) The commission shall maintain an updated conflict of interest
8code and statement of incompatible activities in a manner
9consistent with applicable law.

10

SEC. 3.  

Section 307.5 is added to the Public Utilities Code, to
11read:

12

307.5.  

(a) The commission shall appoint a chief administrative
13law judge, who shall hold office at the pleasure of the commission.

14(b) The chief administrative law judge shall be responsible for
15the oversight of the administrative law judge division and shall
16organize, coordinate, supervise, and direct the operations of the
17division as directed by the commission, consistent with commission
18policies and priorities.

19(c) The chief administrative law judge shall keep a full and true
20record of all proceedings of the commission.

21

SEC. 4.  

Section 307.6 is added to the Public Utilities Code, to
22read:

23

307.6.  

(a) The commission shall appoint an internal auditor,
24who shall hold office at the pleasure of the commission.

25(b) The internal auditor shall be responsible for the oversight
26of the internal audit unit and shall plan, initiate, and perform audits
27of key financial, management, operational, and information
28technology functions within the commission to improve
29accountability and transparency to executive and state management.

30(c) The internal auditor shall report his or her findings and
31recommendations directly to an audit subcommittee of the
32commission.

begin insert

33
(d) The internal auditor shall comply with Part 3.5 (commencing
34with Section 13885) of Division 3 of Title 2 of the Government
35Code.

end insert
36begin insert

begin insertSEC. 5.end insert  

end insert

begin insertSection 308 of the end insertbegin insertPublic Utilities Codeend insertbegin insert is amended
37to read:end insert

38

308.  

(a) The commission shall appoint an executive director,
39who shall hold office during its pleasure. The executive director
40shall be responsible for the commission’s executive and
P9    1administrative duties and shall organize, coordinate, supervise,
2and direct the operations and affairs of the commission and
3expedite all matters within the commission’s jurisdiction.

4(b) The executive director shallbegin delete keep a full and true record of
5all proceedings of the commission,end delete
issue all necessary process,
6writs, warrants, andbegin delete notices,end deletebegin insert noticesend insert and perform such other duties
7as the president, or vote of the commission, prescribes. The
8president may authorize the executive director to dismiss
9complaints or applications when all parties are in agreement
10thereto, in accordance with rules that the commission may
11prescribe.

12(c) The commission may appoint assistant executive directors
13who may serve warrants and other process in any county or city
14and county of this state.

15

begin deleteSEC. 5.end delete
16
begin insertSEC. 6.end insert  

Section 309 of the Public Utilities Code is amended
17to read:

18

309.  

(a) The executive director may employ such officers,
19administrative law judges, experts, engineers, statisticians,
20accountants, inspectors, clerks, and employees as the executive
21director deems necessary to carry out the provisions of this part
22or to perform the duties and exercise the powers conferred upon
23the commission by law. All officers and employees shall receive
24such compensation as is fixed by the commission.

25(b) The executive director may authorize commission employees
26to undertake temporary training and development assignments
27 with other agencies, departments, and commissions that undertake
28coordinated activities with the commission, including the Energy
29Commission, the State Air Resources Board, and the Division of
30Oil, Gas, and Geothermal Resources.

31(c) The executive director shall work with the University of
32California, the California State University, and other postsecondary
33education institutions to develop curriculum and training necessary
34or useful to candidates for employment with the commission.

35

begin deleteSEC. 6.end delete
36
begin insertSEC. 7.end insert  

Section 309.2 is added to the Public Utilities Code, to
37read:

38

309.2.  

The commission shall appoint a Deputy Executive
39Director for Safety, who shall hold office at its pleasure. The
40deputy executive director shall have primary responsibility for
P10   1implementing the authority of the commission to initiate an
2investigation into a safety-related matter and to exercise the
3emergency authority of the commission to ensure the safety of the
4public.

5

begin deleteSEC. 7.end delete
6
begin insertSEC. 8.end insert  

Section 314.6 is added to the Public Utilities Code, to
7read:

8

314.6.  

(a) The commission may conduct financial and
9performance audits of any entity or program created by any order,
10decision, motion, settlement, or other action of the commission.

11(b) The commission shall complete any audit in a timely manner
12consistent with the Generally Accepted Government Auditing
13Standards developed by the United States Government
14Accountability Office.

15(c) After performing an audit pursuant to this section, the
16commission may conduct additional followup work that is related
17to any findings and recommendations related to the audit.

18begin insert

begin insertSEC. 9.end insert  

end insert

begin insertSection 321 of the end insertbegin insertPublic Utilities Codeend insertbegin insert is amended
19to read:end insert

20

321.  

(a) The commission shall establish an office of the public
21advisor and shall appoint a public advisor, including a separate
22office in the Los Angeles office of the commission. The
23commission may employ staff as necessary to carry out the duties
24of the office of the public advisor. The office of the public advisor
25shall assist members of the public and ratepayers who desire to
26testify before or present information to the commission in any
27hearing or proceeding of the commission. The public advisor shall
28advise the commission on procedural matters relating to public
29participation in proceedings of the commission.

30(b) The public advisor and executive director shall publicize
31the commission’s programs for encouraging and supporting
32participation in the commission’s proceedings.

begin insert

33
(c) The public advisor shall receive complaints and comments
34from members of the public concerning how the commission is
35carrying out its functions. The public advisor shall maintain the
36confidentiality of the identity of a member of the public who makes
37a complaint or comment unless the member of the public expressly
38indicates a desire to communicate his or her identity to the
39commission. The public advisor shall compile, no less than once
40annually, and make public on the commission’s Internet Web site
P11   1the number and nature of complaints and comments from members
2of the public.

end insert
3

begin deleteSEC. 8.end delete
4
begin insertSEC. 10.end insert  

Section 321.5 is added to the Public Utilities Code,
5to read:

6

321.5.  

(a) The commission shall appoint an independent
7ombudsman for ethics. The ombudsman shall receive complaints
8and comments from employees of the commissionbegin delete and members
9of the publicend delete
concerning how the commission is carrying out its
10functions. The ombudsman shall maintain the confidentiality of
11an employee’s identity unless the employee expressly indicates a
12desire to communicate his or her identity to the commission.

13(b) The ombudsman, or staff under the direction of the
14ombudsman, shall be responsible for instituting a program of
15enhanced ethics training for all commissioners and employees of
16the commission, including training concerning the commission’s
17conflict of interest code, statement of incompatible activities, and
18limitations upon ex parte communications.

19

begin deleteSEC. 9.end delete
20
begin insertSEC. 11.end insert  

Section begin delete910.7end deletebegin insert910.8end insert is added to the Public Utilities
21Code
, to read:

22

begin delete910.7.end delete
23
begin insert910.8.end insert  

(a) By March 31, 2017, the commission shall report to
24the relevant policy and fiscal committees of the Legislature on
25options to locate operations and staff outside of the commission’s
26San Francisco headquarters. The report shall explore options for
27leveraging additional facilities in areas of the state, including
28Sacramento, that would allow the commission to collaborate with
29other state entities and provide staff more opportunities for training,
30career development, and exchange placements with other state
31entities. The report shall do both of the following:

32(1) Consider categories of operations in different offices.

33(2) Analyze recruitment and retention, salary disparities by
34 location based on duty statements, and costs associated with using
35locations outside of San Francisco with no, or minimal, disruption
36of current commission employees.

37(b) The commission shall conduct one or more public workshops
38to obtain suggestions, concerns, ideas, and comments from
39stakeholders and interested members of the public in furtherance
40of the purpose of the report.

P12   1(c) Pursuant to Section 10231.5 of the Government Code, this
2section is repealed on March 31, 2021.

3

begin deleteSEC. 10.end delete
4
begin insertSEC. 12.end insert  

Section 912.3 is added to the Public Utilities Code,
5to read:

6

912.3.  

Immediately upon completion of an audit of any entity
7or program created by any order, decision, motion, settlement, or
8other action by the commission conducted pursuant to Section
9314.6, the commission shall transmit a copy of the audit report to
10the Legislature, including to the appropriate policy and fiscal
11committees or subcommittees of the Legislature, and to the
12Governor. Once the audit report has been transmitted to the
13Legislature and the Governor, the report shall be made available
14to the public.

begin delete15

SEC. 11.  

Section 1712 is added to the Public Utilities Code,
16to read:

17

1712.  

(a) Reports and analyses by local, state, and federal
18administrative agencies may be admitted into the evidentiary record
19if proffered by a party and both of the following apply:

20(1) The reports or analyses have been adopted or approved by
21a vote of the governing body of the agency, approved by the
22director or head of the agency, or published in a peer-reviewed
23academic publication.

24(2) The commission provides an opportunity, consistent with
25due process, for other parties and the public to analyze and respond
26to any facts asserted by the reports or analyses.

27(b) Unless a witness representing the agency is able to respond
28to questions relating to the content of the reports or analyses, and
29is available for cross-examination, the reports or analyses shall
30not serve as the basis for any findings of fact or conclusions of
31law.

end delete
32

begin deleteSEC. 12.end delete
33
begin insertSEC. 13.end insert  

Section 8331 is added to the Public Utilities Code,
34to read:

35

8331.  

The commission shall advocate before the federal Nuclear
36Regulatory Commission for expedited relocation of any spent fuel
37stored atbegin delete the San Onofre Nuclear Generating Station, the Diablo
38Canyon Units 1 and 2 powerplant, and Humboldt Bay Unit 3
39powerplantend delete
begin insert nuclear powerplants in this stateend insert to an independent,
40offsite spent fuel storage installation.

P13   1

begin deleteSEC. 13.end delete
2
begin insertSEC. 14.end insert  

(a)  For purposes of this section, the following terms
3have the following meanings:

4(1) “Charter-party carrier of passengers” has the same meaning
5as defined in Section 5360 of, subject to the exclusions in Section
65353 of, the Public Utilities Code.

7(2) “Commercial air operator” has the same meaning as defined
8in Section 5500 of the Public Utilities Code.

9(3) “For-hire vessel” has the same meaning as defined in Section
104661 of the Public Utilities Code.

11(4) “Household goods carrier” has the same meaning as defined
12in Section 5109 of the Public Utilities Code.

13(5) “Passenger stage corporation” has the same meaning as
14defined in Section 226 of the Public Utilities Code.

15(6) “Private carrier” has the same meaning as defined in Section
164001 of the Public Utilities Code.

17(7) “Transportation network company” has the same meaning
18as defined in Section 5431 of the Public Utilities Code.

19(8) “Vessel common carrier” means those persons and
20corporations that are a common carrier pursuant to subdivision (b)
21of Section 212 of the Public Utilities Code.

22(b) It is the intent of the Legislature to transfer the duties and
23responsibilities of the Public Utilities Commission over passenger
24stage corporations, charter-party carriers of passengers,
25transportation network companies, household goods carriers, vessel
26common carriers, private carriers, for-hire vessels, and commercial
27air operators to state departments within the Transportation Agency
28in a manner consistent with Article XII of the California
29Constitution. By January 31, 2018, the Governor shall propose the
30specific budget and statutory changes needed to complete the
31transfer of the duties and responsibilities to the Transportation
32Agency by no later than July 1, 2018.

33(c) It is the intent of the Legislature to make conforming changes
34to this code and the other codes of this state to effectuate
35subdivision (b) by July 1, 2018.

36(d) It is the intent of the Legislature to evaluate methods for
37ensuring that rail crossings inspected by the Public Utilities
38Commission and rail transit approved by the Public Utilities
39Commission arebegin delete in coordinationend deletebegin insert coordinatedend insert with the
40Transportationbegin delete Agency.end deletebegin insert Agency to ensure that rail crossings and
P14   1rail transit systems are assessed, and projects prioritized for
2funding are chosen, with regard to transportation safety and
3mobility needs.end insert

4(9) This act is an urgency statute necessary for the immediate
5preservation of the public peace, health, or safety within the
6meaning of Article IV of the Constitution and shall go into
7immediate effect. The facts constituting the necessity are:

8In order for the provisions of this act to be applicable as soon as
9possible in the 2017-18 fiscal year and thereby facilitate the orderly
10transition of duties and responsibilities at the earliest possible time,
11it is necessary that this act take effect immediately.



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