Amended in Senate April 15, 2015

Senate Bill No. 215

Introduced by Senator Leno

February 12, 2015

An act to amend Sections 305, 307, 308, 309.6, 1701.1, begin delete 1701.2, end delete begin delete 1701.3, and 1701.4 end delete begin insert and 1701.2 end insert of, and to add Section 305.5 to, the Public Utilities Code, relating to the Public Utilities Commission.

LEGISLATIVE COUNSEL’S DIGEST

SB 215, as amended, Leno. Public Utilities Commission.

(1) The California Constitution establishes the Public Utilities Commission, with jurisdiction over all public utilities. The California Constitution grants the commission certain general powers over all public utilities, subject to control by the Legislature, and authorizes the Legislature, unlimited by the other provisions of the California Constitution, to confer additional authority and jurisdiction upon the commission that is cognate and germane to the regulation of public utilities. 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 Office of Ratepayer Advocates. Existing law authorizes the executive director and the attorney to undertake certain actions if directed or authorized by the president, except as otherwise directed or authorized by vote of the commission.

This bill would repeal the requirement that the president direct the executive director, the attorney, and other commission staff. The bill would delete the authority of the president to direct or authorize the executive director and attorney to undertake certain actions, and would instead require that they be directed or authorized to undertake those actions by the commission. The bill would authorize the commission to delegate specific management and internal oversight functions to committees composed of 2 or more commissioners and would exempt a meeting conducted by those committees from the Bagley-Keene Open Meeting Act. The bill would require the commission to vote in an open meeting on the assignment or reassignment of begin insert any end insert proceeding to one or more commissioners.

(2) Existing law requires the commission, upon initiating a hearing, to assign one or more commissioners to oversee the case and an administrative law judge, where appropriate. Existing law requires the assigned commissioner to prepare and issue, by order or ruling, a scoping memo that describes the issues to be considered and the applicable timetable for resolution. Existing law requires the commission begin delete , end delete to adopt procedures on the disqualification of administrative law judges due to bias or prejudice similar to those of other state agencies and superior courts.

This bill would require the commission to additionally adopt procedures on disqualification of commissioners due to bias or prejudice similar to those of other state agencies and superior courts. For ratesetting or adjudicatory proceedings, the bill would require a commissioner or an administrative law judge to be disqualified if there is an appearance of bias or prejudice based on specified criteria. The bill would prohibit commission procedures from authorizing a commissioner or administrative law judge from ruling on a motion made by a party to a proceeding to disqualify the commissioner or administrative law judge due to bias or prejudice.

(3) Existing law regulates communications in hearings before the commission and defines “ex parte communication” to mean any oral or written communication between a decisionmaker and a person with an interest in a matter before the commission concerning substantive, but not procedural, issues that does not occur in a public hearing, workshop, or other public proceeding, or on the official record of the proceeding on the matter. Existing law defines “person with an interest” to mean, among other things, a person with a financial interest in a matter before the commission, or an agent or employee of the person with a financial interest, or a person receiving consideration for representing the person with a financial interest. Existing law requires the commission, by regulation, to adopt and publish a definition of the terms “decisionmaker” and “persons” for those purposes, along with any requirements for written reporting of ex parte communications and appropriate sanctions for noncompliance with any rule proscribing ex parte communications.

This bill would define a person involved in issuing credit ratings or advising entities or persons who may invest in the shares or operations of any party to a proceeding as a person with a financial interest. The bill would define “decisionmaker” to include the executive director of the commission, the general counsel of the commission, and the directors of specified divisions of the commission. The bill would require communications between a person with an interest who is not a party to a commission proceeding and a decisionmaker to be reported by the decisionmaker but would not require the communications to be reported by the person with an interest who is not a party to a commission proceeding.

(4) The Public Utilities Act requires the commission to prohibit ex parte communications in adjudication cases. Under existing law, a violation of the Public Utilities Act or any order, decision, rule, direction, demand, or requirement of the commission is a crime.

This bill would require begin insert the end insert commission to additionally prohibit communications concerning procedural issues in adjudication cases between parties or persons with an interest and decisionmakers, except for the assigned administrative law judge. Because a violation of this prohibition would be a crime, this bill would impose a state-mandated local program.

begin delete

(5) The Public Utilities Act requires the commission to prohibit ex parte communications in ratesetting cases, except as provided. If an ex parte communication meeting is granted to any party, the commission is required to grant all other parties individual ex parte meetings of a substantially equal period of time and to send a notice of that authorization at the time that the request is granted. The act authorizes the commission to establish a period during which no oral or written ex parte communications are permitted and authorizes the commission to meet in closed session during that period.

end delete begin delete

This bill would delete the requirement that the commission grant all other parties individual ex parte meetings if an ex parte meeting is granted to a party. The bill would delete the authority of the commission to establish a period during which no oral or written communications are permitted and would delete the authority of the commission to meet in closed session during that period. The bill would also delete related authority of the commission.

end delete begin delete

This bill would require the commission to additionally prohibit communications concerning procedural issues in ratesetting cases between parties or persons with an interest and decisionmakers, except for the assigned administrative law judge. Because a violation of this prohibition would be a crime, this bill would impose a state-mandated local program.

end delete begin delete

(6) The Public Utilities Act requires the commission to permit ex parte communications in quasi-legislative cases without restriction.

end delete begin delete

The bill would require an ex parte communication to be reported within 3 working days of the communication by filing a “Notice of Ex Parte Communication” with the commission in accordance with the procedures established by the commission for the service of that notice. Because a violation of this reporting requirement would be a crime, this bill would impose a state-mandated local program.

end delete begin delete

(7)

end delete

begin insert (5) end insert  The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that no reimbursement is required by this act for a specified reason.

begin delete

(8)

end delete

begin insert (6) end insert  Existing constitutional provisions require that a statute that limits the right of access to the meetings of public bodies or the writings of public officials and agencies be adopted with findings demonstrating the interest protected by the limitation and the need for protecting that interest.

This bill would make legislative findings to that effect.

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

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

SECTION 1.  

Section 305 of the Public Utilities Code is
amended to read:

305.  

The Governor shall designate a president of the
commission from among the members of the commission. The
president shall preside at all meetings and sessions of the
commission.

SEC. 2.  

Section 305.5 is added to the Public Utilities Code, to
read:

305.5.  

(a) The commission shall direct the executive director,
the attorney, and other staff of the commission, except for the staff
of the division described in Section 309.5, in performance of their
duties.

(b) The commission may delegate specific management and
internal oversight functions to committees composed of two or
more commissioners. Committees shall meet regularly with staff
and shall report to the commission for additional guidance or
approval of decisions pertaining to the operations of the
commission.

(c) A meeting conducted pursuant to subdivision (b) is exempt
from the Bagley-Keene Open Meeting Act (Article 9 (commencing
with Section 11120) of Chapter 1 of Part 1 of Division 3 of Title
2 of the Government Code).

(d) The commission shall vote in an open meeting on the
assignment or reassignment of any proceeding to one or more
commissioners.

SEC. 3.  

Section 307 of the Public Utilities Code is amended
to read:

307.  

(a) The commission may appoint as attorney to the
commission an attorney at law of this state, who shall hold office
during the pleasure of the commission.

(b) The attorney shall represent and appear for the people of the
State of California and the commission in all actions and
proceedings involving any question under this part or under any
order or act of the commission. If directed to do so by the
commission, the attorney shall intervene, if possible, in any action
or proceeding in which any such question is involved.

(c) The attorney shall commence, prosecute, and expedite the
final determination of all actions and proceedings directed or
authorized by the commission, advise the commission and each
commissioner, when so requested, in regard to all matters in
connection with the powers and duties of the commission and the
members thereof, and generally perform all duties and services as
attorney to the commission that the commission may require of
him or her.

SEC. 4.  

Section 308 of the Public Utilities Code is amended
to read:

308.  

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

(b) The executive director shall keep a full and true record of
all proceedings of the commission, issue all necessary process,
writs, warrants, and notices, and perform any other duties as the
commission prescribes. The commission may authorize the
executive director to dismiss complaints or applications when all
parties are in agreement thereto, in accordance with rules that the
commission may prescribe.

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

SEC. 5.  

Section 309.6 of the Public Utilities Code is amended
to read:

309.6.  

(a) The commission shall adopt procedures on the
disqualification of commissioners and administrative law judges
due to bias or prejudice similar to those of other state agencies and
superior courts.

(b) (1) For ratesetting and adjudicatory proceedings, a
commissioner or administrative law judge shall be disqualified if
there is an appearance of bias or prejudice based on any of the
following:

(A) Actions taken during the proceeding.

(B) Private communications before the commencement of the
proceeding to influence the request for relief sought by any party
to the proceeding.

(C) Actions demonstrating any commitment to provide relief
to a party.

(2) Past work experience by the commissioner or administrative
law judge shall not be a sufficient basis for demonstrating an
appearance of bias or prejudice pursuant to paragraph (1).

(c) The commission procedures shall not authorize a
commissioner or administrative law judge to rule on a motion
made by a party to a proceeding to disqualify the commissioner
or administrative law judge due to bias or prejudice.

(d) The commission shall develop the procedures with the
opportunity for public review and comment.

SEC. 6.  

Section 1701.1 of the Public Utilities Code is amended
to read:

1701.1.  

(a) The commission, consistent with due process,
public policy, and statutory requirements, shall determine whether
a proceeding requires a hearing. The commission shall determine
whether the matter requires a quasi-legislative, an adjudication,
or a ratesetting hearing. The commission’s decision as to the nature
of the proceeding shall be subject to a request for rehearing within
10 days of the date of that decision. If that decision is not appealed
to the commission within that time period it shall not be
subsequently subject to judicial review. Only those parties who
have requested a rehearing within that time period shall
subsequently have standing for judicial review and that review
shall only be available at the conclusion of the proceeding. The
commission shall render its decision regarding the rehearing within
30 days. The commission shall establish regulations regarding ex
parte communication on case categorization issues.

(b) The commission upon initiating a hearing shall assign one
or more commissioners to oversee the case and an administrative
law judge where appropriate. The assigned commissioner shall
schedule a prehearing conference. The assigned commissioner
shall prepare and issue by order or ruling a scoping memo that
describes the issues to be considered and the applicable timetable
for resolution.

(c) (1) Quasi-legislative cases, for purposes of this article, are
cases that establish policy, including, but not limited to,
rulemakings and investigations which may establish rules affecting
an entire industry.

(2) Adjudication cases, for purposes of this article, are
enforcement cases and complaints except those challenging the
reasonableness of any rates or charges as specified in Section 1702.

(3) Ratesetting cases, for purposes of this article, are cases in
which rates are established for a specific company, including, but
not limited to, general rate cases, performance-based ratemaking,
and other ratesetting mechanisms.

(4) (A) “Ex parte communication,” for purposes of this article,
means any oral or written communication between a decisionmaker
and a person with an interest in a matter before the commission
concerning substantive, but not procedural issues, that does not
occur in a public hearing, workshop, or other public proceeding,
or on the official record of the proceeding on the matter. “Person
with an interest,” for purposes of this article, means any of the
following:

(i) Any applicant, an agent or an employee of the applicant, or
a person receiving consideration for representing the applicant, or
a participant in the proceeding on any matter before the
commission.

(ii) Any person with a financial interest, as described in Article
1 (commencing with Section 87100) of Chapter 7 of Title 9 of the
Government Code, in a matter before the commission, or an agent
or employee of the person with a financial interest, or a person
receiving consideration for representing the person with a financial
interest. A person involved in issuing credit ratings or advising
entities or persons who may invest in the shares or operations of
any party to a proceeding is a person with a financial interest.

(iii) A representative acting on behalf of any civic,
environmental, neighborhood, business, labor, trade, or similar
organization who intends to influence the decision of a commission
member on a matter before the commission.

(B) Decisionmakers shall include the general counsel, the
executive director, the director of the Energy Division, the director
of the Communications Division, the director of the Water begin insert and
Audits end insert Division, and the director of the Safety begin insert and end insert Enforcement
Division. The commission shall by regulation adopt and publish
a definition of additional decisionmakers and persons for purposes
of this section, along with any requirements for written reporting
of ex parte communications and appropriate sanctions for
noncompliance with any rule proscribing ex parte communications.
The regulation shall provide that reportable communications shall
be reported by the party, whether the communication was initiated
by the party or the decisionmaker. However, communications
between a person with an interest who is not a party to a
commission proceeding and a decisionmaker shall be reported by
the decisionmaker in accordance with procedures established
pursuant to this section and shall not be required to be reported by
the person with an interest who is not a party to a commission
proceeding. Communications shall be reported within three
working days of the communication by filing a “Notice of Ex Parte
Communication” with the commission in accordance with the
procedures established by the commission for the service of that
notice. The notice shall include the following information:

(i) The date, time, and location of the communication, and
whether it was oral, written, or a combination.

(ii) The identity of the recipient and the person initiating the
communication, as well as the identity of any persons present
during the communication.

(iii) A description of the party’s, but not the decisionmaker’s,
communication and its content, to which shall be attached a copy
of any written material or text used during the communication.

(C) An ex parte communication shall not be part of the record
of any proceeding and shall not be considered, or relied upon, for
purposes of the commission’s resolution of contested issues.

SEC. 7.  

Section 1701.2 of the Public Utilities Code is amended
to read:

1701.2.  

(a) If the commission pursuant to Section 1701.1 has
determined that an adjudication case requires a hearing, the
procedures prescribed by this section shall be applicable. The
assigned commissioner or the assigned administrative law judge
shall hear the case in the manner described in the scoping memo.
The scoping memo shall designate whether the assigned
commissioner or the assigned administrative law judge shall preside
in the case. The commission shall provide by rule for peremptory
challenges and challenges for cause of the administrative law judge.
Challenges for cause shall include, but not be limited to, financial
interests and prejudice. The rule shall provide that all parties are
entitled to one peremptory challenge of the assignment of the
administrative law judge in all cases. All parties are entitled to
unlimited peremptory challenges in any case in which the
administrative law judge has within the previous 12 months served
in any capacity in an advocacy position at the commission, been
employed by a regulated public utility, or has represented a party
or has been a party of interest in the case. The assigned
commissioner or the administrative law judge shall prepare and
file a decision setting forth recommendations, findings, and
conclusions. The decision shall be filed with the commission and
served upon all parties to the action or proceeding without undue
delay, not later than 60 days after the matter has been submitted
for decision. The decision of the assigned commissioner or the
administrative law judge shall become the decision of the
commission if no further action is taken within 30 days. Any
interested party may appeal the decision to the commission,
provided that the appeal is made within 30 days of the issuance of
the decision. The commission may itself initiate a review of the
proposed decision on any grounds. The commission decision shall
be based on the record developed by the assigned commissioner
or the administrative law judge. A decision different from that of
the assigned commissioner or the administrative law judge shall
be accompanied by a written explanation of each of the changes
made to the decision.

(b)  Notwithstanding Section 307, an officer, employee, or agent
of the commission that is personally involved in the prosecution
or in the supervision of the prosecution of an adjudication case
before the commission shall not participate in the decision of the
case, or in the decision of any factually related adjudicatory
proceeding, including participation in or advising the commission
as to findings of fact, conclusions of law, or orders. An officer,
employee, or agent of the commission that is personally involved
in the prosecution or in the supervision of the prosecution of an
adjudication case may participate in reaching a settlement of the
case, but shall not participate in the decision of the commission to
accept or reject the settlement, except as a witness or counsel in
an open hearing or a hearing closed pursuant to subdivision (d).
The Legislature finds that the commission performs both
prosecutorial and adjudicatory functions in an adjudication case
and declares its intent that an officer, employee, or agent of the
commission, including its attorneys, may perform only one of
those functions in any adjudication case or factually related
adjudicatory proceeding.

(c) (1) Ex parte communications shall be prohibited in
adjudication cases.

(2) Any oral or written communications concerning procedural
issues in adjudication cases between parties or persons with an
interest and decisionmakers, except the assigned administrative
law judge, shall be prohibited.

(d) Notwithstanding any other law, the commission may meet
in a closed hearing to consider the decision that is being appealed.
The vote on the appeal shall be in a public meeting and shall be
accompanied with an explanation of the appeal decision.

(e) Adjudication cases shall be resolved within 12 months of
initiation unless the commission makes findings why that deadline
cannot be met and issues an order extending that deadline. In the
event that a rehearing of an adjudication case is granted, the parties
shall have an opportunity for final oral argument.

(f) (1) The commission may determine that the respondent
lacks, or may lack, the ability to pay potential penalties or fines
or to pay restitution that may be ordered by the commission.

(2) If the commission determines that a respondent lacks, or
may lack, the ability to pay, the commission may order the
respondent to demonstrate, to the satisfaction of the commission,
sufficient ability to pay potential penalties, fines, or restitution that
may be ordered by the commission. The respondent shall
demonstrate the ability to pay, or make other financial
arrangements satisfactory to the commission, within seven days
of the commission commencing an adjudication case. The
commission may delegate to the attorney to the commission the
determination of whether a sufficient showing has been made by
the respondent of an ability to pay.

(3) Within seven days of the commission’s determination of the
respondent’s ability to pay potential penalties, fines, or restitution,
the respondent shall be entitled to an impartial review by an
administrative law judge of the sufficiency of the showing made
by the respondent of the respondent’s ability to pay. The review
by an administrative law judge of the ability of the respondent to
pay shall become part of the record of the adjudication and is
subject to the commission’s consideration in its order resolving
the adjudication case. The administrative law judge may enter
temporary orders modifying any financial requirement made of
the respondent pending the review by the administrative law judge.

(4) A respondent that is a public utility regulated under a rate
of return or rate of margin regulatory structure or that has gross
annual revenues of more than one hundred million dollars
($100,000,000) generated within California is presumed to be able
to pay potential penalties or fines or to pay restitution that may be
ordered by the commission, and, therefore, paragraphs (1) to (3),
inclusive, do not apply to that respondent.

begin delete

SEC. 8.  

Section 1701.3 of the Public Utilities Code is amended
to read:

1701.3.  

(a) If the commission pursuant to Section 1701.1 has
determined that a ratesetting case requires a hearing, the procedures
prescribed by this section shall be applicable. The assigned
commissioner shall determine prior to the first hearing whether
the commissioner or the assigned administrative law judge shall
be designated as the principal hearing officer. The principal hearing
officer shall be present for more than one-half of the hearing days.
The decision of the principal hearing officer shall be the proposed
decision. An alternate decision may be issued by the assigned
commissioner or the assigned administrative law judge who is not
the principal hearing officer. The commission shall establish a
procedure for any party to request the presence of a commissioner
at a hearing. The assigned commissioner shall be present at the
closing arguments of the case. The principal hearing officer shall
present the proposed decision to the full commission in a public
meeting. The alternate decision, if any, shall also be presented to
the full commission at that public meeting. The alternate decision
shall be filed with the commission and shall be served on all parties
simultaneously with the proposed decision.

The presentation to the full commission shall contain a record
of the number of days of the hearing, the number of days that each
commissioner was present, and whether the decision was completed
on time.

(b) The commission shall provide by regulation for peremptory
challenges and challenges for cause of the administrative law judge.
Challenges for cause shall include, but not be limited to, financial
interests and prejudice. All parties shall be entitled to unlimited
peremptory challenges in any case in which the administrative law
judge has within the previous 12 months served in any capacity
in an advocacy position at the commission, been employed by a
regulated public utility, or has represented a party or has been a
party of interest in the case.

(c) (1) Ex parte communications are prohibited in ratesetting
cases. However, oral ex parte communications may be permitted
at any time by any commissioner if all interested parties are invited
and given not less than three days’ notice. Written ex parte
communications may be permitted by any party provided that
copies of the communication are transmitted to all parties on the
same day.

(2) Any oral or written communications concerning procedural
issues in ratesetting cases between parties or persons with an
interest and decisionmakers, except the assigned administrative
law judge, shall be prohibited. However, these communications
may be permitted in the same manner as described for the ex parte
communications in paragraph (1).

(d) Any party has the right to present a final oral argument of
its case before the commission. Those requests shall be scheduled
in a timely manner. A quorum of the commission shall be present
for the final oral arguments.

(e) The commission may, in issuing its decision, adopt, modify,
or set aside the proposed decision or any part of the decision based
on evidence in the record. The final decision of the commission
shall be issued not later than 60 days after the issuance of the
proposed decision. Under extraordinary circumstances the
commission may extend this date for a reasonable period. The
60-day period shall be extended for 30 days if any alternate
decision is proposed pursuant to Section 311.

SEC. 9.  

Section 1701.4 of the Public Utilities Code is amended
to read:

1701.4.  

(a) If the commission pursuant to Section 1701.1 has
determined that a quasi-legislative case requires a hearing, the
procedures prescribed by this section shall be applicable. The
assigned administrative law judge shall act as an assistant to the
assigned commissioner in quasi-legislative cases. The assigned
commissioner shall be present for formal hearings. The assigned
commissioner shall prepare the proposed rule or order with the
assistance of the administrative law judge. The assigned
commissioner shall present the proposed rule or order to the full
commission in a public meeting. The report shall include the
number of days of hearing and the number of days that the
commissioner was present.

(b) Ex parte communications shall be permitted. Any ex parte
communication shall be reported within three working days of the
communication by filing a “Notice of Ex Parte Communication”
with the commission in accordance with the procedures established
by the commission for the service of that notice.

(c) Any party has the right to present a final oral argument of
its case before the commission. Those requests shall be scheduled
in a timely manner. A quorum of the commission shall be present
for the final oral arguments.

(d) The commission may, in issuing its rule or order, adopt,
modify, or set aside the proposed decision or any part of the rule
or order. The final rule or order of the commission shall be issued
not later than 60 days after the issuance of the proposed rule or
order. Under extraordinary circumstances the commission may
extend this date for a reasonable period. The 60-day period shall
be extended for 30 days if any alternate rule or order is proposed
pursuant to Section 311.

end delete

begin delete SEC. 10. end delete
begin insert SEC. 8. end insert   

No reimbursement is required by this act pursuant to
Section 6 of Article XIII B of the California Constitution because
the only costs that may be incurred by a local agency or school
district will be incurred because this act creates a new crime or
infraction, eliminates a crime or infraction, or changes the penalty
for a crime or infraction, within the meaning of Section 17556 of
the Government Code, or changes the definition of a crime within
the meaning of Section 6 of Article XIII B of the California
Constitution.

begin delete SEC. 11. end delete
begin insert SEC. 9. end insert   

The Legislature finds and declares that Section 2 of
this act, which adds Section 305.5 to the Public Utilities Code,
imposes a limitation on the public’s right of access to the meetings
of public bodies or the writings of public officials and agencies
within the meaning of Section 3 of Article I of the California
Constitution. Pursuant to that constitutional provision, the
Legislature makes the following findings to demonstrate the interest
protected by this limitation and the need for protecting that interest:

(a) The limitations are reasonable in light of the need for the
Public Utilities Commission to manage its internal affairs in a
manner that allows all commissioners to fully participate.

(b) The specific management and internal oversight functions
addressed by this limitation do not involve determinations of law
or policy that would bias the outcome of pending proceedings or
harm the public interest.

(c) In order to ensure the effective functioning of the
commission, this act is necessary.