BILL ANALYSIS Ó
SENATE COMMITTEE ON APPROPRIATIONS
Senator Ricardo Lara, Chair
2015 - 2016 Regular Session
SB 215 (Leno) - Public Utilities Commission
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|Version: January 4, 2016 |Policy Vote: E., U., & C. 10 |
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|Urgency: No |Mandate: Yes |
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|Hearing Date: January 19, 2016 |Consultant: Marie Liu |
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This bill meets the criteria for referral to the Suspense File.
Bill
Summary: SB 215 would make numerous changes to the governance
of the California Public Utilities Commission (CPUC),
particularly in regards to ex parte communication.
Fiscal
Impact:
Up to $558,000 annually for the first four-years and
potentially up to $373,000 thereafter from the Public
Utilities Reimbursement Account (special) for creation and
implementation of rules to disqualify commissions or
administrative law judges (ALJs) on the appearance of bias.
Up to $708,000 annually from the Public Utilities
Reimbursement Account (special) to create and implement new ex
parte communication rules.
Ongoing costs of $375,000 from the Public Utilities
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Reimbursement Account (special) for two additional ALJs for
longer proceedings as a result of including oral and written
comments received at a hearing in the record of proceedings.
Minor and absorbable costs from the Public Utilities
Reimbursement Account (special) for CPUC to elect to hold
all-party conferences for a proceeding.
Background: The CPUC is governed by five members appointed by the Governor
and approved by the Senate Rules Committee. The CPUC is
generally empowered to regulate privately owned public utilities
in California. Policies and actions of the CPUC are generally
made through a proceeding. Each proceeding is assigned a lead
commissioner and an administrative law judge (ALJ). ALJs prepare
proposed decisions which may be adopted in whole or in part by
the commission.
Substantive communications outside of the public record that
occurs between a decisionmaker and a party with an interest in a
CPUC proceeding are known as "ex parte" communications. As these
communications can conflict with the need for public decision
making, the CPUC is required under the existing law to have
regulations that require the reporting of ex parte
communications within three working days of the communication
having occurred. These regulations require specific information
about the communication including the form which it occurred,
the identity of the recipient and the person initiating the
communication and the names of any other parties present, as
well as a description of the communication. The requirement to
report ex parte communication falls with the interested party,
not the CPUC decisionmaker.
The CPUC has three types of proceedings, which is its regulator
and decision making process, each of which have different
existing ex parte communication rules.
1.Adjudication Cases: Ex parte communications are prohibited.
2.Ratesetting Cases: Ex parte communications are prohibited
except under specified conditions. Oral ex parte
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communications are allowed with a commissioner if all
interested parties are invited and given at least three days'
notice. Written ex parte communications are permitted if
copies are transmitted to all parties on the same day. If an
individual ex parte communication meeting is granted to any
party, all other parties shall also be granted individual
meetings of similar duration.
3.Quasi-legislative Cases: Ex parte communications are allowed
without restriction.
Proposed Law:
This bill would make a number of changes to the CPUC's
governance, especially in regards to ex parte communication.
Specifically, this bill would:
Require the CPUC to adopt procedures on the disqualification
of commissioners and would further specify the reasons for
which a commissioner or ALJ can be disqualified in ratesetting
and adjudicatory proceedings.
Prohibit ex parte communications in ratesetting proceedings,
with some exceptions and limitations.
Expand the parties and the types of communications that
subject to the ex parte communication rules.
Extends the requirements for the disclosure of prohibited ex
parte communications to the decisionmaker in addition to the
interested party.
Allow the CPUC to assess civil penalties for violations of ex
parte communication requirements.
Allow the Attorney General (AG) to bring enforcement action
against a decisionmaker or CPUC employee who violates ex parte
communication requirements.
Allow for the holding of an all-party conference, as defined,
that have broad participation by parties to a proceeding.
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Require that CPUC to establish and maintain a communications
log summarizing al written and oral ex parte communications.
This log must be available to the public on the CPUC's website
by July 1, 2017.
Related
Legislation: SB 660 (Leno) would have made many of the same
changes as proposed by this bill, among other provisions. The
governor vetoed SB 660 citing technical and conflicting issues
among the bills that proposed governance changes at the CPUC.
Staff
Comments: Disqualification provisions: This bill would require
that a commissioner or ALJ be disqualified if there is an
appearance of bias or prejudice. The CPUC anticipates initial
annual costs of $558,000 for one ALJ and two legal counsel
positions for four years to develop and implement
disqualification procedures. The ALJ would be needed ongoing to
make judgments on disqualification motions. The legal counsel
positions would be needed to advise and handle increased
litigation risks. After four years, the CPUC estimates that only
one of these legal positions will be needed after legal
precedent is established, bringing the annual costs down to
$373,000.
Staff notes a similar provision in SB 660 had lower one-time and
ongoing costs. However, the CPUC notes the additional costs are
largely the result of a lower standard for disqualification in
this bill compared to SB 660 as this bill would allow
disqualification on the appearance of bias. Because of this
lower standard and because disqualification motions can be made
multiple times throughout a proceeding and by multiple parties,
the CPUC has increased its anticipated ongoing costs under the
assumption that there will be a large increase in the number of
disqualification motions that will need to be addressed. Staff
notes that while an increase in ongoing costs appears to be
justified, the actual increase is speculative.
Ex parte provisions generally: This bill will label a greater
number of communications as ex parte communications by expanding
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the definition of decisionmaker and by including informal
discussions. The CPUC would have greater responsibilities for
tracking allowable ex parte communications and reporting
prohibited communications. While the tracking requirements under
this bill are not detailed, the CPUC believes the sheer number
of communications that will need recorded and tracked will
necessitate ongoing annual costs of $708,000 (1 ALJ II, 1 legal
counsel III, 2 legal analysts, 1 senior legal analyst). Staff
notes that these costs are higher than the costs associated with
similar provisions in SB 660. It is unclear what assumptions
have changed since last year.
Staff notes that this bill would also eliminate most ex parte
communications in ratesetting cases, which currently involve
thousands of communication disclosures under existing laws.
However, since the current rules places the responsibility of
disclosing these communications with the interested party
instead of the decisionmaker, the CPUC does not anticipate that
eliminating these communications will result in any significant
workload reduction.
Potential additional legal costs: The CPUC notes that the bill's
provisions allowing the AG to bring enforcement action against a
decisionmaker or CPUC employee for violations of ex parte
communication requirements could result in legal costs as the
CPUC would be required to either defend its employees or to pay
for their litigation costs.
Inclusion of hearing comments into the record of proceedings:
This bill would require the CPUC to include oral and written
comments received from the public at a hearing to be included in
the record of proceedings and to allow parties to respond to
these comments. According to the CPUC, these provisions are
likely to extend the length of all proceedings and increase the
amount of ALJ workload per proceeding, which will necessitate
two additional ALJs at an annual cost of $375,000. These
provisions and associated costs were not part of SB 660.
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