BILL ANALYSIS                                                                                                                                                                                                    Ó



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          Date of Hearing:  July 13, 2015


                    ASSEMBLY COMMITTEE ON UTILITIES AND COMMERCE


                                Anthony Rendon, Chair


          SB  
          660 (Leno) - As Amended July 7, 2015


          SENATE VOTE:  29-7


          SUBJECT:  Public Utilities Commission.


          SUMMARY:  This bill proposes a suite of reforms on the  
          governance and operations of the California Public Utilities  
          Commission (CPUC), including, among others, modifying the powers  
          of the president, establishing rules for the disqualification of  
          commissioners or administrative law judges (ALJ), modifying  
          rules related to ex parte communications, and specifies  
          penalties for violations.   Specifically, this bill:  


          1)Repeals certain powers granted to the President of the CPUC,  
            including the ability to direct the executive director, the  
            attorney, and other staff of the Commission.


          2)Delegates the CPUC to direct the executive director, the  
            attorney, and other staff of the Commission, and authorizes it  
            to delegate specific management and internal oversight  
            functions, as specified.










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          3)Requires the CPUC to adopt procedures on the disqualification  
            of commissioners and ALJs in ratesetting and adjudicatory  
            proceedings if there is an appearance of bias or prejudice  
            based on any of the following:


                 Actions taken during the proceeding, 


                 Private communications before the commencement of the  
               proceeding to influence the request for relief sought by  
               any party to the proceeding, or


                 Actions demonstrating any commitment to provide relief  
               to a party.


          1)Specifies that past work experience by the commissioner or ALJ  
            is not sufficient basis from demonstrating an appearance of  
            bias or prejudice.


          2)Requires the CPUC to establish procedures to prohibit a  
            commissioner or ALJ from ruling on a motion to a proceeding to  
            disqualify the commissioner or ALJ due to bias or prejudice. 


          3)Requires the CPUC, in a proceeding in which both a proposed  
            decision and an alternate have been served upon the parties,  
            and comments have been received on the proposed decision or  
            alternate, or both, to serve upon all parties the  
            substantively revised proposed decision or substantively  
            revised alternate, and make available on the CPUC's website,  
            noted on the docket sheet for the proceeding, not less than  
            five full working days prior to being acted upon by the  
            Commission, as specified. 










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          4)Defines "ex parte communication" to mean any oral or written  
            communication between a decision maker and an interested  
            person concerning any matter that the Commission has not  
            specified in its Rules of Practice and Procedures as being a  
            procedural matter and that does not occur in a public hearing,  
            workshop, or other public proceeding, or on the official  
            record of the proceeding on the matter.


          5)Requires the CPUC to specify in its Rules of Practice and  
            Procedures to establish the types of communications considered  
            procedural.


          6)Specifies that any communication between an interested person  
            and a decision maker regarding which commissioner or ALJ may  
            be assigned to a matter before the CPUC is not  a procedural  
            matter and is an ex parte communication. 


          7)Defines "a person with a financial interest" to include a  
            person involved in issuing credit ratings or advising  
            entities, or a person who may invest in the shares or  
            operations of any party to a proceeding, as well as any other  
            categories of individual deemed by the CPUC, by rule, to be an  
            interested person. 


          8)Requires the CPUC to adopt, by rule, a definition of decision  
            makers and interested persons, along with any requirements and  
            sanctions for written reporting of ex parte communications and  
            noncompliance with proscribed ex parte communications rules. 


          9)Specifies that the definition of decision makers includes, but  
            is not limited to, each commissioner, the attorney for the  
            CPUC, the executive director of the CPUC, the personal staff  
            of a commissioner if the staff is acting in a policy or legal  
            advisory capacity, the Chief ALJ, the ALJ assigned to the  








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            proceeding, and the director of the Energy Division, the  
            director of the Communications Division, the director of the  
            Water and Audits Division, and the director of the Safety and  
            Enforcement Division where those directors are acting in an  
            advisory capacity in the proceeding. 


          10)Requires ex parte communications for quasi-legislative cases  
            to be reported by the interested person, whether the  
            communication was initiated by the interested person or the  
            decision maker, as specified.


          11)Requires the notice of ex parte communications for  
            quasi-legislative cases to be reported by an interested person  
            within three working days of the communication by filing a  
            "Notice of Ex Parte Communication," as specified. 


          12)Requires the notice of ex parte communications for  
            quasi-legislative cases to include:


                 The date, time, and location of the communication,  
               whether it was oral, written, or a combination, and the  
               communications medium utilized,


                 The person initiating the communication, including a  
               decision maker, when applicable, and the identity of the  
               recipient and any persons present during the communication,  
               and


                 A complete and comprehensive description of the  
               interested persons and decision makers' communication and  
               its content, and to attach a copy of any written material  
               or text used during the communication.









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          1)Requires an interested person participating in the  
            communication in adjudication and ratesetting cases, if a  
            prohibited ex parte communication occurs, whether initiated by  
            a decision maker or an interested person, to report the  
            communication within one working day of the communication by  
            filing a "Notice of Prohibited Ex Parte Communication" with  
            the CPUC, as specified.


          2)Requires a decision maker who participated in the  
            communication for adjudication and ratesetting case to  
            promptly prepare and file a "Decisionmaker Notice of  
            Prohibited Ex Parte Communication" with the CPUC, as  
            specified,  if  the interested person who participated in the  
            communication has not timely submitted the "Notice of  
            Prohibited Ex Parte Communication."


          3)Requires the decision maker to review the interest person's  
            submitted notice and, if the decision maker believes that the  
            notice is not accurate or does not meet the specified  
            requirements, to promptly file a notice that corrects or  
            supplements the interested person's submitted notice, as  
            specified.  


          4)Requires the decision maker to review the interested person's  
            submitted notice and, if the decision maker believes the  
            notice is accurate and meets the specified requirements, to  
            file a notice that indicates his or her concurrence with the  
            interested person, as specified.


          5)Prohibits the CPUC from taking any vote on a matter to which a  
            prohibited ex parte communication is known to have occurred  
            until the notices have been made and all parties to the  
            proceeding have been provided a reasonable opportunity to  
            respond to the prohibited ex parte communication.








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          6)Requires the CPUC to provide a reasonable time for a party to  
            file a petition to rescind or modify a decision, as specified,  
            if a prohibited ex parte communication is not disclosed until  
            after the CPUC issued a decision on the matter to which the  
            prohibited communication pertained.


          7)Requires a decision maker to periodically report summary logs  
            of ex parte communications with interested persons, as  
            specified, including any corrected or supplemental  
            information, as specified, and post the summary logs on its  
            website not later than July 1, 2016.


          8)Establishes rules governing ex parte communication that occur  
            at conferences, including open session communications, as  
            defined, including communications relating to adjudication,  
            ratesetting, and quasi-legislative cases. 


          9)Defines "open session communications" to mean an ex parte  
            communication made in a speech, comment, or writing delivered  
            to all attendees of a noticed session of a conference, and  
            specifies that all other ex parte communications at a  
            conference, as specified, is not an open session  
            communication.


          10)Prohibits open session communications relating to a pending  
            adjudication or ratesetting case.


          11)Permits open session communications relating to a pending  
            quasi-legislative case if the CPUC's rules requires that  
            permitted open session communications are promptly disclosed  
            in the proceeding to which the communications relates, and  
            requires that parties to the proceeding are allowed a  








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            reasonable opportunity to respond to the communication before  
            the CPUC may vote on any matter to which the communication  
            pertained. 


          12)Specifies that ex parte communications are not part of the  
            record of the proceedings.


          13)Specifies that any oral or written communication concerning  
            procedural matters in adjudication cases between interested  
            person and decision makers, except the assigned ALJ, is  
            prohibited.


          14)Prohibits ex parte communications in ratesetting cases.


          15)Specifies that oral communications in ratesetting cases are  
            permitted without any reporting obligation by any decision  
            maker if all parties are invited and given at least three  
            days' notice.


          16)Specifies that written communication by any interested person  
            in ratesetting cases are permitted without any reporting  
            obligation if copies of the communication are transmitted to  
            all parties on the same day as the original communication.  


          17)Specifies that oral communications concerning procedural  
            matters in ratesetting cases between interested persons and  
            decision makers, except the assigned ALJ, are prohibited,  
            unless a decision maker invites all parties and give at least  
            three working days' notice.


          18)Specifies that written communications concerning procedural  
            matters in ratesetting cases between interested persons and  








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            decision makers, except the assigned ALJ, are prohibited,  
            unless copies of the communication are transmitted to all  
            parties on the same day.


          19)Specifies that ex parte communications are permitted in  
            quasi-legislative cases and is to be reported by an interested  
            person, as specified.


          20)Specifies that no reporting is required for written ex parte  
            communications in quasi-legislative cases that are transmitted  
            to all parties on the same day as the original communication.


          21)Authorizes the CPUC to assess, as specified, civil sanctions  
            upon any entity or persons, other than a decision maker or  
            employee of the CPUC, up to $50,000 per violation, or up to  
            the amount of financial benefits, and specifies that each day  
            of continuing violation or that the violation is not disclosed  
            constitutes a separate violation.


          22)Authorizes the Attorney General (AG) to bring an enforcement  
            action against a decision maker or employee of the CPUC for  
            violations, as specified.


          23)Authorizes the courts to grant appropriate relief, as  
            specified, including disqualification of the decision maker  
            from one or more proceedings and civil penalties not to exceed  
            $50,000 for each violation, or up to the amount of financial  
            benefits.


          EXISTING LAW:   


          1)Establishes the CPUC with five members appointed by the  








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            Governor and confirmed by the Senate, empowers it to regulate  
            privately-owned public utilities in California, and specifies  
            that the Legislature may prescribe additional classes of  
            private corporations or other person as public utilities.   
            (Article XII of the California Constitution and Public  
            Utilities Code Section 301)


          2)Requires the Governor to designate a president of the CPUC  
            from among members of the Commission, and requires the  
            president to direct the executive director, the attorney, and  
            other staff of the CPUC, except for the staff of the division  
            specified, in the performance of their duties, in accordance  
            with Commission policies and guidelines, and preside at all  
            meetings and sessions of the CPUC.  (Public Utilities Code  
            Section 305)


          3)Requires the CPUC to adopt procedures on the disqualification  
            of ALJs due to bias or prejudice, similar to those of other  
            state agencies and superior courts, and to develop the  
            procedures with the opportunity for public review and comment.  
             (Public Utilities Code Section 309.6)


          4)Exempts the CPUC from the Administrative Procedure Act (APA).   
            (Public Utilities Code Section 1701)


          5)Requires the CPUC to determine whether a proceeding requires a  
            hearing, and to determine whether the matter requires a  
            quasi-legislative, adjudication, or a ratesetting hearing, and  
            to establish regulations regarding ex parte communication on  
            case categorization issues.  (Public Utilities Code Section  
            1701.1)


          6)Defines "ex parte communication" to mean any oral or written  
            communication between a decision maker and a person with an  








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            interest in a matter before the CPUC concerning substantive,  
            but not procedural issues, which does not occur in a public  
            hearing, workshop, or other public proceeding, or on the  
            official record of the proceeding on the matter.  (Public  
            Utilities Code Section 1701.1)


          7)Prohibits ex parte communications in adjudication cases.   
            (Public Utilities Code Section 1701.2)


          8)Prohibits ex parte communications in ratesetting cases, but  
            permits oral ex parte communications at any time by any  
            commissioner if all interested parties are invited and given  
            not less than three days' notice.  Also permits written ex  
            parte communications by any party if copies of the  
            communication are transmitted to all parties on the same day.   
            Requires the CPUC, if an ex parte communication meeting is  
            granted to any party, to also grant all other parties  
            individual ex parte meetings of a substantially equal period  
            of time and to send notice of that authorization at the time  
            that request is granted, but not less than three days.   
            (Public Utilities Code Section 1701.3)


          9)Provides that ex parte communications in quasi-legislative  
            cases is permitted without any restrictions.  (Public  
            Utilities Code Section 1701.4)


          FISCAL EFFECT:  According to the Senate Appropriations Committee  
          on the prior version of this bill, this bill would have cost  
          pressures of $190,000 annually to the Public Utilities  
          Reimbursement Account for additional staff to support the  
          activities of the committees.  In addition, this bill would have  
          one time costs of $160,000 annually for two years to the Public  
          Utilities Reimbursement Account for a proceeding to determine  
          rules for the disqualification of ALJs or commissioners from a  
          case.  Furthermore, this bill would have one time costs of  








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          $160,000 annually for two years, and followed by on-going costs  
          of $235,000 annually to the Public Utilities Reimbursement  
          Account for the creation and implementation of new ex parte  
          rules.


          


          COMMENTS:  


           1)Author's Statement:   "[The] release of emails related to the  
            San Bruno disaster and the San Onofre nuclear plant closing  
            has revealed serious flaws in the management structure and  
            operations of the [CPUC].  These emails have amply  
            demonstrated that the relationships between the Commission and  
            its regulated utilities are too close, and too informal, to  
            inspire confidence that rate payers and non-utility interests  
            are adequately represented by the Commission.  In response to  
            these events, the CPUC's top management asked the law firm of  
            Strumwasser & Woocher LLP to assess current laws and practices  
            related to ex parte communications and to compare the  
            Commission's rules with best practices regarding ex parte  
            communications from other utility regulators ? Many of the  
            Strumwasser report's recommendations are included in SB 660 ?  
            In this high-powered, high-stakes environment, we must protect  
            the impartiality of the Commission, not only in adherence to  
            basic fairness, but also to ensure public confidence in CPUC  
            decisions.  What we face today is an erosion of public trust  
            in the institution Californians rely upon to protect life  
            safety and to keep utility monopolies in check.  SB 660 will  
            crack down on abuses of power, biased decisions, and secret  
            communications; and bring new ethical standards and meaningful  
            change to the CPUC."


           2)Background:   Article XII of the California Constitution  
            establishes the CPUC and grants it the authority to regulate  








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            public utilities.  The CPUC is governed by five full-time  
            commissioners appointed by the Governor and confirmed by the  
            State Senate.  Commissioners are appointed for six-year terms  
            and can only be removed by the Legislature.  The CPUC is  
            staffed by approximately 1,000 individuals who, together,  
            regulate privately-owned electric, natural gas,  
            telecommunications, water, railroad, rail transit, and  
            passenger transportation companies.  CPUC staff includes 4  
            personal advisors to each commissioner, 5 to the president, as  
            well as the 42 judges of the Administrative Law Division -  
            attorneys, engineers, and accountants who prepare the docket  
            for all CPUC official filings, including maintenance of the  
            official record of proceedings.


             


             On September 9, 2010, a natural gas pipeline owned by the  
            Pacific Gas and Electric Company (PG&E) exploded in a  
            residential neighborhood in the City of San Bruno, killing    
            eight people, injuring dozens, and destroying thirty-eight  
            houses.  The subsequent investigation found that PG&E had been  
            mismanaging their pipeline for decades, and had failed to  
            adequately test the strength and durability of the pipeline.   
            However, the incident also exposed the CPUC's complete lack of  
            oversight, allowing PG&E to exploit a very lax system of  
            regulation and review.  As a result of the investigation, the  
            CPUC levied $2.25 billion in fines against PG&E to be used to  
            enhance safety practices and oversight.  PG&E protested this  
            recommendation, and the CPUC referred the proposed penalty  
            against PG&E to the Administrative Law Division for assignment  
            to an ALJ.  The ALJ was to review the recommendation and  
            propose a final decision on the matter, which the CPUC would  
            later vote to adopt, modify, or reject.  


           









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            Beginning in 2014, PG&E began releasing over 65,000 emails  
            from a 5 year period between utility executives and CPUC  
            officials.  The emails revealed discussions on subjects the  
            CPUC was deliberating within a number of proceedings, many of  
            which arguably violated CPUC's rules governing ex parte  
            communications, including emails pertaining to the selection  
            of ALJs for ratesetting cases.  Many of the emails exposed  
            regular, private, familiar communications between PG&E and  
            certain CPUC commissioners, including former CPUC President  
            Michael Peevey.  In September 2015, the California AG opened  
            an independent investigation on the CPUC over issues relating  
            to the 2010 San Bruno pipeline explosion and the selection of  
            an ALJ for a ratesetting case.  


           3)Accountability and the Presidency:   Currently, the Governor  
            designates a president of the CPUC from among members of the  
            Commission, and requires the president to direct the executive  
            director, the attorney, and other staff of the CPUC in the  
            performance of their duties, in accordance with CPUC policies  
            and guidelines, and preside at all meetings and session of the  
            CPUC.  These responsibilities were tasked to the president  
            through SB 33 (Peace, Chapter 509, Statutes of 1999), which  
            sought to explicitly centralize accountability for the  
            functions of the CPUC in light of the CPUCs failure to find  
            the proper balance of competing public interests following the  
            restructuring of the electric and gas markets.  However, in  
            light of the recent investigation by the AG surrounding  
            improper communications between former CPUC President Peevey  
            and regulated utilities, questions have been raised on whether  
            or not centralizing power under the President has had the  
            desired effect of making the CPUC more accountable.


            This bill would repeal the powers given to the president of  
            the CPUC, and instead designate the CPUC to direct the  
            executive director, the attorney, and other staff of the  
            Commission.  The Commission may delegate specific management  
                                                                  







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            and internal oversight functions to committees composed of two  
            commissioners and shall meet regularly with staff and report  
            to the CPUC for additional guidance or approval of decisions  
            pertaining to the operations of the CPUC.  The bill would  
            require the CPUC to vote in an open meeting on the assignment  
            or reassignment of any proceeding to one or more  
            commissioners. 


           4)Disqualification:   Current law requires the CPUC to adopt  
            procedures on the disqualification of commissioners and ALJs  
            due to bias or prejudice similar to those of other state  
            agencies and superior courts.  For adjudicatory proceedings, a  
            commissioner or ALJ may be disqualified if there is even an  
            "appearance of bias."  For quasi-legislative and ratesetting  
            proceedings, a commissioner or ALJ may be disqualified if  
            there is a "clear and convincing showing that the agency  
            member has an unalterably closed mind on matters critical to  
            the disposition of the proceeding."  However, the difficulties  
            associated with demonstrating in a "clear and convincing"  
            manner that an agency member has an "unalterably" closed mind  
            makes it extremely difficult to remove a commissioner or ALJ  
            from a proceeding.  Furthermore, the commissioner in question  
            is still allowed to vote on the decision on whether or not he  
            or she should be removed.  The issue came to light after PG&E  
            released its emails exposing former President Peevey's  
            communications with PG&E regarding issues relating to the San  
            Bruno pipeline explosion.  Subsequently, in July 2014, the  
            City of San Bruno filed a motion seeking to disqualify  
            President Peevey as the assigned commissioner in the  
            proceeding.  President Peevey removed himself from the  
            proceedings in September 2014, and in October 2014 announced  
            that he would not seek reappointment to the CPUC when his  
            terms expired.  


             This bill would specify that for ratesetting and adjudicatory  
            proceedings, a commissioner or ALJ can be disqualified if  
            there is an appearance of bias or prejudice based on (1)  








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            actions taken during the proceeding, (2) private  
            communications before the commencement of the proceeding to  
            influence the request for relief sought by any part to the  
            proceeding, or (3) actions demonstrating any commitment to  
            provide relief to a party.  The bill specifies that past work  
            experience by the commissioner or ALJ is not sufficient basis  
            for demonstrating an appearance of bias or prejudice, and  
            would prohibit the commissioner or ALJ in question from ruling  
            on the motion to disqualify the commissioner or ALJ. 


           5)Ex Parte Communications:   Ex parte communication is defined  
            under the Public Utilities Code as "any oral or written  
            communication between a decision maker 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."   The  
            purpose of ex parte communications is to ensure fairness and  
            transparency in a decision-making process by preventing one  
            party from gaining an unfair advantage.  This could include  
            giving one party increased access or communication with  
            decision makers, which could include additional information  
            not available to other parties, therefore prohibiting other  
            parties from rebutting or providing counterarguments, and  
            potentially giving one party disproportionate weight in the  
            decision-making process over another.  For regulatory  
            agencies, ex parte communications are necessary to maintain  
            the integrity of the decision-making process and the public's  
            perception of fairness.  



             In general, most state departments and agencies follow the  
            APA, which prohibits all communications, direct or indirect,  
            regarding any issue in a proceeding while the proceeding is  
            pending, unless proper notice and opportunity is to all  
            parties to participate in the communication.  However, the  
            CPUC is exempt from the APA, and instead establishes its own  








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            rules and procedures regarding ex parte communications in  
            quasi-legislative, adjudication, and ratesetting cases.





           6)Substantive vs. Procedural Matters:   Rules and procedures  
            governing ex parte communications are applicable to matters  
            before the CPUC concerning substantive issues.  Issues  
            considered procedural are not subject to the ex parte  
            communication rules and procedures; however, there is no  
            clarity in what issues are considered procedural and what are  
            considered substantive.  In general, the CPUC states that a  
            substantive issue is a factual, legal, or policy issue that  
            will be resolved by the Commission's decision on the matter.  
            Procedural issues are issues such as schedules, locations, and  
            formats and dates for filings and submissions.  The issue came  
            to light when PG&E released emails exposed staff meetings  
            between CPUC and PG&E over the selection of a favorable ALJ  
            for the San Bruno ratesetting proceeding and whether or not  
            this was considered a procedural issue or a substantive issue.  
             



             This bill would require the CPUC to enact rules and procedures  
            that explicitly specify what are considered procedural  
            matters.  The bill specifies that any communication between an  
            interested person and a decision maker regarding which  
            commissioner or ALJ may be assigned to a matter before the  
            Commission is  not  a procedural matter and subject to the  
            CPUC's ex parte communications rules. 



           7)Decision Makers and Interested Persons:   The rules and  
            procedures governing ex parte communications apply to decision  
            makers and interested persons.  Yet there still lacks clarity  








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            to what constitutes a decision maker and interested person.   
            According to the CPUC, decision makers include the  
            Commissioners, the Chief ALJ, any Assistant Chief ALJ, any ALJ  
            assigned to a proceeding, and any designated Law and Motion  
            ALJ.  The Commissioners' personal advisors are not defined as  
            "decision makers," but communications with them are governed  
            by most of the same rules that apply to decision makers.   
            Interested persons include any party to the proceeding, any  
            person with a financial interest in the proceeding, as  
            specified, any formally organized association who intends to  
            influence a decision maker, and any representative of such  
            persons.
            This bill would define a person with financial interest to  
            include a person involved in issuing credit ratings or  
            advising entities or persons who may invest in the share or  
            operation of any party to a proceeding.  The purpose is to  
            ensure that those who might have a financial interest in the  
            stock value of any party in a proceeding and might have an  
            incentive to influence decision makers on the degree of  
            punishment or reward in a proceeding are included in the  
            definition of an interested person.  In addition, this bill  
            requires the CPUC to establish rules and procedures defining a  
            decision maker to include, but not limited to, each  
            commissioner, the attorney for the CPUC, the executive  
            director of the CPUC, the personal staff of a commissioner if  
            the staff is acting in a policy or legal advisory capacity,  
            the Chief ALJ, the ALJ assigned to the proceeding, and the  
            director of the Energy Division, Communications Division,  
            Water and Audits Division, and Safety and Enforcement  
            Division, if those directors are acting in an advisory  
            capacity in the proceeding.   





           8)Ex Parte Communications in Quasi-Legislative Cases:    
            Quasi-legislative cases are cases that establish policy,  
            including, but not limited to, rulemakings and investigations  








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            which may establish rules affecting an entire industry.  For  
            quasi-legislative cases, ex parte communications are permitted  
            without restriction, but the CPUC may adopt rules or  
            regulations requiring written reporting.  Reportable  
            communications are to be reported by the party, whether the  
            communication was initiated by the party or the decision maker  
            and reported within three working days of the communication.  



             This bill would require ex parte communications in  
            quasi-legislative cases to be reported by an interested person  
            within three working days of the communications by filing a  
            "Notice of Ex Parte Communication," regardless if the  
            communication was initiated by the interested person or the  
            decision maker.  The notice shall include the following:





                 The date, time, and location of the communication,  
               whether it was oral, written, or a combination, and the  
               communications medium utilized;


                 The person initiating the communication, including a  
               decision maker, when applicable, and the identity of the  
               recipient and any persons present during the communication;  
               and


                 A complete and comprehensive description of the  
               interested persons and decision maker's communication and  
               its content, and to attach a copy of any written material  
               or text used during the communication.


           1)Ex Parte Communications in Adjudication Cases:   Adjudication  








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            cases are enforcement cases and complaints, except those  
            challenging the reasonableness of any rates or charges, as  
            specified.  Ex parte communications are prohibited in  
            adjudication cases.   


             This bill would further specify that any oral or written  
            communication concerning procedural matters in adjudication  
            cases between interested person and decision makers, except  
            the ALJ, is prohibited. 


           1)Ex Parte Communications in Ratesetting Cases:   Ratesetting  
            cases 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.  Current law prohibits ex parte communications in  
            ratesetting cases, but with exceptions.  It permits oral ex  
            parte communications at any time by any commissioner if all  
            interested parties are invited and given at least three days'  
            notice, and permits written ex parte communications by any  
            party if copies of the communication are transmitted to all  
            parties on the same day.  Current law also requires the CPUC,  
            if an ex parte communication meeting is granted to any party,  
            to also grant all other parties individual ex parte meetings  
            of a substantially equal period of time and to send notice of  
            that authorization at the time that request is granted, at  
            least three days in advance.


            This bill would specify that oral ex parte communications in  
            quasi-legislative and judicial cases is permitted without a  
            reporting obligation by any decision maker if all parties are  
            invited and given at least three work days' notice, and  
            written ex parte communications are permitted without any  
            reporting requirement if copies of the communication are  
            transmitted to all parties on the same day as the original  
            communication.  It is unclear why these same provisions would  
            not also be permitted in ratesetting cases without the  








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            specified requirements, if the parties comply with reporting  
            obligations. 


            This bill prohibits oral communications concerning procedural  
            matters in ratesetting cases between an interested person and  
            decision maker, except with the assigned ALJ, unless all  
            parties are invited and given three working days' notice.   
            Furthermore, this bill prohibits written communications  
            concerning procedural matters in ratesetting cases between  
            interested persons and decision makers, except the ALJ, unless  
            copies of the written communication are transmitted to all  
            parties on the same day.  


           2)Prohibited Ex Parte Communications:   As mentioned previously,  
            because the purpose of ex parte communications is to ensure  
            fairness and transparency in a decision-making process by  
            preventing one party from gaining an unfair advantage, the  
            lack of knowledge that an ex parte communication has occurred  
            potentially gives one party's position disproportionate weight  
            in the decision-making process over another.  To ensure the  
            integrity of the decision-making process in the event a  
            prohibited ex parte communication was discovered, such as with  
            the PG&E emails, this bill seeks to establish rules and  
            procedures governing such communications.


            If a prohibited ex parte communication occurs, this bill  
            requires, for adjudication and ratesetting cases, the  
            interested person to report to the Commission within one  
            working day of the communication by filing a "Notice of  
            Prohibited Ex Parte Communication," as specified, regardless  
            if the communication was initiated by a decision maker or an  
            interested person.  If the interested person has not submitted  
            the notice in a timely manner, this bill requires the decision  
            maker to promptly prepare and file a "Decisionmaker's Notice  
            of Prohibited Ex Parte Communication" with the CPUC, as  
            specified.  If a timely notice was filed by the interested  








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            person, this bill requires the decision maker to review the  
            notice and, if he or she believes the notice is not accurate,  
            to file a notice that corrects or supplements the interested  
            person's notice.  If the decision maker reviews the notice and  
            believes that the notice is accurate, he or she shall file a  
            notice indicating that he or she concurs with the interested  
            party's notice.


            Furthermore, in light of the AGs investigation, question have  
            arisen over whether decisions made regarding the San Bruno  
            pipeline explosion and the closure of the San Onofre Nuclear  
            Power Station were made by commissioners whose relationship  
            with regulated entities gave the entities an unfair advantage  
            in influencing the final outcome of those proceedings.  This  
            bill prohibits the CPUC from taking any vote on a matter in  
            which a prohibited ex parte communication is known to have  
            occurred until the notice has been made and all parties to the  
            proceeding have been provided a reasonable opportunity to  
            respond to the prohibited communication.  However, if a  
            decision has already been made on the proceeding before the  
            prohibited ex parte communication was discovered, this bill  
            would require the CPUC to provide a reasonable time for a  
            party to file a petition to rescind or modify the decision, as  
            specified.   


           3)Ex Parte Communications at Conferences:   This bill further  
            seeks to establish rules and procedures governing ex parte  
            communications that occur at conferences, including open  
            session communications, as a way to ensure that ex parte  
            communications rules and procedures apply in conferences  
            regardless if multiple parties of a proceeding and  
            commissioners are present at the conference.  



            This bill defines "open session communication" to mean an ex  
            parte communication made in a speech, comment, or writing  








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            delivered to all attendees of a noticed session of a  
            conference, and specifies that all other ex parte  
            communications at a conference, as specified, is not an open  
            session communication.  This bill prohibits open session  
            communications relating to a pending adjudication or  
            ratesetting case, but permits open session communications in  
            quasi-legislative cases if the CPUC rules require that the  
            communications are promptly disclosed in the appropriate  
            proceeding and all parties in the proceeding are allowed a  
            reasonable opportunity to respond to the communication before  
            the vote.





           4)Summary Logs:   On October 18, 2014, the CPUC Executive  
            Director issued a memo implementing new reporting procedures  
            for communications between certain CPUC staff and  
            CPUC-regulated entities.  The memo was issued in order to  
            enhance the transparency of the CPUC's process and its  
            accountability to the public.  The memo directed Division  
            Directors and above, as well as voluntarily asked  
            commissioners, their advisors, and the Chief ALJ to provide a  
            communications log summarizing all oral or written ex parte  
            communications that occur between themselves and  
            CPUC-regulated entities who are interested persons to a  
            ratesetting or adjudicatory proceeding.  The communications  
            log must include the date of each communication, the persons  
            involved, and to the extent known, any proceedings that were  
            the subject of each communication.  The communications log  
            must be provided on a weekly basis and be made available on  
            the CPUC's website.


            This bill would require a decision maker to periodically  
            report summary logs of ex parte communications, as specified,  
            and post those logs on its website by July 1, 2016.  This bill  
            requires if a decision maker believes that a quasi-legislative  








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            ex parte communication notice is inaccurate, he or she may  
            include a corrected or supplemental information in the summary  
            log and notice the corrected or supplemental information in  
            the appropriate proceeding.


           5)Sanctions and Penalties:   This bill would authorizes the CPUC  
            to assess civil sanctions upon any regulated entity or person,  
            other than a decision maker or employee of the CPUC, that  
            violates or fails to comply with the ex parte communication  
            requirements, of up to $50,000 per violation, or up to the  
            maximum amount of financial benefits the entity or person  
            obtain by violating the ex parte communication requirements.   
            The bill specifies that each day of continuing violation or  
            each day that a violation is not disclosed to the Commission  
            constitute a separate violation.  


            If a decision maker or employee of the CPUC violates or fails  
            to comply with ex parte communication requirements, this bill  
            would authorize the AG to bring an enforcement action to the  
            superior court.  The court may grant appropriate relief,  
            including disqualifying the decision marker from one or more  
            proceedings, as well as civil penalties up to $50,000 or the  
            maximum amount of financial benefit the entity or person  
            obtained by violating the ex parte communication requirements.


           6)Notice for Substantively Revised Provisions:   This bill also  
            includes a provision that would  require the CPUC, in any  
            proceeding in which a proposed decision or alternate has been  
            substantively revised, to post the revised proposed decision  
            or alternate on its website, and note it on the docket sheet  
            for the proceeding for at least five working days before a  
            vote.  This provision is in response to the CPUC's passage of  
            a residential electric rate reform plan on July 3, 2015.   
            Typically, CPUC proposed decisions must wait at least 30 days  
            before they can be voted on.  However, the Commission can  
            continue to make revisions to the proposal within the 30 days.  








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             This provision seeks to provide parties an opportunity to  
            review a final proposed decision.  The lack of proper notice  
            to the public on a final proposed decision allows parties to  
            mislead the public on the facts of the decision.  It is  
            unclear that five days would be enough time for the public or  
            parties to fully dissect some proposed decisions and instead  
            this provision could further serve to delay decisions.  This  
            issue warrants greater discussion.  


            The author may wish to delete this provision from the bill to  
            have more discussion:


              311. (e) (2) In a proceeding in which both a proposed decision  
            and an alternate have been served upon the parties and  
            comments have been received on the proposed decision or  
            alternate, or both, if substantive revisions are made to the  
            proposed decision or alternate that was previously served upon  
            the parties and made available for comment, the substantively  
            revised proposed decision or substantively revised alternate  
            shall be served upon all parties to the proceeding and shall  
            be made publicly available on the commission's Internet Web  
            site, noted on the docket sheet for the proceeding, for not  
            less than five full working days prior to it being acted upon  
            by the commission.  Any party to the proceeding or interested  
            member of the public may file comments with the commission  
            addressing any substantively revised aspect of the proposed  
            decision or alternate prior to it being acted upon by the  
            commission.  


           7)Arguments in Support:   According to the Utility Reform Network  
            (TURN), the sponsor of the bill, "In our March 11, 2015,  
            testimony before the Senate Energy, Utilities and  
            Communications Committee, TURN highlighted key concerns with  
            the current ex parte rules at the [CPUC], identified possible  
            solutions, and discussed the need for statutory reforms.  Most  
            importantly, TURN urged the Legislature to recognize that the  








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            CPUC is very unlikely to reform itself and real reform will  
            require changes to state law.  Many of the concerns identified  
            in this testimony are addressed in SB 660.  One of the most  
            significant elements in SB 660 is a change to the legal  
            framework governing the disqualification of Commissioners due  
            to prejudice or bias.  [In addition,] SB 660 is also needed to  
            democratize the organization of the CPUC by allowing all  
            Commissioners to share the management and oversight of the  
            agency ? Finally, SB 660 closes a number of loopholes relating  
            to ex parte communications in order to promote public dialogue  
            at the CPUC and limit opportunities for private, unreported  
            communications between interested parties and an array of CPUC  
            decision makers."


           8)Related Legislation:   







            AB 825 (Rendon) 2015:  This bill proposes a suite of reforms  
            to the CPUC largely directed at increased transparency of the  
            activities of the agency, including expanding the roles and  
            responsibilities of the public advisor, specifying additional  
            requirements of commissioners, increased transparency of  
            electric utilities' procurement, among others.

            AB 1023 (Rendon) 2015:  This bill would require the CPUC to  
            establish and maintain a weekly communications log summarizing  
            all oral or written ex parte communications, as specified.





            SB 48 (Hill) 2015:  This bill proposes a suite of reforms of  








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            the governance and operations on the CPUC, including, among  
            others, modifying the powers of the president, requiring  
            sessions in Sacramento, applying the Code of Ethics from the  
            APA to ALJs.  





           9)Prior Legislation:



             SB 33 (Peace) 1999:  Transfers authority from the CPUC to the  
            Governor to designate a president of the CPUC and requires the  
            president to direct the staff of the CPUC, as specified.   
            Chaptered by Secretary of State - Chapter 509, Statues of  
            1999.  


             


          REGISTERED SUPPORT / OPPOSITION:




          Support


          The Utility Reform Network (Sponsor)


          California Environmental Justice Alliance


          Center for Accessible Technology









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                                                                    Page  27






          Consumer Federation of California


          The Greenlining Institute


          Privacy Rights Clearinghouse


          San Diego Area Congregations for Change




          Opposition                                 


          Barbara R. Barkovich (Unless Amended)


          Ralph Cavanagh (Unless Amended)


          Michael B. Day (Unless Amended)


          William Kissinger (Unless Amended)


          Barbara O' Connor (Unless Amended)


          William Schulte (Unless Amended)




          Analysis Prepared by: Edmond Cheung / U. & C. / (916)  








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          319-2083