BILL ANALYSIS Ó
SB 660
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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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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