BILL ANALYSIS Ó SB 660 Page 1 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. SB 660 Page 2 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. SB 660 Page 3 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 SB 660 Page 4 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. SB 660 Page 5 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. SB 660 Page 6 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 SB 660 Page 7 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 SB 660 Page 8 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 SB 660 Page 9 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 SB 660 Page 10 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 SB 660 Page 11 $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 SB 660 Page 12 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. SB 660 Page 13 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 SB 660 Page 14 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) SB 660 Page 15 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 SB 660 Page 16 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 SB 660 Page 17 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 SB 660 Page 18 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 SB 660 Page 19 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 SB 660 Page 20 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 SB 660 Page 21 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 SB 660 Page 22 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 SB 660 Page 23 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. SB 660 Page 24 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 SB 660 Page 25 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 SB 660 Page 26 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 SB 660 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) SB 660 Page 28 319-2083