BILL ANALYSIS                                                                                                                                                                                                    Ó





                             SENATE JUDICIARY COMMITTEE
                         Senator Hannah-Beth Jackson, Chair
                             2015-2016  Regular  Session


          SB 1017 (Hill)
          Version: February 11, 2016
          Hearing Date: April 19, 2016
          Fiscal: Yes
          Urgency: No
          NR   


                                        SUBJECT
                                           
            Public Utilities Commission:  public availability of utility  
                                 supplied documents

                                      DESCRIPTION  

          This bill would authorize the Public Utilities Commission to  
          adopt rules providing for the disclosure of information  
          furnished to the Commission by a public utility, a subsidiary,  
          an affiliate, or a corporation holding a controlling interest in  
          a public utility.

                                      BACKGROUND  

          Unlike other state agencies, whose records are generally open  
          for public inspection, the California Public Utilities  
          Commission (CPUC) operates under a statute creates a presumption  
          against public inspection.  Specifically, that statute affords  
          the public access to its records only when specifically  
          permitted by the CPUC.  (Pub. Util. Code Sec. 583.)  Despite the  
          "open government" reforms in California, such as the California  
          Public Records Act (CPRA) (enacted in 1968), the statutory  
          standard for public access to utility filings with the CPUC has  
          not fundamentally changed since it was enacted in 1915.

          The CPRA gives every person the right to inspect and obtain  
          copies of all state and local government documents not exempt  
          from disclosure.  (Gov. Code Sec. 6253.)  Exemptions include  
          corporate financial records and corporate proprietary  
          information, including trade secrets.  (Gov. Code Secs. 6254,  
          6254(k), 6254.15.)  The CPRA also specifically provides that  








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          information held by the CPUC which is deemed confidential under  
          Public Utilities Code Section 583 is not required to be  
          disclosed.  (Gov. Code Secs. 6276, 6276.36.)  In November 2004,  
          the voters passed Proposition 59, which provides the public with  
          a constitutional right of access to records and public meetings  
          of government officials and agencies.  Proposition 59 did not,  
          however, nullify or repeal any confidentiality law existing at  
          that time that created an exception to the right of access to  
          public records.  Accordingly, confidentiality statutes  
          applicable to the CPUC were not affected by the passage of  
          Proposition 59 and remained intact.  
          In September of 2010, eight people were killed when a natural  
          gas pipeline exploded in the San Francisco suburb of San Bruno,  
          which focused the public's attention on the CPUC and its  
          oversight of the utility companies. 

            Shock waves from the San Bruno disaster shook the foundations  
            of PG&E and the California Public Utilities Commission, the  
            state agency charged with regulating the company. The blast  
            exposed the utility's haphazard system of record keeping for  
            its tens of thousands of miles of gas pipelines and its  
            sometimes shoddy construction and inspection practices. The  
            catastrophe prompted questions about whether the company was  
            actually carrying out pipeline safety improvements that  
            ratepayers had been charged for." (Bowe and Pickoff-White,  
            Five Years After Deadly San Bruno Explosion: Are We Safer;The  
            California Report, (2015)  [as of April 8, 2016].)

          As part of the settlement agreement between the CPUC and the  
          City of San Bruno, the CPUC agreed to undergo rulemaking to  
          improve public access to public records by December of 2014,  
          which, at the time of this writing, is still in process.  This  
          bill, seeking to increase transparency and the public's ability  
          to inspect documents, would expressly authorize the CPUC to  
          release public utility records by rule, thereby reducing the  
          time and CPUC effort required to comply with the CPRA. 

                                CHANGES TO EXISTING LAW
           
           Existing law  , the California Constitution, declares the people's  
          right to transparency in government.  Specifically, the  
          California Constitution provides that "the people have the right  
          of access to information concerning the conduct of the people's  







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          business, and therefore, the meetings of public bodies and the  
          writings of public officials and agencies shall be open to  
          public scrutiny...."  (Cal. Const., art. I, Sec. 3.)

           Existing law  , the California Public Records Act (CPRA), governs  
          the disclosure of information collected and maintained by public  
          agencies.  (Gov. Code Sec. 6250 et seq.)  Generally, all public  
          records are accessible to the public upon request, unless the  
          record requested is exempt from public disclosure.  There are 30  
          general categories of documents or information that are exempt  
          from disclosure, essentially due to the character of the  
          information, and unless it is shown that the public's interest  
          in disclosure outweighs the public's interest in non-disclosure  
          of the information, the exempt information may be withheld by  
          the public agency with custody of the information.  (Gov. Code  
          Sec. 6254.)
           
          Existing law  defines state agency, for purposes of the CPRA, to  
          include every state officer, department, division, bureau,  
          board, and commission or other state body or agency, except for  
          the Legislature and the Judiciary.  (Gov. Code Sec. 6252.)

           Existing law  , the CPRA, requires the California Public Utilities  
          Commission (CPUC) to establish written guidelines for  
          accessibility of records; the guidelines and regulations adopted  
          shall be consistent with other sections of the CPRA and reflect  
          the intention of the Legislature to make the records accessible  
          to the public.  (Gov. Code Sec. 6253.4.)

           Existing law  requires the CPUC to investigate the cause of all  
          accidents occurring in California on the property of any public  
          utility accident resulting in the loss of life or injury to  
          person or property; the CPUC is authorized to make any order or  
          recommendation regarding the accident investigation.  (Pub.  
          Util. Code Sec. 315.)

           Existing law  requires every public utility to file with the  
          CPUC, under such rules as the CPUC prescribes, a report of each  
          public utility accident.  (Pub. Util. Code Sec. 315.)

           Existing law  provides that no information furnished to the CPUC  
          by a public utility, business that is a subsidiary or affiliate  
          of a public utility, or corporation that holds a controlling  
          interest in a public utility shall be publicly available  except  
          on order of the commission, or by the CPUC, as specified, in the  







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          course of a proceeding or hearing.  (Pub. Util. Code Sec. 583.)   


           Existing law  provides that any present or former employee of the  
          CPUC who divulges any confidential public utility information  
          provided to the CPUC is guilty of a misdemeanor.  (Pub. Util.  
          Code Sec. 583.)
          
           This bill  would additionally allow the CPUC to make information  
          publicly available by rule of the CPUC. 

                                        COMMENT
           
           1.Stated need for the bill
           
          According to the author: 

            Public Utilities Sec. 583 prevents CPUC staff from releasing  
            utility-furnished documents except by vote of the commission,  
            or by a commissioner during the course of a hearing. This  
            provision has been almost unchanged since the original Public  
            Utilities Act went into effect in 1912-more than 50 years  
            before the CPRA went into effect in 1968. The strict  
            prohibition against release of utility-furnished documents  
            without a vote of the commission-under pain of misdemeanor-is  
            inconsistent with the CPRA's (and California Constitution's)  
            presumption that documents used by public officials to make  
            decisions be available to the public. Much information  
            furnished by CPUC-regulated utilities and other service  
            providers should be withheld from the public-such as  
            information that would disrupt competitive markets or would  
            expose critical infrastructure to security threats-but the  
            CPUC needs to be able to more quickly provide records not  
            exempt from the CPRA to the public and be overburdened by  
            indulging every unconsidered utility wish for confidential  
            treatment with a full vote of the commission to deny it. The  
            solution is to ensure the CPUC has sufficient discretion to  
            release public records that do not merit confidential  
            treatment without a Commission vote.

           2.Significance of "order" versus "rule"
            
           Existing law permits the CPUC to release utility-provided  
          documents pursuant to a CPRA request only by order, which  
          requires a vote by the Commission.  This bill would instead  







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          allow the CPUC to release, both by order and documents that the  
          utilities have provided to the CPUC by rule, in addition to by  
          order.  The main distinction between an "order" and a "rule" is  
          the process.  Under existing law, when an individual requests a  
          record marked "confidential" by a utility,  the CPUC must  
          initially deny the request and then inform the requestor that  
          staff considers the request as an appeal which will be voted on  
          by the full Commission. Of this process, the author writes:

            In addition to the burden placed on CPUC staff, the requestor  
            is guaranteed not to get the public record for at least 30  
            days after the draft resolution has been prepared, as the  
            Commission cannot vote on proposed decisions or draft  
            resolutions until they have been circulated for 30 days (see  
            Public Utilities Code Sec. 311(g)).  [The] unthinking  
            over-marking of confidentiality on the part of a utility can  
            make documents that it could release almost immediately take  
            more than a month to release to the requestor-which is  
            inconsistent with the CPRA's requirement that records be made  
            "promptly available"-and considerable CPUC staff time.

          However, if the CPUC were to make a "rule" allowing the release  
          of these documents, (instead of holding a vote), the rule could  
          provide a process and guidelines for staff to follow in  
          releasing documents. 

          The California Communications Association writes that they are  
          concerned that "by adding 'or rule' to this process, SB 1017  
          would allow the CPUC to skirt the current requirements, which  
          provide notice and due process for utilities, and delegate  
          decisions related to the public release of utility information  
          to staff utilizing broad and imperfect guidelines."

          In response, the author writes that he "recognizes this concern  
          but notes that the only entities currently seeking  
          communications provider records are other communications  
          providers. There is no reason that these providers cannot  
          effectively guide the CPUC in crafting rules responsive to their  
          needs-rules which may include a requirement that communications  
          records requests still would need a vote of the full Commission.  
          As the communications industry is rapidly evolving-those  
          participating in it will say so themselves-this is an issue that  
          shouldn't be carved in statute, but should be handled by the  
          CPUC. Additionally, as the concern is primarily one of different  
          parts of this competitive industry attempting to gain advantage  







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          over the other and very much separate from the PRA requests that  
          the CPUC receives, the industry should be able to craft its own  
          suggested standards for CPUC adoption and not handcuff the CPUC  
          in the commission of its responsibilities under the Public  
          Records Act."
           
            3.Increasing transparency with regard to public utilities
           
          Last year the Governor vetoed three bills relating to the CPUC  
          and transparency (SB 18 (Hill), SB 48 (Hill) and AB 825  
          (Rendon)) and, in his veto message, indicated a more appropriate  
          path for the Legislature to take with regard to increasing  
          transparency: 
            
            These bills include various provisions to increase  
            transparency and accessibility to the Public Utilities  
            Commission. I support the intent of these bills and many of  
            their proposed reforms, however some additional work is needed  
            to ensure that they achieve their intended purposes and can be  
            effectively implemented.

            Allowing Bagley-Keene and Public Records Act lawsuits to be  
            brought against the Commission by any interested party in  
            Superior Court, rather than exclusively in the Courts of  
            Appeal and the California Supreme Court, will only result in  
            increased litigation and likely delay Commission  
            decision-making. It will not improve public access to critical  
            information about the actions of regulated entities. Amending  
            Section 583 of the Public Utilities Code to require more  
            information to be publicly available is a much better way to  
            ensure that the public is provided with this information.

          In direct response, this bill would amend Section 583 of the  
          Public Utilities Code to allow information to be more  
          expediently available as intended by the CPRA.  In opposition, a  
          coalition of communications companies argue that the current  
          system, whereby information designated as "confidential" is  
          treated as confidential until a dispute arises, has worked  
          perfectly for decades, and that allowing the CPUC to issue  
          regulations for the public availability of documents will "chill  
          the industry's willingness to share information with the [C]PUC  
          going forward."  

          However, the communications companies are currently  
          participating in the CPUC proceeding addressing these very  







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          issues.  The coalition writes, "the initial rule proposed by the  
          Commission in that proceeding permitted its staff to make  
          determinations of confidentiality without notice to the  
          utilities or an opportunity to be heard. The communications  
          companies strongly opposed that initial proposal, citing Pub.  
          Util. Code Sec. 583. The initial proposed rule has undergone  
          substantial change since then. The parties to the proceeding are  
          currently engaged in Commission workshops, with the goal of  
          creating a process for evaluating the confidentiality of  
          information submitted by communications companies."

          Staff notes that, like the process of issuing an order which the  
          opposition claims provides notice and due process for the  
          utilities, the process of "rulemaking" also provides notice, a  
          hearing, and an opportunity for any party to present arguments  
          in front of the Commission. (See Pub. Util. Code Sec. 1701.4.)   
          The main difference between the two processes, that in the case  
          of issuing a rule, this notice and opportunity to testify  
          happens only once, and not for every single CPRA request.  To  
          this point, the author notes, "it is in the CPUC's best interest  
          during the rulemaking process to develop rules that do not allow  
          the release of market sensitive, critical infrastructure, or  
          other legitimately confidential information-rules that allow the  
          CPUC to withhold records in the cases where the public interest  
          served by non-disclosure outweighs the public interest served by  
          disclosure. In [my] (painfully long) experience with the CPUC,  
          the agency has never indicated a disposition to do otherwise."


           Support  :  None Known

           Opposition  :  AT&T; California Communications Association; CTIA;  
          Consolidated Communications, Inc.; Frontier Communications;  
          Southern California Edison (late); Sprint; T-Mobile; TechNet;  
          Verizon

                                        HISTORY
           
           Source  :  Author

           Related Pending Legislation  : None Known

           Prior Legislation  :

          AB 825 (Rendon and Stone, 2015) proposed a suite of reforms of  







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          the CPUC, largely directed at increased transparency of the  
          activities of the agency, including requiring the California  
          State Auditor's Office to appoint an Inspector General within  
          its office for the CPUC, expanding the roles and  
          responsibilities of the CPUC public advisor, specifying  
          additional requirements of commissioners, and increased  
          transparency of electric utilities' procurement, among others.  
          This bill was vetoed by the Governor. 

          AB 1541 (Dickinson, 2012), among other things, would have  
          required CPUC accident investigation orders or recommendations  
          and all information furnished to the CPUC, unless exempt as  
          specified, to be subject to public disclosure under the CPRA.  
          This bill was held on the Senate Suspense File. 

          SB 1000 (Yee, 2012) would have eliminated the presumption of  
          confidentiality for utility-furnished CPUC documents and allowed  
          CPUC staff to release utility-furnished records pursuant to the  
          CPRA and without a Commission vote. This bill died in the  
          Assembly Utilities & Commerce Committee. 

          SB 1488 (Bowen, Ch. 690, Stats. 2004) See Background.
           Prior Vote  :  Senate Energy, Utilities and Communications  
          Committee (Ayes 6, Noes 0)

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