BILL ANALYSIS Ó
SENATE COMMITTEE ON ENERGY, UTILITIES AND COMMUNICATIONS
Senator Ben Hueso, Chair
2015 - 2016 Regular
Bill No: SB 1049 Hearing Date: 4/19/2016
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|Author: |Hill |
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|Version: |4/11/2016 As Amended |
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|Urgency: |No |Fiscal: |Yes |
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|Consultant:|Nidia Bautista |
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SUBJECT: Electrical corporations and gas corporations: accident
investigations
DIGEST: This bill would require every electrical and gas
corporation to cooperate fully with the California Public
Utilities Commission (CPUC) in an investigation into any major
accident or any reportable incident. This bill would require a
utility to provide all measurements and analysis once an
incident scene has been secured or service has been restored.
ANALYSIS:
Existing law:
1)CPUC has regulatory authority over public utilities and
authorizes the CPUC to fix rates, establish rules, examine
records, issue subpoenas, administer oaths, take testimony,
punish for contempt, and prescribe a uniform system of
accounts for all public utilities subject to its jurisdiction.
(California Constitution, Article XII, §§3 and 6)
2)Authorizes the CPUC to, at any time, inspect the accounts,
books, papers, or records kept by the public utility. (Public
Utilities Code §314)
3)Requires the CPUC to investigate the cause of all accidents
occurring within this state upon the property of any public
utilities or directly or indirectly arising from or connected
with its maintenance or operation, resulting in loss of life
or injury to person or property and requiring, in the
judgement of the CPUC, investigation by it, and may make such
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order or recommendation with respect thereto as in its
judgement seems just and reasonable. (Public Utilities Code
§315)
4)Establishes that neither the order or recommendation of the
CPUC nor any accident report filed with the CPUC shall be
admitted as evidence in any action for damages based on or
arising out of such loss of life, or injury to person or
property. (Public Utilities Code §315)
5)Requires every public utility to file with the CPUC, under
such rules as the CPUC prescribes, a report of each accident
so occurring of such kinds or classes as the CPUC from time to
time designates. (Public Utilities Code §315)
6)Requires every electrical corporation to cooperate fully with
the CPUC in an investigation into any major accident or any
reportable incident concerning overhead electric supply
facilities. (Public Utilities Code §316)
7)Requires every electrical corporation to provide the CPUC,
upon its request, immediate access to specified documents,
including any and all documents under the electrical
corporation's control that are related to the incident and are
not subject to attorney-client privilege or attorney work
product doctrine. (Public Utilities Code §316)
8)Requires every public utility to furnish and maintain such
adequate, efficient, just and reasonable service,
instrumentalities, equipment, and facilities, as are necessary
to promote the safety, health, comfort, and convenience of its
patrons, employees, and the public. (Public Utilities Code
§451)
9)Requires that every public utility shall deliver to the CPUC,
when required by the CPUC, copies of any or all maps,
profiles, contracts, agreements, franchises, reports, books,
accounts, papers, and records in its possessions or in any way
relating to its property or affecting its business, and also a
complete inventory of all its property in such form as the
CPUC may direct. (Public Utilities Code §582)
10)Establishes that the attorney-client privilege is waived when
the holder of the privilege, without coercion, discloses a
significant part of the privileged communication or consents
SB 1049 (Hill) PageC of?
to such disclosure. (Evidence Code §912(a))
11)Establishes that a client has a privilege to refuse to
disclose, and to prevent another from disclosing, a
confidential communication between client and lawyer, if the
privilege is claimed by: (a) the holder of the privilege; (b)
a person who is authorized to claim the privilege by the
holder of the privilege; or (c) the person who as the lawyer
at the time of the confidential communication, but such person
may not claim the privilege if there is no holder of the
privilege in existence or if he is otherwise instructed by a
person authorized to permit disclosure. (Evidence Code §954)
This bill would:
1)Require each electrical corporation to cooperate fully with
the CPUC in an investigation into any major accident or any
reportable incident concerning electric supply facilities,
rather than only overhead electric supply facilities.
2)Require every gas corporation to cooperate fully with the CPUC
in an investigation into any major accident or any reportable
incident concerning to CPUC-regulated gas pipeline facilities,
regardless of pending litigation or other investigations,
including but not limited to those that may be related to a
CPUC investigation.
3)Require each electrical and gas corporation, after the scene
of the incident has been made safe and, in the case of a major
outage, service has been restored, to provide the CPUC, upon
request, with access to all of the following, in addition to
other statutorily required documents:
a. Each and every measurement of every utility
instrumentality of facility in the vicinity of the
incident. Historical, as well as post-incident
measurements, shall be produced. Measurements of
instrumentalities of facilities not owned by the utility
shall also be produced, if those measurements are
available.
b. Each and every calculation regarding every
instrumentality or facility in the vicinity of the
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incident. Historical, as well as, post incident,
calculations shall be produced.
c. Each and every analysis regarding the cause, or
causes, of the incident. Each analysis shall be produced
regardless of whether identified as a root cause
analysis, a causal evaluation, a failure analysis, a
storm register, or identified in some other manner.
d. Each and every recording or paraphrasing of any
statement by a witness.
Background
In September of 2013, Brandon Orozco, 28, working under a
contractor for Southern California Edison (SCE), died when an
electrical vault he was working on exploded in Huntington Beach.
The CPUC's Safety and Enforcement Division (SED) found that SCE
workers switched off the electricity in some of the circuits in
the underground vault but not all of them. Subsequently, Mr.
Orozco, working for an SCE contractor, entered the vault to
perform maintenance on the circuits that were not energized, but
he appears not to have known which circuits were energized and
which were not, and he touched the wrong one. The details of
why this happened are not fully known, as SCE has claimed that
its investigation is subject to attorney-client privilege as it
was prepared by the SCE Claims Department, a department within
the utility's legal division, at the request of SCE lawyers.
SCE is therefore not providing the investigation to the CPUC,
even after repeated requests by CPUC to do so.
According to the CPUC's October 2015 incident investigation
report:
SCE's refusal to provide ESRB [CPUC's Electric Safety and
Reliability Branch] its Investigation Report and a list of
documents SCE reviewed in its investigation of the
incident, under a claim of attorney-client privilege,
hampered ESRB's investigation of the incident and ability
to determine whether SCE has identified root causes of the
incident and appropriate corrective actions, and whether
SCE has incorporated "lessons learned" in other aspects of
its operations. SCE's decision to withhold this
information is counter to the requirements of Public
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Utilities Code §§314 and 582.<1>
The CPUC was able to secure some information from the Cal/OSHA
incident investigation report. However, SCE continued to refuse
to provide its investigation report and related documents. In
response to the CPUC's claims that SCE's actions hindered the
CPUC investigation and violated the statutes, SCE claims:
The Investigation Report sought by the SED is an absolutely
privileged attorney-client communication. It was prepared
by the SCE Claims Department at the request of SCE lawyers,
and in anticipation of litigation. The authors of the
Investigation Report were not independent witnesses of the
incident. They were instructed by SCE counsel to open a
confidential investigation of the incident, and the report
has remained accessible only to SCE counsel and those
acting at their direction. In addition to qualifying for
absolute protection under the attorney-client privilege,
the Investigation Report is protected by the attorney
work-product doctrine because it was compiled at the
direction of SCE counsel.
Attorney-client privilege. As stated by the American Bar
Association's Center for Professional Responsibility:
The attorney-client privilege, sometimes referred to as the
testimonial privilege, is a concept from the law of evidence and
is present in the common law or statutes of the fifty states.
The client, acting through the lawyer, may claim the privilege.
As stated in Model Rule 1.6, Comment [3]: "The attorney-client
privilege and work product doctrine apply in judicial and other
proceedings in which a lawyer may be called as a witness or
otherwise required to produce evidence concerning a client."
Work-product protection is of relatively recent origin,
springing from court decisions construing the formal discovery
procedures enshrined in the Federal Rules of Civil Procedure.
Under this doctrine, a lawyer's notes, observations, thoughts
and research are protected from discovery processes. The
attorney-client privilege only protects the essence of the
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<1> CPUC Safety and Enforcement Division, Electric Safety and
Reliability Branch. "Investigation Report of the September 30,
2013 Subcontractor Fatality at a Southern California Edison
Company Underground Vault in Huntington Beach Public Report."
October 2015. Filed November 18, 2015.
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communications actually had by the client and lawyer and only
extends to information given for the purpose of obtaining legal
representation. The underlying information is not protected if
it is available from another source. Therefore, information
cannot be placed under an evidentiary "cloak" of protection
simply because it has been told to the lawyer.<2>
CPUC application of attorney-client privilege. The CPUC also
adheres to the attorney-client privilege in its oversight of
utilities. In general, the CPUC provides:
(1) Attorney client privilege - if only facts are sought, the
case law is very strong on the side of the CPUC's SED.
Attorney-client privilege provides that no conversations with
the utility's attorney are sought. SED is just asking for facts
to inform their investigation.
(2) Work-product doctrine - The utility also refers to the
work-product doctrine, which is more problematic. If the
utility attorney is directing what the utility investigator is
investigating, the work-product doctrine may apply. However, it
is a qualified privilege, and the CPUC/SED has argued in the
past that the CPUC investigation to ensure the public is safe
outweighs the utility work-product concerns, or that the
utility's compliance with the accident reporting requirement in
section 316 of the Public Utilities Code waives any right the
utility has to resist the CPUC/SED investigation.
According to the CPUC, some utility investigators are
organizationally placed within the utility's Claims Department,
which is often part of the utility's Legal Department.
Therefore, any follow-up on the part of the CPUC SED or others
to the utility's accident report is often met with resistance by
the utility, which claims the info is protected under (1) the
attorney-client privilege and (2) the work product doctrine.
The author of this bill notes that if a utility is unconcerned
with safety and only wants to know what happened in an incident
in order to protect itself from litigation, it will direct its
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<2>Michmerhuizen,Sue. "Confidentiality, Privilege: A Basic Value
in Two Different Applications," American Bar Association's
Center for Professional Responsibility, May 2007.
http://www.americanbar.org/content/dam/aba/administrative/profess
ional_responsibility/confidentiality_or_attorney.authcheckdam.pdf
SB 1049 (Hill) PageG of?
attorneys to investigate accidents and assert that information
as protected under attorney-client privilege. The SCE
Huntington Beach fatality incident is an example of this
practice, as it illustrates the need to further clarify
additional documents/information required of utilities in CPUC
investigations to avoid similar situations in the future.
CPUC Legal Division has had some success addressing these
issues. The CPUC/SED investigators can get assistance from the
CPUC Legal Division, although they have not always sought this
assistance. The issue of attorney-client privilege was
successfully litigated in the 2007 Malibu Canyon Fire
investigation even before Public Utilities Code §316 was
improved by AB 2584 (Bradford, Chapter 262, Statutes of 2012).
In October 2007, three utility poles in Malibu Canyon broke and
ignited a fire. After the fire, SCE sent one of its employees
to conduct a forensic examination of the failed poles. The
employee took written notes of his field observations, and sent
copies of his notes to SCE's Law Department. The CPUC filed a
motion to compel SCE to produce the documents, however, SCE
refused arguing the documents were shielded from disclosure by
attorney-client privilege and the attorney work-product
doctrine. Since SCE had shared the documents under a signed
agreement with CPUC on a confidential basis, the judge ruled SCE
had waived its attorney-client privilege.<3> Therefore, CPUC
was successful in securing the information.
What Trumps What - Unresolved. The author of this bill intends
to better address root cause analysis when a major incident
occurs related to a utility in order to prevent similar
incidents in the future. Currently, competing statutes can make
it challenging, at best, to determine what information is shared
with the CPUC, let alone the public. These include the Public
Records Act - the public's right to know; Public Utilities Code
§583 - confidentiality of utility information; Public Utilities
Code §§582 and 316 - requiring utilities to provide requested
information to the CPUC; and the American jurisprudence
principle of attorney-client privilege. This bill as currently
drafted preserves the attorney-client privilege while providing
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<3> CPUC Administrative Law Judge Ruling Denying Southern
California Edison Company's Motion to File Under Seal.
Investigation 09-01-018, Filed January 29, 2009. Investigation
into the CPUC's Own Motion into Operations and practices of SCE,
et al, regarding the Utility Facilities and the Canyon Fire in
Malibu of October 2007.
SB 1049 (Hill) PageH of?
additional specified requirements of information that must be
shared by utilities with the CPUC. However, as noted in SCE's
response to the CPUC, concerns that any investigation or
analysis on the part of a utility's legal department is their
own investigation and not something that should be required to
share with the CPUC may still be subject to a judge's decision
based on the specific facts of that case. This bill as drafted
would not guarantee that information would be automatically
shared, or shared at all, but it may help to better position the
CPUC in arguing that it should be shared.
Applying Section 316 More Broadly. The current statute limits
the investigation requirements of Public Utilities Code §316 to
overhead electric facilities. However, it would seem to make
sense to include all electric facilities, especially with recent
incidents of underground vaults exploding in Long Beach, as well
as, the incident in Huntington Beach. When Section 316 was
originally proposed in AB 2584 (Bradford) the language also
included gas corporations. However, for reasons not explained
in the committee analysis, gas corporations were removed by the
Senate Committee on Energy, Utilities and Communications. In
light of recent incidents related to gas corporations, including
the 2010 fatal explosion in San Bruno and the recent leak in
Aliso Canyon, it makes sense to also include gas corporations
under the requirements of this section.
Need for Definitions. This bill, as proposed, includes a number
of words that merit further definition, including; root cause
analysis, vicinity, and storm register. The author may wish to
include definition in the statute, where appropriate, or direct
the CPUC to establish definitions in its rules.
Prior/Related Legislation
AB 2584 (Bradford, Chapter 262, Statutes of 2012) required every
electrical corporation to cooperate fully with CPUC
investigations of overhead electric supply facilities regardless
of pending litigation or other investigations.
FISCAL EFFECT: Appropriation: No Fiscal
Com.: Yes Local: Yes
SUPPORT:
SB 1049 (Hill) PageI of?
None received
OPPOSITION:
Civil Justice Association of California (CJAC)
ARGUMENTS IN SUPPORT: The author states: "Public utilities
need to prepare root cause analyses to learn from accidents so
that their engineers and operations managers can prevent them
from recurring. Were such analyses to be kept private - solely
used by lawyers to protect the utility from lawsuits brought by
victims and their surviving families - the utility would risk
sacrificing its responsibility service "to promote the safety,
health, comfort, and convenience of its patrons, employees, and
the public" (Public Utilities Code §451). Root cause analyses
need not be subject to attorney-client privilege or attorney
work product doctrine, and they should be available to utility
personnel and regulators to learn from accident and prevent
tragedy from striking again"
ARGUMENTS IN OPPOSITION: CJAC has expressed opposition to
this bill due to concerns that this bill is establishing a
unique and diminished form of attorney-client privilege for
electrical and gas corporations subject to the CPUC requests for
information sets a bad precedent. Further arguing that lawyers
must be able to have frank and confidential communications with
their clients in order to properly represent their interests.
Passage of this bill will encourage subsequent attempts to
diminish evidentiary privileges for other parties in other
venues.
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