BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | SB 1049|
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THIRD READING
Bill No: SB 1049
Author: Hill (D)
Amended: 4/11/16
Vote: 21
SENATE ENERGY, U. & C. COMMITTEE: 11-0, 4/19/16
AYES: Hueso, Morrell, Cannella, Gaines, Hertzberg, Hill, Lara,
Leyva, McGuire, Pavley, Wolk
SENATE APPROPRIATIONS COMMITTEE: Senate Rule 28.8
SUBJECT: Electrical corporations and gas corporations:
accident investigations
SOURCE: Author
DIGEST: This bill requires 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 requires a utility to
provide all measurements and analysis once an incident scene has
been secured or service has been restored.
ANALYSIS:
Existing law:
1) Provides that the 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
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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 in the judgment of the
CPUC requires an investigation by it, and may make such order
or recommendation which in its judgment seems just and
reasonable. (Public Utilities Code §315)
4) Establishes that neither the order nor 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
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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 possession 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 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:
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1)Requires 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)Requires every gas corporation to cooperate fully with the
CPUC in an investigation into any major accident or any
reportable incident concerning 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)Requires 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 or facility in the vicinity of the
incident, including historical, as well as post-incident
measurements, and measurements of instrumentalities of
facilities not owned by the utility, if those measurements
are available.
b) Each and every calculation regarding every
instrumentality or facility in the vicinity of the
incident, including historical, as well as, post incident,
calculations.
c) Each and every analysis regarding the cause, or causes,
of the incident, regardless of whether identified as a root
cause analysis, a causal evaluation, a failure analysis, a
storm register, or identified in some other manner.
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d) Each and every recording or paraphrasing of any
statement by a witness.
Background
In September 2013, Brandon Orozco, age 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 only some of the
circuits in the underground vault. 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 has refused requests to provide the investigation to the
CPUC, although it has provided other information.
According to the CPUC's October 2015 incident investigation
report:
SCE's refusal to provide ESRB [CPUC's Electric Safety and
Reliability Branch (ESRB)] 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 Utilities Code §§314 and
582. [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.]
The CPUC was able to secure some information from the Cal/OSHA
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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 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
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told to the lawyer. [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/profe
ssional_responsibility/confidentiality_or_attorney.authcheckdam
.pdf]
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 to access
facts to inform their investigation. However, attorney-client
privilege provides that no conversations with the utility's
attorney are sought by the CPUC.
2)Work-product doctrine - The utility also refers to the
work-product doctrine, which is more problematic and
challenging for the agency. 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 Public
Utilities Code §316 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 may be housed within 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
attorneys to investigate accidents and assert that information
as protected under attorney-client privilege. The SCE
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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 issue of attorney-client privilege was successfully
litigated in the 2007 Malibu Canyon Fire investigation even
before Public Utilities Code §316 was amended by AB 2584
(Bradford, Chapter 262, Statutes of 2012).
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
additional specified requirements of information that must be
shared by utilities with the CPUC. However, as noted in SCE's
response to the CPUC, assertions 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, does not guarantee that information would be
automatically shared, or shared at all, but it may help to
better position the CPUC in arguing to a judge that it should be
shared.
Applying Public Utilities Code 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 §316 was originally proposed in AB 2584 (Bradford) the
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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.
Prior 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.:YesLocal: Yes
SUPPORT: (Verified5/17/16)
None received
OPPOSITION: (Verified5/18/16)
American Insurance Association
California Chamber of Commerce
Civil Justice Association of California
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
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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:The Civil Justice Association of
California (CJAC) and the American Insurance Association oppose
SB 1049 due to concerns that this bill sets a bad precedent by
establishing a unique and diminished form of attorney-client
privilege for electrical and gas corporations subject to the
CPUC requests for information. They specifically take issue
with this bill's requirements to produce measurements and
calculations that are not related to the incident and this
bill's requirement of electrical or gas corporations to provide
the CPUC access to witness statements and internal analyses,
whether or not they are subject to attorney-client privilege or
the attorney work-product doctrine. CJAC argues that passage of
this bill will encourage subsequent attempts to diminish
evidentiary privileges for other parties in other venues.
Prepared by:Nidia Bautista / E., U., & C. / (916) 651-4107
5/18/16 16:27:55
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