BILL ANALYSIS Ó ----------------------------------------------------------------- |SENATE RULES COMMITTEE | SB 1049| |Office of Senate Floor Analyses | | |(916) 651-1520 Fax: (916) | | |327-4478 | | ----------------------------------------------------------------- THIRD READING Bill No: SB 1049 Author: Hill (D) Amended: 5/27/16 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 facts, information, or documents that concern, discuss, or analyze an accident that is not subject to attorney client privilege or attorney work product doctrine. Senate Floor Amendments of 5/27/16 more clearly provide that a utility may not withhold documents related to an accident investigation on the basis that the document/information has been referenced in communication with counsel. The amendments address concerns expressed by opponents regarding references to the utility's own analysis and investigation of the accident. SB 1049 Page 2 The amendments further remove language that was not clearly defined, such as "storm register." 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 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 SB 1049 Page 3 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 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: SB 1049 Page 4 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 any and all documents under the electrical or gas corporation's control that are related to the incident and are not subject to attorney-client privilege or the attorney work product doctrine, in addition to other statutorily required documents. 4) Requires that facts, information, or documents that concern, discuss or analyze an accident for a failure involving utility facilities, but that themselves are not privileged or subject to the attorney work product doctrine, may not be withheld from the CPUC on the basis that they are or were referenced in a communication with counsel or incorporated into an attorney's work product. 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 SB 1049 Page 5 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's 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 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. SB 1049 Page 6 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 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 - according to the CPUC, claims by a utility of attorney work product doctrine can be more SB 1049 Page 7 problematic and challenging for the CPUC to overcome. 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. 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 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. 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. 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 prior to the amendments of Public Utilities Code §316 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 SB 1049 Page 8 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. This bill, as drafted, does not guarantee that CPUC requested information would be automatically shared by a utility during an accident investigation, or shared at al. However, the bill may help to better position the CPUC in arguing to a judge that specified information related to an investigation or outage should be shared. Applying Public Utilities Code §316 More Broadly. The current statute limits the investigation requirements of Public Utilities Code §316 to overhead electric facilities. However, it makes 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 which is the premise for this bill. When §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. Related/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: (Verified5/31/16) None received SB 1049 Page 9 OPPOSITION: (Verified6/1/16) None received 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." Prepared by:Nidia Bautista / E., U., & C. / (916) 651-4107 6/1/16 10:50:31 **** END ****