BILL ANALYSIS �
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Date of Hearing: April 28, 2014
ASSEMBLY COMMITTEE ON NATURAL RESOURCES
Wesley Chesbro, Chair
AB 2661 (Bradford) - As Amended: March 28, 2014
SUBJECT : Political Reform Act of 1974: conflicts of
interests: Energy Commission
SUMMARY : Moves the conflict of interest provisions related to
the California Energy Commission (CEC) from the Public Resources
Code (PRC) into the Political Reform Act (PRA). Revises the
limitations on appointments to the CEC if the appointee received
income from a load serving entity in the two years prior to his
or her appointment.
EXISTING LAW :
1)Establishes the CEC, which is comprised of five members
appointed by the Governor, and specifies that the members have
the following backgrounds:
a) One member with a background in the field of engineering
or physical science who has knowledge of energy supply or
conservation systems;
b) One member who is an attorney and a member of the State
Bar of California with administrative law experience;
c) One member with background and experience in the field
of environmental protection or the study of ecosystems;
d) One member who is an economist with a background and
experience in the field of natural resource management;
and,
e) On member from the public at large.
2)Prohibits a person from being a member of the CEC if, during
the two years prior to appointment to the CEC, the person
received any substantial portion of his or her income directly
or indirectly from any electric utility or engaged in the sale
or manufacture of any major component of any facility.
a) Defines "electric utility" to mean any person engaged
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in, or authorized to engage in, generating, transmitting,
or distributing electric power by any facilities,
including, but not limited to, any such person who is
subject to the regulation of the Public Utilities
Commission (PUC).
b) Defines "facility" to mean any electric transmission
line or thermal powerplant, or both electric transmission
line and thermal powerplant, regulated according to
specified provisions of the PRC.
3)Prohibits a person while serving as a member of the CEC, and
for two years after being a member of the CEC, from being
employed by an electric utility or by any person who engages
in the sale or manufacture of any major component of any
facility.
4)Specifies that the Secretary of the Resources Agency and the
President of the PUC are ex officio members of the CEC and,
with the exception of these two positions, prohibits members
of the CEC from holding any other elected or appointed public
office or position.
5)Creates the Fair Political Practices Commission (FPPC) and
makes it responsible for the impartial, effective
administration, and implementation of the PRA.
6)Prohibits a public official, pursuant to the PRA, from making,
participating in making, or in any way attempting to use his
or her official position to influence a governmental decision
in which the official has a financial interest.
7)Provides that violations of the PRA are subject to criminal,
civil, and administrative penalties.
THIS BILL :
1)Moves the following conflict of interest provisions that are
applicable to the CEC from the PRC to the PRA, and gives the
FPPC, instead of the Attorney General, the authority to waive
these provisions if the interest is not sufficiently
substantial to affect the integrity of services that the state
may expect:
a) Prohibits a person from being a member of the CEC if,
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during the two years prior to appointment to the CEC, the
person received any substantial portion of his or her
income directly or indirectly from any electric utility or
engages in the sale or manufacture of any major component
of any facility.
b) Prohibits members of the CEC from holding any other
elected or appointed public office or position.
c) Prohibits members and employees of the CEC from
maintaining specified relationships with any person who
acts as an attorney, agent, or employee for a person, other
than the state, in connection with a matter in which the
CEC is a party or has a direct and substantial interest.
2)Expands the prohibition described in (1)(a) above, by
additionally prohibiting the appointment of an individual who
received a substantial portion of his or her income directly
or indirectly from any load serving entity, as defined, or
from any person engaged in or authorized to engage in
generating, transmitting, or distributing electricity in the
state.
3)Repeals the prohibition on a member or employee participating
personally and substantially in his or her official capacity
in a proceeding in which any of the following has a direct or
indirect financial interest:
i) The member or employee;
ii) The member or employee's spouse or minor child;
iii) The member or employee's partner; or,
iv) An organization for which the following are true:
(1) The organization is not a governmental
organization or an educational or research institution
that qualifies as a nonprofit organization; and,
(2) The member or employee is serving or has
served as an officer, director, trustee, partner, or
employee while serving as a member or employee of the
CEC or, for members of the CEC, during the two year
period prior to the member's appointment.
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4)Defines the following terms:
a) "Facility" as the structure or equipment necessary for
generating, transmitting, or distributing electricity,
including electric transmission lines and thermal, wind,
hydroelectric, and photovoltaic plants.
b) "Load serving entity" to mean a person, including an
electrical corporation, electric service provider, or
community choice aggregator, who sells or provides, or is
authorized to sell or provide, electricity to end users
located in the state.
c) "Major component" to mean any product or equipment
integral to facility construction or operation or to
electrical generation, transmission, or distribution.
5)Provides that the term "income," for the purposes of the
conflict of interest provisions that are specific to the CEC,
includes the following payments that are not otherwise
considered income for the purposes of the PRA: salary and
reimbursement for expenses or per diem; social security,
disability, or other similar benefit payments received from a
state, local, or federal government agency; and, reimbursement
for travel expenses and per diem received from a nonprofit
entity exempt from taxation under Section 501(c)(3) of the
Internal Revenue Code.
FISCAL EFFECT : Unknown
COMMENTS :
1)This bill . According to the author:
PRC Section 25205 specifies conflicts of interest and
incompatible activities only applicable to
Commissioners of the [CEC]. The section was adopted
when the CEC was established, in 1974, prior to
statutes that created competitive electricity markets.
Also in 1974, voters enacted the Political Reform Act
(Government Code sections 81000 et seq.), which along
with other later-enacted statutes addresses the same
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issues that are the focus of PRC Section 25205:
prohibiting financial conflicts of interests of public
officials in public contracting; post-agency
employment; and, prohibiting the holding of
incompatible public offices.
PRC Section 25205 is exceedingly vague and, therefore,
difficult to interpret. As a result, CEC
Commissioners decline to participate in matters that
the language of the statute may prohibit, but where no
actual conflict exists.
PRC Section 25205 may have made sense at the time of
its adoption, but the subsequent adoption and
development of generally-applicable conflicts law,
shifts in the electricity market structure, and the
ambiguity of many of its terms render it obsolete.
2)Background on the CEC . The CEC was created by the Legislature
in 1974 as the state's primary energy policy and planning
agency. The CEC's responsibilities include: forecasting
future energy needs; setting appliance and building efficiency
standards; supporting energy research; developing renewable
energy resources and alternative renewable energy technologies
for buildings, industry and transportation; licensing thermal
power plants 50 megawatts or larger; and, planning for and
directing state response to energy emergencies. The CEC,
collaboratively with the PUC, is also tasked with implementing
the state's Renewables Portfolio Standard (RPS), which
requires investor-owned utilities (IOUs) and retail sellers of
electricity, as specified, to achieve a 33 percent renewable
energy portfolio by 2020 and establishes a detailed process
and standards for renewable energy procurement.
When the CEC was created with specific conflict of interest
requirements, the FPPC did not yet exist, and the state did
not have the conflict of interest rules that were enacted in
the PRA. The PRC was voted into law through Proposition 9 in
June 1974, just weeks after the CEC was created. In addition
to its own conflict of interest rules, the conflict of
interest provisions in the PRA apply generally to all public
officials and public agencies, including the CEC.
This bill moves the majority of the CEC's conflict of interest
requirements to the PRA. This move will give the FPPC
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jurisdiction over the enforcement and interpretation of the
CEC's conflict rules. Additionally, violations of the CEC's
conflict of interest rules will no longer be subject only to
felony penalties and will instead be subject to the same
penalties that apply to other violations of the PRA, namely
misdemeanor criminal penalties, or civil or administrative
fines. This bill also broadens existing restrictions on who
can become a member of the CEC to include former employees of
entities that sell or manufacture any major component of
electric transmission lines and thermal, wind, hydroelectric,
and photovoltaic plants.
3)Double-Referral . This bill was heard in the Assembly
Elections and Redistricting Committee on April 22nd where it
passed with a vote of 6-0. Due to committee deadlines,
Elections and Redistricting Committee deferred the adoption of
committee amendments this committee. The amendments specify
that a person is prohibited from being appointed to the CEC
only if that person receives a substantial portion of his or
her income from an entity that receives a substantial portion
of its income from energy-related activities.
REGISTERED SUPPORT / OPPOSITION :
Support
None on file
Opposition
None on file
Analysis Prepared by : Elizabeth MacMillan / NAT. RES. / (916)
319-2092