SB 18: Public Utilities Commission: outside counsel.
- Session Year: 2015-2016
- House: Senate
- Latest Version Date: 2015-09-16
The Public Utilities Act authorizes the Public Utilities Commission to appoint an attorney for the commission who holds that office at the pleasure of the commission. The act requires the attorney to represent and appear for the people and the commission in all actions and proceedings involving any question under the act or under any order or act of the commission. The act requires the attorney to commence, prosecute, and expedite the final determination of all actions and proceedings directed or authorized by the president, except as otherwise directed or authorized by vote of the commission, to advise the commission and each commissioner in regard to all matters in connection with the powers and duties of the commission or a commissioner, when requested, and generally to perform all duties and services as attorney to the commission that the president, or vote of the commission, may require of him or her.
This bill would require that any contract or other agreement by the commission for services by outside legal counsel to represent the commission in a criminal investigation initiated by any federal, state, or local agency be approved by a vote of the commission no sooner than 30 days after it is submitted to the Joint Legislative Budget Committee for review.
The Public Utilities Act authorizes the Public Utilities Commission to appoint an attorney for the commission who holds that office at the pleasure of the commission. The act requires the attorney to represent and appear for the people and the commission in all actions and proceedings involving any question under the act or under any order or act of the commission. The act requires the attorney to commence, prosecute, and expedite the final determination of all actions and proceedings directed or authorized by the president, except as otherwise directed or authorized by vote of the commission, to advise the commission and each commissioner in regard to all matters in connection with the powers and duties of the commission or a commissioner, when requested, and generally, to perform all duties and services as attorney to the commission that the president, or vote of the commission, may require of him or her.
This bill would require that any contract or other agreement by the commission for services by outside legal counsel to represent the commission in a criminal investigation initiated by any federal, state, or local agency be approved by a vote of the commission no sooner than 30 days after it is submitted to the Joint Legislative Budget Committee for review.
The Public Utilities Act authorizes the Public Utilities Commission to appoint an attorney for the commission who holds that office at the pleasure of the commission. The act requires the attorney to represent and appear for the people and the commission in all actions and proceedings involving any question under the act or under any order or act of the commission. The act requires the attorney to commence, prosecute, and expedite the final determination of all actions and proceedings directed or authorized by the president, except as otherwise directed or authorized by vote of the commission, to advise the commission and each commissioner in regard to all matters in connection with the powers and duties of the commission or a commissioner, when requested, and generally, to perform all duties and services as attorney to the commission that the president, or vote of the commission, may require of him or her.
This bill would require that any contract or other agreement by the commission for services by outside legal counsel to represent the commission in a criminal investigation initiated by any federal, state, or local agency be approved by a vote of the commission and be subject to a 30-day review by no sooner than 30 days after it is submitted to the Joint Legislative Budget Committee before the agreement is entered into. for review.
The Public Utilities Act authorizes the Public Utilities Commission to appoint an attorney for the commission who holds that office at the pleasure of the commission. The act requires the attorney to represent and appear for the people and the commission in all actions and proceedings involving any question under the act or under any order or act of the commission. The act requires the attorney to commence, prosecute, and expedite the final determination of all actions and proceedings directed or authorized by the president, except as otherwise directed or authorized by vote of the commission, to advise the commission and each commissioner in regard to all matters in connection with the powers and duties of the commission or a commissioner, when requested, and generally, to perform all duties and services as attorney to the commission that the president, or vote of the commission, may require of him or her.
This bill would require that any contract or other agreement by the commission for services by outside legal counsel with respect to a criminal matter to represent the commission in a criminal investigation initiated by any federal, state, or local agency be approved by a vote of the commission and be subject to a 30-day review by the Joint Legislative Budget Committee before the agreement is entered into.
The Public Utilities Act authorizes the Public Utilities Commission to appoint an attorney for the commission who holds that office at the pleasure of the commission. The act requires the attorney to represent and appear for the people and the commission in all actions and proceedings involving any question under the act or under any order or act of the commission. The act requires the attorney to commence, prosecute, and expedite the final determination of all actions and proceedings directed or authorized by the president, except as otherwise directed or authorized by vote of the commission, to advise the commission and each commissioner in regard to all matters in connection with the powers and duties of the commission or a commissioner, when requested, and generally, to perform all duties and services as attorney to the commission that the president, or vote of the commission, may require of him or her.
This bill would require that any contract or other agreement by the commission for services by outside legal counsel with respect to a criminal matter be approved by a vote of the commission and be subject to a 30-day review by the Joint Legislative Budget Committee before the agreement is entered into.
The Public Utilities Act authorizes the Public Utilities Commission to appoint an attorney for the commission who holds that office at the pleasure of the commission. The act requires the attorney to represent and appear for the people and the commission in all actions and proceedings involving any question under the act or under any order or act of the commission. The act requires the attorney to commence, prosecute, and expedite the final determination of all actions and proceedings directed or authorized by the president, except as otherwise directed or authorized by vote of the commission, to advise the commission and each commissioner in regard to all matters in connection with the powers and duties of the commission or a commissioner, when requested, and generally, to perform all duties and services as attorney to the commission that the president, or vote of the commission, may require of him or her.
This bill would require that any contract or other agreement by the commission for services by outside legal counsel with respect to a criminal matter be subject to a 30-day review by the Joint Legislative Budget Committee before the agreement is entered into.
Under existing law, the Public Utilities Commission has regulatory authority over public utilities, as defined. The Public Utilities Act requires the commission to investigate the cause of all accidents occurring upon the property of any public utility 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 judgment of the commission, investigation by it, and authorizes the commission to make any order or recommendation with respect to the investigation that it determines to be just and reasonable. The act provides that any public utility that violates any provision of the California Constitution or the act, or that fails or neglects to comply with any order, decision, decree, rule, direction, demand, or requirement of the commission, where a penalty has not otherwise been provided, is subject to a penalty of not less than $500 and not more than $50,000 for each offense. Existing law requires that any fine or penalty imposed by the commission and collected from a public utility be paid to the State Treasury to the credit of the General Fund. The act includes provisions that are specific to gas corporations that involve safety standards for pipeline facilities or the transportation of gas in the state.
This bill would revise the provisions that are specific to gas corporations that involve safety standards for pipeline facilities or the transportation of gas in the state, to authorize the commission to order that all or a portion of a fine or penalty levied against a gas corporation in three specified proceedings be held in a separate account by the gas corporation to offset investments for pipeline replacement to be undertaken within the service territory of the corporation that would otherwise be recovered from the corporations ratepayers. The bill would require that moneys ordered by the commission to be held in a separate account be used only for the purpose of offsetting investments by the gas corporation for pipeline replacement to be undertaken within the service territory of the corporation, and only if the investments would otherwise be recovered in rates from the utilitys ratepayers. The bill would require that any moneys not used for these purposes be paid to the General Fund 5 years after the date of their deposit into the account. The bill would require the commission to allocate $30,000,000 from the separate account to fund an independent monitor for a period of no less than 5 years to oversee the pipeline operations of the gas corporation and the effectiveness of the commissions regulatory oversight of those pipeline operations and would require the commission to allocate $50,000,000 in seed money from the separate account to fund the operations of a pipeline safety trust. By authorizing specified uses of state penalty moneys, this bill would make an appropriation. The bill would also require the commission to allocate $300,000,000 from the separate account to the General Fund. The bill would authorize the commission to adjust the above-described allocations from the separate account if the fines and penalties levied against the gas corporation in the three specified proceedings are less than $950,000,000 in total.
This bill would establish the California Underground Facilities Safe Excavation Authority. The bill would create the Safe Energy Infrastructure and Excavation Fund in the State Treasury and would provide that moneys deposited into the fund are to be used to cover the administrative expenses of the authority, upon appropriation by the Legislature. The bill would authorize the commission to use excess moneys in the fund for specified purposes relating to the safety of underground utilities, upon appropriation by the Legislature.
Existing law requires the commission to develop and implement a safety enforcement program that is applicable to gas corporations and electrical corporations and that includes procedures for monitoring, data tracking and analysis, and investigations, as well as issuance of citations by commission staff, under the direction of the executive director of the commission, for correction and punishment of safety violations. That law requires the commission to develop and implement an appeals process to govern issuance and appeal of citations, or resolution of corrective action orders. That law requires the commission to implement the safety enforcement program for gas safety by July 1, 2014, and for electrical safety by January 1, 2015.
This bill would require that moneys collected as a result of the issuance of citations to gas corporations and electrical corporations pursuant to the above-described law be deposited in the Safe Energy Infrastructure and Excavation Fund.
This bill would declare that it is to take effect immediately as an urgency statute.
Under existing law, the Public Utilities Commission has regulatory authority over public utilities, as defined. The Public Utilities Act requires the commission to investigate the cause of all accidents occurring upon the property of any public utility 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 judgment of the commission, investigation by it, and authorizes the commission to make any order or recommendation with respect to the investigation that it determines to be just and reasonable. The act provides that any public utility that violates any provision of the California Constitution or the act, or that fails or neglects to comply with any order, decision, decree, rule, direction, demand, or requirement of the commission, where a penalty has not otherwise been provided, is subject to a penalty of not less than $500 and not more than $50,000 for each offense. Existing law requires that any fine or penalty imposed by the commission and collected from a public utility be paid to the State Treasury to the credit of the General Fund. The act includes provisions that are specific to gas corporations that involve safety standards for pipeline facilities or the transportation of gas in the state.
This bill would revise the provisions that are specific to gas corporations that involve safety standards for pipeline facilities or the transportation of gas in the state, to authorize the commission to order that all or a portion of a fine or penalty levied against a gas corporation in three specified proceedings be held in a separate account by the gas corporation to offset investments for pipeline replacement to be undertaken within the service territory of the corporation that would otherwise be recovered from the corporations ratepayers. The bill would require that moneys ordered by the commission to be held in a separate account be used only for the purpose of offsetting investments by the gas corporation for pipeline replacement to be undertaken within the service territory of the corporation, and only if the investments would otherwise be recovered in rates from the utilitys ratepayers. The bill would require that any moneys not used for these purposes be paid to the General Fund 5 years after the date of their deposit into the account. The bill would require the commission to allocate $30,000,000 from the separate account to fund an independent monitor for a period of no less than 5 years to oversee the pipeline operations of the gas corporation and the effectiveness of the commissions regulatory oversight of those pipeline operations and would require the commission to allocate $50,000,000 in seed money from the separate account to fund the operations of a pipeline safety trust. By authorizing specified uses of state penalty moneys, this bill would make an appropriation. The bill would also require the commission to allocate $300,000,000 from the separate account to the General Fund. The bill would authorize the commission to adjust the above-described allocations from the separate account if the fines and penalties levied against the gas corporation in the three specified proceedings are less than $950,000,000 in total.
This bill would establish the California Underground Facilities Safe Excavation Authority. The bill would create the Safe Energy Infrastructure and Excavation Fund in the State Treasury and would provide that moneys deposited into the fund are to be used to cover the administrative expenses of the authority, upon appropriation by the Legislature. The bill would authorize the commission to use excess moneys in the fund for specified purposes relating to the safety of underground utilities, upon appropriation by the Legislature.
Existing law requires the commission to develop and implement a safety enforcement program that is applicable to gas corporations and electrical corporations and that includes procedures for monitoring, data tracking and analysis, and investigations, as well as issuance of citations by commission staff, under the direction of the executive director of the commission, for correction and punishment of safety violations. That law requires the commission to develop and implement an appeals process to govern issuance and appeal of citations, or resolution of corrective action orders. That law requires the commission to implement the safety enforcement program for gas safety by July 1, 2014, and for electrical safety by January 1, 2015.
This bill would require that moneys collected as a result of the issuance of citations to gas corporations and electrical corporations pursuant to the above-described law be deposited in the Safe Energy Infrastructure and Excavation Fund.
This bill would declare that it is to take effect immediately as an urgency statute.
Under existing law, the Public Utilities Commission has regulatory authority over public utilities, as defined. The Public Utilities Act requires the commission to investigate the cause of all accidents occurring upon the property of any public utility 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 judgment of the commission, investigation by it, and authorizes the commission to make any order or recommendation with respect to the investigation that it determines to be just and reasonable. The act provides that any public utility that violates any provision of the California Constitution or the act, or that fails or neglects to comply with any order, decision, decree, rule, direction, demand, or requirement of the commission, where a penalty has not otherwise been provided, is subject to a penalty of not less than $500 and not more than $50,000 for each offense. Existing law requires that any fine or penalty imposed by the commission and collected from a public utility be paid to the State Treasury to the credit of the General Fund. The act includes provisions that are specific to gas corporations that involve safety standards for pipeline facilities or the transportation of gas in the state.
This bill would revise the provisions that are specific to gas corporations that involve safety standards for pipeline facilities or the transportation of gas in the state, to authorize the commission to order that all or a portion of a fine or penalty levied against a gas corporation in three specified proceedings be held in a separate account by the gas corporation to offset investments for pipeline replacement to be undertaken within the service territory of the corporation that would otherwise be recovered from the corporations ratepayers. The bill would require that moneys ordered by the commission to be held in a separate account be used only for the purpose of offsetting investments by the gas corporation for pipeline replacement to be undertaken within the service territory of the corporation, and only if the investments would otherwise be recovered in rates from the utilitys ratepayers. The bill would require that any moneys not used for these purposes be paid to the General Fund 5 years after the date of their deposit into the account. The bill would require the commission to allocate $30,000,000 from the separate account to fund an independent monitor for a period of no less than 5 years to oversee the pipeline operations of the gas corporation and the effectiveness of the commissions regulatory oversight of those pipeline operations and would require the commission to allocate $50,000,000 in seed money from the separate account to fund the operations of a pipeline safety trust. By authorizing specified uses of state penalty moneys, this bill would make an appropriation. The bill would also require the commission to allocate $300,000,000 from the separate account to the General Fund. The bill would authorize the commission to adjust the above-described allocations from the separate account if the fines and penalties levied against the gas corporation in the three specified proceedings are less than $950,000,000 in total.
This bill would declare that it is to take effect immediately as an urgency statute.
(a)Any contract or other agreement by the commission for services by outside legal counsel to represent the commission in a criminal investigation initiated by any federal, state, or local agency shall be approved by a vote of the commission no sooner than 30 days after the contract or agreement is submitted to the Joint Legislative Budget Committee for review.
(b)Any contract or other agreement submitted to the Joint Legislative Budget Committee for review and to be voted on by the commission pursuant to subdivision (a) shall be accompanied by all of the following information:
(1)The funds that the commission will use to pay for these services.
(2)Whether the commission has followed all of the laws and procedures applicable to contracting for legal services.
(3)Whether, and to what degree, existing programs and operations of the commission will be affected.
(a)Any contract or other agreement by the commission for services by outside legal counsel to represent the commission in a criminal investigation initiated by any federal, state, or local agency shall be approved by a vote of the commission no sooner than 30 days after the contract or agreement is submitted to the Joint Legislative Budget Committee for review.
(b)Any contract or other agreement submitted to the Joint Legislative Budget Committee for review and to be voted on by the commission pursuant to subdivision (a) shall include be accompanied by all of the following information:
(1)The funds that the commission will use to pay for these services.
(2)Whether the commission has followed all of the laws and procedures applicable to contracting for legal services.
(3)Whether, and to what degree, existing programs and operations of the commission will be affected.
(a)Any contract or other agreement by the commission for services by outside legal counsel to represent the commission in a criminal investigation initiated by any federal, state, or local agency shall be approved by a vote of the commission and subject to a 30-day review by no sooner than 30 days after the contract or agreement is submitted to the Joint Legislative Budget Committee before the agreement is entered into. for review.
(b)The Joint Legislative Budget Committee, as part of its review, shall consider Any contract or other agreement submitted to the Joint Legislative Budget Committee for review and to be voted on by the commission pursuant to subdivision (a) shall include all of the following information:
(1)The funds that the commission will use to pay for these services.
(2)Whether the commission has followed all of the laws and procedures applicable to contracting for legal services.
(3)Whether, and to what degree, existing programs and operations of the commission will be affected.
(a)Any contract or other agreement by the commission for services by outside legal counsel with respect to a criminal matter to represent the commission in a criminal investigation initiated by any federal, state, or local agency shall be approved by a vote of the commission and subject to a 30-day review by the Joint Legislative Budget Committee before the agreement is entered into.
(b)The Joint Legislative Budget Committee, as part of its review, shall consider all of the following:
(1)The funds that the commission will use to pay for these services.
(2)Whether the commission has followed all of the laws and procedures applicable to contracting for legal services.
(3)Whether, and to what degree, existing programs and operations of the commission will be affected.
(a)Any contract or other agreement by the commission for services by outside legal counsel with respect to a criminal matter shall be approved by a vote of the commission and subject to a 30-day review by the Joint Legislative Budget Committee before the agreement is entered into.
(b)The Joint Legislative Budget Committee, as part of its review, shall consider all of the following:
(1)The funds that the commission will use to pay for these services.
(2)Whether the commission has followed all of the laws and procedures applicable to contracting for legal services.
(3)Whether, and to what degree, existing programs and operations of the commission will be affected.
Any contract or other agreement by the commission for services by outside legal counsel with respect to a criminal matter shall be subject to a 30-day review by the Joint Legislative Budget Committee before the agreement is entered into.
SECTION 1.Section 4216.11 is added to the Government Code, to read:4216.11.The California Underground Facilities Safe Excavation Authority is hereby created.
SEC. 2.Section 320.5 is added to the Public Utilities Code, to read:320.5.(a)The Safe Energy Infrastructure and Excavation Fund is hereby established in the State Treasury. Moneys deposited into the fund shall be used to cover the administrative expenses of the California Underground Facilities Safe Excavation Authority, upon appropriation by the Legislature.
(b)Any excess moneys in the fund that are not necessary for the administrative expenses of the California Underground Facilities Safe Excavation Authority may, upon appropriation by the Legislature, be apportioned by the commission for the following purposes:
(1)The California Underground Facilities Safe Excavation Authority, for the purpose of the education and training of persons who violate Article 2 (commencing with Section 4216) of Chapter 3.1 of Division 5 of Title 1 of the Government Code.
(2)Regional notification centers, as defined in Section 4216 of the Government Code, to cover the cost of public education and outreach programs designed to promote excavation safety around underground facilities.
(3)The commission, to further a workforce development program, which shall be consistent with its equal employment opportunity program, that recruits and trains safety staff to perform the highest quality gas and electric utility inspections, audits, accident investigations, and data tracking and analysis. The commission may only apportion moneys for this purpose upon commission approval of the workforce development program at a meeting of the commission.
SEC. 3.Section 1702.5 of the Public Utilities Code is amended to read:1702.5.(a)The commission shall, in an existing or new proceeding, develop and implement a safety enforcement program applicable to gas corporations and electrical corporations which includes procedures for monitoring, data tracking and analysis, and investigations, as well as issuance of citations by commission staff, under the direction of the executive director. The enforcement program shall be designed to improve gas and electrical system safety through the enforcement of applicable law, or order or rule of the commission related to safety using a variety of enforcement mechanisms, including the issuance of corrective actions, orders, and citations by designated commission staff, and recommendations for action made to the commission by designated commission staff.
(1)When considering the issuance of citations and assessment of penalties, the commission staff shall take into account voluntary reporting of potential violations, voluntary removal or resolution efforts undertaken, the prior history of violations, the gravity of the violation, and the degree of culpability.
(2)The procedures shall include, but are not limited to, providing notice of violation within a reasonable period of time after the discovery of the violation.
(3)The commission shall adopt an administrative limit on the amount of monetary penalty that may be set by commission staff.
(b)The commission shall develop and implement an appeals process to govern the issuance and appeal of citations or resolution of corrective action orders issued by the commission staff. The appeals process shall provide the respondent a reasonable period of time, upon receiving a citation, to file a notice of appeal, shall afford an opportunity for a hearing, and shall require the hearing officer to expeditiously provide a draft disposition.
(c)The commission shall, within a reasonable time set by the commission, conclude a safety enforcement action with a finding of violation, a corrective action order, a citation, a determination of no violation, approval of the corrective actions undertaken by the gas corporation or electrical corporation, or other action. The commission may institute a formal proceeding regarding the alleged violation, potentially resulting in additional enforcement action, regardless of any enforcement action taken at the commission staff level.
(d)The commission shall implement the safety enforcement program for gas safety by July 1, 2014, and implement the safety enforcement program for electrical safety no later than January 1, 2015.
(e)This section does not apply to an exempt wholesale generator, a qualifying small power producer, or qualifying cogenerator, as defined in Section 796 of Title 16 of the United States Code and the regulations enacted pursuant thereto. Nothing in this section affects the commissions authority pursuant to Section 761.3.
(f)Moneys collected as a result of the issuance of citations pursuant to this section shall be deposited in the Safe Energy Infrastructure and Excavation Fund.
SEC. 4.Section 2104 of the Public Utilities Code is amended to read:2104.(a)Except as provided by Sections 2100 and 2107.5, actions to recover penalties under this part shall be brought in the name of the people of the State of California, in the superior court in and for the county, or city and county, in which the cause or some part thereof arose, or in which the corporation complained of has its principal place of business, or in which the person complained of resides. The action shall be commenced and prosecuted to final judgment by the attorney or agent of the commission. All fines and penalties may be sued for and recovered. The commission may enjoin the sale of a public utilitys or common carriers assets to satisfy unpaid fines and penalties. The commission may use any of the remedies afforded to a creditor under the Uniform Fraudulent Transfer Act (Chapter 1 (commencing with Section 3439) of Title 2 of Part 2 of Division 4 of the Civil Code). Respondents who fraudulently transfer assets to avoid paying commission-imposed fines or penalties are subject to prosecution under Sections 154, 531, and 531a of the Penal Code. In all of these actions, the procedure and rules of evidence shall be the same as in ordinary civil actions, except for prosecutions under the Penal Code or as otherwise herein provided. Except as provided in Sections 1702.5 and 2104.5, all fines and penalties recovered by the state in any action, together with the costs thereof, shall be paid into the State Treasury to the credit of the General Fund. Any action may be compromised or discontinued on application of the commission upon the terms the court approves and orders.
(b)This section shall become operative on January 1, 2014.
SEC. 5.Section 2104.5 of the Public Utilities Code is amended to read:2104.5.(a) Any penalty for violation of any provision of this act, or of any rule, regulation, general order, or order of the commission, involving safety standards for pipeline facilities or the transportation of gas in the State of California, may be compromised by the commission. In determining the amount of the penalty, or the amount agreed upon in compromise, the appropriateness of the penalty to the size of the business of the person charged, the gravity of the violation, and the good faith of the person charged in attempting to achieve compliance, after notification of a violation, shall be considered. The amount of any penalty, when finally determined, or the amount agreed upon in compromise, may be recovered in a civil action in the name of the people of the State of California in the superior court in and for the county, or city and county in which the cause or some part thereof arose, or in which the corporation complained of has its principal place of business or the person complained of resides. In any such action, all penalties incurred, or amounts agreed upon in compromise for violations committed up to the time of commencing the action, may be sued for and recovered. In all those actions, the procedure and rules of evidence shall be the same as in ordinary civil actions, except as otherwise herein provided. All fines and penalties recovered by the state in any action, together with the costs thereof, shall be paid into the State Treasury to the credit of the General Fund, except upon order of the commission pursuant to subdivision (b) or as described in Section 1702.5.
(b)The commission shall order that any fine or penalty levied against a gas corporation in Investigation 11-02-016, Investigation 11-11-009, or Investigation 12-01-007, be held in a separate account by the gas corporation to offset investments for pipeline replacement to be undertaken within the service territory of the corporation and that would otherwise be recovered from the corporations ratepayers.
(c)The commission shall set a rate of interest for an account established pursuant to subdivision (b).
(d)Any moneys ordered by the commission to be held in a separate account pursuant to subdivision (b) shall be used only for the purpose of offsetting investments by the gas corporation for pipeline replacement to be undertaken within the service territory of the corporation, and only if the investments would otherwise be recovered in rates from the utilitys ratepayers. Any moneys not used for these purposes shall, five years after the date of their deposit into the account, be paid to the General Fund.
(e)Notwithstanding subdivision (d), funds held in a separate account pursuant to subdivision (b) shall be allocated by the commission in the following manner:
(1)Thirty million dollars ($30,000,000) to fund an independent monitor for a period of no less than five years to oversee both the pipeline operations of the gas corporation described in subdivision (b) and the effectiveness of the commissions regulatory oversight of those pipeline operations.
(2)Fifty million dollars ($50,000,000) in seed money to fund the operations of a pipeline safety trust to represent and advocate on behalf of the interests of the public utility customers and subscribers within the jurisdiction of the commission in all appropriate venues.
(3)Three hundred million dollars ($300,000,000) to the General Fund.
(f)If any fines or penalties levied against a gas corporation pursuant to the investigations specified in subdivision (b) are less than nine hundred fifty million dollars ($950,000,000) in total, the commission may adjust the amount of the allocations specified in subdivision (e).
SEC. 6.This act is an urgency statute necessary for the immediate preservation of the public peace, health, or safety within the meaning of Article IV of the Constitution and shall go into immediate effect. The facts constituting the necessity are:
In order to address and resolve significant financial issues presented by ongoing proceedings before the Public Utilities Commission and to provide funding necessary to protect the public health and safety, it is necessary for this act to take effect immediately.
The California Underground Facilities Safe Excavation Authority is hereby created.
SEC. 2.Section 320.5 is added to the Public Utilities Code, to read:320.5.(a)The Safe Energy Infrastructure and Excavation Fund is hereby established in the State Treasury. Moneys deposited into the fund shall be used to cover the administrative expenses of the California Underground Facilities Safe Excavation Authority, upon appropriation by the Legislature.
(b)Any excess moneys in the fund that are not necessary for the administrative expenses of the California Underground Facilities Safe Excavation Authority may, upon appropriation by the Legislature, be apportioned by the commission for the following purposes:
(1)The California Underground Facilities Safe Excavation Authority, for the purpose of the education and training of persons who violate Article 2 (commencing with Section 4216) of Chapter 3.1 of Division 5 of Title 1 of the Government Code.
(2)Regional notification centers, as defined in Section 4216 of the Government Code, to cover the cost of public education and outreach programs designed to promote excavation safety around underground facilities.
(3)The commission, to further a workforce development program, which shall be consistent with its equal employment opportunity program, that recruits and trains safety staff to perform the highest quality gas and electric utility inspections, audits, accident investigations, and data tracking and analysis. The commission may only apportion moneys for this purpose upon commission approval of the workforce development program at a meeting of the commission.
SEC. 3.Section 1702.5 of the Public Utilities Code is amended to read:1702.5.(a)The commission shall, in an existing or new proceeding, develop and implement a safety enforcement program applicable to gas corporations and electrical corporations which includes procedures for monitoring, data tracking and analysis, and investigations, as well as issuance of citations by commission staff, under the direction of the executive director. The enforcement program shall be designed to improve gas and electrical system safety through the enforcement of applicable law, or order or rule of the commission related to safety using a variety of enforcement mechanisms, including the issuance of corrective actions, orders, and citations by designated commission staff, and recommendations for action made to the commission by designated commission staff.
(1)When considering the issuance of citations and assessment of penalties, the commission staff shall take into account voluntary reporting of potential violations, voluntary removal or resolution efforts undertaken, the prior history of violations, the gravity of the violation, and the degree of culpability.
(2)The procedures shall include, but are not limited to, providing notice of violation within a reasonable period of time after the discovery of the violation.
(3)The commission shall adopt an administrative limit on the amount of monetary penalty that may be set by commission staff.
(b)The commission shall develop and implement an appeals process to govern the issuance and appeal of citations or resolution of corrective action orders issued by the commission staff. The appeals process shall provide the respondent a reasonable period of time, upon receiving a citation, to file a notice of appeal, shall afford an opportunity for a hearing, and shall require the hearing officer to expeditiously provide a draft disposition.
(c)The commission shall, within a reasonable time set by the commission, conclude a safety enforcement action with a finding of violation, a corrective action order, a citation, a determination of no violation, approval of the corrective actions undertaken by the gas corporation or electrical corporation, or other action. The commission may institute a formal proceeding regarding the alleged violation, potentially resulting in additional enforcement action, regardless of any enforcement action taken at the commission staff level.
(d)The commission shall implement the safety enforcement program for gas safety by July 1, 2014, and implement the safety enforcement program for electrical safety no later than January 1, 2015.
(e)This section does not apply to an exempt wholesale generator, a qualifying small power producer, or qualifying cogenerator, as defined in Section 796 of Title 16 of the United States Code and the regulations enacted pursuant thereto. Nothing in this section affects the commissions authority pursuant to Section 761.3.
(f)Moneys collected as a result of the issuance of citations pursuant to this section shall be deposited in the Safe Energy Infrastructure and Excavation Fund.
SECTION 1.SEC. 4.Section 2104 of the Public Utilities Code is amended to read:2104.(a)Except as provided by Sections 2100 and 2107.5, actions to recover penalties under this part shall be brought in the name of the people of the State of California, in the superior court in and for the county, or city and county, in which the cause or some part thereof arose, or in which the corporation complained of has its principal place of business, or in which the person complained of resides. The action shall be commenced and prosecuted to final judgment by the attorney or agent of the commission. All fines and penalties may be sued for and recovered. The commission may enjoin the sale of a public utilitys or common carriers assets to satisfy unpaid fines and penalties. The commission may use any of the remedies afforded to a creditor under the Uniform Fraudulent Transfer Act (Chapter 1 (commencing with Section 3439) of Title 2 of Part 2 of Division 4 of the Civil Code). Respondents who fraudulently transfer assets to avoid paying commission-imposed fines or penalties are subject to prosecution under Sections 154, 531, and 531a of the Penal Code. In all of these actions, the procedure and rules of evidence shall be the same as in ordinary civil actions, except for prosecutions under the Penal Code or as otherwise herein provided. Except as provided in Section Sections 1702.5 and 2104.5, all fines and penalties recovered by the state in any action, together with the costs thereof, shall be paid into the State Treasury to the credit of the General Fund. Any action may be compromised or discontinued on application of the commission upon the terms the court approves and orders.
(b)This section shall become operative on January 1, 2014.
SEC. 2.SEC. 5.Section 2104.5 of the Public Utilities Code is amended to read:2104.5.(a) Any penalty for violation of any provision of this act, or of any rule, regulation, general order, or order of the commission, involving safety standards for pipeline facilities or the transportation of gas in the State of California, may be compromised by the commission. In determining the amount of the penalty, or the amount agreed upon in compromise, the appropriateness of the penalty to the size of the business of the person charged, the gravity of the violation, and the good faith of the person charged in attempting to achieve compliance, after notification of a violation, shall be considered. The amount of any penalty, when finally determined, or the amount agreed upon in compromise, may be recovered in a civil action in the name of the people of the State of California in the superior court in and for the county, or city and county in which the cause or some part thereof arose, or in which the corporation complained of has its principal place of business or the person complained of resides. In any such action, all penalties incurred, or amounts agreed upon in compromise for violations committed up to the time of commencing the action, may be sued for and recovered. In all those actions, the procedure and rules of evidence shall be the same as in ordinary civil actions, except as otherwise herein provided. All fines and penalties recovered by the state in any action, together with the costs thereof, shall be paid into the State Treasury to the credit of the General Fund, except upon order of the commission pursuant to subdivision (b) or as described in Section 1702.5.
(b)The commission shall order that any fine or penalty levied against a gas corporation in Investigation 11-02-016, Investigation 11-11-009, or Investigation 12-01-007, be held in a separate account by the gas corporation to offset investments for pipeline replacement to be undertaken within the service territory of the corporation and that would otherwise be recovered from the corporations ratepayers.
(c)The commission shall set a rate of interest for an account established pursuant to subdivision (b).
(d)Any moneys ordered by the commission to be held in a separate account pursuant to subdivision (b) shall be used only for the purpose of offsetting investments by the gas corporation for pipeline replacement to be undertaken within the service territory of the corporation, and only if the investments would otherwise be recovered in rates from the utilitys ratepayers. Any moneys not used for these purposes shall, five years after the date of their deposit into the account, be paid to the General Fund.
(e)Notwithstanding subdivision (d), funds held in a separate account pursuant to subdivision (b) shall be allocated by the commission in the following manner:
(1)Thirty million dollars ($30,000,000) to fund an independent monitor for a period of no less than five years to oversee both the pipeline operations of the gas corporation described in subdivision (b) and the effectiveness of the commissions regulatory oversight of those pipeline operations.
(2)Fifty million dollars ($50,000,000) in seed money to fund the operations of a pipeline safety trust to represent and advocate on behalf of the interests of the public utility customers and subscribers within the jurisdiction of the commission in all appropriate venues.
(3)Three hundred million dollars ($300,000,000) to the General Fund.
(f)If any fines or penalties levied against a gas corporation pursuant to the investigations specified in subdivision (b) are less than nine hundred fifty million dollars ($950,000,000) in total, the commission may adjust the amount of the allocations specified in subdivision (e).
SEC. 3.SEC. 6.This act is an urgency statute necessary for the immediate preservation of the public peace, health, or safety within the meaning of Article IV of the Constitution and shall go into immediate effect. The facts constituting the necessity are:
In order to address and resolve significant financial issues presented by ongoing proceedings before the Public Utilities Commission and to provide funding necessary to protect the public health and safety, it is necessary for this act to take effect immediately.
(a)Except as provided by Sections 2100 and 2107.5, actions to recover penalties under this part shall be brought in the name of the people of the State of California, in the superior court in and for the county, or city and county, in which the cause or some part thereof arose, or in which the corporation complained of has its principal place of business, or in which the person complained of resides. The action shall be commenced and prosecuted to final judgment by the attorney or agent of the commission. All fines and penalties may be sued for and recovered. The commission may enjoin the sale of a public utilitys or common carriers assets to satisfy unpaid fines and penalties. The commission may use any of the remedies afforded to a creditor under the Uniform Fraudulent Transfer Act (Chapter 1 (commencing with Section 3439) of Title 2 of Part 2 of Division 4 of the Civil Code). Respondents who fraudulently transfer assets to avoid paying commission-imposed fines or penalties are subject to prosecution under Sections 154, 531, and 531a of the Penal Code. In all of these actions, the procedure and rules of evidence shall be the same as in ordinary civil actions, except for prosecutions under the Penal Code or as otherwise herein provided. All Except as provided in Section 2104.5, all fines and penalties recovered by the state in any action, together with the costs thereof, shall be paid into the State Treasury to the credit of the General Fund. Any action may be compromised or discontinued on application of the commission upon the terms the court approves and orders.
(b)This section shall become operative on January 1, 2014.
SEC. 2.Section 2104.5 of the Public Utilities Code is amended to read:2104.5.(a) Any penalty for violation of any provision of this act, or of any rule, regulation, general order, or order of the commission, involving safety standards for pipeline facilities or the transportation of gas in the State of California California, may be compromised by the commission. In determining the amount of such the penalty, or the amount agreed upon in compromise, the appropriateness of such the penalty to the size of the business of the person charged, the gravity of the violation, and the good faith of the person charged in attempting to achieve compliance, after notification of a violation, shall be considered. The amount of any such penalty, when finally determined, or the amount agreed upon in compromise, may be recovered in a civil action in the name of the People people of the State of California in the superior court in and for the county, or city and county in which the cause or some part thereof arose, or in which the corporation complained of has its principal place of business or the person complained of resides. In any such action, all penalties incurred, or amounts agreed upon in compromise for violations committed up to the time of commencing the action action, may be sued for and recovered. In all such those actions, the procedure and rules of evidence shall be the same as in ordinary civil actions, except as otherwise herein provided. All fines and penalties recovered by the state in any such action, together with the costs thereof, shall be paid into the State Treasury to the credit of the General Fund. Fund, except upon order of the commission pursuant to subdivision (b).
(b)The commission shall order that any fine or penalty levied against a gas corporation in Investigation 11-02-016, Investigation 11-11-009, or Investigation 12-01-007, be held in a separate account by the gas corporation to offset investments for pipeline replacement to be undertaken within the service territory of the corporation and that would otherwise be recovered from the corporations ratepayers.
(c)The commission shall set a rate of interest for an account established pursuant to subdivision (b).
(d)Any moneys ordered by the commission to be held in a separate account pursuant to subdivision (b) shall be used only for the purpose of offsetting investments by the gas corporation for pipeline replacement to be undertaken within the service territory of the corporation, and only if the investments would otherwise be recovered in rates from the utilitys ratepayers. Any moneys not used for these purposes shall, five years after the date of their deposit into the account, be paid to the General Fund.
(e)Notwithstanding subdivision (d), funds held in a separate account pursuant to subdivision (b) shall be allocated by the commission in the following manner:
(1)Thirty million dollars ($30,000,000) to fund an independent monitor for a period of no less than five years to oversee both the pipeline operations of the gas corporation described in subdivision (b) and the effectiveness of the commissions regulatory oversight of those pipeline operations.
(2)Fifty million dollars ($50,000,000) in seed money to fund the operations of a pipeline safety trust to represent and advocate on behalf of the interests of the public utility customers and subscribers within the jurisdiction of the commission in all appropriate venues.
(3)Three hundred million dollars ($300,000,000) to the General Fund.
(f)If any fines or penalties levied against a gas corporation pursuant to the investigations specified in subdivision (b) are less than nine hundred fifty million dollars ($950,000,000) in total, the commission may adjust the amount of the allocations specified in subdivision (e).
SEC. 3.This act is an urgency statute necessary for the immediate preservation of the public peace, health, or safety within the meaning of Article IV of the Constitution and shall go into immediate effect. The facts constituting the necessity are:
In order to address and resolve significant financial issues presented by ongoing proceedings before the Public Utilities Commission, it is necessary for this act to take effect immediately.
|
Date
|
Status
|
|---|---|
| Sep 10, 2015 | In Senate. Concurrence in Assembly amendments pending. |
| Jun 24, 2015 | Re-referred to Com. on APPR. pursuant to Joint Rule 10.5. |
| Jun 24, 2015 | Read second time. Ordered to consent calendar. |
| Jul 8, 2015 | From committee: Do pass as amended. Ordered to consent calendar. (Ayes 14. Noes 0.) (July 8). |
| Jul 9, 2015 | Read second time and amended. Ordered to second reading. |
| Jul 13, 2015 | Read second time. Ordered to consent calendar. |
| Jul 16, 2015 | From consent calendar by Assembly Member Cristina Garcia. |
| Jul 16, 2015 | Ordered to third reading. |
| Aug 24, 2015 | Ordered to third reading. |
| Aug 24, 2015 | Read third time and amended. |
| Jun 23, 2015 | From committee: Do pass. Ordered to consent calendar. (Ayes 13. Noes 0.) (June 22). |
| Sep 10, 2015 | Read third time. Passed. Ordered to the Senate. |
| Sep 10, 2015 | Read third time. Passed. (Ayes 80. Noes 0. Page 3090.) Ordered to the Senate. |
| Sep 11, 2015 | Assembly amendments concurred in. (Ayes 36. Noes 0. Page 2774.) Ordered to engrossing and enrolling. |
| Sep 11, 2015 | Assembly amendments concurred in. (Ayes 36. Noes 0.) Ordered to engrossing and enrolling. |
| Sep 17, 2015 | Enrolled and presented to the Governor at 4:45 p.m. |
| Oct 9, 2015 | In Senate. Consideration of Governor's veto pending. |
| Oct 9, 2015 | Vetoed by the Governor. |
| Apr 25, 2016 | Last day to consider Governors veto pursuant to Joint Rule 58.5. |
| Apr 25, 2016 | Last day to consider Governor’s veto pursuant to Joint Rule 58.5. |
| May 5, 2015 | Read second time and amended. Re-referred to Com. on APPR. |
| Dec 2, 2014 | From printer. May be acted upon on or after January 1. |
| Jan 15, 2015 | Referred to Com. on E., U., & C. |
| Feb 4, 2015 | From committee with author's amendments. Read second time and amended. Re-referred to Com. on E., U., & C. |
| Mar 24, 2015 | Set for hearing April 7. |
| Mar 26, 2015 | From committee with author's amendments. Read second time and amended. Re-referred to Com. on E., U., & C. |
| Apr 6, 2015 | April 7 hearing postponed by committee. |
| Apr 7, 2015 | Set for hearing April 21. |
| May 4, 2015 | From committee: Do pass as amended and re-refer to Com. on APPR. (Ayes 10. Noes 0. Page 724.) (April 21). |
| May 4, 2015 | From committee: Do pass as amended and re-refer to Com. on APPR. (Ayes 10. Noes 0.) (April 21). |
| Dec 1, 2014 | Introduced. Read first time. To Com. on RLS. for assignment. To print. |
| May 8, 2015 | Set for hearing May 18. |
| May 20, 2015 | From committee: Be ordered to second reading pursuant to Senate Rule 28.8 and be amended. |
| May 21, 2015 | Read second time and amended. Ordered to third reading. |
| May 28, 2015 | In Assembly. Read first time. Held at Desk. |
| May 28, 2015 | Read third time. Passed. (Ayes 39. Noes 0. Page 1117.) Ordered to the Assembly. |
| May 28, 2015 | Read third time. Passed. (Ayes 39. Noes 0.) Ordered to the Assembly. |
| Jun 4, 2015 | Referred to Com. on U. & C. |
| Jun 10, 2015 | June 15 hearing postponed by committee. |
|
Date
|
Description
|
Location
|
Votes
|
|
|---|---|---|---|---|
| Sep 11, 2015 | Unfinished Business SB18 Hill Concurrence | Senate Floor |
Passed |
|
| Sep 10, 2015 | SB 18 Hill Senate Third Reading By MULLIN | Assembly Floor |
Passed |
|
| Jul 8, 2015 | Do pass as amended. To Consent Calendar. | Assembly Standing Committee on Appropriations |
Passed |
|
| Jun 22, 2015 | Do pass. To Consent Calendar. | Assembly Standing Committee on Utilities and Commerce |
Passed |
|
| May 28, 2015 | Senate 3rd Reading SB18 Hill | Senate Floor |
Passed |
|
| Apr 21, 2015 | Do pass as amended, but first amend, and re-refer to the Committee on [Appropriations] | Senate Standing Committee on Energy, Utilities and Communications |
Passed |
This list shows positions taken on this bill by organizations on the date displayed, which is linked to the original source.
Positions by individuals are not included.
SB 18
Page 6
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Office of Senate Floor Analyses (916) 651-1520 Fax: (916) 327-4478 |
SB 18 |
VETO
Bill No: SB 18
Author: Hill (D) and Hueso (D)
Amended: 8/24/15
SENATE ENERGY, U. & C. COMMITTEE: 10-0, 4/21/15
AYES: Hueso, Cannella, Hertzberg, Hill, Lara, Leyva, McGuire, Morrell, Pavley, Wolk
NO VOTE RECORDED: Fuller
SENATE APPROPRIATIONS COMMITTEE: Senate Rule 28.8
SENATE FLOOR: 39-0, 5/28/15
AYES: Allen, Anderson, Bates, Beall, Block, Cannella, De León, Fuller, Gaines, Galgiani, Glazer, Hall, Hancock, Hernandez, Hertzberg, Hill, Hueso, Huff, Jackson, Lara, Leno, Leyva, Liu, McGuire, Mendoza, Mitchell, Monning, Moorlach, Morrell, Nguyen, Nielsen, Pan, Pavley, Roth, Runner, Stone, Vidak, Wieckowski, Wolk
NO VOTE RECORDED: Berryhill
SENATE FLOOR: 36-0, 9/11/15
AYES: Allen, Anderson, Bates, Beall, Berryhill, Block, Cannella, De León, Fuller, Gaines, Galgiani, Glazer, Hall, Hancock, Hertzberg, Hill, Hueso, Huff, Jackson, Lara, Leno, Leyva, McGuire, Mendoza, Monning, Moorlach, Morrell, Nguyen, Nielsen, Pan, Pavley, Roth, Runner, Stone, Vidak, Wieckowski
NO VOTE RECORDED: Hernandez, Liu, Mitchell, Wolk
ASSEMBLY FLOOR: 80-0, 9/10/15 - See last page for vote
SUBJECT: Public Utilities Commission: outside counsel
DIGEST: This bill requires any contract entered into by the California Public Utilities Commission (CPUC) for outside legal counsel services to represent it in a criminal investigation to be submitted to the Joint Legislative Budget Committee (JLBC) for review, with specified information, and approved by a vote of the CPUC no sooner than 30 days after the contract has been submitted to the JLBC.
Existing law:
Establishes the CPUC and empowers it to regulate privately-owned public utilities in California. Specifies that the Legislature may prescribe that additional classes of private corporations or other persons are public utilities. (Article XII of the California Constitution; Public Utilities Code §301 et seq.)
Establishes that the requirements in Government Code (related to the exclusive role of the Attorney General (AG) in representing state agencies and the role of the Department of General Services (DGS) to approve contracts) and Public Contract Code related to entering into contracts for consultant or advisory services apply to the activities of the CPUC, except when the CPUC makes a finding that extraordinary circumstances justify expedited contracting for consultant and advisory services. (Public Utilities Code §632)
Requires that no state agency, commissioner, or officer shall employ any legal counsel other than the AG, or one of her assistants or deputies, in any matter in which the agency, commissioner, or officer is interested, or is a party as a result of office or official duty. (Government Code §11042)
Requires that for contracts for the services of legal counsel entered into by any state agency subject to §11042 of the Government Code, DGS shall require that state agency to demonstrate that the consent of the AG to the employment of the other counsel has been granted. (Public Contract Code §10335)
Establishes that contracts for legal defense, legal advice, or legal services are exempt from the advertising and bidding requirements in the Public Contract Code. (Public Contract Code §10335.5)
Provides that the State Personnel Board direct a state agency to transmit to it for review any proposed contract it requests to assure that it is consistent with the merit employment principles and requirements contained in Article VII of the California Constitution. (Public Contract Code §10337)
Requires that a public entity may not provide for the defense of criminal action or proceeding, unless the public entity determines that such defense would be in the best interests of the public entity and that the employee or former employee acted, or failed to act, in good faith, without actual malice and in the apparent interests of the public entity. (Government Code §995.8)
Provides that the Director of the DGS may exempt from his or her approval or from approval of the DGS any transactions involving not more than $50,000 for which such approval is required by statute whenever, in his or her judgment, such exemption is appropriate and in the best interests of the state. (Government Code §14616)
This bill:
Requires that any contract or other agreement by the CPUC for services by outside legal counsel with respect to representation of the CPUC in a criminal investigation initiated by any federal, state, or local agency must be approved by a vote of the Commissioners of the CPUC no sooner than 30 days after the contract or agreement is submitted to the JLBC for review.
Requires the contract or other agreement submitted to the JLBC to be accompanied by information about (a) the funds the CPUC will use to pay for the services; (b) whether the CPUC has followed all of the laws and procedures applicable to contracting for legal services; and (c) whether, and to what degree, existing programs and operations of the CPUC will be affected.
Background
On September 19, 2014, a chief assistant attorney general emailed the then executive director of the CPUC to notify the agency that the AG was initiating an independent investigation related to (1) the San Bruno explosion investigation; (2) the rate-setting proceeding for PG&E; and (3) anything relating to the assignment of Administrative Law Judges.
On October 9, 2014, PG&E revealed that the United States Attorney’s Office is investigating five years’ worth of back-channel communications between the company and the CPUC, including communications related to judge-shopping for the San Bruno explosion case. On the same day, PG&E released emails regarding the communication between CPUC and PG&E that exposed some highly questionable exchanges between the two organizations.
On October 29, 2014, the AG’s Office sent a letter to CPUC responding to the CPUC’s request for representation regarding the pending investigations whereby the AG’s Office declined the request citing concern that their simultaneous investigation and representation of the CPUC would “create an untenable conflict of interest or, at the very least, an appearance of one.”
On November 20, 2014, the CPUC entered into a contract with the law firm Sheppard-Mullin for criminal legal representation in the amount capped at $49,000, which was revealed months later when reported in several newspapers. On March 26th, CPUC Executive Director signed an amendment to extend the contract from $49,000 to $5.2 million.
Uncharted territory. A state agency contracting outside criminal attorneys for its defense seems extremely unique, and possibly unprecedented. While the CPUC may have legal authority to contract for outside legal assistance, there are concerns about the appropriateness of such contracts when the focus is related to criminal investigations, particularly when it’s unclear if the intent is to provide criminal defense of former or current employees with funds from a Ratepayer Reimbursement Account. At a minimum, the process by which the contract was secured with a cap of $49,000, and then seemingly overnight amended for $5.2 million without public review, including at a public hearing of the CPUC, has raised concerns about the need for more public review and transparency. Moreover, there seems to be no limit to CPUC’s ability to continue to amend the amount of the contract moving forward. With attorneys charging the CPUC a discounted rate of $880 per hour, there’s no telling how quickly the $5 million might be spent and whether the CPUC may be looking to further amend the contract for a larger amount.
CPUC workload. In addition, the $5.2 million utilized for the Sheppard-Mullin contract and other contracts are likely diminishing some of the work the CPUC would have pursued with these funds. At legislative budget subcommittee hearing, leadership staff commented on the need to adjust other priorities in order to accommodate this redirection of funds. Specifically, they mentioned not filling some open staff positions, foregoing information technology projects, and others.
Prior Legislation
SB 96 (Budget Bill, Chapter 356, Statutes of 2013, §46) added §854.5 in the Public Utilities Code, which limits the ability of the CPUC to create non-state entities, whether for profit or not for profit. Among the provisions in the section, requires that a non-state entity to be created with moneys from a public utility’s shareholders shall be subject to a 30-day review by the JLBC prior to creation.
FISCAL EFFECT: Appropriation: No Fiscal Com.: Yes Local: No
According to the Assembly Appropriations Committee, this bill will have minor, absorbable costs, if any.
None received
OPPOSITION: (Verified 10/21/15)
None received
ARGUMENTS IN SUPPORT: The author argues that the CPUC’s contracting for criminal legal counsel was never approved by the commissioners of the CPUC, let alone the Department of Finance or the Legislature. He further states that were the contract subject to scrutiny, these entities might have asked why it is appropriate for a firm involved in business before the CPUC, including the San Onofre steam generator litigation (as advertised on the Sheppard-Mullin Web Site) to also represent the CPUC. Putting the $5.2 million contract into context, the author notes that, in 2013, the CPUC spent $4.5 million on its gas safety program, $3.6 million of which was reimbursed by the federal government. The $4.5 million of investment was double that spent in 2010, the year of the San Bruno natural gas pipeline explosion that killed eight people and destroyed 30+ homes. However, it took several legislative budget actions, including 20 augmentations, to secure the additional funding for the pipeline safety program – a core function of the CPUC.
GOVERNOR'S VETO MESSAGE:
I am returning Senate Bill 18, Senate Bill 48 and Assembly Bill 825 without my signature.
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.
Moreover, the Commission needs sufficient funds to fully accomplish some of these reforms, such as holding more public meetings outside of San Francisco, shortening the timeframe for concluding formal ratesetting and quasi-legislative proceedings and expanding the scope of the information required to be posted on the CPUC's web site. I am directing the Commission to work with the Legislature through the budget process to ensure the necessary funds are dedicated to accomplish these needed reforms.
ASSEMBLY FLOOR: 80-0, 9/10/15
AYES: Achadjian, Alejo, Travis Allen, Baker, Bigelow, Bloom, Bonilla, Bonta, Brough, Brown, Burke, Calderon, Campos, Chang, Chau, Chávez, Chiu, Chu, Cooley, Cooper, Dababneh, Dahle, Daly, Dodd, Eggman, Frazier, Beth Gaines, Gallagher, Cristina Garcia, Eduardo Garcia, Gatto, Gipson, Gomez, Gonzalez, Gordon, Gray, Grove, Hadley, Harper, Roger Hernández, Holden, Irwin, Jones, Jones-Sawyer, Kim, Lackey, Levine, Linder, Lopez, Low, Maienschein, Mathis, Mayes, McCarty, Medina, Melendez, Mullin, Nazarian, Obernolte, O'Donnell, Olsen, Patterson, Perea, Quirk, Rendon, Ridley-Thomas, Rodriguez, Salas, Santiago, Steinorth, Mark Stone, Thurmond, Ting, Wagner, Waldron, Weber, Wilk, Williams, Wood, Atkins
Prepared by: Nidia Bautista / E., U., & C. / (916) 651-4107
11/4/15 14:11:56
**** END ****
SB 18
Page 6
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Office of Senate Floor Analyses (916) 651-1520 Fax: (916) 327-4478 |
UNFINISHED BUSINESS
Bill No: SB 18
Amended: 8/24/15
SENATE ENERGY, U. & C. COMMITTEE: 10-0, 4/21/15
AYES: Hueso, Cannella, Hertzberg, Hill, Lara, Leyva, McGuire, Morrell, Pavley, Wolk
NO VOTE RECORDED: Fuller
SENATE APPROPRIATIONS COMMITTEE: Senate Rule 28.8
‘
SENATE FLOOR: 39-0, 5/28/15
AYES: Allen, Anderson, Bates, Beall, Block, Cannella, De León, Fuller, Gaines, Galgiani, Glazer, Hall, Hancock, Hernandez, Hertzberg, Hill, Hueso, Huff, Jackson, Lara, Leno, Leyva, Liu, McGuire, Mendoza, Mitchell, Monning, Moorlach, Morrell, Nguyen, Nielsen, Pan, Pavley, Roth, Runner, Stone, Vidak, Wieckowski, Wolk
NO VOTE RECORDED: Berryhill
ASSEMBLY FLOOR: 80-0, 9/10/15 - See last page for vote
SUBJECT: Public Utilities Commission: outside counsel
DIGEST: This bill requires any contract entered into by the California Public Utilities Commission (CPUC) for outside legal counsel services to represent it in a criminal investigation to be submitted to the Joint Legislative Budget Committee (JLBC) for review, with specified information, and approved by a vote of the CPUC no sooner than 30 days after the contract has been submitted to the JLBC.
Assembly Amendments make technical changes.
Existing law:
Establishes the CPUC and empowers it to regulate privately-owned public utilities in California. Specifies that the Legislature may prescribe that additional classes of private corporations or other persons are public utilities. (Article XII of the California Constitution; Public Utilities Code §301 et seq.)
Establishes that the requirements in Government Code (related to the exclusive role of the Attorney General (AG) in representing state agencies and the role of the Department of General Services (DGS) to approve contracts) and Public Contract Code related to entering into contracts for consultant or advisory services apply to the activities of the CPUC, except when the CPUC makes a finding that extraordinary circumstances justify expedited contracting for consultant and advisory services. (Public Utilities Code §632)
Requires that no state agency, commissioner, or officer shall employ any legal counsel other than the AG, or one of her assistants or deputies, in any matter in which the agency, commissioner, or officer is interested, or is a party as a result of office or official duty. (Government Code §11042)
Requires that for contracts for the services of legal counsel entered into by any state agency subject to §11042 of the Government Code, DGS shall require that state agency to demonstrate that the consent of the AG to the employment of the other counsel has been granted. (Public Contract Code §10335)
Establishes that contracts for legal defense, legal advice, or legal services are exempt from the advertising and bidding requirements in the Public Contract Code. (Public Contract Code §10335.5)
Provides that the State Personnel Board direct a state agency to transmit to it for review any proposed contract it requests to assure that it is consistent with the merit employment principles and requirements contained in Article VII of the California Constitution. (Public Contract Code §10337)
Requires that a public entity may not provide for the defense of criminal action or proceeding, unless the public entity determines that such defense would be in the best interests of the public entity and that the employee or former employee acted, or failed to act, in good faith, without actual malice and in the apparent interests of the public entity. (Government Code §995.8)
Provides that the Director of the DGS may exempt from his or her approval or from approval of the DGS any transactions involving not more than $50,000 for which such approval is required by statute whenever, in his or her judgment, such exemption is appropriate and in the best interests of the state. (Government Code §14616)
This bill:
Requires that any contract or other agreement by the CPUC for services by outside legal counsel with respect to representation of the CPUC in a criminal investigation initiated by any federal, state, or local agency must be approved by a vote of the Commissioners of the CPUC no sooner than 30 days after the contract or agreement is submitted to the JLBC for review.
Requires the contract or other agreement submitted to the JLBC to be accompanied by information about (a) the funds the CPUC will use to pay for the services; (b) whether the CPUC has followed all of the laws and procedures applicable to contracting for legal services; and (c) whether, and to what degree, existing programs and operations of the CPUC will be affected.
Background
On September 19, 2014, a chief assistant attorney general emailed the then executive director of the CPUC to notify the agency that the AG was initiating an independent investigation related to (1) the San Bruno explosion investigation; (2) the rate-setting proceeding for PG&E; and (3) anything relating to the assignment of Administrative Law Judges.
On October 9, 2014, PG&E revealed that the United States Attorney’s Office is investigating five years’ worth of back-channel communications between the company and the CPUC, including communications related to judge-shopping for the San Bruno explosion case. On the same day, PG&E released emails regarding the communication between CPUC and PG&E that exposed some highly questionable exchanges between the two organizations.
On October 29, 2014, the AG’s Office sent a letter to CPUC responding to the CPUC’s request for representation regarding the pending investigations whereby the AG’s Office declined the request citing concern that their simultaneous investigation and representation of the CPUC would “create an untenable conflict of interest or, at the very least, an appearance of one.”
On November 20, 2014, the CPUC entered into a contract with the law firm Sheppard-Mullin for criminal legal representation in the amount capped at $49,000, which was revealed months later when reported in several newspapers. On March 26th, CPUC Executive Director signed an amendment to extend the contract from $49,000 to $5.2 million.
Uncharted territory. A state agency contracting outside criminal attorneys for its defense seems extremely unique, and possibly unprecedented. While the CPUC may have legal authority to contract for outside legal assistance, there are concerns about the appropriateness of such contracts when the focus is related to criminal investigations, particularly when it’s unclear if the intent is to provide criminal defense of former or current employees with funds from a Ratepayer Reimbursement Account. At a minimum, the process by which the contract was secured with a cap of $49,000, and then seemingly overnight amended for $5.2 million without public review, including at a public hearing of the CPUC, has raised concerns about the need for more public review and transparency. Moreover, there seems to be no limit to CPUC’s ability to continue to amend the amount of the contract moving forward. With attorneys charging the CPUC a discounted rate of $880 per hour, there’s no telling how quickly the $5 million might be spent and whether the CPUC may be looking to further amend the contract for a larger amount.
CPUC workload. In addition, the $5.2 million utilized for the Sheppard-Mullin contract and other contracts are likely diminishing some of the work the CPUC would have pursued with these funds. At legislative budget subcommittee hearing, leadership staff commented on the need to adjust other priorities in order to accommodate this redirection of funds. Specifically, they mentioned not filling some open staff positions, foregoing information technology projects, and others.
Prior Legislation
SB 96, (Budget Bill, Chapter 356, Statutes of 2013, §46) added §854.5 in the Public Utilities Code, which limits the ability of the CPUC to create non-state entities, whether for profit or not for profit. Among the provisions in the section, requires that a non-state entity to be created with moneys from a public utility’s shareholders shall be subject to a 30-day review by the JLBC prior to creation.
FISCAL EFFECT: Appropriation: No Fiscal Com.: Yes Local: No
According to the Assembly Appropriations Committee, this bill will have minor, absorbable costs, if any.
None received
OPPOSITION: (Verified 9/10/15)
None received
ARGUMENTS IN SUPPORT: The author argues that the CPUC’s contracting for criminal legal counsel was never approved by the commissioners of the CPUC, let alone the Department of Finance or the Legislature. He further states that were the contract subject to scrutiny, these entities might have asked why it is appropriate for a firm involved in business before the CPUC, including the San Onofre steam generator litigation (as advertised on the Sheppard-Mullin Web Site) to also represent the CPUC. Putting the $5.2 million contract into context, the author notes that, in 2013, the CPUC spent $4.5 million on its gas safety program, $3.6 million of which was reimbursed by the federal government. The $4.5 million of investment was double that spent in 2010, the year of the San Bruno natural gas pipeline explosion that killed eight people and destroyed 30+ homes. However, it took several legislative budget actions, including 20 augmentations, to secure the additional funding for the pipeline safety program - a core function of the CPUC.
ASSEMBLY FLOOR: 80-0, 9/10/15
AYES: Achadjian, Alejo, Travis Allen, Baker, Bigelow, Bloom, Bonilla, Bonta, Brough, Brown, Burke, Calderon, Campos, Chang, Chau, Chávez, Chiu, Chu, Cooley, Cooper, Dababneh, Dahle, Daly, Dodd, Eggman, Frazier, Beth Gaines, Gallagher, Cristina Garcia, Eduardo Garcia, Gatto, Gipson, Gomez, Gonzalez, Gordon, Gray, Grove, Hadley, Harper, Roger Hernández, Holden, Irwin, Jones, Jones-Sawyer, Kim, Lackey, Levine, Linder, Lopez, Low, Maienschein, Mathis, Mayes, McCarty, Medina, Melendez, Mullin, Nazarian, Obernolte, O'Donnell, Olsen, Patterson, Perea, Quirk, Rendon, Ridley-Thomas, Rodriguez, Salas, Santiago, Steinorth, Mark Stone, Thurmond, Ting, Wagner, Waldron, Weber, Wilk, Williams, Wood, Atkins
Prepared by: Nidia Bautista / E., U., & C. / (916) 651-4107
9/11/15 8:51:43
**** END ****
SB 18
Page 2
SENATE THIRD READING
SB 18
(Hill and Hueso)
As Amended August 24, 2015
Majority vote
SENATE VOTE: 39-0
Committee |
Votes |
Ayes |
Noes |
Utilities |
13-0 |
Rendon, Patterson, Achadjian, Bonilla, Burke, Cristina Garcia, Hadley, Roger Hernández, Obernolte, Quirk, Santiago, Ting, Williams |
|
Appropriations |
14-0 |
Gomez, Bigelow, Bloom, Bonta, Calderon, Chang, Eggman, Gallagher, Eduardo Garcia, Jones, Quirk, Rendon, Weber, Wood |
|
SUMMARY: Requires any contract entered into by the California Public Utilities Commission (CPUC) for outside legal counsel services to represent it in a criminal investigation to be submitted to the Joint Legislative Budget Committee for review and approved by a vote of the CPUC no sooner than 30 days after the contract has been submitted to the committee. Specifically, this bill:
Requires any contract or other agreement by the CPUC for services by outside legal counsel to represent the CPUC in a criminal investigation initiated by any federal, state, or local agency to be approved by a vote of the CPUC no sooner than 30 days after the contract or agreement is submitted to the Joint Legislative Budget Committee for review.
Requires the contract or other agreement submitted to the Joint Legislative Budget Committee to be accompanied by:
The funds that the CPUC will use to pay for these services;
Whether the CPUC has followed all of the laws and procedures applicable to contracting for legal services; and
Whether, and to what degree, existing programs and operations of the CPUC will be affected.
Fiscal Effect: According to the Assembly Appropriations Committee, this bill would have minor, absorbable costs, if any.
COMMENTS:
Author Statement: "The [CPUC] recently hired criminal defense attorney for $5.2 million dollars without a vote of the commissioners … The [CPUC] paid for the criminal attorney out of money that would have gone toward hiring legislatively-authorized positions, improving Information Technology, strategic planning, and employee training. As such, the [CPUC] is undermining its ability to fulfill its statutory and Constitutional responsibilities by hiring a criminal attorney. For this reason, such a contract should be subject to a vote of the commissioners, and it should receive an expedited review by the Legislature. These straightforward means of oversight would incentivize the [CPUC] to be very clear on the purpose and scope of any proposal to spend money on criminal defense."
Background: In September 2015, the California Attorney General (AG) opened an independent investigation on the CPUC over issues relating to the 2010 San Bruno pipeline explosion and the selection of an administrative law judge for a rate setting case. The AG is investigating whether CPUC officials were influenced by the Pacific Gas and Electric Company (PG&E) to select a more favorable judge to hear a rate setting case involving the 2010 San Bruno explosion in which the utility is seeking to pay for $1.3 billion in pipeline improvements with ratepayer funds.
In October 2014, the CPUC sent a letter to the AG's office requesting the AG's office to represent it in the AG's investigation. The AG's office declined the request based on potential conflicts of interest.
In November 2014, the CPUC signed a $49,000 contract with the law firm of Sheppard Mullin to represent it in the AG's investigation. The contract was subsequently amended to increase the contract to $5.2 million in March 2015. Due to the ongoing criminal investigations on CPUC officials and their relationships with regulated utility officials relating to the San Bruno explosion, there have been questions on whether or not it is appropriate for the CPUC to use ratepayer funds to pay for its outside legal counsel defense, instead of seeking all civil service attorney options.
This bill requires any contract or other agreement by the CPUC in which the CPUC retains outside legal counsel services to represent the CPUC in a criminal investigation initiated by any federal, state, or local agency to be submitted to the Joint Legislative Budget Committee for review and approved by a vote of the CPUC no sooner than 30 days after the contract or agreement has been submitted. The bill requires the contract or other agreement submitted to the Joint Legislative Budget Committee to be accompanied by a) the funds that the CPUC will use to pay for these services, b) whether the CPUC has followed all of the laws and procedures applicable to contracting for legal services, and c) whether, and to what degree, existing programs and operations of the CPUC will be affected.
Analysis Prepared by: Edmond Cheung / U. & C. / (916) 319-2083 FN: 0001504
SB 18
Page 2
SENATE THIRD READING
SB 18
(Hill and Hueso)
As Amended July 9, 2015
Majority vote
SENATE VOTE: 39-0
Committee |
Votes |
Ayes |
Noes |
Utilities |
13-0 |
Rendon, Patterson, Achadjian, Bonilla, Burke, Cristina Garcia, Hadley, Roger Hernández, Obernolte, Quirk, Santiago, Ting, Williams |
|
Appropriations |
14-0 |
Gomez, Bigelow, Bloom, Bonta, Calderon, Chang, Eggman, Gallagher, Eduardo Garcia, Jones, Quirk, Rendon, Weber, Wood |
|
SUMMARY: Requires the California Public Utilities Commission (CPUC) to approve any contract entered into for outside legal counsel services to represent it in a criminal investigation by a vote of the CPUC no sooner than 30 days after the contract is submitted to the Joint Legislative Budget Committee (JLBC) for review. Specifically, this bill:
Requires the CPUC to approve any contract or other agreement for services by outside legal counsel to represent the CPUC in a criminal investigation initiated by any federal, state, or local agency be approved by a vote of the CPUC no sooner than 30 days after the contract or agreement is submitted to the JLBC for review.
Requires the contract or other agreement submitted to the JLBC for review to include the following:
The funds that the CPUC will use to pay for these services;
Whether the CPUC has followed all of the laws and procedures applicable to contracting for legal services; and
Whether, and to what degree, existing programs and operations of the CPUC will be affected.
FISCAL EFFECT: According to the Assembly Appropriations Committee, this bill would have minor, absorbable costs, if any.
COMMENTS:
Author Statement: "The [CPUC] recently hired criminal defense attorney for $5.2 million dollars without a vote of the commissioners … The [CPUC] paid for the criminal attorney out of money that would have gone toward hiring legislatively-authorized positions, improving Information Technology, strategic planning, and employee training. As such, the [CPUC] is undermining its ability to fulfill its statutory and Constitutional responsibilities by hiring a criminal attorney. For this reason, such a contract should be subject to a vote of the commissioners, and it should receive an expedited review by the Legislature. These straightforward means of oversight would incentivize the [CPUC] to be very clear on the purpose and scope of any proposal to spend money on criminal defense."
Background: In September 2015, the California Attorney General (AG) opened an independent investigation on the CPUC over issues relating to the 2010 San Bruno pipeline explosion and the selection of an administrative law judge for a rate setting case. The AG is investigating whether CPUC officials were influenced by the Pacific Gas and Electric Company to select a more favorable judge to hear a rate setting case involving the 2010 San Bruno explosion in which the utility is seeking to pay for $1.3 billion in pipeline improvements with ratepayer funds.
In October 2014, the CPUC requested the AG’s office to represent it in the AG’s investigation. The AG’s office declined the request based on potential conflicts of interest. In November 2014, the CPUC signed a $49,000 contract with the law firm of Sheppard Mullin to represent it in the AG’s investigation. The contract was subsequently amended to increase the contract to $5.2 million in March 2015.
Oversight: In light of the CPUC’s hiring of Sheppard Mullin to represent it in the AG’s criminal investigations, there are questions over whether or not the CPUC exhausted all its efforts to hire civil service attorneys before contracting with private outside counsel. Furthermore, the subsequent increase of the contract from $49,000 to $5.2 million without oversight has also brought up questions about whether or not ratepayer funds should be used for such purposes and whether or not there should be greater oversight over this process.
This bill requires any contract or other agreement by the CPUC for outside legal counsel services to represent the CPUC in a criminal investigation to be approved by a vote of the CPUC no sooner than 30 days after the contract or agreement is submitted to the JLBC for review. This bill requires the contract or other agreement submitted to the JLBC for review to include: a) the funds that the CPUC will use to pay for these services, b) whether the CPUC has followed all of the laws and procedures applicable to contracting for legal services, and c) whether, and to what degree, existing programs and operations of the CPUC will be affected.
Analysis Prepared by: Edmond Cheung / U. & C. / (916) 319-2083 FN: 0001276
Date of Hearing: July 8, 2015
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Jimmy Gomez, Chair
SB 18
(Hill) – As Amended May 21, 2015
Policy Committee: |
Utilities and Commerce |
Vote: |
13 - 0 |
|
|
|
|
|
|
|
|
Urgency: No State Mandated Local Program: No Reimbursable: No
SUMMARY:
This bill requires the Public Utilities Commission (PUC) to approve any contract for specified outside legal counsel by a vote of the Commission and subjects the contract to a review by the Joint Legislative Budget Committee. Specifically, prior to entering the contract, this bill:
Requires any contract or other agreement for services by outside legal counsel to represent the PUC in a criminal investigation initiated by any federal, state, or local agency to be approved by a vote of the Commission.
Requires the Joint Legislative Budget Committee, as part of a 30-day review, to consider all of the following:
The funds that the PUC will use to pay for these services;
Whether the PUC has followed all of the laws and procedures applicable to contracting for legal services; and
Whether, and to what degree, existing programs and operations of the PUC will be affected.
FISCAL EFFECT:
Minor, absorbable costs, if any.
COMMENTS:
Rationale. According to the author, the PUC recently hired criminal defense attorneys for $5.2 million from funds authorized by the Legislature for information technology, strategic planning, and employee training. By diverting funds, the PUC bypassed the legislative process and potentially compromised its ability to fulfill statutory and Constitutional responsibilities.
To prevent future similar actions, this bill subjects such a contract to a vote of the commissioners, and an expedited review by the Legislature.
Background. In September 2015, the California Attorney General's office (AG) opened an independent investigation on the PUC over issues relating to the 2010 San Bruno pipeline explosion and the selection of an administrative law judge for a rate setting case. The AG is investigating whether PUC officials were influenced by PG&E to select a more favorable judge to hear a rate setting case involving the 2010 San Bruno explosion in which the utility sought to pay for $1.3 billion in pipeline improvements with ratepayer funds.
In October 2014, the PUC requested the AG’s office represent it in the AG’s investigation. The AG’s office declined the request based on potential conflicts of interest.
In November 2014, the PUC signed a $49,000 contract with the law firm of Sheppard Mullin to represent it in the AG’s investigation. The contract was subsequently amended to increase the contract to $5.2 million in March 2015. Due to the ongoing criminal investigations on PUC officials and their relationships with regulated utility officials relating to the San Bruno explosion, there have been questions on whether or not it is appropriate for the PUC to use ratepayer funds to pay for its outside legal counsel defense.
JLBC Review Process. Typically, the JLBC reviews budget-related changes under a defined time period. If the JLBC does not comment on the proposed action, the Administration (usually the Department of Finance) is moves forward. When the JLBC raises issues or objects to the proposed action, the Administration usually attempts to address concerns if possible, and does not move forward. Since a large number of reviews are performed when the Legislature is not in session, responses are made by the Chair, after reviewing the recommendation of the LAO and conferring with majority and minority fiscal staff from both houses.
Suggested Amendments. To ensure appropriate legislative review, the author may wish to consider the following amendments.
Any contract or other agreement by the commission for services by outside legal counsel to represent the commission in a criminal investigation initiated by any federal, state, or local agency shall be approved by a vote of the commission
and subject to a 30-day reviewno sooner than 30 days after the contract or other agreement is submitted tobythe Joint Legislative Budget Committee for reviewbefore the agreement is entered into.
(b) The Joint Legislative Budget Committee, as part of its review, shall consider all of the following:
Any contract or other agreement submitted to the Joint Legislative Budget Committee for review and submitted to the Commission for vote pursuant to this section must include the following:
(1) The funds that the commission will use to pay for these services.
(2) Whether the commission has followed all of the laws and procedures applicable to contracting for legal services.
(3) Whether, and to what degree, existing programs and operations of the commission will be affected.
Analysis Prepared by: Jennifer Galehouse / APPR. / (916) 319-2081
SB 18
Page 4
Date of Hearing: June 15, 2015
ASSEMBLY COMMITTEE ON UTILITIES AND COMMERCE
Anthony Rendon, Chair
SB 18
(Hill) – As Amended May 21, 2015
SENATE VOTE: 39-0
SUBJECT: Public Utilities Commission: outside counsel.
SUMMARY: This bill requires any contract entered into by the California Public Utilities Commission (CPUC) for outside legal counsel services to represent it in a criminal investigation to be approved by a vote of the CPUC and be subject to a 30-day review by the Joint Legislative Budget Committee. Specifically, this bill:
Requires any contract or other agreement by the CPUC for services by outside legal counsel to represent the CPUC in a criminal investigation initiated by any federal, state, or local agency to be approved by a vote of the CPUC and subject to a 30-day review by the Joint Legislative Budget Committee before the agreement is entered into.
Requires the Joint Legislative Budget Committee, as part of its review, to consider all of the following:
The funds that the CPUC will use to pay for these services;
Whether the CPUC has followed all of the laws and procedures applicable to contracting for legal services; and
Whether, and to what degree, existing programs and operations of the CPUC will be affected.
EXISTING LAW:
Prohibits a state agency, commissioner, or officer from employing any legal counsel, other than the Attorney General (AG), or one of her or his assistants or deputies, in any matter in which the agency, commissioner, or officer is interested or is a party as a result of office or official duties. (Government Code Section 11042)
Authorizes the CPUC to appoint an attorney to represent and appear for the people of the State of California and the CPUC in all actions and proceedings involving any question, as specified, or under any order or act of the CPUC. (Public Utilities Code Section 307)
Requires a state agency to demonstrate to the Department of General Services (DGS) that the consent of the AG to employ other counsel has been granted, as specified, for contracts for services of legal counsel entered into by any state agency. (Public Contract Code Section 10335)
Exempts contracts for legal defense, legal advice, or legal services from advertising and bidding requirements, as specified. (Public Contract Code Section 10335.5)
Establishes standards for the use of personal service contracts to achieve overall cost savings to the state, as specified. (Government Code Section 19130)
Authorizes the State Personnel Board (SPB), at the request of an employee organization that represents state employees, to review the adequacy of any proposed or executed contract, as specified. (Government Code Section 19132)
Establishes requirements for purposes of entering into contracts for consultant or advisory services, as specified, apply to the activities of the CPUC, except when the CPUC makes a finding that extraordinary circumstances justify expedited contracting for consultant or advisory services. (Public Utilities Code Section 632)
Authorizes the SPB to establish standards and controls over approval of contracts by DGS, as necessary, to assure that the approval is consistent with the merit employment principals and requirements contained in Article VII of the California Constitution. (Public Contract Code Section 10337)
Specifies that a public entity is not required to provide for the defense of a criminal action or proceeding brought against an employee or former employee, unless the criminal action or proceeding is brought on account of an act or omission in the scope of employment as an employee of the public entity, and the public entity determines that such defense would be in the best interests of the public entity, and that the employee or former employee acted, or failed to act, in good faith, without actual malice and in the apparent interests of the public entity. (Government Code Section 995.8)
Provides that the Director of DGS may exempt from his or her approval, or from approval of the department, any transactions involving not more than $50,000 for which such approval is required by statute whenever, in his or her judgment, such exemption is appropriate and in the best interests of the state. (Government Code Section 14616)
FISCAL EFFECT: Unknown.
COMMENTS:
Author Statement: “The [CPUC] recently hired criminal defense attorney for $5.2 million dollars without a vote of the commissioners … The [CPUC] paid for the criminal attorney out of money that would have gone toward hiring legislatively-authorized positions, improving Information Technology, strategic planning, and employee training. As such, the [CPUC] is undermining its ability to fulfill its statutory and Constitutional responsibilities by hiring a criminal attorney. For this reason, such a contract should be subject to a vote of the commissioners, and it should receive an expedited review by the Legislature. These straightforward means of oversight would incentivize the [CPUC] to be very clear on the purpose and scope of any proposal to spend money on criminal defense.”
Background: In the wake of the ongoing controversy regarding backchannel communications between the CPUC and Pacific Gas and Electric Company (PG&E) officials, in September 2015, the California AG opened an independent investigation on the CPUC over issues relating to the 2010 San Bruno pipeline explosion and the selection of an administrative law judge for a rate setting case. The AG is investigating whether CPUC officials were influenced by PG&E to select a more favorable judge to hear a rate setting case involving the 2010 San Bruno explosion in which the utility is seeking to pay for $1.3 billion in pipeline improvements with ratepayer funds.
In October 2014, the CPUC sent a letter to the AG’s office requesting the AG’s office to represent it in the AG’s investigation. The AG’s office declined the request and responded by stating that “the [AG] is conducting an independent investigation related to the CPUC. As a result, the [AG’s] simultaneous representation of the CPUC – or any of its individual commissioners or employees – in connection with the matters […] cited in [the] request would create an untenable conflict of interest, at the very least, an appearance of one.”
In November 2014, the CPUC signed a $49,000 contract with the law firm of Sheppard Mullin to represent it in the AG’s investigation. The contract was subsequently amended to increase the contract to $5.2 million in March 2015. Due to the ongoing criminal investigations on CPUC officials and their relationships with regulated utility officials relating to the San Bruno explosion, there have been questions on whether or not it is appropriate for the CPUC to use ratepayer funds to pay for its outside legal counsel defense, instead of seeking all civil service attorney options.
Outside Contracts: Existing law tasks the SPB to review personal service contacts between state entities and vendors to determine whether the service can be contracted to a private entity. In March 2015, the California Attorneys, Administrative Law Judges, and Hearing Officers in State Employment (CASE) filed a request with the SPB to disapprove the CPUC legal service contract with Sheppard Mullin. CASE argues that “the CPUC is currently undergoing at least two separate investigations into criminal wrongdoing. To the extent CPUC needs experienced criminal defense counsel, the State of California has an entire office of trained criminal defense attorneys at the Office of the State Public Defenders.”
Appropriate use of Ratepayer Funds? In light of the CPUC’s hiring of Sheppard Mullin to represent it in the AG’s criminal investigations, there are questions over whether or not the CPUC exhausted all its efforts to hire civil service attorneys before contracting with private outside counsel. Furthermore, the subsequent increase of the contract from $49,000 to $5.2 million without oversight has also brought up questions about whether or not ratepayer funds should be used for such purposes and whether or not there should be greater oversight over this process. Since there does not seem to be any limit on the amount the CPUC can amend the contract in the future, there are serious questions about how much ratepayer funds will eventually be used for the CPUC’s criminal legal counsel and what impact this would have on the CPUCs main operating purposes and whether those funds are redirected from programs authorized through the state budget.
This bill requires any contract or other agreement by the CPUC in which the CPUC retains outside legal counsel services to represent the CPUC in a criminal investigation initiated by any federal, state, or local agency to be approved by a vote of the CPUC and be subject to a 30-day review by the Joint Legislative Budget Committee. As part of its review, the Joint Legislative Budget Committee will consider (1) the funds that the CPUC will use to pay for these services, (2) whether the CPUC has followed all of the laws and procedures applicable to contracting for legal services, and (3) whether, and to what degree, existing programs and operations of the CPUC will be affected.
Public Vote? This bill would require any contract entered into by the CPUC for outside legal counsel services to represent it in a criminal investigation to be approved by a vote of the CPUC. There are questions of whether or not such a vote should be open to the public. Although the public does have the right to evaluate the merits of how ratepayer funds are used by the CPUC, because of the nature of seeking legal counsel for criminal investigations, it might be difficult to hold public hearings without running into issues such as disclosing individual personal information, details of the investigation, or running into conflicts with attorney-client privilege. However, as this bill moves forward, the author may wish to consider alternative methods to informing the public of pending contracts and its process before such contracts are approved.
REGISTERED SUPPORT / OPPOSITION:
Support
None on file.
Opposition
None on file.
Analysis Prepared by: Edmond Cheung / U. & C. / (916) 319-2083
SB 18
Page 6
|
Office of Senate Floor Analyses (916) 651-1520 Fax: (916) 327-4478 |
THIRD READING
Bill No: SB 18
Author: Hill (D) and Hueso (D)
Amended: 5/5/15
SENATE ENERGY, U. & C. COMMITTEE: 10-0, 4/21/15
AYES: Hueso, Cannella, Hertzberg, Hill, Lara, Leyva, McGuire, Morrell, Pavley, Wolk
NO VOTE RECORDED: Fuller
SENATE APPROPRIATIONS COMMITTEE: Senate Rule 28.8
SUBJECT: California Public Utilities Commission: outside counsel
DIGEST: This bill requires that any contract or other agreement by the California Public Utilities Commission (CPUC) for services by outside legal counsel with respect to a criminal investigation of the CPUC must be approved by a vote of the Commissioners of the CPUC and subject to a 30-day review by the Joint Legislative Budget Committee (JLBC) before entering into the contract or agreement.
Existing law:
Establishes the CPUC and empowers it to regulate privately-owned public utilities in California. Specifies that the Legislature may prescribe that additional classes of private corporations or other persons are public utilities. (Article XII of the California Constitution; Public Utilities Code §301 et seq.)
Establishes that the requirements in Government Code (related to the exclusive role of the Attorney General (AG) in representing state agencies and the role of the Department of General Services (DGS) to approve contracts) and Public Contract Code related to entering into contracts for consultant or advisory services apply to the activities of the CPUC, except when the CPUC makes a finding that extraordinary circumstances justify expedited contracting for consultant and advisory services. (Public Utilities Code §632)
Requires that no state agency, commissioner, or officer shall employ any legal counsel other than the AG, or one of her assistants or deputies, in any matter in which the agency, commissioner, or officer is interested, or is a party as a result of office or official duty. (Government Code §11042)
Requires that for contracts for the services of legal counsel entered into by any state agency subject to §11042 of the Government Code, DGS shall require that state agency to demonstrate that the consent of the AG to the employment of the other counsel has been granted. (Public Contract Code §10335)
Establishes that contracts for legal defense, legal advice, or legal services are exempt from the advertising and bidding requirements in the Public Contract Code (Public Contract Code §10335.5)
Provides that the State Personnel Board direct a state agency to transmit to it for review any proposed contract it requests to assure that it is consistent with the merit employment principles and requirements contained in Article VII of the California Constitution. (Public Contract Code §10337)
Requires that a public entity may not provide for the defense of criminal action or proceeding, unless the public entity determines that such defense would be in the best interests of the public entity and that the employee or former employee acted, or failed to act, in good faith, without actual malice and in the apparent interests of the public entity. (Government Code §995.8)
Provides that the Director of the DGS may exempt from his or her approval or from approval of the DGS any transactions involving not more than $50,000 for which such approval is required by statute whenever, in his or her judgment, such exemption is appropriate and in the best interests of the state. (Government Code §14616)
This bill:
Requires that any contract or other agreement by the CPUC for services by outside legal counsel with respect to representation of the CPUC in a criminal investigation must be approved by a vote of the Commissioners of the CPUC and be subject to a 30-day review by the JLBC before entering into the agreement.
Provides specific criteria for the JLBC to consider in its review, including: the funds the CPUC is using to pay for the contract, whether the CPUC has complied with all legal requirements when contracting for such services, and whether existing programs and operations are affected by the redirection of the funds.
Background
On September 19, 2014, a chief assistant attorney general emailed the then executive director of the CPUC to notify the agency that the AG was initiating an independent investigation related to (1) the San Bruno explosion investigation; (2) the rate-setting proceeding for PG&E; and (3) anything relating to the assignment of Administrative Law Judges.
On October 9, 2014, PG&E revealed that the United States Attorney’s Office is investigating five years’ worth of back-channel communications between the company and the CPUC, including communications related to judge-shopping for the San Bruno explosion case. On the same day, PG&E released emails regarding the communication between CPUC and PG&E that exposes some highly questionable exchanges between the two organizations.
On October 29, 2014, the AG’s Office sent a letter to CPUC responding to the CPUC’s request for representation regarding the pending investigations whereby the AG’s Office declined the request. The letter from the AG’s Office cited concern that their simultaneous investigation and representation of the CPUC would “create an untenable conflict of interest or, at the very least, an appearance of one.”
On November 20, 2014, the CPUC entered into a contract with the law firm Sheppard-Mullin for criminal legal representation in the amount capped at $49,000, which was revealed months later when reported in several newspapers.
On February 24, 2015, CASE (California Attorneys, Administrative Law Judges, and Hearing Officers in State Employment) told the State Personnel Board, "CPUC is currently undergoing at least two separate investigations into criminal wrongdoing. To the extent CPUC needs experienced criminal defense counsel, the State of California has an entire office of trained criminal defense attorneys at the Office of the State Public Defender."
On March 3, 2015, the Senate Energy Utilities and Communications Committee questioned newly-appointed CPUC President Michael Picker and Executive Director Timothy Sullivan on the appropriateness of using public funds for criminal defense of the CPUC or its current and former employees. The CPUC argued that since the AG could not represent the CPUC due to potential conflict, the CPUC was encouraged to seek outside counsel. President Picker and Executive Director Sullivan also appeared before the Committee on March 25th at the third of three oversight hearings related to CPUC Reform. The following day, Executive Director Sullivan signed an amendment to the initial contract with Sheppard-Mullin to extend the contract from $49,000 to $5.2 million. However, neither President Picker nor Executive Director Sullivan mentioned to the Committee or at a public hearing of the CPUC, or elsewhere, the intent to extend the contract for criminal legal services.
More recently, the CPUC has provided information related to pursuit of an additional legal contract for criminal defense for an unnamed employee. The new contract is in addition to the Sheppard-Mullin contract. The new contract would be for $35,000 with the Law Office of Anthony J. Brass for “representation of CPUC employee in connection with state and federal investigations of various actions at the CPUC.”
Uncharted territory. A state agency contracting outside criminal attorneys for its defense seems to be extremely unique, and possibly unprecedented. While the CPUC may have legal authority to contract for outside legal assistance, there are serious questions about the appropriateness of such contracts when the focus is related to criminal investigations, particularly when it’s unclear if the intent is to provide criminal defense of former or current employees with funds from a Ratepayer Reimbursement Account. At a minimum, the process by which the contract was secured with a cap of $49,000, and then seemingly overnight amended for $5.2 million without public review, including at a public hearing of the CPUC, has further eroded the public’s trust. Moreover, there doesn’t seem to be a limit to CPUC’s ability to continue to amend the amount of the contract moving forward. With attorneys charging the CPUC a discounted rate of $880 per hour, there’s no telling how quickly the $5 million might be spent and whether the CPUC may be looking to further amend the contract for a larger amount.
In addition, the $5.2 million utilized for the Sheppard-Mullin contract and other contracts are likely diminishing some of the work the CPUC would have pursued with these funds. At a recent budget subcommittee hearing, leadership staff of the CPUC noted that the $5.2 million was “absorbable”, representing roughly one - two percent of the agency’s operating budget. However, they also commented on the need to adjust other priorities in order to accommodate this redirection of funds. Specifically, they mentioned not filling some open staff positions, foregoing information technology projects, and others.
Prior Legislation
SB 96 (Budget Bill, Chapter 356, Statutes of 2013, §46) added §854.5 in the Public Utilities Code, which limits the ability of the CPUC to create non-state entities, whether for profit or not for profit. Among the provisions in the section, requires that a non-state entity to be created with moneys from a public utility’s shareholders shall be subject to a 30-day review by the JLBC prior to creation.
FISCAL EFFECT: Appropriation: No Fiscal Com.: Yes Local: No
None received
OPPOSITION: (Verified 5/18/15)
None received
ARGUMENTS IN SUPPORT: The author argues that the CPUC’s contracting for criminal legal counsel was never approved by the Commissioners of the CPUC, let alone the Department of Finance or the Legislature. He further states that were the contract subject to scrutiny, these entities might have asked why it is appropriate for a firm involved in business before the CPUC, including the San Onofre steam generator litigation (as advertised on the Sheppard-Mullin Web site) to also represent the CPUC.
Putting the $5.2 million contract into context, the author notes that, in 2013, the CPUC spent $4.5 million on its gas safety program, $3.6 million of which was reimbursed by the federal government. The $4.5 million of investment was double that spent in 2010, the year of the San Bruno natural gas pipeline explosion that killed eight people and destroyed 30+ homes. However, it took several legislative budget actions, including 20 augmentations, to secure the additional funding for pipeline safety program – a core function of the CPUC.
Prepared by: Nidia Bautista / E., U., & C. / (916) 651-4107
5/21/15 14:25:36
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SB 18 (Hill) Page 5 of 5
SENATE COMMITTEE ON ENERGY, UTILITIES AND COMMUNICATIONS
Senator Ben Hueso, Chair
2015 - 2016 Regular
Bill No: SB 18 Hearing Date: 4/21/2015
Author: |
Hill |
||
Version: |
3/26/2015 As Amended |
||
Urgency: |
No |
Fiscal: |
Yes |
Consultant: |
Nidia Bautista |
||
SUBJECT: Public Utilities Commission: outside counsel
DIGEST: This bill requires a 30-day review by the Joint Legislative Budget Committee (JLBC) prior to the California Public Utilities Commission (CPUC) entering into any contract or other agreement for services by outside legal counsel with regards to criminal matters.
ANALYSIS:
Existing law:
Establishes the CPUC and empowers it to regulate privately-owned public utilities in California. Specifies that the Legislature may prescribe that additional classes of private corporations or other persons are public utilities. (Article XII of the California Constitution; Public Utilities Code §301 et seq.)
Establishes that the requirements in Government Code (related to the exclusive role of the Attorney General in representing state agencies and role of the Department of General Services (DGS) to approve contracts) and Public Contract Code related to entering into contracts for consultant or advisory services apply to the activities of the CPUC, except when the commission makes a finding that extraordinary circumstances justify expedited contracting for consultant and advisory services. (California Public Utilities Code §632)
Requires that no state agency, commissioner, or officer shall employ any legal counsel other than the AG, or one of her assistants or deputies, in any matter in which the agency, commissioner, or officer is interested, or is a party as a result of office or official duty. (Government Code §11042)
Requires that for contracts for the services of legal counsel entered into by any state agency subject to §11042 of the Government Code, DGS shall require that state agency to demonstrate that the consent of the AG to the employment of the other counsel has been granted. (Public Contract Code §10335)
Establishes that contracts for legal defense, legal advice, or legal services are exempt from the advertising and bidding requirements in Public Contract Code (Public Contract Code §10335.5)
Provides that the State Personnel Board direct a state agency to transmit to it for review any proposed contract it requests to assure that it is consistent with the merit employment principles and requirements contained in Article VII of the California Constitution. (Public Contract Code §10337)
Requires that a public entity may not provide for the defense of criminal action or proceeding, unless the public entity determines that such defense would be in the best interests of the public entity and that the employee or former employee acted, or failed to act, in good faith, without actual malice and in the apparent interests of the public entity. (Government Code §995.8)
Provides that the Director of the DGS may exempt from his or her approval or from approval of the department any transactions involving not more than fifty thousand dollars ($50,000) for which such approval is required by statute whenever, in his or her judgment, such exemption is appropriate and in the best interests of the state. (Government Code §14616)
This bill would require the CPUC to submit for review to the JLBC any contract or other agreement of services for outside legal counsel regarding criminal matters prior to the CPUC entering into such an agreement.
Background
On September 19, 2014, a chief assistant attorney general emailed the then executive director of the CPUC to notify the agency that the AG was initiating an independent investigation related to (1) the San Bruno explosion investigation; (2) the ratesetting proceeding for PG&E; and (3) anything relating to the assignment of Administrative Law Judges.
On October 9, 2014, PG&E revealed that the United States Attorneys Office is investigating five years’ worth of back-channel communications between the company and the CPUC, including communications related to judge-shopping for the San Bruno explosion case. On the same day, PG&E released emails regarding the communication between CPUC and PG&E that illuminates some highly questionable exchanges between the two organizations.
On October 29, 2014, the AG’s Office sent a letter to CPUC responding to the agency’s request for representation regarding the pending investigations whereby the AG’s office declined the request. The letter from the AG’s Office cited concern that their simultaneous investigation and representation of the agency would “create an untenable conflict of interest or, at the very least, an appearance of one.”
On November 20, 2014, the CPUC entered into a contract with the law firm Sheppard-Mullin for criminal legal representation in the amount capped at $49,000, which was revealed months later when reported in several newspapers.
On February 24, CASE (California Attorneys, Administrative Law Judges, and Hearing Officers in State Employment) told the State Personnel Board, "CPUC is currently undergoing at least two separate investigations into criminal wrongdoing. To the extent CPUC needs experienced criminal defense counsel, the State of California has an entire office of trained criminal defense attorneys at the Office of the State Public Defender."
On March 3, 2015, this committee questioned newly-appointed CPUC President Michael Picker and Executive Director Timothy Sullivan on the appropriateness of using public funds for criminal defense of the agency or its current and former employees. The CPUC argued that because the Attorney General could not represent the agency due to potential conflict, the CPUC was encouraged to seek outside counsel. President Picker and Executive Director Sullivan also appeared before this committee on March 25th at the third of three oversight hearings related to CPUC Reform. The following day Executive Director Sullivan signed an amendment to the initial contract with Sheppard-Mullin to extend the contract from $49,000 to $5.2 million. However, neither President Picker nor Executive Director Sullivan mentioned to this committee, or elsewhere, the intent to extend the contract for criminal legal services.
Uncharted Territory
A state agency contracting outside criminal attorneys for its defense seems to be extremely unique, and possibly unprecedented. While the CPUC may have legal authority to contract for outside criminal attorneys, there are serious questions about the appropriateness of such contracts, particularly when it’s unclear if the intent is to provide criminal defense of former or current employees with funds from a Ratepayer Reimbursement Account. At a minimum, the process by which the contract was secured with a cap of $49,000, and then seemingly overnight amended for $5.2 million without public review, including by the CPUC, has further eroded the public’s trust. Moreover, there doesn’t seem to be a limit to CPUC’s ability to continue to amend the amount of the contract moving forward. With attorneys charging the CPUC a discounted rate of $800+ per hour, there’s no telling how quickly the $5 million might be spent and whether the CPUC may be looking to further amend the contract for a larger amount.
In addition, the $5.2 million utilized for this contract is likely diminished some of the work the CPUC would have pursued with these funds. At a recent budget subcommittee hearing, leadership staff of the CPUC noted that the $5.2 million was “absorbable”, representing roughly 1-2 percent of the agency’s operating budget. However, they also commented on the need to shift some priorities to accommodate this redirection of funds, including not filling some open positions, foregoing information technology projects, and others.
The author and committee may wish to amend the bill to require the CPUC to review any contract or agreement related to criminal legal counsel at a publicly noticed voting meeting of the CPUC. Furthermore, the author and committee may wish to amend the bill to provide criteria for the JLBC to consider in its review, for example how the contract will be funded and any potential impact on existing programs and operations of the agency.
Prior/Related Legislation
SB 96 (Budget Bill, Chapter 356 2013, Section 46) adds Section 854.5 in the Public Utilities Code, which limits the ability of the CPUC to create non-state entities, whether for profit or not for profit. Among the provisions in the section, requires that a non-state entity to be created with moneys from a public utility’s shareholders shall be subject to a 30-day review by the JLBC prior to creation.
FISCAL EFFECT: Appropriation: No Fiscal Com.: Yes Local: No
SUPPORT:
None received.
OPPOSITION:
None received.
ARGUMENTS IN SUPPORT: The author argues that the CPUC’s contracting for criminal legal counsel was never approved by the CPUC, let alone the Department of Finance or the Legislature. He further states that were the contract subject to scrutiny, these entities might have asked why it is appropriate for a firm involved in business before the CPUC, including the San Onofre steam generator litigation (as advertised on its website) to also represent the CPUC.
Putting the $5.2 million contract into context, the author notes that, in 2013, the CPUC spent $4.5 million on its gas safety program, $3.6 million of which as reimbursed by the federal government. The $4.5 million of investment was double that spent in 2010, the year of the San Bruno natural gas pipeline explosion that killed 8 people and destroyed 30+ homes. However, it took several legislative budget actions, including 20 augmentations, to secure the additional funding for pipeline safety program –a core function of the CPUC.
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Bill Co-Author(s):