Report to the California Public Utilities Commission Regarding Ex Parte Communications

and Related Practices

June 22, 2015

Michael J. Strumwasser Beverly Grossman Palmer

Dale K. Larson Strumwasser & Woocher LLP

10940 Wilshire Blvd., Suite 2000 Los Angeles, California 90024

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Contents Introduction ..........................................................................................................................1 Executive Summary of Findings and Recommendations ....................................................1

Legal Review ...........................................................................................................1 Ex Parte Communications Practices in Ratesetting Cases .......................................3 Opinions and Recommendations Expressed in the Interviews ................................3 Analysis and Recommendations ..............................................................................4

Part I: Legal Framework I. Introduction ..............................................................................................................8 II. Statutory and Regulatory Restrictions on Ex Parte Communications in the

CPUC .......................................................................................................................8 A. Legal Background to the CPUC’s Rules and Types of Proceedings ...........8 B. Rules Governing Ex Parte Communications Before the CPUC ................11

1. Adjudicatory ..................................................................................11 2. Ratesetting......................................................................................12 3. Quasi-Legislative ...........................................................................13

C. Penalties .....................................................................................................13 III. Laws Governing Ex Parte Contacts Before Other California

Administrative Agencies ........................................................................................14 A. Administrative Procedure Act....................................................................14

1. Adjudicatory Proceedings ..............................................................14 2. Rulemaking and Other Non-Adjudicatory Proceedings ................15

B. California Energy Commission ..................................................................16 1. Adjudicatory Proceedings Within the Energy Commission ..........16 2. Ratesetting and Other Non-Adjudicatory Proceedings

Within the Energy Commission .....................................................17 C. California Coastal Commission .................................................................17

IV. Ex Parte Laws Governing Federal Agencies .........................................................20 A. The Federal Administrative Procedure Act ...............................................20 B. The Federal Communications Commission ...............................................22

1. Exempt proceedings .......................................................................23 2. Permit-but-disclose proceedings ....................................................23 3. Restricted proceedings ...................................................................24 4. Exempt presentations .....................................................................25

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5. Other noteworthy restrictions ........................................................25 6. Violations and sanctions ................................................................26

C. The Federal Energy Regulatory Commission ............................................26 1. Adjudicatory and ratesetting proceedings ......................................27 2. Rulemaking proceedings ................................................................29

V. Ex Parte Laws Governing Other States’ Regulatory Agencies .............................29 A. Revised Model State Administrative Procedure Act .................................29

1. Contested cases ..............................................................................29 2. Rulemaking ....................................................................................32

B. Florida Public Services Commission .........................................................32 1. Adjudicatory and ratesetting proceedings ......................................32 2. Rulemaking proceedings ................................................................34

C. Illinois Commerce Commission ................................................................35 1. Adjudicatory and licensing proceedings ........................................35 2. Ratesetting proceedings .................................................................36 3. Rulemaking proceedings ................................................................37

D. New York Public Service Commission .....................................................38 E. Pennsylvania Public Utility Commission ..................................................40

1. Contested on-the-record proceedings—adjudicatory and ratesetting .......................................................................................40

2. Rulemaking proceedings ................................................................41 F. Texas Public Utility Commission ..............................................................41

1. Contested cases—adjudicatory and ratesetting proceedings .........41 2. Uncontested cases ..........................................................................42

G. Washington Utilities and Transportation Commission ..............................42 1. Adjudicatory and ratesetting proceedings ......................................42 2. Rulemaking proceedings ................................................................44

VI. Practices Across Agencies Studied ........................................................................44 A. Adjudicatory Proceedings ..........................................................................44 B. Quasi-Legislative Proceedings...................................................................44 C. Ratesetting Proceedings .............................................................................47 D. Scope of Agency Personnel Included ........................................................48 E. Disclosure Obligations, Timing, and Right of Reply ................................49 F. Disclosure Contents ...................................................................................51 G. Inclusion in Record of Proceedings ...........................................................52

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H. Enforcement, Penalties, and Sanctions ......................................................53 I. Communications with Decision-Makers....................................................54

1. Staff communications ....................................................................54 2. Non-party communications ............................................................55

J. Exempted Communications .......................................................................55 K. Conclusions ................................................................................................56

Part II: Ex Parte Communications in Practice Before the CPUC I. Volume of Proceedings and Ex Parte Contacts .....................................................58

A. Volume of Proceedings and Decisions ......................................................58 B. Volume and Frequency of Ex Parte Contacts ............................................60

II. The Context in Which Ex Parte Communications Take Place at the CPUC .........67 A. Categorization of Proceedings and the Corresponding Rules on

Ex Parte Communications ..........................................................................67 1. Adjudication proceedings and ex parte communications ..............67 2. Quasi-legislative proceedings and ex parte communications ........68 3. Ratesetting proceedings and ex parte communications .................69

B. Initiation of Proceedings ............................................................................71 1. Applications ...................................................................................71 2. Complaints .....................................................................................72 3. Petitions..........................................................................................72 4. Orders initiating investigation ........................................................73 5. Orders instituting rulemaking ........................................................73

C. Initial Commission Action .........................................................................74 1. Assignment of Commissioner ........................................................74 2. Assignment of Administrative Law Judge .....................................74 3. Categorization ................................................................................74 4. Prehearing conference ....................................................................76 5. Scoping memorandum ...................................................................76 6. Proceedings without answer, protest, or hearing ...........................76 7. Discovery ..................................................................