In a series of private emails in 2014, Pacific Gas and Electric Co. successfully persuaded senior staff members and commissioners of the Public Utilities Commission to replace an administrative law judge assigned to the company’s rate-making case.
“Let’s just say she has a history of being very hard on us,” wrote PG&E’sformer vice president of regulatory affairs, Brian Cherry, shooting down a proposed substitute in an email to the chief of staff for the former PUC president.
When the commission assigned the company’s judge of choice, Cherry expressed his gratitude: “Thank you. Thank you. Thank you.”
While PG&E’s wheeling and dealing eventually backfired – Cherry and other senior executives were fired – the case demonstrates how private communications between regulators and the parties they oversee can spell trouble.
California generally bans private conversations, known as ex parte communication, between state agencies, boards or commissions and representatives of groups with pending cases before them. The intent of the law is to promote public transparency, create even playing fields and prevent the unfair influence of decision-makers.
But over time, lawmakers have made nearly 15 exceptions to the rule.
Officials at the state’s most controversial agencies, including the Public Utilities Commission and the Coastal Commission, are allowed to communicate with groups behind closed doors and in private emails. So are leaders at the Board of Equalization, the Public Employee Relations Board and the California Air Resources Board, among others, in some form. State lawmakers, who don’t rule on specific regulatory cases, also can discuss their business privately.
Advocates for ex parte communications say such one-on-one meetings are available to those on both sides of an issue. They say private talks allow regulators to understand a case without having to read through extensive reports.
Critics say the behavior benefits deep-pocketed companies and special interests who can afford to hire lobbyists to engage in repeated conversations and form relationships with officials. They argue that neighbors opposing a major construction project on the coast in Arcata, or PG&E customers who can’t afford a proposed rate increase, don’t have the same opportunities to sway decision-makers.
“We’re usually dealing with issues that have billions of dollars at stake,” said Steven Weissman, a lecturer at the Goldman School of Public Policy at UC Berkeley and a former administrative law judge at the PUC. “It motivates people to present an extremely favorable view of the underlying facts.”
A series of bills moving through the Legislature attempt to expose the organizations influencing questionable actions. Authors were motivated by the unexplained ouster of the Coastal Commission’s leader, as well as revelations of uncomfortably cozy relationships between groups such as the PUC and PG&E.
So far, Gov. Jerry Brown hasn’t been on board with proposals to ban ex parte talks.
Last year Brown vetoed six bills, all of which received unanimous approval in the Legislature, aimed at increasing transparency and disclosure at the PUC. One of the bills, SB 660 from Sen. Mark Leno, D-San Francisco, banned ex parte communications in rate-setting cases and allowed the attorney general to enforce the law.
In his veto message, Brown said the package of bills included necessary reforms, but were “unworkable” taken all together.
Regulatory groups have various rules governing private conversations in different types of cases.
The state’s top political watchdog, however, questions why these groups should be allowed to entertain private conversations at all.
“It should be justified,” said Jodi Remke, the chairwoman of the Fair Political Practices Commission. “It should be limited and it should be understood why we even need to have it.”
Other critics point to major loopholes in the rules that allow commissioners to make decisions behind closed doors with little public explanation.
For example, outside groups file reports to the PUC about private talks they have with commissioners, and it’s often in their best interest to provide as little information as possible, Weissman said. The reports only ask for a summary of the outside group’s comments, with no description of anything a commissioner says. If the commissioner is the only person speaking, then the conversation doesn’t have to be reported at all.
Attorney Michael Strumwasser found that private conversations “are extensive and in material ways influencing the outcome of cases” in a report the PUC commissioned.
“Secondly, they are unfair,” he said. “They are done where parties don’t know what other parties are saying to the commissioners and don’t have a meaningful way to rebut them.”
Weissman, who co-authored a different study of the PUC, pointed to a fundamental contradiction within the language of the law. While the commission allows private conversations, commissioners are only allowed to base their decisions on facts and comments made before the public.
“It becomes a sham or a charade,” Weissman said. “Of course it’s outside the record and of course it’s going to influence the decision-maker. Why would the decision-maker do it?
“When the ultimate answer from a public official is ‘Well you’re just going to have to trust me on this,’ you know you’re in trouble.”
There have been other efforts besides those vetoed by Brown.
Senate Bill 512, introduced by Sen. Jerry Hill, D-San Mateo, attempts to rein in the PUC. Hill has asked the Legislature to require all written testimony, advice letters and responses to become part of the public record. The bill calls for the PUC to hold six regular meetings in Sacramento each year, to increase legislator oversight, and forces the commission to seek out and disclose community perspectives.
Assemblyman Mike Gatto, D-Los Angeles, introduced Assembly Constitutional Amendment 11 to dismantle the PUC altogether. The amendment circumvents any potential opposition from Brown, requiring a two-thirds majority vote in the Legislature to land on the ballot.
Legislators are also pushing legislation to limit ex parte communications at the California Coastal Commission, which governs the state’s 1,100-mile coastline. The commission ousted its executive director, Charles Lester, earlier this year despite widespread opposition from the public. The move prompted lawmakers to question the influence lobbyists and companies carry over the commission.
Commissioners, who are not paid a salary, are required to disclose private conversations they have with the groups they preside over.
Conversations that take place more than seven days before a meeting must be disclosed in writing, including the basic details and timing of the communication, the people involved and a description of the conversation. The disclosures are included in the staff report on an agenda item.
Conversations that occur after the seven-day threshold must be disclosed on the microphone during the meeting.
A former member of the Coastal Commission, Assemblyman Mark Stone, D-Scotts Valley, said the agency doesn’t store the disclosures in a database, or all together, which makes the conversations difficult to track.
“If you wanted to go figure out which lobbyists tend to talk to which commissioners, good luck,” Stone said. “You would have to go back through every single agenda item and pull up the ex partes and then hand-calculate that.”
His bill, AB 2002, attempts to close some of the loopholes.
Stone sees benefits to some one-on-one conversations, which he said can expedite a coastal commissioner’s understanding of an issue, give elected officials valuable access to regulators and help private citizens, too.
The coastal commission holds monthly sessions at various locations along the coast, and decisions on issues can often roll over to the next meeting. While big companies can afford to send advocates all over California, the public often cannot. Ex parte communication allows anyone to connect with regulators from afar, he said.
But he thinks private conversations should be banned 24 hours prior to a meeting, allowing staff members to aggregate all conversations before the commission convenes. The bill also requires agents who influence the commission to register as lobbyists.
“My problem is that it’s very clear to me that there are certain lobbyists who have their hooks very deeply into certain commissioners,” Stone said. “Nobody is really paying that much attention.”
Weissman suggested some of the PUC commissioners like getting attention themselves.
“I remember asking somebody, ‘Isn’t it obvious to you that the reason they want to take you out isn’t because you’re a swell person, but because they want to influence the outcome?’ ” Weissman said. “They said ‘I chose the civil service when I could have gone into the private sector and made a bunch of money. I’m OK with someone paying for my lunch.’ ”