Edison proposes that the Commission create an advisory ruling process, under which a utility could receive an advance interpretation as to how the rules should be applied to a new program. A utility would send a written request to the chief administrative law judge for assignment to a designated administrative law judge. In Edison's original proposal, the judge would try to issue an advisory ruling within 30 days. The utility would be immune from prosecution for anything it did which was consistent with the ruling. We did not include an advisory ruling process in the proposed rules, but solicited comments on Edison's suggestion.
In its comments, Edison modified its proposal in several ways. It would require that the designated administrative law judge rule within ten days of the filing of a request for ruling. Failure to rule within 10 days would be "deemed approval of the request." A ruling (presumably, a "deemed approval," as well) would be binding in any complaint proceeding subsequently initiated by the Commission or its staff. The ruling would also be given the "highest evidentiary value" in any third-party complaint. Even if the Commission later found the utility's conduct to be inconsistent with the rules, the Commission would be prohibited from imposing a penalty on the utility, so long as it complied with the earlier ruling. Edison also proposes that the utility requesting the ruling pay a fee to cover the Commission's related costs.
Not surprisingly, each utility supports the creation of an advisory ruling process. So do the Edison Electric Institute and Questar. SoCalGas/SDG&E would have a utility serve notice of a request for an advisory opinion on those on the service list in R.97-04-011/I.97-04-012 and would allow 20 days for comments. The administrative law judge's ruling would be treated as a proposed decision and submitted to the Commission for adoption. PG&E proposes that notice of the request appear in the Commission calendar, with other parties given an opportunity to get copies of the request and to make comments. PG&E further proposes that there be no hearings or discovery.
Those supporting the use of advisory opinions point to the added certainty that would benefit the utilities as they undertake new arrangements and enterprises, and argue that such a procedure is particularly appropriate because there are "gray areas" in the affiliate transaction rules, subject to various interpretations. Some argue that the use of advisory rulings would reduce the amount of litigation related to the affiliate rules.
The Joint Petitioner Coalition offers the most fervent opposition to the use of advisory rulings. First, the Coalition points out that in the absence of an actual case or controversy, the Commission would be dealing only with hypothetical issues which have been described and characterized only by the utility and not by any party that might be affected by the utility's conduct. Second, the Coalition argues that granting a utility immunity before it takes an action that other parties find objectionable would render the complaint process largely meaningless. Finally, the Coalition argues that this new procedure would impose a substantial burden on the Commission's resources.
In assessing the merits of a proposed new procedure, we must be confident that it will be both fair and efficient. We find that this proposal fails both tests. A fair procedure provides all interested parties with notice, an opportunity to effectively respond, and a result with clear boundaries. There are two basic characteristics of adequate notice: it must alert the right people and it must provide a clear picture of what is at stake. There is no certain way to alert the right people when the circumstances are prospective and the associations that will affect individuals and other businesses are yet to be forged. This is a significant concern when the utility seeking the ruling is also seeking protection against future enforcement. An entity that might uncover a rules violation and suffer its consequences may not even exist yet when the advisory ruling is sought, or might not be on a service list used to provide notice.
The ability to provide a clear picture of what is at issue is problem-ridden, as well. An interested party may not be able to comment effectively on a request for advisory opinion depending on the way the requesting party chooses to phrase its request. In the absence of specific facts, it may not be possible for an interested party to recognize that it could be affected by the outcome of a particular request. Similarly, in the absence of a specific factual foundation, the boundaries within which an advisory ruling should apply may be unclear. If a subsequent complaint arises, a defendant may argue that a prior advisory ruling applies while the complainant argues that it does not. Even if the Commission determines that a prior advisory ruling does not apply, would the Commission then be asked to determine whether the defendant had acted in good faith in assuming that it did apply? If the defendant had acted in good faith, should an otherwise-applicable penalty be reduced?
For another party to participate effectively in a request for advisory ruling, it needs access to adequate information about the request and enough time to prepare its positions. Edison would have an administrative law judge provide the ruling within 10 days, or it would be deemed approved.5 SoCalGas/SDG&E would allow 20 days for other parties to comment. Neither proposal would provide meaningful time for another party to prepare its position. Such a notice would come to others without warning. It may not be immediately obvious that the request applies to a party's area of interest or may not refer to something within the party's field of expertise. A party might need to ask clarifying questions just to determine what the requesting party is seeking. A request of this type would not be likely to reach the hands of an interested party until several days after it is filed. It would be a challenge for any party to be able to gather all relevant information and draft cogent comments in the remaining time if comments were due in 20 days. The opportunity to comment would be virtually non-existent if the administrative law judge was obliged to issue a ruling within 10 days of the filing, as Edison proposes. PG&E goes even further, proposing that there be no hearings or discovery. None of these options provides an opportunity to participate effectively.
Despite the utilities' assertions, we are also not convinced that an advisory ruling process would be more efficient than other approaches. Edison recognizes that the Commission would experience costs if it were asked to render advisory rulings and suggests that the requesting party be charged a "reasonable" fee to cover those costs. However, any other person or organization acting to protect its existing or future interests by filing comments would also face costs. None of the proponents of this procedure has suggested an approach for reimbursing those costs.
The proponents also suggest that the issuance of advisory rulings will reduce the number of complaints and thereby reduce overall regulatory activity. There is no reason to expect that this will be the result. Assuming that utilities will always strive to comply with the rules, successful complaints should be rare. Further, it is inappropriate (and usually counter-productive) to file a frivolous complaint. We seek to dismiss such complaints as early as possible. These factors result in a natural limit to the number of complaints filed before the Commission. On the other hand, it is hard to imagine why utilities would not use an advisory ruling process as a matter of course. What attorney would advise his or her client not to secure the Commission's assurance that a new program offering or affiliate interaction will be immune from penalty, even if it is later found to be forbidden under the applicable rules? It appears likely that this type of procedure would lead to the creation of more dockets, not fewer.
Finally, would we have a utility's assurance that if it did not like the advice it was given, it would not appeal to the assigned commissioner, the full Commission, or the courts? Even if the Commission were to secure such a concession from a requesting utility, it could not seek such assurances from others. If an interested party did not like the advice, it would be forced to appeal to a higher authority, or face limitations on its ability to secure an effective remedy if the activity later proves to be unlawful.
For all of these reasons, we will not adopt an advisory ruling process.
5 The "deemed approved" proposal raises the issue of what "approval" means in the context of a request for advice.
