3. Discussion

3.1 Decisions Subject to Waiver or Reduction of Comment Period

In general, parties make only limited suggestions or criticisms regarding the proposed rules. In keeping with the Administrative Procedure Act, Appendix B to today's decision contains a point-by-point response to each suggestion or criticism made by the commenters. The strongest point of disagreement, however, is not with the proposed rules but with SB 779 itself.

The disagreement concerns the statute's provisions for waiver or reduction of the review and comment period, and specifically the meaning of the following sentence from Section 311(g)(3):

"Consistent with regulatory efficiency and the need for adequate prior notice and comment on commission decisions, the commission may adopt rules, after notice and comment, establishing additional categories of decisions subject to waiver or reduction of the time period in this section."

In the OIR, we describe and justify six such "additional categories" subject to waiver or reduction. (See OIR mimeo. at 6-8.)⁶ Nine of the 10 parties filing comments on the OIR's proposals make no objection to these additional categories, but the Joint Energy Utilities object to all of them and offer no suggestions for improvement (either clarification of the categories or alternative categories). The Joint Energy Utilities would limit waiver or reduction to those situations already spelled out in the statute. In effect, the Joint Energy Utilities would ignore the quoted sentence from SB 779.

In contrast, many of the telephone utilities would use the limited authority in the quoted sentence as the basis for exempting vast numbers of decisions from public review and comment. Most dramatic is the proposal of GTE (supported by Pacific Bell) to waive or reduce the public review and comment period for any resolution that responds to an advice letter filed by a telecommunications service provider. AT&T supports this proposal, with one major qualification: resolutions responding to advice letters filed by an incumbent local exchange carrier (such as Pacific Bell and GTE California Incorporated) would not qualify for waiver or reduction. Pacific Bell, GTE, and AT&T all ignore the fact that where the Legislature intended in SB 779 to broadly exempt a particular utility sector (specifically, water utilities) from the public review and comment provisions, the Legislature expressly stated that those provisions did not apply.⁷ Had the Legislature intended to broadly exempt resolutions relating to all or part of the telecommunications industry, SB 779 could easily have so stated.

In short, in SB 779 and other recent statutes concerning this Commission's procedures, the Legislature has tried to balance the need for public review and accountability with the need for a regulatory process that is efficient, dependable, and swift. We are confident that the rules we adopt today to implement the public review and comment provisions of SB 779 accurately reflect this legislative balance.

3.2 Definition of "Alternate"

Turning now to the changes that we set forth in D.99-11-052 to the rules as initially proposed in the OIR, we find the only major controversy concerns which definition of "alternate" to adopt: the definition in the OIR, which reflects historical usage at the Commission; or another definition on which we invited comment in D.99-11-052. Under the latter definition, any substantive change to a decision before the Commission (regardless of who makes the change) would be an "alternate"; under the definition in the OIR, a change made by the presiding

officer (who placed the decision before the Commission) would not be an "alternate." PG&E, Edison, and Sempra support the more inclusive definition. It was later supported by ORA (comments on Neeper alternate) and GTE (comments on D.99-11-052). TURN (comments on Bilas/Neeper alternate) does not object to the definition advocated by the energy utilities, but TURN strongly disputes the energy utilities' contention that the definition they prefer is compelled by the terms of the statute. Id. at 4. Specifically, TURN agrees with the Commission's discussion of the history and use of "alternate" (see D.99-11-052 mimeo. at 3-4)⁸ and asserts that:

"Everyone involved in the legislative process that resulted in SB 779 knew the Commission's longstanding definition of `alternate' and the term was used in that traditional context. If the legislature had meant to change that longstanding definition, it would have done so explicitly, but it did not." (TURN, Comments on Bilas/Neeper Alternate at 4.)

We have decided to adopt, in those respects relevant to this discussion, the definition of "alternate" we proposed initially.⁹ Basically, this definition continues our historical usage. Under that usage, "decision" or "proposed decision" refers to an agenda item offered and supported by the presiding officer for the relevant proceeding, and "alternate" refers to a substantially different version of the agenda item, offered by someone else in preference to the agenda item supported by the presiding officer. We find nothing in SB 779 that compels us to modify this historical usage, and we see much reason to continue it. As we noted in D.99-11-052, our historical usage makes good sense,¹⁰ and avoids unnecessary delay and repetition of arguments.

SB 779 does not require mechanically issuing for public review and comment all versions of an item that may appear on the Commission's agenda. The statute wholly exempts many decisions from public review and comment, allows reduction or waiver of public review and comment in many situations, and authorizes the Commission to subject additional categories of decisions to reduction or waiver. Regarding the latter authorization, the statute directs us to consider "regulatory efficiency and the need for adequate prior notice and comment" (Section 311(g)(3), emphasis added). Thus, efficiency and adequacy of notice are part of the Legislature's express concerns in SB 779; of necessity, the Commission must consider how much notice is enough notice in implementing this statute.

We also bear in mind the broader statutory context. SB 779 amends Section 311, as that section was amended in 1996 by SB 960 (Leonard).¹¹ However, SB 779 does not amend the various provisions of SB 960 directing the Commission to bring its proceedings to a timely resolution and setting specific time periods (12 months for adjudicatory proceedings, 18 months for other proceedings) within which to do so. (See Pub. Util. Code § 1701.2(d) and Section 1 of SB 960, the legislative intent section, which is uncodified.) SB 960 also requires the Commission to issue its "final decision" in a ratesetting proceeding not later than 60 days after issuance of the proposed decision. (See Pub. Util. Code § 1701.3(e).)¹² We cannot possibly meet the directives of SB 960 if we implement SB 779 in such a way as to allow the comment process under the latter statute to become the longest part of the proceeding.¹³

Issuing for public review and comment the presiding officer's revisions, even where (as is usually the case) those revisions have little impact on the presiding officer's recommended outcome, does not serve public policy as set forth in either SB 779 or SB 960. We conclude that SB 779 was enacted in full cognizance of our contemporaneous use of "alternate." Thus, under a fair reading of the statute, we should continue to define that term as initially proposed in the OIR,¹⁴ but with the one modification we discuss next.

In D.99-11-052, we proposed the following additional amendment to Rule 77.6(a): "A substantive revision to a proposed decision is not an `alternate' if the revision does no more than make changes suggested in prior comments on the proposed decision, or in a prior alternate to the proposed decision." Edison opposes this additional amendment, asserting that "[t]he manner in which comments are incorporated merits as much review as other alternates and the proposed decision itself."¹⁵ TURN supports the additional amendment (Comments on Bilas/Neeper Alternate at 4), and GTE appears to support the additional amendment if certain qualifying language is added.¹⁶

Edison's assertion is not self-evident. Where incorporation of changes requires extensive revision affecting many interrelated parts of a decision, including, e.g., parts of the decision that are not directly the subject of the prior comment or prior alternate, this proposed amendment would not exempt this revision from public review and comment. Where the revision follows easily and directly from the prior comment or prior alternate, we see no public interest that would be served, under SB 779 or otherwise, by subjecting the revision to yet another round of public review and comment.

⁶ In D.99-11-052, we proposed a seventh "additional category" and also modified the description of one of the categories as initially proposed. (See id. at 8-10.) ⁷ The first sentence of Section 311(g)(3) creates an express exemption for water utilities. The sentence reads in relevant part: "This subdivision does not apply to advice letter filings or to uncontested matters, that pertain solely to water corporations. ..." The comma following "matters" has led to some confusion over the scope of the exemption. Reading SB 779 as a whole, and considering the legislative history and intent, we conclude that we should read Section 311(g)(3) as consistent with Section 311(g)(1), which expressly subjects resolutions on advice letters to the public review and comment provisions. Thus, we read the first sentence of Section 311(g)(3) to refer to resolutions on advice letter filings only of water utilities, not to all advice letters, and not to uncontested matters of utilities other than water utilities unless the decision grants the relief requested. See Section 311(g)(2). ⁸ The discussion to which TURN refers reads, in part, as follows: "At the time that the term `alternate' was enacted into the Public Utilities Code [§ 311(e), added in 1994 by Assembly Bill 2850 (Escutia), Ch. 1110 of Stats. 1998], and for many years before the enactment, the Commission used that term in distributing agenda materials internally and in publishing its agenda. Under this Commission practice, to which § 311(e) expressly refers, the Commission has applied the term to a revision not prepared or accepted by the presiding officer who originally prepared the decision to be revised. In contrast, a revision that the presiding officer makes or accepts simply replaces the order as originally proposed, since that order no longer has a sponsor and therefore is not before the Commission or on its agenda. In implementing the statutory term `alternate,' the Commission followed this established practice...." (D.99-11-052, mimeo. at 3, footnote omitted.) Nothing in SB 779 indicates that the Legislature intended to expand "alternate" beyond this historical usage; rather, the Legislature's intent was to expand the kinds of decisions (including alternates to those decisions) that would be issued for comment. ⁹ D.99-11-052 contains another change relative to "alternate" that we do adopt, as we discuss later. ¹⁰ As we there explained, a presiding officer's change simply replaces the decision as originally proposed by the presiding officer. In other words, the presiding officer's version is not an alternate to the decision being revised, it supersedes that decision. (See D.99-11-052 mimeo. at note 3 and accompanying text.) ¹¹ See specifically Section 5 of Chapter 856 of the Statutes of 1996. ¹² The quoted statute provides that the Commission has leeway to extend this deadline "under extraordinary circumstances...for a reasonable period" and must extend the deadline (but only for 30 days) if an alternate is proposed. ¹³ Unfortunately, this rulemaking exemplifies the problem, as it appears that "public review and comment" will have consumed more than half the elapsed time between issuance of the OIR (February 1999) and adoption of the rules. ¹⁴ Nothing in today's decision bars the issuance, for public review and comment, of a presiding officer's revisions where public review and comment might be appropriate, as in the case where those revisions do result in fundamental changes to the recommended outcome. ¹⁵ Edison, Comments on D.99-11-052 at 2; Comments on Bilas/Neeper Alternate at 2. ¹⁶ Specifically, GTE would add "where such prior changes have already been subject to public review and comment." (See Comments on D.99-11-052 at 2.) Since comments must be served on all parties, who may then reply, and since a prior "alternate" already would have been subject to public review and comment, we see no reason to add this qualifying language.