VI. Assignment of Proceeding

Carl Wood is the Assigned Commissioner and Dorothy Duda is the assigned Administrative Law Judge in this proceeding.

Findings of Fact

1. On May 15, 2002, the Commission held a ratesetting deliberative meeting to discuss a draft decision and two alternate decisions in this proceeding.

2. On May 15, 2002, Pacific sent a letter to eleven decision-makers regarding the substance of one of the alternate decisions under deliberation at the RDM.

3. On May 15, 2002, an attorney for WorldCom left a voicemail message for a Commissioner's personal advisor regarding the substance of the draft and alternate decisions.

4. According to Rule 6.6 and Rule 7.e, the ex parte prohibitions of Rule 7.c, including a quiet time if an RDM is scheduled, apply in all ratesetting cases where there has been no final determination on the need for hearings.

5. A June 14, 2001 scoping ruling in this proceeding stated that the need for hearings would be decided at a later date and ruled that ex parte Rules 7.c and 7.1 applied to this proceeding.

6. Pacific and WorldCom engaged in ex parte communications during the ex parte "quiet time" surrounding the RDM.

7. Pacific physically retrieved the letters it had sent after it was asked to do so by the ALJ.

Conclusions of Law

1. Pacific's and WorldCom's ex parte communications on May 15, 2002 violated Commission Rule 7.c that establishes a ban on ex parte communications regarding proposed decisions in ratesetting matters from the day of an RDM through the business meeting at which the item is considered.

2. Pacific's and WorldCom's violations harmed the integrity of the regulatory process.

3. Pacific should pay a larger fine per offense because of the deliberate nature of its conduct.

4. The severity of these violations is mitigated by the fact that the violations were self-disclosed, this was the first instance of a violation by these parties of ex parte rules regarding an RDM, and Pacific retrieved its letters.

5. Violations of ex parte rules for closed session meetings warrant a penalty because the violation occurred during the Commission's critical decision-making phase and after the parties had many months of experience with the applicable ratesetting ex parte rules.

6. Pacific and WorldCom should be fined $22,000 and $1,000 respectively for their violations of Commission Rule 7.c.

7. Pacific and WorldCom have adequate financial resources to pay the fine assessed in this order.

ORDER

IT IS ORDERED that:

1. Pacific Bell Telephone Company shall pay a fine of $22,000 to the Commission, for deposit in the General Fund of the State of California, within 180 days of the effective date of this order.

2. WorldCom, Inc. shall pay a fine of $1,000 to the Commission, for deposit in the General Fund of the State of California, within 180 days of the effective date of this order.

This order is effective today.

Dated December 5, 2002 San Francisco, California.

HENRY M. DUQUE

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