Comments on Proposed Interim Proposed Decision

The interim proposed decision of the ALJ in this matter was mailed to the parties in accordance with Pub. Util. Code § 311(d) and Rule 77.1 of the Rules of Practice and Procedure. CWS filed its comments on May 5, 2004; no reply comments were filed.

CWS generally supports the interim proposed decision, but the company asks the Commission to delete any language (including Finding of Fact 15, Conclusion of Law 5, and Ordering Paragraph 8) concerning a violation of Health & Safety Code § 116455. In making this request, CWS argues that the Commission lacks jurisdiction to enforce the section. The company also argues that it has been deprived of due process because it was not afforded an opportunity to respond to the allegation that it failed to notify local public officials in a timely manner of the TCPA exceedances. The company also indicates that it will be deprived of the ex parte benefits of the ratesetting categorization of this proceeding if an adjudicatory issue is now introduced.

As we recognize earlier, the California Supreme Court's Hartwell decision recognizes our jurisdiction to take appropriate actions to ensure water safety. In its own motion (under the heading "The Commission has authority to make water quality findings"), CWS acknowledges that Hartwell recognized the Commission's authority to "decide[ ] what constitutes compliance with applicable water quality standards." (CWS Motion at 7.)

CWS refers to the 1996 Memorandum of Understanding [MOU] . . . on Maintaining Safe and Reliable Water Supplies for Regulated Water Companies in California," entered into between this Commission and DHS. CWS argues that this MOU vests DHS with authority for the enforcement of the safe drinking water provisions of the Health & Safety Code. This argument is wrong for two reasons. First, the MOU assigns the initiation of enforcement actions under Sections 116650 and 116655 to DHS. We do not initiate an enforcement action under either of these sections; DHS remains free to initiate such actions on its own. Second, the MOU precedes Hartwell, which is a more authoritative explanation of our water quality responsibilities.

CWS' due process complaints are also without merit. The Scoping Memo specified a series of water quality-related issues that are sufficient to encompass CWS' notice obligation under Health & Safety Code § 116455. (See Scoping Memo § 8(d)-(f) (December 5, 2003).) An expedited hearing was held specifically on the TCPA water quality issues. CWS' January 2004, motion provided the specific basis for the hearing and asked the Commission to determine that the company's operation of the TCPA-tainted wells is reasonable and prudent. Asked to make this decision, the Commission may well consider whether the company has acted reasonably and prudently in complying with existing state law including the required notification of local public officials. CWS' own motion, which states "DHS requires that notice be given to local government officials whenever an action level is exceeded" (page 4, citing Health & Safety Code § 116455), further demonstrates that compliance with this particular requirement was well within the scope of the expedited hearing and the company was aware of the scope of issues. CWS itself introduced the uncontested testimony and other evidence upon which the ALJ made the factual and legal determinations about CWS' failure to notify local public officials in the Bakersfield and South San Francisco districts within the specified period. CWS had sufficient notice that its compliance with the Health & Safety Code notice requirement was one of the water quality issues to be addressed in this proceeding.

We also reject CWS' argument that these Health & Safety Code issues transform this ratesetting into an adjudicatory proceeding, thereby limiting the company's ex parte opportunities concerning the ratesetting issues. This proceeding was categorized as ratesetting, it remains a ratesetting proceeding, and the ex parte rules pertaining to ratesetting continue to apply. (See Rules of Practice and Procedure 6.1(c) (indicating that ratesetting is the default category in mixed proceedings) and 6.1(d) (recognizing Commission discretion in categorization "to achieve a full, timely, and effective resolution of the substantive issues" in the proceeding).)

We will clarify, however, the procedure to be followed for the duration of this proceeding. The ALJ will hold an additional hearing to determine whether the findings and conclusions approved in this decision constitute a violation of General Order 103. If they do, the ALJ will recommend, either in the proposed decision concerning the settlement of the rate issues or in a separate proposed decision, whether sanctions should be imposed against the company and, if so, what the sanctions should be. Ordering Paragraph 8 is so modified.