The public interest: In all cases, the harm will be evaluated from the perspective of the public interest.

The facts of this case indicate that the degree of wrongdoing, though not egregious, was sufficiently serious to warrant a substantial fine. First, Applicant did not file this application in advance in order to obtain prior Commission approval of the transfer of Yak America to Blackbird, in violation of Section 854(a) and did not disclose the violation or file an application for Commission approval until approximately 45 days after the transaction had closed. Applicants have not claimed ignorance of the requirements of Section 854(a), but proceeded to complete the transaction without our advance approval for their own business reasons. Although Applicants claim that they needed to transfer Yak America to Blackbird immediately in order to ensure that the company had appropriate management, Applicants could have filed an application for expedited Commission approval of the transaction and/or Blackbird could have consulted with Yaktastic regarding the management of Yak America pending our decision on the application. In addition, Yak America and Yaktastic recently committed another violation of Section 854(a) by transferring Yak America to Yaktastic without prior Commission authorization.

In mitigation, Applicant did eventually file an application for Commission approval of the transaction, and no consumers were harmed by Applicants' failure to comply with Section 854(a). These same facts also indicate that the public interest was not significantly harmed by Applicants' violation of Section 854(a).

Criterion 5: The Role of Precedent

In D.98-12-075, the Commission held that any decision which imposes a fine should (1) address previous decisions that involve reasonably comparable factual circumstances, and (2) explain any substantial differences in outcome.¹⁷

In D. 00-09-035 and D. 00-12-053, we stated that although the Commission had in some instances approved applications for transfer of control on a nunc pro tunc basis, the Commission does not have a policy in favor of nunc pro tunc approvals.¹⁸ We also announced that in the future, we may deny such applications and may impose penalties for failure to obtain advance Commission authorization as required by Section 854(a).¹⁹ In recent years, we have generally declined to grant nunc pro tunc approvals of applications for the transfer of control of a public utility. Applicants and other public utilities have therefore been given notice that the Commission will require compliance with the requirements of Section 854(a) and may impose penalties for violations.

Here, Applicants have presented no circumstances which justify approval of their application on a nunc pro tunc basis. Despite their business need to move swiftly, Applicants still have a duty to comply with Section 854(a). Moreover, Applicants could have avoided this violation by filing the application earlier and requesting expedited Commission approval. In addition, this transaction is the second time that Yaktastic and Yak America has violated Section 854(a) by failing to obtain prior Commission approval of a transfer of control.

Although in the past, the Commission has not always imposed sanctions for violations of Section 854, in D.00-09-035 we held that our precedent of meting out lenient treatment to those who violate Section 854(a) had failed to deter additional violations. We therefore stated a policy of imposing fines for violations of Section 854(a) in order to deter future violations.²⁰ Therefore, requiring the Applicants to pay a fine for violating Section 854(a) would be consistent with D.00-09-035.

Conclusion: Setting the Fine

We previously concluded that the Applicants should be fined for their violation of Section 854(a). The application of the criteria adopted by the Commission in D.98-12-075 to the facts of this case indicates that a moderate fine is warranted. First, Applicants' violation of Section 854(a), though not egregious, was serious. Second, this violation was the second time that Applicants have transferred control of Yak America without first obtaining Commission approval in order to advance their own business objectives. Third, while Yak and its subsidiaries have incurred some losses during 2006, Applicants appear to have sufficient resources to pay a moderate fine. However, the public interest and the interests of consumers were not significantly harmed by the Applicants' violation of Section 854(a).

We conclude based on the facts of this case that the Applicants should be fined $10,000 for this second violation of Section 854(a). The fine we impose today is meant to deter future violations Section 854(a) by the Applicants and other parties. We emphasize that the size of the fine we impose today is tailored to the unique facts and circumstances before us in this proceeding. We may impose larger fines in other proceedings if the facts so warrant. If Applicants again violate Section 854(a), we shall impose more serious sanctions.

¹⁷ 1998 Cal. PUC LEXIS 1016, *77.

¹⁸ We noted that we based our past nunc pro tunc approval of certain transactions on the unique facts of each case.

¹⁹ Id.

²⁰ D.00-09-035, pp. 10-11. D.00-09-035 required the applicants in that proceeding to pay a $500 fine for violating Section 854(a). In D.00-12-053, the Commission imposed a fine of $5,000 for a similar violation of Section 854(a).