2. Discussion

D.00-12-053 concludes that the Commission has the authority to ignore the provisions of section 854 and approve this transaction based on a theory of prospective approval. Despite the fact that section 854 clearly indicates that transactions must be approved by the Commission first, and completed by the parties second, the majority concludes that it can approve an already-completed transaction, as long as the approval is prospective and not retroactive. This conclusion misses the point. The fact that a subsequent approval only has prospective effect does not change the nature of that approval: it is subsequent. And subsequent approval is the precise thing the statute prohibits. To approve such a transaction without a legal basis supporting deviation from these statutory requirements would contravene the directive that this Commission "proceed in the manner required by law." (Pub. Util. Code, § 1757, subd. (a)(2).)

Nor does D.00-12-053's claim that the transaction was temporarily void during the period that a Commission decision was pending withstand analysis. Section 854 does not provide for a partial or limited period during which a transaction may be considered void. Rather section 854 makes impermissible transactions void as a matter of law. In fact, the statute's use of the word "void" rather than "suspended," or "invalid," or "unenforceable," indicates that such a transaction has no effect, and cannot be re-instated.

Only section 853 gives the Commission authority to determine that certain transactions or types of transactions need not be subject to the full review requirements of the statute. However, the public interest test in section 853 is not met by ordinary transactions that were completed without Commission review as a result of oversight or a business decision to ignore the requirements of the Public Utilities Code. This Commission has a clear practice of invoking section 853 only to address significant practical difficulties created when transactions have been voided in "extraordinary circumstances." (E.g., Re Pacific Gas and Electric Company (1999) [D.99-02-062] __ Cal.P.U.C.2d __, __, 1999 Cal.P.U.C. LEXIS 59, LEXIS p. 9.) The Commission has made clear the application of section 853 must be a "seldom used procedure." (Ibid.) Frequent reliance on section 853 would create an exception that swallowed the rule. If the Commission relied regularly on section 853 it would effectively amend the clear requirements of the other 850 series sections out of the Public Utilities Code. This Commission is not empowered to take such legislative action.

In fact, the Commission's continued attempts to find a basis to approve illegal business transactions is troublesome. The dissents in In re CRL Network Services, Inc. (2000) Cal.P.U.C. Dec. No. (D.) 00-09-033 and In re StormTel, Inc. (2000), D.00-09-035 criticized the fact that two requests for retroactive approval were granted at a single Commission meeting, and the relative normalcy that surrounded those proceedings. Here, the fact that D.00-12-053 continues to search for other theories to support approval of invalid mergers causes us the same concern.

Finally, the majority's assessment of a $5,000 penalty for contravening the statutes' requirements does not convince us that the program it wishes to adopt is proper. Although this figure is larger than the trivial $500 the Commission previously imposed, it is imposed without regard to the size of the companies, or the transaction involved. As a result, it is difficult to see how a business would fail to see it as an acceptable "late fee," making it an incentive, rather than a deterrent to non-compliance. The consequence for failing to follow section 854 should be the voiding of the transaction specified in the statute, and not any others.