JET/tcg 4/15/2004

BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA

Order Instituting Investigation into the Gas Market Activities of Southern California Gas Company, San Diego Gas and Electric, Southwest Gas, Pacific Gas and Electric, and Southern California Edison and their impact on the Gas Price Spikes experienced at the California Border from March 2000 through May 2001.	Investigation 02-11-040 (Filed November 21, 2002)
Order Instituting Investigation whether San Diego Gas & Electric Company, Southern California Gas Company and their holding company, Sempra Energy, respondents, have complied with relevant statutes and Commission decisions, pertaining to respondents' holding company systems and affiliate activities.	Investigation 03-02-033 (Filed February 27, 2003)

ADMINISTRATIVE LAW JUDGE'S RULING
ON MOTION CONCERNING DISCOVERY COSTS

Southern California Edison (SCE), a respondent in this Commission-initiated investigation, served a subpoena duces tecum on Sempra Energy Trading Corp. (SET) seeking many types of documents pertaining to the issues being addressed in this proceeding. One category of documents sought under the subpoena are email records for certain SET employees for the period of March 1, 2000, through May 31, 2001. In response, SET has filed a motion to require SCE to pay SET's costs incurred in searching and retrieving the pertinent email records (Motion of February 25, 2004). The motion is denied.

SET is not a party to this investigation. SET is, however, a subsidiary of Sempra Energy (Sempra), as well as an affiliate of other Sempra subsidiaries including San Diego Gas & Electric Company (SDG&E) and Southern California Gas Company (SoCalGas). Sempra, SDG&E, and SoCalGas are all named respondents in this investigation.

In its motion concerning costs, SET alleges that it may expend more than one million dollars in recovering and producing the emails responsive to SCE's subpoena duces tecem. SCE contests this figure, offering its own estimate of $270,000 for such document retrieval expenses.

SET argues that California Evidence Code section 1563 is applicable to SCE's subpoenaed document request. SET also argues that, pursuant to section 1563, these document-production costs should be paid at the time of actual delivery of the documents to SCE. SET also cites state and federal cases requiring discovery to proceed in a manner that minimizes costs for nonparties. SCE, for its part, seeks to distinguish these cases. SCE also argues that SET is not properly characterized as a nonparty since the company's "activities are expressly identified by the Commission as issues to be investigated in this proceeding." SCE Response at 5 (March 19, 2004) (citing Scoping Memo for Phase I of the proceeding).

Before addressing the motion, I reaffirm the ruling previously made by ALJ Thomas that, at least as of March 29, 2004, SET was obligated to commence the restoration, review, and processing of the requested emails pending a decision on the allocation of costs. I now turn to SET's motion for cost recovery.

Evidence Code § 1563

Evidence Code section 1563 indicates that "[a]ll reasonable costs incurred in a civil proceeding by any witness which is not a party with respect to the production of . . . business records . . . requested pursuant to a subpoena duces tecem may be charged against the party serving the subpoena duces tecem." SET makes the unwarranted assumption that this provision applies to all "adjudicatory bodies" including the Commission.¹

By its own terms, the Evidence Code "applies in every action before the Supreme Court or a court of appeal or superior court" or other judicial proceedings. The text of section 1563(b) indicates that it applies to discovery in a "civil proceeding," a different venue from the Commission-initiated investigation underway here. Provisions of the Public Utilities Code that apply to hearings, investigations, and proceedings before the Commission also indicate that "the technical rules of evidence need not be applied." Pub. Util. Code § 1701(a). The Commission's own Rules of Practice and Procedure do not accomplish a wholesale incorporation of the Evidence Code. Indeed, only one specific mention of the California Evidence Code appears in the Rules of Practice and Procedure in a brief discussion of document certification (Rule 69). Rather than wholesale incorporation of the Evidence Code, Rule 64 indicates only that "[a]lthough technical rules of evidence ordinarily need not be applied in hearings before the Commission, substantial rights of the parties shall be preserved."

SET has failed to demonstrate the applicability of Evidence Code section 1563 to this proceeding. For the above reasons, I conclude that section 1563 does not afford SET a legal basis for recovering the email recovery costs incurred in complying with the subpoena duces tecem served by SCE.

¹ In an email dated April 8, 2004, to this ALJ and the parties, SET indicated that Judge Thomas had recognized that Evidence Code section 1563 allows the withholding of documents until preparation costs have been paid. After reviewing the audio recording of the March 29, 2004, law and motion hearing, I have determined that Judge Thomas did not rule on the applicability of section 1582 to this proceeding.