3. The Nature of Our Approval

Public Utilities Code section 854 subdivision (a) states in pertinent part (emphasis added):

No person or corporation, whether or not organized under the laws of this state, shall merge, acquire, or control either directly or indirectly any public utility organized and doing business in this state without first securing authorization to do so from the commission. The commission may establish by order or rule the definitions of what constitute merger, acquisition, or control activities which are subject to this section. Any merger, acquisition, or control without that prior authorization shall be void and of no effect. No public utility organized and doing business under the laws of this state, and no subsidiary or affiliate of, or corporation holding a controlling interest in a public utility, shall aid or abet any violation of this section.

Similarly, section 852 prohibits public utilities from purchasing stock in other utilities unless the Commission has given advance approval. (Unspecified references to "sections" in this decision indicate the Public Utilities Code.) Section 852 also provides that stock transactions which are completed without prior Commission approval are void. These strictures ensure that "before any transfer of public utility property is consummated", the Commission will, "review the situation and to take such action, as a condition to the transfer, as the public interest may require." (San Jose Water Co. (1916) 10 CRC 56; see also, In re E. B. Hicks Water Company (1990) 37 CPUC2d 13.)

In this proceeding, the assigned administrative law judge responded to applicants' failure to comply with applicable law by directing applicants to show cause why the application should not be denied in a ruling dated April 24, 2000. The ruling also suggested that applicants should be penalized for failing to comply with section 854. (Cf. Pub. Util. Code, §§ 2107, 2111.)
The ruling directed applicants within 30 days to file a brief, with supporting affidavits as necessary, showing (1) why the purported transfer of control should not be declared void and of no effect, (2) why the operating authorities of the telecommunications carrier should not be revoked pending application for new authority, and (3) why penalties should not be imposed on the applicants pursuant to Pub. Util. Code §§ 2107 and 2111.