Regulators of utilities and industry work very closely with people they regulate, often developing personal relationships. That is not shocking. These people of shared expertise and experience move back and forth between the public and private sector, regulating former and future employers while in transit. That is not shocking.

State Public Utilities Commission (PUC) officials and Pacific Gas & Electric (PG&E) executives exchanged thousands of e-mails for years, plotting strategy on nuclear power plants, gas pipeline safety and financial compensation in what appears, in hindsight, to clearly be improper, if not illegal, conduct of the public’s business in a back room. That is only shocking if one has not heard of e-mail.

What was shocking Wednesday as experts testified before the state Senate Energy, Utilities and Communication Committee about a culture of “lawlessness” at the PUC is that anyone could even feign surprise.

The San Francisco Chronicle reported that Ed Howard, an expert in regulatory and administrative law at the University of San Diego law school’s Center for Public Interest Law, told lawmakers that what was shocking was that the e-mails exist at all. They are casual and belie suggestion that the participants thought their exchanges were “anything untoward or wrong.”

Where could the e-mailers possibly have gotten such an idea in heavily regulated California, where business leaders complain of the insular, oppressive, job-killing practices of activist government agencies?     

“It is unprecedented to the degree to which the regulated entity sought—and successfully sought—to control the terms by which it is being regulated,” Howard said of the PUC/PG&E flap.

That’s debatable, judging by the lead sentence of a Los Angeles Times story the day before. “The agencies charged with overseeing oil production and protecting California's ever-dwindling water sources from the industry's pollution all fell down on the job, one state official told a panel of peeved lawmakers Tuesday.”

Senator Hannah-Beth Jackson (D-Santa Barbara) remarked at the hearing over the hundreds of unpermitted wastewater injection wells pumping toxic materials into clean aquifers, “There has been a serious imbalance between the role regulating the oil and gas industry and the role of protecting the public.”  

That sounds like a precedent.

But Stephen Weissman, a former PUC lawyer and current professor at UC Berkeley, said at Wednesday’s hearing the utility commission and PG&E really don’t need a precedent. “California does not even discourage” the contacts, Weissman said. “To the contrary, it welcomes them.”

It’s how we roll in California. Although there is language abounding in rules about the impropriety of regulators becoming overly cozy with regulatees, Weissman said commissioners aren’t required to report every contact and there is no penalty for violation of the rules. So-called “ex-parte” communications are supposed to be made public so all parties to an issue have equal access to decision makers, but they aren’t.  

The U.S. Department of Justice and the state Attorney General’s office are investigating some of the more egregious improprieties in the unfolding PUC scandal, like alleged judge shopping to adjudicate billion-dollar issues. Mistakes have been acknowledged. Some heads have rolled.  

Demands for the e-mails began last year during a court proceeding over the 2010 San Bruno gas pipeline explosion that killed eight people and leveled a neighborhood. Dribs and drabs were released until public pressure forced the disclosure of 65,000 e-mails.

The Senate panel heard a report from its staff Wednesday that the rules governing PUC contacts with parties involved in pending cases are pretty much ignored. The staff recommended that not happen.

–Ken Broder

To Learn More:

Experts: E-mails Show Culture of “Lawlessness” at CPUC (by Jaxon Van Derbeken, San Francisco Chronicle)

Report: PUC Needs Tougher Rules on Contact Between Utilities, Commissioners (by Marc Lifsher, Los Angeles Times)

PG&E Caves to “Emotional” San Bruno “Nuts,” Will Release All 65,000 E-Mails (by Ken Broder, AllGov California)