In the recent Central Hudson merger and rate plan extension case, it may be that ex parte presentations played a role in the Commission's unexpected overturning of the Recommended Decision of Administrative Law Judges presiding in the matter to reject the acquisition of the utility by Fortis, Inc.
In addition to storm and LIPA related matters, the Moreland Commission on Utility Storm Preparations and Response also looked at the functioning of New York's utility regulatory system. One of the matters criticized in their Final Report is the practice of unreported "ex parte" communications at the PSC, between utility representatives and Commissioners or their advisors which are not divulged to parties in the case or the public. New York's practice is at odds with the practice of most other state and federal utility regulatory agencies.
The Moreland Report states:
6.2 EX PARTE COMMUNICATIONS
While there are various ways in which any interested party may appear before and/or file comments with the PSC, it is obvious that there exists disparity in the ability of certain classes of utility customers to avail themselves of direct access to the decision-makers at the PSC and DPS. The Commission learned during the course of its investigation that it is statutorily permissible and common practice for utility company executives, lobbyists and other paid representatives of interested parties to have unfettered access to the PSC Chair and Commissioners without having to disclose details of these conversations, presentation materials or other specifics to the other parties participating in cases before the PSC ex parte communications consist of evidence, arguments or other information related to a disputed issue pending before a decision-maker or in advance of such submission. Such communications are made in a manner that makes that information insufficiently available to challenge and counter by the adversely affected party or those with differing viewpoints. Since ex parte communications enable one party to influence a decision-maker off-the-record and outside the presence of the other interested parties, it effectively skirts procedural due process. Ex parte communications have the effect of undermining the indispensable fairness and unbiased attributes of decision-makers in judicial and administrative proceedings. Thus, actions to control those communications, in the form of statutory frameworks, become necessary for those proceedings before the agency to maintain fairness and transparency with the public-at-large. Of particular concern to the Commission is that many ratepayers lack the necessary resources to express their opinions and concerns on matters that impact their lives and their pocketbooks, and that of other similarly situated New Yorkers. Such deficiencies may result in certain customers or customer groups, who are not in a position to advocate for themselves and may feel marginalized when compared to utility companies and other special interest groups during proceedings before the PSC. The Commission questions the fairness of allowing one side with virtually unlimited resources total access, while the other side lacks a similar voice.
Based on the Commission’s research, the only two states that currently lack a statutory framework construct to control and manage ex parte communications concerning utility regulation are New York and Massachusetts. New York, in fact, through statute specifically exempts the application of any ex parte rules as they relate to public utility commissions.... The statutory carve-out against the inclusion of ex parte rules as applied to public utility proceedings is unique to New York State....
6.2.1 APPROACHES TO MANAGING EX PARTE COMMUNICATIONS
The exact verbiage used to limit or prohibit ex parte communications varies from state to state, but differs little in substance, each limiting ex parte communication. The real difference between each states’ rules relate directly to the timing of the imposition of a ban on ex parte communication and whether communication is absolutely prohibited or instead, requires notice to all parties. Most states prefer a noticing provision and New York’s State Administrative Procedures Act (SAPA) Law governing state agencies (those to which it applies) prohibits communication in adjudicatory proceedings “except upon notice and opportunity for all parties to participate”, therefore the timing of the imposition of the ban is the more relevant issue here. [FN]
Approach 1: Imposition Upon Filing
The majority of states impose a “contested case” triggering event for the ban on ex parte communication to begin. In short, once a case is brought before an agency or commission, ex parte communications are prohibited. For example, Ohio’s rule states:
A small number of states ... have all imposed earlier triggering events related to the assignment of a case or a docketing of such matters. In particular, Florida has a very early triggering event that delineates a 90-day pre-filing period, where no ex parte communications can occur after a 90-day set out date from any filing in front of an agency or commission. This is the most conservative approach; however, in some cases it may be difficult to predict the specific date that the rules would begin.
Approach 3: Imposition upon Initiation of Decision-Making Phase
A very small minority of states have a later triggering event. [They] impose ex parte rules once a proceeding has moved to the decision-making phase and any deliberations by the decision-maker have begun. This triggering period excludes the period before and during any public proceedings. This approach is the least conservative application of ex parte rules and does not include the public comment period which is critical in developing the record used in the PSC’s deliberative process.
Perhaps one of the most important mandates of the PSC is to protect and enforce the rights of the public. The rules that govern New York’s regulatory
environment are complex and require specific acumen to navigate. The public expects, and indeed deserves, to be afforded full disclosure of PSC and DPS inte ractions with the parties involved in its proceedings. If the PSC is to hold itself out as safeguarding the public interest, it then must codify ex parte communications rules, thereby placing all New York ratepayers on a level playing field.
Recommendations:
• The existing statutory exemption of ex parte rules as they relate to public utility commissions must be eliminated so as to subject the PSC to the same rules that other State agencies that are bound by SAPA.
• Upon elimination of the statutory exemption of ex parte rules, the PSC should enact an implementing regulation that includes a specific triggering event, preferably with a set term prior to filing with the PSC, along with sanctions that are sufficient enough to deter violations (i.e., fines).
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In addition to storm and LIPA related matters, the Moreland Commission on Utility Storm Preparations and Response also looked at the functioning of New York's utility regulatory system. One of the matters criticized in their Final Report is the practice of unreported "ex parte" communications at the PSC, between utility representatives and Commissioners or their advisors which are not divulged to parties in the case or the public. New York's practice is at odds with the practice of most other state and federal utility regulatory agencies.
The Moreland Report states:
6.2 EX PARTE COMMUNICATIONS
While there are various ways in which any interested party may appear before and/or file comments with the PSC, it is obvious that there exists disparity in the ability of certain classes of utility customers to avail themselves of direct access to the decision-makers at the PSC and DPS. The Commission learned during the course of its investigation that it is statutorily permissible and common practice for utility company executives, lobbyists and other paid representatives of interested parties to have unfettered access to the PSC Chair and Commissioners without having to disclose details of these conversations, presentation materials or other specifics to the other parties participating in cases before the PSC ex parte communications consist of evidence, arguments or other information related to a disputed issue pending before a decision-maker or in advance of such submission. Such communications are made in a manner that makes that information insufficiently available to challenge and counter by the adversely affected party or those with differing viewpoints. Since ex parte communications enable one party to influence a decision-maker off-the-record and outside the presence of the other interested parties, it effectively skirts procedural due process. Ex parte communications have the effect of undermining the indispensable fairness and unbiased attributes of decision-makers in judicial and administrative proceedings. Thus, actions to control those communications, in the form of statutory frameworks, become necessary for those proceedings before the agency to maintain fairness and transparency with the public-at-large. Of particular concern to the Commission is that many ratepayers lack the necessary resources to express their opinions and concerns on matters that impact their lives and their pocketbooks, and that of other similarly situated New Yorkers. Such deficiencies may result in certain customers or customer groups, who are not in a position to advocate for themselves and may feel marginalized when compared to utility companies and other special interest groups during proceedings before the PSC. The Commission questions the fairness of allowing one side with virtually unlimited resources total access, while the other side lacks a similar voice.
Based on the Commission’s research, the only two states that currently lack a statutory framework construct to control and manage ex parte communications concerning utility regulation are New York and Massachusetts. New York, in fact, through statute specifically exempts the application of any ex parte rules as they relate to public utility commissions.... The statutory carve-out against the inclusion of ex parte rules as applied to public utility proceedings is unique to New York State....
6.2.1 APPROACHES TO MANAGING EX PARTE COMMUNICATIONS
The exact verbiage used to limit or prohibit ex parte communications varies from state to state, but differs little in substance, each limiting ex parte communication. The real difference between each states’ rules relate directly to the timing of the imposition of a ban on ex parte communication and whether communication is absolutely prohibited or instead, requires notice to all parties. Most states prefer a noticing provision and New York’s State Administrative Procedures Act (SAPA) Law governing state agencies (those to which it applies) prohibits communication in adjudicatory proceedings “except upon notice and opportunity for all parties to participate”, therefore the timing of the imposition of the ban is the more relevant issue here. [FN]
Approach 1: Imposition Upon Filing
The majority of states impose a “contested case” triggering event for the ban on ex parte communication to begin. In short, once a case is brought before an agency or commission, ex parte communications are prohibited. For example, Ohio’s rule states:
After a case has been assigned a formal docket number neither a member of the public utilities commission nor any examiner associated with the case shall discuss the merits of the case with any party or intervener to the proceeding, unless all parties and interveners have been notified and given the opportunity of being present or a full disclosure of the communication insofar as it pertains to the subject matter of the case has been made. Failure of any assigned examiner of the public utilities commission or any commissioner to abide by this section may, at the discretion of the commissioners, lead to that examiner's or commissioner's removal from a particular case or appropriate disciplinary action. [FN] This approach sets a clearly defined triggering event that encompasses the entire public comment and decision-making process.Approach 2: Imposition Prior to Case Assignment
A small number of states ... have all imposed earlier triggering events related to the assignment of a case or a docketing of such matters. In particular, Florida has a very early triggering event that delineates a 90-day pre-filing period, where no ex parte communications can occur after a 90-day set out date from any filing in front of an agency or commission. This is the most conservative approach; however, in some cases it may be difficult to predict the specific date that the rules would begin.
Approach 3: Imposition upon Initiation of Decision-Making Phase
A very small minority of states have a later triggering event. [They] impose ex parte rules once a proceeding has moved to the decision-making phase and any deliberations by the decision-maker have begun. This triggering period excludes the period before and during any public proceedings. This approach is the least conservative application of ex parte rules and does not include the public comment period which is critical in developing the record used in the PSC’s deliberative process.
Perhaps one of the most important mandates of the PSC is to protect and enforce the rights of the public. The rules that govern New York’s regulatory
environment are complex and require specific acumen to navigate. The public expects, and indeed deserves, to be afforded full disclosure of PSC and DPS inte ractions with the parties involved in its proceedings. If the PSC is to hold itself out as safeguarding the public interest, it then must codify ex parte communications rules, thereby placing all New York ratepayers on a level playing field.
Recommendations:
• The existing statutory exemption of ex parte rules as they relate to public utility commissions must be eliminated so as to subject the PSC to the same rules that other State agencies that are bound by SAPA.
• Upon elimination of the statutory exemption of ex parte rules, the PSC should enact an implementing regulation that includes a specific triggering event, preferably with a set term prior to filing with the PSC, along with sanctions that are sufficient enough to deter violations (i.e., fines).
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