A California Agency Implements Important Public Policy Goals Through Secret Litigation Settlement: A Case Study
| Date | 01 September 2013 |
| Author | Ward Benshoof and Diane Wizig |
43 ELR 10754 ENVIRONMENTAL LAW REPORTER 9-2013
A California Agency Implements
Important Public Policy Goals
Through Secret Litigation
Settlement: A Case Study
by Ward Benshoof and Diane Wizig
Ward Benshoof is a Partner and Diane Wizig is an Associate with Alston & Bird LLP. e authors represented ECOtality, Inc.,
in their challenge to the settlement agreement between the California Public Utilities Commission and NRG Energy, Inc.
Some administrative agencies exist in California solely
as creatures of the state legislature. Other agencies,
such as the California Public Utilities Commission
(PUC), exist by virtue of both the state Constitution and
subsequent delegation of power and responsibilities by the
legislature. In either case, administrative agencies have only
such powers as have been delegated to them. A nd when
they exercise those powers, certain rules generally apply.
ese vary, but typically include:
• an obligation to follow a particula r set of procedures
in making any decision;
• to follow the prescribed procedures in a transparent
manner that will allow for public review and com-
ment on the agency’s proceedings; and
• a requirement to publicize the agency’s rationale for
reaching the specic decision it did.
As a general rule, the more consequential the agency’s
action will be, the stricter these rules tend to and should
be enforced. Persons potentially adversely impacted by
the agency’s decision typically are allowed to cha llenge
whether the agency followed the correct procedure and/
or had the authority to do what it did. To do so, impacted
persons usually have full access to Ca lifornia’s court system
to seek redress.
Quite dierent circumstances were presented in March
2012, when the PUC announced that it had entered into
an agreement with NRG Energy, Inc. (NRG) obligating
NRG to make a $100 -million investment in building out
a network of electric vehicle charging stations (EVCS) in
selected California locations.
I. The 2012 PUC/NRG Agreement
In the wake of California’s awed energy deregulation
instituted in 1996, the state faced an energy crisis in
2000-2001, including rolling blackouts and the ultimate
bankruptcy of Pacic Gas and Electric. In an eort to ade-
quately meet electricity demands, California contracted
with various wholesale energy sellers, including a company
known as Dyneg y. In 2002, the PUC sued Dynegy (and
others) at the Federal Energy Regulatory Commission
(FERC) under the Federa l Power Act, seeking to terminate
or amend those contracts. e PUC alleged that California
ratepayers had been overcharged by “hundreds of millions
of dollars.”1
e case went to trial, was dismissed, appealed, and ulti-
mately was remanded to FERC where it remained until
March 2012, when the parties announced that a settlement
agreement had been reached (the Agreement) wherein the
California ratepayer claims would be dismissed and NRG
(the successor to Dynegy) would: (1)pay the PUC $20 mil-
lion; and (2)invest $102.5 million in California to expand
its electric vehicles (EV) charging infrastructure.
e Agreement’s announcement came as a complete
surprise to everyone other than the PUC and NRG. As
with almost all settlement agreements, it had been negoti-
ated in secret, without any of the typical public process
that normally accompanies PUC action.
e president of the PUC praised the Agreement as
essential to jump start the market for EVs in California:
e settlement will l aunch a virtuous circle in which ever
more California ns will feel comfortable d riving EVs, and
growing EV sales will in turn attract ever more invest ment
1. See Public Utilities Comm’n of the State of California v. Allegheny Energy
Supply Co., LLC et al., FERC Docket No. EL02-60-000 (led Feb. 25,
2002).
Copyright © 2013 Environmental Law Institute®, Washington, DC. Reprinted with permission from ELR®, http://www.eli.org, 1-800-433-5120.
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