CPUC Adopts Comprehensive Enforcement Policy

On November 6, 2020, the CPUC issued Resolution M-4846, which was adopted at the November 5, 2020 CPUC business meeting. Resolution M-4846 provides an Enforcement Policy to promote maximum compliance with CPUC rules and requirements through the adoption and application of consistent enforcement practices and to develop a sufficient record ensuring regulated entities subject to an enforcement action receive due process. Resolution M-4846 also includes a Penalty Assessment Methodology which is used to determine the amount of a penalty for each violation. Resolution M-4846 applies to all entities regulated by the CPUC.

Enforcement Actions

In carrying out CPUC mandates and requirements, staff may pursue different levels of enforcement action, outlined below. All enforcement actions shall be designed and implemented to ensure that timely action is taken to avoid or correct a violation and return to compliance.

• In Person or Telephone Communication: Staff may, but are not required to, inform regulated entities of violations.
• Warning Letter or Email: Staff may send a regulated entity a letter or an email that identifies program weaknesses, safety concerns, or opportunities for improvement (that do not being cited as violations).
• Request for Information: Staff are authorized to inspect the accounts, books, papers, and documents of a regulated entity.
• Subpoena: Staff may subpoena records or depose or examine a person under oath from a regulated entity as permitted by the Public Utilities Act.
• Cease and Desist/Stop Work Order: The CPUC or staff may issue an order to cease and desist an activity or an order to stop work.
• Notice of Violation: When a violation is identified, staff may issue a Notice of Violation to a regulated entity. An entity receiving a notice of violation may respond. After reviewing the response, Staff may:
  • Send a Proposed Administrative Consent Order and negotiate a proposed settlement for CPUC review;
  • Request additional information;
  • Take the next appropriate enforcement action; or
  • Notify the regulated entity that the response resolved the violation.
• Administrative Consent Order: A negotiated proposed settlement shall be memorialized as an Administrative Consent Order, which is subject to review and approval by the CPUC.
• Citation and Compliance Programs: For violations that fall under an existing Citation and Compliance Program, staff shall determine whether to issue a citation as allowed under the program or take a different enforcement action. Staff will consider whether circumstances warrant more flexibility, the culpability of the regulated entity, whether the entity benefited economically, whether violations are chronic, whether violations can be corrected, the amount of actual or potential harm, whether corrective action is required, and whether the case warrants other action (e.g., Order Instituting Investigation, civil, or criminal action) in determining whether a different enforcement action is appropriate.
• Administrative Enforcement Order: Staff may issue a proposed Administrative Enforcement Order to a regulated entity, which is subject to review and approval by the CPUC. The regulated entity may request a hearing on the AEO.
• Order Instituting Investigation: Staff may recommend that the CPUC issue an OII.
• Order to Show Cause: Staff may recommend that the CPUC issue an Order to Show Cause.
• Suspension, Alteration, Amendment, and Revocation/Receivership: The CPUC or staff may suspend, alter, amend, or revoke the license or certification of a regulated entity.
• Civil or Criminal Action: Staff may request that the CPUC refer the matter to the Legal Division for the filing of a civil or criminal action, including requests for injunctive relief.
• Referral to or from and Coordinating with Other Agencies: The case may be referred to another local, state, or federal agency for consideration of enforcement action, if appropriate.

Penalties

Staff may propose, and the CPUC may assess, a penalty against a regulated entity within the statutory range authorized by the Public Utilities Act. Resolution M-4846 includes a Penalty Assessment Methodology setting forth the factors that staff and the CPUC must consider in determining the amount of a penalty for each violation. The factors include:

• Severity or Gravity of the Offense
• Conduct of the Regulated Entity
• Financial Resources of the Regulated Entity, Including the Size of the Business
• Totality of the Circumstances in Furtherance of the Public Interest
• The Role of Precedent

For additional information, please contact Jed Gibson.