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It’s not uncommon for the five regulators at the California Public Utilities Commission to disagree with each other. But the rules of engagement were drastically revised last week when the agency’s own legal department was forced to pick sides. In what some observers call an unprecedented move, the CPUC legal division locked out two commissioners, barring them from access to the legal analysis it is mandated to provide to the commission. Subsequent efforts by Carl Wood and Loretta Lynch, the two dissident commissioners, to obtain independent legal advice were summarily dismissed. “We don’t have a public defender’s service for commissioners who disagree with our opinions,” said Commissioner Jeff Brown. The schism is the latest twist in the controversial Pacific Gas & Electric Co. bankruptcy case and underscores to what extent the matter has pushed the commission into uncharted legal waters. “It’s an absolutely remarkable, unique circumstance,” said James Squeri, an attorney at San Francisco’s Goodin, MacBride, Squeri, Ritchie & Day who worked in the CPUC for more than seven years. “It’s an extraordinary statement of the degree to which this issue has touched a raw nerve and is obviously deeply held by both sides.” The situation stems from Wood and Lynch’s federal court appeal of a bankruptcy judge’s confirmation of the PG&E reorganization plan. The appeal put the pair in the improbable position of being litigants against their own agency, which voted 3-2 in December to approve a settlement agreement at the heart of the PG&E plan. Wood and Lynch contend that the plan unlawfully abdicates the PUC’s ratemaking authority. Because of the appeal, the commission’s legal division appears to have concluded that Wood and Lynch could no longer be privy to some of its work product and refused to provide them with its legal analysis of the agency’s position on the PG&E settlement. Lionel Wilson, the deputy CPUC general counsel who is responsible for the PG&E matter, did not return calls for comment. According to Squeri, the decision to withhold the analysis from an adverse party is not surprising. “It’s like having your trial strategy being given to the other side, or what you really think about the legitimacy of your position,” he said. According to a statement released by Wood and Lynch, the pair was only informed that the legal division had frozen them out a few days before they were slated to vote on whether to rehear the commission’s approval of the PG&E settlement. They subsequently sought to retain separate outside counsel, since, they claimed, the Public Utilities Code mandates that all commissioners receive necessary legal advice. “Instead of honoring the statutory requirement to provide us with the required advice, the commission majority voted to override our request and to proceed to vote on the matter,” the statement said. At least one commissioner took issue with this reasoning. “They are not entitled to paid outside counsel,” said Brown. He noted that Wood and Lynch, like every other commissioner, have personal legal advisers who can provide them with any analysis they require when a conflict arises. But Thomas Long, the adviser to Lynch, said the commissioners’ advisers are not meant to be doing that kind of work. “The commissioners have very small staffs, so they don’t have the kind of resources that the overall legal division has,” he said. “The fact remains that we’re entitled to analysis from the GC’s office on the issues raised during the rehearing.” Brian Cragg, another former CPUC attorney and now partner at Goodin, MacBride, said he could not recall an instance in which an individual commissioner was not given adequate representation by the legal division. But he said that while the CPUC’s 60-attorney legal division serves the individual commissioners, the client is ultimately the commission itself. “The commission is a body rather than five individuals,” said Cragg. “Once the commission as a body has made a decision, it would seem to me that the GC would be obliged to support it.”

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