STATEMENTS OF POLICY
PENNSYLVANIA PUBLIC UTILITY COMMISSION
[52 PA. CODE CH. 69]
[35 Pa.B. 5272] [L-00051875]
Litigation and Settlement Proceedings Involving Violations of the Public Utility Code and Commission Regulations Public Meeting held
August 11, 2005Commissioners Present: Wendell F. Holland, Chairperson; James H. Cawley, Vice Chairperson; Bill Shane; Kim Pizzingrilli; Terrance J. Fitzpatrick
Proposed Policy Statement for Litigated and Settled Proceedings Involving Violations of the Public Utility Code and Commission Regulations; Doc. No. M-00051875
Order By the Commission:
A. Introduction
The Commission proposes to establish a policy statement that will address the factors/standards for evaluating litigated and settled cases involving violations of the Public Utility Code (Code) and Commission regulations. The Commission currently evaluates litigated and settled cases involving such violations according to the standards established in Rosi v. Bell Atlantic-Pennsylvania, Inc. and Sprint Communications Company, L.P., C-00992409 (Order entered March 16, 2000). The Commission initially adopted the standards in Rosi in order to determine the amount of civil penalties to be assessed in slamming cases, as well as to evaluate settlement agreements in slamming cases. See Pennsylvania Pub. Util. Comm'n v. PEPCO Energy Serv., M-00001432 (Order entered Nov. 9, 2000).
Rosi was a litigated case, in which a hearing was held before an Administrative Law Judge (ALJ). The ALJ made determinations, including that Sprint Communications Company (Sprint) should pay a civil fine of $64,000 for slamming. Sprint appealed as to the amount of the fine, and the Commission issued an order which set forth the following standards the Commission would apply when determining the amount of a civil penalty in slamming cases:
1. Whether the violation was intentional or negligent. If the violation is intentional, the Commission should start with the presumption that the penalty will be in the range of $500 to $1,000 per day. If the violation is negligent, the Commission should start with the presumption that the penalty will be in the range of zero dollars to $500 per day. The precise penalty amount per day will be arrived at by applying the following additional standards, while recognizing that the Commission retains broad discretion in determining a total civil penalty amount that is reasonable on an individual case basis.
2. Whether the regulated entity promptly and voluntarily took steps to return the customer to the appropriate carrier and credited the customer's account.
3. Whether the regulated entity initiated procedures to prevent future slamming.
4. The number of customers affected and the duration of the violation.
5. Whether the penalty arises from a settlement or a litigated proceeding.
6. The compliance history of the regulated entity which committed the violation.
7. Whether the regulated entity cooperated with the Commission.
8. The amount necessary to deter future violations.
9. Past Commission decisions in similar situations.
10. Other relevant factors.
Subsequently, the Commission determined that all violations of the Code and the Commission's regulations would be subject to review under the standards set forth in Rosi. Pennsylvania Pub. Util. Comm'n v. NCIC Operator Serv., M-00001440 (Order entered Dec. 21, 2000). In reference to the Commission's review under the Rosi standards, the NCIC Operator Services case states,
This review is conducted with the purpose of developing or, in cases of settlement agreements, reviewing the appropriate penalty to be applied for all types of violations for all categories of public utilities. Clearly, the factors we consider pursuant to our decision in Rosi are generic in nature and can be applied in all cases. The nature of the violation (intentional or negligent), impact (customers affected and duration), extent of cooperation by the regulated entity, and compliance history are, inter alia, examples of factors that can be reviewed for all types of violations for all types of utilities.These factors, particularly the extent of cooperation by the regulated entity and measures taken to improve compliance, have been viewed as key mitigating factors under Rosi, and the Commission has examined such factors to determine whether settlement agreements are in the public interest.
B. Policy Statement
The Commission finds that many of the Rosi standards work well in evaluating litigated and settled cases involving violations of the Code and the Commission's regulations. However, all of the Rosi standards do not apply equally well to all utility cases, particularly those that do not deal with slamming issues. This is due to the wide variety of matters that come before the Commission, including the Commission's Bureau of Consumer Services matters, Gas Safety Division matters, the Bureau of Transportation and Safety matters, and other complaint matters before the Commission. Moreover, strict compliance with the Rosi standards does not allow parties adequate flexibility in reaching settlements. As such, this proposed policy statement will set forth new factors/standards for evaluating litigated and settled cases involving violations of the Code and the Commission's regulations. The factors may be considered by the Commission in determining if a fine/civil penalty for violating a Commission order, regulation, or statute is appropriate, and if a proposed settlement for a violation is reasonable and approval of the settlement agreement is in the public interest.
1. Litigated Cases
In adjudicating litigated cases where the Commission must weigh the evidence, determine culpability and, where appropriate, assess a fine or other penalty, the Commission proposes in Annex A that its first factor will retain considerations regarding intentional or negligent conduct as it did in Rosi. In addition, the Commission will consider the seriousness of the conduct at issue. Under the Commission's proposal, when conduct of a serious nature is involved, such as property damage, personal injury, and willful fraud or misrepresentation, the conduct could warrant a higher/more significant penalty. When the conduct is less egregious, such as administrative filing/technical errors, it could warrant a lower/less significant penalty.
For its second factor, the Commission will consider the regulated entity's efforts to modify its internal practices/procedures in order to address the conduct at issue and prevent similar conduct in the future. These modifications may include activities such as training and improving company techniques and supervision.
The rest of the factors the Commission will consider in its policy statement are those it has retained from Rosi, including the following: the number of customers affected and the duration of the violation, the compliance history of the regulated entity which committed the violation, whether the regulated entity cooperated with the Commission's investigation, the amount of the civil penalty necessary to deter future violations, past Commission decisions in similar situations, and other relevant factors.
2. Settled Cases
With regard to settled cases the parties should be afforded more flexibility in determining the amount of a fine, penalty, or other resolution. Though many of the Rosi standards may be taken into consideration, the standards will not be applied in such a restrictive fashion.
The first factor to be considered will focus solely on the seriousness of the conduct at issue. This includes a determination of whether public safety and/or property damage are at issue. This factor is distinguished from that applied in litigated cases by the lack of a finding of intentional or negligent conduct on the part of the regulated entity.
The second factor, like that in litigated cases, focuses on the actions taken or proposed by the regulated entity to correct the conduct involved in the proceeding. Numerous other factors may also be taken into consideration in settled cases. These factors may include, but not be limited to, the number of customers affected, the duration of the incident, whether the regulated entity cooperated with the Commission's investigation, and other relevant factors.
We encourage settlements and intend to allow the parties flexibility in reaching amicable resolutions to complaints and other matters before us so long as the settlement is in the public interest. To this end the parties to a settlement should include in the settlement agreement a statement in support of settlement explaining how the settlement is in the public interest. The statement may be filed jointly by the parties or separately by each individual party. Accordingly, while some of the standards for settlements may reflect those to be applied in litigated cases, parties will be free to propose innovative provisions that address the issues at hand but which may not strictly adhere to specific guidelines. As always, our overriding concern in these matters is that any proposed agreement reflect the public interest.
All interested parties are invited to submit comments on the proposal set forth in Annex A. We propose to amend Chapter 69 of our regulations by adding 52 Pa. Code § 69.1201 as set forth in Annex A, which establishes a policy statement for litigated and settled proceedings involving violations of the Public Utility Code and Commission regulations. Accordingly, pursuant to section 501 of the Public Utility Code, 66 Pa.C.S. § 501, and the Commonwealth Documents Law, 45 P. S. §§ 1201 et seq., and regulations promulgated thereunder at 1 Pa. Code §§ 7.1--7.4, we amend the regulations at 52 Pa. Code Chapter 69 as previously noted and as set forth in Annex A; Therefore,
It Is Ordered That:
1. The proposed amendments to 52 Pa. Code Chapter 69, as set forth in Annex A, are issued for comment.
2. The Secretary shall submit this order and Annex A to the Governor's Budget Office for review of fiscal impact.
3. The Secretary shall certify this order and Annex A and deposit them with the Legislative Reference Bureau for publication in the Pennsylvania Bulletin.
4. Interested persons may submit an original and 15 copies of written comments to the Office of the Secretary, Pennsylvania Public Utility Commission, P. O. Box 3265, Harrisburg, PA 17105-3265 within 30 days from the date this order is published in the Pennsylvania Bulletin.
5. A copy of this Order shall be posted on the Commission's website.
6. The contact person for this matter is Wayne T. Scott, Law Bureau, (717) 783-6150 (legal).
JAMES J. MCNULTY,
SecretaryFiscal Note: 57-241. No fiscal impact; (8) recommends adoption.
Annex A
TITLE 52. PUBLIC UTILITIES
PART I. PUBLIC UTILITY COMMISSION
Subpart C. FIXED SERVICE UTILITIES
CHAPTER 69. GENERAL ORDERS, POLICY STATEMENTS AND GUIDELINES ON FIXED UTILITIES
FACTORS AND STANDARDS FOR EVALUATING LITIGATED AND SETTLED PROCEEDINGS § 69.1201. Factors and standards for evaluating litigated and settled proceedings involving violations of the Public Utility Code and Commission regulations.
The Commission will consider specific factors and standards in evaluating litigated and settled cases involving violations of 66 Pa.C.S. (relating to Public Utility Code) and this title. These factors and standards will be utilized by the Commission in determining if a fine for violating a Commission order, regulation or statute is appropriate, as well as if a proposed settlement for a violation is reasonable and approval of the settlement agreement is in the public interest. The factors and standards that will be considered by the Commission include the following:
(1) Standards for litigated cases.
(i) Whether the conduct at issue was deemed intentional or negligent in nature. When conduct has been deemed intentional, the conduct may result in a higher penalty.
(ii) Whether the conduct at issue was of a serious nature. When conduct of a serious nature is involved, such as property damage, personal injury, and willful fraud or misrepresentation, the conduct may warrant a higher penalty. When the conduct is less egregious, such as administrative filing or technical errors, it may warrant a lower penalty.
(iii) Whether the regulated entity made efforts to modify internal practices and procedures to address the conduct at issue and prevent similar conduct in the future. These modifications may include activities such as training and improving company techniques and supervision.
(iv) The number of customers affected and the duration of the violation.
(v) The compliance history of the regulated entity which committed the violation.
(vi) Whether the regulated entity cooperated with the Commission's investigation.
(vii) The amount of the civil penalty or fine necessary to deter future violations.
(viii) Past Commission decisions in similar situations.
(ix) Other relevant factors.
(2) Standards for settled cases. Though the following standards may be taken into consideration in the evaluation of a proposed settlement, these standards, when applied, will not be applied in as strict a fashion as in a litigated proceeding. The parties in settled cases shall be afforded flexibility in reaching amicable resolutions to complaints and other matters so long as the settlement is in the public interest. The parties to a settlement should include in the settlement agreement a statement in support of settlement explaining how the settlement is in the public interest. The statement may be filed jointly by the parties or separately by each individual party.
(i) Whether the conduct at issue was of a serious nature. When conduct of a serious nature is involved, such as property damage, personal injury, and willful fraud or misrepresentation, the conduct may warrant a higher penalty. When the conduct is less egregious, such as administrative filing or technical errors, it may warrant a lower penalty.
(ii) Whether the regulated entity made efforts to modify internal practices and procedures to address the conduct at issue and prevent similar conduct in the future. These modifications may include activities such as training and improving company techniques and supervision.
(iii) The number of customers affected and the duration of the violation.
(iv) The compliance history of the regulated entity which committed the violation.
(v) Whether the regulated entity cooperated with the Commission's investigation.
(vi) Other relevant factors.
[Pa.B. Doc. No. 05-1776. Filed for public inspection September 23, 2005, 9:00 a.m.]
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