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/ Official File CopyReading File CopyUnited States Government / Department of Energy
/ Bonneville Power Administration
DRAFT
DATE: / December 4, 2014
REPLY TO
ATTN OF: / Barry Bennett, LT-7, and Kurt Casad, LP-7
SUBJECT: / Ex Parte – Frequently Asked Questions
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Rate Case Staff
Ex Parte Communications - Questions and Answers
NOTE: If you have any questions about the ex parte rule, please call Kurt Casad at extension 4024 or Barry Bennett at extension 4053, Office of General Counsel.
Q.Why this memo?
A.Bonneville’s customer orientation means that there is the opportunity for regular direct contact with customers. While everyone recognizes the need to continue such conversations in order to do business, we also must be mindful of our legal obligation to ensure that the rate hearing is fair for all parties and that issues that must be resolved in the rate case receive the public scrutiny required. Part of our responsibility as BPA employees is to avoid ex parte communications during the rate case.
Q.What are ex parte communications?
A.An “ex parte communication” is “an oral or written communication regarding the merits of any issue pending in a hearing conducted pursuant to Northwest Power Act section 7(i) which is not on the record and with respect to which reasonable prior notice to parties has not been given, but it shall not include requests for status reports on any hearing.” Section 1010.2(d), BPA Hearing Rules (51 FR 7611) (1986). As discussed below, the ex parte rule forbids ex parte communications.
Q.Why does the rule apply to BPA?
A.The Government in the Sunshine Act amended the Administrative Procedures Act (APA) to provide that no “interested person outside the agency shall make ... to any member of the body comprising the agency ... who is ... involved in the decisional process of the proceeding an ex parte communication relevant to the merits of the proceeding[.]” 5 U.S.C. § 557(d)(1). In CentralLincolnPeoples'UtilityDist.v.Johnson, 735 F.2d 1101, 1119 (9th Cir. 1984), the United States Court of Appeals for the Ninth Circuit held that BPA ratemaking is subject to the APA’s prohibition of ex parte communications. This is because BPA’s rates are subject to a formal evidentiary hearing and the Administrator’s rate decisions are to be solely based on the rate case record. 16 U.S.C. §§ 839e(i)(2), 839e(i)(5). Judicial review is based on that same record.
Ex parte communications violate the procedural protection and fundamental fairness intended by Congress in the APA, namely: to ensure that all parties have equal access to the agency through the formal hearing process; to ensure that the administrative record upon which the agency makes its decisions is the same record upon which subsequent administrative and judicial review will be made; to ensure the benefits of adversarial discussion among the parties to the hearing; and to ensure that the record is tested by public scrutiny.
Q.What is the effect of violating the rule?
A.Violation of the ex parte rule is a potential basis for a challenge to BPA’s rates in the Ninth Circuit Court of Appeals. If BPA’s rates are successfully challenged on ex parte grounds, the court may invalidate the rates and remand them to BPA for reformulation based on a record free of any ex parte taint. Exparte communications may thus render meaningless the year-long efforts of BPA, its customers, public interest groups and other interested parties who participated in good faith in the development of BPA’s rates in the formal evidentiary hearing. Reformulation of the rates risks BPA’s having to refund monies to customers. In addition, BPA contracts that incorporated the invalidated rates could have to be renegotiated in whole or in part, depending on the contract provisions.
In order for a court to determine the validity of an ex parte challenge, a special evidentiary hearing may be ordered. The hearing would be conducted to determine the nature, extent, source and effect of any and all ex parte communications. This could involve the deposition and appearance at hearing of, at a minimum, the commentator and the recipient of the communication.
Q.When does the ex parte rule take effect?
A.The ex parte rule applies when BPA announces the start of its 2016BPA Rate Case 7(i) process with the publication of the notice in the Federal Register.
Q.What does the ex parte rule require?
A.The ex parte rule generally provides that, with certain exceptions addressed below, no BPA employee may engage in ex parte communications with a non-BPA/DOE person or group, i.e., communications regarding the merits of a rate case issue, that are not on the rate case record, and for which parties have not been given reasonable advance public notice. The prohibition of the general rule does not apply to a communication:
(1) relating to matters of procedure only;
(2) from a person when otherwise authorized by law or other portions of these procedures;
(3) from or to the Federal Energy Regulatory Commission after coordination with BPA counsel;
(4) which all parties agree may be made on an ex parte basis;
(5) relating to exchanges of data in the ordinary course of business, data required to be exchanged pursuant to contracts, or data which would be available pursuant to Freedom of Information Act requests;
(6) which relates solely to a request for supplemental information or data necessary for an understanding of factual materials contained in documents filed with BPA during a hearing and which is made in the presence of or after coordination with BPA counsel; or
(7) which relates to a topic that is only secondarily the object of a hearing, for which BPA is statutorily responsible under provisions other than Northwest Power Act section7, or which is eventually decided other than through a section 7(i) hearing.
The legislative history of the APA states that any doubts with regard to application of the ex parte ruleshould be resolved in favor of its application; that is, doubts should be resolved on the assumption that the rule forbids the communication.
BPA’s ex parte rule provides that if BPA intends to meet with any customer group or member of the public when it reasonably appears that matters of substance relative to the merits of a BPA rate proceeding will be discussed, BPA must give reasonable notice of the meeting and prepare a memorandum citing the date of the meeting, persons in attendance, and a summary of issues discussed and positions taken. The memorandum should then be promptly provided to Barry Bennett and Peter Burger in BPA’s Office of General Counsel. The memorandum will be placed in an ex parte file available for review through BPA’s Public Involvement Office. Any written material received by BPA that is an ex parte communication must be similarly treated and placed in the ex parte file.
If someone attempts to make an ex parte communication to a BPA employee, the employee must decline to listen to the communication and explain that the matter is pending determination in the rate case. If unsuccessful in preventing the communication, the recipient must advise the communicator that he or she cannot consider the communication. The recipient must then prepare a statement setting forth the substance of the communication and the circumstances thereof within 48 hours and deliver the statement to Kurt Casadand Barry Bennett in BPA’s Office of General Counsel. BPA’s Office of General Counsel will deliver the statements to the Hearing Officer, who will serve copies on parties to the proceeding and serve a copy on the communicator, providing a reasonable opportunity to file a response. Requests for an opportunity to rebut, on the record, any facts or contentions contained in an ex parte communication or a memorandum on such communications must be filed with the Hearing Officer. The Hearing Officer will decide whether to grant such requests. All of these steps are dictated by the ex parte rule.
These rules impose upon BPA employees an affirmative duty to try to prevent improper ex parte contacts. These guidelines are meant only to give general guidance. Specific questions should be referred to the Office of General Counsel.
Q.To what extent can conversations be held with customers during BPA’s rate case?
A.BPA employees may not discuss the merits of rate case issues with anyone outside the agency. A customer may wish to make its views on BPA’s proposal known to an AE or other BPA employee, perhaps in the hope that such discussion will influence the outcome of the rate case. In this circumstance, the BPA employee has an obligation to decline to listen to the communication and to follow the procedures outlined above.
However, AEs or other employees may freely share public information that is not related to the rate case, such as the progress of contract negotiations. If the issue is related to the rate case, the employee may not entertain the customer’s views on the subject.
Q.What does the ex parte rule require after publication of the initial proposal in the Federal Register?
A.After the initial rate proposal is published in the Federal Register, all interested parties have notice of the substantive issues relative to the merits of the case. The potential for an outside party attempting to influence the Administrator’s decision through conversations with BPA employees is heightened, and particular care must be taken to refuse such communications and to make a record of them as required in the rules described above.