BEFORE THE PUBLIC UTILITIES COMMISSION

FILED
OF THE STATE OF CALIFORNIA 6-29-17
04:59 PM

In the Matter of the Application of California- A.13-05-017

American Water Company (U 210 W) for an
Order (1) Approving a Settlement Agreement (Filed May 24, 2013)
with the County of Monterey and the Monterey
County Water Resources Agency to Settle and
Resolve Claims and Issues Between the Parties
and to Promote the Development, Construction
and Operation of a Water Supply Project for
Monterey County on an Expedited Basis, and
(2) Authorizing the Transfer of Authorized
Costs Related to the Settlement Agreement to
Its Special Request 1 Surcharge Balancing
Account.

MARINA COAST WATER DISTRICTS

MOTION FOR AN ORDER UNSEALING EVIDENCE,
SETTING ASIDE DECISIONS AND ESTABLISHING A
BRIEFING SCHEDULE
ON REMAND OF PETITION FOR WRIT OF REVIEW
FROM THE CALIFORNIA SUPREME COURT (No. S230728)
DIRECTING THE COMMISSIONS RECONSIDERATION

MARK FOGELMAN
RUTH STONER MUZZIN
FRIEDMAN & SPRINGWATER LLP
350 Sansome Street, Suite 210
San Francisco, CA 94104
Telephone: (415) 834-3800
Facsimile: (415) 834-1044
Email: mfogelman@friedmanspring.com
Email: rmuzzin@friedmanspring.com

Attorneys for Marina Coast Water District

Date: June 29, 2017
I. INTRODUCTION

In accordance with Rule 11 of the Commissions Rules of Practice and Procedure,

Marina Coast Water District (MCWD) respectfully moves the Commission to

(1) reverse its prior determination that Exhibit D to the instant application, a

public document under Los Angeles County Bd. of Supervisors v. Superior

Court (ACLU) (2016) 2 Cal.5th 282, be sealed from disclosure to parties that

have chosen not to sign a nondisclosure agreement,

(2) direct that Exhibit D, a public document consisting of the legal invoices of a

public agency for services rendered in A.04-09-019 a proceeding that was

closed in 2012 be placed forthwith in the Commissions public file in this

matter and be served on all parties that have not previously been served with

Exhibit D,

(3) vacate or set aside Decision (D.) 15-03-002 and D.15-10-052 (the

Decisions) to facilitate their fair reconsideration as directed by the Supreme

Court, and

(4) set a briefing schedule for reconsideration of the Decisions, consistent with the

California Supreme Courts order in its cause number S230728,1 dated May

10, 2017 (the Remand Order), as well as the Commissions process relating

to potentially confidential documents, as set forth in D.16-08-024, which was

developed during the time that the Supreme Court had jurisdiction of the

Decisions and following the grant of MCWDs petition for writ of review.
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MCWDs petition for a writ of review of the Decisions, which was granted on March 23,
2016. The Supreme Court deferred briefing in S230728 pending its decision in Los Angeles
County Bd. of Supervisors v. Superior Court (ACLU).

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 MCWD believes that, upon remand, the Commission should first reverse the August

19, 2013 email ruling of the Assigned Administrative Law Judge (ALJ) granting the May

24, 2013 motion of California-American Water Company (Cal-Am) to file Exhibit D under

seal and the July 22, 2013 motion of the Monterey County Water Resources Agency

(MCWRA) and the County of Monterey (County) for adoption of a protective order as

to Exhibit D, and direct that Exhibit D be filed publicly and served on all parties. The

Supreme Courts decision in Los Angeles County Bd. of Supervisors v. Superior Court

(ACLU), supra, 2 Cal.5th 282, coupled with the Commissions own process for the handling

of potentially confidential documents compels the unsealing of Exhibit D, and largely

resolves the threshold issue of public access that MCWD raised in its application for

rehearing of D.15-03-002 and its ensuing petition to the Supreme Court.

Second, MCWD believes that, in order for the Commission fairly to reconsider its

Decisions, it should set aside the Decisions and then promptly set a schedule for legal

briefing and reconsideration. MCWD does not believe any further evidentiary hearings are

needed or proper. The Commission should evaluate this application and render its decision

upon reconsideration with the benefit of the parties briefing upon the full and public record,

after Exhibit D has been publicly filed and served. In doing so, the Commission must

resolve a second question raised by MCWDs application for rehearing and its Supreme

Court petition, which was not reached by the Supreme Court in S230728 or considered in

Los Angeles County Bd. of Supervisors v. Superior Court (ACLU), supra, 2 Cal.5th 282.

That second question is the issue of whether MCWRA waived its claim of attorney-client

privilege as to the portions of Exhibit D that it redacted, either by fully disclosing them to

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Cal-Am without redaction during the pendency of A.04-09-019, or by putting the

reasonableness of its legal invoices at issue in this application, or both.

As noted above, MCWD believes that additional hearings or other development of the

record are unnecessary in order for the Commission to resolve the remaining issues

presented to the Commission on remand of MCWDs petition for writ of review from the

Supreme Court. Those issues are:

(1) Did MCWRA and the County waive their claim of attorney-client privilege
regarding Exhibit D, such that all redactions (other than those necessary for
legitimate protection of confidential personal or financial information)
should be lifted, by

a. fully disclosing the contents of Exhibit D to Cal-Am in 2010 and

2011, with no redactions and no indication of confidentiality; or

b. putting at issue the reasonableness of the legal expenditures set

forth in Exhibit D by seeking approval of Cal-Ams reimbursement
and recovery in rates of those amounts in this proceeding?

(2) Does the record, including Exhibit D, support the Commissions approval
of this application in whole or in part, i.e.,

a. approval of the settlement agreement, including Cal-Ams

reimbursement of the claimed costs set forth in Exhibits C and D, as
incurred by MCWRA in connection with A.04-09-019; and

b. approval of Cal-Ams rate recovery of the claimed MCWRA costs,

including for the legal services documented in Exhibit D?

The purpose of this motion is to provide the Commission a vehicle by which to

expeditiously commence the reconsideration process mandated by the Supreme Court.

Because the construction and application to this case of the Supreme Courts decision in Los

Angeles County Bd. of Supervisors v. Superior Court (ACLU) will be necessary to the

Commissions compliance with the Supreme Courts mandate, MCWD believes it would

best serve the interests of the Commission and the parties if an Administrative Law Judge

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who is also an attorney be assigned to this matter.

II. BACKGROUND

The instant application sought Commission approval of an agreement among Cal-Am,

MCWRA and the County, which purported to settle all controversies among them including

certain costs related to the Regional Desalination Project, and which sought rate relief for

Cal-Ams recovery of those costs. The Regional Desalination Project was approved by the

Commission in D.10-12-016. The project was to be a public-private partnership among Cal-

Am, MCWRA and MCWD. (D.10-12-016, p. 5.) The project was intended to provide Cal-

Am with a replacement source for a portion of the water supply for its Monterey service

district, thereby permitting it to confine pumping from the Carmel River and underlying

groundwater basin to withdrawal limits that the State Water Resources Control Board

(SWRCB) previously determined were lawful. (D.10-12-016, p. 4 and fn. 1, citing

SWRCB Orders WR 95-10 and 2009-0060.)

In D.12-07-008, the Commission permitted Cal-Am to abandon its pursuit of the

Regional Desalination Project, and the Commission closed A.04-09-019 on July 12, 2012.

(D.12-07-008, p.1.) Cal-Am had determined that it would pursue its own entirely privately-

owned project instead of the Regional Desalination Project, filing A.12-04-019 (ibid.), which

proceeding remains pending. Rate recovery of remaining disputed costs incurred by

MCWRA and MCWD in A.04-09-019 in relation to the Regional Desalination Project was

permitted to be addressed in future applications, such as this one. (D.12-07-008, pp. 25-26,

Ordering Para. 2.) Meanwhile, in a decision on September 15, 2016 regarding a bifurcated

issue in A.12-04-019, a substantial portion of the replacement water supply required by Cal-

Am has now been secured by the Commissions approval of Cal-Ams entry into an

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agreement to purchase water from a different project developed by other local agencies in

Monterey County. (D.16-09-021, p. 2.)

After withdrawing from the Regional Desalination Project, Cal-Am sued both

MCWRA and MCWD, seeking declaratory relief as to whether certain contracts related to

the Regional Desalination Project were void. (California-American Water Co. v. Marina

Coast Water District, et al. (2016) 2 Cal.App.5th 748, 753-754, 756, rev. denied California-

American Water Co. v. Marina Coast Water Dist. (Nov. 9, 2016) 2016 Cal. LEXIS 9065.)

Exactly two months after filing its declaratory relief suit, Cal-Am reached a settlement

agreement with MCWRA and the County of Monterey of all claims among them.

(Application, pp. 1-2, Ex. A. thereto, p. 3, U and p. 4 1.) On May 24, 2013, the settling

parties filed this application, seeking approval of their settlement, approval of Cal-Ams

payment of MCWRAs stranded project costs including legal fees incurred in connection

with A.04-09-019, and rate recovery for Cal-Am in the amount of its settlement payment to

MCWRA. (Ibid.)

At the same time, Cal-Am and Monterey proceeded to litigate the declaratory relief

suit together against MCWD, and the matter proceeded through trial, decision, and appeal.

The matter is now finally resolved, with the result that four contracts related to the Regional

Desalination Project were determined to be void from their inception due to a conflict of

interest on the part of an MCWRA official, including the Reimbursement Agreement which

was a basis for the rate relief granted in D.15-03-002. (California-American Water Co. v.

Marina Coast Water District, et al., supra, 2 Cal.App.5th at 756-757, 764-766.) Unlike

MCWRA, MCWD has not yet been able to reach a settlement with Cal-Am concerning its

stranded project costs. Claims for damages arising from the failure of the Regional

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Desalination Project are presently the subject of further litigation now pending in the San

Francisco Superior Court.

The instant application attached documentation of MCWRAs claimed expenditures

in connection with A.04-09-019 in two exhibits, Exhibit C and Exhibit D. (Application,

p. 3.) Exhibit C was publicly filed. (Ibid. and id. at Ex. C thereto.) Exhibit D, consisting of

documentation of MCWRAs legal fees incurred in A.04-09-019, was the subject of a motion

to file under seal by Cal-Am and a motion for entry of a protective order by MCWRA.

(Ibid.; see May 24, 2013 motion of Cal-Am to file Ex. D under seal, July 22, 2013 motion of

MCWRA and the County for protective order as to Ex. D.)

MCWD and several other parties contested the sealing motion and the need for a

protective order. (July 19, 2013 response of WaterPlus; July 22, 2013 responses of Citizens

for Public Water (aka Public Water Now), Public Trust Alliance and MCWD; July 29, 2013

reply of MCWD to MCWRA/County response; Aug. 6, 2013 response of MCWD; Aug. 8,

2013 joinder of Public Trust Alliance; Aug. 19, 2013 joinder of WaterPlus.) However, the

motions for sealing and a protective order were granted by the presiding ALJ. (Email ruling

dated Aug. 19, 2013.)2 MCWD, the Public Trust Alliance and WaterPlus declined to sign a

nondisclosure agreement regarding Exhibit D, and hence were denied the opportunity to

examine Exhibit D and address the reasonableness of the legal fees and costs it set forth.

(See D.15-03-002, p. 4 and fn 2.) The only parties aside from the three settling parties who

signed the nondisclosure agreement were the Office of Ratepayer Advocates and Citizens for

Public Water. (Ibid.)

2
Not formally filed on the docket in A.13-05-017.

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 In D.15-03-002, the Commission affirmed its determination to seal Exhibit D and

filings discussing it. (D.15-03-002, pp. 27-30, Ordering Paras. 4-8.) The Commission also

approved Cal-Ams settlement agreement with MCWRA and the County and granted Cal-

Am the rate relief it sought, in part, concluding that costs reflected in Exhibit D were

reasonable and should be recovered in rates, over the objection of all parties other than Cal-

Am, MCWRA and the County. (Id. at p. 27, Ordering Paras. 1-2.)

MCWD sought rehearing on multiple grounds, including that the Commissions

determinations to seal Exhibit D were in error. (D.15-10-052, p. 2; MCWDs Apr. 17, 2015

Application for Rehearing of D.15-03-002, pp. 11-19; MCWDs May 11, 2015 Reply to

Joint Response to Application for Rehearing, pp. 1-3.) MCWD also challenged that portion

of the settlement agreement, Section 7, wherein the settling parties agreed that a Monterey

County ordinance requiring any desalination facility in that county to be owned by a public

agency, as opposed to an investor-owned utility such as Cal-Am, would not apply to Cal-Am

or the project it now proposes in A.12-04-019, as constituting an illegal and unconstitutional

agreement for the Countys selective exercise of its police powers. (MCWD Application for

Rehearing, pp. 19-22; MCWD Reply to Joint Response to Application for Rehearing, pp.

3-5.)

The Commission denied MCWDs application for rehearing, but at the same time it

clarified the contours of its approval of the settlement agreement, including Section 7, as

merely approving an agreement by the parties to follow the Commissions advisory decisions

concerning the Commissions power to preempt the ordinance, if a subsequent public

convenience and necessity determination or other lawful exercise of Commission authority

engendered a conflict with the ordinance. (Id. at pp. 8-9, citing D.12-10-030 and D.13-07-

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048.) On November 20, 2015, MCWD petitioned the California Supreme Court for a writ of

review as to the Decisions, pursuant to Public Utilities Code sections 1756 and 1767.

MCWD argued in its petition to the Supreme Court that the sealing of Exhibit D, a public

document used by the Commission as the evidentiary basis for granting the application,

including utility rate relief, was an unconstitutional legal error.

MCWDs petition was granted by the Supreme Court on March 23, 2016, and the

matter was held in abeyance while the Court considered a related issue in another case. (See

docket entry Mar. 23, 2016, Case No. S230728.3) The Court issued its opinion in Los

Angeles County Bd. of Supervisors v. Superior Court (ACLU), supra, 2 Cal.5th 282 on

December 29, 2016. The Court held that the invoices of a public agency for legal services

rendered on matters that have concluded are subject to public disclosure. (Id. at 299-300.)

On May 10, 2017, the Court remanded the Decisions to the Commission for reconsideration

in light of its decision in Los Angeles County Bd. of Supervisors v. Superior Court (ACLU)

(2016) 2 Cal.5th 282. (Remand Order.)

To date, the Commission has taken no action in response to the Remand Order.

In order to promptly carry out the Supreme Courts directive, MCWD believes the

Commission should (1) direct that Exhibit D and all filings sealed due to discussion of

Exhibit D be placed promptly in the public file, (2) set aside the Decisions to facilitate a fair

reconsideration of their merits as directed by the Supreme Court, and (3) establish a briefing

schedule so that the parties to this proceeding may expeditiously brief (a) the issue of waiver

3
Available online at:
http://appellatecases.courtinfo.ca.gov/search/case/dockets.cfm?dist=0&doc_id=2126298&do
c_no=S230728.

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of the attorney-client privilege as to the redactions MCWRA made to Exhibit D prior to Cal-

Am submitting it for filing with the Commission and (b) the merits of this application, with

the benefit of the parties views on the matter at last being fully informed by all the record

evidence and completely accessible to the public.

III. PUBLIC FILING OF EXHIBIT D IS CONSISTENT WITH D.16-08-024

During the pendency of this application, the Commission commenced a rulemaking

concerning its processes for handling clams of confidentiality as to documents submitted by

utilities and other parties appearing before it. (D.16-08-024, p. 2.) That rulemaking resulted

in the issuance of D.16-08-024, the Decision Updating Commission Processes Relating to

Potentially Confidential Documents. D.16-08-024 issued on August 25, 2016, after the

Supreme Court had already granted MCWDs petition for a writ of review regarding the

Decisions.

In D.16-08-024, the Commission adopted guidelines for the Commissions review

and possible release of documents submitted to the Commission under a claim of

confidentiality. (Id. at pp. 19-21, 31.) The adopted guidelines support the prompt release of

Exhibit D to the public file in this proceeding. The Commissions guidelines expressly

provide for release of previously submitted documents that are not marked confidential

with no formal action of the Commission required in order to do so. (Id. at p. 20, 5.)

As far as MCWD can ascertain, Exhibit D was never marked confidential by

MCWRA, neither when the documents were first provided to Cal-Am in 2010 and 2011, nor

when they were submitted to the Commission by Cal-Am in redacted form for filing under

seal in 2013. MCWRA redacted all attorney-client privileged material; client confidential

material; attorney work product; material concerning settlement discussions and personal

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information from Exhibit D before it was presented to the Commission for filing under seal.

(MCWRAs July 22, 2013 Motion for Adoption of Protective Order, p. 5.) As the

Commission observed in D.16-08-024, parties that provide purportedly confidential

information to the Commission with no marking or designation or other indication that the

material is confidential shows at best an indifference to, or at worst a total disregard for, the

protection of confidential information. (D.16-08-024, p. 26, emphasis in original.) Here,

MCWRA took steps albeit belatedly to protect the information that it believed was truly

confidential in its documents, yet it improperly sought to hide the entirety of Exhibit D from

public view. Therefore, at a minimum, the redacted version of Exhibit D that is presently

filed under seal should promptly be placed in the public file.

Moreover, any claim that MCWRAs legal invoices for services rendered in a long-

closed proceeding should be exempt from public disclosure is soundly refuted by the

Supreme Courts holding in Los Angeles County Bd. of Supervisors v. Superior Court

(ACLU), supra, 2 Cal.5th 282, 299-300. Redactions may be appropriate to preserve the

confidentiality of information contained within such invoices, such as certain redactions

MCWRA represented that it made to the documents more than four years ago. (Los Angeles

County Bd. of Supervisors v. Superior Court (ACLU), supra, 2 Cal.5th at 292, 300, citing

CBS, Inc. v. Block (1986) 42 Cal3d 646, 653.) Because the matter in which the legal services

were rendered has been long closed, and because all potentially privileged information was

redacted by MCWRA before Cal-Am presented the document for filing, Exhibit D and all

filings discussing it should promptly be unsealed and publicly filed. (Los Angeles County

Bd. of Supervisors v. Superior Court (ACLU), supra, 2 Cal.5th 282, 299-300.)

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IV. REQUEST FOR RELIEF

MCWD respectfully requests the Commission promptly and expeditiously (1) unseal

Exhibit D and all other documents filed under seal in this proceeding due to discussion of

Exhibit D; (2) direct the public filing and service on all parties of Exhibit D and all

documents discussing it; (3) vacate the Decisions to facilitate their fair reconsideration as

directed by the Supreme Court; and (4) set a schedule for briefing on the unresolved issue of

MCWRAs waiver of its claim of attorney-client privilege and for briefing on the

Commissions reconsideration of the Decisions, consistent with the Remand Order of the

Supreme Court. MCWD also respectfully requests the assignment to this proceeding of an

Administrative Law Judge who is also an attorney, due to the need to construe and apply Los

Angeles County Bd. of Supervisors v. Superior Court (ACLU), supra, 2 Cal.5th 282.

DATED: June 29, 2017 Respectfully submitted,

FRIEDMAN & SPRINGWATER LLP

By: _/s/ Mark Fogelman

Mark Fogelman
Ruth Stoner Muzzin
Attorneys for
MARINA COAST WATER DISTRICT

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