Associated Press State & Local Wires
SAN FRANCISCO: Henry Duque should never have been removed from the California Public Utilities Commission for owning stock in a company the agency regulates, a state appeals court ruled Monday.
The 1st District Court of Appeal, in overturning a lower court judge, said Duque broke no laws for investing and earning $70,000 in Nextel Communications Inc., a telecommunications company the PUC oversees in California.
The San Francisco-based appeals court conceded there was a loophole, or “critical gap” in the law, that does not disqualify commissioners who voluntarily purchased stock in regulated companies.
Instead, the court said, the law allows for the removal of commissioners who “involuntarily” invest in companies the PUC regulates. An involuntary investment would be acquiring regulated stock via a gift or inheritance.
And that doesn’t make sense to consumer advocacy groups, which brought the state’s first case against a PUC commissioner on financial conflict of interest charges.
“It’s completely absurd,” said Pamela Pressley, an attorney with the Foundation for Taxpayer and Consumer Rights.
Pressley said the Santa Monica-based group is likely to ask the California Supreme Court to review the decision. “We need to really clarify for the public what the law is,” she said.
The five-member commission, whose members are appointed to six-year terms by the governor, regulates privately owned telecommunications, electric, natural gas, water, railroad, rail, transit and passenger transportation companies. The commission, created in 1911, is best known for regulating electricity rates.
“We’re all happy the court confirmed Mr. Duque’s actions don’t warrant removal from office,” said Thomas Willis, Duque’s attorney, who added his client was unavailable for comment.
The ruling, however, came two weeks after Duque’s six-year term expired January 1st. Governor Gray Davis, a Democrat, did not give him a new six-year term that pays $107,000 a year.
Former Gov. Pete Wilson, a Republican, originally appointed Duque.
In April, San Francisco Superior Court Judge Alfred Chiantelli ordered Duque removed from office for investing $10,000 in mobile-phone company Nextel. That decision was stayed pending Monday’s ruling by Justice Barbara Jones.
In fighting the charges, Duque testified he did not break the law and he did not know until 2001 that his agency regulated the wireless industry. Duque did not hide his investment and noted it on economic interest papers filed with the state.
The commissioner voted on Nextel business interests at least three times while owning the stock.
He voted against allocating Nextel and other phone companies access to 310 area code numbers. He voted to approve consumer protection rules for the wireless industry and agreed to an interconnection agreement between Pacific Bell and Nextel.
The appeals court noted that, if it chose, the Legislature is constitutionally empowered to remove a PUC commissioner for being incompetent or corrupt.
The case is Foundation for Taxpayer and Consumer Rights v. Duque, A098863.
Editors: David Kravets has been covering state and federal courts for a decade.