PUC conflict case off to rocky start

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Judge says court lacks authority to boot commissioner

The San Francisco Chronicle

A San Francisco Superior Court judge yesterday rejected a watchdog group’s request to oust a state utility commissioner for investing roughly $27,000 in a mobile-phone company his agency helps regulate.

In a preliminary ruling, Judge A. James Robertson ruled that state law does not give the court the authority to boot a California Public Utilities Commission member for purposely buying stock in a verboten firm. The Chronicle first reported a year ago that PUC Commissioner Henry Duque violated state law by buying stock in Nextel Communications, the nation’s fifth-largest wireless firm.

Though state law bars commissioners from investing in regulated companies, Duque’s attorneys argued that only the state Legislature has the power to remove commissioners. “The constitutional scheme could not be more clear,” Duque’s attorney wrote.

Duque’s attorney also argues the statute is “strange and ambiguous,” bluntly stating that the commissioner’s office “shall become vacant” if he or she inherits stock and does not sell it right away, but not stating any penalty for deliberately investing in a forbidden firm.

In addition, Duque said he didn’t realize the investment was a problem until a Chronicle reporter asked him about the conflict last year. Duque said he sold the stock shortly afterward.

But the Foundation for Taxpayer and Consumer Rights, the Santa Monica (Los Angeles County) group that filed suit to oust Duque, said it would be a mistake for the court to do nothing.

“The judicial branch has to make sure the laws are enforced,” Executive Director Jamie Court said. “The only remedy is removal.”

Both sides are slated to give their arguments in more detail during a hearing this morning in San Francisco.

Robert Fellmeth, director of the Center for Public Interest Law at the University of San Diego, says Duque’s argument is “viable,” but he believes previous court precedents support the Foundation.

The case also has the backing of Attorney General Bill Lockyer. In a strongly worded opinion last year, Lockyer said that Duque forfeited his right to remain in office when he bought 700 Nextel shares. Though the Federal Communications Commission mainly regulates cell phone firms, Nextel is registered with the state as a utility and has weighed in on several recent proceedings at the PUC.

But if Robertson winds up tossing the suit, it is unclear whether the Legislature will take up the issue. To force Duque from office, two-thirds of each house would have to vote to remove him.

“There haven’t been any big lines or calls to my office saying we need to scalp the guy,” said Bill Morrow, vice chair of the Senate Committee on Energy, Utilities and Communications.

Anthony Pescetti, vice chairman of the state Assembly Committee on Utilities and Commerce, said the Legislature should wait until the court case is finished before deciding to weigh in.

But with appeals, Fellmeth said it’s possible the court case won’t be finished until after Duque’s term ends on Jan. 1, 2003.

Pescetti said the delays are a problem. “Conflicts of interest need to be dealt with expeditiously,” he said.E-mail Todd Wallack at [email protected].

Consumer Watchdog
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