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Key: (1) language to be deleted (2) new language

  

                         Laws of Minnesota 1986 

                        CHAPTER 409-S.F.No. 1869 
           An act relating to utilities; changing qualifications 
          for members of the public utilities commission; 
          requiring the governor to appoint the chair of the 
          commission; requiring commissioners to file certain 
          information before taking office; prohibiting 
          commissioners and certain employees of the department 
          of public service from engaging in certain activities 
          prior to and after leaving the commission or the 
          department; requiring the commission to adopt rules 
          relating to ex parte communications and a code of 
          conduct; authorizing stipulated settlements in certain 
          cases; prescribing penalties; amending Minnesota 
          Statutes 1984, sections 216A.03, subdivisions 1 and 3; 
          216A.035; 216B.16, subdivisions 1a and 2; and 237.075, 
          subdivisions 1a and 2; proposing coding for new law in 
          Minnesota Statutes, chapter 216A. 
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
    Section 1.  Minnesota Statutes 1984, section 216A.03, 
subdivision 1, is amended to read: 
    Subdivision 1.  [MEMBERS.] As of January 1, 1975 The public 
utilities commission shall consist of five members, three of 
whom shall be the members then serving, who shall continue to 
serve for the balance of their elective or appointive terms.  
There shall be two additional commissioners appointed by the 
governor with the advice and consent of the senate, one for a 
term expiring December 31, 1975, and one for a term expiring 
December 31, 1977.  Thereafter The terms of all subsequent 
members of the commission shall be six years and until their 
successors have been appointed and qualified.  Each commissioner 
shall be appointed by the governor by and with the advice and 
consent of the senate.  Not more than three commissioners shall 
belong to the same political party.  At least one commissioner 
must have been domiciled at the time of appointment outside the 
seven-county metropolitan area.  If the membership of the 
commission after July 31, 1986, does not consist of at least one 
member domiciled at the time of appointment outside the 
seven-county metropolitan area, the membership shall conform to 
this requirement following normal attrition of the present 
commissioners.  The governor in his selection of commissioners 
shall give consideration to persons learned in the law or 
persons who have engaged in the profession of engineering, 
public accounting or, property and utility valuation, finance, 
physical or natural sciences, production agriculture, or natural 
resources as well as being representative of the general public. 
    For purposes of this subdivision, "seven-county 
metropolitan area" means Anoka, Carver, Dakota, Hennepin, 
Ramsey, Scott, and Washington counties. 
    Sec. 2.  Minnesota Statutes 1984, section 216A.03, 
subdivision 3, is amended to read: 
    Subd. 3.  [CHAIRMAN.] The commission governor shall elect 
select one of their number the commissioners to serve as the 
chairman at the meeting of the commission in the second week in 
January of each year for a term of one year concurrent with that 
of the governor.  
    If a vacancy occurs in the position of chairman, the 
commission governor shall elect select a new chairman to 
complete the unexpired term.  
    Sec. 3.  Minnesota Statutes 1984, section 216A.035, is 
amended to read: 
    216A.035 [CONFLICT OF INTEREST.] 
    (a) No person during his term of membership on the public 
utilities commission, while acting as executive secretary of the 
commission, or while employed in a professional capacity by the 
commission, shall receive any significant portion of his income, 
other than dividends or other earnings from a mutual fund or 
trust if these earnings do not constitute a significant portion 
of the person's income, directly or indirectly from any public 
utility or other organization subject to regulation by the 
commission. No person shall be eligible to be appointed as a 
member of the public utilities commission unless and until he 
divests himself of any significant interest or abandons any 
employment with a utility.  
    (b) No person is eligible to be appointed as a member of 
the commission if the person has been employed with an entity, 
or an affiliated company of an entity, that is subject to rate 
regulation by the commission within one year from the date when 
the person's term on the commission will begin. 
    (c) No person who is an employee of the public service 
department shall participate in any manner in any decision or 
action of the commission where he has a direct or indirect 
financial interest.  Each commissioner or employee of the public 
service department who is in the general professional, 
supervisory, or technical units established in section 179A.10 
or who is a professional, supervisory, or technical employee 
defined as confidential in section 179A.03, subdivision 4, or 
who is a management classification employee and whose duties are 
related to public utilities or transportation regulation shall 
report to the ethical practices board annually before April 15 
any interest he has in an industry or business regulated by the 
commission.  Each commissioner shall file a statement of 
economic interest as required by section 10A.09 with the ethical 
practices board and the public utilities commission before 
taking office.  The statement of economic interest must state 
any interest that the commissioner has in an industry or 
business regulated by the commission. 
    (d) A professional employee of the commission or department 
must immediately disclose to the commission or to the director 
of the department, respectively, any communication, direct or 
indirect, with a person who is a party to a pending proceeding 
before the commission regarding future benefits, compensation, 
or employment to be received from that person. 
    Sec. 4.  [216A.036] [EMPLOYMENT RESTRICTIONS.] 
    (a) A person who serves as (1) a commissioner of the public 
utilities commission, (2) director of the department of public 
service, or (3) deputy director of the department, shall not, 
while employed with or within one year after leaving the 
commission, or department, accept employment with, receive 
compensation directly or indirectly from, or enter into a 
contractual relationship with an entity, or an affiliated 
company of an entity, that is subject to rate regulation by the 
commission. 
    (b) An entity or an affiliated company of an entity that is 
subject to rate regulation by the commission, or a person acting 
on behalf of the entity, shall not negotiate or offer to employ 
or compensate a commissioner, the director, or the deputy 
director, while the person is so employed or within one year 
after the person leaves that employment. 
    (c) For the purposes of this section, "affiliated company" 
means a company that controls, is controlled by, or is under 
common control with an entity subject to rate regulation by the 
commission. 
    (d) A person who violates this section is subject to a 
civil penalty not to exceed $10,000 for each violation.  The 
attorney general may bring an action in district court to 
collect the penalties provided in this section.  
    Sec. 5.  [216A.037] [RULES.] 
    Subdivision 1.  [EX PARTE COMMUNICATIONS.] The commission 
shall adopt rules under chapter 14 prescribing permissible and 
impermissible ex parte communications.  
    The ex parte rules may prohibit only ex parte 
communications by commission members with a party relating to: 
    (1) a material issue during a pending contested case 
proceeding; 
    (2) a material issue in a rulemaking proceeding after the 
beginning of commission deliberations;  
    (3) a material issue in a disputed formal petition; and 
    (4) any other communication impermissible by law.  
    A contested case is pending from the time the commission 
refers the matter to the office of administrative hearings until 
the commission has issued its final order, and the time to 
petition for reconsideration has expired or the commission has 
issued an order finally disposing an application for 
reconsideration, whichever is later. 
    Subd. 2.  [COMMUNICATIONS PROHIBITED.] A commissioner shall 
not communicate, directly or indirectly, with a person or entity 
who is a party to a pending proceeding before the commission 
regarding past or future benefits or compensation to be received 
from that person or entity.  The commission may dismiss a 
proceeding if an applicant, petitioner, or complainant violates 
this subdivision. 
    Subd. 3.  [CODE OF CONDUCT.] Except as limited by 
subdivision 1, the commission shall adopt rules prescribing a 
code of conduct for commissioners and employees of the 
commission.  The code of conduct must include standards to 
preserve the quasi-judicial function of the commission. 
    The commission shall adopt emergency rules to implement 
this subdivision. 
    Sec. 6.  Minnesota Statutes 1984, section 216B.16, 
subdivision 1a, is amended to read: 
    Subd. 1a.  [SETTLEMENT BARRED.] When a public utility 
proposes changes in general rates that would increase general 
rates paid by consumers by more than $500,000 annually, the 
commission shall not may approve the change until after 
requiring the office of administrative hearings to 
conduct without a contested case hearing on, at a minimum, the 
appropriate rate base, expense and revenue levels for the test 
year, and the rate of return.  If the formal parties to the 
contested case choose not to cross-examine the testimony 
presented, it shall be the duty of the commission and its staff 
to make inquiry of the witnesses presented to ensure that the 
testimony is well reasoned and constitutes substantial 
evidence.  After a report of the examiner has been issued, the 
commission may proceed to take action on the proposed rates 
consistent with the provisions of this section.  The commission 
shall not accept any stipulation that is not agreed to by if 
applicant and all intervening parties agree to a stipulated 
settlement of the case and the settlement is supported by 
substantial evidence.  The commission shall accept or reject the 
settlement in its entirety and, at any time until its final 
order is issued in the case, may require the office of 
administrative hearings to conduct a contested case hearing. 
    Sec. 7.  Minnesota Statutes 1984, section 216B.16, 
subdivision 2, is amended to read: 
    Subd. 2.  [SUSPENSION OF RATES; HEARING.] Whenever there is 
filed with the commission a schedule modifying or resulting in a 
change in any rates then in force as provided in subdivision 1, 
the commission may suspend the operation of the schedule by 
filing with the schedule of rates and delivering to the affected 
utility a statement in writing of its reasons for the suspension 
at any time before the rates become effective.  The suspension 
shall not be for a longer period than ten months beyond the 
initial filing date.  During the suspension the commission shall 
determine whether all questions of the reasonableness of the 
rates requested raised by persons deemed interested or by the 
administrative division of the department of public service can 
be resolved to the satisfaction of the commission.  If the 
commission finds that all significant issues raised have not 
been resolved to its satisfaction, or upon petition by ten 
percent of the affected customers or 250 affected customers, 
whichever is less, it shall refer the matter to the office of 
administrative hearings with instructions for a public hearing 
as a contested case pursuant to chapter 14, except as otherwise 
provided in this section.  The commission may order that the 
issues presented by the proposed rate changes be bifurcated into 
two separate hearings as follows:  (1) determination of the 
utility's revenue requirements and (2) determination of the rate 
design.  Upon issuance of both hearing examiner reports, the 
issues shall again be joined for consideration and final 
determination by the commission.  All prehearing discovery 
activities of state agency intervenors shall be consolidated and 
conducted by the department of public service.  If the 
commission does not make a final determination concerning a 
schedule of rates within ten months after the initial filing 
date, the schedule shall be deemed to have been approved by the 
commission; except if a settlement has been submitted to and 
rejected by the commission, the schedule is deemed to have been 
approved 12 months after the initial filing.  For the purposes 
of this section, "final determination" means the initial 
decision of the commission and not any order which may be 
entered by the commission in response to a petition for 
rehearing or other further relief.  The commission may further 
suspend rates until it determines all those petitions. 
    Sec. 8.  Minnesota Statutes 1984, section 237.075, 
subdivision 1a, is amended to read: 
    Subd. 1a.  [SETTLEMENT BARRED.] When a telephone company 
proposes changes in general rates that would increase general 
rates paid by consumers by more than $500,000 annually, the 
commission shall not may approve the change until after 
requiring the office of administrative hearings to 
conduct without a contested case hearing on, at a minimum, the 
appropriate rate base, expense and revenue levels for the test 
year, and the rate of return.  If the formal parties to the 
contested case choose not to cross-examine the testimony 
presented, it shall be the duty of the commission and its staff 
to make inquiry of the witnesses presented to ensure that the 
testimony is well reasoned and constitutes substantial 
evidence.  After a report of the examiner has been issued, the 
commission may proceed to take action on the proposed rates 
consistent with the provisions of this section.  The commission 
shall not accept any stipulation that is not agreed to by if 
applicant and all intervening parties agree to a stipulated 
settlement of the case and the settlement is supported by 
substantial evidence.  The commission shall accept or reject the 
settlement in its entirety and, at any time until its final 
order is issued in the case, may require the office of 
administrative hearings to conduct a contested case hearing. 
    Sec. 9.  Minnesota Statutes 1984, section 237.075, 
subdivision 2, is amended to read:  
    Subd. 2.  [SUSPENSION OF RATES; HEARING.] Whenever there is 
filed with the commission as provided in subdivision 1 a 
schedule modifying or resulting in a change in any rate then in 
force, the commission may suspend the operation of the schedule 
by filing with the schedule of rates and delivering to the 
affected telephone company a statement in writing of its reasons 
for the suspension at any time before the rates become 
effective.  The suspension shall not be for a longer period than 
ten months beyond the initial filing date.  During the 
suspension the commission shall determine whether all questions 
of the reasonableness of the rates requested raised by persons 
deemed interested or by the administrative division of the 
department of public service can be resolved to the satisfaction 
of the commission.  If the commission finds that all significant 
issues raised have not been resolved to its satisfaction, or 
upon petition by ten percent of the affected customers or 250 
affected customers, whichever is less, it shall refer the matter 
to the office of administrative hearings with instructions for a 
public hearing as a contested case pursuant to chapter 14, 
except as otherwise provided in this section.  The commission 
may order that the issues presented by the proposed rate changes 
be bifurcated into two separate hearings as follows:  (1) 
determination of the telephone company's revenue requirements 
and (2) determination of the rate design.  Upon issuance of both 
administrative law judge reports, the issues shall again be 
joined for consideration and final determination by the 
commission.  All prehearing discovery activities of state agency 
intervenors shall be consolidated and conducted by the 
department of public service.  If the commission does not make a 
final determination concerning a schedule of rates within ten 
months after the initial filing date, the schedule shall be 
deemed to have been approved by the commission; except if a 
settlement has been submitted to and rejected by the commission, 
the schedule is deemed to have been approved 12 months after the 
initial filing.  For the purposes of this section, "final 
determination" means the initial decision of the commission and 
not any order which may be entered by the commission in response 
to a petition for rehearing or other further relief.  The 
commission may further suspend rates until it determines all 
those petitions. 
    Sec. 10.  [EFFECTIVE DATE.] 
    Sections 1 and 3, paragraphs (b), (c), and (d), and 
sections 4 and 5 are effective the day following final 
enactment.  Section 3, paragraph (a), is effective July 1, 
1986.  Section 2 is effective January 1, 1987. 
    Approved March 24, 1986