It is unfortunate how Californiawent about the restructuring ofits electric industry. It truly has

become a “horror story.”The Califor-nia economy is on its knees becauseof restructuring.

In 1995, California was racing tobe the first state to restructure. Itmade sense at the time. After all, thestate had the highest rates in theU.S. (because of mistakes made inthe 1970s), especially because ofPURPA contracts that were signed atrates as much as 15 cents/kWhs.

That’s why no long-term con-tracts were allowed and there was

heavy reliance on a spot market orday-ahead approach to wholesaleenergy supply purchases. The statewas burned once by long-termPURPA contracts; it wasn’t going tomake that mistake again.

Also, California Governor PeteWilson was looking for an issue onwhich to run for President. And,there was a “rush to judgment”in theCalifornia legislature. Environmen-talists were told to “get on this bus orit will leave without you.” Con-sumers were kept at bay because

Administrative Law NewsTHE ADMINISTRATIVE LAW SECTION OF THE VIRGINIA STATE BAR

VOLUME XVI, ISSUE 1 WINTER 2002

CONTENTSThe Tempest:

Weathering theRestructuring Storm

Peter Navarro’s Keynoteaddress to the 19th National

Regulatory Conference providesa California perspective on

electric utility industryrestructuring

Message from the Chair

Section Chair Jim GuyForecasts Exciting Year for

Section

Fresh from theCircuits

Bob Gillespie examines howthe City of Bristol case wrestles

with the scope of federalpreemption under the

Telecommunications Act

Judicial Review ofAgency Decision-

Making in VirginiaJohn Sharer describes lessonsgleaned from the CLE paneldiscussion sponsored by the

Administrative Law Section atthe VSB Annual Meeting in

Virginia Beach

General AssemblyScrutiny of SCC

Cliona Robb reviews recentdevelopments concerning theJoint Subcommittee Studying

the Regulatory Responsibilities,Policies, and Activities of the

State Corporation Commission

Brown Bag LunchProgram

Immediate Past Chair KodwoGhartey-Tagoe describes abrown bag lunch program

addressing timelyadministrative law issues in an

informal setting.

The Tempest: Weathering the Restructuring StormThe theme for the 19th annual National Regulatory Conference, held inPortsmouth on May 7–8, 2001, was “The Tempest: Weathering the Restruc-turing Storm.” Peter Navarro presented the keynote address for the conference.The following summary of Peter Navarro’s remarks was compiled from notestaken during Professor Navarro’s remarks. It simply attempts to capture thehighlights of his talk; he was not speaking from a prepared text.

Professor Navarro’s remarks from this past May illustrate how dynamicenergy restructuring is. He criticized certain power marketers for profitingexcessively during California’s energy crises. Just last month, the front page ofthe New York Times business section for December 13th observed that “Thepower companies that not long ago were criticized as ‘profiteers’ responsiblefor California’s energy crises are now reeling from Enron’s collapse.” The tem-pest remains an apt metaphor for the electric restructuring experience.

Peter Navarro is an Associate Professor of Economics and Public Policy in the Graduate School of Man-agement at the University of California, Irvine. He is considered a leading expert on utility deregulation,and has been interviewed extensively by national as well as local media since California’s electric powercrises started making headlines.

continued on page 6 — Tempest

The 2001-2002 Bar Year promises to be anexciting one for the Administrative Law Sec-tion. A new Board of Governors has been

elected and is already working to provide greaterservices and programs to you, its members. Thisyear’s Board looks forward to a full agenda, withrenewed efforts to enhance our traditional pro-grams.

In the past year, under the leadership ImmediatePast Chair Kodwo Ghartey-Tagoe, the section hadone of its best years ever. Kodwo introduced thefirst in what we hope will be a long running seriesof Administrative Law Section brown bag speakerlunches. The 19th National Regulatory Conferencewas held in Portsmouth for the first time, and anoutstanding array of nationally recognized speakerspresented an informative and challenging programon the progress of restructuring across the utilityindustries. Also, for the second time, the conferenceincluded a section on ethics directed entirely toadministrative law practitioners. The section’sworkshop on judicial review of administrative deci-sions at the Virginia State Bar Annual Meeting wasriveting and very well attended. All the speakerswere exceptional, and the insights of SupremeCourt Justice Lacy (a former administrative adjudi-cator who became part of the ultimate judicialreviewer in Virginia) were particularly interesting.The section also updated and reissued its pamphlettitled Administrative Law.

In the current year, our most challenging projectremains the annual National Regulatory Confer-ence. This year will mark the Twentieth NationalRegulatory Conference, and the Board is exploringan appropriate celebration to mark this milestone.The conference itself is being planned for Williams-burg on May 13-14, 2002. Jointly sponsored by the

Section, the Virginia State Corporation Commis-sion, and the College of William & Mary’s Mar-shall-Wythe School of Law, the conferencetraditionally focuses on an important and timelyaspect of the regulation of industries under theCommission’s jurisdiction. In recent years, industryrestructuring and its effects have constituted amajor part of each conference. Conference ChairAlex Skirpan and his committee will assemble agroup of nationally-recognized speakers. If youwould like to join the committee or have ideas orsuggestions, please contact Alex Skirpan at804/371-9082 or askirpan@scc.state.va.us.

We are also planning to continue our morerecent tradition of organizing a CLE workshop on

2

Administrative Law News Winter 2002

Message from the Chairby James Patrick Guy, II

Jim Guy is Chair of the Administrative Law Section Board of Gov-ernors. He is a shareholder at LeClair Ryan, where his practice con-centrates on the utility industries.

Administrative Law SectionCommittee Chairs

National Regulatory ConferenceAlex Skirpan804/371-9082

askirpan@scc.state.va.us

Annual Meeting CLE ProgramBrian Buniva804/775-3809

bbuniva@virtualmk.com

Brown Bag Speakers LunchKodwo Ghartey-Tagoe

804/775-1191kghartey.tagoe@mcguirewoods.com

NewsletterCliona Robb804/697-4140

crobb@cblaw.com

continued on page 4 — Chair

The federal judiciary is once again sorting outwhat Congress intended by certain words usedin the Telecommu-

nications Act of 1996. Dif-ferent courts havereached different conclu-sions about the “clearintent” of §253(a), whichrequires that state or localstatutes, regulations orlegal requirements notprohibit or ”…have theeffect of prohibiting theability of any entity toprovide any interstate orintrastate telecommuni-cations service.”Does thisfederal prohibition trumpVa. Code § 15.2-1500(B)’srestriction on Virginialocalities offeringtelecommunications ser-vices? Judge James P.Jones of the U.S. DistrictCourt for the WesternDistrict of Virginia foundthat it did and grantedsummary judgment forthe City of Bristol on May16, 2001. See, City of Bris-tol, Va. v. Earley, et al, 145F. Supp. 741 (W.D.Va.2001) (hereafter, City ofBristol). His decisiondeclared that §15.2-1500(B) was preemptedby operation of theSupremacy Clause of theU.S. Constitution as being contrary to §253(a)’s pro-hibitions.

Judge Jones noted that the relationship between astate and its political subdivisions is traditionally

within the exclusive con-trol of states. However,Congress may preemptthis control if it makesthat intention “clear andmanifest.”Citing to Grego-ry v. Ashcroft, 501 U.S.452,461 (1991), JudgeJones found this degreeof clarity to be shown bythe statute’s use of themodifier “any”. This mod-ifier precludes a narrowinterpretation of the law’sapplication. See, City ofBristol, at p.747, citing toSalinas v. United States,522 U.S. 52, 57 (1997) andto United States v. Gonza-les, 520 U.S. 1, 5 (1997).

The decision is now onappeal to the Fourth Cir-cuit (Docket No. 01-1800)and, if affirmed, will likelyreach the Supreme Court,because a conflicting FCCinterpretation wasaffirmed by the D.C. Cir-cuit’s decision, City of Abi-lene v. FCC, 164 F.3d 49(D.C.Cir. 1999). The mat-ter bears watchingbecause the Court’sexpansive reading of “anyentity” could preemptother Virginia statutes in

addition to §15.2-1500(B).A longstanding principle of Virginia corporate

law is that only a corporation chartered as a “publicservice corporation” may conduct a public utility

Winter 2002 Administrative Law News

Fresh from the Circuitsby Robert M. Gillespie

A longstanding principle of Virginiacorporate law is that only a

corporation chartered as a “publicservice corporation”may conduct apublic utility business, and such a

public service corporation mayfurnish only the utility service

designated in its charter…. Becauseof this,Virginia’s electric utilities

have not been able to engage directlyin furnishing telecommunications

service…. [E]ntry into thetelecommunications market has beenaccomplished by the electric utility’s

holding company chartering aseparate and independent public

service corporation.This process isburdensome…. If electric utilities, or

for that matter Virginia generalbusiness corporations, are “anyentity”…, why should they berequired to…charter a separatesubsidiary before engaging in

telecommunications?

continued on page 5 — Circuits

3

Bob Gillespie is Of Counsel at Christian & Barton, L.L.P., wherehis practice concentrates on the telecommunications and energyindustries.

4

Administrative Law News Winter 2002

an administrative law topic at the VSB AnnualMeeting. In contrast to the National RegulatoryConference, our Annual Meeting workshop usuallyfocuses on an administrative law topic that is notrelated (or only tangentially related) to practicebefore the State Corporation Commission. Thisshould be another great opportunity to becomeinvolved in Bar activities, meet your colleagues, andearn CLE credits while enjoying the gentle breezesof Virginia Beach in June. Brian Buniva and hiscommmitte are organizing the workshop this year.If you would like to join the committee or haveideas or suggestions, please contact Brian at804/775-3809 or bbuniva@virtualmk.com.

Newsletter Editor Cliona Robb, of Christian &Barton, has promised to reinvigorate this newsletterand has many great ideas for several issues thisyear. More to the point, she has an excellent planfor executing those ideas and ensuring that theAdministrative Law News is a valuable benefit ofsection membership. If you would like to submit anarticle for publication in Administrative LawNews, please contact Cliona Robb at 804/697-4140or crobb@cblaw.com.

Another new development is a website for theadministrative law section.You can access the web-site at www.vsb.org by clicking on “sections” andthen “administrative law.” I am actively searchingfor someone to assist in making the website as use-ful to our members as possible. In the meantime,we’d like to begin collecting e-mail addresses forsection members who would like to receive thisnewsletter electronically.

We are pleased to welcome new Board membersJay Holloway, Rob Omberg, Patrick Horne, andJoAnne Nolte. Along with myself, the Board alsoincludes Immediate Past Chair Kodwo Ghartey-Tagoe, Vice Chair Alexander Skirpan, SecretaryBrian Buniva, Newsletter Editor Cliona Robb, andreturning members Allen Glover, Judy Jagdmannand Warren Tisdale.

We bid a fond farewell to four Board members:past Chair Ed Petrini of Christian & Barton, MarkLaFratta of McGuire Woods, Vishwa Link ofDominion Virginia Power, and John Sharer of

Dominion Virginia Power. We are very grateful fortheir tremendous contributions to the Section.

Finally, I have to thank two people for theirremarkable support year after year. Dolly Shaffneris our Virginia State Bar Liason. Her efficiency andwarmth have made Bar service a joy for me, and forall who’ve had the good fortune to work with her.Mary Council on the SCC staff is the coordinator ofthe National Regulatory Conference. Her expertise,dedication and practical management style arelargely responsible for the consistently high qualityof the conference. The efforts of these two remark-able people make the work of this Section possible.We are deeply indebted to them and grateful.

We want to hear from the members of the Sec-tion. We want to hear your thoughts on the Sec-tion’s activities, and we want to know how we canserve you better. We also want to know whetheryou would like to become more involved in theSection’s projects. Call me at 804/968-2984 or sendme an e-mail at jguy@leclairryan.com. ■

Chaircontinued from page 2

The Virginia State BarAdministrative Law Section

Administrative Law NewsNewsletter Editor

Cliona Mary Robb

©2002, The Virginia State Bar Administrative Law SectionAll Rights Reserved

Administrative Law Newsis published by the Virginia State Bar’sAdministrative Law Section. Statements, expres-sions of opinion or comments appearing hereinare those of the editors or contributors, and notnecessarily those of the Virginia State Bar or theSection. Articles and materials accepted for pub-lication become the property of the VirginiaState Bar’s Administrative Law section and maynot be reprinted without the express writtenpermission of the editor.

business, and such a public service corporation mayfurnish only the utility service designated in itscharter. See, Va. Code § 13.1-620.D. Because of this,Virginia’s electric utilities have not been able toengage directly in furnishing telecommunicationsservice. See, C&P Telephone Co v. VEPCO, 1990 SCCAnn. Rept. 239. Instead, entry into the telecommu-nications market has been accomplished by theelectric utility’s holding company chartering a sepa-rate and independent public service corporation.This process is burdensome because it involves,among other regulatory matters, compliance withthe Public Utility Holding Company Act, 15 U.S.C.§79, et seq., and approvals from the SecuritiesExchange Commission or the FCC. If electric utili-ties, or for that matter Virginia general business cor-porations, are “any entity” under § 253(a) of theTelecommunications Act, why should they berequired to comply with § 13.1-620.D. and charter aseparate subsidiary before engaging in telecommu-nications?

Similarly,Va. Const. Art.IX, § 5 prohibits foreign-chartered corporations from furnishing public utili-ty service in Virginia. Section 253(a) does not,however, mention state constitutions. Its prohibi-tions apply to a “…State or local statute or regula-tion, or other State or local legal requirement.”DidCongress intend for the phrase “…other State orlocal legal requirement” to cover constitutions? IfArt. IX, § 5 is not likewise preempted by §253(a),then such foreign-chartered corporations are “enti-ties”prohibited from providing telecommunicationsservice in Virginia.

Public service corporations are also among thefew Virginia entities that have been granted thepower of eminent domain. See,Va. Code § 56-49. Ifa non-public service corporation were furnishingtelephone service and could not acquire neededright-of-way by condemnation, would this lack ofauthority “…have the effect of prohibiting the abili-ty of [that] entity to provide…telecommunicationsservice”under the City of Bristol’s interpretation of §253(a)?

Follow this case through the Fourth Circuit tosee if these and other statutory problems areresolved. ■

5

Winter 2002 Administrative Law News

Circuitscontinued from page 3

How would you like to get

Less Mail?The Administrative Law Section of the Virginia State Bar

is preparing to offer section members an electronic subscription of the

Administrative Law NewsIf you’d like to get your

Administrative Law NewsBetter, Cheaper & Faster

Send your full name and e-mail address to

Shaffner@vsb.organd ask to be added to the list.

We promise to not use your e-mail address for any purpose except those of the Section and the Virginia State Bar

6

Administrative Law News Winter 2002

there was a 10% rate reduction built into therestructuring legislation.

The idea was to create a well-functioningwholesale market, and California would benefitfrom cheap power. To get such a market, it wasdecided that it was necessary to force utilities todivest themselves of their power plants. So, all ofthe non-nuclear assets were sold to a handful oflarge energy companies — Dynegy, Reliant,Williams, Calpine, etc. Surprisingly, these oldclunker power plants were not considered to be ofmuch value...yet a good price was paid for manyof them.

With only four-to-six such players, instead of awholesale market, California got a “Dutch mar-ket.”These few players have been able to withhold

power to drive up the prices. The California ISOwas forced to take power at those high prices,with no discretion.

What has that meant in terms of prices? Elec-tricity that was 5, 10 or 15 cents per kilowatt-hournow goes for 25, 30, 35 cents/kWhs and can evenspike to $1/kWhs.

Don’t believe what you hear regarding a supplysituation. There is 45,000 MW of capacity availableto California. The winter peak is only 30,000 MW,yet the state is declaring stage 2 and stage 3 emer-gencies with rolling blackouts implemented as a

last resort. Why? Because the market is beingmanipulated by a small number of generators whoare withholding electricity from the market. Theyare accomplishing this even though they onlycontrol about 40% of the state’s generation. Theother 60% is either nuclear (still owned by theincumbents) or small generators (PURPA plants).The small generators have stopped producingbecause the bankrupt incumbents stopped payingthem and, as a result, they could not pay their nat-ural gas bills (the fuel of choice for generatingelectricity.) The only way for California to get outof this mess is to stop allowing those who are pro-ducing electricity at a nickel/kWhs to be able tosell it for $1/kWhs.

In my assessment, FERC could end the Califor-nia crisis tomorrow by 1) establishing hard pricecaps of 15-20 cents/kWhs. You can still make a lotof money at those prices. And, 2) require genera-tors to run in order to meet market demand. ButFERC won’t take this step because of its free mar-ket, conservative ideology. I’m a free market pro-ponent, but still find these two steps necessary.

I consider the situation in California extremelyserious. I caution Virginia not to put itself in aposition where an oligopoly is controlling themarket. And, it’s not just in electric supply. Cali-fornia is experiencing the same in gas. Why is theprice for natural gas 10 times higher in Californiawhen it is only 3 times higher everywhere else inthe U.S.?

In summary, California is a victim of oligopolytheory, regulatory stupidity, and unintended con-sequences. Because the state’s energy situation isso intertwined with the state’s economy, the stateis suffering death by a thousand cuts.

Looking back at how this all happened, theutility marketers (Enron, Williams, etc.) were thesmart people playing chess. And the Californiapoliticians were the dumb people playing check-ers. In chess versus checkers, guess who alwayswins?

I am all for companies being profitable, butwhen you see tripling of earnings within a yearand CEOs making $200 million/year salaries…there is a lot really wrong and really dangerous.

Tempestcontinued from page 1

In my assessment, FERC could endthe California crisis tomorrow by1) establishing hard price caps of15-20 cents/kWhs.You can still

make a lot of money at thoseprices. And, 2) require generators

to run in order to meet marketdemand. But FERC won’t take this

step because of its free market,conservative ideology.

continued on page 8 — Tempest

On June 15, 2001, the Administrative LawSection presented a continuing legal educa-tion (CLE) pro-

gram on “Judicial Reviewof Agency Decision-Making in Virginia” dur-ing the Bar’s AnnualMeeting at VirginiaBeach. Three seasonedpractitioners from privateand government practicejoined two respectedjurists to offer theirinsights, perspectives andpractical pointers onchallenging decisions ofadministrative agenciesin the circuit courts, theCourt of Appeals, andthe Supreme Court ofVirginia.

The importance ofcareful, painstakingpreparation emergedfrom these presentationsas an overriding principleand unifying theme.Specifically, an attorneywho hopes to be success-ful in challenging agencyaction in the courts mustbe (1) thoroughly familiarwith the organic statute under which the agencyacted; (2) immersed in the administrative record;

(3) fully educated in the statutory provisions (e.g.the Administrative Process Act,Va. Code Ann. §§ 9-

6.14:1 et seq.), and courtrules and procedures,governing the appealprocess; and (4) of criticalimportance, not onlycompletely conversantwith the applicable stan-dard of judicial review,but also able to use thestandard of review effec-tively and deftly as anappellate advocacy tool.

Brian L. Buniva(McCandlish Kaine P.C.)and the Hon. TheodoreJ. Markow (Circuit Courtof the City of Richmond)both emphasized thecritical role, and funda-mental importance, ofthe standard of review.Indeed, Judge Markowexhorted the audience ofapproximately fifty attor-neys to anticipate theappellate standard ofreview before the under-lying agency proceedingeven begins. (In thisregard, it was noted that

an important contribution to the scholarly litera-ture on judicial review in Virginia is M. R. Carter,Standards of Judicial Review in the Virginia Adminis-trative Process Act, 30 U.RICH.L.REV. 905 (1996).)Judge Markow also offered practical insights onhow to present and argue the appeal in a manner

7

Winter 2002 Administrative Law News

Judicial Review of Agency Decision-Making in Virginia

by John D. Sharer

John D. Sharer is Managing Counsel – Electric Delivery &Telecommunications, Dominion Resources Services, Inc. Mr. Sharerorganized and chaired the Section’s CLE panel. The views expressedin this article are solely those of the author, and do not necessarilyrepresent the views of Dominion Resources, Inc., its subsidiariesand affiliates.

The importance of careful,painstaking preparation emerged

from these presentations as anoverriding principle and unifying

theme. Specifically, an attorney whohopes to be successful in challengingagency action in the courts must be

(1) thoroughly familiar with theorganic statute under which the

agency acted; (2) immersed in theadministrative record; (3) fully

educated in the statutoryprovisions…, and court rules andprocedures, governing the appeal

process; and (4) of criticalimportance, not only completelyconversant with the applicable

standard of judicial review, but alsoable to use the standard of review

effectively and deftly as an appellateadvocacy tool.

continued on page 8 — Agency

that is most helpful to, and informative for, the cir-cuit court hearing the case.

Roger L. Chaffe (Senior Assistant Attorney Gen-eral, Office of the Attorney General) surveyedrecent case law from the Court of Appeals and theSupreme Court of Virginia on important facets ofjudicial review, e.g. waiver of sovereign immunity;deference to the agency; standing; jurisdictionalnature of the petition for appeal under Rule 2A:4;and attorneys’ fees. Arguably, a jurisprudentialstruggle and debate between the Court of Appealsand the Supreme Court may be discernible withrespect to the development of the law in several ofthese areas.

James C. Dimitri (McGuireWoods LLP) dis-cussed the special rules and procedures (e.g.Supreme Court Rule 5:21) applicable to appeals ofright from the State Corporation Commission ofVirginia to the Supreme Court of Virginia. Theserules and procedures, and the body of case lawgoverning the deference that the Supreme Courtaffords to the Commission’s factual decisions, andthe decisions that it makes in its legislative capacity,can be traps for the unwary practitioner who isunfamiliar with the workings of the Commissionand of the unique considerations applicable to judi-cial review of the Commission’s final orders.

The Hon. Elizabeth B. Lacy (Justice, SupremeCourt of Virginia) closed the CLE presentation with“The View from the Supreme Court — Observa-tions and Perspectives.”Among other topics, JusticeLacy emphasized the importance of the standard ofreview as an appellate advocacy tool. She also high-lighted the critical role of assignments of error (not-ing, for example, that winning appellees may bewise to assign cross-error). Justice Lacy provided ahelpful and informative glimpse at the SupremeCourt’s internal operating procedures. She noted,for example, that the Court performs an indepen-dent procedure check on the cases that comebefore it, e.g. jurisdictional issues such as themandatory statement of significant precedentialvalue or constitutional question as determinative ofthe issue in civil appeals from the Court of Appeals,Va. Code §17.1-410(b), and the proper form for pre-

sentation of the assignment of error in appeals tothe Supreme Court, Rule 5:17(c). (Justice Lacyobserved that the Supreme Court largely leaves thedevelopment of the law of administrative agenciesto the Court of Appeals. Thus, the Supreme Courtgrants review in only a handful of cases involvingagency decision-making.) Justice Lacy also stressedthe importance of the Joint Appendix, and exhortedcounsel to ensure that it is well indexed.

The panelists’ written materials may beobtained, subject to the availability of copies, fromMrs. Dolly Shaffner, Section Liaison, at the VirginiaState Bar, 804/775-0514 (telephone), or shaffn-er@vsb.org (e–mail). Any questions about theforegoing article should be directed to the authorat 804/819-2271 (telephone), or john_d_sharer@dom.com (e-mail). ■

8

Administrative Law News Winter 2002

Agencycontinued from page 7

And all of this chaos comes about from onlyone-half of the restructuring process — thewholesale market. The retail market stuff hasn’treally gotten off the ground. Restructuring wasdone on the promise of lowering retail prices. Butretail competition does not exist and may nevercome to be.Yet, look what is being given up in thisyet unpromised return. No more reserve margincontrols, no more environmental controls, nomore diversified energy mix (it’s all natural gas.)

The regulation devil is bad. A lot does notwork. But, if something is broken in regulation,you need to be extremely careful how you fix it.

I’m convinced California’s problem would nothave happened if regulation had remained inplace. Sure, there was some preliminary excite-ment when the market opened. Brokers came into sell, got a few customers, but when things gotbad, they abandoned those customers. This is anextremely complicated, complex and arcane field.You need to be very, very careful. California didnot exert the proper care.

P.S. If Virginia ever has to resort to rollingblackouts…make sure you don’t do randomrolling blackouts. Our experience shows that peo-ple need to know in advance when the lights willgo out. Come up with a procedure to apply themselectively and by order of preference. ■

Tempestcontinued from page 6

9

Winter 2002 Administrative Law News

The General Assembly’s recent scrutiny ofthe State Corporation Commission(“SCC”) has resulted in significant struc-

tural changes at the SCC, with further changesunder consideration during this session of theGeneral Assembly.

For the past two years, a General Assemblyjoint subcommittee (the“Joint Subcommittee”)has subjected the SCCto extensive scrutiny inorder to assess its corefunctions and determinewhether the responsibil-ities, policies and activi-ties of the SCC shouldbe amended to addresschanging market struc-tures and emergingtechnologies of the in-dustries it regulates. Thisscrutiny produced twomajor studies assessingthe SCC, and thesestudies have providedimpetus for the SCCvoluntarily to imple-ment significant struc-tural changes. The JointSubcommittee did notendorse a study recom-mendation to increasethe size of the SCC from three to five commis-sioners. However, Senator Norment, the chair of

the Joint Subcommittee, has, in his capacity as anindividual lawmaker, introduced SB 375 to in-crease the number of commissioners from threeto five. In addition, Senator Norment has intro-duced SB 554 to limit the SCC’s authority to dealwith environmental and other effects associatedwith new power plants; this bill was endorsed by

the Legislative Transi-tion Task Force, whichSenator Norment alsochairs.

The SCC is reorga-nizing to improve itsoperational efficiency,effective February 1,2002. This reorganiza-tion addresses, in part,r e c o m m e n d a t i o n sresulting from the JointSubcommittee’s studies.One of the most signifi-cant changes is the cre-ation of a new bufferbetween the commis-sioners and the SCC’sregulatory staff when-ever the SCC’s rulesprohibit staff from hav-ing any direct involve-ment in formulating aSCC decision. Two newcounsel positions, one

for business and financial matters and anotherfor utility matters, have been created to helpensure that the regulatory staff does not haveundue influence on SCC decisions.

General Assembly Scrutiny of SCCby Cliona Mary Robb

Cliona Robb is a partner with Christian & Barton, L.L.P., whereher practice focuses on the energy and telecommunications indus-tries, including local government issues.

The SCC is reorganizing toimprove its operational

efficiency…. One of the mostsignificant changes is the creation

of a new buffer between thecommissioners and the SCC’sregulatory staff whenever the

SCC’s rules prohibit staff fromhaving any direct involvement informulating a SCC decision. Two

new counsel positions, one forbusiness and financial matters and

another for utility matters, havebeen created to help ensure that

the regulatory staff does not haveundue influence on SCC decisions.

continued on page 10 — SCC

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Administrative Law News Winter 2002

Philip R.“Duke”de Haas will serve as Counselto the Commission—Business and Financial,while John F. Dudley will serves as Counsel tothe Commission—Utilities. Duke de Haas hasbeen counsel to the SCC since July 2000 and willremain in that capacity but now will primarilyfocus on insurance, banking, securities, and cor-porate matters. John Dudley is expected to starthis new position in mid-February. For more thanthree years, he has been a senior assistant attor-ney general and chief of the Attorney General’sinsurance and regulatory section.

Another major aspect of the SCC’s reorgani-zation is that the chairman of the SCC will bedesignated as the SCC’s chief operating officer,and all sixteen SCC divisions will report to thechairman. In the past, oversight responsibility forthe sixteen divisions was divided among thethree commissioners. The three commissionerswill continue to elect a chairman from amongthemselves on an annual basis.

The reorganization has also simplified thelines of communications with SCC divisions bydesignating six industry points of contact withinthe SCC. The six division directors will assumethe lead in communicating and encouraging thedevelopment of competitive markets involvingtheir respective sectors. To further emphasize thestructure-by-industry organization, all formalcases requiring an order from the SCC will betracked by the SCC’s new case management sys-tem (scheduled to be implemented in April2002) using PUC for communications cases, PUEfor energy cases, INS for insurance cases, BFI forfinancial cases, SEC for securities cases, and CLKfor business entity cases.

This reorganization plan stemmed from twomajor studies resulting from the Joint Subcom-mittee’s scrutiny of the SCC. The first was con-ducted by the SCC’s consultant and resulted in

the Final Report on the Virginia State Corpora-tion Commission by David Wirick and John Wil-helm of the National Regulatory ResearchInstitute, which was completed in March 2001(“Wirick Report”). The second was conducted bythe Joint Subcommittee’s consultant and resultedin the Study of Regulatory Responsibilities, Poli-cies, and Activities of the State CorporationCommission by George Mason University Schoolof Public Policy, which was completed in August2001 (“GMU Report”).

On November 19, 2001, the Joint Subcommit-tee determined that the General Assembly willhold off for at least a year in mandating whatcould involve major structural and proceduralchanges at the SCC. During its November 19thmeeting, the Joint Subcommittee agreed toextend its study of the SCC through 2002 andsubmit its final report to the 2003 GeneralAssembly. This extension was based on anassessment by members of the Joint Subcommit-tee that the SCC had not yet fully responded tothe Wirick Report or the GMU Report. Prior tosubmitting its final report to the General Assem-bly, members of the Joint Subcommittee willmeet at the SCC with the staff and commission-ers to obtain a first hand look at the activitiesperformed by the SCC.

Most aspects of the consultants’ reports arestill under consideration by the Joint Subcommit-tee, but the proposal by the GMU Report toincrease the number of commissioners fromthree to five was not adopted by the Joint Sub-committee at its November 19th meeting.Nonetheless, Senator Norment, who serves aschair of the Joint Subcommittee, has introduced abill to do just that in his capacity as an individuallawmaker.

Anyone who practices before the SCC or rep-resents industries affected by SCC decisions willwant to keep an eye on developments in theGeneral Assembly’s ongoing consideration ofmatters impacting the SCC. ■

SCCcontinued from page 9

11

Winter 2002 Administrative Law News

This past year, we have endeavored to presenthigh-quality, timely, and affordable educa-tional programs to our members. On Thurs-

day, April 12, 2001, we held our first sectionluncheon program inrecent memory in Rich-mond. The program wasentitled “Federal ElectricRestructuring—ProgressReport,” and our speak-ers were Shaheda Sultanfrom the Federal EnergyRegulatory Commission,Office of the GeneralCounsel, and CharlesFoster from Edison Elec-tric Institute. Ms. Sultanprovided some insightfulcomments on the Feder-al Energy RegulatoryCommission’s approvalof Regional TransmissionOrganizations (RTO),the flaws in California’smodel for restructuringits electric industry, andthe differences betweenCalifornia and Virginia’srestructuring models.Notably, she identified anumber of differences in the two states’ restructur-ing approaches and concluded that “[h]opefully thedifferences between the two programs will ensurethat the result in Virginia is very different from thatin California.”

Mr. Foster discussed some of the proposed leg-islation affecting the electric industry being con-sidered in Congress. He discussed, among otherthings, the details of the Comprehensive and Bal-

anced Energy Policy Actof 2001 proposed bySen. Bingaman, theNational Energy Securi-ty Act of 2001 proposedby Sen. Murkowski, andthe Home Energy Gen-eration Act proposed byRep. Inslee.

The program was agreat success. It was wellattended (including onetelephone participantfrom Roanoke), andincluded a lively discus-sion of what the futureholds for Virginia electricutilities and consumers.

With the success ofthe program has come alively interest in futureluncheon programs ontopical subjects. A pro-gram to address effectiveadvocacy in administra-tive hearings will be

held at McGuireWood’s offices in Richmond inlate January, and another brown bag lunch pro-gram is being considered for April. Call me at804/775-1191 or e-mail me at kghartey.tagoe@mcguirewoods.com if you’re interested in help-ing to plan the April program or other brown bagevents. ■

Brown Bag Lunch Program

by Kodwo Pere Ghartey-Tagoe

Kodwo Ghartey-Tagoe us a partner at McGuireWoods, LLP, wherehis practice focuses on the utility industries.

…[W]e held our first sectionluncheon program in recent memory

in Richmond. The program wasentitled “Federal Electric

Restructuring—Progress Report,”andour speakers were Shaheda Sultanfrom the Federal Energy RegulatoryCommission, Office of the GeneralCounsel, and Charles Foster from

Edison Electric Institute. …

The program was a great success. Itwas well attended (including one

telephone participant fromRoanoke), and included a lively

discussion of what the future holdsfor Virginia electric utilities and

consumers.

Virginia State BarEighth & Main Building707 E. Main Street, Ste. 1500Richmond, VA 23219-2800

PRST STDU.S. POSTAGE

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RICHMOND

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Administrative Law News Winter 2002

Administrative Law News

Virginia State Bar Administrative Law Section2001-02 Board of Governors

Harry Allen Glover, Jr.Roanoke, VA

John Malcolm Holloway, IIIRichmond, VA

Patrick Thomas HorneRichmond, VA

Judith Williams JagdmannRichmond, VA

JoAnne Lewis NolteRichmond, VA

Robert Arthur OmbergGlen Allen, VA

Warren Lafayette TisdaleNorfolk, VA

Dolly ShaffnerVSB Liaison

804/775-0514

James Patrick Guy, IIChair

Glen Allen, VA804/968-2984

Hon. Alexander Frank Skirpan, Jr. Vice Chair

Richmond, VA804/371-9082

Brian Lawrence BunivaSecretary

Richmond, VA804/775-3809

Kodwo Pere Ghartey-TagoeImmediate Past Chair

Richmond, VA804’775-1191

Cliona Mary Burke RobbNewsletter Editor

Richmond, VA804/697-4140