Oct 15, 2024
A consumer attorney argued Tuesday for a jury to get to hear the legal fight over a multibillion-dollar agreement granting San Diego Gas & Electric exclusive rights to serve the city of San Diego, and whether it was legally negotiated. At an afternoon hearing before the 4th District Court of Appeal, former San Diego City Attorney Mike Aguirre said Mayor Todd Gloria wrongly held private meetings with individual City Council members before they voted to approve the 20-year franchise agreement in 2021. He also noted that SDG&E donated thousands of dollars to political campaigns supporting the mayor and City Council members in an effort to help win a lengthy contract renewal after its 50-year deal expired in 2020. “All that decision-making was done behind closed doors with the mayor acting as a facilitator,” Aguirre told a panel of three judges. “This is $30 billion that’s going to be taken out of our city with no bidding.” Lawyers for the city of San Diego and SDG&E told the appellate court that Superior Court Judge Eddie Sturgeon was correct when he dismissed the lawsuit before trial in 2022 on a technicality. They argued that pre-litigation rules were breached because plaintiff Kathryn Burton did not sign a letter to the city demanding the illegal action be cured or corrected before she filed her lawsuit. The two so-called cure letters were signed by attorney Maria Severson, Aguirre’s law partner. “We think the plain language in the statute is very clear,” SDG&E attorney Maurice Suh argued to the appeals court. “The interested party shall present a letter … Substantial compliance is not no compliance, and what we have here is no compliance.” Judge William Dato pressed Aguirre about why his client did not sign a cure letter herself. He said Severson was writing on behalf of multiple ratepayers and that the discrepancy made “absolutely no difference” and did not affect the merits of the complaint. “She (Burton) incorporated that (cure letter) into her complaint,” Aguirre told the judge. “She verified it and she ratified it, and that became the basis for this case.” Judge Dato similarly questioned the city and SDG&E legal team. “Tell me what the city would have done differently, or might have done differently,” if Burton had signed the cure letter, he asked Suh. “It was very clear to the city when they got the complaint what Ms. Burton was relying on as (her) compliance with the pre-litigation notice.” The utility lawyer said there was no way to tell. “We can’t speculate on that, because there is no record on this,” Suh told the court. But he said there could be unintended consequences if the case were returned to the trial court for further proceedings even though Burton did not sign a cure letter as required. “The doors to the Brown Act would be thrown open,” he said. No decision was announced Tuesday. The three-judge panel questioned each side for about 20 minutes and then took the matter under submission. A ruling is expected later this year or early next year. If the appeal succeeds, the lucrative franchise agreement awarded to SDG&E three years ago could be upended. Should a jury find it was negotiated illegally, the deal could be canceled and the city forced to start anew. The contract, which contributes a major share of the nearly $1 billion a year in SDG&E profits, passed on a 6-3 vote in May 2021 after Gloria met individually with all nine council members to discuss terms of the agreement, according to the lawsuit. Council members who opposed the agreement said that the city should have demanded more money from the utility and considered a shorter timeline, given the pace of technological innovations across the energy sector. “I think we can get a better deal,” said then-Councilmember Monica Montgomery Steppe, who has since been elected to the county Board of Supervisors. Aguirre, who was the elected city attorney from 2004 to 2008 and is now a public-interest lawyer in private practice, sued the city under the legal theory that officials violated the Ralph M. Brown Act, the law that requires government agencies to debate and vote on matters of public interest in public. He also told the appeals court Tuesday that Sturgeon had wrongly allowed SDG&E to intervene in the case, even though the merits of the agreement were not at issue. The lawsuit limited its challenge to the Brown Act violations, and the utility had no role in it, he argued. “That is a fatal flaw, even allowing them to appear in a Brown Act case,” Aguirre said. The open-meetings law “is designed to protect the public from actions by the city that involve serial meetings as is alleged in this court.” SDG&E, which is a subsidiary of the San Diego-based Fortune 500 conglomerate Sempra, won the 20-year renewal after a series of discussions that began under former Mayor Kevin Faulconer. The utility and former mayor never struck a deal before he left office, and the franchise-agreement debate landed before Gloria. The city issued what’s called an invitation to bid and received a single reply — a letter from SDG&E asking to negotiate. No terms were publicly released until days before the council convened to debate the agreement. The 2021 deal called for SDG&E to pay San Diego $70 million for the right to deliver electricity across the city and $10 million for natural-gas delivery rights. It also called on the utility to pay $20 million to help advance the city’s climate-equity goals — including enhanced parks, more trees and upgraded public transit in lower-income areas — and $10 million for other programs to promote solar power and rebates in historically underserved communities. The adopted agreement, which can be ended after 10 years with a subsequent vote of the City Council, was also challenged in court by the Protect Our Communities Foundation, a nonprofit that promotes the environment. That lawsuit argued that the city had failed to perform the needed environmental review and wrongly favored SDG&E in negotiations, and it argued financial provisions in the deal constituted a tax that needed voter approval. In a decision issued last year, Superior Court Judge Katherine A. Bacal upheld virtually all elements of the agreement but did rule that only five council votes — rather than six — would be needed to cancel the deal after 10 years.
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