The Little Hoover Commission recommended on a 7-1 vote rejecting the administration?s energy agency reorganization plan because of legal concerns. The rub is that the California Public Utilities Commission?s transmission and other siting authority is based in the constitution and apparently cannot be transferred. The governor?s plan would have the CPUC?s authority in some areas, such as transmission, taken over by a new Department of Energy and have the California Energy Commission subsumed into that department under the administration?s control. ?Clearly there?s a need for a Department of Energy,? said Jim Mayer, Hoover executive director. But the ultimate concern in the June 23 vote, he said, was based on legal opinions from the California attorney general and legislative counsel. They concluded that the reorganization as proposed would violate existing law. According to the commission, the reorganization plan cannot be amended in this process. ?I can?t say it will delay the reorganization,? said Joe Desmond, California Energy Commission chair. He added that it depends on the governor?s response. The problem could be addressed in modified reorganization language or in a bill, he added. The distinction between ?amended??what the commission says can?t be done?and ?modified??what the administration proposes?isn?t clear. According to the administration, the plan has been revised to address concerns that the commission raised over the reorganization plan submitted in May. The Attorney General?s Office notes that the governor submitted a ?revised draft? June 13. In a June 20 letter to Senator Don Perata (D-Oakland), California?s deputy legislative counsel Bradley Webb wrote that the law governing Schwarzenegger?s reorganization ?specifically precludes the plan from abolishing any agency created by the California Constitution, or transferring to the jurisdiction and control of any other agency any function conferred? by the constitution. Counsel concludes that the governor is precluded from transferring the authority over public convenience and necessity for power plants and transmission lines from the CPUC to a new agency. The Attorney General?s Office had similar responses. It issued two legal opinions to the commission?one on the original reorganization document, and an additional one on the reworked plan the commission took up this week. According to the attorney general, the June 13 version of the reorganization plan (available at <i>www.leginfo.ca.gov<\/i>) differs from the original by:<ul><li>Allowing shared responsibility with the CPUC for participating in Federal Energy Regulatory Commission proceedings on California Independent System Operator issues, instead of keeping exclusive responsibility in the new department.<\/li> <li>Transferring responsibility for building new transmission facilities from the CPUC to the new department.<\/li> <li>Shifting authority for taking ?all feasible actions? for FERC-established transmission rates to be reflected in retail rates from the CPUC to the new department.<\/li> \t <li>Moving jurisdiction over nonutility gas lines from the CPUC to the new department.<\/li> \t <li>Transferring from the CPUC responsibility for determining the effect of a project on rates, the environment, and public benefits.<\/li><\/ul>The Little Hoover Commission told the governor that if his plan were to go into effect, ?it would be subject to legal challenge.? The commission went on to urge the governor to ?expeditiously put in place those reforms that would improve leadership and accountability.? It encouraged further revision and resubmission of the plan. ?The CPUC and the CEC have different competencies, decision-making procedures, and standards for judicial review. Given the importance of these proceedings, the administration should carefully review the regulatory procedures and present to the Legislature a comprehensive proposal for streamlining, integrating and if necessary, consolidating authorities,? said the commission. The ?extraordinary authority? that would be given the secretary of energy also gave the commission members pause. They particularly noted the potential authority over any new department?s staff.