San Diego city attorney withdraws law firm’s $250,000 contract to help defend new franchise deal with SDG&E

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The San Diego City Attorney’s Office has withdrawn a contract of up to $250,000 from a noted international law firm after a potential conflict of interest was pointed out by two opponents of the city’s recently signed electric and gas franchise agreement with San Diego Gas & Electric.

The city attorney originally sought to retain the services of Dentons, a firm with lawyers in more than 200 offices around the world including San Diego, to provide legal services for handling implementation and litigation dealing with the new franchise agreement.

But City Heights resident John Stump and San Diego attorney Michael Aguirre said after each performed a Google search, they quickly came across a 17-page presentation from Dentons that included a mention that the firm had represented Sempra, the parent company of SDG&E and Southern California Gas, regarding projects Sempra had in Mexico.

“Anybody could have done this in 12 seconds,” said Stump, who is also an attorney who deals with veterans affairs.

Stump and Aguirre said Dentons’ work involving Sempra could raise conflict of interest questions when the city defends itself in upcoming lawsuits that look to overturn the new agreement.

“It’s a conflict because (Dentons) has a duty of loyalty to Sempra, SDG&E and SoCalGas to put their interests first and they would have had a duty of loyalty to put the city’s interests first,” Aguirre said. “Maybe that could have been waived but the fact that it wasn’t disclosed or discovered is surprising.”

The contract with Dentons, set to run up to two years and not to exceed more than $250,000, was scheduled to come up for a vote at Tuesday’s City Council meeting but as first reported by the Times of San Diego, the City Attorney’s Office took the item off the council’s agenda late Monday.

“Because Dentons failed to disclose to the City its potential conflict of interest, we pulled (the item) from the docket and will bring back to Council at a later time new options for outside counsel with the specialized expertise needed to implement the franchise agreements,” City Attorney spokeswoman Hilary Nemchik said in an email.

Nemchik went on to say when the city “engages outside counsel, it expects complete transparency of every potential and actual conflict. Obviously, that standard was not met here.”

The Union-Tribune left emails and multiple voicemail messages with Dentons but as of late afternoon Tuesday, had received no response.

Bill Powers, board member of the Protect Our Communities Foundation — an environmental group that opposed the city’s new franchise agreement — said the City Attorney’s Office should get some blame, too.

“It’s embarrassing for the city that they go through this song and dance about why they had to (hire Dentons) and nobody bothered to do any due diligence to find out if there is a connection” between the law firm and SDG&E’s parent company, Powers said.

Earlier this month in a filing with the City’s Purchasing and Contracting Department, the City Attorney’s Office said it is seeking outside legal help because “the implementation of a major electric and gas franchise agreement is extremely complex, time-intensive, and requires specialized legal knowledge and expertise in energy law, which the City Attorney’s Office does not currently possess.”

Under a franchise agreement, a municipality grants a utility the exclusive use of public rights of way for transmission and distribution, as well as the right to install and maintain wires, poles, power lines and underground gas and electric lines within its city limits.

After Mayor Todd Gloria negotiated with SDG&E executives, the City Council voted 6-3 in late May and early June to approve a new franchise agreement with the utility.

The agreement runs for 10 years and has an automatic renewal for another 10 years. If the city is unhappy with SDG&E, it has a window to void the 10-year renewal, provided two-thirds of the City Council vote against extending the deal.

Last week, the Protect Our Communities Foundation filed a lawsuit against the city, looking to overturn the agreement. The filing in State Superior Court, contends, among other things, the deal should have gone through the California Environmental Quality Act process and that a franchise surcharge imposed on ratepayers of 3 percent constitutes a tax, thus violating Proposition 26.

Aguirre’s law firm last month issued its own legal challenge. Representing San Diego resident Kathryn Burton, the suit contends the city violated sections of the City Charter and the state’s open meetings law, specifically the Brown Act that deals with public access to government meetings.

Gloria met with individual council members before the vote to discuss the proposed agreement, something the lawsuit said should have been done only in a public forum.

The mayor’s office has maintained that Gloria “did not discuss (council member’s) votes or any other member’s votes or opinions in the briefings” and the City Attorney’s Office has said, “Based on the information provided, there is no evidence of a Brown Act violation.”

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