City Attorney Mara Elliott did an about-face on hiring an international law firm to handle franchise-agreement issues. Photo by Chris Stone

The San Diego City Attorney’s Office has pulled the plug on its effort to hire multinational law firm Dentons for up to $250,000 to defend the city’s utility franchise agreements with SDG&E.

The decision came Monday afternoon — less than 24 hours ahead of closed sessions Tuesday of the City Council, which will hear updates on two legal actions over the SDG&E pact approved 6-3 on June 8.

Petition for court order voiding San Diego gas and electric franchise agreements (PDF

Besides a well-publicized June suit by San Diego resident Kathryn Burton against the city and six council members, a new one filed July 12 goes far deeper.

The petition by the Protect Our Communities Foundation alleges violations of the state’s environmental quality law, the city’s Climate Action Plan and even the state rule that a two-thirds public vote is needed to approve new taxes and fees. It wants the franchise deals voided.

The case was assigned to Judge Carolyn M. Caietti in San Diego Superior Court.

When Caietti hears the case, however, Dentons lawyers won’t be involved.

After an inquiry Monday by Times of San Diego — noting how Dentons has represented SDG&E parent Sempra in cases involving its Mexican projects — a spokeswoman for the City Attorney’s Office said:

“Because Dentons failed to disclose to the City its previous representation of Sempra, we are pulling Item S500 from tomorrow’s 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.”

Hilary Nemchik, the spokeswoman, added: “When the City engages outside counsel, it expects complete transparency of every potential and real conflict. Obviously, that standard was not met here.”

As a result, an item on Tuesday’s public agenda — “Waiver of Conflict of Interest and Authorization to Retain Dentons to Provide As-Needed Legal Services for Implementation of Franchise Agreement” — has been removed.

Asked about the latest suit, SDG&E spokeswoman Helen Gao said: “We are reviewing the complaint and will respond as appropriate.”

Mayor Todd Gloria’s office didn’t respond to a request for comment.

Malinda Dickenson, a veteran environmental lawyer with the Protect Our Communities Foundation, is handling the case and said her clients “want to get this resolved on the merits as quickly as possible.”

But she’s not seeking — and doesn’t need — temporary injunctive relief “because we do believe that the court will agree with us that the city’s approvals of the franchise agreements are void.”

In the meantime, she said, any actions taken in “furtherance of what we allege … is done at the actors’ own peril.” She said CEQA cases typically proceed quickly through the courts.

Bill Powers, a board member with the San Diego-based foundation, said: “It looks like the city did zero due diligence before attempting to sole-source Dentons to serve as the city’s expert counsel on energy matters.”

In fact, Deputy City Attorney Ken So wrote a memo to city purchasing officials July 6 saying: “The Dentons law firm … has the capacity, skill, knowledge and expertise to perform the services sought by the City on this matter and to do so with no conflict of interest, which could be problematic and time-consuming to resolve because a conflict waiver would have to be sought.”

But had the city simply googled “Dentons Sempra,” Powers said, it would immediately have found a company document that said Dentons “represented Sempra Energy (NYSE: SRE), the parent company for San Diego Gas & Electric and Southern California Gas, with respect to its Mexico projects.”

Dentons has at least 190 offices in 77 countries, including an office in San Diego, and says it has been a “vital part of business and civic life in the city for 138 years.”

Dickenson, the San Diego lawyer who once represented the City of San Diego, said in a phone interview: “Why now do [city attorneys] not have the expertise? Why didn’t they figure this out before, when they were negotiating this bogus deal? If they don’t have the expertise now, they didn’t have it then.”

Her 33-page petition, including exhibits, goes beyond the Burton lawsuit (filed with help of former City Attorney Mike Aguirre), which mainly alleged violations of the Brown Act, City Charter and other transparency laws.

“The city failed to analyze, mitigate or avoid the environmental impacts of the ordinances and the associated agreement(s) in violation of the California Environmental Quality Act (CEQA) and the City’s own Climate Action Plan,” said a news release.

The lawsuit alleges that the City Council “inappropriately granted SDG&E what amounts to ‘veto’ power over the city’s climate policies, and made other municipal decision-making related to terminating the electric and gas franchises or transitioning to public power more difficult than the Charter requires.”

The suit also alleges the bidding process was unfair and anti-competitive, and that the ordinances impose hidden taxes without a vote of the people in violation of Proposition 26.

Dickenson says she once handled one of the first successful climate-change CEQA cases in California.

In a statement she said: “This is no time to be awarding a long term franchise to any fossil fuel company that refuses to comply with the requisite updates to the City’s Climate Action Plan and that refuses to reduce its greenhouse gas emissions to the fullest extent practicable.”

Sonja Robinson, program manager for the nonprofit foundation, added: “We applaud Councilmembers Montgomery Steppe, Moreno and LaCava, who were the only councilmembers who stood up for the public and voted ‘no’ when presented with these unfair agreements that did not reflect the terms councilmembers had previously expressed.”

Powers, an energy expert and secretary of the group’s board, said: “The bottom line is that the ordinances granting the gas and electric franchises to SDG&E fail to protect the public interest and inappropriately present obstacles to public power.”

Also targeted are SDG&E fees that critics consider taxes requiring two-thirds voter approval.

SDG&E’s website describes three types of franchise fees “collected as part of your SDG&E bill” and says: “Electric franchise fees are collected from customers by SDG&E and paid to a city or county for the nonexclusive right to install and maintain equipment on highways, streets or public rights of way. Franchise fees for electricity SDG&E provides are included in its rates and represent 1.1% of customers’ electric bills.”

The foundation’s petition argues that the so-called 3% charge [“a sum equal to three percent of SDG&E’s gross receipts for each franchise”], the Electric Franchise Fee Surcharge, the Municipal Undergrounding Surcharge and the Gas Franchise Fee Surcharge are charges that the “ordinances purport to impose upon taxpayers.”

Proposition 26 — passed by state voters in 2010 — broadened the definition of taxes and mandated two-thirds voter approval, with certain exceptions.

Nicole Capretz, founder and executive director of the Climate Action Campaign, said her activist group hasn’t had time to review the latest petition.

“And we are not involved, so it wouldn’t be helpful for us to comment,” she said.

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