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Public Service Commission President (and state auditor hopeful) James Brown stood before the Legislative Audit Committee for the third time in as many years Wednesday to discuss a legislative audit of the financial and organizational performance of the PSC, which regulates monopoly utilities in Montana.

The mood at Wednesday’s meeting was markedly different from that of June 2021, when lawmakers, troubled by an audit that documented falsified records and wasted state resources, took a sharp tone toward the commission, which Brown had joined just six months prior. During the 2021 meeting, Brown acknowledged that the state’s utility board “clearly has work to do” and outlined what he and fellow commission newcomer Jennifer Fielder planned to do about it, including an organizational restructuring, implementation of internal controls, and shifting the “tone and tenor at the top.”

This go-around, Brown spent more time on offense. He issued an 11-page response to the January 2024 performance audit’s findings — a highly unusual move — and defended several items it had flagged for improvement.

One of the audit’s findings was that 14 staffers — nearly a third of the agency — left in 2021, a year that followed intense turmoil among commissioners and a handful of PSC staff. That turmoil, which involved allegations of illegal spying and the firing of a senior agency staffer who tried to report it, resulted in two lawsuits against the agency.  

On Wednesday, Brown argued that the turnover was healthy, and represented the effects of new management and necessary housecleaning.

“Frankly, I don’t have any concern about that, because if you get new management and you look at the performance of people who were in the agency at that time — we wanted to turn over some folks, and we did,” he said.

One of the positions that’s seen considerable turnover is the PSC’s non-elected executive director, a job three people have held in the two and a half years since the position was created. Late last week, the PSC announced that David Sanders, who formerly worked for the U.S. House of Representatives and the U.S. Department of Transportation, is stepping into the position former Republican state lawmaker Brad Tschida vacated in September. 

Auditors also suggested that filling key positions in the agency with politically appointed exempt state employees discourages frank reporting of commissioner or management misconduct. Brown pushed back against that idea, arguing that the commission’s ability to appoint exempt staff — who aren’t subject to the same hiring and firing scrutiny as non-exempt staff — helps commissioners do the job voters expect them to do.

Legislative Audit Division Director Angus Maciver, who generally remained quiet throughout Wednesday’s hearing, weighed in on that debate in particular.

“We don’t have a misunderstanding with the Public Service Commission. We have a disagreement. We didn’t misunderstand how you see this — we just see it differently,” Maciver said. “We think those division-level equivalent positions should not be exempt, appointed positions. They should be permanent, classified positions.”

Brown also took up, glancingly, the issue of accountability for questionable commissioner conduct, arguing that commissioners are granted unique protections under the Constitution by virtue of their status as elected officials. In the report, auditors flagged instances where commissioners experienced “difficulty separating campaign and political activity from their official position,” including an apparent reference to a 2022 statement that commissioners Randy Pinocci and Tony O’Donnell sent on PSC letterhead championing coal-fired power and warning of imminent energy blackouts for Montana Dakota Utilities customers — a threat MDU disputed.

“It is way more difficult, for constitutional reasons, to enforce conduct against elected officials,” Brown said. “I have no power, under current Montana law, to somehow punish an elected official within my agency.”

He argued before Legislative Audit Committee members that adopting a “single code of ethics,” one of the audit report’s suggestions, would be inadequate, and noted that he and Fielder had spearheaded the adoption of 17 new PSC policies covering everything from budgeting and telework to delegation.  

The committee also dove into vacancy savings, pay plans and the commission’s legislatively established budget during its 1.5-hour exploration of the audit.

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