On August 7, 2025, the California Supreme Court (the Court) issued Opinion S283614 in the case Center For Biological Diversity, Inc. v. Public Utilities Commission regarding the degree of deference that courts should afford to the California Public Utilities Commission’s (CPUC) interpretations of the Public Utilities Code. The Court held that the longstanding “highly deferential” approach does not apply in cases affected by significant legislative change.
For nearly a century, statutory law directed courts to uphold CPUC decisions so long as the CPUC had “regularly pursued its authority” in the matter being contended. During that era, the Court instructed that the CPUC’s interpretation controlled unless it failed to bear a “reasonable relation to statutory purposes and language,” based on the Court’s decision in Greyhound Lines, Inc. v. Public Utilities Com. (1968). In determining that Greyhound’s “highly deferential” approach does not apply in cases affected by significant legislative change, the Court noted that beginning in the mid 1990’s in response to deregulation in the energy and other utility markets, the Legislature passed a series of amendments that expanded the legal scope of review of CPUC decisions, particularly Public Utilities Code sections 1757 and 1757.1. These amendments specify several bases on which a reviewing court may set aside a CPUC decision. The Court held that judicial review under these statutory provisions should be consistent with the judicial review that applies to the administrative decisions of other California agencies, rather than the “uniquely deferential” form of review described in Greyhound.
According to the Court, the correct standard of review is whether there was any prejudicial abuse of discretion, established by whether the agency proceeded in the manner required by law. As a result of this change, the Court disapproved Southern Cal. Edison Co. v. Public Utilities Com. (2004) 117 Cal.App.4th 1039; The Utility Reform Network v. Public Utilities Com. (2008) 166 Cal.App.4th 522; and Ames v. Public Utilities Com. (2011) 197 Cal.App.4th 1411.
Notably, one exception to this standard is for CPUC decisions pertaining solely to water corporations, because the Court noted that the water supply industry continues to operate in a traditional, noncompetitive utility market.
The underlying dispute in the matter before the Court concerned rooftop solar panels and Net Energy Metering. At the appellate court, Center for Biological Diversity and Protect Our Communities Foundation argued that CPUC Decision 22-12-056 failed to account for all the benefits of renewable energy conferred on society generally, failed to ensure that customer-sited renewable distributed generation continues to grow sustainably, and failed to include specific alternatives for growth in disadvantaged communities. Upon reviewing the appellate court’s ruling upholding the CPUC’s decision, the Court found that the appellate court erred in relying on the uniquely deferential standard in Greyhound. However, the Court did not rule on the substance of the underlying dispute and instead remanded the case back to the Court of Appeal.
[View source.]
