At a Glance
- From Greyhound to Yamaha: The Court replaced the decades-old Greyhound standard, which accorded the CPUC extraordinary deference, with the Yamaha framework.
- Closer Judicial Review: Courts will now more carefully examine CPUC decisions when the lawfulness of the decision turns on a questions of statutory construction.
- Aligned Standards: The vast majority of CPUC rulings will be reviewed by appellate courts under the same standards as those applied to other state agencies, improving consistency and predictability.
Full Case Summary
On August 7, 2025, the California Supreme Court issued its decision in Center For Biological Diversity v. California Public Utilities Commission. The decision reversed the decision of a lower appellate court which had affirmed a highly controversial order of the California Public Utilities Commission. The Commission’s order sharply reduced the credits or payments to the owners of rooftop and other solar generating devices interconnected to the distribution network of the owner’s electricity supplier. The Supreme Court held that the lower court had employed a level of deference to the Commission that the Legislature had effectively repealed in 1998. The Court remanded the matter back to the lower court to review the Commission’s order under the correct standard of review.
Created as a constitutional agency in 1911, the Commission is generally regarded as the most powerful state agency in the United States. Article XII, Section 5 of the California Constitution vests the Legislature with “plenary power, unlimited by the other provisions of this constitution but consistent with this article…..to establish the manner and scope of review of commission action in a court of record….”[1]
Over a century ago, the Legislature exercised that authority by limiting judicial review of Commission decisions to the California Supreme Court through a discretionary writ of review (Public Utilities (PU) Code § 1756). Simultaneously, the Legislature enacted PU Code Section 1757, which treated any factual findings of the Commission as “final” and not subject to appellate review; Section 1757 limited court review to the question of whether the Commission had “regularly pursued its authority”. Finally, the Legislature enacted PU Code Section 1759(a), which expressly provided that (1) no other lower state court (trial or appellate) could reverse or modify an order of the Commission and (2) lower courts were proscribed from even issuing an order in a proceeding to which the Commission was not a party if that order would “interfere” with the Commission’s exercise of its broad jurisdiction.
In 1968, the Court examined Section 1757 in a case involving Bay Area bus service. As last week’s decision described it:
We considered the meaning of this review provision in Greyhound…..which concerned the validity of a Commission decision requiring a commuter bus operator to extend service over certain routes in the San Francisco Bay Area. The challenger argued that the Commission had “not regularly pursued its authority” because the statute on which the Commission relied for its authority did not, in fact, authorize the order. (Id. at p. 410.) In rejecting this argument, we wrote: “There is a strong presumption of validity of the commission’s decisions [citations], and the commission’s interpretation of the Public Utilities Code should not be disturbed unless it fails to bear a reasonable relation to statutory purposes and language.”
Greyhound arguably constructed a wall of deference around the Commission that was even higher than that represented by its federal counterpart, the now departed Chevron v. Natural Resources Defense Council. Deference, however, was not the issue that motivated stakeholders to press for changes to the judicial review scheme adopted by the Legislature over a century ago. The growing support for change arose from the fact that the California Supreme Court, the only state court with jurisdiction to review Commission decisions, was simply not agreeing to do so. The Court issued only eight opinions in Commission matters over the fourteen-year period from 1983 to 1996 (and only one after 1995). The growing consensus view was that the Commission was not subject to meaningful judicial review.
Proposals to modify the review scheme, however, met with stiff resistance from the Commission and the large utilities. Most bills did not make past their first committee hearing. It was not until 1998 that Senator Charles Calderon’s SB 799 was enacted and entitled the “Calderon-Peace-MacBride Judicial Review Act of 1998” (named for the Chairs of the Senate Judiciary and Energy Committees and the principal policy advocate for SB 799 (now an attorney at Downey Brand)).
SB 799 is best known for vesting the intermediate appellate courts with jurisdiction to review most Commission decisions. As expected, far more cases are now being reviewed in a manner producing a written opinion than was the case prior to 1998.
The Judicial Review Act, however, also adopted standards of review, largely parroting Code of Civil Procedure Section 1094.5. The team from the California Judicial Council working on the bill, pointed out that it made sense to employ standards familiar to the current justices of the Court of Appeal (many of whom were not thrilled about the prospect of reviewing what they expect to be complex records from the Commission). The Act, for example, opened Commission decisions to limited review of factual findings- the “substantial evidence test” found in PU Code Section 1757(a)(4).
The Legislature expressly stated in an uncodified portion of SB 799 that judicial review of Commission decisions regarding energy, transportation and telecommunications should “be consistent with judicial review of the other state agencies”[2]. As the Court pointed out last week, however, even after the passage of the Judicial Review Act:
Courts have continued to cite Greyhound when applying the modified statutory standard of review, albeit without much explanation or discussion.
After careful examination of the effect of the legislative changes, we now conclude that, for the category of cases in which the “regularly pursued its authority” standard is no longer in effect, the degree of deference prescribed in Greyhound no longer governs review under Public Utilities Code sections 1757 … and 1757.1.
The Court identified the level of deference that had, as a result of the enactment of SB 799, replaced Greyhound in cases reviewed under Sections 1757-1757.1. The Court pointed to its 1998 decision in Yamaha[3] and noted that:
The Court of Appeal in this case did not cite Yamaha, nor did its analysis resemble the Yamaha inquiry. The court instead relied on the “uniquely deferential” approach it understood to be required under Greyhound. The Yamaha standard distinguishes between “opposite ends of an administrative continuum”.
In the context of review of Commission decisions, the reader is advised to review the Court of Appeal’s opinion in New Cingular Wireless v. CPUC (2016) 246 Cal App. 4th 784, an opinion written nine years ago that addressed the Commission’s application of the statutes authorizing intervenor compensation. Justice Streeter first explained that Greyhound deference is not appropriate when the statute at issue delimits the Commission’s jurisdiction (an exception to Greyhound courts have long recognized.). Perhaps more importantly, the opinion explains how far Greyhound departs from Yamaha. As expressed by Justice Streeter:
Since we are dealing with a set of “explicit, limited fee rules”…[citation]… enacted as part of a detailed statutory scheme defining the CPUC’s jurisdiction in this area, applying the Greyhound test here would effectively swallow the statutory scheme in whole, rendering its limitations subordinate to the CPUC’s interpretation of the statute. New Cingular is therefore correct that Yamaha supplies the appropriate lens through which to evaluate this case.
The Court expressly disapproved of certain post-SB 799 decisions that had adhered the Greyhound, perhaps most notably the high-water mark of Greyhound, Southern California Edison v. Public Utilities Commission, 117 Cal. App. 4th 1039 (2004), where Court of Appeal affirmed a Commission award of intervenor compensation to The Utility Reform Network (TURN), concluding that TURN’s activities as an intervenor in the federal court proceeding on behalf of the defendant therein (the Commission) fell within the scope of the phrase “obtaining judicial review” in PU Code Section 1802.
The Supreme Court’s decision will affect some cases now pending in the Court of Appeal. The Commission has already sent a least one letter to a reviewing court apprising the court of “new authority” as required by Rule of Court 8.524.
Under the new standard enacted last week, the decades-old Greyhound standard extending extraordinary deference to the CPUC is now replaced with the Yamaha framework. This will lead to more careful examination of CPUC decisions when the lawfulness of the decision turns on a questions of statutory construction, and will more closely align standards of review applied to other state agencies.
[1] The constitutionality of the Legislature’s limitation of appellate review of Commission decisions is explained by the First District Court of Appeal in Communities For A Better Environment v. Energy Resources Conservation And Development Commission, 57 Cal.App.5th 786, 807-808 (2020). See also, Gerawan v. ALRB, 27 Cal. App. 4th 284 (2016).
[2] Stats 1998, c. 886, Sec, 1.5(b).
[3] Yamaha Corp. of America v. State Bd. of Equalization (1998) 19 Cal.4th 1.
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