BILL ANALYSIS
AB 840
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Date of Hearing: April 22, 2003
ASSEMBLY COMMITTEE ON JUDICIARY
Ellen M. Corbett, Chair
AB 840 (Calderon) - As Amended: April 10, 2003
As Proposed to Be Amended
SUBJECT : PUBLIC UTILITIES COMMISSION: REVIEW OF DECISIONS
KEY ISSUES :
1)IS THERE A NEED TO SUBJECT DECISIONS OF THE PUBLIC UTILITIES
COMMISSION TO AN AUTOMATIC RIGHT TO JUDICIAL REVIEW IN MANY
CASES, DESPITE THE RECENT SUCCESSFUL IMPLEMENTATION OF GREATER
JUDICIAL OVERSIGHT OVER SUCH DECISIONS?
2)IS IT APPROPRIATE TO IMPOSE THE EVIDENTIARY RULES OF THE
ADMINISTRATIVE PROCEDURE ACT ON ADJUDICATORY PROCEEDINGS OF
THE PUBLIC UTILITIES COMMISSION, DESPITE THE UNIQUE NEEDS OF
THE PUC, AND CONTRARY TO THE RECOMMENDATION OF THE CALIFORNIA
LAW REVISION COMMISSION?
SYNOPSIS
This bill, sponsored by the Pacific Gas and Electric Company,
makes major procedural changes with regard to the Public
Utilities Commission (PUC) in two areas. First, the bill would
require the PUC to adhere to the evidentiary rules of the
Administrative Procedure Act in its adjudicatory proceedings.
Second, it would require a writ of review to be issued by the
court in certain cases where an application is filed for review
of a PUC decision: any case where the petition challenges the
decision on the ground that the decision relies on reasoning
that miscontrues, misinterprets or misapplies a statute; or
where the decision relies on a statutory provision that is
unconstitutional or prohibited by federal law or regulations.
Supporters argue that these changes are necessary to ensure
consistency and adherence to legislative intent in the
application of the complex body of laws pertaining to public
utilities. They put forward AB 840 as a natural extension of
the reforms carried out with regard to judicial review of PUC
decisions in 1998 and 2000.
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Opponents, who include the PUC and the utility consumer group,
The Utility Reform Network (TURN), argue that those reforms have
served their purpose well and have resulted in adequate judicial
oversight of PUC decisions. They argue that AB 840 would, in
essence, create a right of appeal from PUC adjudicatory
decisions, unnecessarily burdening the courts and working
against the state's interest in prompt and final resolutions in
the matters that come before the PUC. Under existing law,
approximately one in five cases for which review is sought is in
fact reviewed by the courts, and opponents argue that this rate
of review provides sufficient oversight. They point to the
procedures created under the bill as confusing and without
precedent elsewhere in the law.
SUMMARY : Creates new procedural requirements as to the Public
Utilities Commission (PUC). Specifically, this bill :
1)Provides that, where a petition for a writ of review has been
filed in the court of appeal or the Supreme Court as to a
decision or order of the PUC, a writ shall issue in any one of
the following circumstances:
a) The petition in whole or part challenges the decision on
the ground that the decision relies on a reasoning that
misconstrues, misinterprets, or misapplies a relevant
statutory decision;
b) The petition in whole or part challenges the decision on
the grounds that the decision relies on a statutory
provision that is unconstitutional or prohibited by federal
law or regulations, and the commission has no authority to
declare the statute unenforceable under Section 3.5 of
Article III of the California Constitution.
c) Whenever the court deems appropriate for purposes of
inquiring into and determining the lawfulness of the
decision.
2)Requires all evidence in any adjudication by the PUC to be
taken in accordance with the evidentiary requirements of the
Administrative Procedure Act.
EXISTING LAW :
1)Provides that the Legislature has plenary power to establish
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the manner and scope of review of action by the PUC in a court
of record. (California Constitution, Article XII, Sec. 5.)
2)Provides that an aggrieved party may petition for a writ of
review in the court of appeal or the Supreme Court for the
purpose of having the lawfulness of an order or decision of
the PUC inquired into and determined. (Public Utilities Code
section 1756.)
3)Sets forth the scope of review permitted in court review of
PUC actions. (Public Utilities Code sections 1757 and
1757.1.)
4)Provides that only the Supreme Court and courts of appeal have
jurisdiction to review PUC decisions. (Public Utilities Code
section 1759.)
5)Sets forth requirements as to the evidence taken in
adjudicatory proceedings subject to the Administrative
Procedure Act. (Government Code section 11513.)
FISCAL EFFECT : The bill as currently in print is keyed fiscal.
COMMENTS : This bill is sponsored by the Pacific Gas and
Electric Company (PG&E) to address what it sees as inadequate
judicial review of the decisions of the Public Utilities
Commission (PUC). The sponsor states:
Now more than ever, it is important to allow for oversight
beyond what the Legislature provides for public utilities
policies in California. Specifically, as the State's
energy policy evolves and the Legislature and CPUC
implement changes that affect broad sectors of the
California economy and millions of consumers, it is
critical that the California courts provide the checks and
balances on CPUC decision making that the
Calderon-MacBride-Peace Judicial Review Act of 1998 was
intended to ensure.
Judicial review of PUC decisions . As the sponsor notes, the
Legislature acted in 1998 to expand what was at that time quite
limited judicial review of PUC decisions. Prior to 1998, PUC
decisions could only be reviewed by the California Supreme
Court, which had complete discretion whether or not to accept
such appeals. The Court granted only one petition for review
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from 1990 through 1997. The Legislature acted in 1996 to allow
petitions for review to the court of appeal. (SB 1322,
Calderon; Ch. 855, Statutes of 1996). This was followed by SB
779 (Calderon; Ch. 886, Statutes of 1998) which provided for
appeal to either the court of appeal or the Supreme Court and
created new standards for review, providing for broader scope of
review. SB 779 was the result of extensive negotiations among
business, utilities, labor, environmental and consumer groups
and had the support of all of these groups.
The enactment of SB 779 has, as intended, resulted in more
extensive judicial review of PUC decisions. According to
statistics provided by the author's office for the years 1999
through 2002, of 54 petitions for review filed with the court of
appeal or the Supreme Court, 12 have been granted review -
approximately 22 percent. (These numbers do not include
petitions which have been filed but as to which a decision as to
whether to grant review has not yet issued.)
Proponents argue that this is an insufficient level of oversight
given the complexity of this area of law and the critical policy
decisions that it represents. Verizon states:
The PUC renders decisions all the time, which have a
profound impact on the California economy and the quality
of life enjoyed by its residents. ? And yet, judicial
review of PUC decisions is a "hit or miss" (largely a
"miss") proposition under today's law. Appeals from PUC
final decisions are taken to the Courts of Appeal on a
discretionary writ today. Under existing law the Court can
internally review the filed paperwork and decide it will
simply "dismiss" the case, with no explanation. Such a
procedure does nothing to improve the workings and process
at the PUC. It leaves all interested persons, the
Commission, consumer groups, utilities and others to
speculate as to why the Courts dismissed the case. Again,
there is no explanation, much less legal guidance,
emanating from the Courts.
Proponents further argue that the provisions for mandatory
judicial review under AB 840 are quite limited in scope,
requiring review only in cases where there is a failure to apply
or interpret statutory provisions correctly, or constitutional
or federal law violations.
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Opponents see the bill as creating a much broader right of
review. They argue that by requiring review whenever a petition
alleges a misinterpretation or misapplication of law, AB 840
would in essence create an appeal of right from PUC decisions.
The Utility Reform Network (TURN) writes:
While we have supported limited judicial review in the
past, this bill would mean that virtually any hotly
contested issue at the PUC would end up in the courts. It
is simple to challenge a decision based on statutory
interpretation, or compliance with federal law or
regulation, as the bill provides, and thus the appeals
court would replace the PUC as the place where complex
regulatory issues are decided.
Opponents argue that the review provided under existing law has
been sufficient to provide for the appropriate level of
oversight by the courts. The rate at which petitions for writs
of review is granted is comparable to, if not greater than, the
rate of issuance of discretionary writs in other types of cases.
Several cases a year are granted review, allowing for
development of a body of law in this area. Moreover, opponents
disagree that in those cases where review is summarily denied
there is no judicial oversight: they argue that the courts'
procedures require careful review of each petition, and thus
view summary denial as an affirmation of the PUC decision in the
case.
Given the existing level of oversight, opponents believe that
the increased review provided for in AB 840 will do little but
create a less efficient system that benefits no one. PUC
resources will have to be redirected to the participation in the
process of court review of decisions that, under existing law,
would not be reviewed, and that likely would have the same
eventual outcome - affirmation of the PUC's decision. Opponents
further argue that creation of an additional right of review
will tilt the balance in these cases toward the players with the
most resources - large utilities and other large companies. The
PUC writes "AB 840's expansion of judicial review could allow
well-funded parties to overwhelm the resources of public
interest groups and individual citizens who participate in
commission proceedings." Similarly, TURN states: "[O]n the many
issues which would be reviewed under this bill, large utilities
and large customers will always have far more resources for
court challenges than will representatives of small ratepayers."
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Finally, the PUC points out that the procedure for review
created under the bill is somewhat confusing. Issuance of a
writ of review is, by its nature, discretionary for the court;
yet AB 840 requires issuance in certain cases. Because AB 840
continues to use the terminology "writ of review" and yet
provides for procedures unlike those for writs of review in
other cases, the courts may experience some confusion as to the
application of the new law.
Administrative Procedure Act requirements for evidence . In
addition to the provisions regarding judicial review of PUC
decisions, AB 840 would require that evidence in adjudicatory
proceedings of the PUC be taken in accordance with the
requirements of the Administrative Procedure Act (APA). The APA
provides, for example, that inadmissible hearsay evidence may be
used to supplement other evidence, but should not be used by
itself to support a finding. (Government Code section 11513.)
The PUC uses its own, looser, standards for evidence. To use
the same example, hearsay is allowed, but the fact that it is
hearsay goes to the weight that the evidence will be given. The
PUC argues that they have developed the procedures and rules
that best suit the type of evidence likely to be presented in
their cases.
In 1995, the California Law Revision Commission considered the
issue of which state agencies should be subject to the
requirements of the Administrative Procedure Act. It found that
the PUC should be exempted from those requirements, stating:
The Public Utilities Commission is a constitutional agency
that is authorized to establish its own procedures, subject
to statute and due process. In addition to special
constitution provisions, there is an extensive body of
special statutory rules governing hearings under the Public
Utilities Act. As a practical matter, application of the
proposed law would have little effect other than to add
complexity to the law. (California Law Revision
Commission, Recommendation: Administrative Adjudication by
State Agencies (January 1995), p. 92.)
These considerations still apply to suggest that the application
of APA evidentiary rules to PUC proceedings is not necessary and
would not, in fact, be beneficial.
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REGISTERED SUPPORT / OPPOSITION :
Support
Pacific Gas and Electric Company (sponsor)
Verizon
Opposition
Public Utilities Commission
The Utility Reform Network
Analysis Prepared by : Kathy Sher / JUD. / (916) 319-2334