Report 2004-118 Summary - July 2005

Public Utilities Commission:

Since the Judicial Review Act of 1998, the Number of Petitions Seeking Judicial Review of Commission Decisions Has Increased

HIGHLIGHTS

Our review of the recent history of judicial review of decisions made by the Public Utilities Commission (commission) revealed the following:

  • With 1996 legislation, the Judicial Review Act of 1998 (act) expanded the courts in which parties could seek judicial review of commission decisions and broadened the grounds on which judicial review could be sought.
  • The average annual number of commission decisions since the act has not substantially changed from before the act, but the average annual number of petitions seeking judicial review of commission decisions has increased.
  • Since the act, the number of petitions for which the courts have granted review of commission decisions has increased.
  • Since the act, the standard of review for commission decisions more closely resembles that of agencies that regulate utilities at the federal level and in many of the 10 states we surveyed.
  • Judicial review of decisions by most of the entities we surveyed is generally mandatory at the court where a party first seeks it, whereas the California appellate courts have a certain degree of discretion in determining whether to grant or deny a petition seeking judicial review of a commission decision.

RESULTS IN BRIEF

In 1999, the Calderon-Peace-MacBride Judicial Review Act of 1998 (act) took effect. This act, together with other legislation enacted in 1996, expanded the courts in which parties could seek judicial review of Public Utilities Commission (commission) decisions and broadened the grounds on which review could be sought. Before these legislative changes, the California Supreme Court was the only court in which a party could file a petition seeking review of a commission decision. Since the legislative changes took effect, parties have been able to seek review of certain commission decisions either in the Supreme Court or in one of the six courts of appeal. Before these legislative changes, the law limited the court to reviewing whether the commission properly exercised its authority and required the court to uphold a commission decision if its factual findings were based on any evidence. The legislation added several new grounds for judicial review of commission decisions, including whether the commission acted beyond its powers, whether the commission proceeded as required by law, and whether the commission's decision was obtained by fraud. The legislation also changed the law to require the courts to determine whether the commission's factual findings are supported by substantial evidence in light of the whole record (substantial evidence).

Although the average annual number of decisions made by the commission in the six years since the act has not substantially changed from the five-year period before the act, the average annual number of petitions seeking judicial review of commission decisions has increased from 10 to 19. Moreover, since the act, the number of petitions in which the courts have granted review of commission decisions has increased. During the five years before the act, the courts granted review of 2 percent of petitions related to commission decisions, but since the act, the courts have granted review of 27 percent of commission-related petitions. Petitions seeking judicial review of decisions made by three other state agencies subject to similar court jurisdiction and standards of review—the Agricultural Labor Relations Board (ALRB), the Public Employment Relations Board (PERB), and the Workers' Compensation Appeals Board (WCAB)—did not substantially increase in number from 1994 through 2004, with the courts granting review of no more than 20 percent of the petitions.

Since the act, the standard of review of commission decisions more closely resembles the standards of review of decisions of the Federal Energy Regulatory Commission, the Federal Communications Commission, and agencies regulating utilities in many of the 10 states we surveyed. As in the laws governing the standards of review for the decisions of most of the surveyed entities, when a court reviews a decision made by the commission when it has acted like a judicial body—such as when it has conducted an investigation into whether a regulated entity violated a commission rule—the current statutes require the court to review whether the commission's factual findings were supported by substantial evidence, whether those findings support the commission's decision, and whether the decision met certain other legal requirements. When a court reviews a decision made by the commission when it has acted more like a legislative body—such as when it has adopted rules affecting a regulated industry—the statutes require that the court only overturn the commission's decision if the court finds that the commission abused its discretion or failed to meet certain other legal requirements. Also, similar to the laws governing the standards of review for decisions of half the surveyed entities, California law related to court jurisdiction generally establishes the intermediate appellate courts as the first level in which parties may seek judicial review of commission decisions.

In some ways, judicial review of decisions issued by the surveyed entities differs from judicial review of the commission's decisions. For instance, the laws governing judicial review of decisions by most of those entities create a clear statutory right to an appeal at the court of initial review, and the court generally cannot deny the petitioner's request to hear the matter. In contrast, a California appellate court has a certain degree of discretion in determining whether to grant or deny a petition seeking judicial review of a commission decision. Generally, the court must grant the petition if it finds that the commission, when making its decision, made an error of law that harmed the petitioner. Otherwise, the court may still grant the petition at its discretion. The court may choose to exercise this discretion when it believes that a petition, while not meritorious, involves new or important legal issues. Finally, for the three other California agencies that we reviewed, although there are some procedural differences, the legal requirements applied by the courts when deciding whether to grant or deny a petition are essentially the same as those for petitions seeking review of commission decisions.

AGENCY COMMENTS

The commission believes that the characterizations of its decision-making processes and the judicial review statutes as applied to the commission are factually correct. The Administrative Office of the Courts indicates that our review accurately captures the law and procedure in this area. The Labor and Workforce Development Agency believes the report accurately represents the structure and procedures of the ALRB. Although the PERB and the WCAB did not provide a formal response, they informally conveyed to us that they were satisfied with the descriptions in the report pertaining to them.


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