For the first time in its 80-year history, the California Public Utilities Commission will have its decisions subject to appellate court review. Senate Bill 779, which will apply to commission orders and decisions with an effective date of January 1, 1999 or later, provides for lower court appellate review of the majority of CPUC decisions. Previously, decisions issued by the CPUC could only be appealed to the California Supreme Court.

Senate Bill 779's reforms include discretionary appellate court review of the CPUC's ratemaking and rulemaking cases. These cases involve complex determinations of what consumers should pay for telecommunication, energy, and transportation services. It is anticipated that the judicial review provisions will have a particularly significant impact in the new, deregulated energy market. Basing estimates on figures supplied by the CPUC, the state court's budget estimated 125 court filings on adjudicatory matters &endash; the ratepayer complaint cases &endash; alone. This projected number reflects a dramatic increase from the 14 CPUC cases that were appealed to the California Supreme Court in 1997. Just to prepare and argue is own briefs in appellate courts, it is reported that the CPUC will ask the Legislature for 18 new staff and $1.6 million to fund them.

Among the proponents of the legislation expanding judicial review of CPUC decisions were the investor-owned utilities Pacific Gas & Electric and Southern California Edison, who were once adamantly opposed to the concept. The change in heart was apparently prompted by the deregulated marketplace which has created a more complex playing field for energy services. Senate Bill 779 acknowledges that the conversion to competitive markets in the energy, transportation, and telecommunications industries "will require access to the court system at all levels."

The standard of review applied by the courts of appeal to CPUC decisions and orders will encompass a determination of whether: (1) the commission acted without, or in excess of, its powers or jurisdiction; (2) the commission has not proceeded in a manner required by law; (3) the decision of the commission is not supported by the findings; (4) the findings in the decision are not supported by substantial evidence in light of the whole record; (5) the commission's order was procured by fraud or was an abuse of discretion; or (6) the commission's order or decision violates a constitutional right. The effect of the standard of review will be to subject CPUC decisions and orders to much closer scrutiny by the appellate courts.

The principal provisions of the bill include:

• authorizing discretionary judicial review in the court of appeal in ratemaking and rulemaking cases. The bill further expresses the intent of the Legislature to conform the standard of judicial review of decisions of the commission to that of other state agencies, and to expressly overrule the holding of Camp Meeker Water System v. Public Utilities Commission, 51 Cal. 3d 845 (1990).
• requiring decisions, as defined under the statute, to be served on parties and subject to at least a 30-day public review and comment period prior to being voted on by the commission. Prior to Senate Bill 779, the CPUC was exempt from provisions of the Administrative Procedure Act relating to the adoption of regulations, the review of regulations by the Office of Administrative Law, and the judicial review of regulations.
• requiring the commission to publish the agenda, agenda items, documents, and adopted decisions in a manner that makes copies of them easily available to the public, including effective July 1, 1999, publishing those documents on the CPUC's Internet site.

The collective effect of these provisions will bring the CPUC in line with other state administrative agencies and provide expanded judicial oversight of commission decisions.

If you would like to receive a copy of the legislation or if you have any questions regarding its implications for QFs, please call Gordon Erspamer in Walnut Creek at (925) 295-3341 or Robert Loeffler in Washington D.C. at (202) 887-1506.

Because of the generality of this memorandum, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.