On August 8, 2025, the California Supreme Court issued an opinion (Center for Biological Diversity v. Public Utilities Commission, S284614 (August 7, 2025)) on a single issue of law specific to the degree of deference afforded to the California Public Utilities Commission (CPUC) in interpreting the Public Utilities Code.  Specifically, “whether the highly deferential approach of Greyhound continues to apply…” in light of the Legislature’s acts to revise and expand judicial review of CPUC actions as part of the deregulation process of the 1990s under Public Utilities Code §§ 1757 and 1757.1. Previously, the legal analysis of the 1968 Greyhound Lines, Inc. v. Public Utilities Commission was used to grant highly deferential treatment to CPUC decisions at the superior court and appellate levels shielding the CPUC from scrutiny of how it interprets its own statutes, a long held but striking difference from how all other executive branch regulatory agencies are scrutinized by courts because of its constitutional authority and regulation of investor owned public utilities (electric, natural gas, etc.). This opinion will have far-reaching impacts on litigation against the CPUC and will change CPUC administrative adjudications that are now subject to heightened judicial review. This post, the first of two on this topic, will discuss this opinion.

Center for Biological Diversity v. Public Utilities Commission:  What was Challenged and What Changed?

The case before the court stems from a challenge to the CPUC’s December 12, 2023 adoption of the net billing tariff (NBT), often referred to as the net energy metering (NEM) 3.0 decision (See CPUC D. 22-12-056; See Proceeding Docket for R. 20-08-020). NBT differs from previous net energy metering decisions and tariffs by significantly decreasing the value of exported energy from customer generation, amongst other changes, by compensating exported energy at the avoided cost instead of the retail cost of electricity (See CPUC NEM Webpage). NBT went into effect on April 15, 2023, meaning that all interconnected distributed energy resources (e.g., solar, solar/batteries, etc.), have taken service on the NBT since then. Between April 15, 2025 and the end of May 2025, per data reported through the California Solar DG Stats website, this potentially impacts approximately 35,145 systems in San Diego Gas & Electric (SDG&E) territory, 79,214 systems in Southern California Edison (SCE) territory, and 75,886 systems in Pacific Gas & Electric (PG&E) territory. The case is now remanded to the Court of Appeals under a new standard of review of CPUC action. This may or may not result in a full or partial overturning of D. 22-12-056.

Past to the Present: Greyhound to Yamaha

What is notable about this opinion is that petitioners led by Center for Biological diversity sought the specific review of whether the Greyhound opinion remained applicable to judicial review of CPUC action, an argument not made in its original appeal. Respondents and real parties in interest did not object, allowing the California Supreme Court to focus its review on this narrow issue of statewide importance.

To understand the expansion of judicial review of CPUC actions, it is important to remember that the CPUC is a state agency of constitutional origin with far reaching duties, functions, and powers (See California Constitution, Article XII, Sections 1-6) where judicial review was expressly limited until the 1990s. The Legislature is granted the sole authority to determine judicial review of CPUC action under Article XII, Section 5. The exercise of this authority began under the Public Utilities Act of 1911, which created a narrow path of judicial review to determine whether “the commission has regularly pursued its authority…” that included a review of whether a petitioner’s rights were violated under the California and United States Constitution. (Stats. 1911, 1st Ex. sess. 1911, ch. 14, Section 67, pp. 55, 56.) This language remained through decades of amendments to the Public Utilities Code and was interpreted by many cases during this time.

Within this statutory framework, the Legislature limits what may be judicially reviewed by disallowing new evidence (See Public Utilities Code § 1757 Bill Cross Reference). Instead, only the certified record of the applicable CPUC action is reviewed. This makes the evidence before –- and the findings and conclusions made by – the CPUC the only basis for review to avoid relitigating in superior or appellate court what was already litigated in CPUC administrative adjudications. This view of CPUC adjudication and record making is long standing in California.

It is important to note here that the CPUC acts with Constitutional authority to create its own procedures, subject to statute and due process per California Constitution Article XIII, Sec. 2. By and large, the CPUC follows statute where applicable but is otherwise left to create its own Rules of Practice and Procedure, including the creation of its own basis for evidence that does not have an underpinning in the Administrative Procedure Act because the CPUC is specifically exempted from the APA by Public Utilities Code § 1701 (b) and because there is no statutory mandate to adhere to the Evidence Code (See Public Utilities Code § 1701 (a)). For all purposes, the CPUC is its own animal with no analogue, besides perhaps the Judicial Branch’s State Bar (see Business and Professions Code § 6001 (e); California Constitution Article VI, Section 9), to how it is scrutinized and challenged.

Until this Center for Biological Diversity opinion, CPUC actions have been reviewed on whether they bear a reasonable relation to the purpose and language of the Public Utilities Code. The Greyhound Lines, Inc. v. Public Utilities Commission (1968) 68 Cal2d 406 created a deferential judicial review standard for review of CPUC actions. Specifically, it found “[t]here 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.” Appellate cases from the 2000s and 2010s used this reasoning in reviewing CPUC actions where the applicable statutory amendments to judicial review in the 1990s, namely Public Utilities Code Sections 1757 and 1757.1, were the basis of the petition for review.  These sections grant judicial review of CPUC action based on its type of proceeding (e.g., complaint/enforcement, ratemaking, licensing, or other) and what is being challenged (e.g., CPUC acted without jurisdiction, decision not supported by findings, etc.).

In the recent Center for Biological Diversity opinion, the California Supreme Court focused on the application of Greyhound to these Public Utilities Code Sections. The Court found that the “regularly pursued its authority” standard of deference promulgated in Greyhound is not applicable to cases where CPUC actions are reviewed under Public Utilities Code Sections 1757 and 1757.1 except where these sections expressly specify its applicability to water corporations. This fundamentally changes the standard of review for CPUC actions, aligning judicial review of CPUC action where legislative interpretation is challenged with the judicial review of other state agencies under Code of Civil Procedure Section 1094.5 (Administrative Mandamus) and the Yamaha Corp of America v. State Board of Equalization (1998) 19 Cal.4th 1 opinion. The Supreme Court of California has now fully implemented the statutory amendments adopted during the deregulatory era of the 1990s that granted statutory interpretations of CPUC authority to the courts, independent of CPUC interpretation and deference, and applied the Yamaha framework that grants deference depending on whether the challenge is specific to CPUC statutory interpretation, quasi-legislative action,  quasi-adjudicative action, or a combination thereof.

The California Supreme Court did not make a determination on whether the NBT decision was correct or incorrect under Public Utilities Section 2871.1 that governs net energy metering regulation by the CPUC, remanding this next step in the case to the appellate court to determine. We will continue to track this case and provide updates. It is possible that an appellate opinion will be issued this year.

My next post will discuss the potential outcomes of this opinion on the NBT decision. I will then take a broader look at the impacts of this opinion on future litigation against the CPUC and how the CPUC administers proceedings and interprets statutes.