California appeals court decision increases the potential for CEQA challenges to power plant projects under the CEC’s jurisdiction.
In Communities for a Better Environment v. Energy Resources Conservation & Development Commission, the California First District Court of Appeal recently held that the State Legislature violated the California Constitution by limiting the scope of judicial review for California Energy Commission (CEC) decisions involving power plant siting to the California Supreme Court. Although the California Constitution gives the Legislature express authority to limit the scope of judicial review for California Public Utilities Commission (CPUC) decisions, the court found there is no similar authority regarding appeals of CEC decisions.
The Supreme Court has rarely, if ever, agreed to hear CEQA challenges of CEC power plant decisions. Now, developers seeking to construct new power plants or modify existing power plants under the CEC’s jurisdiction may see an increase in legal challenges — including California Environmental Quality Act (CEQA) challenges — in California’s trial courts. As a result, CEQA challenges to power plants may closely resemble other land use challenges in the state.
Background for Appeal
In 1974, California established the CEC and granted it exclusive power to certify all sites and related facilities for thermal power plants with generating capacities of 50 or more megawatts. However, public utilities seeking to construct a power plant must also obtain a Certificate of Public Convenience and Necessity from the CPUC after they receive a site certificate from the CEC. As initially written, Public Resources Code section 25531 (section 25531) provided that judicial review of CEC decisions must be done “in the same manner as the decisions of the [CPUC] on the application for a Certificate of Public Convenience and Necessity for the same site and related facility.”
Because CPUC decisions at the time could only be reviewed by the California Supreme Court, this effectively limited review of CEC decisions to the state’s highest court. However, in 1996, the Legislature amended the judicial review process for CPUC decisions to allow review by the courts of appeal or the Supreme Court, with the effect that these two review options thereby also applied to CEC decisions.
In 2001, the Legislature amended section 25531, decoupling the CEC’s judicial review process from that of the CPUC. Section 25531(a) now states that “decisions of the [CEC] … are subject to judicial review by the Supreme Court of California,” and section 25531(c) states that “no court in this state has jurisdiction” otherwise. Additionally, section 25531(b) states that the courts’ jurisdiction is limited to determining “whether the commission has regularly pursued its authority, including a determination of whether the order or decision under review violates any right of the petitioner under the United States Constitution or the California Constitution,” and the CEC’s findings on questions of fact are final.
The present case began in 2013 when two environmental groups challenged the constitutionality of section 25531, claiming that:
- Section 25531(a) unconstitutionally restricts the powers of the superior and appellate courts to hear challenges to CEC decisions.
- Section 25531(b) unconstitutionally restricts the courts’ ability to review those challenges.
The trial court agreed, finding that section 25531(a) was an unconstitutional legislative abridgment of the jurisdiction of the courts, and that section 25531(b) unconstitutionally abridged the courts’ power to review agency findings.
Section 25531(a) Unconstitutionally Abridges the Courts’ Original Jurisdiction
The court first addressed the CEC’s claim that the California Constitution empowers the Legislature to decide which courts have jurisdiction to review an agency’s administrative rulings. Article VI, section 10 of the Constitution states that the Supreme Court, Courts of Appeal, and Superior Courts have original jurisdiction over extraordinary writ proceedings, and their jurisdiction may not be diminished by statute. However, the Legislature may limit judicial review of an administrative decision when such an action is authorized by another provision of the Constitution.
First, the CEC argued that Article VI, section 10 does not expressly delineate which level of the court functions as the court of first resort in extraordinary writ proceedings, and that, because of this ambiguity, the Legislature is free to enact statutes specifying which court may exercise its original jurisdiction to decide a particular matter. The CEC argued that, although Article VI, section 10 states that the Supreme Court, Courts of Appeal “and” Superior Courts all have original jurisdiction over extraordinary writ proceedings, the word “and” should be interpreted to mean “or” rather than “in addition to.”
According to the CEC, this interpretation would allow the Legislature to decide which court has jurisdiction to hear extraordinary writ proceedings in a particular situation. The court rejected this interpretation, finding that, the plain meaning of Article VI, section 10 was unambiguous — each court level is given original jurisdiction in proceedings for extraordinary relief in the nature of mandamus. Moreover, the legislative history and case law surrounding Article VI, section 10 clearly indicate that the Legislature may not limit the original jurisdiction of the Superior Courts and the Courts of Appeal in writ of mandate cases without another provision in the Constitution authorizing the Legislature to do so.
Second, the CEC argued that Article XII, section 5 of the Constitution — which vests the CPUC with the power to regulate public utilities through the Legislature — provides authority for section 25531(a). Article XII, section 5 states that “[t]he Legislature has plenary power, unlimited by other provisions of this constitution but consistent with this article, to confer additional authority and jurisdiction upon the [CPUC], to establish the manner and scope of review of [CPUC] action in a court of record, and to enable it to fix just compensation for utility property taken by eminent domain.”
Courts have interpreted this article to allow the Legislature to restrict judicial review of CPUC decisions. In fact, the prior version of section 25531, which tied judicial review of CEC decisions to review of CPUC decisions on the same facility (effectively limiting review to the Supreme Court), was upheld as constitutional under this article. However, the court held that Article XII, section 5 no longer supported section 25531(a), which was now decoupled from the judicial review requirements for the CPUC and actually limited judicial review for CEC decisions more significantly than review of CPUC decisions (which could be reviewed in the Supreme Court and the Courts of Appeal). Moreover, as a result of the electrical industry’s restructuring, most new thermal power plants are now proposed by independent power producers that no longer require a Certificate of Public Convenience and Necessity from the CPUC — further proof that authority to regulate the CPUC does not necessarily extend to the CEC. Accordingly, the court found no authority in Article XII, section 5 to limit which courts may review CEC decisions.
Section 25531(b) Violates the Judicial Powers Clause
Finally, the court held that section 25531(b) (which limits judicial review of CEC’s factual findings) is unconstitutional because it effectively confers judicial power on an administrative agency. Article VI, section 1 of the Constitution vests “[t]he judicial power of this State … in the Supreme Court, courts of appeal, and superior courts,” and agencies not vested by the Constitution with judicial powers — like the CEC — may not exercise such powers. In California, although an agency may hold hearings, determine facts, apply the law to those facts, and order relief, “the ‘essential’ judicial power (i.e., the power to make enforceable, binding judgments) remains ultimately in the courts, through review of agency determinations.”
The CEC argued that section 25531(b), which allows courts to determine whether the CEC “has regularly pursued its authority,” actually entitles courts to review the CEC’s factual determinations for substantial evidence and, thus, there was no constitutional issue. Likewise, the CEC argued that this provision was modeled after a similar provision governing judicial review of CPUC decisions that courts interpreted as allowing review based on substantial evidence. The court disagreed. Unlike the CPUC, no constitutional provision vests the CEC with judicial authority, and section 25531(b) does not, by its own terms, provide for substantial evidence review of CEC factual findings.
The Decision Does Not Question Legislative Restrictions on Judicial Review of CPUC Decisions
While the CEC repeatedly tried to align its position on limited judicial review with the CPUC, the court consistently distinguished and separated the functions and Constitutional provisions applicable to the two agencies. The court rejected the CEC’s claim that its siting decisions were an integral part of the CPUC’s electricity policies, noting that section 25531 applied to entities that are not subject to CPUC jurisdiction (such as wholesale power producers), and is actually more restrictive in terms of judicial review of CEC decisions than statutes governing review of CPUC decisions.
Similarly, the court noted that the Constitution grants certain judicial functions to the CPUC that the CEC does not have. The court pointed out that this discrepancy can explain why the Constitution also permits legislative restrictions on judicial review of CPUC findings and conclusions (which are not accorded to the CEC). Notably, neither the CPUC nor any public utility subject to CPUC jurisdiction filed amicus briefs in support of the CEC. Instead, CEC support came from the independent power community and the California Independent System Operator.
Implications for CEQA Review
The court’s holding will likely impact how litigants challenge CEC approvals of new power plants or modifications to existing power plants under CEQA. The Supreme Court has rarely, if ever, agreed to hear CEQA challenges involving CEC decisions on power plants. However, now that judicial review of CEC decisions will no longer be narrowly focused and limited to the Supreme Court, potential litigants may have greater opportunity to challenge power plant construction and modification in California’s Superior Courts.
 County of Sonoma v. State Energy Resources Conservation etc. Comm. (1985) 40 Cal. 3d 361.
 McHugh v. Santa Monica Rent Control Bd. (1989) 49 Cal.3d 348, 355.