NEW CINGULAR WIRELESS PCS, LLC, et al., Petitioners, v. PUBLIC UTILITIES COMMISSION, Respondent; THE UTILITY REFORM NETWORK et al., Real Parties in Interest.
No. A144005
First Dist., Div. Four.
Apr. 19, 2016.
246 Cal. App. 4th 784
Mayer Brown, J. Tyson Covey, Hans J. Germann; J. Scott Paisley, David P. Discher and Niki B. Okcu for Petitioners.
Karen V. Clopton, Helen W. Yee and Maria Bondonno for Respondent.
Robert Finkelstein and Christine Mailloux for Real Party in Interest The Utility Reform Network.
Melissa W. Kasnitz for Real Party in Interest Center for Accessible Technology.
OPINION
STREETER, J.—Here we decide whether the Public Utilities Commission (CPUC) properly awarded fees and costs to two intervenors, The Utility Reform Network (TURN) and the Center for Accessible Technology (CforAT), for their work in a complex telecommunications merger review proceeding dismissed by the CPUC as moot for reasons unrelated to anything that happened in the proceeding itself.
We deny the requested writ relief, but for reasons explained below will nonetheless vacate the challenged awards without prejudice to the renewal and redetermination by the CPUC of TURN‘s and CforAT‘s requests for fees and costs.
I. PROCEDURAL BACKGROUND
Five years ago, AT&T sought to acquire T-Mobile USA, then a subsidiary of Deutsche Telekom, and merge the operations and infrastructure of T-Mobile USA into itself. The prospect of this combination attracted immediate and intense regulatory scrutiny nationwide.
Beginning in approximately April 2011, when the AT&T/T-Mobile merger proposal was announced, and for the next five months, the Federal Communications Commission (FCC), the United States Department of Justice, and various state regulatory agencies undertook overlapping investigation and review proceedings to determine whether the merger would have adverse effects on competition and customer service, and if so, whether mitigation measures were warranted as a condition of regulatory approval. In California, the center of the action was the CPUC‘s investigatory proceeding in this case, investigation No. 11-06-009 (hereafter Docket No. I11-06-009), which commenced June 9, 2011, pursuant to an order instituting investigation (OII). Among the participants in Docket No. I11-06-009 were the petitioners here, New Cingular Wireless PCS, LLC, AT&T Mobility Wireless Operations Holdings Inc., Santa Barbara Cellular Systems, Ltd., and AT&T Mobility Wireless Operations Holdings, LLC (collectively, New Cingular), which are all entities owned directly or indirectly by AT&T.
The OII set an expedited schedule under which any and all comments from interested parties had to be submitted within 60 days. Procedurally, the CPUC sought to carry out and complete the investigation of a complex transaction having national scope within a few months, and in doing so, to build an
TURN appears to have taken a leading role in the proceeding from the beginning, starting with its successful advocacy concerning the need for an intensive review of the proposed transaction before the OII even issued.2 At the outset of the proceeding, TURN won some crucial procedural victories that kept things on track, first defeating an effort by AT&T to stop the investigation based on jurisdictional and preemption arguments that the CPUC has no authority to regulate wireless telephone carriers,3 and then arguing successfully that the OII proceeding should be categorized as a “procedural rate-setting proceeding,” which had the effect of triggering a number of rules designed to ensure public transparency (among other things, restrictions on ex parte contacts).4 On TURN‘s motion, the administrative law judge (ALJ) took official notice of a complaint filed by the Department of Justice seeking to enjoin the AT&T/T-Mobile merger.5 TURN also prevailed
The CPUC placed a high priority on obtaining maximum public input during the investigatory process. Thus, “[c]onsistent with the direction set forth in the OII, the assigned Commissioner and ALJ held workshops and public participation hearings throughout California during the month of July [2011], to gather information on specific issues related to the proposed merger and to hear public comment. Each workshop was facilitated by the assigned ALJ, with the assigned Commissioner and other Commissioners in attendance. Participants at each workshop included independent experts, representatives of the respondents and other market participants, and representatives of other interested groups, including unions, consumer advocates, and others. Each workshop consisted of panel presentations, and provided opportunities for parties to ask questions of panel members. Each workshop also included time during which members of the public could comment.” (Decision Dismissing Investigation into Acquisition of T-Mobile by AT&T and New Cingular Wireless (Aug. 23, 2012) Cal.P.U.C. Dec. No. 12-08-025 [2012 Cal.P.U.C. Lexis 365, p. *8] (hereafter Final Decision and Order).)
A key piece of the CPUC‘s record-building process in Docket No. I11-06-009 was economic analysis, which is often at the core of antitrust litigation, and is something that typically requires examination of voluminous financial data. In this area, the bulk of the work was done by TURN‘s expert economist, Dr. Trevor Roycroft, who filed a detailed affidavit setting forth his opinions in August 2011. Before filing his affidavit, Dr. Roycroft appeared and presented his views at a public workshop on July 22, 2011. At all three workshops, speakers from TURN presented their views, arguing that the proposed merger would have serious anticompetitive effects in California. Consistent with the position it took from the beginning of the proceeding in favor of public transparency, TURN later sought to persuade the ALJ that the
Before the CPUC had occasion to prepare comments for submission to the FCC, AT&T аnd Deutsche Telekom unexpectedly announced the withdrawal of their proposed merger transaction (see FCC, Order No. DA 11-1955 (Nov. 29, 2011) p. 2, at <https://apps.fcc.gov/edocs_public/attachmatch/DA-11-1955A1.pdf> [as of Apr. 19, 2016].), and in November 2011 moved to dismiss Docket No. I11-06-009 on grounds of mootness. The CPUC granted that motion on August 23, 2012 (the Final Decision and Order). The Final Decision and Order was more than a naked, unexplained dismissal. It addressed and decided a number of collateral matters, including whether to adopt all of the interim rulings that had issued in the course of the proceeding. In section 5, entitled “Affirmation of All Rulings,” the CPUC explained: “All Rulings by the assigned ALJ and assigned Commissioner in the course of this proceeding, including rulings made by electronic mail, are affirmed. Rulings affirmed through this decision include the July 5, 2011, ruling requiring that AT&T provide and pay for support services for all workshops and public participation hearings held in this proceeding. In addition, this decision affirms various electronic mail rulings modifying the proceedings schedule, granting party status to [specified intervenors], and addressing other procedural issues.” (Final Dec. & Order, supra, 2012 Cal.P.U.C. Lexis 365 at pp. *16–*17.)
The Final Decision and Order also addressed the issue of intervenor compensation, explaining as follows: “The former merger proponents moved to dismiss this proceeding after approximately six months of concentrated effort to evaluate the proposed transaction, undertaken in good faith by Commission staff and parties participating in this proceeding. Given the advanced stage of the proceeding at the time the respondents abandoned the proposed transaction and requested dismissal, it is reasonable for the Commission to acknowledge the work done by parties to this proceeding, and to explicitly state that requests for intervenor compensation are appropriate.” (Final Dec. & Order, supra, 2012 Cal.P.U.C. LEXIS 365 at pp. *14–*15.) TURN and CforAT then moved for awards of intervenor compensation, and in subsequent orders—each of which, in turn, was based on detailed findings explaining the “substantial contributions” TURN and CforAT made to specific rulings prior to dismissal—the CPUC issued the compensation awards that are now at issue (respectively, the TURN Award
New Cingular now petitions for review in this court, urging us to reverse the Final Decision and Order insofar as it finds TURN and CforAT to be eligible for intervenor compensation, and to reverse outright the three orders that followed the eligibility finding—the TURN Award, the CforAT Award, and the Rehearing Decision.
II. DISCUSSION
” ‘As in any case involving statutory interpretation, our fundamental task is to determine the Legislature‘s intent so as to effectuate the law‘s purpose.’ [Citation.] The rules for performing this task are well established. We begin by examining the statutory language, giving it a plain and commonsense meaning. [Citation.] We do not, however, consider the statutory language in isolation; rather, we look to the entire substance of the statutes in order to determine their scope and purposes. [Citation.] That is, we construe the words in question in context, keeping in mind the statutes’ nature and obvious purposes. [Citation.] We must harmonize the various parts of the enactments by considering them in the context of the statutory framework as a whole.” (People v. Cole (2006) 38 Cal.4th 964, 974–975). To discern the legislative intent here, we begin our analysis with an examination of the statutory language, setting out the relevant text of Article 5, placed within its overall context and structure.
A. The Text and Structure of Article 5
Article 5, Intervenor‘s Fees and Expenses, opens with a broad statement of purpose: “The purpose of this article is to provide compensation for reasonable advocate‘s fees, reasonable expert witness fees, and other reasonable costs to public utility customers of participation or intervention in any proceeding of the commission.” (
These definitional sections are followed by a series of clauses addressing eligibility for compensation. “Participation by a customer that materially supplements, complements, or contributes to the presentation of anоther party, including the commission staff, may be fully eligible for compensation if the participation makes a substantial contribution to a commission order or decision, consistent with Section 1801.3.” (
Finally, Article 5 concludes with a series of clauses that set out conditions to eligibility, mostly procedural in nature, including the following: “(c) Following issuance of a final order or decision by the commission in the hearing or proceeding, a customer who has been found . . . to be eligible for an award of compensation may file within 60 days a request for an award. The request shall include at a minimum a detailed description of services and expenditures and a description of the customer‘s substantial contribution to the hearing or proceeding. . . . [¶] . . . [¶] (e) Within 75 days after the filing of a request for compensation pursuant to subdivision (c), . . . the commission shall issue a decision that determines whether or not the customer has made a substantial contribution to the final order or decision in the hearing or proceeding.” (
On its face, the above language yields no definitive answer to the statutory construction question presentеd here. That question turns on the meaning of the phrase “order or decision,” which appears in sections
New Cingular‘s position runs contrary to the statutory language contemplating that even a “procedural recommendation[]” (
For confirmation of the legislative intent, we may look to the pertinent statutory history and the wider circumstances of Article 5‘s enactment. (See Dyna-Med, Inc. v. Fair Employment & Housing Com. (1987) 43 Cal.3d 1379, 1387 [“Both the legislative history of the statute and the wider historical circumstances of its enactment may be considered in ascertaining the legislative intent.“].) In this case, that history is complex and multilayered, as will become apparent, but after taking stock of everything, we conclude that the CPUC‘s reading of the statutory text aligns best with the legislative intent.
1. The Origins of Article 5
The model for Article 5 was a set of regulations adopted by the CPUC in 1980 pursuant to a federal statute, the Public Utility Regulatory Policies Act of 1978 (PURPA),
From the beginning, the CPUC took the view that because it could not anticipate the procedural nuances of every situation that might arise in the application of the “substantial contribution” test, it would have to flesh out the meaning of that concept over time, using its discretion. In its order adopting the PURPA Regulations, the CPUC noted that, since Congress intended the term “substantially contributed” to be broadly construed under PURPA (Utah State Coalition of Senior Citizens v. Utah Power & Light Co. (Utah 1989) 776 P.2d 632, 638; H.R.Rep. No. 95-1750, 2d Sess. (1978),
2. Consumers Lobby Against Monopolies v. CPUC
Outside of the context of electric utilities regulation proceedings covered by the PURPA Regulations, the CPUC initially viewed its authority to award intervenors compensation for participating in its proceedings as quite limited. In Consumers Lobby Against Monopolies v. Public Utilities Com. (1979) 25 Cal.3d 891 (Consumers Lobby), the California Supreme Court adopted that view as well, at the CPUC‘s urging. In Consumers Lobby, two consumer advocates sought compensation for their participation in CPUC proceedings. The first of these parties, Consumers Lobby Against Monopolies (CLAM), filed a reparations complaint with the CPUC alleging that Pacific Telephone and Telegraph (Pacific) was failing to collect equipment disconnection charges from commercial customers. Following a settlement in which Pacific agreed to pay $400,000 into a CPUC-approved fund for public benefit, CLAM sought reimbursement for the time and expenses it spent pursuing the matter. (Id. at pp. 897–898.) In a separate proceeding, the second consumer advocate group, TURN,11 requested an award of feеs and costs on the ground that its advocacy in a multiparty rate-setting proceeding led Pacific to adopt significant reforms, including the cessation of certain “wiretapping/monitoring” activities that only TURN had focused on in the
In consolidated writ proceedings, the Supreme Court reversed in part. (Consumers Lobby, supra, 25 Cal.3d at pp. 915–916.) Drawing a distinction between quasi-judicial proceedings, such as the complaint proceedings in which CLAM had been involved, and quasi-legislative proceedings, such as the rate-setting proceedings in which TURN had been involved, the court ruled that the CPUC had authority to award compensation to CLAM, but not to TURN. (Id. at p. 913.) In quasi-adjudicatory proceedings, the court explained, the CPUC has equitable powers analogous to those of a judicial tribunal, and thus a fee award was justified under the “common fund” doctrine where a litigant confers a significant benefit on others. (Id. at pp. 905–908.) But with respect to TURN, the “[c]onsiderations . . . militat[ing] in favor of recognizing equitable jurisdiction to award attorney fees in reparation cases . . . do not apply . . . .” (Id. at p. 909.) Echoing concerns that the CPUC itself raised, the court held that because of the complexity of the issues in rate-setting cases, the task of evaluating and separately valuing the contributions of the many parties involved was impracticable. (Id. at pp. 909–910.) The petitioners attempted to argue that section 701, a broad and expansive grant of CPUC regulatory authority, may be read to confer blanket authority to award intervenor compensation, but the court was unpersuaded. (25 Cal.3d at pp. 910–911.) “The decision to include such ‘public participation costs’ in rate-making proceedings is . . . apprоpriately within the province of the Legislature,” the court said. (Id. at pp. 911–912.)
3. The OII 100 Regulations, Southern California Gas, and the Enactment of Article 5
Following the decision in Consumers Lobby, the CPUC shifted course and began to take a broader view of its authority to grant intervenor compensation in ratemaking proceedings. In May 1983, it promulgated a new set of regulations, providing for the award of public participation costs to eligible intervenors in virtually all formal CPUC proceedings, including rate-setting proceedings. (Cal. Code Regs., tit 20, art. 18.6, former §§ 76.21–76.32 (rules 76.21–76.32) & history foll. § 76.21 (the OII 100 Regulations).) In a reversal of the position it took in Consumers Lobby—where it argued that it did not have authority to award intervenor compensation under section 701 (Consumers Lobby, supra, 25 Cal.3d at pp. 897, 906)—the CPUC cited section 1701, the basic grant of
In the OII 100 Regulations, the CPUC formally codified the idea—announced in 1980 in its Order Establishing PURPA Regulations—that it would use its discretionary judgment to establish the contours of what constitutes a “substantial contribution,” which it defined as “that contribution which, in the judgment of the Commission, greatly assists the Commission to promote a public purpose in a matter relating to an issue by the adoption, at least in part, of the participant‘s position. A showing of substantial contribution shall include, but need not be limited to, a demonstration that the Commission‘s order or decision has adopted factual contention(s), legal contention(s), and/or specific recommendation(s) presented by the participant.” (OII 100 Regs., rule 76.26, italics added.)
The OII 100 Regulations drew an immediate challenge from a group of utilities in Southern Cal. Gas Co. v. Public Utilities Com. (1985) 38 Cal.3d 64 (Southern California Gas) on the ground that the CPUC‘s assertion of regulatory authority to provide for intervenor compensation was directly contrary to the Supreme Court‘s decision in Consumers Lobby. But while Southern California Gas was pending in the Supreme Court, the Legislature enacted Article 5, passing it in the form of Senate Bill No. 4 (1981-1982 Reg. Sess.), which was signed by Governor Deukmejian on July 5, 1984. (Stats. 1984, ch. 297, § 2, pp. 1526–1529.)13 Borrowing definitional language drawn from rule 76.26 of the OII 100 Regulations—including use of the phrase “in the judgment of the Commission“—Article 5 defined “substantial contribution” to mean “the customer‘s presentation has substantially assisted the commission in the making of its order or decision because the order or decision has adopted in whole or in part one or more factual contentions, legal contentions, or specific policy or procedural recommendations presented by the customer.” (
Although the open-ended framing of the “substantial contribution” definition in rule 76.26 (a “showing of substantial contribution shall include, but need not be limited to . . .“) (OII 100 Regs., rule 76.26) was in some respects more expansive than the definitional language ultimately adopted by statute in Article 5, there is no indication in the legislative history that the definition of “substantial contribution” was intended to be different, in substance, from that used in rule 76.26. Indeed, in other respects the definitional language adopted by statute was slightly broader than that used in rule 76.26.14 Nothing in the legislative history shows any particular focus on these textual nuances or any intent to narrow the CPUC‘s discretionary power to make findings of “substantial contribution.” And one thing is abundantly clear: The main purpose оf Article 5, stated over and over in the legislative history—indicating that the Legislature acted in direct response to Southern California Gas—was to “confirm” the statutory authority for the CPUC‘s then existing practice of awarding intervenor compensation under the OII 100 Regulations, retrospectively, and to codify that practice by statute, going forward.15 In light of newly enacted Article 5, the Supreme Court dismissed
4. The 1992 Amendments
Responding to a report of the California Auditor General entitled The California Public Utilities Commission Can Improve Aspects of its Program to Compensate Intervenors (1992) (the State Auditor‘s Report),16 the Legislature passed Assembly Bill No. 1975 (1991–1992 Reg. Sess.) in August 1992 (hereafter Assembly Bill 1975), substantially updating Article 5 with a set of amendments (the 1992 Amendments).17 Rather than promote broad public participation in CPUC proceedings, the State Auditor found that Article 5 had actually created a disincentive for many groups who might have wanted to participate in CPUC proceedings, but were wary of doing so because of the uncertainty surrounding whether they would be paid. (State Auditor‘s Rep., p. 13.) Thus, the focus of Assembly Bill 1975 was to revise Article 5 so that, implementing it going forward, the CPUC could achieve the Legislature‘s original objective of encouraging broad public input in CPUC proceedings by creating stronger incentives for intervenors to participate.
become effective“); Senate Republican Caucus, Digest of Senate Bill 4 (June 13, 1984) (“This bill would now state the intent of the Legislature to confirm the authority of the Public Utilities Commission . . . to make awards to participants in [C]PUC prоceedings commenced on or before December 31, 1984, pursuant to [C]PUC rules and regulations, and to require that awards in proceedings commenced on and after January 1, 1985, be governed by this bill.“); Senate Democratic Caucus, Conference Report on Senate Bill 4, as amended August 30, 1983, page 2 (“this bill merely provides the [C]PUC with statutory authority for the existing practice of awarding intervenor fees“); Assembly Office of Research, Conference Committee Report on Senate Bill 4, as amended August 30, 1983 (Sen. bill, adopted with Assem. amendments following conference, “provided a statutory basis for the Public Utilities Commission . . . to award fees for costs incurred by advocates of residential consumer interests who participate in public utility rate proceedings before the [C]PUC . . . . The [C]PUC already awards these costs as a matter of practice.“). See People v. Martinez (1987) 194 Cal.App.3d 15, 22 (in relying on legislative history “courts may properly consider committee reports [citation], partisan caucus analyses [citation], and the digest of the Legislative Counsel. [Citation.]“).
The 1992 Amendments, especially when taken together with the broader history of Article 5, appear to be inconsistent with New Cingular‘s core position in this case, resting, as it does, on the premise that there can be no “substantial contribution” to an “order or decision” of the CPUC without a merits determination. The heart of New Cingular‘s argument, drawn from the statutory structure, is that Article 5 unfolds in a logical progression, becoming increasingly specific, from generalized statements of purpose in
C. Judicial Review of the CPUC‘s Interpretation of Article 5
We now turn to the scope of our own review of the agency decisions at issue in this writ proceeding, focusing particularly on how much deference we should give to the CPUC‘s interpretation of its power to award intervenor compensation, as conferred upon it by Article 5. Having satisfied ourselves that the TURN Award and the CforAT Award are based on a reasonable construction of Article 5, the CPUC contends our task is complete. According to the CPUC, the applicable standard of review is so narrow that we should simply defer to its decisionmaking, without further inquiry, denying the writ and leaving these awards undisturbed. Considerable deference is warranted, we agree, but in our view, the applicable standard of review calls for a more searching inquiry than the CPUC would have us apply, one that ultimately leads us to reject the CPUC‘s stated reasons for issuing the awards at issue here, while deferring to its overall conclusion that TURN and CforAT are eligible for compensation.
1. The Applicable Standard of Review
“[T]he [C]PUC is not an ordinary administrative agency, but a constitutional body with broad legislative and judicial powers.” (Wise v. Pacific Gas & Electric Co. (1999) 77 Cal.App.4th 287, 300.) On judicial review, the CPUC‘s decisions historically have been generally presumed valid, not to be disturbed absent a manifest abuse of discretion or unreasonable interpretation of the relevant statute, particularly on matters of procedure. (See Greyhound Lines, Inc. v. Public Utilities Com. (1968) 68 Cal.2d 406, 410-411 (Greyhound); Southern Cal. Edison Co. v. Public Utilities Com. (2000) 85 Cal.App.4th 1086, 1096-1097.) “[W]hen no constitutional issue is presented, a [C]PUC decision has the same standing as a judgment of the superior court: it is presumed correct, and any party challenging the decision has the burden of proving that it suffers from prejudicial error.” (Pacific Gas & Electric Co. v. Public Utilities Com. (2015) 237 Cal.App.4th 812, 838; see generally City and County of San Francisco v. Public Utilities Com. (1985) 39 Cal.3d 523, 530; Southern California Edison Co. v. Public Utilities Com. (2014) 227 Cal.App.4th 172, 185.) “Indeed, our Supreme Court has repeatedly called the presumption in favor of the Commission‘s decision a ‘strong’ one. (Greyhound[, supra, at p. 410] [‘There is a strong presumption [in favor] of [the] validity of the commission‘s decisions . . . .‘];
But the call for deference to agency decisionmaking is not uniformly compelling in all circumstances. The final word on questions of statutоry interpretation always rests with the judiciary. (Yamaha Corp. of America v. State Bd. of Equalization (1998) 19 Cal.4th 1, 7, 11 (Yamaha).) The rationale for deference is strongest when the challenged action by the agency results from a rulemaking decision within the authority delegated to the agency (id. at pp. 11-12), where the agency interprets one of its own regulations (Pacific Gas & Electric Co. v. Public Utilities Com., supra, 237 Cal.App.4th at p. 840; Utility Consumers’ Action Network v. Public Utilities Com. (2010) 187 Cal.App.4th 688, 697-698), or where the agency engages in factfinding based on conflicting evidence (Pacific Gas & Electric Co. v. Public Utilities Com., supra, at pp. 838-839). One basis for challenging a CPUC decision is that the CPUC acted “without, or in excess of, its powers or jurisdiction.” (
Citing Greyhound and its progeny, the CPUC urges us to recognize the “‘strong presumption‘” that Greyhound sets up in its favor. Under the Greyhound test, the CPUC argues, “the [C]ommission‘s interpretation of the Public Utilities Code should not be disturbed unless it fails to bear a reasonable relation to statutory purposes and language.” (Greyhound, supra, 68 Cal.2d at pp. 410-411.) New Cingular, on the other hand, takes the position that the CPUC has acted in excess of its authority and argues that we have an independent obligation to construe the statutory language under Yamaha, supra, 19 Cal.4th at page 11. We conclude New Cingular has the better of the argument on this point. Because we are reviewing the CPUC‘s interpretation of a statute that defines the reach of its power to enter the awards under review, Yamaha, not Greyhound, governs the applicable standard of review. It is not enough for the CPUC simply to demonstrate that its proffered interpretation bears a reasonable relation to the language and
2. The Yamaha Framework
“Although balancing the necessary respect for an agency‘s knowledge, expertise, and constitutional office with the courts’ role as interpreter of laws can be a delicate matter, familiar principles guide us.” (Gonzales v. Oregon (2006) 546 U.S. 243, 255.) Under the Yamaha framework of analysis, ” ‘The standard for judicial review of agency interpretation of law is the independent judgment of the court, giving deference to the determination of the agency appropriate to the circumstances of the agency action.’ ” (Yamaha, supra, 19 Cal.4th at p. 8.) Applying the directives of Yamaha is a “nuanced” matter, calling upon us to evaluate the “contextual merit of [the agency‘s] interpretation, together with the rules of statutory construction.” (California School Bds. Assn. v. State Bd. of Education (2010) 186 Cal.App.4th 1298, 1314, 1315.)
Conceptually, the Yamaha framework rests on “two classes of [administrative] rules—quasi-legislative and interpretive.” (Yamaha, supra, 19 Cal.4th at p. 10.) “[B]ecause of their differing legal sources,” the rules in these two categories “command significantly different degrees of deference by the courts.” (Ibid.) “One kind—quasi-legislative rules—represents an authentic form of substantive lawmaking: Within its jurisdiction, the agency has been delegated the Legislature‘s lawmaking power. [Citations.] Because agencies granted such substantive rulemaking power are truly ‘making law,’ their quasi-legislative rules have the dignity of statutes. When a court assesses the validity of such rules, the scope of its review is narrow. If satisfied that the rule in question lay within the lawmaking authority delegated by the Legislature, and that it is reasonably necessary to implement the purpose of the statute, judicial review is at an end.” (Id. at pp. 10-11.)
The specific legal issue presented in Yamaha concerned the applicable standard of review for “interpretive” agency decisionmaking. “Unlike quasi-legislative rules, an agency‘s interpretation does not implicate the exercise of a delegated lawmaking power; instead, it represents the agency‘s view of the statute‘s legal meaning and effect, questions lying within the constitutional domain of the courts. But because the agency will often be interpreting a statute within its administrative jurisdiction, it may possess special familiarity with satellite legal and regulatory issues. It is this ‘expertise,’ expressed as an interpretation . . . , that is the source of the presumptive value of the agency‘s views. An important corollary of agency interpretations, however, is their diminished power to bind. Because an interpretation is an agency‘s legal opinion, however ‘expert,’ rather than the exercise of a delegated legislative power to make law, it commands a commensurably lesser degree of judicial deference.” (Yamaha, supra, 19 Cal.4th at p. 11.)
“On a question of interpretation, ‘the opinion of an administrative agency as to a statutе‘s meaning may be helpful even if it is “not binding or necessarily even authoritative.” ’ ” (Pacific Gas & Electric Co. v. Public Utilities Com., supra, 237 Cal.App.4th at pp. 851-852.) “Courts must, in short, independently judge the text of the statute, taking into account and respecting the agency‘s interpretation of its meaning, of course, whether embodied in a formal rule or less formal representation. Where the meaning and legal effect of a statute is the issue, an agency‘s interpretation is one among several tools available to the court. Depending on the context, it may be helpful, enlightening, even convincing. It may sometimes be of little worth.” (Yamaha, supra, 19 Cal.4th at pp. 7-8value of an interpretation must consider a complex of factors material to the substantive legal issue before it, the particular agency offering the interpretation, and the comparative weight the factors ought in reason to command.” (Id. at p. 12.) Applying this “situational” test (id. at p. 12, italics omitted), the Yamaha court held that the Board‘s annotations were entitled to ” ‘some consideration,’ but not great weight (id. at p. 15).22
3. Yamaha as Clarified by Ramirez
Ramirez v. Yosemite Water Co. (1999) 20 Cal.4th 785 (Ramirez), added a key refinement to the Yamaha framework. Concurring in Yamaha, Justice Mosk explained, “There is an important qualification to the independent judgment/great weight standard . . . when a court finds that the Legislature has delegated the task of interpreting or elaborating on a statute to an administrative agency. A court may find that the Legislature has intended to delegate this interpretive or gap-filling power when it employs open-ended statutory language that an agency is authorized to apply or ‘when an issue of interpretation is heavily freighted with policy choices which the agency is empowered to make.’ ” (Yamaha, supra, 19 Cal.4th at p. 17 (conc. opn. of Mosk, J.), original italics.) Highlighting language from a footnote in Justice Brown‘s opinion for the majority in Yamaha, Justice Mosk emphasized that administrative decisionmaking does not always fall ” ‘neatly into one category or the other.’ ” (Id. at p. 18 (conc. opn. of Mosk, J.); see id. at p. 6, fn. 3.)
Barely a year after Yamaha was decided, the California Supreme Court unanimously adopted Justice Mosk‘s clarifying qualification, explaining that because the Yamaha framework is a “continuum,” some agency decisions will be hybrid in nature, having “both quasi-legislative and interpretive characteristics, as when an administrative agency exercises a legislatively delegated power to interpret key statutory terms” (Ramirez, supra, 20 Cal.4th at p. 799, italics added), allowing it to ” ‘fill up the details’ of a statutory scheme” (ibid.). Without resolving what standard of review applies to agency decisions of this kind, Ramirez analyzed the decision under review there—a wage order issued by the California Industrial Welfare Commission, defining a statutory term in
Whether a unitary standard of review applies to agency action with characteristics of both quasi-legislative and interpretive decisionmaking, and if so, what that standard is, has not yet been settled by the California Supreme Court. (See Western States Petroleum Assn. v. Board of Equalization (2013) 57 Cal.4th 401, 436 (conc. & dis. opn. of Kennard, J.) [“This court has not resolved what standard of review applies to such hybrid cases.” (original italics)].) But in the meantime, the Courts of Appeal have used the same two-track approach that the Supreme Court used in Ramirez, analyzing such decisions under the standards of review applicable to both. (See Diageo-Guinness USA, Inc. v. Board. of Equalization (2012) 205 Cal.App.4th 907, 917-922 [regulations adopted by the Board of Equalization defining the statutory term “distilled spirits” found to be both quasi-legislative and interpretive; regulation invalidated]; Megrabian v. Saenz (2005) 130 Cal.App.4th 468, 477-487 [benefits eligibility decision by the State Department of Social Services, embodied in its manual of policies and procedures, found to be both quasi-legislative and interpretive; agency decision upheld].) In this case, the first step of the Ramirez test is easily satisfied, since the interpretive position the CPUC has taken is broadly within the scope of authority conferred upon it by Article 5, as recognized in Southern California Gas, and bears a reasonable relation to the purposes of Article 5. The question remains, however, what weight the CPUC‘s decision in this case should be given, applying Yamaha with Ramirez in mind.
In evaluating the deference to be accorded agency decisionmaking under Yamaha, we apply a group of interrelated “situational” factors that break down into two broad categories (Yamaha, supra, 19 Cal.4th at pp. 11-13): first, those suggesting that the agency may have some ” ‘comparative interpretive advantage’ ” over courts in deciding the issue in question (id. at pp. 11-12), and, second, those indicating that the interpretation in question is ” ‘probably correct’ ” (id. at pp. 12-13).
The comparative advantage criteria all focus on the substantive nature of the interpretive issue decided by the agency. We look to whether ” ‘the agency has expertise and technical knowledge, especially where the legal text to be interpreted is technical, obscure, complex, open-ended, or entwined with issues of fact, policy, and discretion,’ ” as for example when an agency is interpreting its own regulations, since it is ” ‘likely to be intimately familiar with regulations it authored and sensitive to the practical implications of one interpretation over another’ ” (Yamaha, supra, 19 Cal.4th at p. 12). The likely to be correct criteria, by contrast, all focus on circumstantial evidence surrounding the agency‘s decision. Here, we look to whether there are indications of careful consideration by senior agency officials (id. at p. 13), whether the agency ” ‘has consistently maintained the interpretation in question, especially if [it] is long-standing’ ” (ibid.), whether the interpretation was contemporaneous with legislative enactment of the statute being interpreted (ibid.), and whether the decision or rule in question was adopted in accordance with the Administrative Procedure Act (
1. The Position Taken By the CPUC Is Informed By Significant Expertise, Is One of Long Standing, and Existed at the Time of Article 5‘s Enactment.
Applying Yamaha‘s “situational” factors on this record, three factors—agency expertise, longevity of the CPUC‘s interpretive position, and the contemporaneousness of that position with enactment—appear to be most important, and they all cut in favor of giving deference to CPUC‘s interpretation. First, it seems undeniable that the CPUC has considerable expertise relevant to its interpretation of Article 5, since the origin of the “substantial contribution” test goes back to a set of regulations that the CPUC itself adopted in 1980, and since the CPUC has decades of accumulated practical experience applying iterations of that test. It also seems clear that when the Legislature enacted Article 5 in 1984, and then amended it significantly in 1992, it
Second and third, the interpretive position taken by the CPUC in this case—at least in its outcome, putting aside for now its reasoning—is one of long standing; such long standing, in fact, that it dates all the way back to Article 5‘s enactment, and before. For context here in particular, the statutory history must be kept in mind. Left unaddressed explicitly in Article 5, even as amended in 1992, was a question brought into sharp focus by the broadened definition of “proceeding” in
The CPUC first answered the question in November 1981 in The Environmental Defense Fund Requests Compensation for Its Participation in SoCal Edison Co.‘s Application for a Certificate for the Harry Allen/Warner Valley Energy System (1981) 7 Cal.P.U.C.2d 75 (Allen/Warner), the very case that led the CPUC to promulgate the OII 100 Regulations. In Allen/Warner, Pacific Gas and Electric, Southern California Edison and several other utilities sought a certificate of public convenience and necessity to operate a coal-fired power plant. The Environmental Defense Fund (EDF) participated extensively in these certificate proceedings as an intervenor, but ultimately there was no decision on the merits because the certificate application was abruptly withdrawn by the utility proponents on the eve of the hearing. (Allen/Warner, supra, 7 Cal.P.U.C.2d at pp. 78-79.) Aсknowledging that strict application of the “substantial contribution” test required a showing that it had “adopted” some “factual contention(s), legal contention(s), and/or specific recommendation(s)” of EDF in an “order or decision,” the CPUC decided that an “exception” was warranted for the “unique circumstances” of an unexpected, abrupt dismissal. (Allen/Warner, supra, 7 Cal.P.U.C.2d at pp. 103, 95.) This exception—explained in Allen/Warner as a discretionary rule, applicable as a matter of equity—was ultimately codified in rule 76.26 of the OII 100 Regulations, which provided that “In proceedings where some or all of the relief sought by a participant is obtained without a Commission order or decision, the participant may be entitled to compensation by clearly
Since Allen/Warner was decided in 1981, the CPUC has invoked its discretion to award intervenor compensation many times in cases resolved without a decision on the merits, in a wide variety of settings.25 Among these cases was a telecommunications merger review proceeding more than a decade ago where the proposed merger was withdrawn before any decision on the merits issued. (See Opinion on Requests for Intervenor Compensation in Application 99-12-012 of MCI WorldCom, Inc. and Sprint Corporation (July 17, 2002) Cal.P.U.C. Decision No. 02-07-030 [2002 Cal.P.U.C. Lexis 438] (MCI).) The CPUC has consistently ruled since 1981 that it has discretion to award intervenor compensation in cases that end without a
MCI was a case much like this one, where the impact the intervenors had in an aborted merger review proceeding was reflected in a series of procedural victories. In finding that the intervenors had established that they made a “substantial contribution” despite the withdrawal of the proposed merger and the dismissal of the proceeding on mootness grounds, the CPUC explained: “A party may make a substantial contribution to a decision in a number of ways. It may offer a factual or legal contention upon which the Commission relies in making a decision, or it may advance a specific policy or procedural recommendation that the ALJ or the Commission adopts. A substantial contribution includes evidence or argument that supports part of the decision even if the Commission does not adopt the party‘s position in total. The Commission has provided compensation even when the position [on the merits] advanced by the intervenor is rejected.” (MCI, supra, 2002 Cal.P.U.C. Lexis 438, at p. *12, citing Cal.P.U.C. Dec. No. 89-03-96, fns. omitted.)
2. The CPUC‘s Interpretation of Article 5 Qualifies for Treatment As “Hybrid” Agency Decisionmaking Under Ramirez
Although the agency expertise, decisional longevity and contemporaneity with enactment factors under Yamaha, by themselves, point toward giving the CPUC‘s decisionmaking something more than minimal deference, Ramirez further tips the Yamaha calculus in the CPUC‘s favor. The awards at issue here, in our view, qualify for treatment as “hybrid” decisions where the CPUC was called upon to interpret a statute using a mixture of policymaking and conventional legal analysis. Our review of the statutory history gives us ample reason to conclude that the Legislature not only agreed with the CPUC‘s view that intervenor compensation may be awarded on a discretionary basis in cases that resolve short of a decision on the merits, but more than that, delegated to the CPUC the authority to “fill in gaps” in Article 5 in the course of administering it based on express policy guidance in the statute. In
The Department of Insurance administers a statutory intervenor compensation program under a statutory scheme analogous to Article 5, and in turning back a challenge to an interpretation of that scheme by the Department of Insurance—a challenge strikingly similar to the one mounted in this case—the Court of Appeal recognized the Insurance Commissioner‘s delegated “gap-filling” power. That case, Association of California Ins. Cos. v. Poizner (2009) 180 Cal.App.4th 1029 (Poizner), involved
New Cingular sought to distinguish Poizner at oral argument on the ground that, there, the Department of Insurance carried out its gap-filling power by regulation. We find that distinction to be immaterial. It is true that in cаses giving agency interpretive decisionmaking great weight under Yamaha, notice-and-comment rulemaking is often involved. (See California Building Industry Assn. v. Bay Area Air Quality Management Dist. (2015) 62 Cal.4th 369, 390 [finding deference warranted under Yamaha to an agency interpretation adopted by regulation and observing that notice-and-comment rulemaking under the Administrative Procedure Act “subjects potential agency interpretations to procedural safeguards that foster accuracy and reliability“].) But we need not decide whether formal, on-the-record adjudicative decisionmaking—which is what we have here, in the form of a published, reasoned opinion—may be viewed as equivalent to notice-and-comment rulemaking for purposes of Yamaha‘s “situational factors.” Ramirez presents a related but slightly different question. Under Ramirez, the issue is whether the Legislature intended to confer gap-filling authority. Here, we find not only that it did, but that both the Legislature and the CPUC recognized there was no need for further, formal rulemaking to establish a regime for intervenor compensation in CPUC proceedings. Because the purpose of Article 5 was to reinforce and then supplant the CPUC‘s previously issued regulations governing case-by-case adjudication of entitlement to intervenor compensation,30 the Legislature appears to have contemplated that case-by-case decisionmaking by the CPUC would be the mode of administratively implementing Article 5.
E. The Correct Construction of Article 5, Giving Considerable Deference to the Legal Result the CPUC Reached, but Not to Its Reasoning
Although the awards to TURN and CforAT are entitled to considerable deference, the bottom line under both Yamaha and Ramirez is that, even when an agency is to be given wide-berth in interpreting a statute, we defer only to the extent we are prepared to accept ” ‘the validity of its reasoning, its consistency with earlier and later pronouncements, and all those factors which give it power to persuade, if lacking power to control.’ ” (Yamaha, supra, 19 Cal.4th at pp. 14-15, italics omitted, quoting Skidmore, supra, 323 U.S. at p. 140.) In this case, the CPUC‘s explanation of the legal basis for the awards at issue falls short when measured against that bottom-line
As we construe Article 5, so long as the advocacy of an intervenor claiming compensation contributes to a CPUC proceeding by “assist[ing] the commission in the making of” any “order or decision” (
The CPUC appears to agree with this reading of Article 5—certainly its extensive history of administrative decisionmaking in nonmerits intervenor compensation cases, at least prior to this case, suggests it is in agreement—but we cannot be sure, for the reasoning it employed here pays insufficient heed to the statutory text. Rather than anchor its rationale in its own factual findings and show how those findings fit into the statutory language, the Rehearing Decision identifies a “conflict” between
Based on the CPUC‘s detailed factual findings and our own reading of Article 5 in light of the statutory history, we are convinced the CPUC was correct to conclude that TURN and CforAT are eligible for intervenor compensation. But we are equally сonvinced that the legal path it took to justify the awards at issue here is unsustainable. Though we do not find New Cingular‘s reading of Article 5 to be persuasive either, we cannot say that the result it advocates is in any way “absurd.” Nor do we discern a genuine “conflict” between
“Since ‘an agency‘s order must be upheld, if at all, “on the same basis articulated in the order by the agency itself” ’ ” (Pacific Gas & Electric Co. v. Public Utilities Com. (2000) 85 Cal.App.4th 86, 96; see Securities and Exchange Comm‘n v. Chenery Corp. (1947) 332 U.S. 194, 196), we will set aside the challenged awards in this case, without prejudice to reinstatement after further consideration by the CPUC in view of this opinion. At oral argument, New Cingular‘s counsel suggested that, if the only basis to award compensation here was for work done on minor matters such as obtaining extensions of time to file pleadings, the amounts awarded could never have been justified and should have been far less. We express no view on that issue, except to note that, because of the breadth of the legal rationale the CPUC relied upon to justify its exercise of discretion, we cannot tell whether the CPUC considered whether the amounts
III. CONCLUSION
We decline to adopt the interpretation of Article 5 proffered by New Cingular in this case. For many decades, the CPUC has taken the position it has discretion to award intervenor compensation in proceedings that end without a decision on the merits, and the awards to TURN and CforAT here are consistent with that long-standing position. More importantly, however, the awards are consistent with the text of Article 5 and with our reading of legislative intent. Indeed, we find abundant evidence in the history and prehistory of Article 5 showing that this particular statutory scheme has been built, in effect, on a shared enterprise between the Legislature and the CPUC, with the CPUC having delegated authority under
IV. DISPOSITION
The TURN Award and the CforAT Award are vacated, as is the Rehearing Decision, without prejudice to reinstatement of the awards, in the same or different amounts, on grounds consistent with this opinion. Except as so ordered, New Cingular‘s petition for a writ of review is denied. The parties shall bear their own costs.
Ruvolo, P. J., and Rivera, J., concurred.