California’s Solar Compensation Ruling: Implications for New Jersey and Beyond

On August 7, 2025, the California Supreme Court, in Center for Biological Diversity, Inc. v. Public Utilities Commission (2025), held that courts should no longer apply a “uniquely deferential” standard when reviewing the California Public Utilities Commission’s (CPUC) interpretation of statutes governing solar compensation. Instead, courts must independently review whether the CPUC’s decisions are consistent with the law, using the same standards applied to other state agencies. This marks a significant shift away from the historic approach, which largely insulated the CPUC’s statutory interpretations from judicial scrutiny unless they were plainly unreasonable.

Implications for Other States (Including New Jersey)

  • Judicial Review Standards: In rapidly evolving sectors, such as distributed solar energy, states may look at this decision to model how courts can actively review agency interpretations of statutes.
  • Policy Flexibility vs. Accountability: This decision signals a move toward greater judicial oversight, which could encourage more balanced policymaking. Agencies may need to provide stronger legal justifications, knowing that courts will not just simply defer to their expertise.
  • Potential for Legal Challenges: Solar advocates may find it easier to challenge agencies’ unfavorable decisions in court, as the bar for overturning such decisions is now lower in California.
  • Relevance to New Jersey: New Jersey also has a robust solar market, with strong goals to meet clean energy and climate commitments, having doubled its solar output since 2017. Moving forward, the Board of Public Utilities may face calls to clarify the standard of review for agency decisions affecting distributed energy resources. Similar to the U.S. Supreme Court ruling in Loper Bright Enterprises v. Raimondo, this California ruling could be cited as persuasive authority in debates over how much deference courts should give to their state agencies in this context.

Bottom Line 

This decision is a win for those seeking greater judicial oversight of utility commission decisions, particularly in distributed energy policy and solar compensation. It may inspire similar legal and policy debates, as states grapple with the balance between agency expertise and judicial accountability in the transition to cleaner energy.

If you have any questions about the information in this post or would like to learn more on this topic, you can contact Dana Roamer at droamer@hoaglandlongo.com, Joe Petrillo at jpetrillo@hoaglandlongo.com, or both at 732-545-4717.

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