EEIX 8-K dated September 23, 2002

-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, RWJ8+KmucNZLgOOPeYvj1/cNnAgAFn9tndbrJWr3hfEs9hNCWayqJSGieRgj0on8 +DYXgAjC0/vY+Zw7BunaVw== 0000827052-02-000031.txt : 20020924 0000827052-02-000031.hdr.sgml : 20020924 20020923211328 ACCESSION NUMBER: 0000827052-02-000031 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20020923 ITEM INFORMATION: Other events ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 20020924 FILER: COMPANY DATA: COMPANY CONFORMED NAME: EDISON INTERNATIONAL CENTRAL INDEX KEY: 0000827052 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC SERVICES [4911] IRS NUMBER: 954137452 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-09936 FILM NUMBER: 02770498 BUSINESS ADDRESS: STREET 1: 2244 WALNUT GROVE AVE, STE 369 STREET 2: P O BOX 800 CITY: ROSEMEAD STATE: CA ZIP: 91770 BUSINESS PHONE: 6263022222 MAIL ADDRESS: STREET 1: 2244 WALNUT GROVE AVE, STE 369 STREET 2: P O BOX 800 CITY: ROSEMEAD STATE: CA ZIP: 91770 FORMER COMPANY: FORMER CONFORMED NAME: SCECORP DATE OF NAME CHANGE: 19920703 8-K 1 eix8ksep23.htm EDISON INTERNATIONAL SEPT. 23, 2002 8-K EEIX 8-K dated September 23, 2002

===================================================================================================================

                                        SECURITIES AND EXCHANGE COMMISSION
                                              Washington, D.C. 20549



                                                     FORM 8-K



                                                  CURRENT REPORT



                                      Pursuant to Section 13 or 15(d) of the
                                          Securities Exchange Act of 1934




                       Date of Report (Date of earliest event reported): September 23, 2002



                                               EDISON INTERNATIONAL
                              (Exact name of registrant as specified in its charter)



                 CALIFORNIA                           001-9936                              95-4137452
     (State or principal jurisdiction of          (Commission file                       (I.R.S. employer
       incorporation or organization)                  number)                          identification no.)



                                             2244 Walnut Grove Avenue
                                                  (P.O. Box 800)
                                            Rosemead, California 91770
                           (Address of principal executive offices, including zip code)

                                                   626-302-2222
                               (Registrant's telephone number, including area code)


===================================================================================================================










Items 1 through 4, 6, 8, and 9 are not included because they are inapplicable.

Item 5.  Other Events

On September 23, 2002, the United States Court of Appeals for the Ninth Circuit issued an opinion and order on
the appeal from a federal district court's stipulated judgment approving the settlement agreement between
Southern California Edison Company ("SCE") and the California Public Utilities Commission ("CPUC").  SCE is the
public utility subsidiary of Edison International.  The opinion and order affirmed the stipulated judgment of the
district court in part and referred questions based on California state law to the Supreme Court of California.

Background.  In November 2000, SCE filed a complaint in the United States District Court for the Central District
of California against the commissioners of the CPUC, alleging that their refusal to allow SCE to recover its
wholesale costs of purchasing power in its retail rates violated federal law.  The CPUC and SCE negotiated a
settlement agreement to resolve the litigation, and the district court entered a stipulated judgment on October
5, 2001, incorporating the settlement agreement.  Several entities appealed the stipulated judgment, including
The Utility Reform Network ("TURN"), a California consumer group that had been allowed to intervene in the
litigation as a permissive intervenor, and three other entities whose motions to intervene had been denied.

In accordance with the settlement agreement, the CPUC has established a procurement-related obligations account,
or PROACT, with an opening balance of about $3.6 billion, representing SCE's unrecovered power procurement costs
as of September 1, 2001.  While the appeal of the district court's stipulated judgment has been pending, SCE and
the CPUC have continued to operate under the terms of the settlement agreement.  As of August 31, 2002, the
remaining unrecovered balance in the PROACT was $1.1 billion.

Opinion and Order.  In its September 23 opinion, the appeals court affirmed the district court on all claims,
except for the challenges founded on California state law, which the appeals court referred to the California
Supreme Court.  Specifically, the appeals court affirmed the district court in the following respects:  (1) the
district did not err in denying the motions to intervene of the entities other than TURN; (2) the district court
did not err in denying standing for the entities other than TURN to appeal the stipulated judgment; (3) the
district court was not deprived of original jurisdiction over the lawsuit; (4) the district court did not err in
declining to abstain from the case; (5) the district court did not exceed its authority by approving the
stipulated judgment without TURN's consent; (6) the district court's approval of the settlement agreement did not
deny TURN due process; and (7) the district court did not violate the Tenth Amendment of the United States
Constitution in approving the stipulated judgment.  In sum, the appeals court concluded that none of the
substantive arguments based on federal statutory or constitutional law compelled reversal of the district court's
approval of the stipulated judgment.

The appeals court stated in its opinion, however, that there is a serious question of whether the settlement
agreement violated state law, both in substance and in the procedure by which the CPUC agreed to it.  The appeals
court further stated that if the settlement agreement violated

Page 2


state law, the CPUC lacked capacity to consent to the stipulated judgment, and the appeals court would be
required to vacate the stipulated judgment as void.  The appeals court said that, on a substantive level, the
stipulated judgment appears to violate California's electric industry restructuring statute providing for a rate
freeze.  The appeals court said that, on a procedural level, the stipulated judgment appears to violate
California laws requiring open meetings and public hearings.  Because federal courts are bound by the
pronouncements of the state's highest court on applicable state law, and because the appeals court found no
controlling precedents from California courts on the issues of state law in this case, the appeals court issued a
separate order certifying those issues to the California Supreme Court and requesting the California Supreme
Court to accept certification.

The appeals court stayed further proceedings in the case pending a response from the California Supreme Court on
the request for certification.  The appeals court did not stay the continued operation of the settlement
agreement.  SCE is evaluating the appeals court's opinion and order and determining what actions to take in
response.  Possible actions include a petition for rehearing before an en banc panel of the appeals court or the
filing of briefs with the California Supreme Court.

Neither EIX nor SCE can predict the ultimate outcome of these proceedings, or the impact that any outcome would
have on the stipulated judgment or the settlement agreement.

Item 7.  Financial Statements, Pro Forma Financial Information and Exhibits.

(a)      Not applicable

(b)      Not applicable

(c)      Exhibits

         99.1     Opinion of the United States Court of Appeals for the Ninth Circuit, filed September 23, 2002.

         99.2     Order of the United States Court of Appeals for the Ninth Circuit, filed September 23, 2002.





Page 3


                                                    SIGNATURES


Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report
to be signed on its behalf by the undersigned thereunto duly authorized.


                                                 EDISON INTERNATIONAL
                                                            (Registrant)



                                                                       KENNETH S. STEWART
                                                 -------------------------------------------------------------
                                                                       KENNETH S. STEWART
                                                        Assistant General Counsel and Assistant Secretary


September 23, 2002

EX-99.1 3 exhibit991sep.htm OPINION OF US COURT OF APPEARLS SEPT. 23, 2002 Exhibit 99.1

                                FOR PUBLICATION
                         UNITED STATES COURT OF APPEALS
                              FOR THE NINTH CIRCUIT

SOUTHERN CALIFORNIA EDISON                  )
COMPANY,                                    )
                  Plaintiff-Appellee,       )
                  v.                        )
LORETTA M. LYNCH; HENRY M.                  )
DUQUE; RICHARD A. BILAS; CARL               )              No. 01-56879
W. WOOD; GEOFFREY F. BROWN,                 )                D.C. No.
Commissioners of California                 )             CV-00-12056-RSWL
Public Utilities Commission,                )
                  Defendants-Appellees.     )
UTILITY REFORM NETWORK,                     )
                  Defendant-intervenor-     )
                                  Appellant.)


SOUTHERN CALIFORNIA EDISON                  )
COMPANY,                                    )
                  Plaintiff-Appellee,       )
RELIANT ENERGY SERVICES, INC.;              )
MIRANT AMERICAS ENERGY                      )             No. 01-56993
MARKETING, LP,                              )                D.C. No.
                  Intervenors-Appellants,   )            CV-00-12056-RSWL
                  v.                        )
LORETTA M. LYNCH; HENRY M.                  )
DUQUE; RICHARD A. BILAS; CARL               )
W. WOOD; GEOFFREY F. BROWN,                 )
                  Defendants                )


                                         14655





14656                      So. Cal. Edison v. Lynch
- --------------------------------------------------------------------------------


SOUTHERN CALIFORNIA EDISON                  )
COMPANY,                                    )
                  Plaintiff-Appellee,       )
CALIFORNIA MANUFACTURERS AND                )
TECHNOLOGY ASSN.,                           )          No. 01-57020
                  Intervenor-Appellant,     )           D.C. No.
                  v.                        )       CV-00-12056-RSWL
LORETTA M. LYNCH; HENRY M.                  )           OPINION
DUQUE; RICHARD A. BILAS; CARL               )
W. WOOD; GEOFFREY F. BROWN,                 )
in their official capacities as             )
Commissioner of the California              )
Public Utilities Commission,                )
                  Defendants-Appellees.     )


                  Appeal from the United States District Court
                     for the Central District of California
                   Ronald S.W. Lew, District Judge, Presiding

                              Argued and Submitted
                       March 4, 2002--Pasadena, California

                            Filed September 23, 2002

                 Before: James R. Browning, Sidney R. Thomas and
                      Johnnie B. Rawlinson, Circuit Judges.

                             Opinion by Judge Thomas






14660                       SO. CAL. EDISON v. LYNCH
- --------------------------------------------------------------------------------


                                    COUNSEL

Robert E. Finkelstein and Randolph L. Wu, The Utility
Reform Network, San Francisco, California; Michael J.
Strumwasser, Frederic D. Woocher, Johanna R. Shargel, Daniel
J. Sharfstein, Strumwasser & Woocher LLP, Santa Monica,
California; for the defendant-intervenor-appellant.

Terry J. Houlihan and Geoffrey T. Holtz, McCutchen, Doyle,
Brown & Enersen, LLP, San Francisco, California; John C.
Morrissey and Brian I. Cheng, McCutchen, Doyle, Brown &
Enersen, LLP, Los Angeles; California; for the intervenor-appellant
Reliant Energy Services, Inc.

Bryan A. Merryman and Lisa A. Cottle, White & Case LLP,
Los Angeles, California, for the intervenor-appellant Mirant
Americas Energy Marketing, LP.

Keith R. McCrea and Jim Bushee, Sutherland Asbill & Brennan
LLP, Washington, D.C., for the intervenor-appellant California
Manufacturers and Technology Association.

Gary M. Cohen, Arocles Aguilar, Harvey Y. Morris, and Carrie
G. Pratt, Public Utilities Commission of the State of California,
San Francisco, California, for the defendants-appellees.

Stephen Pickett, Barbara Reeves, and Kris G. Vyas, Southern
California Edison Company, Rosemead, California; Ronald L.
Olson, John W. Spiegel, and Henry Weissmann, Munger, Tolles
& Olson LLP, Los Angeles, California; for the plaintiff-appellee.

- --------------------------------------------------------------------------------

                                    OPINION

THOMAS, Circuit Judge:

   In this appeal, we review the district court's order entering
a stipulated judgment in an action brought by Southern Cali-






                             SO. CAL. EDISON v. LYNCH           14661
- --------------------------------------------------------------------------------

fornia Edison Co. ("SoCal Edison"), an electric public utility
that provides retail electric service in Southern California,
against the Commissioners ("Commissioners") of the California
Public Utilities Commission ("the Commission"), which
regulates the rates, practices and services of SoCal Edison and
other California public utilities. We affirm the judgment of
the district court in part and certify questions based on California
state law to the Supreme Court of California.

                                       I

   The origins of the present controversy began in 1996 with
the passage of Assembly Bill 1890 ("AB 1890"), which significantly
restructured California's power industry. Act of
September 23, 1996, 1996 Cal. Legis. Serv. 854, codified in
Cal. Pub. Util. Codess.ss.330-398.5. The idea animating AB
1890 was that deregulation would foster competition in electrical
generation, which would ultimately provide better service
and reduce the price of electricity to consumers. See
generally Cal. Pub. Util. Codess.330.1 Under prior law, the
Commission set the retail electricity rates charged by utilities
providing service in exclusive service territories. Id. at
ss.330(d). These regulated rates included reimbursement for
the cost of constructing power plants and contractual obligations
for the provision of electrical service. Id. atss.330(q).
The goal of AB 1890 was to create a deregulated market in
which price would be established by competition and consumers
could select their electrical power supplier.

   The legislature recognized that the transition from a regulated
environment to a competitive market had the potential
to leave the utilities with unrecoverable, or "stranded" costs.
In general terms, stranded costs are those costs an electrical
supplier incurs in anticipation of serving customers that later
become unrecoverable because the supplier either cannot

- --------------------------------------------------------------------------------

   1 The legislation is summarized in Cal. Power Exchange Corp. v. FERC
(In re Cal. Power Exchange Corp.), 245 F.3d 1110, 1114-15 (2001).





14662                  SO. CAL. EDISON v. LYNCH
- --------------------------------------------------------------------------------

charge a rate that allows cost recovery or is unable to sell sufficient
power. This most typically occurs when there is a shift
in utility rate philosophy from a "cost plus rate of return"
design to a market-driven rate. Ass'n of Pub. Agency Customers,
Inc. v. Bonneville Power Admin., 126 F.3d 1158, 1180
(9th Cir. 1997).

   Of course, as we have observed, "the term `stranded costs'
is something of a misnomer, for someone always pays for
them." Id. Under AB 1890, the Commission was charged with
the responsibility of calculating the amount of stranded costs.
Cal. Pub. Util. Codess.367. The utilities were to recover their
allowed stranded costs through individual cost-recovery plans
during a transition period when rates were temporarily frozen,
under the theory that the utilities would continue to make a
profit. Id. atss.368. During this transition period, the utilities
were also to dismantle their vertically-integrated operations
by selling a large portion of their generation plants, and to sell
the output of their remaining generation capacity to a wholesale
clearinghouse known as the California Power Exchange
Corporation ("CalPx"). Cal. Power Exchange Corp., 245 F.3d
at 1114-15. During the transition period, the utilities were
required to purchase power from CalPx on behalf of retail
customers who had not elected to purchase power elsewhere.
Id. at 1115. The demise of vertical integration, which was regulated
by the state, subjected the utilities' purchases of wholesale
power to the jurisdiction of the Federal Energy
Regulatory Commission ("FERC"), which regulated CalPx as
a public utility under the Federal Power Act. Id. at 1114.

   In 2000, wholesale electricity prices skyrocketed, particularly
in the CalPx spot markets. SoCal Edison, which was still
subject to the retail rate freeze designed to lock in profit,
incurred enormous debt because it was unable to pass its
wholesale power costs onto its customers. Id. at 1115. SoCal
Edison alleges that it incurred obligations of over $6.5 billion
for wholesale electricity in excess of what it recovered in
retail sales. A series of power emergencies ensued which






                    SO. CAL. EDISON v. LYNCH          14663
- --------------------------------------------------------------------------------

threatened the continuous provision of electricity in California.
Id. at 1115-16. FERC responded in a series of regulatory
actions detailed in Cal. Power Exchange Corp. Id. at 1116-19.
In 2001, the California legislature and the Commission took
a series of steps to alleviate the power crisis, the result of
which was to significantly alter the impact of AB 1890. However,
SoCal Edison alleges that the legislation failed to
improve SoCal Edison's dire financial condition because
SoCal Edison was precluded by a Commission decision from
recovering costs incurred during the rate freeze period.

   As a result, SoCal Edison filed the instant action for injunctive
and declaratory relief against the Commissioners. Among
other theories, SoCal Edison alleged that the refusal of the
Commission to increase its retail rates as SoCal Edison's
wholesale rates rose was preempted under the federal filedrate
doctrine, which holds that a state is preempted from preventing
the recovery in retail rates of costs incurred pursuant
to FERC tariffs.

   After some preliminary decisions by the district court, The
Utility Reform Network ("TURN"), a non-profit organization
devoted to protecting the interests of residential and smallcommercial
consumers of utility services, moved to intervene.
The district court initially denied the motion, but eventually
granted TURN permissive intervention. After further proceedings,
the case was stayed by agreement of the Commission
and SoCal Edison so that the parties could attempt to resolve
their disputes. A settlement was negotiated and presented to
the district court in the form of a stipulated judgment
("Stipulated Judgment"). Under the terms of the Stipulated
Judgment, existing rates were to remain in effect for a twoyear
period to allow SoCal Edison to recover approximately
$3.3 billion of its $6.3 billion loss during the prior rate-freeze
period. TURN objected to the entry of the Stipulated Judgment.
The district court allowed TURN one day to register its
objections, and one day for SoCal Edison and the Commission
to respond. After reviewing the objections, the district






14664                     SO. CAL. EDISON v. LYNCH
- -------------------------------------------------------------------------------

court approved the Stipulated Judgment. TURN appeals the
entry of the Stipulated Judgment. Three other parties who
were denied intervention appeal the district court's denial of
their intervention motions.

   We affirm the district court on all claims, except for the
challenges founded on California state law, which we certify
to the California Supreme Court.

                                       II

   The district court did not err in denying the motions to
intervene filed by Reliant Energy Services ("Reliant"), Mirant
Americas Energy Marketing ("Mirant"), and the California
Manufacturers and Technology Association ("CMTA") (collectively,
"Proposed Intervenors"). Reliant and Mirant are
wholesale generators of electricity. The CMTA is a trade
association with approximately 800 manufacturing and technology
companies owning and operating facilities in California.
We review the district court's denial of intervention as of
right is reviewed de novo, Waller v. Fin. Corp. of Am., 828
F.2d 579, 582 (9th Cir. 1987), except for district court's determination
of timeliness, a decision which we review for abuse
of discretion. Cunningham v. David Special Commitment Ctr.,
158 F.3d 1035, 1037 (9th Cir. 1998). We review the district
court's denial of permissive intervention for abuse of discretion.
Venegas v. Skaggs, 867 F.2d 527, 529 (9th Cir. 1989).

                                      A

   The district court properly denied the Proposed Intervenors'
motions to intervene as of right, pursuant to Rule 24(a),
Federal Rules of Civil Procedure. An applicant for intervention
in a pending federal action as a matter of right must satisfy
four requirements, namely that: "(1) it has a significant
protectable interest relating to the property or transaction that
is the subject of the action; (2) the disposition of the action
may, as a practical matter, impair or impede the applicant's





                          SO. CAL. EDISON v. LYNCH           14665
- --------------------------------------------------------------------------------

ability to protect its interest; (3) the application is timely; and
(4) the existing parties may not adequately represent the
applicant's interest." United States v. City of Los Angeles, 288
F.3d 391, 397 (9th Cir. 2002) (quoting Donnelly v. Glickman,
159 F.3d 405, 409 (9th Cir. 1998) (internal quotation marks
omitted)).

   The district court correctly denied the Proposed Intervenors'
motions to intervene as of right because they did not satisfy
the first requirement: that they have a significant
protectable interest relating to the property or transaction that
is the subject of the action. We recently discussed the analytical
framework for this requirement in City of Los Angeles,
288 F.3d at 398:

     "An applicant has a `significant protectable interest'
     in an action if (1) it asserts an interest that is protected
     under some law, and (2) there is a `relationship'
     between its legally protected interest and the
     plaintiff's claims." Donnelly, 159 F.3d at 409. The
     relationship requirement is met "if the resolution of
     the plaintiff's claims actually will affect the applicant."
     Id. at 410. The "interest" test is not a clear-cut
     or bright-line rule, because "[n]o specific legal or
     equitable interest need be established." [Greene v.
     United States, 996 F.2d 973, 976 (9th Cir. 1993).]
     Instead, the "interest" test directs courts to make a
     "practical, threshold inquiry," id., and "is primarily
     a practical guide to disposing of lawsuits by involving
     as many apparently concerned persons as is compatible
     with efficiency and due process," County of
     Fresno v. Andrus, 622 F.2d 436, 438 (9th Cir. 1980)
     (internal quotation marks and citation omitted).

   Reliant and Mirant argue that they have a significant protectable
interest in the litigation because SoCal Edison owes
them over $260 million arising out of their wholesale electricity
transactions which, allegedly due to the Commission's





14666                  SO. CAL. EDISON v. LYNCH
- --------------------------------------------------------------------------------

actions, SoCal Edison is unable to repay. The pending litigation
would not resolve those claims, and SoCal Edison is in
privity with the California Power Exchange Corporation, not
with Reliant or Mirant. Thus, Reliant and Mirant are claiming
a right to intervene based on a contingent, unsecured claim
against a third-party debtor. This falls far short of the "direct,
non-contingent, substantial and legally protectable" interest
required for intervention as a matter of right. Dilks v. Aloha
Airlines, 642 F.2d 1155, 1157 (9th Cir. 1981) (citation omitted).

   CMTA asserts that, as an association of more than 800
companies in the manufacturing and high-technology sectors,
its members are "an integral part of the California economy"
who "purchase significant quantities of electricity from SoCal
Edison." However, "an undifferentiated, generalized interest
in the outcome of an ongoing action is too porous a foundation
on which to premise intervention as of right." Public
Serv. Co. of N.H. v. Patch, 136 F.3d 197, 205 (1st Cir. 1998);
see also Westlands Water Dist. v. U.S., 700 F.2d 561, 563 (9th
Cir. 1983) (Environmental Defense Fund's interest in water
district's water export rights is no different from interest of
"substantial portion of the population of northern California"
and is thus not "legally protectible" under Rule 24(a)). Thus,
CMTA does not have the right to intervene in this case under
federal law.

                                       B

   The district court also did not err in denying Reliant,
Mirant, and CMTA permissive intervention. "[A] court may
grant permissive intervention where the applicant for intervention
shows (1) independent grounds for jurisdiction; (2)
the motion is timely; and (3) the applicant's claim or defense,
and the main action, have a question of law or a question of
fact in common." City of Los Angeles, 288 F.3d at 403 (quoting
Northwest Forest Res. Council v. Glickman, 82 F.3d 825,
839 (9th Cir. 1996)). "Even if an applicant satisfies those





                          SO. CAL. EDISON v. LYNCH           14667
- -------------------------------------------------------------------------------

threshold requirements, the district court has discretion to
deny permissive intervention." Donnelly, 159 F.3d at 412.

   Here, Proposed Intervenors fail to meet the threshold
requirements because no common question of law or fact
exists between their claims and the main action. Proposed
Intervenors argue that the amount of money that SoCal Edison
may collect, and how SoCal Edison uses that money,
raises questions of law and fact common to both the underlying
action and any claims Reliant and Mirant have against
SoCal Edison and/or the Commission. However, the Proposed
Intervenors' concerns as to whether SoCal Edison would
repay them are sufficiently different from the issues in the
underlying action so as to not meet this factor of the test for
permissive intervention. "The intervention rule is . . . not
intended to allow the creation of whole new lawsuits by the
intervenors." Donnelly, 159 F.3d at 412 (internal quotation
marks and citation omitted).

                                      III

   Reliant, Mirant, and CMTA argue in the alternative that,
even if the district court did not err in denying their motions
to intervene, they still have standing to appeal the entry of the
Stipulated Judgment. We disagree.

   A nonparty has standing to appeal a district court's decision
"only in exceptional circumstances." Citibank Int'l. v. Collier-
Traino, Inc., 809 F.2d 1438, 1441 (9th Cir. 1987). We have
allowed such an appeal only when "(1) the appellant, though
not a party, participated in the district court proceedings, and
(2) the equities of the case weigh in favor of hearing the
appeal." Bank of Am. v. M/V Executive, 797 F.2d 772, 774
(9th Cir. 1986). Proposed Intervenors have not met these
requirements. Apart from their applications for intervention,
the Proposed Intervenors did not participate in the district
court proceedings. By contrast, the appellant in Bank of Am.
filed papers and presented oral argument to a magistrate judge






14668                    SO. CAL. EDISON v. LYNCH
- -------------------------------------------------------------------------------

and the district court on the merits of the case. Id. at 774. Further,
there is nothing inequitable about limiting participation
in this appeal to submission of amicus briefs. In short, there
are no "exceptional circumstances" in this case that justify
granting a non-party standing to appeal.

                                       IV

   TURN argues that the Rooker-Feldman doctrine2 precluded
the district court from exercising original jurisdiction. The
Rooker-Feldman doctrine is founded on "the unremarkable
proposition that federal district courts are courts of original,
not appellate, jurisdiction." Gruntz v. County of Los Angeles
(In re Gruntz), 202 F.3d 1074, 1078 (9th Cir. 2000) (en banc).
It is based on negative inferences drawn from 28 U.S.C.
ss.1331, which establishes the district court's original jurisdiction,
and 28 U.S.C.ss.1257, which allows Supreme Court
review of "[f]inal judgments or decrees rendered by the highest
court of a State in which a decision could be had." Id.
(internal quotation marks omitted). Applying these jurisdictional
limitations, the Rooker-Feldman doctrine bars direct
federal district court appellate review of state court judicial
proceedings. See Worldwide Church of God v. McNair, 805
F.2d 888, 890 (9th Cir. 1986).

   TURN contends that the Rooker-Feldman doctrine applies
here because SoCal Edison's lawsuit is "inextricably intertwined"
with the actions of the Commission and because the
Pacific Gas & Electric Company ("PG&E") sought state judicial
review of the Commission's cost-recovery decisions.

- -------------------------------------------------------------------------------

   2 The doctrine takes its name from Rooker v. Fid. Trust Co., 263 U.S.
413 (1923), and District of Columbia Court of Appeals v. Feldman, 460
U.S. 462 (1983). Rooker held that federal statutory jurisdiction over direct
appeals from state courts lies exclusively in the Supreme Court and is
beyond the original jurisdiction of federal district courts. See Rooker, 263
U.S. at 415-16. Feldman held that this jurisdictional bar extends to particular
claims that are "inextricably intertwined" with those a state court has
already decided. See Feldman, 460 U.S. at 486-87.






                     SO. CAL. EDISON v. LYNCH           14669
- -------------------------------------------------------------------------------

   The Rooker-Feldman doctrine does not apply to the actions
of the Commission because it is a state administrative agency,
not a court. The primary statute from which the Rooker-
Feldman doctrine has been drawn-- 28 U.S.C.ss.1257--
does not, by its terms, describe state administrative decisions.
More importantly, the Supreme Court has recently rejected a
claim that the Rooker-Feldman doctrine barred federal district
court review of adjudicatory decisions of state administrative
agencies. As the Court noted:

     The Commission also suggests that the Rooker-
     Feldman doctrine precludes a federal district court
     from exercising jurisdiction over Verizon's claim.
     See District of Columbia Court of Appeals v. Feldman,
     460 U.S. 462, 103 S.Ct. 1303, 75 L.Ed.2d 206
     (1983); Rooker v. Fidelity Trust Co., 263 U.S. 413,
     44 S.Ct. 149, 68 L.Ed. 362 (1923). The Rooker-
     Feldman doctrine merely recognizes that 28 U.S.C.
     ss. 1331 is a grant of original jurisdiction, and does
     not authorize district courts to exercise appellate
     jurisdiction over state-court judgments, which Congress
     has reserved to this Court, see 28 U.S.C.
     ss. 1257(a). The doctrine has no application to judicial
     review of executive action, including determinations
     made by a state administrative agency.

Verizon Md. Inc. v. Pub. Serv. Comm'n of Md., 122 S. Ct.
1753, 1759 n.3 (2002) (emphasis added).

   TURN also claims that a collateral state court judicial challenge
to the Commission action filed by PG&E deprives the
district court of jurisdiction over this case. This argument is
unavailing. The Rooker-Feldman doctrine does not bar the
exercise of federal court jurisdiction when the federal court
litigant was not a party to the state court action. Johnson v. De
Grandy, 512 U.S. 997, 1006 (1994). SoCal Edison was not a
party to PG&E's state court challenge; thus the Rooker-
Feldman doctrine did not preclude the federal district court






14670                       SO. CAL. EDISON v. LYNCH
- -------------------------------------------------------------------------------

from exercising jurisdiction in this case.3 SoCal Edison did
file an amicus letter in support of PG&E's petition. However,
"mere participation in the state case as amici does not invoke
the Rooker/Feldman bar." Bennett v. Yoshina, 140 F.3d 1218,
1224 (9th Cir. 1998). Thus, existence of collateral state court
proceedings involving a third party did not deprive the district
court of original jurisdiction over this action.

                                       V

   TURN argues the district court should have abstained under
the "Burford doctrine" from exercising jurisdiction over this
lawsuit. See Burford v. Sun Oil Co., 319 U.S. 315, 332-33
(1943)). We review whether the requirements for abstention
have been met de novo, and the district court's decision
whether to abstain for an abuse of discretion. Fireman's Fund
Ins. Co. v. Quackenbush, 87 F.3d 290, 294 (9th Cir. 1996).

   "District courts have an obligation and a duty to decide
cases properly before them, and `[a]bstention from the exercise
of federal jurisdiction is the exception, not the rule.' "
City of Tuscon v. U.S. West Communications, Inc., 284 F.3d
1128, 1132 (2002) (quoting Colorado River Water Conservation
Dist. v. United States, 424 U.S. 800, 813 (1976)).

   However, under the Burford abstention doctrine, when
timely and adequate state court review is available, a federal
court sitting in equity may decline to interfere with the proceedings
or orders of state administrative agencies:

     (1) when there are difficult questions of state law
     bearing on policy problems of substantial public
     import whose importance transcends the result in the

- -------------------------------------------------------------------------------

   3 In fact, the district court in PG&E's case rejected the argument that
PG&E's state court writ was res judicata of PG&E's federal claims. Pac.
Gas & Elec. Co. v. Lynch, No. CV 01-1083RSWLSHX, 2001 WL 840611,
at *8 (C.D. Cal. May 2, 2001).





                  SO. CAL. EDISON v. LYNCH          14671
- -------------------------------------------------------------------------------

     case then at bar; or (2) where the exercise of federal
     review of the question in a case and in similar cases
     would be disruptive of state efforts to establish a
     coherent policy with respect to a matter of substantial
     public concern.

New Orleans Pub. Serv., Inc. v. Council of New Orleans, 491
U.S. 350, 361 (1989) (internal quotation marks and citation
omitted).

   We have required certain factors to exist before a district
court can abstain under Burford. See City of Tuscon, 284 F.3d
at 1133. These are:

     first[,] that the state has chosen to concentrate suits
     challenging the actions of the agency involved in a
     particular court; second, that federal issues could not
     be separated easily from complex state law issues
     with respect to which state courts might have special
     competence; and third, that federal review might disrupt
     state efforts to establish a coherent policy.

Id. (quoting United States v. Morros, 268 F.3d 695, 705 (9th
Cir. 2001)).

   Here, not only has the state not chosen to concentrate suits
challenging the administrative action in a particular court, it
has expressly waived any abstention defense to SoCal Edison's
action and consented to the Stipulated Judgment. See
Ohio Civil Rights Comm'n v. Dayton Christian Schs., Inc.,
477 U.S. 619, 626 (1986) ("A State may of course voluntarily
submit to federal jurisdiction even though it might have had
a tenable claim for abstention."). Thus, the threshold requirements
for the exercise of Burford abstention by the district
court have not been satisfied.4  The fact that a non-state inter-

- -------------------------------------------------------------------------------

   4 We also note that "Burford abstention is particularly inappropriate
when the plaintiff's claim is based on preemption, because abstaining






14672                    SO. CAL. EDISON v. LYNCH
- -------------------------------------------------------------------------------

vening party preferred another forum is not relevant to satisfying
the prerequisites for Burford abstention. Cf. Southwest
Airlines Co. v. Texas Intern. Airlines, Inc., 546 F.2d 84, 93
(5th Cir. 1977). "If the State voluntarily chooses to submit to
a federal forum, principles of comity do not demand that the
federal court force the case back into the State's own system."
Ohio Bureau of Employment Servs. v. Hodory, 431 U.S. 471,
480 (1977). The district court did not err in declining to
abstain in this case.

                                       VI

   The district court did not exceed its authority by approving
the stipulated settlement between SoCal Edison and the Commission
without TURN's consent, a decision which we
review de novo. Class Plaintiffs v. City of Seattle, 955 F.2d
1268, 1287 (9th Cir. 1992). An intervenor does not have the
right to prevent other parties from entering into a settlement
agreement. Local No. 93, Int'l Ass'n of Firefighters, AFL-CIO
v. City of Cleveland, 478 U.S. 501, 528-29 (1986). As the
Court explained:

     [i]t has never been supposed that one party--
     whether an original party, a party that was joined
     later, or an intervenor--could preclude other parties
     from settling their own disputes and thereby withdrawing
     from litigation. Thus, while an intervener is
     entitled to present evidence and have its objections
     heard at the hearings on whether to approve a consent
     decree, it does not have power to block the
     decree merely by withholding its consent.

- -------------------------------------------------------------------------------

under Burford would be an implicit ruling on the merits." Morros, 268
F.3d at 705 (quoting Knudsen Corp. v. Nevada State Dairy Comm'n, 676
F.2d 374, 377 (9th Cir. 1982)). Here, SoCal Edison alleges that the federal
filed-rate doctrine facially preempts any Commission refusal to permit
recovery of SoCal Edison's wholesale procurement costs.





                         SO. CAL. EDISON v. LYNCH           14673
- -------------------------------------------------------------------------------

  Thus, TURN's consent was not a necessary precursor to the
district court's accepting the Stipulated Judgment.

   TURN points out that Firefighters provides an exception
where "nonconsenting intervenors" have brought "valid
claims" that are "properly raised." Id. at 529. However, as
TURN itself admits, the organization "as defendants were not
expected to raise claims and [its] members cannot challenge
the terms of the settlements in later suits." Instead, what
TURN claims to possess is a "legally cognizable interest in
protecting the refund rights of its 30,000 ratepaying members,
in securing the lower rates that state law guarantees them and
the stipulated judgment denies them, and in preventing the
rate increases that will inevitably result from this judgment."
These interests do not amount to the kind of "valid claims"
the Firefighters Court had in mind. Furthermore, TURN's
attempt to narrow the scope of the Firefighters exception as
applying only to plaintiffs, and not defendants such as TURN,
is unavailing because the Firefighters case clearly references
"third part[ies]" in general. See Firefighters, 478 U.S. at 529.
In sum, TURN's consent was not required for the district
court to approve the settlement.

                                      VII

   Nor did the district court's approval of the settlement deny
TURN due process. TURN argues that the district court did
not afford it sufficient time to submit briefs opposing the proposed
settlement.

   District courts have "inherent power" to control their dockets.
Ferdik v. Bonzelet, 963 F.2d 1258, 1260 (9th Cir. 1992).
Our review of such decisions is deferential; we will reverse a
district court's litigation management decisions only if it
abused its discretion, see id., or if the procedures deprived the
litigant of due process of law within the meaning of the Fifth
or Fourteenth Amendments. See Barona Group of Capitan
Grande Band of Mission Indians v. Am. Mgmt. & Amusement,





14674                      SO. CAL. EDISON v. LYNCH
- -------------------------------------------------------------------------------

Inc., 824 F.2d 710, 721-22 (9th Cir. 1987), amended by 840
F.2d 1394, 1405-06 (9th Cir. 1988). Due process requires that
a party affected by government action be given "the opportunity
to be heard at a meaningful time and in a meaningful
manner." Mathews v. Eldridge, 424 U.S. 319, 333 (1976)
(internal quotation marks and citation omitted). In analyzing
the constitutional sufficiency of notice, we must consider:

     [f]irst, the private interest that will be affected by the
     official action; second, the risk of an erroneous
     deprivation of such interest through the procedures
     used, and the probable value, if any, of additional or
     substitute procedural safeguards; and finally, the
     Government's interest, including the function
     involved and the fiscal and administrative burdens
     that the additional or substitute procedural requirement
     would entail.

Id. at 335.

   Although the district court expedited the notice and hearing
process in this case, TURN filed an extensive brief raising all
of the salient issues. In turn, the district court required
TURN's opponents to file their response brief on an expedited
schedule, which they did. TURN does not quantify either the
probable increased value of alternative procedures, or the risk
of an erroneous deprivation of the interest through the procedures
used. Indeed, TURN does not contend that it was prevented
from presenting its case; its essential complaint is that
the district court did not consider adequately the arguments
that TURN made. However, that argument goes to the merits,
not to procedural due process.

   For the same reasons, TURN has not established prejudice.
TURN has failed to demonstrate that the district court's
scheduling order substantially prejudiced TURN's ability to
present its arguments. See Fitch, 472 F.2d at 549 n.5 U.S. v.
Fitch, 472 F.2d 548, 549 n.5 (9th Cir. 1973)(rejecting chal-





                       SO. CAL. EDISON v. LYNCH           14675
- -------------------------------------------------------------------------------

lenge to contempt judgment based on insufficient notice
where "[a]ppellants have shown no prejudice."); Hoffman for
and on Behalf of NLRB v. Beer Drivers & Salesmen's Local
Union No. 888, 536 F.2d 1268, 1273 (9th Cir. 1976) (rejecting
due process claim based on "insufficient notice of hearing"
because "[t]here is no indication that the parties were not
fully aware of the issues or were in any way deprived of a full
opportunity to explore the issues of fact or be heard on the
issues of law").

   Given the totality of the circumstances of this case, we cannot
say that the expedited briefing schedule deprived TURN
of procedural due process.

                                      VIII

   Contrary to TURN's assertion, the district court did not
violate the Tenth Amendment in approving the Stipulated
Judgment. The application of federal preemption, as sought
by SoCal Edison in its complaint, would not intrude on the
rights reserved under the Tenth Amendment. Further, "[t]o
say that nothing in the Commerce Clause justifies federal regulation
of even the intrastate operations of public utilities misapprehends
the proper role of the courts in assessing the
validity of federal legislation promulgated under one of Congress'
plenary powers." FERC v. Mississippi, 456 U.S. 742,
753 (1982). "If Congress has the constitutional authority to
enact legislation, then the pre-emption question is whether
Congress intended to displace state law in that area, not
whether the existence of state law forbade Congress from regulating."
United States v. Geiger, 263 F.3d 1034, 1040 (9th
Cir. 2001) (citing Lorillard Tobacco Co. v. Reilly, 533 U.S.
525, 540-41 (2001)).

   The district court's approval of the Stipulated Judgment
does not mandate state participation in the enforcement of a
federal statutory scheme such as in Printz v. United States,
521 U.S. 898 (1997), nor require a state legislature to adopt





14676               SO. CAL. EDISON v. LYNCH
- -------------------------------------------------------------------------------

federal regulations such as in New York v. United States, 505
U.S. 144 (1992). Rather, the judgment simply confirms a settlement
of a valid federal preemption claim. The Tenth
Amendment cannot be used to bar enforcement of consensual
judgments. United States v. District of Columbia, 654 F.2d
802, 808 (D.C. Cir. 1981). In short, the district court had the
power under Article III to approve a settlement over a suit
alleging federal preemption, and did not unconstitutionally
commandeer California's regulatory apparatus in doing so.

                                       IX

   [1] In sum, none of the substantive arguments based on federal
statutory or constitutional law compel reversal of the district
court's approval of the Stipulated Judgment. There is,
however, a serious question of whether the agreement
between the Commission and SoCal Edison violated state
law, both in substance and in the procedure by which the
Commission agreed to it. If so, then the Commission lacked
capacity to consent to the Stipulated Judgment, and we would
be required to vacate it as void. State officials cannot enter
into a federally-sanctioned consent decree beyond their
authority under state law. See Keith v. Volpe, 118 F.3d 1386,
1393 (9th Cir. 1997) (consent decree could not be interpreted
to supplant California Outdoor Advertising Act because state
agency would not have had authority to agree to such a
decree); Wash. v. Penwell, 700 F.2d 570, 573 (9th Cir. 1983)
(vacating a consent decree that required the state of Oregon
to fund a prisoners' legal services program because the state
Attorney General acted beyond his authority and therefore
"the consent decree was void to the extent that it exceeded
defendants' authority").

                                       A

   [2] On a substantive level, there is a serious question as to
whether the Stipulated Judgment's ratemaking terms violate
ss.368 of AB 1890. California Public Utilities Codess.368






                      SO. CAL. EDISON v. LYNCH           14677
- -------------------------------------------------------------------------------

directed the Commission to set rates "at levels equal to the . . .
rate schedules as of June 10, 1996," to reduce those levels for
residential and small-commercial customers by ten percent,
and to maintain those rates until the utility has fully recovered
its stranded costs or until March 31, 2002, whichever comes
first. Cal. Pub. Util. Codess.368(a) (emphasis added). Section
368 explicitly states that the utility "shall be at risk for those
costs not recovered during that time period." Id.

   [3] The Stipulated Judgment appears to violatess.368 in two
respects. First, the settlement expressly maintains the ratefreeze
beyond March 31, 2002, in violation ofss.368, and the
settlement expressly does so for the purpose of allowing
SoCal Edison to recover its past procurement costs. The contested
language of the Stipulated Judgment reads as follows:

     The Parties hereby agree that during the Recovery
     Period [SoCal Edison] shall recover in retail electric
     rates its Procurement Related Obligations recorded
     in the PROACT [Account for Recovery of Procurement
     Related Obligations established pursuant to
     ss. 2.1(a) of the Agreement]. The Parties acknowledge
     that they each currently project that the maintenance
     of Settlement Rates will likely result in sufficient
     Surplus for [SoCal Edison] to recover substantially
     all of its unrecovered Procurement Related Obligations
     prior to the end of 2003.

Stipulated Judgment,ss.2.2, emphasis added. The agreement
defines "Recovery Period" as:

     the period commencing September 1, 2001 and ending
     on the earlier of the date that [SoCal Edison]
     recovers all Procurement Related Obligations
     recorded in the PROACT or December 31, 2005.
     The Recovery Period includes the Rate Repayment
     Period.





14678                   SO. CAL. EDISON v. LYNCH
- -------------------------------------------------------------------------------

Stipulated Judgment,ss.1.1(q), emphasis added. These provisions
appear to violatess.368, which clearly limits the utilities
to March 31, 2002 and disallows SoCal Edison from applying
collections past this date to prior procurement costs.

   [4] Second, the settlement also appears to violatess.368's
rate-freeze guarantee that protects consumers from price
increases during the transition to a competitive market. The
Stipulated Judgment allows the SoCal Edison to "pocket" for
itself the above-rate-freeze-level rates that the Commission
adopted in 2001 solely in order to pay the state for wholesale
power the California Department of Water Resources was
procuring for the utilities. As a result, under the Stipulated
Judgment, the SoCal Edison will collect a "surcharge" rate
that is above the rates in effect on June 10, 1996, in violation
of ss.368.

   The testimony of the Commission President Loretta Lynch,
in response to the California Legislature's query as to why the
Commission did not agree to the SoCal Edison - Commission
settlement months earlier, supports this conclusion. She
explained as follows:

     MS. LYNCH: Well, actually the Commission is prevented
     under state law under 1890 from allowing
     that recovery, and what we did with the [SoCal Edison]
     settlement was essentially agree to a settlement
     that federal law trumped state law, but the Commission
     on its own could not trump state law. The Commission
     must follow state law.

   We are not dissuaded by SoCal Edison's and the Commission's
argument that, whatever restrictionsss.368 may once
have imposed on the Commission, subsequent legislative
changes and Commission decisions have restored the Commission's
traditional authority to permit utilities to recover
their costs--specifically, those costs associated with its utility
retained generation, which includes its nuclear power plants





                       SO. CAL. EDISON v. LYNCH           14679
- -------------------------------------------------------------------------------

and contracts involving Qualifying Facilities--even after the
AB 1890 rate freeze. Most notably, the Appellees cite Assembly
Bill 6X ("AB 6X"), which in 2001 amended or deleted
three provisions of AB 1890, which had previously provided
for the transition from regulated status to unregulated status
for utility generation.

   However, AB 6X as well as Assembly Bill 1X ("AB 1X")
were not intended to relieve the utilities of their regulatory
bargain but rather to protect the state from further damage due
to the utilities' imminent inability to meet their utility obligation
of providing power to their customers. The Appellees'
interpretation of AB 1X and AB 6X is contradicted by the fact
that the legislature retained Cal. Pub. Util. Codess.ss.367,
368(a), and repeals by implication are "heavily disfavored."
See, e.g., NLRB v. Kolkka, 170 F.3d 937, 941 (9th Cir. 1999).
A finding of implied repeal must be based on a finding that
the legislative body actually formulated the intent to repeal
the earlier enactment but somehow failed to carry out that
intent. Kenai Peninsula Borough v. State of Alaska, 612 F.2d
1210, 1214 (9th Cir. 1980) ("There can be no implied repeal
unless the intention of the legislative body to repeal is
clear."). The legislative history here demonstrates no such
intent. Moreover, there is nothing in the 2001 legislation that
is inconsistent with the rate-freeze or with holding the utilities
to the risk of not fully recovering stranded costs. Finally, both
the Commission and SoCal Edison recognized, when AB 1X
and AB 6X were enacted, that these acts left the utilities
responsible for unrecovered stranded costs. Thus, on a substantive
level, the Stipulated Judgment appears to violate state
law.

                                       B

   [5] On a procedural level, there is a serious question as to
whether the Stipulated Judgment violates state laws, specifically
those requiring open government and reasoned decisions
reached upon an evidentiary record. It appears that the Com-





14680                  SO. CAL. EDISON v. LYNCH
- -------------------------------------------------------------------------------

mission adopted the agreement with SoCal Edison in violation
of both the Bagley-Keene Open Meeting Act ("Bagley-Keene
Act"), Cal. Gov't Codess.ss.11120-11132.5, andss.454 of the
Public Utilities Code.

   [6] First, the Stipulated Judgment seems to violate the
Bagley-Keene Act because the parties approved it in a secret
meeting. Section 11126(d)(1), in particular, requires that
"[n]otwithstanding any other provision of law, any meeting of
the Public Utilities Commission at which the rates of entities
under the commission's jurisdiction are changed shall be
open and public." Cal. Gov't Codess.11126(d)(1) (emphasis
added). The Stipulated Judgment, which extinguished ratepayers'
refund rights, precluded a reduction in rates that were
otherwise subject to reduction, and granted SoCal Edison significant
concessions for years to come, changes rates such that
the open meeting requirement ofss.11126(d)(1) is triggered.

   SoCal Edison and the Commission argue that the Stipulated
Judgment does not change existing rates. Rather, in their
view, the agreement obligates the Commission to allow SoCal
Edison to charge existing rates. But the provision of the agreement
to which SoCal Edison cites merely defines the phrase
"settlement rates" without saying anything about what the
Commission is obligated to do. See Settlement Agreement,
ss.1.1(w).

   The Commission has claimed that it could settle the litigation
in a "closed session" pursuant to section 11126(e)(1) of
the Government Code, which provides that:

     [n]othing in this article shall be construed to prevent
     a state body, based on the advice of its legal counsel,
     from holding a closed session to confer with, or
     receive advice from, its legal counsel regarding
     pending litigation when discussion in open session
     concerning those matters would prejudice the position
     of the state body in the litigation.






                  SO. CAL. EDISON v. LYNCH           14681
- -------------------------------------------------------------------------------

Cal. Gov't Codess.11126(e)(1) (emphasis added). However,
ss.11126(e) merely allows the agency to meet in closed session
"to confer with, or receive advice from, its legal counsel
regarding pending litigation"--not to take action, and certainly
not to issue regulatory orders. Id.

   [7] Second, the Commission appears to have violated Public
Utilities Codess.454 with its decision to extinguish ratepayer
refund rights and to lock in higher rates, without a
public hearing and without findings. Section 454 provides
that:

     [e]xcept as provided in Section 455 [which deals
     with rate schedules not resulting in a rate increase],
     no public utility shall change any rate or so alter any
     classification, contract, practice, or rule as to result
     in any new rate, except upon a showing before the
     commission and a finding by the commission that the
     new rate is justified.

Cal. Pub. Util. Codess.454(a) (emphasis added). California
case law also holds that the Commission must hold a hearing
and issue findings before adopting an order that affects rates.
See Cal. Mfrs. Ass'n v. Pub. Utils. Comm'n, 595 P.2d 98, 102
(Cal. 1979) (annulling the Commission rate-increase decisions
for absence of supporting findings and evidence).

   SoCal Edison and the Commission argued below thatss.454
did not apply because the Commission was not changing rates
but rather agreeing not to change rates. The Appellees make
a similar argument on appeal; they maintain thatss.454 applies
only when a utility seeks to "increase" rates, not when a utility
keeps existing rates in place, as they claim the Stipulated
Judgment provides for.

   However, this argument conforms neither to the text nor to
the order or its result. First, as a textual matter, the SoCal Edison -
Commission agreement does far more than just agree





14682                 SO. CAL. EDISON v. LYNCH
- -------------------------------------------------------------------------------

not to reduce rates. Under the Stipulated Judgment the Commission
agrees not to penalize SoCal Edison for failing to
meet the Commission's capital-structure requirements, not to
"unreasonably withh[o]ld" consent to SoCal Edison's payment
of dividends to shareholders, to allow SoCal Edison up
to $900 million per year in rates for capital additions, to
approve SoCal Edison compromising certain claims against
wholesale-power sellers, and to announce that SoCal Edison
may recover past costs that would not be recoverable under
the TURN Accounting Proposal adopted by the Commission.
Each of these constitutes a "change" in SoCal Edison's rate.

   Second, as an economic matter the agreement will result in
huge changes in the rates SoCal Edison customers will pay.
Before the entry of the Stipulated Judgment, any overcollection
in rates was subject to refund under the Commission
Decision 01-03-082. After the entry of the Judgment, it is not.
TURN estimates that the SoCal Edison - Commission deal
adds $3.3 billion to ratepayers' electric costs.

                                       C

   [8] As we have noted, as a matter of federal law, state officials
cannot enter into a federally-sanctioned consent decree
beyond their authority under state law. In addition, California
agencies such as the Commission are explicitly prohibited by
the state constitution from agreeing to be enjoined from
enforcing state laws that have not been declared unconstitutional
by an appellate court. Article III, section 3.5, of the
California Constitution provides that:

     [a]n administrative agency, including an administrative
     agency created by the Constitution . . . has no
     power . . . (c) [t]o declare a statute unenforceable, or
     to refuse to enforce a statute on the basis that federal
     law or federal regulations prohibit the enforcement
     of such statute unless an appellate court has made a





                         SO. CAL. EDISON v. LYNCH           14683
- -------------------------------------------------------------------------------

     determination that the enforcement of such statute is
     prohibited by federal law or federal regulations.

CAL. CONST. art. III,ss.3.5. In assenting to the judgment here,
the Commission ("an administrative agency created by the
Constitution," see CAL. CONST. art. XII) was refusing to
enforce both the substantive limits on the utilities' transition
cost recovery and the procedures required of the Commission
when making rate orders. By stipulating to the judgment, the
Commission agreed not only to exempt SoCal Edison from
AB 1890 but also to be enjoined from enforcing AB 1890.
Thus, assuming our interpretation of California state law is
correct, the Stipulated Judgment must be vacated as void.

                                       D

   [9] However, ours is not the final word on California state
law. Federal courts are bound by the pronouncements of the
state's highest court on applicable state law. Davis v. Metro
Productions, Inc., 885 F.2d 515, 524 (9th Cir. 1989). However,
the decisions of California appellate courts provide no
controlling precedent on these issues of state law; thus, this
case satisfies the criteria for certification. See Cal. Rules of
Court 29.5(a)(3). Resolution of the state law issues involved
in this litigation will have a substantial effect on California
law and the citizens of California. Accordingly, principles of
comity suggest that those decisions should be made by California
courts. Thus, by separate order accompanying this decision,
we certify these issues of state law to the Supreme Court
of California and respectfully request the Court to accept certification.

                                       X

   We affirm the judgment of the district court in all respects,
except for the state law claims identified in section IX. We
respectfully certify those issues to the Supreme Court of California.
We stay further proceedings in this case pending a





14684                     SO. CAL. EDISON v. LYNCH
- -------------------------------------------------------------------------------

response from the Supreme Court of California on the request
for certification.

                      AFFIRMED IN PART; CERTIFIED IN PART.

EX-99.2 4 exh992sep.htm ORDER FILED SEPT. 23, 2002 Exhibit 99.2 - Order

FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT

SOUTHERN CALIFORNIA EDISON )
COMPANY, )
Plaintiff-Appellee, )
v. )
)
LORETTA M. LYNCH; HENRY M. Duque; ) No. 01-56879
Richard A. Bilas; Carl W. Wood; ) D.C. No.
Geoffrey F. Brown,Commissioners ) CV-00-12056-RSWL
of California Public Utilities Commission, )
Defendants-Appelees. )
)
UTILITY REFORM NETWORK, )
Defendant-intervenor- )
Appellant. )
- ---------------------------------------

SOUTHERN CALIFORNIA EDISON )
COMPANY, )
Plaintiff-Appellee, )
RELIANT ENERGY SERVICES, INC.; )
Mirant Americas Energy ) No. 01-56993
Marketing, LP, ) D.C. No.
Intervenors-Appelants ) CV-00-12056-RSWL
v. )
LORETTA M. LYNCH; HENRY M. )
DUQUE; RICHARD A. BILAS; CARL )
W. WOOD; GEOFFREY F. BROWN, )
Defendants )
- ---------------------------------------

14646 SO. CAL. EDISON v. LYNCH
- ------------------------------------------------------------------------

SOUTHERN CALIFORNIA EDISON )
COMPANY, )
Plaintiff-Appellee, )
)
CALIFORNIA MANUFACTURERS AND )
TECHNOLOGY ASSN., ) No. 01-57020
Intervenor-Appellant, ) D.C. No.
v. ) CV-00-12056-RSWL
LORETTA M. LYNCH; HENRY M. )
ORDER DUQUE; RICHARD A. BILAS; )
CARLW. WOOD; GEOFFREY F. BROWN, ) ORDER
in their official capacities as )
Commissioner of the California )
Public Utilities Commission, )
Defendants-Appellees.)
- ---------------------------------------

Appeal from the United States District Court
for the Central District of California
Ronald S.W. Lew, District Judge, Presiding

Argued and Submitted
March 4, 2002--Pasadena, California

Filed September 23, 2002

Before: James R. Browning, Sidney R. Thomas and
Johnnie B. Rawlinson, Circuit Judges.
- ------------------------------------------------------------------------------------------------------
ORDER

We respectfully certify the following questions to the Supreme Court of California all as set forth in
the attached request:

14647 SO. CAL. EDISON v. LYNCH
- ------------------------------------------------------------------------

1. Does the stipulated judgment approved by the district court violatess.368 of Assembly Bill 1890
(Act of September 23, 1996, 1996 Cal. Legis. Serv. 854, codified in Cal. Pub. Util. Codess.ss.
330-398.5)?

2. Do the procedures employed in entering the stipulated judgment violate the Bagley-Keene Open
Meeting Act, Cal. Gov't Codess.ss.11120- 11132.5?

3. Does the stipulated judgment violatess.454 of the Public Utilities Code by altering utility
rates without a public hearing and the issuance of findings?

We stay all further proceedings in this case in this Court and the district court pending
receipt of the answers to the certified questions. If the Supreme Court of California declines
certification, we will resolve the issues according to our perception of California law.

The Clerk of the Court is hereby directed to transmit, under the official seal of the Ninth
Circuit, a copy of this order, the attached Request for Certification, and a copy of the opinion
filed concomitantly with this Order. The parties and amici are directed to file with the Supreme
Court of California copies of all briefs and excerpts of record submitted to this Court. This case
is withdrawn from submission until further order of the Court.

REQUEST FOR CERTIFICATION DIRECTED TO THE
SUPREME COURT OF CALIFORNIA

Pursuant to Rule 29.5 of the California Rules of Court, a panel of the United States Court of Appeals
for the Ninth Circuit, before which this appeal is pending, hereby certifies to the Supreme Court of
California the previously identified

14648 SO. CAL. EDISON v. LYNCH
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questions of law. The California courts provide no controlling precedent on these questions. The answers
to the certified questions will be determinative of a part of this appeal. We respectfully request that
the Supreme Court of California answer the certified questions presented below. Our phrasing of the
issues should not restrict the Court's consideration of the issues.

I. Caption of the Case

The caption of the case is:

SOUTHERN CALIFORNIA EDISON )
COMPANY, )
Plaintiff-Appellee, )
v. ) No. 01-56879
LORETTA M. LYNCH; HENRY M. DUQUE; ) D.C. No.
Richard A. Bilas; Carl W. Wood; ) CV-00-12056-RSWL
Geoffrey F. Brown, )
Commissioners of California )
Public Utilities Commission, )
Defendants-Appellees. )
)
UTILITY REFORM NETWORK, )
Defendant-intervenor- )
Appellant. )

14649 SO. CAL. EDISON v. LYNCH
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SOUTHERN CALIFORNIA EDISON )
COMPANY, )
Plaintiff-Appellee, )
v. ) No. 01-56993
Reliant Energy Services, Inc.; ) D.C. No.
Mirant Americas Energy ) CV-00-12056-RSWL
Marketing, LP. )
Intervenors-Appelants. )
)
LORETTA M. LYNCH; HENRY M. DUQUE; )
Richard A. Bilas; Carl W. Wood; )
Geoffrey F. Brown, )
Defendants )
- -----------------------------------------

SOUTHERN CALIFORNIA EDISON )
COMPANY, )
Plaintiff-Appellee, )
v. ) No. 01-57020
) D.C. No.
California Manufacturers and ) CV-00-12056-RSWL
Technology Assn., )
Intervenor-Appelant )
)
LORETTA M. LYNCH; HENRY M. DUQUE; )
Richard A. Bilas; Carl W. Wood; )
Geoffrey F. Brown, in their official capacities )
as Commissioners of California )
Public Utilities Commission, )
Defendants-Appellees. )
- -----------------------------------------

Counsel for the parties are as follows:

Robert E. Finkelstein and Randolph L. Wu, The Utility Reform Network, San Francisco, California; Michael
J.

14650 SO. CAL. EDISON v. LYNCH
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Strumwasser, Frederic D. Woocher, Johanna R. Shargel, Daniel J. Sharfstein, Strumwasser & Woocher LLP,
Santa Monica, California; for the defendant-intervenor-appellant.

Gary M. Cohen, Arocles Aguilar, Harvey Y. Morris, and Carrie G. Pratt, Public Utilities Commission of
the State of California, San Francisco, California, for the defendants-appellees.

Stephen Pickett, Barbara Reeves, and Kris G. Vyas, Southern California Edison Company, Rosemead,
California; Ronald L. Olson, John W. Spiegel, and Henry Weissmann, Munger, Tolles & Olson LLP, Los
Angeles, California; for the plaintiff-appellee.

Terry J. Houlihan and Geoffrey T. Holtz, McCutchen, Doyle, Brown & Enersen, LLP, San Francisco,
California; John C. Morrissey and Brian I. Cheng, McCutchen, Doyle, Brown & Enersen, LLP, Los Angeles;
California; for the intervenor-appellant Reliant Energy Services, Inc.

Bryan A. Merryman and Lisa A. Cottle, White & Case LLP, Los Angeles, California, for the
intervenor-appellant Mirant Americas Energy Marketing, LP.

Keith R. McCrea and Jim Bushee, Sutherland Asbill & Brennan LLP, Washington, D.C., for the
intervenor-appellant California Manufacturers and Technology Association.

II. Questions of Law to be Answered

2. Do the procedures employed in entering the stipulated judgment violate the Bagley-Keene Open

14651 SO. CAL. EDISON v. LYNCH
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Meeting Act, Cal. Gov't Codess.ss.11120- 11132.5?

3. Does the stipulated judgment violatess.454 of the Public Utilities Code by altering utility
rates without a public hearing and the issuance of findings?

III. Statement of Facts

A brief description of the factual background of this case is contained in the panel opinion that
accompanies this Order.

IV. The Need for Certification

All parties agree that the instant litigation is of the utmost importance to the California utility
regulation and the California economy. We have resolved all of the pending federal questions. The only
issues left for resolution are ones of state
law. Federal courts are bound by the pronouncements of the state's highest court on applicable state
law. Davis v. Metro Productions, Inc., 885 F.2d 515, 524 (9th Cir. 1989). However, the decisions of
California appellate courts provide no controlling precedent on these issues of state law; thus, this
case satisfies the criteria for certification. See Cal. Rules of Court 29.5(a)(3). Resolution of the
state law issues involved in this litigation will have a substantial effect on California law and the
citizens of California, not only on the questions presented by this case, but in future state
administrative proceedings. Therefore, principles of comity suggest that decisions about California
state law be made by California courts.

V. Accompanying Materials

The Clerk of the Court of the Ninth Circuit Court of Appeals has been directed to transmit, under the
official seal of the Ninth Circuit a copy of the opinion filed concomitantly with this Order. The
parties and amici have been directed to

14652 SO. CAL. EDISON v. LYNCH
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file with the Supreme Court of California copies of all briefs and excerpts of record submitted to the
Ninth Circuit Court of Appeals.

Sidney R. Thomas
United States Circuit Judge
14652 SO. CAL. EDISON v. LYNCH

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