SOUTHERN PACIFIC TRANSPORTATION COMPANY, Petitioner, v. PUBLIC UTILITIES COMMISSION, Respondent, 18 Cal. 3d 308

Opinion CLARK, J. Southern Pacific Transportation Company seeks review of Decisions 83509 and 82933 of the Public Utilities Commission, holding that Public Utilities Code

section 1202.3 is unconstitutional. Following an auto-train collision at a crossing on Southern Pacific Coast Route Main Line, the Public Utilities Commission (commission) investigated the safety, maintenance, operation and use of the crossing. The commission found that public welfare; convenience and necessity require the crossing be protected by flashing light signals and automatic gate arms. It also found the crossing is “publicly used” within the meaning of

section 1202. However, concluding that

section 1202.3 is unconstitutional, the commission ordered the costs of installing and maintaining the protective devices be paid by the railroad, the City of San Jose, County of Santa Clara, and the Department of Transportation.

Section 7537 gives the owner of adjoining lands the right to private or farm crossings necessary or convenient for egress or ingress. The railroad must maintain the crossing, and the commission is given the authority to fix and assess the cost thereof.

Section 1202 gives the commission exclusive power to regulate public or publicly used road or highway crossings, including locating, maintaining, protecting, and closing them. The

section further provides for allocation of costs by the commission among the railroad and public entities, including the abolition expense of the crossings.

Section 1202.3, added in 1971 and the subject of this appeal, provides that, in any proceeding under

section 1202 involving a publicly used road or highway not on a publicly maintained road system, the commission may apportion costs of improvement to the public entity if the commission finds (

a) express dedication and acceptance of the road or (

b) a judicial determination of implied dedication. If neither condition is found, the commission shall order the crossing abolished by physical closing. The

section further provides that the railroad shall in no event be required to, bear improvement costs “in excess of what it would be required to bear in connection with the improvement of a public street or highway crossing.” Concluding that

section 1202.3 unconstitutionally delegates the state’s police power to private litigants, the commission reasoned that the statute unlawfully allows private litigants absolute discretion to require closing of crossings merely by commencing a proceeding under

section 1202. The Legislature may not confer upon private persons unrestricted authority to make administrative determinations. (Blumenthal v. Board of Medical Examiners (1962) 57 Cal.2d 228, 235-237 [18 Cal.Rptr. 501, 368 P.2d 101]; State Board v.

Thrift-D-Lux Cleaners, Inc. (1953) 40 Cal.2d 436, 448 [254 P.2d 29]; see 1 Davis, Administrative Law Treatise (1958) § 2.15, pp. 148-151.) However, the limitation on delegation has never been interpreted to invalidate reasonable grants of power to an administrative agency, when suitable safeguards are established by the Legislature to guide the power’s use and to protect against its misuse. (Clean Air Constituency v. California State Air Resources Bd. (1974) 11 Cal.3d 801, 817 [114 Cal.Rptr. 577, 523 P.2d 617]; Kugler v.

Yokum (1968) 69 Cal.2d 371, 375 et seq. [71 Cal.Rptr. 687, 445 P.2d 303]; Wilke & Holzheiser, Inc. v. Dept. of Alcoholic Bev. Control (1966) 65 Cal.2d 349, 365 et seq. [55 Cal.Rptr. 23, 420 P.2d 735].) The standard of public convenience and necessity has been upheld in appropriate circumstances (Federal Comm’n v. Broadcasting Co. (1940) 309 U.S. 134, 138 [84 L.Ed. 656, 659, 60 S.Ct. 437]), and this court has repeatedly applied the standard in utility cases (e.g., Southern Pac. Co. v. Public Utilities Com. (1953) 41 Cal.2d 354, 365-367 [260 P.2d 70]). We are satisfied that implicit in

section 1202.3 are suitable safeguards to guide the administrator’s exercise of his power to close crossings and to guard against misuse of the power. By the introductory phrase “in any proceeding under

Section 1202,” the Legislature has declared that

section 1202.3 is an exception to the former

section and that the provisions for cost allocation and closing crossings in the latter

section are only applicable when the commission would otherwise have ordered improvement of a crossing pursuant to the former section. The standard for compelling crossing improvement implicit in

section 1202 is obviously public convenience and necessity, including safety concerns (see In re Petersen (1958) 51 Cal.2d 177, 185-186 [331 P.2d 24]; Rescue Army v. Municipal Court (1946) 28 Cal.2d 460, 471 [171 P.2d 8]), and this standard must be read into

section 1202.3. Thus, before the commission may close a crossing under

section 1202.3, it must not only find public use and lack of requisite dedication, but also find that necessity and convenience preclude continued use of the crossing in its existing condition. Such findings—rather than mere commencement of a proceeding under

section 1202—is the basis for closing a crossing under

section 1202.3. The function of the private litigant within the statutory framework is merely to call the commission’s attention to the need for improving or closing a crossing and perhaps to urge action on the commission. When the private litigant points to facts requiring closure of the crossing, he is merely calling upon the commission to carry out the Legislature’s direction. Acts of private parties prerequisite to operation of a statute containing valid standards for action do not constitute unlawful delegation. (Wilke & Holzheiser, Inc. v. Dept. of Alcoholic Bev.

Control, supra, 65 Cal.2d 349, 365.) This is not a case where the Legislature has provided that private persons in their absolute discretion may veto or make inapplicable legislative standards and administrative determinations. (See 1 Davis, Administrative Law Treatise, supra, § 2.14, pp. 141-143.) The commission also held invalid the provision of

section 1202.3 limiting the railroad’s costs for improvements for a publicly used crossing to those the railroad would be required to bear in connection with improvement of a public crossing. The commission reasoned that the provision is unconstitutionally vague because, although the commission presently has a policy for apportioning costs as to public crossings, it might abrogate that policy and apportion improvement costs on a case-by-case basis.

The plain meaning of the statute is that the railroad should pay no more for a publicly used crossing improvement than it would be required to pay for a public crossing improvement. Whether determined on broad principles or on a case-by-case basis, allocation of costs for publicly used crossings shall be the same as for public crossings. There is nothing vague or unintelligible in the provision. The decisions are annulled. Wright, C. J., McComb, J., Tobriner, J., and Richardson, J., concurred. Unless otherwise specified, all statutory references are to the Public Utilities Code.

In adopting its rules and regulations, an administrative agency must act within the Constitution. (Sokol v.

Public Utilities Commission (1966) 65 Cal.2d 247, 256 [53 Cal.Rptr. 673, 418 P.2d 265].) Due process provides “the best insurance for the government itself against those blunders which leave lasting stains on a system of justice." (Id., at p. 255.) An administrative agency’s obligation to adhere to the Constitution is not limited to mere promulgation of rules, but extends to the agency’s application of legislation to the facts presented. (E.g., 3 Davis, Administrative Law Treatise (1958) § 20.04, p. 74; Jaffe, Judicial Control of Administrative Action (1965) pp. 438-439.) Obviously, administrative agencies, like police officers (People v.

Cahan (1955) 44 Cal.2d 434, 437 [282 P.2d 905, 50 A.L.R.2d 513] [former Pen. Code, § 653h “could” not authorize violations of the Constitution]), must obey the Constitution and may not deprive persons of constitutional rights.

In a few cases involving the question whether a litigant may raise constitutional issues in court when he has not exhausted administrative remedies, it has been indicated that administrative agencies may not determine the validity of statutes, invalidating the legislative will. (3 Davis, Administrative Law Treatise, supra, § 20.04, p. 74.) The exhaustion question, of course, involves a number of considerations other than whether a statute excuses an administrator from his constitutional duties. Taken literally, the two lines of authority are difficult to reconcile.

When the United States Supreme Court, for example, repudiates the separate but equal doctrine established by the statutes of one state, should the school boards of other states continue to apply identical statutes until a court declares them invalid; should the boards, recognizing the potential denial of constitutional rights, enforce the Constitution on a case-to-case basis without considering whether the statutes may be enforced in some other case; or should the boards recognize the invalidity of the statutes?

The first position will result in denial of constitutional rights; the second, although protecting constitutional rights, is wasteful, ignores reality and compels intellectual dishonesty insofar as the administrator must close his eyes to the fact that deprivation of constitutional rights will occur in all cases to which the statute may be applied. Only the third complies with the board’s duty to determine and follow the law. In any event, the Constitution and statutes of this state grant the commission wide administrative, legislative and judicial powers. (Cal. Const., art. XII, §§ 1-9; Pub. Util.

Code, § 701; People v. Western Air Lines, Inc. (1954) 42 Cal.2d 621, 630-633 [268 P.2d 723]; Southern Calif. Edison Co. v. Railroad Com. (1936) 6 Cal.2d 737, 748-749 [59 P.2d 808].) The Legislature has limited the judiciary from interfering with the commission by restricting review to the Supreme Court and by additionally restricting review to determining “whether the commission has regularly pursued its authority, including a determination of whether the order or decision under review violates any right of the petitioner under the Constitution of the United States or of this State.” (Italics added; Pub. Util.

Code, §§ 1756-1760; Waters v. Pacific Telephone Co. (1974) 12 Cal.3d 1, 4. 6 et seq. [114 Cal.Rptr. 753, 523 P.2d 1161]; Pacific Tel. & Tel. Co. v. Superior Court (1963) 60 Cal.2d 426, 429-430 [34 Cal.Rptr. 673, 386 P.2d 233]; Hickey v. Roby (1969) 273 Cal.App.2d 752, 763-768 [77 Cal.Rptr. 486].) Public Utilities Code

section 1732 provides corporations and individuals may not raise matters in any court not presented to the commission on petition for rehearing, reflecting, when read with the judicial review sections, legislative determination that all issues must be presented to the commission. Under the broad powers granted it, the commission may determine the validity of statutes.

Section 7537 provides: “The owner of any lands along or through which any railroad is constructed or maintained, may have such farm or private crossings over the railroad and railroad right of way as are reasonably necessary or convenient for ingress to or egress from such-lands, or in order to connect such lands with other adjacent lands of the owner. The owner or operator of the railroad shall construct and at all times maintain' such farm or private crossing in a good, safe, and passable condition.

The commission shall have the authority to determine the necessity for any crossing and the place, manner, and conditions under which the crossing shall be constructed and maintained, and shall fix and assess the cost and expense thereof.”

Section 1202 provides: “The commission has the exclusive power: [H] (

a) To determine and prescribe the manner, including the particular point of crossing, and the terms of installation, operation, maintenance, use, and protection of each crossing of one railroad by another railroad or street railroad, and of a street railroad by a railroad, and of each' crossing of a public or publicly used road or highway by a railroad or street railroad, and of a street by a railroad or vice versa. [H] (

b) To alter,- relocate, or abolish by physical closing any such crossing heretofore or hereafter established. [H] (

c) To require, where in its judgment it would be practicable, a separation of grades at any such crossing heretofore or hereafter established and to prescribe the terms upon which such separation shall be made and the proportions in which the expense of the construction, alteration, relocation, or abolition of such crossings or the separation of such grades shall be divided between the railroad or street railroad corporations affected or between such corporations and the State, county, city, or other political subdivision affected.”

Section 1202.3 provides; “Notwithstanding any other provision of this chapter, in any proceeding under

Section 1202, in the case of a crossing involving a publicly used road or highway not on a publicly maintained road system, the commission may apportion expense for improvements to the county in the case of unincorporated territory, city or other political subdivision if the commission finds (

a) that the owner or owners of private property served by such publicly used crossing agree to expressly dedicate and improve, and the affected public agency agrees to accept, a right-of-way or roadway over such property for a reasonable distance from such crossing as determined by the commission, or (

b) that a judicial determination of implied dedication of such road or highway over the railroad right-of-way to public use, based on public user in the manner and for the time required by law, has taken place. [H] If neither of these conditions is found to exist, the commission shall order the crossing abolished by physical closing. [H] In no event shall a railroad be required to bear costs for the improvement of a publicly used crossing in excess of what it would be required to bear in connection with the improvement of a public street or highway crossing.” The limitation, on the railroad’s liability for costs in

section 1202.3 applies only to costs of improvement; the

section does not limit potential eminent domain liability in the event the crossing is closed. (Cf. City of Los Angeles v. Ricards (1973) 10 Cal.3d 385, 388-389 [110 Cal.Rptr. 489, 515 P.2d 585]; Breidert v. Southern Pac. Co. (1964) 61 Cal.2d 659, 662 [39 Cal.Rptr. 903, 394 P.2d 719].) Southern Pacific contends the commission erred in finding the crossing in question “is a publicly used one within the purview of

Section 1202.” Since the commission’s construction of

section 1202 underlying this finding may well have reflected its erroneous conclusion that

section 1202.3 is unconstitutional, we believe that no purpose could be served by reviewing the challenged finding at this time. On remand the commission will be free to reconsider the challenged finding.