Kearns-Tribune Corp. v. Public Service Com'n of Utah

• Decision Date: 01 May 1984
• Docket Number: KEARNS-TRIBUNE,19209,Nos. 19208,s. 19208
• Parties: CORPORATION, a Utah corporation, Plaintiff, v. PUBLIC SERVICE COMMISSION OF UTAH; Brent H. Cameron, Chairman; David R. Irvine, Commissioner, and James M. Byrne, Commissioner, Defendants. MOUNTAIN FUEL SUPPLY COMPANY, Plaintiff, v. PUBLIC SERVICE COMMISSION OF UTAH; Brent H. Cameron, Chairman; David R. Irvine, Commissioner; James Byrne, Commissioner, Defendants.
• Court: Utah Supreme Court

Page 858

682 P.2d 858

KEARNS-TRIBUNE CORPORATION, a Utah corporation, Plaintiff, v. PUBLIC SERVICE COMMISSION OF UTAH; Brent H. Cameron,

Chairman; David R. Irvine, Commissioner, and

James M. Byrne, Commissioner, Defendants.

MOUNTAIN FUEL SUPPLY COMPANY, Plaintiff, v. PUBLIC SERVICE COMMISSION OF UTAH; Brent H. Cameron,

Chairman; David R. Irvine, Commissioner; James

Byrne, Commissioner, Defendants.

Nos. 19208, 19209.

Supreme Court of Utah.

May 1, 1984.

Gary G. Sackett, Patricia S. Drawe, Richard L. Hinckley, Arthur A. Allen, Jr., Salt Lake City, for Mountain Fuel Supply Co.

Donald B. Holbrook, Jones, Waldo, Holbrook & McDonough, Lee Curtis, Salt Lake City, for Newpaper Agency Corp.

Michael Ginsberg, Asst. Atty. Gen., Salt Lake City, for Div. of Public Utilities.

Ted D. Smith, Salt Lake City, for Mountain States Tel. & Tel. Co.

DURHAM, Justice:

Kearns-Tribune Corporation and Mountain Fuel Supply Company (Mountain Fuel) challenge a rule of the Utah Public Service Commission (PSC) imposing a "tagline" requirement on certain advertising by Mountain Fuel. We set aside the rule for lack of statutory authority.

Paragraph 3 of the PSC's rule A67-05-100 states that "[a]ll electric and natural gas utility advertising which is promotional, institutional, or political in nature must clearly identify its source of funding." In its practical effect, the rule has resulted in Mountain Fuel's including a tagline on its promotional, institutional and political advertising announcing that the advertisement was not paid for at customer expense. Mountain Fuel challenges this requirement on several grounds. We treat only the issue of statutory authority, which is dispositive.

The PSC has no inherent regulatory powers. Basin Flying Service v. Public Service Commission, Utah, 531 P.2d 1303, 1305 (1975). However, the PSC has the statutory authority to determine the rates Mountain Fuel may charge its customers. U.C.A., 1953, § 54-4-4 (1983 Supp.). Reasonably included in this authority is the power to determine what advertising expenses may be passed on by the utility to consumers. Id.; see also U.C.A., 1953, §§ 54-4-1, 54-4-18, 54-4-26. The authority to oversee allocation of expenses as a factor in rate regulation, however, does not necessarily provide the PSC with carte blanche to regulate all aspects of advertising. We must decide whether the legislative grant to the PSC reasonably includes the authority to impose a tagline requirement on some of Mountain Fuel's public advertisements. This is a general question of law, and we apply a correction-of-error standard with no necessity of deferring to the expertise of the PSC. Utah Department of Administrative Services v. Public Service Commission, Utah, 658 P.2d 601, 608 (1983).

In a ruling on a similar tagline requirement, the Oregon Court of Appeals held that the tagline requirement was not within the authority delegated to the Public Utility Commissioner of Oregon. Pacific Northwest Bell Telephone Company v. Davis, 43 Or.App. 999, 608 P.2d 547, 553 (1979). This holding was grounded on the absence of a "clearly defined statutory grant of authority" for the enactment of the tagline rule. 608 P.2d at 552. The relevant Oregon statutes included broad language similar to Utah's § 54-4-1, on which the PSC relies in this case. Section 54-4-1, U.C.A., 1953 (1983 Supp.), "General jurisdiction," states:

The commission is hereby vested with power and jurisdiction to supervise and regulate every public utility in this state, and to supervise all of the business of every such public utility in this state, and to do all things, whether herein specifically designated or in addition thereto, which are necessary or convenient in the exercise of such power and jurisdiction....

The Oregon statute at issue in Davis, supra, ORS 756.040(2), states:

The commissioner is vested with power and jurisdiction to supervise and regulate every public utility, railroad, air carrier and motor carrier in this state, and to do all things necessary and convenient in the exercise of such power and jurisdiction.

608 P.2d at 551. Despite the broad language of the Oregon statute, and further expansive language giving the commissioner the authority to "adopt and amend reasonable and proper rules and regulations relative to all statutes administered by him," id., the Oregon court was unable to find a clearly defined statutory grant of authority authorizing the imposition of a tagline because the statutory scheme nowhere mentioned the authority to regulate advertising as a discrete function. We are similarly unable to find any clearly defined statutory grant to the PSC of authority to regulate utility advertising.

The lack of explicit statutory authority to "regulate advertising," however, is not dispositive of the question before us because the PSC certainly has considerable latitude in performing its rate-regulation function. Any activities of a utility that actually affect its rate structure would necessarily be subject to some degree to the PSC's broad supervisory powers in relation to rates. The question, then, is whether the activity the Commission is attempting to regulate is closely connected to its supervision of the utility's rates and whether the manner of the regulation is reasonably related to the legitimate legislative purpose of rate control for the protection of the consumer. As the New York Court of Appeals observed:

In such cases, the sheer breadth of delegated authority precludes a precise demarcation of the line beyond which the agency may not tread. What is called for, rather, is a realistic appraisal of the particular situation to determine whether the administrative action reasonably promotes or transgresses the pronounced legislative judgment.

Consolidated Edison Company of New York v. Public Service Commission, 47 N.Y.2d 94, 417 N.Y.S.2d 30, 33, 390 N.E.2d 749, 752 (1979), rev'd on other grounds, 447 U.S. 530, 100 S.Ct. 2326, 65 L.Ed.2d 319 (1980).

Having undertaken such an appraisal of the situation presented in this record, we are unable to find that the tagline requirement reasonably promotes the purpose of the statutory authorization granted to the PSC. The PSC has failed to articulate any legislatively intended public policy that is furthered by the operation of the tagline rule. The PSC can only claim that taglines allow customers to "better understand" how the regulatory process operates and when advertising costs are or are not being passed on to them in their utility bills. The objective of greater consumer understanding is undoubtedly beneficial to the public in general, but it is only peripheral to those purposes for which the Legislature created the PSC, namely regulation of utility rates. The publication of the manner of allocation of advertising costs, as opposed to control of the allocation itself, can have no effect on a utility's rate structure or the PSC's oversight thereof.

The PSC argues that the tagline requirement does have as its purpose some tangential effect on the regulation of rates, namely the encouragement of greater public scrutiny of utility advertisements, with the assumption that a better-informed public will participate more meaningfully in public hearings before the Commission. However, given the extremely remote nature of the connection between the tagline requirement and the rate-regulation function, we believe that less restrictive alternatives are clearly adequate. We emphasize that we do not reach the question of whether the tagline requirement infringes on any free speech right secured by the constitutions of the United States or...