Kimberly-Clark Corp. v. Public Service Com'n of Wisconsin

• Citation: 110 Wis.2d 455,329 N.W.2d 143
• Decision Date: 03 February 1983
• Docket Number: No. 81-977,KIMBERLY-CLARK,81-977
• Parties: CORPORATION, Appellant-Petitioner, v. PUBLIC SERVICE COMMISSION OF WISCONSIN, Respondent, City of Neenah, Intervenor-Respondent.
• Court: United States State Supreme Court of Wisconsin

Page 143

329 N.W.2d 143

110 Wis.2d 455

KIMBERLY-CLARK CORPORATION, Appellant-Petitioner, v. PUBLIC SERVICE COMMISSION OF WISCONSIN, Respondent, City of Neenah, Intervenor-Respondent.

No. 81-977.

Supreme Court of Wisconsin.

Argued Jan. 4, 1983.

Decided Feb. 3, 1983.

L.C. Hammond, Jr., Milwaukee, argued, for appellant-petitioner; Mary Pat Koesterer and Quarles & Brady, Milwaukee, on brief.

Steven Levine, Asst. Chief Counsel, Madison, argued, for respondent; Steven M. Schur, Chief Counsel, Madison, on brief.

BEILFUSS, Chief Justice.

This is a review of a decision of the court of appeals, Kimberly-Clark Corp. v. Public Service Comm., 107 Wis.2d 177, 320 N.W.2d 5 (Ct.App.1982), which affirmed the judgment of the trial court in a ch. 227 review proceeding. The trial court affirmed the Public Service Commission's (PSC) declaratory ruling and order that it lacked the authority to retroactively set sewerage rates for a municipal sewerage system.

The City of Neenah (City) established a sewer system user rate structure by an ordinance revised on May 15, 1974 and effective June 1, 1974. The rate structure was amended in April and May of 1976. The structure created by the City was designed to charge each user of the system in proportion to its use.

The Kimberly-Clark Corporation owns two paper mills located in the City of Neenah which discharge waste water into the Neenah-Menasha Sewerage Commission treatment system. ¹ Pursuant to the ordinance the City charged Kimberly-Clark $825,813 for sewerage service during the period between June 1, 1974 and December 31, 1976. ²

Kimberly-Clark objected to the amount charged during this period claiming that the rate structure was unreasonable and discriminatory and deducted approximately $150,000 from the City's billings as its initial estimate of the overcharge. On March 2, 1977, Kimberly-Clark filed a complaint with the PSC against the City and the Neenah-Menasha Sewerage Commission pursuant to sec. 66.076(9), Stats.1975. ³ Kimberly-Clark alleged that through misallocation of various expenses and charges unrelated to use the City overcharged it in the amount of $236,136. Kimberly-Clark asked the PSC to review the rate structure, to find that the City discriminated against Kimberly-Clark and to order a refund.

The PSC originally scheduled a hearing on the complaint for October 10, 1977. The hearing was delayed and a prehearing conference was held on February 20, 1978. At that hearing the City and Kimberly-Clark agreed to submit to the PSC, pursuant to sec. 227.06, Stats., the question of whether the PSC has the authority under sec. 66.076(9) to set retroactive rates and order refunds.

On July 13, 1978, the PSC issued a declaratory ruling in which it concluded that it did not have the statutory authority to set rates retroactively. This ruling was based on the following conclusions of law:

"1. That the words 'make such other order respecting such complaint as may be just and reasonable' as used in section 66.076(9) are not intended to include an order that sets retroactive rates.

"2. That since the last sentence in section 66.076(9) provides that 'the proceedings herein shall be governed, as far as applicable, by ss. 196.26 to 196.40' and since such sections of Chapter 196, particularly s. 196.37, do not authorize retroactive rate making, it is clear that s. 66.076(9) does not authorize retroactive rate making.

"3. That the commission generally does not have statutory authority to engage in retroactive rate making. That without specific authority the commission is only authorized to set rates for the future. Friends of Earth v. Public Service Commission, supra.

"4. That in instances where the Legislature has adopted laws where the commission was intended to have the power to set rates for services provided in the past, the legislation specifically granted the commission power to retroactively set rates. See s. 195.37(1), Wis.Stats., 1975 and Chapter 382, Laws of 1977."

The PSC made no determination as to the merits of Kimberly-Clark's claim that sewerage rates were unreasonable and discriminatory and no hearing was held on this issue.

On August 14, 1978, Kimberly-Clark petitioned for review of the PSC's declaratory ruling in the circuit court for Winnebago County. The circuit court affirmed the PSC's ruling, holding that sec. 66.076(9), Stats., was unambiguous and did not authorize the PSC to set sewerage rates retroactively. The court entered judgment affirming the order of the PSC.

The court of appeals affirmed. Although it found sec. 66.076(9), Stats., to be ambiguous, ⁴ the court also held that the statute did not authorize retroactive rate making. The court's reasoning was threefold. First, the court concluded that because other statutes expressly authorize the PSC to set rates retroactively and order refunds, the absence of such explicit language demonstrates that such power is lacking under sec. 66.076(9). Second, the court held that the prohibition against retroactive rate making in sec. 196.37(1) was applicable to sec. 66.076(9) because such prohibition was incorporated into sec. 66.076(9) by the last sentence of the statute. Finally, the court relied on the interrelationship between sec. 66.076(9) and sec. 66.077, both of which deal with the sewerage service rates, and held that retroactive rate making was prohibited under both statutes. The court concluded that Kimberly-Clark was not denied a remedy for a wrong because it could have sought relief at an earlier stage.

The issue on review is whether the PSC has the authority pursuant to sec. 66.076(9), Stats., to set retroactive rates and order refunds. We hold that the PSC lacks retroactive rate making authority because sec. 66.076(9) does not expressly or impliedly grant such power.

Sec. 66.076, Stats., governs the establishment and operation of municipal sewerage systems. Pursuant to this statute, municipalities are authorized to establish a system of sewerage service charges to meet all or part of the capital and operating expenses of municipal sewer systems. A municipally owned sewerage system is not a "public utility" as defined in sec. 196.01(1) and is not regulated as such by the PSC. Thus, sewerage service rates adopted pursuant to sec. 66.076 are not subject to prior review or approval by the PSC as is true in the case of public utility rates. ⁵

However, following the enactment of such a rate structure by a municipality, a user may file a complaint with the PSC if the user believes the rates to be unreasonable or discriminatory. Sec. 66.076(9), Stats. Pursuant to sub. (9), the PSC has exclusive jurisdiction over complaints alleging unreasonable or discriminatory sewer rates. Wm. H. Heinemann Creameries v. Kewaskum, 275 Wis. 636, 640, 82 N.W.2d 902 (1957).

It is the scope of the PSC's authority to grant relief under sec. 66.076(9), Stats., which is at issue in the present case. When a complaint is filed pursuant to this statute, the PSC must investigate and if there is sufficient cause, set the case for a public hearing. Following the hearing, if the PSC determines that rates are unreasonable or unjustly discriminatory, sec. 66.076(9) authorizes the PSC to "determine and by order fix reasonable rates, rules and practices and shall make such other order respecting such complaint as may be just and reasonable."

The parties differ as to the scope of the remedial authority vested in the PSC by the language "and shall make such other order respecting such complaint as may be just and reasonable." Kimberly-Clark contends that this language grants broad authority in the PSC which includes the power to order a refund of rates that were paid in excess of what the PSC determines to be reasonable. The PSC contends that the ordering of refunds constitutes improper retroactive rate making, which the PSC can not do in the absence of express or implied statutory authority. It argues that no such express or implicit grant of power can be found in the general language of sec. 66.076(9), Stats.

The PSC, as an agency created by the legislature, has only those powers which are expressly conferred or which are necessarily implied by the statutes under which it operates. Elroy-Kendall-Wilton Schs. v. Coop. Educ. Serv., 102 Wis.2d 274, 278, 306 N.W.2d 89 (Ct.App.1981). Therefore we begin our analysis of the authority of the PSC to order refunds under sec. 66.076(9), Stats., with an examination of the statute itself.

Sec. 66.076(9), Stats., provides that if the PSC finds the rates to be unjust, it may (1) set reasonable rates and (2) make such order regarding the complaint as may be just and reasonable. The statute clearly does not expressly authorize the PSC to refund excessive rates. It must therefore be determined whether such power is implied from the language of the statute. Any reasonable doubt as to the existence of an implied power in an agency should be resolved against the exercise of such authority. Elroy-Kendall-Wilton Schs., 102 Wis.2d at 278, 306 N.W.2d 89. We agree with the court of appeals that the language "make such other order respecting such complaint as may be just and reasonable" is ambiguous. We must therefore apply principles of statutory construction to determine the intent of the legislature.

The first rule we apply is that the primary source of construction is the language of the statute. Milwaukee v. Lindner, 98 Wis.2d 624, 634, 297 N.W.2d 828 (1980). The last sentence of sec. 66.076(9), Stats., provides: "The proceedings herein shall be governed, as far as applicable, by ss. 196.26 to 196.40." Sec. 196.37(1), which is one of the statutes incorporated into sec. 66.076(9) by this language, provides:

"196.37 Lawful rates; reasonable service. (1) Whenever upon an investigation made under the provision of chapters 196 and 197 the commission shall find rates, tolls, charges, schedules or joint rates to be unjust, unreasonable, insufficient or unjustly discriminatory or...