Pacific Northwest Bell Telephone Co. v. Davis

• Decision Date: 31 December 1979
• Docket Number: No. 96734,No. 96672,96672,96734
• Citation: 608 P.2d 547,43 Or.App. 999
• Parties: , 35 P.U.R.4th 542, 5 Media L. Rep. 2443 PACIFIC NORTHWEST BELL TELEPHONE COMPANY, a Washington Corporation; General Telephone Company of the Northwest, Inc., a Washington Corporation; Continental Telephone Company of the Northwest, a Washington Corporation; United Telephone of the Northwest, an Oregon Corporation; and Oregon Newspaper Publisher's Association, an Oregon non-profit Corporation; Portland Advertising Federation, an Oregon non-profit Corporation; and Idaho Power Company, a Maine Corporation, Plaintiffs-Respondents, v. Charles DAVIS, Public Utility Commissioner of Oregon, Defendant-Appellant. OREGON ASSOCIATION OF BROADCASTERS, an Oregon non-profit Corporation, Pacific Power & Light Company, a Maine Corporation, Northwest Natural Gas Company, an Oregon Corporation, Portland General Electric Company, an Oregon Corporation and Oregon Water Corporation, an Idaho Corporation, Plaintiffs-Respondents, v. Charles DAVIS, Public Utility Commissioner of Oregon, Defendant-Appellant. PACIFIC NORTHWEST BELL TELEPHONE COMPANY, a Washington Corporation; General Telephone Company of the Northwest, Inc., a Washington Corporation; Continental Telephone Company of the Northwest, a Washington Corporation; United Telephone of the Northwest, an Oregon Corporation, Plaintiffs-Appellants, and Idaho Power Company, a Maine Corporation, Plaintiff, v. Charles DAVIS, Public Utility Commissioner of Oregon, Defendant-Respondent. ; CA 11110,; CA 11109.
• Court: Oregon Court of Appeals

Page 547

608 P.2d 547

43 Or.App. 999, 35 P.U.R.4th 542, 5

Media L. Rep. 2443

PACIFIC NORTHWEST BELL TELEPHONE COMPANY, a Washington

Corporation; General Telephone Company of the Northwest,

Inc., a Washington Corporation; Continental Telephone

Company of the Northwest, a Washington Corporation; United

Telephone of the Northwest, an Oregon Corporation; and

Oregon Newspaper Publisher's Association, an Oregon

non-profit Corporation; Portland Advertising Federation, an Oregon non-profit Corporation; and Idaho Power Company, a Maine Corporation, Plaintiffs-Respondents, v. Charles DAVIS, Public Utility Commissioner of Oregon,

Defendant-Appellant.

OREGON ASSOCIATION OF BROADCASTERS, an Oregon non-profit

Corporation, Pacific Power & Light Company, a Maine

Corporation, Northwest Natural Gas Company, an Oregon

Corporation, Portland General Electric Company, an Oregon

Corporation and Oregon Water Corporation, an Idaho

Corporation, Plaintiffs-Respondents, v. Charles DAVIS, Public Utility Commissioner of Oregon,

Defendant-Appellant.

PACIFIC NORTHWEST BELL TELEPHONE COMPANY, a Washington

Corporation; General Telephone Company of the Northwest,

Inc., a Washington Corporation; Continental Telephone

Company of the Northwest, a Washington Corporation; United

Telephone of the Northwest, an Oregon Corporation, Plaintiffs-Appellants, and Idaho Power Company, a Maine Corporation, Plaintiff, v. Charles DAVIS, Public Utility Commissioner of Oregon,

Defendant-Respondent.

No. 96672; CA 11110, No. 96734; CA 11109.

Court of Appeals of Oregon.

Argued and Submitted July 23, 1979.

Decided Dec. 31, 1979.

W. Benny Won, Asst. Atty. Gen., Salem, argued the cause for appellant. With him on the briefs were James A. Redden, Atty. Gen., Walter L. Barrie, Sol. Gen., and Bruce R. DeBolt, Asst. Atty. Gen., Salem.

Marcus A. Wood, Portland, argued the cause for respondents, Pacific Power & Light Co., Northwest Natural Gas Co. and Oregon Water Corp. With him on the brief were Rives, Bonyhadi & Smith, Portland, attorneys for respondents, Pacific Power & Light Co., Northwest Natural Gas Co. and Oregon Water Corp., Chris L. Mullmann, Ragen, Roberts, O'Scannlain, Robertson & Neill, Portland, attorneys for Pacific Northwest Bell Tel. Co., and Jeffrey M. Alden, Davies, Biggs, Strayer, Stoel & Boley, Portland, attorneys for United Tel. Co., Portland.

Chris L. Mullmann, Portland, argued the cause for appellant Pacific Northwest Bell Tel. Co. With him on the briefs were Ragen, Roberts, O'Scannlain, Robertson & Neill, and Paul R. Romain, Portland.

Bruce R. DeBolt, Asst. Atty. Gen., Salem, argued the cause for respondent. On the brief were James R. Redden, Atty. Gen., Walter L. Barrie, Sol. Gen., and W. Benny Won, Asst. Atty. Gen., Salem.

Before LEE, P. J., and GILLETTE and ROBERTS, JJ.

GILLETTE, Judge.

In these cases, the plaintiffs, regulated utilities and news media and advertising organizations, challenge two basic aspects of the Public Utility Commissioner's order No. 76-467 which seeks to regulate utility advertising. In separate actions ¹, both Pacific Northwest Bell, et al., and the Oregon Association of Broadcasters, et al., alleged that the "tagline" portion of the Commissioner's order was invalid because the "tagline" rule exceeded the Commissioner's statutorily delegated authority and violated various constitutional provisions including those protecting the right to freedom of speech. ² The "tagline" rule, OAR 860-21-075, requires that,

"(1) All investor-owned public utilities subject to the jurisdiction of the Public Utility Commissioner shall include in all printed, radio and television advertisements directed to Oregon ratepayers a statement that the advertisement is paid for by either the customers or the stockholders."

Although Pacific Northwest Bell also had attacked the "guidelines" portion of the Commissioner's order, the "tagline" aspect of the case was consolidated with the Oregon Association of Broadcasters case which challenged only the "tagline" rule ORS 11.050 ³. As to this aspect of the Commissioner's order, the trial court granted the plaintiffs' motions for summary judgment, holding that the "tagline" rule exceeded the limits of the Commissioner's delegated authority. The Commissioner appeals. ⁴

The "guidelines" portion of the Commissioner's order deals with the treatment of utility advertising expenditures in a rate proceeding. In general, the "guidelines" create a presumption that most utility advertising expenses are reasonable up to one-half percent of net operating income. In addition, the "guidelines" provide that expenditures for certain kinds of advertising will not be allowed in a rate proceeding.

On this aspect of the Pacific Northwest Bell case, the trial court granted the Commissioner's motion for summary judgment and held that the "guidelines" were valid. Pacific Northwest Bell appeals, contending that the "guidelines" exceed the Commissioner's delegated authority and that, in any event, summary judgment should not have been granted. The utility contends that the "guidelines" violate various constitutional provisions ⁵ and that the entry of summary judgment was inappropriate because genuine issues of material fact, relating to the utility's constitutional claims, were in dispute.

Although the "tagline" and "guidelines" aspects of these cases were separately briefed and argued on appeal, the two portions of the Commissioner's order may be dealt with in a single opinion. We affirm the trial court's rulings with one modification.

The "tagline" rule is set out below. ⁶ The rule mandates that regulated utilities must include in their advertisements " * * * a statement that the advertisement is paid for by either the customers or the stockholders." The rule defines certain types of advertising and directs which types of advertising must be labeled as being paid for by customers and which types should be labeled as being paid for by stockholders.

The trial court held that this rule was outside the ambit of the Commissioner's authority.

A " * * * rule is valid * * * if it is within the legislative delegation of authority, Angelos v. Bd. of Dental Examiners, 244 Or. 1, 414 P.2d 335 (1966); Oregon Newspaper Publ. v. Peterson, 244 Or. 116, 415 P.2d 21 (1966), and is reasonably calculated to accomplish the legislative purpose, Van Ripper v. Liquor Cont. Com., 228 Or. 581, 365 P.2d 109 (1961) * * *" Crouse v. Workmen's Comp. Bd., 26 Or.App. 849, 852, 554 P.2d 568 (1976).

In seeking to identify the statutory delegation of authority underlying the "tagline" rule, the Commissioner relies on statutes which give him broad regulatory authority. ORS 756.040(1) and (2) provide:

"(1) In addition to the powers and duties now or hereafter transferred to or vested in the commissioner, he shall represent the customers of any public utility, railroad, air carrier or motor carrier, and the public generally in all controversies respecting rates, valuations, service and all matters of which he has jurisdiction. In respect thereof he shall make use of the jurisdiction and powers of his office to protect such customers, and the public generally, from unjust and unreasonable exactions and practices and to obtain for them adequate service at fair and reasonable rates."

"(2) 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."

ORS 756.060, which sets out the Commissioner's general rulemaking authority, provides:

* * * The commissioner may adopt and amend reasonable and proper rules and regulations relative to all statutes administered by him and may adopt and publish reasonable and proper rules to govern his proceedings and to regulate the mode and manner of all investigations and hearings of public utilities, railroads air carriers, motor carriers and other parties before him."

Despite these expansive statutes, the decision in Or. Newspaper Publ. v. Peterson, supra, compels the conclusion that the statutes do not delegate to the Commissioner the authority to enact the "tagline" rule.

In Peterson, the court considered the validity of a regulation of the State Board of Pharmacy which prohibited the public advertisement of prescription drugs. Although the Board of Pharmacy had broad statutory authority to "(m) ake regulations * * * pertaining to the practice of pharmacy * * *," and to "(r)egulate the sale of poisons," ORS 689.620, ⁷ the court held that this statute did not delegate to the board the authority to prohibit advertising of prescription drugs. The court noted that,

"In the absence of a statute which grants a presumption of validity to administrative regulations, an administrative agency must, when its rule-making power is challenged, show that its regulation falls within a clearly defined statutory grant of authority. Safeway Stores v. State Bd. of Agriculture, 198 Or. 43, 71, 255 P.2d 564 (1953); and see, for cases elsewhere, 1 Cooper, State Administrative Law, supra at 252. The reason behind this rule is that the people, by adopting the state constitution, conferred upon the Legislative Assembly the power to legislate. Therefore this power is not by implication to be delegated to nonelective officers. The tendency of administrators to expand the scope of their operations is perhaps as natural as nature's well-known abhorrence of a vacuum. But no matter how highly motivated it may be, the tendency to make law without a clear direction to do so must be curbed by the overriding constitutional requirement that substantial changes in the law be made solely by the Legislative Assembly, or by the people. Oregon Constitution, Art. IV, § 1 * * *."

" * * *

"Nothing in ORS 689.620 or elsewhere in the same chapter suggests that advertising was contemplated as a proper subject of regulation. The sale of certain chemicals for...