Savage Bros., Inc. v. Public Service Com'n of Utah

• Decision Date: 05 August 1986
• Docket Number: No. 20253,20253
• Citation: 723 P.2d 1085
• Parties: SAVAGE BROTHERS, INCORPORATED, Plaintiff, v. PUBLIC SERVICE COMMISSION OF UTAH and Uintah Freightways, Defendants.
• Court: Utah Supreme Court

Page 1085

723 P.2d 1085

SAVAGE BROTHERS, INCORPORATED, Plaintiff, v. PUBLIC SERVICE COMMISSION OF UTAH and Uintah Freightways, Defendants.

No. 20253.

Supreme Court of Utah.

Aug. 5, 1986.

Lon Rodney Kump, Salt Lake City, for plaintiff.

David L. Wilkinson, Atty. Gen., James L. Barker, Asst. Atty. Gen., Rick L. Hall, Salt Lake City, for defendants.

DURHAM, Justice:

This case is before this Court on writ of certiorari ¹ which requests that we review a Public Service Commission ("the Commission") report and order ² requiring Savage Brothers, Inc. ("Savage"), to cease and desist in its transportation of barite. In addition, the Commission ordered Savage to submit copies of its records to the Division of Public Utilities so that the Division could make recommendations for sanctions against Savage. The decision of the Commission involves its interpretation of a certificate of convenience and necessity previously issued to Savage by the Commission.

Uintah Freightways ("Uintah") instigated the proceedings before the Commission by filing a complaint that alleged that Savage did not have the authority to transport barite. Both Uintah and Savage are common carriers of property in intrastate commerce in Utah, and each holds several certificates of authority issued by the Commission. One of the certificates held by Uintah grants Uintah the authority to transport well-servicing equipment and supplies, including barite. One of the certificates held by Savage grants Savage the authority to transport dry chemicals in bulk. After Savage obtained that certificate, Eisenmann Chemical Company requested that Savage transport barite for use in oil well drilling. After a hearing on the matter in which many expert witnesses testified, the Commission agreed with Uintah's allegation and concluded that "barite does not fall within ... Savage's dry chemical [authority] or any other authority...." We reverse the Commission's order.

Uintah argues that this Court should apply a "reasonableness" or "limited deference" standard when reviewing the Commission's interpretation of whether a certificate encompasses a particular product. According to Uintah, whether the product falls within a general authority granted to a motor carrier is a technical question which calls for the expertise of the Commission and the consideration of policy, which is primarily the responsibility of the Commission. See Utah Department of Administrative Services v. Public Service Commission, 658 P.2d 601, 610-11 (Utah 1983) (hereinafter cited as "Administrative Services" ).

In Administrative Services, we set forth the general principles concerning the standard of review of agency decisions. Where the issue involves the interpretation of a general question of law, we apply a "correction-of-error standard, with no deference to the expertise of the Commission." Id. at 608. Where the question involves a basic factual question (as opposed to "ultimate facts"), we extend great deference to the Commission's findings and affirm if the findings are supported by "evidence of any substance whatever." Id. at 609. Other issues are reviewed under an intermediate standard. Typical issues reviewed under the intermediate standard include mixed questions of law and fact and Commission interpretations of statutory law the Commission is charged to administer. The intermediate standard requires that the Commission's decisions "fall within the limits of reasonableness or rationality." Id. at 610.

Generally, the interpretation of a certificate of public convenience and necessity involves a question of general law. Id. at 608. However, on certain occasions, the Commission has specialized knowledge necessary to interpret ambiguous terms in a certificate. Thus, when the words in a certificate are used in a technical sense or when extrinsic evidence is necessary to determine their meaning, the intermediate standard of review is appropriate. See, e.g., Milne Truck Lines, Inc. v. Public Service Commission, 13 Utah 72, 75, 368 P.2d 590, 592 (1962) (the Commission's superior understanding of the carrier industry and authority delegated by the legislature required use of reasonableness standard when determining whether the term "commodities generally" included petroleum products). However, when the words are used in an ordinary, nontechnical sense involving only questions of law, the issue of certificate construction requires no deference. Accord Coca-Cola Co. v. Atchison, T. & S.F. Railway, 608 F.2d 213, 218-20 (5th Cir.1979); Kansas City Southern Railway v. Great Lakes Carbon Corp., 462 F.Supp. 21, 23 (E.D.Mo.1978), aff'd, 624 F.2d 822 (8th Cir.1980), cert. denied, 449 U.S. 955, 101 S.Ct. 363, 66 L.Ed.2d 220 (1980). For example, in W.S. Hatch Co. v. Public Service Commission, 3 Utah 2d 7, 10, 277 P.2d 809, 812 (1954), we treated under the general question of law standard the question of whether transporting acid requires special equipment or falls within the authority for "special service" or "supplies used in ... facilities for the ... development and production of ... minerals" since the Commission had no special expertise. Similarly, we interpreted the phrase "between Salt Lake City, Utah and Provo, Utah" in a certificate as a question of law. Peterson v. Public Service Commission, 1 Utah 2d 324, 266 P.2d 497 (1954).

The terms to be construed in this case are "dry chemicals" and "barite." These words, while used in their ordinary sense, nevertheless required extrinsic evidence and technical expertise for their interpretation. In determining the meaning of these terms, the Commission heard extensive testimony from chemists, petroleum engineers, and other expert witnesses. The Commission looked to and relied upon factors related to the production and processing of barite and various definitions of "dry chemicals." The Commission then relied on this information to determine the "ultimate facts" or legal conclusions in this case. Under these circumstances, we deem the interpretation of this certificate to require review of a mixed question of law and fact and will apply the reasonableness standard.

The certificate in controversy in this case allows Savage "[t]o operate as a common carrier by motor vehicle in the transportation of DRY CHEMICALS, in bulk, between points in the State of Utah. Restricted against the transportation of phosphorite concentrates from the plant facilities of Chevron Resources and successor companies located North of Vernal, Utah."

The Commission examined this certificate and ordered "[t]hat Savage Brothers, Inc. cease and desist in its transportation of barite insofar as barite is used for well- drilling purposes." The Commission based this order on the following conclusion:

[B]arite is not a dry chemical for transportation purposes. Whether barite is a dry chemical ... is of secondary importance to settling this issue. The Commission's primary concern is as to intended use. The barite with which we are here concerned is used as a well-drilling mud. Complainant Uintah has long held authority from the Commission to transport well-drilling supplies, including barite specifically.

This conclusion was made despite the Commission's additional conclusion that "barite is a chemical when its intended use is as a chemical agent for further reaction with other materials for domestic or industrial purposes."

This Court has not adopted the intended use test as a means to limit the extent of a carrier's operating authority when that authority is defined in the certificate by general class terms. ³ We note that the Interstate Commerce Commission ("ICC") has explicitly disapproved the intended use test when defining the scope of the operating authority of a carrier operating with a certificate containing a general commodity description of "liquid chemicals." Southern Tank Lines, Inc., Extension--St. Bernard, Ohio, 88 M.C.C. 127 (1962). We likewise disapprove of the intended use test in this context for the reasons set forth in that opinion:

[W]e think it to be immaterial from a transportation standpoint whether a commodity which has been produced chemically is to be used as an ingredient in a different product, on the one hand, or on the other, is to be packaged and sold to the general public as a finished or end product. Regardless of their intended use, the transportation of such commodities is merely part and parcel of an overall service to the chemical producers. Motor carriers attempting to afford a complete service under specific or generic authority to transport chemicals and chemical products should hold such authority as will cover any of these commodities irrespective of their intended use or other considerations which often require hairsplitting distinctions.

Id. at 141-42.

In this case the term "dry chemicals" is the general authority granted to Savage in the certificate. The legal test presented is whether the material at issue, barite, is outside the class of commodities covered by the certificate, i.e., "dry chemicals." See W.S. Hatch v. Public Service Commission, 3 Utah 2d at 13, 277 P.2d at 814. Based on the Commission's conclusion that barite is a chemical, we cannot conclude that barite does not fall within the general grant of authority contained in Savage's certificate.

The effect of the Commission's application of the intended use test to this certificate is to retroactively define the scope of a certificate granting general operating authority. There is nothing in Savage's certificate or amendments thereto that would have given Savage notice of the restrictive and limiting application the Commission intended to make by employing the intended use test. Under these circumstances, it was unreasonable for the Commission to use the intended use test to restrict retroactively the scope of a certificate based upon a general operating authority. ⁴

As alternatives to the intended use test, Uintah urges us to affirm the Commission's order either on the...