Opinion ID: 2007410
Heading Depth: 1
Heading Rank: 2

Heading: Agency's statutory authority. We pass then to the merits of the controversy.

Text: A. To be valid, a rule adopted by an agency must be within the scope of powers delegated to to it by statute. Haesemeyer v. Mosher, 308 N.W.2d 35, 37 (Iowa 1981); Temple v. Vermeer Manufacturing Co., 285 N.W.2d 157, 159 (Iowa 1979); Hiserote Homes, Inc. v. Riedemann, 277 N.W.2d 911, 913 (Iowa 1979); Davenport Community School Dist. v. Iowa Civil Rights Comm'n, 277 N.W.2d 907, 910 (Iowa 1979); Quaker Oats Co. v. Cedar Rapids Human Rights Comm'n, 268 N.W.2d 862, 868 (Iowa 1978). The ultimate determination of whether an agency could have rationally concluded it was acting within its delegated powers is for the court. Haesemeyer, 308 N.W.2d at 37; Iowa Department of Revenue v. Iowa Merit Employment Comm'n, 243 N.W.2d 610, 615 (Iowa 1976); Schmitt v. Iowa Department of Social Services, 263 N.W.2d 739, 745 (Iowa 1978). B. The commission finds authority to promulgate mandatory utility financing in the recent amendments to sections 476.1 and .2 of the Code. Section 476.1 now provides in part: The jurisdiction of the commission under this chapter shall include programs designed to promote the use of energy conservation strategies by rate or service-regulated gas and electric utilities. Section 476.2 now provides in part: The commission shall promulgate rules concerning the use of energy conservation strategies by rate or service regulated gas and electric utilities by July 1, 1981. We note the commission  shall include programs designed to promote the use of and  shall promulgate rules concerning the use of energy conservation strategies. (Emphasis added.) Section 4.1(36) of the Code provides that use of the word shall in a statute imposes a duty. Thus the commission has no discretion as to whether it will promote programs and promulgate rules relating to energy conservation; the legislature has mandated that action. See Consolidated Freightways Corp. v. Nicholas, 258 Iowa 115, 137 N.W.2d 900, 904 (Iowa 1965). But the legislature has not, by those directives, mandated the commission to require utility financing of conservation measures. Such commission authority, if it exists, must be implied from the statutory language the commission relies on. Section 4.1(2) of the Code states that words and phrases shall be construed according to the context and the approved usage of the language. We think the ordinary meaning of phrases such as programs designed to promote and rules concerning the use of suggest the commission is to encourage, influence, and provide incentives relating to energy conservation. But we find difficulty reading into this language authority to require utility financing of energy conservation. The California Supreme Court faced a similar problem in Southern California Gas Co. v. Public Utilities Comm'n, 24 Cal.3d 653, 156 Cal.Rptr. 733, 596 P.2d 1149 (1979). The state commission proposed a rule requiring utility financing. The utilities challenged the proposal by pointing to provisions of the California Home Insulation Assistance and Financing Act, which provides: The commission shall permit any electrical or gas corporation to institute a home insulation assistance and financing program for its residential customers.... Calif.Pub.Util.Code § 2782 (Deering 1979). Because the legislature had expressly permitted utility financing, the court refused to find an intent to allow the commission to institute mandatory financing: Although we are mindful of the importance of energy conservation in today's society, we must nevertheless conclude that the Legislature has not yet bestowed upon the commission the power to mandate the institution of home insulation financing assistance programs. 24 Cal.3d at 661, 156 Cal.Rptr. at 737, 596 P.2d at 1153. See also Re Residential Energy Conservation Policy Act of 1978 (Dist. Colum.Pub.Serv.Comm'n No. 743, 7/16/82), 48 Publ.Util.Rep. 4th 575 (commission refused to assume authority to require utility financing where statute allowed permissive utility financing). The Iowa Code provisions relied on by the commission do not mention financing at all, let alone permit it, as have the other codes quoted from. Cf. Rochester Gas & Electric Corp. v. Public Service Comm'n, 71 App.Div.2d 185, 422 N.Y.S.2d 770 (1979) (applying N.Y.Pub.Serv.Law § 135-g (McKinney 1979) requiring utility financing); Ohio Rev.Code Ann. § 4933.021 (Baldwin Supp. 1978) ( requiring utilities to be lenders of last resort up to $750). We find the Iowa commission does not have authority to require utility financing under the recent amendments to sections 476.1 and 476.2. C. The commission also relies on portions of statutory language in sections 476.1,.2, and .8 of the Iowa Code: The Iowa state commerce commission shall regulate the rates and services of public utilities to the extent and in the manner hereinafter provided. .... The commission shall have broad general powers to effect the purposes of this chapter.... .... Every public utility is required to furnish reasonably adequate service and facilities. The commission argues energy conservation is a service that necessarily must be provided by utilities to assure the adequacy of traditional energy services in the future; as such, the commission has authority to see to it such service is provided, including forcing utilities to finance conservation measures. Regulation of utility services has traditionally included such items as rate-structure, method of providing energy sources, construction of new power plants, and customer relations. Requiring utilities to teach consumers energy efficiency may be within the scope of utility regulation, but requiring financing of the implementation of these measures casts the utility in an entirely different rolethat of an involuntary lending institution. We think that if such a departure from the traditional function of utilities was intended by the General Assembly, it would have said so. In Southern California Gas, the commission attempted to justify its proposed rule by relying on its broad statutory powers to supervise and regulate every public utility in the State and may do all things ... which are necessary and convenient in the exercise of such power and jurisdiction.... 24 Cal.3d at 657, 156 Cal.Rptr. at 735, 596 P.2d at 1151. But the court stated: The Legislature is given plenary power to confer other powers upon the commission. This plenary power, however, is subject to the limitation that the additional powers bestowed upon the commission must be cognate and germane to the regulation of public utilities. Id. Requiring utility financing was not found by the court to be within the domain of utility regulation. Id. at 660, 156 Cal. Rptr. at 736, 596 P.2d at 1153. The District of Columbia Public Service Commission dealt with this problem in a proceeding entitled Re Residential Energy Conservation Policy Act of 1978 (Dist.Colum.Pub.Serv.Comm'n No. 743, 7/16/82), 48 Pub.Util.Rep. 4th 575. The commission concluded it had no authority to order utilities to provide direct loan financing of residential conservation measures. Id. at 584. The function of that commission is to insure that every public utility doing business within the District of Columbia is required to furnish service and facilities reasonably safe and adequate and in all respects just and reasonable. D.C.Code Ann. § 43-402 (1981). But the commission found that a direct utility loan program is not a necessary and integral part of the utility services required ... and therefore is not a `service' under the implied regulatory authority of the commission. If utilities are to be required to undertake the substantial burden of establishing direct financing programs ... there must be a clearer manifestation of the intent of the council of the District of Columbia or The Congress to grant the commission authority to do so.... For these reasons we find that the commission lacks authority to order a direct utility loan program. 48 P.U.R. 4th at 585. We likewise find authority to require financing to be such a departure from traditional utilities regulation that it must be clearly manifested by legislative enactment. We agree with the district court that the commission does not have authority under its present powers to require utility financing. We intimate no opinion on any constitutional implications in compulsory utility financing by statute. D. Intervenor urges us to consider certain provisions in chapter 93 of the Iowa Code relating to solar energy. The promulgated rule, however, has been amended to delete any portions regarding solar energy. We therefore find no need to consider chapter 93. Having found the commission acted outside its delegated authority, we also find no need to reach the utilities' challenges of unreasonableness and unconstitutionality. AFFIRMED.