Court Opinion

ID: 9849948
Source: CourtListenerOpinion
Date Created: 2023-09-24 04:50:06.150895+00
Date Added: 2024-06-11T09:20:29.558344
License: Public Domain

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 dis-positive.
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 experise 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 ....
*860The 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 tag-line 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 Utah. However, it does appear significant that alternative methods of regulating the allocation of the costs of utility advertising exist, such as a regular review of utility *861advertisements and specific guidelines respecting charges. Presumably, such guidelines and review are now being used by the PSC. Such methods are less intrusive in the management of the utility and more directly related to the fulfillment of the PSC’s specific statutory mandate. The tagline requirement goes beyond both the spirit and the letter of that mandate.1
We hold that the PSC has no statutory authority to impose the tagline requirement on Mountain Fuel. Rule A67-05-100(3) of the PSC is set aside.
HALL, C.J., OAKS, J., and J. DENNIS FREDERICK, District Judge, concur.

. The dissent grounds its argument on the benefits resulting from greater communication between the public and the PSC and the convenient manner of communication that the tagline supplies. It states that the “PSC can serve the public interest by promoting the exchange of information regarding rates.” As the PSC has no broad statutory authority to "serve the public interest,” the exchange of information must be a practice "necessary or convenient" in the exercise of the PSC’s regulation of rates. The dissent does not show, and we cannot see, why this exchange of information is necessary; it must be only convenient. With this we have no quarrel. We agree that “[cjertainly ... the PSC can reasonably and conveniently disclose ... to the consuming public” its determination of what advertising expenses may be passed on to customers. Yet because the PSC can make its own disclosure does not mean it has the authority to force this disclosure to be made by Mountain Fuel. The dissent makes a peculiar leap when it concludes that the PSC can impose a tagline requirement because it is a "convenient" way of disseminating helpful or useful information.
The dissent thereby undertakes a novel construction of § 54-4-1, concluding that the statute grants the PSC the authority to accomplish in a "convenient” manner whatever it finds "convenient” to do in the exercise of its power and .jurisdiction. Where this interpretation of convenience would finally lead, it is impossible to say; certainly it appears to have no defined limits.
The dissent also claims that we rely "primarily" upon Davis and makes a point of characterizing Davis as “a case decided by an intermediate court of appeal.” The point is irrelevant, for we rely on Davis not as precedent, but rather for the quality of its reasoning. Furthermore, the claim that the Davis holding is a major support of this opinion is inaccurate. As we have stated, the lack of explicit statutory authority alone is not dispositive of the issue before us. We have also considered the close connection of the regulated activity to the process of supervising rates and the reasonable relation of the disputed manner of regulation to the legislative grant of authority to regulate. To this analysis, the dissent offers no response.