City of Torrington, a Wyoming municipal corporation v. Leroy P. Smith, Z & W Mill Inc., Russell Zimmer, Torrington Conservative Citizens, a Wyoming corporation, and Wyoming Public Service Commission

IN THE SUPREME COURT, STATE OF WYOMING

2016 WY 126

OCTOBER TERM, A.D. 2016

December 28, 2016

CITY OF TORRINGTON, a Wyoming
municipal corporation,

Appellant
(Petitioner),

v.
S-16-0107
LEROY P. SMITH, Z & W MILL INC.,
RUSSELL ZIMMER, TORRINGTON
CONSERVATIVE CITIZENS, a
Wyoming corporation, and WYOMING
PUBLIC SERVICE COMMISSION,

Appellees
(Respondents).

Appeal from the District Court of Goshen County
The Honorable Steven K. Sharpe, Judge

Representing Appellant:
James A. Eddington, Jones & Eddington Law Offices, Torrington, Wyoming.

Representing Appellee Public Service Commission:
Peter K. Michael, Wyoming Attorney General; John G. Knepper, Chief Deputy
Attorney General; Ryan T. Schelhaas, Division Deputy Attorney General; Karl D.
Anderson, Senior Assistant Attorney General; Michael M. Robinson, Senior
Assistant Attorney General. Argument by Mr. Robinson.

Representing Appellees Leroy P. Smith, Z & W Mill Inc, Russell Zimmer, and
Torrington Conservative Citizens:
No appearance.

Before BURKE, C.J., and HILL, DAVIS, and FOX, JJ, and Donnell, D.J.
NOTICE: This opinion is subject to formal revision before publication in Pacific Reporter Third.
Readers are requested to notify the Clerk of the Supreme Court, Supreme Court Building,
Cheyenne, Wyoming 82002, of any typographical or other formal errors so that correction may be
made before final publication in the permanent volume.
FOX, Justice.

[¶1] The City of Torrington (the City) sought judgment declaring that it has the
authority to set rates for electricity it provides to customers outside its corporate limits,
and that it has broad discretion to utilize revenues from the provision of electricity for
other City expenses. The district court determined that the Public Service Commission
(PSC) has the exclusive jurisdiction to set rates for electricity provided by municipalities
to customers outside the municipality’s limits and declined to rule on the question of the
City’s expenditure of electricity revenues, holding that there was no justiciable
controversy regarding that issue. We affirm.

ISSUES

[¶2] 1. Does the Public Service Commission have the exclusive jurisdiction to set
rates for electricity provided to customers outside the municipality’s limits?

2. Is there a justiciable controversy regarding the City’s use of revenues from the
sale of electricity?

FACTS

[¶3] The City owns and operates an electric utility that provides electrical service to
approximately 3,500 customers. Twenty-three percent of those customers are outside the
City limits.

[¶4] The City sued Appellees Leroy P. Smith, Z & W Mill Inc., Russell Zimmer, and
Torrington Conservative Citizens (collectively, the Citizens Group), seeking judgment
declaring that it was authorized to set rates for electrical services it provided to customers
outside the City limits, and that it had discretion to use revenue from the sale of electrical
services for other City expenses. The Citizens Group moved to dismiss the action,
arguing that the City had not presented a justiciable controversy. The district court
denied the motion and ordered that the PSC be joined in the action

[¶5] On cross motions for summary judgment, the City claimed that the laws
authorizing municipalities to enact ordinances and enter into contracts to provide
electricity outside municipal limits, Wyo. Stat. Ann. §§ 15-7-201, 15-7-203, and 15-7-
204(a)(iii) (LexisNexis 2015), grant it the power to set rates for all of its customers,
whether in or out of its municipal borders. The PSC claimed that the power to set rates
outside municipal borders is exclusively vested in the PSC pursuant to Wyo. Stat. Ann.
§§ 37-1-101(a)(vi)(C) and (H)(II) (LexisNexis 2015). The district court found that the
PSC “has jurisdiction over the rates and aspects of the City’s electric utility service
provided to customers outside the City’s corporate limits . . . .” The district court also
concluded that there was not a justiciable controversy between the City and the Citizens

1
Group and declined to rule on the question of whether the City was properly utilizing
revenues from the sale of electricity. The City timely filed this appeal.

STANDARD OF REVIEW

[¶6] We review a grant of summary judgment deciding a question of law de novo and
afford no deference to the district court’s ruling. In re Estate of Meyer, 2016 WY 6, ¶ 15,
367 P.3d 629, 634 (Wyo. 2016); Mont. Food, LLC v. Todosijevic, 2015 WY 26, ¶ 10, 344
P.3d 751, 754-55 (Wyo. 2015). Interpretation of statutory language is a question of law,
which we also review de novo. Best v. Best, 2015 WY 133, ¶ 8, 357 P.3d 1149, 1151
(Wyo. 2015).

DISCUSSION

I. Does the Public Service Commission have the exclusive jurisdiction to set rates
for electricity provided to customers outside the municipality’s limits?

[¶7] The district court concluded that “the PSC has the authority to review and
establish just and reasonable rates for all the City’s electric utility services provided to
customers outside of the City’s corporate limits.” The City asserts on appeal that the
district court erred as a matter of law, and it contends that Wyo. Stat. Ann. §§ 15-7-201
(allowing a city to enter into contracts to provide electricity to customers outside
corporate limits), 15-7-203 (ratifying contracts for supply of electricity outside corporate
limits), and 15-7-204(a)(iii) (granting a city the power to enact ordinances “providing for
the rates to be charged customers of electric current”) give the City the authority to set
electric utility rates for its customers outside the City’s corporate limits. The PSC argues
that statutory language granting it “general and exclusive power to regulate and
supervise” public utilities in Wyoming, Wyo. Stat. Ann. § 37-2-112 (LexisNexis 2015),
and excluding only services provided within city limits from that grant, Wyo. Stat. Ann.
§ 37-1-101(a)(vi)(H)(II), vest it with the exclusive jurisdiction to set those rates.

In interpreting statutes, this Court must endeavor to find the
reasonable intent of the drafters. We begin by examining the
ordinary and obvious meaning of the words employed according
to their arrangement and connection. When a statute is
sufficiently clear and unambiguous, we give effect to the plain
and ordinary meaning of the words and need not invoke our
longstanding rules of statutory construction.

Best, 2015 WY 133, ¶ 8, 357 P.3d at 1151-52 (citations omitted). “All statutes must be
construed in pari materia; and in ascertaining the meaning of a given law, all statutes
relating to the same subject or hav[ing] the same general purpose must be considered and

2
construed in harmony.” Thunderbasin Land, Livestock & Inv. Co. v. Cty. of Laramie
Cty., 5 P.3d 774, 779 (Wyo. 2000); see also In re Estate of Meyer, 2016 WY 6, ¶ 21, 367
P.3d at 636; Wyo. Cmty. Coll. Comm’n, 2001 WY 86, ¶ 16, 31 P.3d 1242, 1249 (Wyo.
2001). “Moreover, we strive to avoid an interpretation that produces an absurd result, or
that renders a portion of the statute meaningless.” Seherr-Thoss v. Teton Cty. Bd. of Cty.
Comm’rs, 2014 WY 82, ¶ 19, 329 P.3d 936, 945 (Wyo. 2014) (citations omitted); see
also Powder River Basin Res. Council v. Wyo. Oil & Gas Conservation Comm’n, 2014
WY 37, ¶ 42, 320 P.3d 222, 234 (Wyo. 2014).

[¶8] Wyo. Stat Ann. § 37-2-112 grants the PSC the “general and exclusive power to
regulate and supervise every public utility within the state . . . .” The parties do not
dispute that the City is a “public utility” because it “owns, operates, leases, controls . . .
[any] plant, property or facility for the generation, transmission, distribution, sale or
furnishing to or for the public of electricity for light, heat or power . . . .” Wyo. Stat.
Ann. § 37-1-101(a)(vi)(C).

[¶9] In reviewing PSC rate-setting decisions, we have explained that “PSC is required
to give paramount consideration to the public interest in exercising its statutory powers to
regulate and supervise public utilities. The desires of the utility are secondary.”
PacifiCorp v. Pub. Serv. Comm’n of Wyo., 2004 WY 164, ¶ 13, 103 P.3d 862, 867-68
(Wyo. 2004) (citations omitted). Rates shall be “just and reasonable,” Wyo. Stat. Ann.
§ 37-3-101 (LexisNexis 2015), and the PSC is empowered to determine whether rates
meet this requirement. See Wyo. Stat. Ann. § 37-2-121 (LexisNexis 2015). The
rationale underlying this grant of power to the PSC, and utility regulation in general, is
known as the “regulatory compact.”

In general, the compact is a theoretical agreement between
the utilities and the state in which, as a quid pro quo for being
granted a monopoly in a geographical area for the provision
of a particular good or service, the utility is subject to
regulation by the state to ensure that it is prudently investing
its revenues in order to provide the best and most efficient
service possible to the consumer. In exchange, the utility is
allowed to earn a fair rate of return on its rate base.

PacifiCorp, 2004 WY 164, ¶ 28, 103 P.3d at 871 (citations omitted); see also 64 Am. Jur.
2d Public Utilities § 16 (2011).

[¶10] The Wyoming legislature carved out a limited exception to the PSC’s “general and
exclusive power to regulate and supervise” utilities for “public utilities owned and
operated by a municipality of the state of Wyoming, except as to that portion of a
municipality owned and operated public utility, if any, as may extend services outside
the corporate limits of a municipality . . . .” Wyo. Stat. Ann. § 37-1-101(a)(vi)(H)(II)

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(emphasis added). The legislature’s intent is clear. The PSC has general and exclusive
power to regulate utility services, except to the limited extent that a municipality provides
such services to customers within its corporate limits. The City argues that “if the parties
agree to rates in a contract, there is no need for the PSC to review, approve, regulate or
supervise [the City] and its customers.” This may be true with respect to those customers
who reside within the City limits, and who have the opportunity to influence municipal
decisions, such as setting rates for utility services, when they cast their ballot. However,
customers outside the City limits have no means to influence municipal decisions because
they have no vote in municipal elections. As the PSC points out, “[w]ithout regulatory
oversight from the [PSC], municipalities could subsidize their residents’ rates through
increased rates on non-residents’ services.”

[¶11] “The purpose of the authority of the PSC is to secure to the public all the
advantages of competition in obtaining fair rates and good service and to protect the
public from its disadvantages.” In re Rule Radiophone Serv., Inc., 621 P.2d 241, 246
(Wyo. 1980). The PSC serves that purpose for the customers outside the City, while the
voters take on that function for those services provided within the City limits. Our
reading of the statutes is consistent with our language in Tri-County Electric Association,
Inc. v. City of Gillette, 584 P.2d 995, 1003 (Wyo. 1978), where we stated:

At no time in the statutory history of municipal
ownership and operation of an electric utility has a Wyoming
city or town had authority to grant or deny the right to any
utility to serve areas outside its corporate limits. That
jurisdiction has been and still is solely vested in the P.S.C.

[¶12] The City argues that several provisions in Title 15, granting powers to cities and
towns, trump the regulatory scheme governing utilities. The City first relies upon Wyo.
Stat. Ann. § 15-7-201, which provides that a city “may . . . supply electric current to
persons . . . outside the corporate limits and enter into the necessary contracts upon the
terms and under any rules and regulations as agreed upon by the parties.” The City
claims that section 201 permits it to provide electrical service to customers outside the
corporate limits pursuant to contract and that the terms it refers to include the amount it
will charge for the electricity provided. We agree that the plain language of § 15-7-201
grants the City the authority to provide services to customers and to enter into contracts
regarding that service. But the statute is silent as to the City’s authority to set rates.

[¶13] Coffinberry v. Town of Thermopolis, 2008 WY 43, 183 P.3d 1136 (Wyo. 2008),
upon which the City relies, does not provide support for the City’s position that power to
set the rate it charges non-residents is implied by the grant of authority in § 15-7-201.
The issue there was whether a municipality had statutory authority to hold a property
owner liable for water, sewer, and sanitation service fees that were unpaid by his tenants.
Id. at ¶ 2, 183 P.3d at 1137. The property owner had argued that the town could not

4
charge him unpaid utility fees because the relevant statutes did not specifically provide
cities with the authority to charge “property owners” with service fees; instead, they used
words such as “user,” “consumer,” and “inhabitant.” Id. at ¶ 9, 183 P.3d at 1139. In
rejecting the property owner’s argument, we recognized that “the powers of a
municipality are not necessarily limited to those expressly conferred but that a
municipality may also exercise powers fairly and necessarily implied from the grant
contained in the statute or constitutional provision.” Id. at ¶ 7, 183 P.3d at 1139
(emphasis omitted) (citing Coulter v. City of Rawlins, 662 P.2d 888, 894-95 (Wyo.
1983)).

[¶14] The City asks us to conclude, as we did in Coffinberry, that “the long-recognized
principle that statutory authority granted to cities and towns carries with it necessarily
implied powers to carry out the purposes of the grant[,]” 2008 WY 43, ¶ 10, 183 P.3d at
1139-40, in this case, the power to set rates for electricity. The distinction between
Coffinberry and the case at bar is that here there is a statute that unambiguously confers
to the PSC the power to set rates for electricity used by customers outside a municipality.
In Coffinberry, there was no analogous statute. We decline the City’s invitation to find
an implicit power in § 15-7-201 when elsewhere the Wyoming statutes unambiguously
grant the power to the PSC. See, e.g., Lance Oil & Gas Co. v. Wyo. Dep’t of Revenue,
2004 WY 156, ¶ 14, 101 P.3d 899, 903-04 (Wyo. 2004) (even assuming statute is
ambiguous, result would be reached in light of other statutes relating to the same subject).
Applying our rules of statutory construction to give effect to § 15-7-201, as well as to the
statutes granting the PSC authority to regulate utilities, we hold that the City’s authority
to enter into contracts regarding its supply of electricity outside the City limits does not
override the PSC’s authority to set the rates for that service.

[¶15] The argument that Wyo. Stat. Ann. § 15-7-204(a)(iii) specifically grants the City
the power to set rates for its electricity customers also fails. That statute authorizes
municipalities to “[e]nact ordinances . . . and establish rules and regulations . . . providing
for the rates to be charged consumers of electric current either for lights, power or other
purposes and for their collection.” Id. Again, we must read this provision in harmony
with other provisions and, if possible, interpret statutes so as not to render any language
meaningless. Seherr-Thoss, 2014 WY 82, ¶ 19, 329 P.3d at 945 (“[W]e strive to avoid an
interpretation that produces an absurd result, or that renders a portion of the statute
meaningless.”). The authority to “enact ordinances” that “provid[e] for the rates” does
not explicitly grant power to the City to establish those rates. That power is granted to
the City for customers within the City limits by Wyo. Stat. Ann. § 37-1-101(a)(vi)(H)(II),
which excludes municipalities from the PSC’s jurisdiction; but that power is reserved to
the PSC for customers outside the City limits. Id.; see supra ¶ 10. Any other reading of
these two statutes would render Wyo. Stat. Ann. § 37-1-101(a)(vi)(H)(II) meaningless.1

1
Although not raised by the parties, we note that Wyo. Const. art. 13, §1(b) provides:

5
[¶16] The City next claims that Wyo. Stat. Ann. § 15-7-203 prohibits Title 37 from
interfering with the City’s “specific statutory authority to contract and set rates for
customers outside of its corporate limits.” (Emphasis in original.) The statute provides:

Existing contracts ratified.
Any contracts entered into by any city or town for
supplying electric current outside its corporate limits are
ratified and confirmed as valid and binding contracts, any
other act or law to the contrary notwithstanding.

Wyo. Stat. Ann. § 15-7-203. The City claims that it derives the “specific statutory
authority to . . . set rates” from § 15-7-204(a)(iii). As we concluded above, that statute
does not grant the City authority to set rates outside the municipal limits. See supra ¶ 15.
Reading the statutes in pari materia, we conclude that the legislature granted the City the
authority to provide electricity to customers outside the City limits via Wyo. Stat. Ann.
§ 15-7-201, but reserved the authority to determine an appropriate rate for
the service provided outside the City limits to the PSC in Wyo. Stat Ann. §§ 37-2-112,
37-1-101(a)(vi)(C) and (a)(vi)(H)(II). The language of Wyo. Stat. Ann. § 37-1-
101(a)(vi)(H)(II) unambiguously grants the PSC exclusive regulatory power over all
municipally-owned public utility services provided to customers outside the
municipality’s corporate limits.

[¶17] Wyo. Stat. Ann. §§ 15-7-201, 15-7-203, and 15-7-204, do not grant the City power
to establish rates for those services. The district court did not err as a matter of law when
it concluded that only the PSC has the authority to establish rates for municipal electricity
customers located outside the City.

II. Is there a justiciable controversy regarding the City’s use of revenues from the
sale of electricity?

[¶18] The City sought a declaration that Wyoming statutes authorize the City to transfer
funds from its electrical department to other departments. The Citizens Group responded,
alleging that there was no justiciable controversy between the parties, and the district
court agreed.

All cities and towns are hereby empowered to determine their local
affairs and government as established by ordinance passed by the
governing body, subject to referendum when prescribed by the
legislature, and further subject only to statutes uniformly applicable to all
cities and towns . . . .

Title 37 establishes uniformly applicable utility regulation laws that are applicable to cities and towns,
and thus the City’s authority to enact ordinances providing for rates is “subject to” those statutes.

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[¶19] On appeal, the City argues that there is a justiciable controversy because, in the
past, members of the Citizens Group have asked the county attorney to enforce the
statutes in question and because the statutes directly affect the operation of the City. The
Citizens Group did not respond.

[¶20] The purpose of the Uniform Declaratory Judgments Act “is to settle and to afford
relief from uncertainty and insecurity with respect to legal relations, and [it] is to be
liberally construed and administered.” Wyo. Stat. Ann. § 1-37-114 (LexisNexis 2015).2
However, the Act does not create jurisdiction where it does not otherwise exist. Best,
2015 WY 133, ¶ 19, 357 P.3d at 1153-54; William F. West Ranch, LLC v. Tyrrell, 2009
WY 62, ¶ 11, 206 P.3d 722, 726 (Wyo. 2009). The elements to establish a justiciable
controversy under the Uniform Declaratory Judgments Act are:

1. The parties have existing and genuine, as distinguished
from theoretical, rights or interests.

2. The controversy must be one upon which the judgment of
the court may effectively operate, as distinguished from a
debate or argument evoking a purely political, administrative,
philosophical or academic conclusion.

3. It must be a controversy the judicial determination of
which will have the force and effect of a final judgment in
law or decree in equity upon the rights, status or other legal
relationships of one or more of the real parties in interest, or,
wanting these qualities to be of such great and overriding
public moment as to constitute the legal equivalent of all of
them.

4. The proceedings must be genuinely adversary in character
and not a mere disputation, but advanced with sufficient
militancy to engender a thorough research and analysis of the
major issues.
2
The Uniform Declaratory Judgments Act, Wyo. Stat. Ann. §§ 1-37-101 through 1-37-115
(LexisNexis 2015) provides that:

Any person . . . whose rights, status or other legal relations are affected
by the Wyoming constitution or by a statute, municipal ordinance,
contract or franchise, may have any question of construction or validity
arising under the instrument determined and obtain a declaration of
rights, status or other legal relations.

Wyo. Stat. Ann. § 1-37-103.

7
Maxfield v. State, 2013 WY 14, ¶ 14, 294 P.3d 895, 899 (Wyo. 2013) (citing Carnahan v.
Lewis, 2012 WY 45, ¶ 17, 273 P.3d 1065, 1071 (Wyo. 2012); Brimmer v. Thomson, 521
P.2d 574, 578 (Wyo. 1974)). “The difference between an abstract question [that is
nonjusticiable] and a controversy contemplated by the Uniform Declaratory Judgments
Act is one of degree . . . .” Cranston v. Thomson, 530 P.2d 726, 729 (Wyo. 1975).
“Basically, the problem in each case is whether the facts alleged under all the
circumstances show that there is a substantial controversy between parties having adverse
legal interests of sufficient immediacy and reality to warrant the declaratory judgment.”
William F. West Ranch, 2009 WY 62, ¶ 30, 206 P.3d at 733 (citing Cranston, 530 P.2d at
729; Golden v. Zwickler, 394 U.S. 103, 89 S.Ct. 956, 959-960, 22 L.Ed.2d 113 (1969)).

[¶21] In William F. West Ranch, the plaintiffs sought declaratory judgment, claiming
that the State was not regulating the production of water associated with coal bed
methane extraction in compliance with Wyoming’s constitution or statutes, resulting in
damage to their property. 2009 WY 62, ¶ 6, 206 P.3d at 725. This Court determined that
the plaintiffs had sufficiently alleged that they had an interest which had been harmed,
satisfying the first element of the Brimmer test: their property was affected by coal bed
methane water. Id. at ¶ 25, 206 P.3d at 731. However, the facts did not satisfy the
second element of the Brimmer test in that the plaintiffs did not show that the relief
sought would remedy the situation. Id. at ¶ 26, 206 P.3d at 731-32. We concluded that
because the relief sought by the plaintiffs was theoretical and would not have an
immediate and real effect on them, they had not presented a justiciable controversy. Id.
at ¶ 30, 206 P.3d at 733.

[¶22] The City contends that its situation is similar to the situation in BJ Hough, LLC v.
City of Cheyenne, 2012 WY 140, 287 P.3d 761 (Wyo. 2012). In Hough, the City of
Cheyenne adopted an ordinance annexing certain property. Id. at ¶ 3, 287 P.3d at 763.
Owners of properties surrounding the annexed parcel challenged the validity of that
ordinance, seeking a declaratory judgment. Id. at ¶ 4, 287 P.3d at 764. Without applying
the Brimmer factors, we determined that, while the landowners had no standing under the
annexation statutes which granted owners of the annexed territory a right of appeal to the
district court, id. at ¶ 11, 287 P.3d at 765, the adjacent landowners did have standing
under the Uniform Declaratory Judgments Act to challenge the validity of the ordinance
annexing the land at issue. Id. at ¶ 13, 287 P.3d at 766. We held that “the Declaratory
Judgment[s] Act is specifically designed to bring an action challenging the
constitutionality or validity of local laws or ordinances.” Id. at ¶ 12, 287 P.3d at 765
(citations omitted).

[¶23] Our examination of the allegations contained in the City’s petition reveals that the
City’s situation is not analogous to the situations in Hough or even William F. West
Ranch. In those cases, the citizens brought declaratory judgment actions to challenge the
government’s specific conduct. The Declaratory Judgments Act does not grant the

8
authority for the government to challenge citizens’ readings of the law just because a
citizen may take issue with the government’s interpretation of that law in a public
meeting or elsewhere.

[¶24] The first Brimmer requirement requires that the “parties hav[e] existing and
genuine, as distinguished from theoretical, rights or interests.” Brimmer, 521 P.2d at 578.
While the City may desire court ratification of its method of allocating proceeds from its
sale of electricity, the City has not alleged a tangible interest that has been harmed; nor
has the City established that the Citizens Group has anything other than a “theoretical”
interest. If the City’s assertion that the Citizens Group has “taken positions contrary to
[the City] regarding the statutes at issue” qualified as an “existing and genuine” interest,
there would be no end to declaratory judgment actions by governmental entities.

[¶25] Brimmer’s second prong requires that the “controversy must be one upon which
the judgment of the court may effectively operate.” Id., 521 P.2d at 578. We have
explained that “[t]he first two elements of the Brimmer test are inextricably linked: if a
plaintiff fails to allege that an interest has been harmed, a judicial decision cannot remedy
a nonexistent harm.” Vill. Rd. Coalition v. Teton Cty. Hous. Auth., 2013 WY 38, ¶ 16,
298 P.3d 163, 169 (Wyo. 2013). Because the City has alleged no harm, the courts could
fashion no remedy. There is no controversy the judicial determination of which would
have the effect of a final judgment; and these proceedings are “a mere disputation,” thus,
the third and fourth Brimmer prongs are also not satisfied. We agree with the district
court’s conclusion that the City has failed to assert a justiciable controversy, and any
decision on the City’s spending of electrical revenues would be advisory.

CONCLUSION

[¶26] Wyoming Statutes §§ 37-1-101(a)(vi)(C) and (H)(II) clearly and unambiguously
grant the PSC the exclusive power to set rates for electricity provided to customers
outside the City corporate limits. The City has not established that there is a justiciable
controversy between the City and the Citizens Group, as required pursuant to the
Uniform Declaratory Judgments Act, and therefore the district court correctly declined to
rule on the question of whether the City was properly utilizing funds it obtained from the
sale of electricity. Affirmed.

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