Nevada Public Service Commission/Railroad Commission

State regulation of railroads began in the eastern states in the pre-Civil War era. The regulatory movement spread to the other regions of the country, especially the Midwest, in the 1870s. State laws created railroad commissions whose main purpose was to set the rates that railroads were to charge for shipping and passengers. The commissions were also empowered to prohibit unfair practices such as rebates to favored shippers, free passes to public officials, and discrimination in long-haul/short-haul rates.

In Munn v. Illinois (1877) the United States Supreme Court upheld the principle of state regulation of railroads and other businesses "clothed with a public interest." Subsequent decisions placed limits on state regulatory power. Federal regulation came in 1887 with the passage of the Interstate Commerce Act, which established the Interstate Commerce Commission (ICC). Despite court-imposed restrictions on state regulation, and the entrance of the federal government into the regulatory field, the states continued to have considerable power to monitor railroad rates and practices. State and federal regulatory power grew to include other common carriers, telephones, telegraphs, express companies, and pipelines.

In the late nineteenth century a number of Nevada laws attempted to regulate the rates and practices of railroads and other businesses "clothed with public interest." An amendment to the state constitution in 1889 stated that "nothing in this section [Article 4, section 20] shall be construed to deny or restrict the power of the Legislature . . . to establish and regulate the rates of freight, passage, toll, and charges of railroads, tollroads, ditch, flume and tunnel companies incorporated under the laws of this State or doing business therein."

Nevada's regulatory legislation, most of it lacking provisions for effective enforcement, proved inadequate. In 1907 the Legislature passed an act creating a Railroad Commission, an agency that most other state In 1907 the Legislature passed an act creating a Railroad Commission, an agency that most other states had instituted earlier. Modeled after similar laws of Wisconsin and Ohio, it embodied the latest Progressive Era regulatory thinking.

The Nevada act of 1907 also established a Railroad Board, to consist of the Governor, Lieutenant Governor, and Attorney General; the Board was to appoint the three members of the bipartisan Railroad Commission, who were given three-year terms.

The Nevada agency differed in one significant way from the regulatory bodies of other states: it legislated specific maximum freight rates, rather than delegate the power to the Commission. The law authorized the Commission to determine passenger fares, and its jurisdiction extended also to telephone, telegraph, and express companies.

Railroad charges were to be "reasonable and just" and their services and facilities "reasonably adequate." The companies were compelled to publicly post schedules of rates and fares; any change of schedules required thirty days notice to the Commission. Objectionable practices such as rebates and free passes to public officials were prohibited. Other provisions addressed such matters as the maintenance of depots and the furnishing of suitable and sufficient cars.

The Commission was given the power to investigate complaints, conduct hearings regarding rates and service, subpoena evidence, and compel witnesses to appear. The act empowered the commissioners to initiate an investigation even without a complaint. Discriminatory or illegal actions subjected railroad companies and their agents and officials to the payment of fines. Private parties injured by illegal activities were entitled to sue the companies for treble damages. Railroads were to submit to the Commission annual reports of their operations, as well as reports of all fatal accidents occurring on their lines or property. The act encouraged consultation and cooperation with other state railroad commissions and the ICC. Railroads and other interested parties dissatisfied with the rulings of the Commission were allowed to seek injunctions against them in the state's district courts.

From the earliest years of state regulation, railroads persisted in challenging the constitutionality of regulation. The charge most often made was that rates imposed by state laws or commissions did not provide the railroads with a fair return; this, the railroad attorneys argued, was the taking of property without due process of law, which the XIV Amendment to the U. S. Constitution prohibited states from doing. Usually the courts upheld the rates imposed by the states, but occasionally they found them "confiscatory".

Not surprisingly, most of the railroads affected by Nevada's 1907 law brought suit in the United States Circuit Court for the District of Nevada, challenging the act. In Southern Pacific Company, et al. v. Bartine, et al. (1909) the court upheld the act's constitutionality.

A longstanding grievance in Nevada was the "back-haul"charge. This was the practice whereby the rates for westbound freight destined for Nevada were the same as if shipped to Sacramento or San Francisco and then back to Nevada. Because it involved interstate rates, the Railroad Commission could not act on this directly. It did, however, bring the matter before the ICC, beginning in 1908, with the so-called Reno Rate Case. The ICC consolidated it with similar ones; the combined action was known as the Intermountain Rate Cases. When the ICC finally ruled in the matter, the decision largely favored the Railroad Commission's position. When the ICC finally ruled in the matter, the decision largely favored the Railroad Commission's position. But the railroads took the matter to the new federal Commerce Court and secured an injunction against the rates set by the ICC. The case then went to the United States Supreme Court, which sustained the ICC (Intermountain Rate Cases, 234 U.S. 476 [1914]). Meanwhile, the railroads continued to challenge Railroad Commission rulings in the lower federal courts.

The 1909 session of the Legislature repealed section 7 of the 1907 law and gave the Commission full power over freight as well as passengers charges. Other provisions of the 1909 statute clarified or strengthened the 1907 law. The new act took aim at long-haul/short haul rate discrimination, and brought street railways under the jurisdiction of the Commission.

As in other states, Nevada's Railroad Commission evolved into an agency with powers to regulate public utilities. In 1911 the Legislature directed that the Railroad Commission serve ex officio as a Public Service Commission. This body was given wide authority to regulate the rates and practices of public utilities, the latter being defined as those businesses producing or furnishing "heat, light, power in any form or by any agency, water for business, manufacturing, agricultural or household use, or sewerage service. . . ." Echoing the language of the Railroad Commission Act of 1907, the law specified that utilities had "to furnish reasonably adequate service and facilities," that schedules be publicly posted, and that their rates be "reasonable and just." The new Commission was granted powers to investigate company records, conduct hearings, and fix standards for service. The act prohibited rebates and rate discrimination, and required annual reports from all regulated utilities.

In 1919 the Legislature abolished the Railroad Commission, replacing it with a new Public Service Commission. As before, the Governor, Lieutenant Governor, and Attorney General (replaced by the State Treasurer in 1947) comprised the body (now called the Public Service Board) that appointed the members of the Commission. The act's definition of "public utilities" embraced common carriers, and express, telegraph, and telephone companies, as well as private and municipal concerns supplying heat, light, power, water, and sewer service.

In most respects the act was generally along the lines of the 1907 measure, as amended. For example, the 1919 statute and all later legislation regarding membership on the Commission required that it be a bipartisan body, that is, no more than a bare majority of the commissioners could be of one political party. The agency retained its authority to investigate, conduct hearings, require reports, set rates, prescribe standards, and impose penalties. This law also addressed matters such as long and short haul rates, rebates, and free passes. New features included requirements that public utilities obtain from the Commission a "certificate of public convenience" and that the Commission cooperate with the State Highway Department. The act also gave the Commission regulatory power over canal companies.

Throughout the 1920s, as a tribunal for intrastate cases and as Nevada's advocate before the ICC in interstate matters, the Commission continued to contest excessive and discriminatory rates. It issued several certificates of public convenience to persons and companies operating vehicles carrying freight and passengers. The Commission acted upon the requests of power companies seeking to discontinue service for dying mining communities. Also, it made and enforced rules for overhead and underground electrical lines.

Legislation of the 1920s brought oil pipelines (1921), and air common carriers and radio (1928) under the Commission's jurisdiction. State control over radio appears to have been brief and negligible, virtually ending with the passage of the Federal Communications Act of 1934. The Commission's regulatory powers over air carriers ended in 1981.

An act of 1921 made the Commission responsible for issuing licenses for commercial motor vehicles and for colleting the fees. The Motor Vehicle Carrier Act of 1933 gave the Commission the authority to license, supervise, and regulate all motor carriers, that is, private and contract carriers, as well as common carriers. Legislation of 1939 made contract motor carriers subject to regulation by the Commission.

In 1929 the Commission's responsibility to cooperate with federal agencies was increased to include the Department of Commerce, Bureau of Standards, Federal Radio Commission, Federal Power Commission, and Federal Trade Commission, as well as the ICC and the "regulating bodies of other states." Much later, in 1967, the Legislature authorized cooperation also with the Department of Transportation and other federal boards, agencies, and commissions concerned with transportation and communication. The federal Motor Carrier Act of 1935 entitled state agencies that regulated transportation to sit on joint boards for conducting hearings involving the interstate transportation of passengers and property by motor vehicle.

In anticipation of the completion of Hoover Dam and the availability of cheap and abundant electrical power for southern Nevada, the Power District Law, enacted in 1935, enabled municipalities to apply to the Public Service Commission for authorization to organize power districts.

During World War II the agency received permission to issue "emergency temporary" certificates to contract and common carriers. Following the war, the Commission's powers over motor vehicles came to encompass more than commercial carriers. The Motor Vehicle Safety-Responsibility Act of 1949 made the Commission the "administrative commissioner" to enforce its provisions, which mainly concerned liability insurance, the report of accidents, and the suspension and revocation of licenses. That year, following the recommendation of the Legislative Counsel Bureau, the Legislature also transferred various activities relating to public highways from the State Highway Department to the Public Service Commission: the issuing of drivers' and chauffeurs' licenses; the collection of fees for registration and licenses; collection of taxes on gasoline and motor fuel; highway safety; safety education. To enforce these provisions the statute placed the Highway Patrol under the Commission. The 1957 Legislature created the Department of Motor Vehicles and provided for the transfer of these activities from the Commission to the new department. Through a statute of 1959 the Commission retained the authority to regulate, supervise, and license motor, common, and contract carriers, as well as certain private carriers.

By the end of 1952 the Commission controlled and supervised the following: "4 railroads; The Pullman Company and Railway Express Agency, Inc.; 35 water utilities; 26 utilities furnishing electricity or gas; 20 telephone and/or telegraph companies; 2 airlines; 116 intrastate contract carriers; 120 intrastate common carriers and 2000 private motor vehicle carriers."

As is often the case with regulatory agencies, the Public Service Commission came to believe it had a responsibility to the businesses being regulated as well as to the public. For example, its report for 1959-1960 emphasized that "it is very important that Nevada participate in the Interstate Commerce Commission hearings in order to protect the interests of Nevada carriers." The Commission nevertheless continued to concern itself with the needs of the traveling and shipping public. For example, in 1960 the U.S. District Court agreed with the Commission that Bonanza Airlines could not discontinue its service to Hawthorne nor curtail service to Tonopah.

Legislation of 1953 raised the number of commissioners to four, stipulating that one of them be the State Engineer. The other three were to be appointed by the Governor. One of the appointive members had to "be generally familiar with the operation of transportation facilities"; another was required to have "general knowledge of fares and freights and tolls and charges levied and collected by public utilities." The law provided for a secretary "who shall be an expert rate man" (a qualification dropped in 1967) and an assistant secretary, both of whom were appointive by the Commission. Also provided for in 1953 was an office in Las Vegas for the Public Service Commission and some of its divisions. Since then, in addition to the main office in Carson City and the regional office in Las Vegas, field offices have been set up in Elko, Reno, Ely, and Winnemucca. Beginning in 1985, one of the commissioners has been based in Las Vegas.

An act of 1957 dropped the number of commissioners back to three, all of whom were to perform their duties full time. The membership was raised to five in 1983. The law doing so required that all commissioners have at least two years experience in one or more of the following areas: accounting; business administration; finance; administrative law; professional engineering; the operation of motor carriers. The act allowed for the appointment of one member "to represent the general public."

A statute of 1957 (amended in 1963, 1965, 1967, 1973, 1989, and 1997) brought securities issued by public utilities under the supervision of the Commission. In 1960 the Legislature designated the Public Service Commission as the agency to require and approve liability insurance for motor carriers.

Legislative action in 1963 brought about a number of significant changes. An act of that year empowered the Commission to levy and collect an annual assessment on gross operating revenues from the intrastate operations of public utilities in Nevada. This, along with a highway fund appropriation, has been the primary source of Commission funding. The same legislation declared certain cooperative associations and nonprofit corporations "to be affected with a public interest" and therefore public utilities subject to the Commission's regulation and control. Another statute authorized the agency to issue cease and desist orders to utilities operating without a certificate of public convenience and necessity, or operating in violation of the laws of the state. Water and sanitation districts came under the jurisdiction of the Commission. So too, from 1967 to 1977, did general improvement districts.

Two other enactments of 1967 took the power to regulate taxicabs away from the cities and gave it to the Commission, but in 1969 the regulating of taxicabs in Clark County became the responsibility of the county. The legislative session of that year also created the Taxicab Regulating Fund Account.

Community antenna television companies came under the purview of the Commission in 1967. Soon this authority was extended to cable television. An Executive Order issued in the mid-1960s assigned to the Commission the responsibility for maintaining and operating a State Emergency Transportation Office.

For many years up to 1969 the chairman of the Commission had been an ex officio member of the Tax Commission. Legislation of that year eliminated the dual appointment.

As the Commission's powers and duties expanded, so too did its staff. By 1970 personnel consisted of "three full-time commissioners, a secretary, an assistant secretary, one Deputy Attorney General, four professional engineers, one engineering technician, a rate specialist, a tariff clerk, seven auditors, eight inspectors in both motor carrier and aviation activity, and a clerical staff of nine stenographers and clerks."

The Legislature authorized the hiring of an Executive Director in 1975. In 1979 the Commission and its inspectors received police power to enforce its regulations. That year a deputy commissioner, authorized to conduct hearings (except in rate-change cases), was added to the staff.

The Utility Environmental Protection Act of 1971 delegated to the Public Service Commission most of the responsibility for its enforcement. Specifically, the Commission's major responsibility was to act upon applications from utility companies for permits to build new facilities. As authorized by the Legislature, the Commission assumed jurisdiction over tow-car operators in 1971 and, in 1973, over household goods warehousing.

Since Fiscal Year 1971-1972 the Commission has received funds on a matching basis from the Federal Gas Pipeline Safety Fund. In addition to assessments on utilities and the highway fund appropriation, other sources of revenue have included taxicab, tow-car, and application and filing fees.

In 1975 two new divisions of the Commission were established by law, the Division of Consumer Relations and the Energy Management Division. The latter, however, was abolished in 1977. After that time the two components were the Policy Section and the Regulatory Operations Staff.

The Legislature, in a 1975 resolution, directed the Legislative Commission to study and report upon the Public Service Commission and the utilities it regulated. Meanwhile, in 1977, the Legislature, responding to allegations about the integrity of members of the Commission and questions about contracts and procurement practices, passed a strongly worded resolution calling for a study and report. Apparently no report was published in response to this resolution. In 1979 came yet another resolution, directing the Legislative Commission to study and report on the Commission. The report, published in 1980, addressed competitive bidding, consumer representation, community antenna television, and conservation.

In this period, criticism of the Commission reflected the nationwide consumer movement. Specifically, there were complaints about the lack of regulation of small water and sewer companies. The Legislature, in 1985, ordered another Legislative Commission report on the agency. The report, which appeared in 1986, addressed the water company issue in particular. Other legislatively mandated reports appeared in 1990 (on transportation and the regulation of motor carriers) and 1997 (on competition in the electrical energy industry).

Another serious matter was the public perception that the Commission was more responsive to the large utilities than to the public. The tendency for this and other regulatory agencies, both state and federal, to safeguard the interests of the regulated industries became increasingly evident in the later twentieth century. In 1988 the Commission stated that its goal was "To ensure that Nevadans receive safe, dependable and reliable utility service at a fair cost." By 1994, the mission statement was amended to declare that the agency "will balance the interests of customers and shareholders of public utilities [and] will promote a transportation infrastructure flexible enough to accommodate the economic growth of the state without creating a competitive environment detrimental to the traveling and shipping public, or to the motor carrier industry." The agency's report for 1985-1986 announced that the Commission was working with the telecommunications industry "to obtain legislation allowing the Commission to deregulate competitive long-distance services," and was continuing to work with the transportation industry to revise the state's transportation regulations.

To provide greater representation of the public interest, the Legislature created the office of Advocate for Customers of Public Utilities in 1981, placing it within the Office of the Attorney General. Responding to the public's concern over rising utility costs, the 1985 legislative session created a special joint committee to investigate rates for gas and electricity.

A statute of 1977 required that the members of the Commission "be persons who are independent of the industries regulated by the commission and who possess demonstrated competence"; an act of 1987 prohibited a public utility or a parent or subsidiary company to employ a former commissioner for one year. Enacted also in 1977 was a law granting the Commission the power "to order an examination of the condition and management of any public utility under its jurisdiction which is a community antenna television system, telephone company, electric light, heat and power company or a natural gas company." In 1979 the Legislature ordered the Department of Highways, working with the Public Service Commission, to draw up and implement a state plan for railroads, with the objectives of preserving and rehabilitating rail lines and restoring and improving freight service.

An act of 1981 declared geothermal energy a public utility and its sale subject to control by the Commission. Throughout the 1980s and 1990s state legislation increased the Commission's responsibilities relating to water conservation and the transportation of hazardous waste.

The increase of federal power and recent demands for the deregulation of industry have caused a diminution of the power of the Public Service Commission in some areas. In the field of railroad regulation, for example, there has been a notable decrease in Commission activity. By 1986, it no longer controlled railroad rates or service. In 1985 the lawmakers deregulated community antenna television and allowed the Commission to exempt from regulation "to the extent it deems reasonable, services related to telecommunication . . . upon a determination after hearing that the services are competitive and that regulation thereof is unnecessary." In this period there are several other examples of the Legislature mandating or permitting the removal or relaxation of controls of public utilities. The major rationale for deregulation was the belief that, by allowing the replacement of regulated monopolies with competing enterprises, regulation would not be needed.

In 1997 the Public Service Commission became the Public Utilities Commission. The legislation making the change also created the Transportation Services Authority, which was given the old Commission's responsibilities for motor carriers.

From the description of Agency history (Unknown). WorldCat record id: 77615467