Hohokam Irrigation & Drainage Dist. v. APS
| Decision Date | 29 November 2001 |
| Docket Number | No. 2 CA-CV 01-0026.,2 CA-CV 01-0026. |
| Parties | HOHOKAM IRRIGATION AND DRAINAGE DISTRICT, Pinal County, Arizona, a political subdivision of the State of Arizona, Plaintiff/Counterdefendant/Appellee, v. ARIZONA PUBLIC SERVICE COMPANY, an Arizona public service corporation, Defendant/Counterclaimant/Appellant. Central Arizona Irrigation and Drainage District, a political subdivision of the State of Arizona; Electrical District No. One, Pinal County, Arizona, a political subdivision of the State of Arizona; Electrical District No. 3, Pinal County, Arizona, a political subdivision of the State of Arizona; Electrical District No. 4, Pinal County, Arizona, a political subdivision of the State of Arizona; Electrical District No. 5, Pinal County, Arizona, a political subdivision of the State of Arizona; and Maricopa-Stanfield Irrigation & Drainage District, Pinal County, Arizona, a political subdivision of the State of Arizona, Intervenors/Appellees, v. Arizona Public Service Company, an Arizona public service corporation, Defendant/Appellant. The Harquahala Power District, a political subdivision of the State of Arizona; Aguila Irrigation District, a political subdivision of the State of Arizona; McMullen Valley Water Conservation and Drainage District, a political subdivision of the State of Arizona; Buckeye Water Conservation and Drainage District, a political subdivision of the State of Arizona; Roosevelt Irrigation District, a political subdivision of the State of Arizona; Electrical District No. 7, a political subdivision of the State of Arizona; and Electrical District No. 8, a political subdivision of the State of Arizona, Intervenors/Appellees, v. Arizona Public Service Company, an Arizona public service corporation, Defendant/Appellant. |
| Court | Arizona Court of Appeals |
Brown & Bain, P.A., By Paul F. Eckstein and Dan L. Bagatell, Phoenix, for Plaintiff/Counterdefendant/Appellee Hohokam Irrigation.
Osborn Maledon, P.A., By Andrew D. Hurwitz and Warren Stapleton, Phoenix, for Defendant/Counterclaimant/Appellant Arizona Public Service.
Robert S. Lynch, Paul R. Orme, P.C., Phoenix, Mayer, for Pinal County Intervenors/Appellees.
Moyes Storey, By Jay I. Moyes and Steve Wene, Phoenix, for Maricopa County Intervenors/Appellees.
¶ 1 Appellant Arizona Public Service Company (APS) challenges the trial court's grant of summary judgment in favor of appellees Hohokam Irrigation and Drainage District, the Pinal County Intervenors,1 and the Maricopa County Intervenors.2 APS contends the trial court erred as a matter of law by declaring that Hohokam and the intervenor irrigation districts can furnish electricity to customers outside their district boundaries. Because we agree with APS's position, we reverse the judgment.
¶ 2 In Arizona, several entities are authorized by various constitutional provisions and statutes to provide electrical services to customers. Two such entities are public service corporations and irrigation districts.3 The Arizona Constitution authorizes public service corporations, such as APS, to furnish electricity. Ariz. Const. art. XV, §§ 2 and 3. APS is regulated by the Corporation Commission, which defines APS's area of service by issuing various certificates of public convenience and necessity. A.R.S. §§ 40-281, 40-282.
¶ 3 Hohokam and the intervenor irrigation districts and water conservation districts (collectively, irrigation districts) were created pursuant to statute. A.R.S. §§ 48-2901 through 48-3256. An irrigation district is created when a majority of landowners in an area "propose the organization of an irrigation district under the provisions of [A.R.S. Title 48, chapter 19]" in order to "provide for the irrigation of lands in the area." § 48-2903(A). The boundaries of the district are determined by the county board of supervisors, § 48-2909, and a majority of the qualified electors in the proposed district must approve its creation. §§ 48-2913, 48-2917, and 48-2921. Irrigation districts expressly derive their authority to furnish electricity from § 48-2978, which permits an irrigation district's board of directors to:
¶ 4 In 1972, Hohokam was organized in Pinal County as an irrigation and drainage district to provide irrigation water to its farmer members at the lowest possible cost. In 1997, Hohokam entered the retail power business, planning to use the revenue from that business to reduce its members' water costs. Hohokam buys electrical power in the wholesale market, and Electrical District No. 2(ED2) transmits that power over its grid to service drops and extension lines owned by Hohokam that serve Hohokam's customers. Hohokam's board of directors designated its electrical service area, an area that exceeds its defined irrigation district boundaries.
¶ 5 APS has provided electrical service in Pinal County continuously since 1930. The boundaries described in APS's certificate of public convenience and necessity issued by the Corporation Commission cover much of the area now within Hohokam's designated electrical service area. Thus, APS and Hohokam directly compete for customers in the overlapping areas.
¶ 6 Hohokam filed this action in 1998 for declaratory and injunctive relief. Hohokam asked the trial court to declare that Hohokam has a right to own, operate, and maintain an electrical distribution and transmission system; that APS lacks legal authority to prevent Hohokam from selling electrical power within the boundaries of Hohokam's designated service area; and that recently enacted legislation, A.R.S. § 30-801, did not limit Hohokam's right to furnish electricity. Hohokam also sought to enjoin APS from interfering with Hohokam's furnishing electricity within its electrical area. APS counterclaimed, requesting, inter alia, a declaration that Hohokam could furnish electricity only to Hohokam's irrigation customers and only to those customers within the boundaries of the irrigation district.
¶ 7 The Pinal County Intervenors and the Maricopa County Intervenors, various electrical and irrigation districts, then moved to intervene as a matter of right, asserting an interest in the controversy. After the trial court granted their motions, the intervenors filed complaints for declaratory relief against APS, raising essentially the same claims as Hohokam had, as well as other claims.
¶ 8 All parties then moved for summary judgment. After oral argument, the trial court granted summary judgment without comment against APS and in favor of Hohokam, the Pinal County Intervenors, and the Maricopa County Intervenors. This appeal followed.
¶ 9 Much of the debate in this controversy centers around the constitutional and statutory provisions that confer on irrigation districts the status of municipalities. We review issues of statutory interpretation and constitutional law de novo. Ramirez v. Health Partners of S. Ariz., 193 Ariz. 325, 972 P.2d 658 (App.1998).
¶ 10 Article XIII, § 7, of the Arizona Constitution, adopted in 1940, provides:
Irrigation, power, electrical, agricultural improvement, drainage, and flood control districts, and tax levying public improvement districts, now or hereafter organized pursuant to law, shall be political subdivisions of the State, and vested with all the rights, privileges and benefits, and entitled to the immunities and exemptions granted municipalities and political subdivisions under this Constitution or any law of the State or of the United States ....
Section 48-2901 provides that "[a]ll irrigation districts organized under the laws of this state are declared to be municipal corporations for all purposes" and that, "[u]nder the laws of this state affecting or relating to irrigation districts[,] such irrigation districts shall be deemed municipal corporations in the construction and application thereof." And, as noted in paragraph three above, in order to accomplish the purposes of the district, an irrigation district's board of directors may "[p]rovide the district with water, electricity and other public conveniences and necessities, and engage in any and all activities, enterprises and occupations within the powers and privileges of municipalities generally." § 48-2978(15).
¶ 11 Hohokam and the intervenors reason that, because article II, § 34, of the Arizona Constitution authorizes a municipality to engage in industrial pursuits, including selling electricity outside its municipal boundaries, see Crandall v. Town of Safford, 47 Ariz. 402, 56 P.2d 660 (1936), it follows that irrigation districts may do the same. In Maricopa County v. Maricopa County Municipal Water Conservation District No. 1, 171 Ariz. 325, 830 P.2d 846 (App.1991), Division One of this court accepted a similar argument. In that case, Maricopa County had filed a declaratory action against a water conservation district to resolve a dispute over entitlement to vehicle fees collected by the county at a regional park established by the county at a lake created by the district's dams. Relying in part on article XIII, § 7, and § 48-2978(15), the court reasoned that, "[b]ecause municipalities are permitted to establish, maintain and regulate parks and public grounds, and because [the district] is entitled to engage in activities or enterprises within the powers and privileges of municipalities, [the district] may establish and maintain public parks and may assess the users of these...
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