Board of County Com'rs of Arapahoe County v. Denver Bd. of Water Com'rs

Citation718 P.2d 235
Decision Date07 April 1986
Docket NumberNo. 83SA252,83SA252
PartiesThe BOARD OF COUNTY COMMISSIONERS OF the COUNTY OF ARAPAHOE; the Board of County Commissioners of the County of Adams; and the Board of County Commissioners of the County of Jefferson, Plaintiffs-Appellees, v. The DENVER BOARD OF WATER COMMISSIONERS; the City and County of Denver, State of Colorado, a municipal corporation; Federico Pena, Mayor; and the Denver Planning Board, Defendants-Appellants.
CourtSupreme Court of Colorado

Hall & Evans, Raymond J. Connell, Edward H. Widmann, Kevin E. O'Brien, Alan Epstein, Denver, for plaintiffs-appellees.

Stephen Kaplan, City Atty., Brian Goral, Asst. City Atty., Wayne D. Williams, Michael L. Walker, Casey S. Funk, Gorsuch, Kirgis, Campbell, Walker & Grover, Leonard M. Campbell, Sp. Counsel, Denver, for defendants-appellants.

Susan K. Griffiths, Tami A. Tanoue, Denver, for amicus curiae Colorado Mun. League.

John Dingess, Patrick E. Kowaleski, Office of City Atty., Aurora, for amicus curiae City of Aurora.

James G. Colvin, II, City Atty., Colorado Springs, for amicus curiae City of Colorado Springs.

Broadhurst & Petrock, Kenneth L. Broadhurst, J.J. Petrock, Ronald D. Hutchinson, Frederick A. Fendel, III, Denver, for amicus curiae City of Thornton.

Rothgerber, Appel & Powers, James M. Lyons, Marcia M. Hughes, Denver, for amicus curiae Home Builders Ass'n of Metro Denver.

Robert J. Flynn, Englewood, for amici curiae Southwest Metropolitan Water and Sanitation Dist., Arapahoe, Jefferson and Douglas Counties, Platte Canyon Water and Sanitation Dist., Arapahoe and Jefferson Counties, Willows Water Dist., Arapahoe County, Lakehurst Water and Sanitation Dist., Jefferson and Denver Counties, Cherryridge Water and Sanitation Dist., Arapahoe County, Southwest Suburban Denver Water Dist., Jefferson County.

ROVIRA, Justice.

This case is an appeal from an order of the Denver District Court holding that the Denver Board of Water Commissioners (Board) is a public utility, required to supply water as available to all residents of certain areas within the Denver metropolitan area, and required to comply with the rules and regulations of the Colorado Public Utilities Commission (PUC). We reverse, and hold that, although the Board meets the statutory definition of a public utility, it is not subject to regulation by the PUC or any other entity.

I.

This suit was initiated by the Board of County Commissioners of Adams, Arapahoe, and Jefferson Counties (Counties) in 1973. 1 The Counties, claiming standing as parens patriae of their residents and citizens, sought to compel the City and County of Denver (Denver), acting by and through the Board, to supply water as available to all citizens of the Counties and to charge reasonable rates therefor. Further, the Counties asserted that the Board has become a public utility and therefore sought an order requiring the Board to comply with the rules and regulations of the PUC.

Venue was challenged. We ordered venue transferred from the District Court of Arapahoe County to Denver District Court. Denver Bd. of Water Comm'rs v. Board of County Comm'rs of Arapahoe County, 187 Colo. 113, 528 P.2d 1305 (1974).

Because of the similarity between the issues here and those determined in City of Englewood v. City and County of Denver, 123 Colo. 290, 229 P.2d 667 (1951) (hereafter Englewood ) (where we held that the Board was not a public utility and not subject to PUC regulation), the trial court issued a pretrial ruling limiting the issues to changes in circumstances occurring since Englewood was decided in 1951. At the same time, the court denied the Board's motion to dismiss the Counties for lack of standing. It also dismissed several of the Counties' claims for relief, but at the beginning of the trial reinstated the claim alleging that the Board's actions resulted in an illegal monopoly. Trial of this claim has not yet taken place.

The case was tried in March 1982. After the trial, but before the trial court's ruling, the City of Thornton and various contract distributors (distributors) sought to intervene to protect their interests. The court decided the case in November 1982, granting the Counties' requested relief and denying the motion to intervene.

The Board moved to stay the court's order pending appeal and also moved to reopen the case for the purpose of taking evidence of changed circumstances in light of the Metropolitan Water Development Agreement of July 1982. The court granted the motion to stay, denied the motion to reopen, and entered final judgment pursuant to C.R.C.P. 54(b), permitting immediate appeal.

II.

A brief summary of the evidence adduced at trial will be helpful in considering the issues raised by the Board. The primary purpose of the Board has been the development of a water system to serve the citizens of Denver pursuant to the provisions of the City Charter. Denver Charter §§ C4.14-C4.35 (1959). However, for many years, the Board has also furnished water to users outside the Denver city limits by way of distributors' contracts.

Prior to 1959, the Board leased water to outside users on year-to-year contracts pursuant to the City Charter. In 1959, the citizens of Denver amended the City Charter, allowing the Board to enter into water leases which have no time limit with entities outside of Denver. Denver Charter § C4.26 (1959). 2 The Charter, as amended, imposes limitations upon the Board, including a requirement that extraterritorial water leases provide for the payment of sufficient money to reimburse the people of Denver for the cost of furnishing water, plus an additional amount to be determined by the Board. Denver Charter § C4.26. Since 1918, the Charter of Denver has required that such leases provide for limitations of delivery of water to whatever extent may be necessary to enable the Board to provide an adequate supply of water to the people of Denver. Denver Charter § C4.26; Denver Municipal Code § 297B (1927).

Since 1951, the population of Denver and the metropolitan area has substantially increased. Between 1951 and 1982, the Board has maintained its policy of serving areas outside Denver only by way of distributors' contracts. The increase in population growth led to increased demand for additional water supplies. Comprehensive studies by the Denver Regional Council of Governments (DRCOG) anticipated this future growth, and some municipalities such as Aurora, Glendale, Broomfield, Boulder, Thornton, Federal Heights, Westminster, Englewood, Northglenn, and Golden, and special districts such as Mission Viejo Water and Sanitation District, Willows Water and Sanitation District, and South Adams County Water and Sanitation District, proceeded to develop their own water supplies independent of the Board's system. In addition, some municipalities and special districts, previously furnished water under distributors' contracts with the Board, have severed their relationship with the Board and developed their own supplies. The Counties did not develop their own supplies, although they are constitutionally and statutorily empowered to do so. Colo. Const. art. XIV, § 17; § 30-20-402, 12 C.R.S. (1977).

The Board presently has 114 distributors' contracts with various entities outside Denver's city limits including municipalities, quasi-municipal special districts, private companies, and individuals. These distributors' contracts are in three different formats: Total Service, Read and Bill, and Master Meter. In addition, the Board serves a small number of individuals by way of connector agreements.

In a Total Service Contract, the Board has the responsibility of operating, maintaining, and replacing the distribution facilities within that district and the individual customer pays the Board for the water service. More work and costs for the Board are associated with this type of contract than with any other contract.

In a Read and Bill Contract, the distributor is responsible for operations, maintenance, and replacement of distribution facilities. The Board reads each individual meter and bills individual customers directly. These distributors assess their own tap fees, install their own facilities, and issue bonds to pay for any improvements.

In a Master Meter Contract, the Board delivers treated water to the periphery of the district. The distributor has the responsibility for operations, maintenance, replacement of the distribution facilities, billing, and collecting from each individual customer. Master Meter distributors charge their own rates, assess their own tap fees, install their own facilities, and issue bonds to pay for any improvements.

In 1980, 71 billion gallons of water were treated and delivered by the Board. Of this amount, nearly 46 billion gallons (60%) were utilized inside Denver. Of the 25 billion gallons of treated water delivered outside Denver, 50% was delivered to Master Meter distributors, 29% to Read and Bill distributors, and 21% to Total Service distributors.

All distributors' contracts contain a description of the contract service area eligible to receive water from the Board. To amend this contract service area, a property owner petitions the distributor. If the request is approved, the distributor then refers the request to the staff of the Board. The staff proceeds with a review process and solicits comments from various local, state, and county agencies, including the planning commission of the county involved, the Denver Planning Commission, DRCOG and other interested local agencies. The Board then acts upon the request, taking into account all comments it has received. However, under the terms of its distributor contracts the Board cannot grant a service area expansion without the prior approval of the distributor.

Between September 1973, when the complaint in this case was filed, and September 1981, a total of 4,495.63 acres or in excess of 7 square miles were...

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