DeFazio v. Washington Public Power Supply System
| Decision Date | 01 May 1984 |
| Citation | 679 P.2d 1316,296 Or. 550 |
| Court | Oregon Supreme Court |
| Parties | Peter DeFAZIO, David Dix, Leslie Ratley, Gwen E. Ross, William F. Palmer, Fred McDaniel, Norma McDaniel, Frederick B. Simmons, Robert R. Davis, John C. Montgomery, Robert N. Faught, Mary Boyersmith, Lloyd Larry Roberson, Harold Loroy Davis, Fred J. Stigall, Paul M. Stewart, Harold Eller, Terry Bollenbaugh, Gary W. Ensign, Will Brown, Rhonda Sparks, Bonnie Charles, Michael Faught, Glenn Sofge, William E. Morrisette, and Janice M. Morrisette (Springfield Ratepayers); Cascade Steel Rolling Mills, Inc., an Oregon Corporation; Cascade Tractor & Implement Co., an Oregon Corporation; McDaniel Feed & Grain Co., an Oregon Corporation; Jack Wright; Waldo Farnharn; John Jankowski; Charles E. Colvin; A.E. Hurl; Chuck Neilson; Stan Amundson; Merle Lingle; Hans Simon; Jerry Lucas; William B. Nourse; Doyle Smith; Chester McDonough; Ezra Koch; Bill O'Dell; Gary Brooks; Chester Gibson; Del Casteel; (McMinnville Ratepayers); Plaintiffs-Respondents/Cross-Appellants, The City of Drain, a Municipal Corporation (Drain): Canby Utility Board, an Independent Governmental Subdivision of the City of Canby, a Municipal Corporation (Canby Utility Board); The City of Bandon; a Municipal Corporation (Bandon); The City of Cascade Locks, a Municipal Corporation (Cascade Locks); Donald Maples; John Bendele; Jack Barber; and Charles Robert Miller (Drain Ratepayers); Plaintiffs-Respondents, v. WASHINGTON PUBLIC POWER SUPPLY SYSTEM, a Washington Municipal Corporation (WPPSS); City of Springfield, a Municipal Corporation, acting by and through the Springfield Utility Board (Springfield); City of McMinnville, a Municipal Corporation, acting by and through its Water & Light Commission (McMinnville); City of Milton-Freewater, a Municipal Corporation (Milton-Freewater); Defendants-Appellants/Cross-Respondents, Northern Wasco People's Utility District, a Municipal Corporation and People's Utility District of the State of Oregon; Tillamook People's Utility District, a Municipal Corporation and a People's Util |
[296 Or. 552-A] James H. Clarke, Portland and Bruce Smith, Eugene, argued the cause and submitted brief for defendant-appellant/cross-respondent Washington Public Power Supply System. With them on the brief were Frank Gibson and Cass, Scott, Woods & Smith, Eugene; David H. Wilson, Jr. and Spears, Lubersky, Campbell, Bledsoe, Anderson & Young, Portland; Richard C. Yarmuth and Culp, Dwyer, Guterson & Grader, Seattle, Wash.
Garry P. McMurry, Portland, argued the cause and submitted brief for defendants-appellants/cross-respondents Cities of Springfield, Milton-Freewater and McMinnville. With him on the brief were Peter A. Mersereau, James A. Fitzhenry and Rankin, McMurry, VavRosky & Doherty, Portland; Douglas E. Hojem and Corey, Byler & Rew, Pendleton; David C. Haugeberg, Gary A. Rueter and Haugeberg & Rueter, McMinnville.
Robert L. Ackerman, Springfield, argued the cause and filed brief for plaintiffs-respondents/cross-appellants Springfield Ratepayers. With him on the brief were Ackerman, DeWenter & Huntsberger, Springfield, and Lawrence D. Salmony, Certified Law Student, Springfield.
Martha L. Walters, of Johnson, Harrang & Swanson, Eugene, argued the cause for plaintiffs-respondents City of Drain, Drain Ratepayers and City of Bandon. With her on supplemental briefs were John H. Hammond, Jr., Oregon City, representing plaintiff-respondent Canby Utility Board and Wilford K. Carey, Jr., Hood River, representing plaintiff-respondent City of Cascade Locks.
John R. Faust, Jr., Portland, argued the cause and filed brief for defendants-respondents Central Lincoln People's Utility District and Clatskanie People's Utility District. With him on the brief were Donald A. Haagensen, Mildred J. [296 Or. 552-B] Carmack and Schwabe, Williamson, Wyatt, Moore & Roberts, Portland. With him on memorandum of additional authority was George P. Winslow, Jr., Tillamook, representing defendant-respondent Tillamook People's Utility District. With him on additional authorities was Stanley D. Heisler, The Dalles, representing defendant-respondent Northern Wasco People's Utility District.
Willard L. Cushing, McMinnville, argued the cause and filed brief for plaintiffs-respondents/cross-appellants City of McMinnville Ratepayers. With him on the brief was Cushing, Johnstone & Peterson, P.C., McMinnville.
In 1976, the Washington Public Power Supply System and 88 governmental and cooperative entities in six states entered into a set of agreements under which the system, hereafter designated WPPSS, would construct and operate two nuclear-powered generating plants, Washington Nuclear Projects (WNP) 4 and 5, and the participating entities, referred to as the "participants," would be entitled to fractions of the power generating potential of these plants in return for specified financial obligations. The present litigation concerns the question whether various Oregon participants could legally commit themselves to the terms of these agreements. Upon suit brought in 1981 by ratepayers of the City of Springfield, one of the participants, later joined by a number of other private and municipal plaintiffs, the circuit court rendered a judgment declaring the Participants' Agreements executed by seven cities and four People's Utility Districts to be "ultra vires, void and invalid." Defendants appealed, and we accepted certification of the appeal by the Court of Appeals to this court pursuant to ORS 19.210 and ORAP 17.05.
Because some of the issues are common to several parties and others are not, it is necessary to sort out the parties' positions in this action.
The action began with a complaint filed on December 22, 1981 by plaintiffs DeFazio, Dix, and Ratley, as consumers of electricity distributed by the Springfield Utility Board, an agency of the City of Springfield, against the City of Springfield and the Washington Public Power Supply System, alleging the invalidity of the city's agreement with WPPSS and seeking declaratory relief. During the months of March to May, 1982, motions to intervene were filed by the cities of Drain, Bandon, Cascade Locks, Milton-Freewater, McMinnville, and the Canby Utility Board, by ratepayers served by the cities of Drain and McMinnville, and by the Clatskanie, Central Lincoln, Tillamook and Northern Wasco People's Utility Districts (PUDs). The circuit court allowed these motions on May 26, 1982, and the parties filed an amended consolidated complaint on July 13, 1982.
Although the procedure placed among the defendants some who deny the validity of the agreement, specifically the PUDs, no question is raised about this procedure. Rather than refer to the parties as plaintiffs and defendants, we ordinarily shall refer to WPPSS as the main proponent of the Participants' Agreements, joined in part by the cities of Springfield, McMinnville, and Milton-Freewater, and to the opponents respectively as the ratepayers, the cities, and the districts or PUDs.
The ratepayers and some of the cities contend that they lack charter authority to enter into the agreements and that special statutory procedures were the exclusive means for joining with others in financing generating facilities. They also contend that by promising unconditionally to pay a share of the project costs whether or not they received any electricity in return the cities incurred debts that may only be incurred by charter amendments or other consent of their qualified voters, and that they unconstitutionally invested in or lent their credit to WPPSS. Finally, they attack the agreements as unlawfully delegating the authority of city officials over electric rates by committing future rates to cover whatever payments would be required under the agreements.
The cities of Springfield, Milton-Freewater, and McMinnville deny these contentions. Among other arguments they maintain that the Participants' Agreements imposed no obligation on the participants to pay for construction costs, or debt service on such costs, if the projects were terminated before commencing operation, as WNP 4 and 5 in fact were. The actual legal consequences of the termination are not before us in this litigation, because the plaintiffs sued for a declaration that the Participants' Agreements were unlawful when they were made.
The PUDs argue that the obligations assumed in the Participants' Agreements constituted long-term indebtedness of the PUDs equivalent to revenue bonds and could be accomplished only with approval by the PUD's qualified voters. Like the other opponents, the PUDs contend that they could join with others in financing the projects only under statutes that were not followed, that they lacked authority to guarantee the debts of other entities such as WPPSS, that the agreements were an unconstitutional investment or lending of credit, and that the agreements unlawfully delegated their authority over their operations and electric rates. They also claim that the agreements were void as being against the public policies represented by these legal restrictions.
The proponents reject all attacks on the transactions, maintaining that the agreements were purchase contracts within the ordinary legal authority of the cities and PUDs. They contend in turn that plaintiffs' claims should have been dismissed as barred by laches or by estoppel.
The logical sequence is to take up, first, a challenge to the timing of the plaintiffs' action; then issues of the cities' and...
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