Emerald People's Utility Dist. v. Pacific Power & Light Co.

• Decision Date: 25 November 1986
• Parties: EMERALD PEOPLE'S UTILITY DISTRICT, an Oregon municipal corporation, Petitioner on Review, v. PACIFIC POWER & LIGHT CO., an Oregon corporation, Respondent on Review. TC 83-1726; CA A30473; SC S32566.
• Court: Oregon Supreme Court

Page 552

729 P.2d 552

302 Or. 256

EMERALD PEOPLE'S UTILITY DISTRICT, an Oregon municipal

corporation, Petitioner on Review, v. PACIFIC POWER & LIGHT CO., an Oregon corporation, Respondent

on Review.

TC 83-1726; CA A30473; SC S32566.

Supreme Court of Oregon,

In Banc.

Argued and Submitted Sept. 4, 1986.

Decided Nov. 25, 1986.

John R. Faust, Jr., Portland, argued the cause for petitioner on review. With him on the petition were Donald A. Haagensen, James M. Finn, and Schwabe, Williamson, Wyatt, Moore & Roberts, Portland.

Charles F. Hinkle, Portland, argued the cause for respondent on review. With him on the response brief was Stoel, Rives, Boley, Fraser & Wyse, Portland.

Christopher M. Kittell, Tillamook, filed an amicus curiae brief on behalf of Tillamook People's Utility District, Central Lincoln People's Utility District, Northern Wasco People's Utility District, Clatskanie People's Utility District and Columbia River People's Utility District. With him on the brief were Sheldon H. Rich, The Dalles, for Northern Wasco People's Utility District; Mark A. Williams, Newport, for Central Lincoln People's Utility District; Robert A. Lucas, St. Helens, for Columbia River People's Utility District; and Ted Grove, Clatskanie, for Clatskanie People's Utility District.

PETERSON, Chief Justice.

Emerald People's Utility District (Emerald) filed this action under ORS 543.610 (1981) to take over the hydroelectric project of defendant Pacific Power & Light (PP & L). ORS 543.610 (1981) authorized the "state, or any municipality thereof * * * to take over" power-generating facilities at "net investment," a price which, in some cases, is more advantageous than the value generally required to be paid by a condemnor. ¹

The trial court dismissed Emerald's complaint, holding that a people's utility district (PUD) may not take over an existing facility under ORS 543.610 because it is not a "municipality" under the statute. In affirming that holding, the Court of Appeals discussed the interrelationship of two laws passed in 1931, and noted that PUDs lack express condemnation power to condemn a facility already devoted to public use under the constitution or its implementing legislation. Emerald PUD v. PP & L, 76 Or.App. 583, 711 P.2d 179 (1985). We, too, believe that the 1931 legislation should be considered as a package. Although we disagree with the Court of Appeals as to the power of PUDs to condemn existing privately owned facilities under ORS chapter 261, we agree with its conclusion concerning ORS 543.610. We therefore affirm the decision of the Court of Appeals, but not its statement as to eminent domain under ORS chapter 261.

Interest in PUDs in 1930 culminated in the submission by initiative and adoption of what was known as the "Grange Amendment" in the 1930 general election. See Brown, People's Utility Districts in Oregon, 20 Or.L.Rev. 3, 3 n 1, 6-8 (1940) (discussion of history of amendment). The amendment was sponsored by the Oregon State Grange and was adopted by initiative as Article XI, section 12. The amendment sought to grant PUDs, as local governmental units, broad powers to, among other things, use the power of eminent domain and to "acquire, develop and otherwise provide for * * * water power and electric energy." PUDs were part of a broad movement in utility reform which included not only the Grange Amendment but also a bill introduced at the next legislative session at the request of Governor Julius Meier that created the Hydroelectric Commission and included comprehensive water power policy legislation. Or.Laws 1931, ch. 67, codified as amended at ORS ch. 543 (discussed post ).

The problems with respect to private utilities at that time included

"[t]he financial scandals of utility holding and operating companies, the dissipation of assets of operating companies by their unregulated affiliates, [and] the failure of public utility rates to follow the fall of commodity prices during [the] years of economic distress [all of which] cast a shadow of ill-feeling upon the entire industry * * *." Rooks and Booth, Current Problems of Public Utility Rate Regulation, 13 Or.L.Rev. 122, 122 (1934); see also Claire, Recent Utility Regulation in Oregon, 11 Or.L.Rev. 338, 340 (1932) (discussing Governor Meier's platform with respect to utilities).

The sponsors of the constitutional amendment envisioned not only local control over energy resources, but also inexpensive production of energy. Voters' Pamphlet, November 4, 1930, p 51. What the sponsors envisioned is not always what the voters understood and intended, but in this case the publicity given PUDs with respect to the possibilities of local control and inexpensive production of energy, the overwhelming electoral support given PUDS, and the ill will directed at private utilities suggest that the voters intended these results in the creation of PUDs. The dual goals of local control and inexpensive production of energy could not be accomplished if PUDs had no choice but to duplicate existing hydroelectric facilities or to acquire such a facility at whatever price a utility demanded in contractual negotiations.

The strength of the voters' conviction that PUDs were a preferable alternative to private utilities is evidenced by two factors. First, they chose to enact a constitutional amendment rather than a statute by initiative to accomplish their purposes; although the same method is prescribed for each, the former may be amended or repealed only by popular vote. Or. Const., Art. IV, § 1, and Art. XVIII, § 1. Second, their votes in the November 1930 gubernatorial election confirm their resolve with respect to public power in that they sought public servants who would dutifully carry out their constitutional mandate, for "as election day neared, candidates for every important office stumbled over each other proclaiming their faith in public development of water power." Ogden, The Development of Federal Power Policy in the Pacific Northwest 96 (1949) (unpublished University of Chicago dissertation), quoted in Emerald's Petition for Review at 6. Julius Meier ran as an independent candidate for governor solely on a platform of reform of utility regulation. He soundly defeated the "regular" Republican and Democratic candidates. Claire, supra, 11 Or.L.Rev. at 339-40. The Nation, 96-7 (January 28, 1931) stated:

"In the November election Meier received more than twice as many votes as the 'regular' Republican nominee, and thousands more than * * * all other candidates combined, notwithstanding the desperate [sic ] fight waged against him by the power concerns and allied utilities. * * *

"Majorities in both houses of the legislature either were elected on the same program or have subsequently pledged themselves to support it, while the same wave of protest against the private power interests carried Major General Charles H. Martin, retired, * * * into Congress from the overwhelmingly Republican district which includes Portland. The main plank of his platform was publicly owned hydroelectric power. * * *

" * * *

" * * * Mr. Meier has just issued a public announcement to the effect that if the legislature attempts to mar the program in any single detail, he will go over their heads by calling a special election and placing the proposed legislation in its entirety directly before the people. That he will do just exactly that is not doubted by anyone who really knows him * * *."

Article XI, section 12, of the Oregon Constitution, as adopted by initiative in November 1930, authorized the creation of PUDs "for the development of water power and/or electricity * * * and sale of water, water power and electric energy" and it provided in part that PUDs shall have the power:

"(e) To exercise the power of eminent domain.

"(f) To acquire and hold real property and other property necessary to or incident to the business of such districts.

"(g) To acquire, develop, and/or otherwise provide for a supply of water, water power and electric energy."

The last paragraph of Article XI, section 12, directed the legislature to provide implementing legislation. It provides:

"The legislative assembly shall and the people may provide any legislation, that may be necessary, in addition to existing laws, to carry out the provisions of this section."

The legislature met in January 1931 and promptly passed two separate but related bills. Oregon Laws 1931, chapter 279, now ORS chapter 261, implemented Article XI, section 12. The other, Oregon Laws 1931, chapter 67, now ORS chapter 543, created a comprehensive program regulating the use of any lake, stream or river "in connection with the development of any water-power project for the generation of electricity." Or.Laws 1931, ch. 67, §§ 2-3. This chapter contained the favorable takeover provisions of the statute at issue here, ORS 543.610, discussed below.

The passage of Article XI, section 12, gave the legislature a mandate from the people to enact legislation permitting PUDs to condemn property. We will consider chapters 279 and 67 (now ORS chapters 261 and 543) together, for together they reveal that PUDs could condemn the property of existing private utilities under ORS chapter 261, but not take over existing private utility property under ORS chapter 543.

The implementing legislation (now found in ORS chapter 261) provided for the establishment and operation of peoples' utility districts, an entity theretofore not existent in Oregon, "to distribute, sell and/or otherwise dispose of water, water power and electric energy, within or without the [districts'] territory." Or.Laws 1931, ch. 279, §§ 1, 2, 29(d). This legislation was prepared by members of the Oregon State Grange. See 41 Op.Att'y.Gen. 335, 344 (Or.1981), citing Oregon Journal, pp 1, 16, January 12, 1931 (inaugural address of Governor Meier). It was signed by Governor Meier on March 6, 1931. Included in that legislation was section 29(d) and (e), codified as...