HOHOKAM IRR. AND DRAINAGE DIST. v. APS
| Citation | 64 P.3d 836,204 Ariz. 394 |
| Decision Date | 28 February 2003 |
| Docket Number | No. CV-02-0091-PR.,CV-02-0091-PR. |
| 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 | Supreme Court of Arizona |
Brown & Bain, P.A. by Paul F. Eckstein, Dan L. Bagatell, Phoenix, Attorneys for the Petitioner, Hohokam Irrigation and Drainage District, Pinal County, Arizona.
Osborn Maledon, P.A. by Andrew D. Hurwitz, Warren Stapleton, Phoenix, Attorneys for the Respondent, Arizona Public Service Company.
Moyes Storey by Jay I. Moyes, Steven L. Wene, Phoenix, Attorneys for Maricopa County Intervenors Harquahala Power District, et al.
Law Offices of Robert S. Lynch by Robert S. Lynch, Phoenix, and Law Office of Paul R. Orme, P.C. by Paul R. Orme, Mayer, Attorneys for Pinal County Intervenors Central Arizona Irrigation and Drainage District, et al.
Gust Rosenfeld P.L.C. by Fred H. Rosenfeld, Richard A. Segal, Phoenix, Attorneys for Amicus Curiae Cortaro Marana Irrigation District.
Arizona Center for Law in the Public Interest by Timothy M. Hogan, Phoenix, Attorneys for Amicus Curiae Arizona Consumers Council.
¶ 1 We granted review to determine whether irrigation districts have authority, under the constitution and statutes of Arizona, to provide electricity to customers outside established district boundaries. Because we answer in the affirmative, we vacate the decision of the court of appeals and reinstate the trial court's grant of summary judgment in favor of the Hohokam Irrigation and Drainage District. We have jurisdiction pursuant to Article 6, Section 5(3), of the Arizona Constitution.
¶ 2 Hohokam Irrigation and Drainage District ("Hohokam") was formed in Pinal County in 1972. In 1997, Hohokam began buying electric power on the wholesale market and reselling it at retail. Arizona Public Service Company ("APS") sells electricity in areas covered by a certificate of public convenience and necessity issued by the Arizona Corporation Commission. This dispute arose because Hohokam began offering competing electrical service outside district boundaries to persons located in the APS service territory.
¶ 3 In 1998, Hohokam filed a declaratory suit against APS, claiming the right to serve electricity to customers located outside district boundaries and seeking an injunction to prevent interference from APS. APS counterclaimed, seeking a declaration prohibiting Hohokam from serving customers outside its boundaries. The trial court permitted intervention as a matter of right to the Central Arizona Irrigation and Drainage District; Electrical Districts Nos. 1, 2, 3, and 5 of Pinal County; the Maricopa-Stanfield Irrigation & Drainage District; Harquahala Power District; Aguila Irrigation District; McMullen Valley Water Conservation and Drainage District; Buckeye Water Conservation and Drainage District; Roosevelt Irrigation District; Electrical District No. 7; and Electrical District No. 8 ("the Intervenors").
¶ 4 On cross-motions for summary judgment, the trial court entered judgment in favor of Hohokam, declaring that irrigation districts have the constitutional and statutory authority to provide electrical service outside district boundaries. The court of appeals reversed, holding that by enacting Arizona Revised Statute ("A.R.S.") § 48-2978(15)(1997), the legislature prohibited irrigation districts from selling electric power outside district boundaries. Hohokam Irr. and Drainage Dist. v. Ariz. Pub. Serv. Co., 201 Ariz. 356, 360, ¶ 14, 35 P.3d 117, 121 (App.2002). Hohokam appeals.
¶ 5 We review the grant of summary judgment de novo, and view the evidence and all reasonable inferences in the light most favorable to the party opposing the motion. Wells Fargo Bank v. Ariz. Laborers, Teamsters and Cement Masons Local No. 395 Pension Trust Fund, 201 Ariz. 474, 482, ¶ 13, 38 P.3d 12, 20 (2002). Likewise, the interpretation of statutes and constitutional provisions is an issue of law that we review de novo. Ramirez v. Health Partners of S. Ariz., 193 Ariz. 325, 327-28,
¶ 6 Irrigation districts are entities of statutory creation. Enloe v. Baker, 94 Ariz. 295, 301, 383 P.2d 748, 752 (1963). Once organized they become political subdivisions of the state. Id. They derive their powers from the constitution and statutes of Arizona.
¶ 7 Article 13, Section 7 of the state constitution is the principal source of powers granted to irrigation and other special purpose districts in Arizona:
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....
Ariz. Const. art. 13, § 7 (adopted 1940).
¶ 8 This provision was adopted in response to our decision in State v. Yuma Irrigation District, which held that the legislature could not exempt irrigation districts from property taxes because no such power existed in the constitution. 55 Ariz. 178, 184, 99 P.2d 704, 706 (1940).
¶ 9 Although a primary purpose of section 7 was to grant the legislature the power to exempt irrigation districts from taxation, this was not its sole purpose or effect. Local 266, Int'l Bhd. of Elec. Workers v. Salt River Project Agric. Improvement and Power Dist., 78 Ariz. 30, 35, 275 P.2d 393, 396 (1954). Rather, the plain language of the provision vests irrigation and other districts with powers and duties equal to the powers and duties conferred on municipalities and political subdivisions. See id. (); see also Pinetop-Lakeside Sanitary Dist. v. Ferguson, 129 Ariz. 300, 302, 630 P.2d 1032, 1034 (1981)
¶ 10 The constitution grants municipalities "the right to engage in industrial pursuits." Ariz. Const. art. 2, § 34. We have consistently held that Article 2, Section 34 confers on municipalities the right to engage in industry "without specifying any limitation whatever as to kind or character." Crandall v. Town of Safford, 47 Ariz. 402, 409, 56 P.2d 660, 663 (1936). In Crandall, we held that by virtue of Article 2, Section 34, a municipality is authorized to distribute surplus water outside its corporate boundaries. Id. at 411, 56 P.2d at 663. Similarly, in City of Phoenix v. Wright, solely on the basis of Article 2, Section 34, we stated that even in the absence of statutory authority, a municipal corporation is authorized to furnish water to customers residing outside its boundaries. 52 Ariz. 227, 233, 80 P.2d 390, 392 (1938). In City of Phoenix v. Kasun, we further confirmed that "a municipal corporation has the right to furnish water through its municipal water plant to customers without, as well as within, its corporate limits." 54 Ariz. 470, 474, 97 P.2d 210, 212 (1939). Read together, Article 13, Section 7 and Article 2, Section 34, in clear terms, confer on irrigation districts the right to engage in industrial pursuits. Certainly the sale of electricity is an industrial pursuit and therefore within the rights and privileges granted municipalities.
¶ 11 In addition to the broad powers granted irrigation districts by the state constitution, the legislature conferred specific statutory powers on these districts in the Irrigation District Act of 1921. A.R.S. §§ 48-2901 to -3256 (Supp.2002). The legislature first...
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