Matthews v. Tri-County Water Conservancy Dist., TRI-COUNTY

• Decision Date: 07 July 1980
• Docket Number: No. 79SC83,TRI-COUNTY,79SC83
• Citation: 200 Colo. 202,613 P.2d 889
• Parties: Keith MATTHEWS, Barbara Matthews, and Carl B. Runyon, Petitioners, v.WATER CONSERVANCY DISTRICT, Respondent.
• Court: Colorado Supreme Court

Page 889

613 P.2d 889

200 Colo. 202

Keith MATTHEWS, Barbara Matthews, and Carl B. Runyon, Petitioners, v. TRI-COUNTY WATER CONSERVANCY DISTRICT, Respondent.

No. 79SC83.

Supreme Court of Colorado, En Banc.

July 7, 1980.

Overholser & Slee, John W. Overholser, Montrose, for petitioners.

Brooks, Miller, Brooks & White, Ralph E. Miller, John A. Brooks, Theodore L. Brooks, Montrose, for respondent.

Fairfield & Woods, Charles J. Beise, Denver, for amicus curiae Southeastern Colorado Water Conservancy Dist.

Baker & Cazier, Stanley W. Cazier, Granby, for amicus curiae Middle Park Water Conservancy Dist.

Lawrence W. McDaniel, Durango, for amicus curiae Florida Water Conservancy Dist.

George R. Armstrong, Cortez, for amicus curiae Dolores Water Conservancy Dist Sam P. Lockard, Delaney & Balcomb, Kenneth Balcomb, Scott Balcomb, Glenwood Springs, for amicus curiae Ute Water Conservancy Dist.

Delaney & Balcomb, Kenneth Balcomb, Scott Balcomb, Glenwood Springs, for amici curiae Basalt Water Conservancy Dist., West Divide Water Conservancy Dist., and Silt Water Conservancy Dist.

Arthur A. Abplanalp, Jr., Glenwood Springs, for amicus curiae Bd. of County Com'rs of Garfield County.

LEE, Justice.

Certiorari was granted to review the decision of the court of appeals in Matthews v. Tri-County Water Conservancy Dist., Colo.App., 594 P.2d 586 (1979).

Petitioners seek to permanently enjoin the Tri-County Water Conservancy District ¹ (district) from enforcing a new rate schedule and water tap fee policy. The District Court of Montrose County denied petitioners' motions for injunctive relief, and that action was affirmed on appeal. We now affirm the court of appeals.

The district was organized in 1957 pursuant to the Water Conservancy Act, now in section 37-45-101 et seq., C.R.S. 1973. The district's rules and regulations require subdividers to install water systems in their subdivisions at their cost and to the district's specifications. When a system is completed, it is transferred to the district for operation and maintenance and the district then sells taps to each lot owner within the subdivision.

Petitioners are the owners to two subdivisions in Montrose County. In 1975, they installed a water system in their first subdivision and connected it to the occupied houses. The district rejected the system when, upon inspection, it found that it did not meet specifications. As a temporary solution, the district agreed to sell petitioners a 2-inch commercial tap, which petitioners continue to use. ² Petitioners then installed a subdivision pipeline system which was fed by the commercial tap, with a meter for each residence. The district billed petitioners at a bulk rate; petitioners in turn billed the owners of the residences for the amount of water used.

At the quarterly meeting of the board of directors of the district on July 27, 1976, the board instructed its executive committee ³ to formulate revised rates and regulations governing commercial taps for trailer parks, apartment houses, condominiums, and subdivisions. The new rates and policies were adopted by the executive committee in August 1976 and approved by the board of directors in October 1976. They provide that commercial taps supplying individual residences will no longer be billed at the commercial bulk rate, but rather that the owner of the commercial tap will be billed according to the number of residences supplied with water from it. Owners of commercial taps will also be billed $500 for each new residence in the subdivision connected to their taps.

Petitioners contend that the new rates and regulations are unlawful and unenforceable. We do not agree.

I.

Initially, petitioners contend that the new rates and regulations were not validly adopted by the district because only the full board of directors is authorized to act on behalf of the district. Here, petitioners assert that the rates and regulations were established by the executive committee, with the board of directors acting merely as a "rubber stamp."

The board of directors has statutory authority to "fix rates at which water not allotted to lands * * * shall be sold, leased, or otherwise disposed of * * *." Section 37-45-118(l)(g), C.R.S. 1973. See section37-45-118(l)(j), C.R.S. 1973 (1979 Supp.). In this case, the record indicates that the executive committee was acting under the direction of the full board when it formulated the new rules and regulations.

At the July 27, 1976, meeting of the board of directors, the directors discussed active and inactive water tap rates and the problems relating to subdivision water systems. At least one of the petitioners was present at this meeting. It was also at the July 27 meeting that the executive committee was requested to determine new rates and regulations. The committee had the benefit, then, of the discussion, at a public meeting, of the issues it was to address.

Once the executive committee formulated the new rates and regulations, they were submitted to the board for approval and adoption. Thus, it was the board of directors and not the executive committee which "fixed" the new rates. We find no merit in petitioners' contention that the rates and regulations were not properly adopted by the board of directors.

Petitioners further argue that public policy requires that persons affected by decisions of public entities be entitled to have such questions considered at meetings of the entire board, with the opportunity for discussion in that forum. Such an opportunity was afforded members of the public, both at the regular meeting when the executive committee was directed to formulate new rates and regulations and at the quarterly meeting in October 1976 when the new rates and regulations were approved and adopted.

Petitioners also contend that, since the executive committee is an appointive group, aggrieved persons have no recourse to election or recall remedies if they are dissatisfied with the actions of that group. This argument is without merit.

The membership of the board of directors is subject to the elective process if steps are taken by the electors of the district as provided for in section 37-45-114(2), C.R.S. 1973. ⁴ Thus, if the electorate is dissatisfied with the operation of the district, they may demonstrate their discontent by exercising their right to initiate the elective process.

II.

We do not reach the merits of petitioners' position that the board of directors is subject to the State Administrative Procedures Act since petitioners failed to raise this issue in the trial court and are thus precluded from raising it on appeal. C.R.C.P. 59(f).

III.

Petitioners next contend that the district is a public utility within the meaning of section 40-1-103, C.R.S. 1973, and, therefore, may not set rates and make regulations without first complying with the requirements imposed on a public utility.

We do not agree that water conservancy districts are public utilities subject to the regulation of the Public Utilities Commission (PUC).

The Water Conservancy Act (Act) declares that a water conservancy district shall be a "political subdivision of the state of Colorado and a body corporate with all the powers of a public or municipal corporation." Section37-45-112(7), C.R.S. 1973. Among the specific powers granted to it is that of fixing water rates at which water "not allotted to lands" shall be sold, leased or otherwise disposed of.

The power of a conservancy district to engage in rate fixing for the sale, leasing or disposition of its waters does not by this authority alone give it public utility status or subject it to the rules, regulations, and supervision of the PUC. More significant is the extent to which the business or enterprise is impressed with the public interest and the extent to which it holds itself out as serving, or ready to serve, all of the public indiscriminately. Section 40-1-103, C.R.S. 1973 (statutory definition); P.U.C. v. Colorado Co., 142 Colo. 361, 351 P.2d 241 (1960). See Robinson v. Boulder, 190 Colo. 357, 547 P.2d 228 (1976); Englewood v. Denver, 123 Colo. 290, 229 P.2d 667 (1951). See also Parrish v. P.U.C.., 134 Colo. 192, 301 P.2d 343 (1956).

A municipal corporation which operates as a public utility and limits its services to the inhabitants of the municipality only is not subject to PUC regulation. Loveland v. PUC, 195 Colo. 298, 580 P.2d 381 (1978); K. C. Elec. v. PUC, 191 Colo. 96, 550 P.2d 871 (1976); Thornton v. P.U.C., 157 Colo. 188, 402 P.2d 194 (1965); People ex rel. v. Loveland, 76 Colo. 188, 230 P. 399 (1924); Compare Schlarb v. Sanitation Dist., 144 Colo. 590, 357 P.2d 647 (1960) (sanitation district held not a public utility).

Significantly, the Act provides: " * * * but the sale, leasing, and delivery of water for irrigation and domestic purposes as provided in this section shall only be made for use within the district." Section 37-45-118(1)(j). (Emphasis added.) It follows that a water conservancy district, a political subdivision of the state, having the powers of a public or municipal corporation and having no obligation to sell, and being prohibited by statute from selling water for use outside the district boundaries, does not rationally fall within the definition of a public utility or within the regulatory control of the PUC.

Finally, as the court of appeals noted, the Act was enacted almost twenty-five years after the creation of the PUC. It specifically provides: "All acts or parts of acts conflicting in any way with any of the provisions of this (Act) * * * are declared nonoperative and noneffective as to this (Act) as completely as if they did not exist." Section 37-45-107, C.R.S. 1973.

Since the Act specifically grants to the water districts the authority to fix water rates for non-irrigation water, section 37-45-118(1)(g), without any reference to the ratemaking procedure of the PUC, it is clear that the legislature did not intend to make the district's...