Nicoll v. City of Eugene, 16-80-08132

• Decision Date: 17 August 1981
• Docket Number: No. 16-80-08132,CA,16-80-08132
• Parties: Burton NICOLL, Appellant, v. The CITY OF EUGENE, a Municipal Corporation, acting by and through the Eugene Water & Electric Board, Respondent. 19745.
• Court: Oregon Court of Appeals

Page 1213

628 P.2d 1213

52 Or.App. 379

Burton NICOLL, Appellant, v. The CITY OF EUGENE, a Municipal Corporation, acting by and through the Eugene Water & Electric Board, Respondent.

No. 16-80-08132, CA 19745.

Court of Appeals of Oregon.

Argued and Submitted April 10, 1981.

Decided May 26, 1981.

On Reconsideration Aug. 17, 1981.

See 632 P.2d 502.

John E. Jaqua, Eugene, argued the cause for appellant. With him on the briefs was Jaqua & Wheatley, P.C., Eugene.

Windsor Calkins, Eugene, argued the cause for respondent. With him on the brief was Calkins & Calkins, Eugene.

Before RICHARDSON, P.J., and THORNTON and VAN HOOMISSEN, JJ.

RICHARSON, Presiding Judge.

Plaintiff appeals from a judgment for the defendant, City of Eugene, acting through its agency, the Eugene Water & Electric Board (EWEB), in this ORS chapter 27 proceeding. Plaintiff is a customer of EWEB and contends that EWEB's residential energy conservation plan (plan), which was adopted pursuant to the National Energy Conservation Policy Act (42 U.S.C.A. § 8201 et seq.), violates various provisions of the Oregon Constitution and was adopted without charter or statutory authority. We affirm.

The parties' statement of the controversy recites, in relevant part:

"VII.

"Pursuant to the EWEB Plan, EWEB is authorized to engage in the following activities.

"(A) Provide matching grants of funds to EWEB customers to be used to purchase approved energy conservation and renewable resource measures and equipment to be installed by EWEB customers;

"(B) Lend funds at zero percent interest to EWEB customers with electric space heating to be used to purchase and install approved energy conservation and renewable resource measures and equipment;

"(C) Lend funds at an interest rate and financing charge equal to the financing and handling cost incurred by EWEB to customers without electric space heating, such funds to be used to purchase and install approved energy conservation and renewable resource measures and equipment;

"(D) Arrange financing by lenders for EWEB customers to purchase and install approved energy conservation and renewable resource measures and equipment;

"(E) Provide for repayment of approved loans made by lenders to EWEB customers for the purchase and installation of approved energy conservation and renewable resource measures and equipment through EWEB billings; and

"The activities described in paragraphs VII(A), (B), and (C) are collectively referred to as the 'EWEB Financing Program.'

"VIII.

"To participate in the EWEB Financing Program, an EWEB customer must be an 'eligible customer' as defined in the EWEB Plan. The plaintiff is an eligible customer. The plaintiff has purchased and installed energy conservation and renewable resource measures and equipment prior to May 27, 1980 on his residential buildings.

"* * * *

"X.

"The EWEB Financing Program is effective as of May 27, 1980, the date on which the resolution adopting the EWEB Plan was passed by the EWEB Board of Commissioners.

"XI.

"As an adjunct to the EWEB Plan, the EWEB Board of Commissioners approved, on May 27, 1980, a Temporary Program to provide, without direct cost to EWEB customers, certain approved energy conservation and renewable resource measures and equipment. * * *

"XII.

"The EWEB Financing Program and Temporary Program will be funded by revenues received from operations or by bonds payable from revenues received from operations.

"In order to use bond funds EWEB must submit to the voters of the City of Eugene a proposed charter amendment authorizing the issuance and sale of the bonds. The amendment shall provide that the bonds on their face state that they shall not in any manner be a general obligation of the Eugene Water & Electric Board or of the City of Eugene, nor a charge upon the tax revenue of such city nor of any revenues or property of such city or revenues or property of the Eugene Water & Electric Board not specifically pledged thereto; however, the general revenues of the electric utility system of the Eugene Water & Electric Board may be pledged for the amount of such bonds."

Plaintiff argues that the provisions of the plan which relate to financing of and assistance for customer energy conservation measures violate the Oregon constitutional requirements (1) that public bodies not loan credit to or raise money for private entities (Art. XI, § 9); (2) that no law be passed which confers privileges or immunities on persons or classes unequally (Art. I, § 20); (3) that no private property or services be taken without just compensation or for non-public purposes (Art. I, § 18); and (4) that no law impair the obligation of contracts (Art. I, § 21).

Or.Const., Art. XI, § 9 provides, as relevant:

"No * * * city * * * or other municipal corporation * * * shall * * * raise money for, or loan its credit to, or in aid of, any * * * company, corporation or association."

In Carruthers v. Port of Astoria, 249 Or. 329, 438 P.2d 725 (1968), the Supreme Court concluded that public commitments or expenditures which incidentally benefit private entities do not violate Art. XI, § 9, unless they entail ultimate recourse against general tax revenues or do not serve a "public purpose." The parties' statement of controversy states that EWEB's commitments under the plan will be redeemed out of operating revenues of the utility or from bonds which must show on their face that they do not create a general obligation of EWEB or the city.

Plaintiff argues, however, that the plan's contemplated expenditures to or in aid of eligible residential customers are not for a public purpose. Plaintiff states:

"Defendant relies upon the attenuated theory that Congress has declared the existence of an energy crisis which threatens the very vitals of the nation, and by reason of the existence of such an impending calamity, stern measures engendering conservation will benefit the public. This argument must be tried and found wanting * * *."

We disagree. Strongly as plaintiff may disagree with the congressional policy and the objectives of the EWEB plan, they constitute a public purpose under the following test articulated in Carruthers v. Port of Astoria, supra:

" 'The only valid criterion would seem to be whether the expenditures are sufficiently beneficial to the community as a whole to justify governmental involvement; but such a judgment is more appropriate for legislative than judicial action. The judiciary should invalidate expenditures only where reasonable men could not differ as to their lack of social utility.' Note, 66 Harv.L.Rev. 898 at 903 (1953)." 249 Or. at 341, 438 P.2d 725.

We conclude that the plan does not violate Art. XI, § 9. ¹

Plaintiff next argues that the plan violates the equal privileges and immunities section of the state constitution (Art. I, § 20) in two ways: first, by discriminating against customers like plaintiff who took qualifying energy conservation measures prior to the plan's May 27, 1980, effective date and, second, by benefiting "some favored citizens (those who comply with energy-related compulsion) over others * * *."

The standard for determining whether the plan violates Art. I, § 20 by making assistance available only to eligible customers who first take conservation measures after May 27, 1980, is whether there is a rational basis which is related to the plan's purposes for according benefits to such customers while denying benefits to customers who took similar measures at an earlier time and are thereby not eligible for financial assistance. See, e.g., School District No. 12 v. Wasco County, 270 Or. 622, 529 P.2d 386 (1974); and Mallatt v. Luihn et al., 206 Or. 678, 294 P.2d 871 (1956); cf. Olsen v. State ex rel. Johnson, 276 Or. 9, 554 P.2d 139 (1976). We conclude that there is a rational basis for the different treatment. The aim of the plan is to induce energy conservation and reduce future demands on the energy production and distribution system. The plan provides financial assistance to consumers in order that conservation measures can be put into effect for the immediate benefit of the individual consumer and the ultimate benefit to the energy distribution system. In light of these purposes of the plan, it is rational to provide benefits only to consumers who have not yet taken conservation measures and who may be induced to do so by the availability of financial assistance. Moreover, we agree with the suggestion in EWEB's brief that plaintiff's argument would render unconstitutional virtually all governmental action which does not confer benefits retroactively. We therefore reject the argument that the plan discriminates unconstitutionally by not providing assistance to customers who took energy conservation measures prior to the plan's effective date.

We also reject plaintiff's second privileges and immunities clause argument. The Supreme Court stated in Jarvill v. City of Eugene, 289 Or. 157, 613 P.2d 1 (1980), that

"* * * Article I, section 20, however, prohibits only the grant of a privilege which does not belong to all citizens ...