South Fork Water v. Town of South Fork

• Decision Date: 25 April 2011
• Docket Number: No. 09SC840.,09SC840.
• Citation: 252 P.3d 465
• Parties: SOUTH FORK WATER AND SANITATION DISTRICT, Petitionerv.TOWN OF SOUTH FORK, Colorado, Respondent.
• Court: Colorado Supreme Court

252 P.3d 465

SOUTH FORK WATER AND SANITATION DISTRICT, Petitioner

v.TOWN OF SOUTH FORK, Colorado, Respondent.

No. 09SC840.

Supreme Court of Colorado, En Banc.

April 25, 2011.

Norton, Smith & Keane, P.C., Charles E. Norton, J. Michael Keane, Denver, Colorado, Attorneys for Petitioner.Karp Neu Hanlon, P.C., Karl J. Hanlon, Cassia R. Furman, Glenwood Springs, Colorado, Attorneys for Respondent.Justice HOBBS delivered the Opinion of the Court.

We granted certiorari to review the court of appeals' judgment in South Fork Water & Sanitation District v. Town of South Fork, 228 P.3d 192 (Colo.App.2009).¹ This is a declaratory judgment action under C.R.C.P. 57 by which the South Fork Water and Sanitation District (“the District”) attempts to prevent the Town of South Fork (“the Town”) from acquiring water rights and water systems to serve its residents. A significant portion of the Town includes lands within the District's boundaries.

Section 31–35–402(1)(b), C.R.S. (2010), provides that a municipality, like the Town, or a quasi-municipal corporation formed to operate a water system, like the District, may not provide water service within the boundaries of the other without its approval. Here, throughout an extended period of existence, the District has been unable to provide water service to residents of the District, yet it attempts to prevent the Town from acquiring water rights and private water systems as part of its efforts to furnish water to its residents.

We hold, under section 31–35–402(1)(b), that a municipality cannot unreasonably withhold its approval for water service in an overlapping territorial area when it is not capable of furnishing that service and the other municipality can. Under the facts of this case, the district court did not err in refusing the District's request for declaratory relief. Accordingly, we affirm the judgment of the court of appeals.

I.

The District is a special district and quasi-municipal corporation originally organized in 1977 to provide sewerage service. Most of the Town is within the boundaries of the District, and the District currently provides sewerage service to a large portion of the Town.

Between 2001 and 2003, the District began to develop a utility plan (“plan”) that included construction of a centralized water system. The plan estimated the cost of constructing the water system at approximately $7.8 million. The Rio Grande County Commissioners approved the amended service plan in 2004.

The District took preliminary steps toward the provision of water service. It paid for its manager to be trained as a certified water system operator. It also applied for various loans and grants. But, the District failed to secure the funding necessary to build the centralized water system. Its lack of financial resources prevented it from purchasing existing private water systems in the area. The District did not budget or spend any money on planning and constructing a centralized water system in 2004 and 2005. In 2006, a majority of voters in the District rejected its proposal to provide water services to them.

Based on these facts, the trial court found that the District lacked the financial means, ability, and intent to provide water service.

The Town is a statutory town established in 1992. Pursuant to section 31–15–708, C.R.S. (2010), it is authorized to provide water service to its residents. The current dispute arose when the Town began preparing to provide water service to its residents in 2006. As part of its efforts, the Town amended its Land Use and Development Code to require the dedication of water rights and water systems as a condition for subdivision approval. Its Board of Trustees agreed by resolution, dated December 14, 2006, to provide water service to the Town. It also negotiated three agreements for subdivisions requiring the dedication of water rights and water systems.

In 2006, the District filed a declaratory judgment complaint against the Town alleging that the Town was “furnishing water service” within the District without the District's approval, in violation of section 31–35–402(1)(b). The Town then filed a petition for exclusion from the District's boundaries pursuant to section 32–1–502, C.R.S. (2010). After more than 100 voters within the District petitioned for an election on the question of exclusion pursuant to section 32–1–502(5), the Town withdrew its petition for exclusion. In 2007 and 2008, the Town negotiated three letters of intent to acquire private water systems.

The district court found that the Town had a realistic possibility of operating a water system in the near future. It applied the precedent of Town of Sheridan v. Valley Sanitation District, 137 Colo. 315, 324 P.2d 1038 (1958), in construing section 31–35–402(1)(b) to require a reasonable exercise of the approval power. It found the District's withholding of approval to be unreasonable because it had no capability to provide water service yet was attempting to prevent the Town from serving its residents. The district court concluded that the Town's police power to enact a land use code for the dedication of water rights and the acquisition of private water systems, as a condition for subdivision approval, prevailed over the District's withholding of approval.

The court of appeals ruled that the municipal water service approval power granted to municipalities by section 31–35–402(1)(b) could only be exercised in a reasonable manner. South Fork Water & Sanitation Dist., 228 P.3d at 197. The court of appeals concluded the District's attempt to bar the Town from furnishing water service was unreasonable because it had neither the intent nor financial resources to provide water service itself. Id. at 198. It also approved of the trial court's conclusion that the Town could use its land use power to require dedications of water rights and water systems where another municipality had failed to provide water service within its territory. Id.

The District filed a petition for writ of certiorari, which we granted. We affirm the judgment of the court of appeals.

II.

We hold, under section 31–35–402(1)(b), that a municipality cannot unreasonably withhold its approval for water service in an overlapping territorial area when it is not capable of furnishing that service and the other municipality can. Under the facts of this case, the district court did not err in refusing the District's request for declaratory relief. Accordingly, we affirm the judgment of the court of appeals.

A.Standard of Review

We review de novo a lower court's conclusions of law. Freedom Colo. Info., Inc. v. El Paso Cnty. Sheriff's Dept., 196 P.3d 892, 897 (Colo.2008). We set aside a trial court's factual findings only when they are “so clearly erroneous as to find no support in the record.” People ex rel. A.J.L., 243 P.3d 244, 250 (Colo.2010).

Statutory construction proceeds de novo. Specialty Rests. Corp. v. Nelson, 231 P.3d 393, 397 (Colo.2010). When construing a statute, we effectuate the intent of the General Assembly; we look to the plain meaning of the statutory language and consider it within the context of the statute as a whole. Bly v. Story, 241 P.3d 529, 533 (Colo.2010). We construe the entire statutory scheme to give consistent, harmonious, and sensible effect to all parts. Climax Molybdenum Co. v. Walter, 812 P.2d 1168, 1174 (Colo.1991).

If the statutory language is clear, we apply it. Specialty Rests. Corp., 231 P.3d at 397. If the statutory language is ambiguous, we may use other tools of statutory interpretation to determine the General Assembly's intent. Crandall v. City of Denver, 238 P.3d 659, 662 (Colo.2010). We avoid interpretations that would lead to an absurd result. Id.

Where a contest between competing governmental entities over their relative authority threatens the provision of an essential public service to residents within overlapping boundaries, we construe the applicable statutory provisions in a manner that avoids inter-governmental conflict and inconsistency, if possible, and promotes the health and safety of the residents. Bd. of Cnty. Commr's v. Hygiene Fire Protection Dist., 221 P.3d 1063, 1070 (Colo.2009).

B.Powers of Special Districts

The General Assembly enacted the Special District Act with the intent that special districts would “promote the health, safety, prosperity, security, and general welfare” of their inhabitants and of the state of Colorado. § 32–1–102(1), C.R.S. (2010). Special districts are political subdivisions of the state that possess various proprietary powers. Romer v. Fountain Sanitation Dist., 898 P.2d 37, 41 (Colo.1995); People ex rel. Lakewood v. Haase, 198 Colo. 47, 50, 596 P.2d 392, 394 (1979). But, they possess only those powers expressly conferred on them by the constitution or statute, as well as the incidental implied powers reasonably necessary to carry out the express powers. § 32–1–1001(1)(n), C.R.S. (2010); Romer, 898 P.2d at 41.

Title 32, Article 1, Part 10 sets forth powers the General Assembly has conferred upon special districts. Two statutory sections detail the express powers conferred on water and sanitation districts. First, as a type of special district, water and sanitation districts share with other special districts those common powers set forth in section 32–1–1001, C.R.S. (2010). These include various basic powers, such as the power to enter into contracts, to control the district's business and affairs, and to “exercise all rights and powers necessary or incidental to or implied from the specific powers granted to special districts by this article.” § 32–1–1001(d), (h), (n).

Second, section 32–1–1006, C.R.S. (2010), confers upon water and sanitation districts several additional powers. As pertinent to this case, many of those powers are directly related to the construction and operation of a water system. For example, subsection (1)(c)(I) gives water and sanitation districts the power to “establish, construct,...