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

Citations: 76 Or. App. 583; 711 P.2d 179Docket: E83-1726; CA A30473

Court: Court of Appeals of Oregon; December 3, 1985; Oregon; State Appellate Court

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Emerald People’s Utility District (Emerald) initiated a legal action under former ORS 543.610 seeking a judicial determination of the compensation for hydroelectric dams it aimed to acquire from Pacific Power Light (PP&L). The statute, prior to its 1983 amendment, granted the state or municipalities the right to take over licensed projects after providing two years' written notice and paying the fair value of the property, defined as the net investment plus reasonable damages to any remaining property not taken. If a payment agreement could not be reached, it would be determined through an equity proceeding in the relevant circuit court. The state and municipalities also retained the right to take over projects via condemnation proceedings as per Oregon law.

The trial court dismissed Emerald’s complaint, ruling that a People’s Utility District (PUD) does not qualify as a "municipality" under the statute. The plaintiffs argued that PUDs possess general condemnation powers which should include existing power facilities and contended that the legislature likely intended to include PUDs in the term "municipality" when the statute was enacted in 1931. However, the court noted ambiguity in the term's definition and acknowledged that determining legislative intent from 1931 regarding PUDs' condemnation authority is challenging. The examination of constitutional provisions from 1931 revealed that PUDs can be formed across counties for supplying water and developing electric energy, with management by a board of directors and specific powers including eminent domain and property acquisition.

Provisions regarding the authority of People's Utility Districts (PUDs) to exercise eminent domain are not self-executing and required legislative action for implementation, specifically found in ORS chapter 261, enacted in 1931. This legislation grants PUDs the authority to acquire property necessary for their statutory objectives, which include developing water and energy resources and providing public utility services. However, the interpretation that "any property" can be broadly applied is deemed too expansive. The authority to condemn property is limited to what is necessary for fulfilling the chapter's provisions, which is narrower than the constitutional authority to acquire property relevant to the PUD's operations. 

It raises questions about whether condemning an existing private utility’s hydroelectric project, already in public use, is necessary, despite the convenience of such action. Historical legal precedent emphasizes that the power to condemn land already appropriated for public use must be expressly stated. Therefore, it is uncertain whether ORS 261.305(5) grants PUDs the authority to condemn existing hydroelectric facilities. However, the plaintiff contends that the statutory history supports PUDs' power to condemn, referencing original and amended language of ORS 261.305(5). The original enactment allowed PUDs to follow state condemnation procedures, while a 1939 amendment permitted immediate possession of property for condemnation, with specific exclusions regarding other public or private utilities.

Plaintiff contends that the language in the 1939 legislative enactment suggests that Public Utility Districts (PUDs) were granted the authority to condemn property, implying that such language was necessary for clarity. This assertion is supported by the 1941 amendment, which allowed PUDs to take immediate possession of property through court deposit, while also imposing restrictions on condemning property already utilized by other public or private utilities. Specifically, neither the 1939 nor the 1941 amendments explicitly authorized the condemnation of existing power generating facilities devoted to public use. Instead, these amendments appear to recognize PUDs' authority to condemn property not dedicated to public use. The original statute would have permitted such condemnations, but the amendments introduced limitations on PUDs' rights regarding property of public utilities. 

The legislature has the power to empower public entities to condemn private land used for public purposes, but such authority must be explicitly granted. Citing the case of Little Nestucca Road Co. v. Tillamook Co., it is established that government agencies can only condemn property with express statutory authority and cannot take property already serving a public use if it would disrupt that use. Other jurisdictions support this, allowing for the condemnation of private corporation property only if specifically named or authorized by statute. A privately owned power generation facility for public consumption is considered a public use. Notably, the principles established in Little Nestucca predate the authorization of PUDs, indicating legislative awareness of these restrictive rules when enacting ORS 545.082(2) in 1917, which permits the condemnation of property already in public use if deemed less necessary than the intended use by the district.

The 1931 legislature, when enacting the precursor to ORS 261.305(5), did not include provisions allowing governmental entities, such as Public Utility Districts (PUDs), to condemn property already devoted to public use, indicating an awareness of the proper procedures for such authority. The analysis assumes that property condemned would continue to serve the same public use, but this is uncertain for a PUD condemning existing power generating facilities of a private utility, particularly if those facilities serve consumers outside the PUD’s borders. Unlike ORS 543.610(1), ORS 261.305(5) does not obligate PUDs to honor existing power supply contracts, raising concerns about the impact on current public use.

It is concluded that PUDs lack express authority under ORS 261.305(5) to condemn power generating facilities dedicated to public use, nor does such authority arise by necessary implication. Amendments from 1939 and 1941 did not expand this authority, having been repealed, and there is insufficient persuasive evidence that later legislatures believed the original statute allowed for such condemnation. The term "any property" in ORS 261.305(5) is interpreted to have limitations, following principles established in prior case law, which do not support the idea that PUDs can condemn existing facilities serving the public.

The remaining question is whether PUDs possess authority under former ORS 543.610 to condemn existing generating facilities, and whether they qualify as municipalities within that statute's context. The term "municipality" has varied interpretations that depend on the context, referencing the constitutional basis for PUDs' creation under Article XI, section 12, which allows for the establishment of PUDs encompassing both incorporated and unincorporated territories.

Section 12 differentiates Public Utility Districts (PUDs) from municipalities, establishing them as distinct legal entities with separate authorities over the same territory. This distinction was established through the initiative process rather than legislative action, yet the legislature acknowledged it in relevant legislation. Oregon Laws 1931, chapter 279, section 2 defines a PUD as an "incorporated people's utility district" and a municipality as an "incorporated city or town with a council or legislative body," definitions that persist in ORS 261.010(1) and (2). Although PUDs are quasi-corporations, they qualify as municipalities under the Oregon Constitution when the term is interpreted broadly.

The legislative context reveals that the predecessor of ORS 543.610 recognized PUDs as part of a broader framework addressing state water power resources and mirrored the Federal Water Power Act. This federal act granted preference to "states and municipalities" for license issuance, defining municipalities to include any state political subdivision. In Oregon's SB 62, the legislature initially referred to "municipal corporation" but amended it to include "public utility district." The absence of PUDs in section 21, despite their mention in section 9, implies the legislature intended different meanings for these terms across related statutes. Section 21, now ORS 543.610(2), reserves the right for the state and municipalities to acquire projects through condemnation, seemingly limiting "municipality" to cities and towns governed by a charter.

Plaintiff argues that inconsistencies in terminology, particularly the use of "public utility district" instead of the correct "people’s utility district," indicate careless drafting. Additionally, the failure to amend section 10 to include PUDs, despite granting a preference to municipal corporations, raises questions about legislative intent. The preferences outlined in sections 9 and 10 differ in application: section 9 pertains to licensing after a preliminary permit, while section 10 addresses applications for water use prior to any permit issuance.

The language of section 37 of the original act explicitly excludes cities, towns, and other municipal corporations in Oregon, including public utility districts (PUDs), from its provisions, while preserving certain rights and preferences specified in sections 9, 10, and 21. The plaintiff argues that the term “other municipal corporations” includes PUDs and that these entities retain rights under the cited sections. However, the argument does not convincingly enhance the interpretation of section 21, as the language primarily serves to exclude PUDs from the act’s general provisions while granting them specific rights under section 9 (now ORS 543.260). Subsequent legislative actions, including ORS 261.315 and ORS 261.250(2), further clarify that PUDs cannot condemn existing power plants, indicating a legislative intention to restrict such authority. An attorney general’s opinion from 1981 suggested uncertainty regarding PUD condemnation powers, leading to a legislative moratorium on such actions concerning hydroelectric plants outside their districts. Discussions during the legislative process indicated a desire to prevent litigation regarding the attorney general's conclusions, rooted in the understanding that PUDs do not qualify as municipalities.

The 1967 prohibition against acquiring existing thermal facilities was intended to be matched with a similar restriction on takeover litigation concerning hydroelectric plants. Legislative debates in both the House and Senate indicated uncertainty about whether existing condemnation powers were being limited, yet ultimately supported the attorney general’s opinion confirming such limitations. The legislature confirmed this view, even after the moratorium was repealed on July 1, 1983. The 1981 legislature reinforced the attorney general's conclusion by prohibiting other districts, apart from public utility districts (PUDs), from using condemnation powers to acquire hydroelectric facilities, as codified in ORS 543.675. This legislation aimed to prevent any implicit expansion of these powers and emphasized that condemnation authority must be expressly granted. Additionally, the 1981 legislature enacted ORS 543.660, distinguishing between municipalities and PUDs, further supporting the attorney general’s interpretation. In 1983, ORS 543.610(1) was amended to stipulate that acquisition of water projects must involve "just compensation" instead of "net investment costs," addressing constitutional concerns and aiming to prevent unfairness in cases like the proposed takeover by Emerald. These legislative changes suggest a departure from assumptions made in prior years (1939, 1941, 1945, and 1967) and lead to the conclusion that the legislature likely did not intend to include PUDs as "municipalities" under ORS 543.610.

The case of Little Nestucca Road Co. v. Tillamook Co. establishes that the authority to condemn property already devoted to public use must be explicitly granted to the entity seeking to exercise that power. The relevant statute in this context fails to meet this requirement, leading to the affirmation of the defendant’s motion to dismiss. Historical context reveals that an earlier attorney general's opinion in 1930 indicated that cities could condemn existing water power projects under a more specific statute than the one later providing Public Utility Districts (PUDs) with condemnation authority. The validity of that earlier opinion is now questioned in light of Little Nestucca. The current attorney general's opinion suggests that the 1931 statute aimed to confer exclusive authority on the state, cities, and towns to take over existing facilities. Legislative discussions reflect mixed opinions on the actions of PUDs, with some senators expressing concerns over the appropriateness of using legislation to address perceived overreach by a PUD in acquiring hydroelectric plants outside its jurisdiction.