Brown v. City of Eugene

Brown v. City of Eugene, 250 Or. App. 132 (2012) (holding that the term “water service” in a city charter granted a city council control over extensions of water service to end users but not over wholesale transfers of water).

In April 2010, the Eugene Water and Electric Board (“EWEB”) contracted with the City of Veneta (“Veneta”) for Veneta to purchase water from EWEB. The contract further specified that EWEB would not provide service directly to customers in Veneta, the sale would be characterized as wholesale, and the point of delivery would be within Eugene city limits. In accordance with Oregon statute, EWEB petitioned for judicial validation of the contract. The trial court subsequently granted motions to intervene by the City of Eugene (“Eugene”) and other interested parties (collectively “intervenors”).

Intervenors moved for summary judgment, arguing that the proposed contract between EWEB and Veneta violated section 44(3) of the Eugene Charter (“Charter”) that gives only the Eugene City Council the authority to approve sales of water. EWEB also moved for summary judgment. EWEB argued that other than the city council’s control over the extension of water service, the same provision of the Charter grants the EWEB full authority over the water utility, including wholesale transactions. The trial court granted EWEB’s motion for summary judgment and the intervenors appealed to the Court of Appeals of Oregon.

On appeal, intervenors contended that the term “water service” encompasses the wholesale sale of water to other entities, regardless of what entity distributes that water to end users. Thus, the Court of Appeals of Oregon sought to interpret the meaning of section 44(3) of the Charter.

First, the court established that section 44(3) provides EWEB with authority over wholesale water sales unless those sales constitute an extension of water service. The parties agreed on the meaning of extension, but the disagreement centered on the meaning of water service.

Second, the court determined the meaning of water service. The court discounted the varied and numerous dictionary meanings of service, and instead relied on what voters understood water service to mean when they voted for section 44(3) in 1976. From the voters’ perspective, the court stated, water service would have connoted the provision of water to the end user, consistent with EWEB’s argument. The court thought it unlikely that voters would have understood water service to encompass the wholesale transfer of water from one utility or entity to another.

Third, the court looked to the Charter provision’s context to discern a meaning of extension of water service. To do this, the court reviewed the statutory framework that existed at the time of the Charter vote. The court found that in 1969 the Oregon state legislature created three local government boundary commissions and used the word “service” in a way that enforced EWEB’s definition and understanding of service. Therefore statutory references to service in the 1969 legislation reflected the general understanding of service to individuals and entities, not to wholesale utilities and municipalities.

Fourth, the court reviewed the charter’s enactment history, which included a statement in the voters’ guide that the city council’s authority over the extension of water service provided it with a tool in land use planning and control of urban sprawl. The court stated that its meaning of water service would still provide the city council with some measure of control over land use and urban sprawl.

Accordingly, the court held that EWEB had authority to enter into the contract with Veneta without first obtaining approval from the Eugene City Council and that the trial court properly validated the contract.