Letter including legal opinion from O'Melveny & Myers law offices (Los Angeles) to the Las Vegas Valley Water District Board of Directors, October 20, 1955

LAW OFFICES OF O MELVENY & MYERS 433 SOUTH SPRING STREET LOS ANGELES 13 October 20th 19 5 5 OPINION LAS VEGAS VALLEY WATER DISTRICT Honorable Board of Directors Las Vegas Valley Water District Las Vegas, Nevada Gentlemen: HOLLYWOOD OFFICE 6920 SUNSET BOULEVARD LOS ANGELES 28 CABLE ADDRESS MOMS IN REPLY REFER TO B-2805-a You have requested the opinion of our office covering the power of the Las Vegas Valley Water District to install water meters within a portion of the territory of the District consisting of the incorporated area of the City of Las Vegas ' and to establish and collect metered water rates and charges' therein. Based upon findings and advice of engineers, the Board of Directors is of the view that a metering program must be undertaken by the District for the following reasons! (1) To conserve the limited water supply available to the Las Vegas Valley so that further development will not be curtailed. (2) To defer the time when the District must finance and construct additional water facilities to meet the essential water needs of the area. (3) To reduce the construction costs of water facilities by eliminating excessive water demands which now require the "over design" of the water system. (4) To provide a more equitable method of distributing the cost of water as between various types and classes of water consumers. #2 - Honorable Board of Directors - 10/20/55 The question of the District's power to adopt a meter- ing program arises from broad language found in a section of the Public Service Commission Act (Section 6112, N.C.L.) making it unlawful for any public utility to install meters in cities and towns of specified populations (which includes a city of the size of Las Vegas), except for cities and towns owning and operating municipal water works". The District is neither a "city" nor a "town" and the question arises whether the prohi- bition of the statute was intended by the Legislature to apply to the District. It is our opinion that a court, in construing the provisions of the Public Service Commission Act and the Las Vegas Valley Water District Act (Section 8254.01 et seq., N.C.L., 1943-1949 Supp.), should determine that the District is not pro- hibited from installing water meters and collecting metered water rates and charges. Section 6112, Nevada Compiled Laws, as enacted in 1919, stated that the Public Service Commission could prescribe stan- dards for the measurement of the product or service of a public utility and gave the Public Service Commissioners the right to have the quality and quantity of the product or service of any public utility tested, subject to the following proviso: "provided, that in cities of more than ten thousand population nothing contained in this act shall direct or permit the Installation or the use of mechanical water meters or similar mechanical devices to measure the quantity of water served or delivered to water users." It will be noted that the proviso was not then limited to "public utilities". In City of Reno v. Sierra Pacific Power Co. (44 Fed. 2d 28l, CCA 9, 1930), the water company enjoined the City of Reno from interfering with the water company's meters. In construing Section 6112 as it then existed, the court held that the pro- visions of the statute that "this act shall [not] direct or permit the installation" of meters simply prohibited the Public Service Commission from requiring the installation of meters but did not prohibit a water company voluntarily installing water meters. In 1931, the following year, the Legislature amended the proviso of Section 6112 to read as follows: #3 - Honorable Board of Directors - 10/20/55 "provided, that it shall be unlawful for any public utility, for any purpose or object whatever, in any city or town containing more than four thousand five hundred inhabitants, to install, operate or use, within such city or town, any mechanical water meter, or similar mechanical device, to measure the quantity of water delivered to water users; provided further, that nothing in the immediate foregoing proviso shall apply to cities and towns owning and operating municipal water works." Three significant changes were made by the 1931 amend- ment: (l) the statute was changed from a limitation on the power of the Commission to an outright prohibition of meters; (2) it was limited to "public utilities" and (3) the further proviso excepting cities and towns with municipal waterworks was added. The constitutionality of the 1931 amendment was tested in Sierra Pacific Power Company v. City of Reno (33 Fed. Supp. 878, D.C., D.Nev., 1940). In this case the water utility con- tended that it was entitled to install meters to determine "the amount of water consumed" and whether "waste is permitted." The court noted, however, that no contention was made by the utility that its water supply was inadequate or endangered by lack of meters. The court sustained Section 6112 as being a proper exercise of the police power designed to encourage "lawn, shrubbery and flowers" in an arid area. The court went to great length to demonstrate that there was little "waste" of water, since most of the water taken from the source of supply, the Truckee River, was returned to the river either as sewage effluent or as return water from irrigation. Consequently, the utility's source of water supply (the Truckee River) was not impaired by the so-called extravagant use of water. It is sig- nificant, however, that the court in denying the utility's right to injunction expressly made its order "without prejudice to any rights which in the future may exist by reason of any change in conditions". Even if it be assumed that the District is a "public utility" within the meaning of Section 6112, the second Reno case is significant in indicating that the courts might hold Section 6112 inapplicable if, in fact, the metering of water was necessary to conserve the supply of water and to prevent the waste of water otherwise required for beneficial use. #4 - Honorable Board of Directors - 10/20/55 An examination of the Las Vegas Valley Water District Act quickly reveals that one of the principal purposes and functions of the District is the conservation of water and the elimination of water waste. The title of the Act recites that the Act is "to provide for the conservation of the ground- water resources of the Las Vegas valley". Section 1, sub- paragraph 6, provides, among other things, that the water district was created for the following objects and purposes: ". . . to conserve and reclaim water for present and future use within the district; . . . to conserve same within the district, for any useful purpose to the district; . . . to assume the costs and expenses of any action or proceeding . . . involving the waste- ful use of water therein; . . . to prevent interference with or diminution of [water] . . . " Section 9 of the Act provides that the Board of Directors of the District shall have power " . . . to establish by-laws, rules, and regulations for the distribution and use of water in the district." The foregoing excerpts make it amply clear that the Legislature intended to authorize the Board of Directors of the District to adopt any reasonable measures necessary to conserve the supply of water within the District. In pursuance of the statutory mandate, the Board of Directors desire to adopt a metering program to provide for the conservation of the water supply. It is our view that a court, in construing the provisions of the Public Service Commission Act and the Las Vegas Valley Water District Act, should hold that the metering prohibition of Section 6112, Nevada Compiled Laws, is not applicable to the District. Turning first to Section 6112, two things will be noted. First, the prohibition is contained in the Public Service Commission Act, a comprehensive act dealing specifically with the regulation of "public utilities" as defined in that act, and, secondly, that the metering prohibition of Section 6112 was, by amendment of 1931, specifically limited to "public utilities." Among other things, Section 6106 of Nevada Compiled Laws defines "public utilities" as embracing " . . . all corporations, com- panies, individuals, associations of individuals, their lessees, trustees or receivers . . . that now, or may hereafter, own, operate, manage, or control . . . any plant or equipment . . . for the production, delivery or furnishing . . . [of] water .. " #5 - Honorable Board of Directors - 10/20/55 The rule of statutory construction is well established that the state and a subdivision of the state, Including admini- strative agencies, counties, cities and special districts, are not bound by general words of a statute which would operate to limit the sovereign rights of the state, or its agencies, or to injuriously affect the capacity of the state, or its subdivisions to perform their functions, unless the Intent to so bind the ' state and its subdivisions clearly appears. (3 Sutherland Statutory Construction, 3d Ed., 1943, ?6301.) The rule is well stated in 82 Corpus Juris Secundum, page 554, as follows: "The government, whether federal or state, and its agencies are not ordinarily to be considered as within the purview of a statute, however general and comprehensive the language of act may be, unless intention to include them is clearly manifest, as where they are expressly named therein, or included by necessary implication. "This general doctrine applies, or applies with special force, to statutes by which prerogatives, rights, titles, or interests of the government would be divested or diminished . . ." Normally speaking, such words as "person" and "corporation" are not construed as including the state or its subdivisions (82 c.JoS. 557). The addition in 1931 of the language that the metering prohibition shall [not] apply to cities and towns owning and operating municipal water works" appears to have been a super- abundance of caution, since, under generally accepted rules of statutory construction, the definition of a "public utility" would not ordinarily include the state, or a public corporation or agency of the state. The fact that other public corporations and agencies, such as irrigation districts and water districts were not included with cities and towns should not affect the ' conclusion that they are not to be construed as being "public utilities." ^ Probably the strongest argument that the District is not subject to the provisions of other laws is found in the language of Section 19 of the Las Vegas Valley Water District Act. Section 19 of the Act provides, in part, as follows: #6 - Honorable Board of Directors - 10/20/55 "This act shall in itself constitute complete authority for the doing of the things herein authorized to be done. The provisions of no other law, either general or local, except as provided in this act, shall apply to doing of the things herein authorized to be done, and no board, agency, bureau or official, other than the governing body of the district and the public service commission of the State of Nevada shall have any authority or juris- diction over the doing of any of the acts herein authorized to be done nor shall any proceedings, nor publication, notice of election be required for the doing of such acts except as herein specifically required." Chapter 307, Nevada Statutes, 1951, amended Section 19 by delet- ing the words "and the public service commission of the State of Nevada" shown above by strike-out type. The very purpose of Section 19 was to prevent anomalous results which might otherwise follow from the application statutes enacted for other purposes. No better illustration can be found than the application of Section 6112 N.C.L. to the District. The great bulk of the area of the District consists of unincorporated territory, together with the smaller incorporated areas of the cities of Las Vegas, North Las Vegas and Henderson. North Las Vegas and Henderson have city owned water systems; Las Vegas does not. If Section 6112 is applicable then the District has the power to meter water in unincorporated territory and could prob- ably meter water delivered wholesale to North Las Vegas or Hender- son but could not meter water within Las Vegas. It could hardly be assumed that the Legislature would Intend this illogical result and Section 19 of the District Act was intended to prevent such capricious results. Even if Section 6112 were construed as being applicable to the District, Section 19 of the District Act, being enacted later in point of time, would supersede any inconsistent provi- sions in Section 6112. Moreover, the 1951 amendment to Section 19, eliminating the jurisdiction of the Public Service Commission, fortifies the conclusion that the legislative Intent was that the District was not to be subject to any laws or regulations pertain- ing to the Public Service Commission. An additional reason for believing that the anti-metering provisions of Section 6112 are inapplicable to the District is the fact that the District is given exclusive power to establish water rates and charges. Section l6d of the Las Vegas Valley Water Dis- trict Act provides as follows: #7 - Honorable Board of Directors - 10/20/55 "The board shall from time to time establish reasonable rates and charges . . . and no board or commission other than the governing body of the district shall have authority to fix or supervise the making of such rates and charges." The fixing of water rates and charges on the basis of actual quan- tity of water as measured by water meters is a reasonable method for establishing water rates and charges. In 12 McQuillin on Municipal Corporations (3d Ed., 1950) ?34.138, it is said: "It is well settled that a public service company, or a municipality owning its own plant, in the absence of a statute or contract to the contrary, may charge a rate according to the amount used, which is called a meter rate, and this is so although other customers are charged a flat rate." The broad and exclusive authority conferred on the Board of Direc- tors by said Section l6d to establish rates and charges would appear to be more than sufficient to permit the Board of Direc- tors to establish and collect metered water rates and charges. It is our opinion that there is no limitation on the power of the Water District to install meters within that portion of the territory of the District included within the boundaries of the City of Las Vegas and to establish and collect metered water^ates and charges therein. Respectfully submitted,