Appellees Brief — Ball v. James

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No. 79-1740

In The

Supreme Court of the United States

October Term, 1980

GERMAIN H.. BALL, et al.,

Appellants,

ROLAND W. JAMES, et al.,

Appellees.

ON APPEAL FROM THE UNITED

STATES COURT OF APPEALS FOR

THE NINTH CIRCUIT

BRIEF OF APPELLEES

BRUCE MEYERSON

(Counsel of Record)

AMY J. GITTLER

ARIZONA CENTER FOR LAW

IN THE PUBLIC INTEREST

112 North Fifth Avenue

Phoenix, Arizona 85003

Tel. (602) 252-4904

Counsel for Appellees

QUESTION PRESENTED

Whether a multi-purpose political subdivision which pro-

vides electric service to over one-quarter million customers

and 60% of the municipal water supply for approximately

1.5 million people can condition and weight voting on prop-

erty ownership.

TABLE OF CONTENTS

TABLE OF AUTHORITIES cicccccsssssscisrccossssccenssoresees

STATEMENT OF THE CASE ...........ccssssssssssssesees

Although it was once Rural Farm Land, the

District Today is Located in the Heart of

Arizona’s Most Populated Region. ................

The Enormous Demographic Changes in the

District Have Been Mirrored by Expansion

and Change in the Nature of the District’s

PIONS cactsciicas\tiivinisecanhusplovdeusoaleiuninbseaisitesiin

The District’s Authority over Water Alloca-

tion and Management Have Little Rela-

tionship to Land Ownership. ...............sseeee

The Costs and Risks of the District’s Activi-

ties are Unrelated to the Ownership of

TaN. duiithanlccn cu chacdbeasaaheuiacanualaiinsasoniaiabiseecamacpiidiadriae

. The District’s Acreage-Voting System Re-

moves it from any Meaningful Public

pT REST P ENON ONO es PPLE SOO

SUMMARY OF ARGUMENT .........c cs cesssceesessseeeees

REIATIIITE sec isisionsstiinnscriecnqemnbinnincininvmmninishan

THE DISTRICT’S ONE ACRE, ONE

VOTE SYSTEM IS NOT WITHIN THE

NARROW EXCEPTION TO TRADI-

TIONAL CONSTITUTIONAL

FPR NGE BIE scunitiinia inoniesnsylesioncigiidpniaaabeteision

A. This Court Has Looked with Disfavor

upon Conditioning the Right to Vote

on Property Ownership. ................00000

B. The District is not a Special-Purpose

Unit of Government as Described in

TY sAitisicscpeidmivacsdiiniatenisheindipioinccainianisinion

ill

TABLE OF CONTENTS (Continued)

1. The Tulare District and the Salt

River Project District are To-

CRETY DOMSSIMATDAP. ..0.0ccccccaccesseecenssese

2. The District Provides General

Public Services. ...........0cccccccesscess

3. The District’s Activities do not

Disproportionately Affect Land-

te a I ETON TOS Oe EP F

C. The California Supreme Court, Con-

sidering Facts Very Similar to Those

Present Here, Rejected Property-

Ownership Restrictions. ..............cces0000-

D. The One Acre, One Vote System Fails

to Meet the Strict Standard of Re-

i ee RE ERE ATOR

Il. THE ONE ACRE, ONE VOTE SYSTEM

DOES NOT EVEN MEET THE TEST OF

REASONABLENE SG. ...........cccsssscssesossesesseees

III. THE ASSERTED BUSINESS CHARAC-

TERISTICS OF THE DISTRICT ARE

NOT CONSTITUTIONALLY RELE-

VANT. THE VOTING SYSTEM MUST

BE CONSIDERED IN LIGHT OF ITS

IMPACT ON PEOPLE’S LIVES TODAY,

NOT ITS HISTORIC PURPOSE. .............

A. Regardless of its Asserted Business

Character, the District’s Voting Sys-

tem is not Immune from Consti-

CEREROMNAE FRUITING, coscicccnccoccinsscevoreceosnsocs

B. The District’s Heavy Reliance on His-

toric Purpose is Misplaced. .................

See aE sdicesiceninaisbonsuissicesssdninsciamaameinaner eae

Page

TABLE OF AUTHORITIES

CASES Page

Avery v. Midland County, 390 U.S. 474 (1968) ....... 21

Baker v. Regional High School District No. 5, 520

Fe TOD CR Cle. TFG: scccccnccistnscsiscccctctitansisctenivetion 11

Brown v. Board of Education, 347 U.S. 483 (1954) 33

Burrey v. Embarcadero Municipal Improvement

District, 97 Cal. Rptr. 203, 488 P.2d 395 (1971) .. 34

Carrington v. Rash, 380 U.S. 89 (1965) ..............ce00 24

Chastleton Corp. v. Sinclair, 264 U.S. 543 (1924) .. 34

Choudhry v. Free, 131 Cal. Rptr. 654, 552 P.2d 438

CRIFIED cirisstetchsdsscehscdoesnanieigacceihcodeienimadiaatsmmnas 11,22,25,26

Cipriano v. City of Houma, 395 U.S. 701

CN ob deshiteisstasccniitnitdbiandaniniinciniisdiieniataites 10,12,15,22,23,27

City of Cleveland v. Cleveland City Ry. Co., 194

ac AES CII icecsusbiinistniessittnntestcesta imadiiaehciiatelia de 24

City of Modesto v. Modesto Irrigation District, 34

Cal. App. 3d 504, 110 Cal. Rptr. 111 (1973) ......... 25

City of Phoenix v. Kolodziejski, 399 U.S. 204

CRITI -saecraissensiescdsdcicieinisnalatieicantsiecaasiaiabeadioiesiidiadss 11,12,15,16,26,27

City of Rome v. United States, 48 U.S.L.W. 4463

CAIEE is SURED : celninccccchistubtisesibitbasometecabemmniiia 34

Evans v. Cornman, 398 U.S. 419 (1970) ..............0000 24

Gomillion v. Lightfoot, 364 U.S. 339 (1960) ............. 32

Hadley v. Junior College District of Metropolitan

Kansas City, 397 U.S. 50 (1970) ............ssccccssseresees 21

Hill v. Stone, 421 U.S. 289 (1975) ............cceseeeees 16,28

Johnson v. Lewiston Orchards Irrigation District,

99 Idaho 501, 584 P.2d 646 (1978) 00.0... ..csseeceesees 11

Kramer v. Union Free School District No. 15, 395

07 GR CRD esisnavaicccctssicnsecnsnpnccincancissiaciisnsacasadiuianian 11,14,26

TABLE OF AUTHORITIES (Continued)

CASES Page

Leary v. United States, 395 U.S. 6 (1969) ............... 34

Lockport v. Citizens for Community Action, 430

i inscicishescscaanibennsnisaivastiineciedsosumeensecs 28

North Carolina v. Alford, 400 U.S. 25 (1970) .......... 32

Police Jury of the Parish of Vermilion v. Hebert,

404 U.S. 807 (1971), rev’g mem., 258 La. 41, 245

a. saci peennccnesbincees 16

Reynolds v. Sims, 377 U.S. 533 (1964) .........ccceeeeeee 11,14

Sailors v. Board of Education, 387 U.S. 105 (1967) 12

Salyer Land Co. v. Tulare Lake Basin Water Stor-

age District, 410 U.S. 719 (1973) ................0.. 10,passim

Stewart v. Parish School Board of the Parish of St.

Charles, 310 F. Supp. 1172 (E.D. La. 1970), aff’d

| EE 24,30

Wright v. Town Board of Carlton, 41 A.D.2d 290,

EE MESD SEWED) vicncvnsccvsecsoscocessccsccccsosecteoses 11

Yick Wo v. Hopkins, 118 U.S. 356 (1886) ................ 14

Yolo v. Modesto Irrigation District, 216 Cal. 274,

I nis secscpncsegerssnnccesnncescosesersseseosee 25

STATUTES

United States Code

Sl ch sb cis sbcenentvnicninseoceonesoneee 19

css saashanddeieotesnavenscnsinecoseseves 19

EE I csi cnnaesvoncsedcesansvesrsnesisentveesees 19

Arizona Constitution

ST Riis iaklisaciidinecbiarsesgninatinctesoviereccencenceoey 8,17

itil tas cansiciosnndiexteessnnmsenachseneee 9

ERE Co 8

TABLE OF AUTHORITIES (Continued)

STATUTES Page

BG Diy DD hccressicecccienipsiieenianninventunninttinnsniaiains 9

Arizona Revised Statutes Annotated

DINO IIITID sacictinitnncerssnssaneitssansnbnesaeniineghonss 8

Oe E ierestietsnidssenvensinensasbictabinsenionpans 9

§ 45-401 (Saws 1GBD) ...csecssvcsesccccsvniessssoessevoeve 6,20

§ 45-411.A.2 (Supp. 1980) ....ccccccsccsesscsecssseeeees 20

§ 45-541.D (Supp. 1980) .............sccsccssssscsscsees 6

rte I hercssstasenetccetvicniesennpnnnsesenondunclaniacs 18

§ 45-933.01.D.3 (Supp. 1980) ......csssesscsseeeeeee 9

SEI CIN aveiiicentntlincinisnictsntahcteviisnctninnsenticnnis 9

§ 45-935 (1956) (Supp. 1980) ...... eee 5,18

§ 45-936 (1956) (Supp. 1980) .......... eee 18

§ 45-937 (1956) (Supp. 1980) ......... eee 18

i I na ct iowa 18

ai be sen 18

§ 45-983.C (Supp. 1980) ............cccccscccssscessseess 2,8

NE ii ti ences 18

I i a 23

§ 45-1061 (Supp. 1980) .....cscccccssssccsssescecsseseen 7

Cal. Water Code § 20500 (1956) .......... cc ceeeseseeeeeeeee 25

vii

TABLE OF AUTHORITIES (Continued)

OTHER AUTHORITIES Page

AMERICAN PusB.Lic Power ASSOCIATION, THE

PEOPLE’s RIGHT TO CHOOSE (1978) ............ 4

Ariz. Admin. R. and Reg. R14-3-103 et seq. 9

ARIZONA GROUNDWATER MANAGEMENT STUDY

Commission, Fina Report (June, 1980) . 6

Comment, Voter Restrictions in Special

Districts: A Case Study of the Salt River

Project, 1969 Law AND THE SociAL ORDER

gr PRUE ETON RCRA PY DRAIN RPC ok 2

Pontius, Groundwater Management in Ari-

zona: A New Set of Rules, 16 Ariz. B.J.

BP IUD bai icticenssess.rctechiscace ih creseticeantsectens 6

SattT RiveR’ Provect AGRICULTURAL

IMPROVEMENT AND POWER DISTRICT,

OrFiciAL STATEMENT FOR ELECTRIC

SysTEM REVENUE Bonps, 1980 Series B

PONG ac NINN cite Ss ee 3-5,7,8,23

SALT River PrRovgect AGRICULTURAL

IMPROVEMENT AND Power District, SALT

RIvER Prosect 1979-80 ANNUAL REPORT

SPT Widliadicttemisineicnitia nt kk 3,5

No. 79-1740

In The

Supreme Court of the United States

October Term, 1980

GERMAIN H. BALL, et al.,

Appellants,

¥.

ROLAND W. JAMES, et al.,

Appellees.

ON APPEAL FROM THE UNITED

STATES COURT OF APPEALS FOR

THE NINTH CIRCUIT

BRIEF OF APPELLEES

STATEMENT OF THE CASE

This case concerns the constitutionality of the one acre,

one vote election system of the pre-eminent political subdi-

vision of the State of Arizona—the Salt River Project

Agricultural Improvement and Power District (District or

Salt River Project District). Although its pervasive electric

utility operations and water management activities affect

the lives of hundreds of thousands of residents in the Phoe-

nix metropolitan area,’ the District is virtually unaccount-

able for its actions. As set forth more fully below, Appel-

lants’ brief significantly understates the District’s wide-

ranging activities and expansive growth.

A. Although it was once Rural Farm Land, the

District Today is Located in the Heart of

Arizona’s Most Populated Region.

Established initially as the Salt River Valley Water

Users’ Association (Association) in 1903,2. when Phoenix

was little more than a dusty, desert crossroads, the original

reclamation project evolved into much, much more. But

despite the dramatic growth and urbanization in our com-

munity, and the corresponding change in the District’s

activities, the historic land-based voting scheme by which

the District’s governing board is chosen has remained rela-

tively untouched.

The growth of the District’s electric operations and the

change in emphasis of its water activities, is, of course, di-

rectly related to the rapid urbanization of the District’s

geographic area. In 1937, when the District was formed,

94% of the the District’s lands were agricultural. J.A. 46.

By 1975, this proportion was reduced to 52%, with 48% of

the District land committed to urban uses. Jd. By 1979 ur-

' Appellees are (1) residents of the District who are homeowners

owning less than one acre of land and are entitled to a fractional vote for

the District Board of Directors equal to the fraction of an acre which

they own, Ariz. Rev. Stat. ANN. § 45-983.C (Supp. 1980) and (2) resi-

dents who own no land and are totally precluded from voting. Ariz. REV.

Stat. ANN. § 45-909 (Supp. 1980). Elections are held on the first Tuesday

in April in even-numbered years. Ariz. Rev. Stat. ANN. § 45-965 (Supp.

1980).

This action was filed as a class action; Appellees have not appealed

the denial of class action status by the Court of Appeals.

* For an excellent and thorough review of the District’s history and

growth, see Comment, Voter Restrictions in Special Districts: A Case

Study of the Salt River Project, 1969 Law AND THE SociaAL ORDER 636

(now Ariz. State L.J.). Although written before this Court’s decision in

Sa yer, the author argues forcefully that the District’s voting system is

constitutionally defective.

ban lands exceeded agricultural lands, making up 56% of

the District. Satr River Progect AGRICULTURAL

IMPROVEMENT AND PowER District, SALT RIvER PRovect

1979-80 ANNUAL Report 11-12 (1980) (1980 ANNUAL RE-

PORT).°

Today the 236,000-acre area making up the District, J.A.

33, embraces much of the Phoenix metropolitan area, in-

cluding major portions of Phoenix, Scottsdale, Tempe,

Mesa, Glendale, Chandler, Peoria, Tolleson and Gilbert.

J.A. 32. These cities make up almost 50% of Arizona’s pop-

ulation. See Exhibit K at 6.1 About 75% of the combined

area of these cities is served by the District’s electric opera-

tions. Id. at 8.

Although at one time there was virtually a direct rela-

tionship between the District’s water and power activities

and ownership of land, that nexus has been significantly

eroded over time. This erosion has come about principally

for two reasons. First, the thrust of the District’s activities

has shifted away from simply providing water for agricul-

tural land toward providing water and power to the urban

areas of metropolitan Phoenix. Second, and equally impor-

tant, the costs and risks associated with District activities

have likewise become largely unrelated to land ownership,

because (1) 98% of the District’s water and power revenues

are supplied by its electric customers, J.A. 36, and (2)

nearly 90% of the District’s debt is currently secured by

District electric revenues, not by liens on land. SALT RIVER

PROJECT AGRICULTURAL IMPROVEMENT AND Power District,

OFFICIAL STATEMENT FOR ELEcTRIC SYSTEM REVENUE Bonps,

1980 Series B at 25 (Oct. 1, 1980) (OrriciAL STATE-

* Although the District’s 1980 ANNUAL REPorT is not in the record, it

is a public document of which this Court may take judicial notice. It is

referred to only to indicate trends already established when this action

was filed. A copy has been lodged with the Clerk.

‘ “Exhibit” refers to Exhibits to Stipulated Statement of Facts. The

exhibits are not included in the Joint Appendix, but are contained in a

separately bound volume included in the record on appeal.

MENT).° These changes, which resulted from the enormous

demographic shifts within the District, have been facili-

tated practically every step of the way by the Arizona

Legislature through amendments to the District’s enabling

act.®

B. The Enormous Demographic Changes in the

District Have Been Mirrored by Expansion

and Change in the Nature of the District’s

Operations.

Sixty years ago, the electric operations of the Association

were truly incidental to its water delivery activities; it

served only 21 customers. Exhibit K at A-5. By 1975, its

successor, the Salt River Project Agricultural Improvement

and Power District, whose election system is at issue here,

served almost 250,000 electric customers. Jd. at 6. By April,

1980, the District was serving 313,000 customers, OFFICIAL

STATEMENT 21, and has become not only Arizona’s second

largest electric utility, but the seventh largest publicly-

owned electric utility in the United States. AMERICAN

Pustic Power ASSOCIATION, THE PEOPLE’s RIGHT TO

CHOOSE 15 (1978).

In 1955 the District was granted the exclusive right to

provide electric service to significant portions of Phoenix

and surrounding communities. J.A. 37. The rapid growth in

these areas required the District to quickly expand its elec-

tric generating capacity. The District has broad authority to

* See footnote 3, supra.

* See footnote 7, infra and pages 6-7.

go even outside the State of Arizona to secure virtually any

source of energy.’

By the time of the filing of this action in 1975, the Dis-

trict owned four steam-generating plants and was a

participant in the Four Corners Plant in New Mexico, the

Navajo Plant in Page, Arizona, and the Mohave Plant in

Nevada. Exhibit K at 8-11. In the intervening five years the

District has acquired an ownership interest in the Hayden

and Craig Plants in Colorado and the Coronado Generating

Station in St. Johns, Arizona, and the Palo Verde Nuclear

Plant now under construction west of Phoenix. OFFICIAL

STATEMENT 8-10, 14. The District estimates that it must

spend $1.9 billion during the next five years to expand its

electric system in‘order to meet the demands of new growth

within its service territory. Jd. at ii.

C. The District’s Authority Over Water Alloca-

tion .and Management have Little Rela-

tionship to Land Ownership.

The District’s water delivery operations are significantly

unrelated to agricultural activities. The District delivers

almost sixty percent of the municipal water used in Phoe-

nix, Scottsdale, Tempe, Chandler, Peoria, Glendale, Mesa

and Gilbert. J.A. 35. Water deliveries to these cities in-

creased by 39% between 1974 and 1979. Compare J.A. 35

with 1980 ANNUAL Report 15. These water deliveries are

paid for by the cities from municipal water revenues. J.A.

50.

For the purpose of acquiring or assuring a supply of electric

power and energy to serve the district’s customers, the board, for

and in the name of the district may, without the boundaries of the

state," acquire, develop, own, lease, purchase, construct, operate,

equip, maintain, repair and replace, and contract for... any form

of energy or energy resources including but not limited to coal, gas,

oil shale, uranium and other nuclear materials, hot water, steam

and other gecthermal materials or minerals, solar energy, wind,

water and water power and compressed air, .. .

Ariz. Rev. Stat. Ann. § 45-935.B. (Supp. 1980).

Appellants are far too modest in their description of the

District’s authority over water matters within the District’s

service area. A.B.* 11-12. The Arizona Legislature has

vested the District with many special and significant pow-

ers over water allocation and management not only within,

but, also beyond, the District’s geographic area. More im-

portant, such powers may be exercised whether the water is

owned by District landowners or not. For example, the Dis-

trict has absolute veto power over all transfers of surface

water from one place or type of use to another. Ariz. REv.

StaT. ANN. § 45-172 (Supp. 1980) This veto power extends

not only to lands within the District, but also to any “wa-

tershed or drainage area which supplies or contributes wa-

ter for the irrigation of lands within [the] ... district ....”

Ariz. Rev. Stat. ANN. § 45-172.5 (Supp. 1980).

Most important, Appellants’ claim that the District “only

stores water behind its dams” and “then delivers water ...

to the landowners who own it,” A.B. 12, is flatly untrue.

Arizona’s recently enacted Groundwater Management

Act,? Ariz. Rev. Stat. ANN. § 45-401 et seg. (Supp. 1980),

sanctions a long-standing District policy of pumping and

transporting as much groundwater as is needed within its

geographic territory." Ariz. Rev. Stat. ANN. §§ 45-494,

541.D (Supp. 1980). Because “[g]roundwater does not re-

spect property ownership boundaries.... [the District is]

withdrawing groundwater from a common source of sup-

ply.” ARIZONA GROUNDWATER MANAGEMENT StuDyY Com-

MISSION, FINAL Report I-5 (June, 1980). Thus, the District’s

groundwater pumping activities have a very real impact on

the water supply of central Arizona bringing about conse-

* “A.B.” refers to Appellants’ brief.

* For a comprehensive analysis of the new Act, see Pontius, Ground-

water Management in Arizona: A New Set of Rules, 16 Ariz. B.J. 28

(Oct. 1980).

'© In 1974, for example, the District pumped 361,000 acre-feet of

groundwater, Exhibit L at 20, roughly 30% of the water which it deliv-

ered.

quences which are important not only to landowners but to

all residents of the District’s geographic area.

D. The Costs and Risks of the District’s Activi-

ties are Unrelated to the Ownership of

Land.

Although many years ago there was a relationship be-

tween the District’s activities and land ownership, that is

no longer the case. As already discussed, the District’s func-

tions exceed the mere provision of services to landowners.

Likewise, the costs and risks associated with District activi-

ties are unrelated to land ownership, because (1) 98% of

the District’s revenues are supplied by its electric custom-

ers, J.A. 36, and (2) only 12% of District debt is secured by

a lien on the land within the District.

Although Appellants argue extensively about the risk

undertaken by the landowners in financing District activi-

ties, A.B. 20-26, the only risk undertaken by the landowners

is limited to the “pledging” of their land as security for the

repayment of certain loans to the Federal Government and

for the sale of District general obligation bonds. This, of

course, does not constitute capital investment, qualifying

the landowners as entrepreneurs. As of January 2, 1976,

out of $796,687,583 in long-term debt, $12,353,345 was owed

to the United States and $283,160,000 pertained to general

obligation bonds. Exhibit K at 36. The balance of approxi-

mately $500,000,000 was made up of revenue bonds which

are “secured by a pledge of and lien on all revenues and

income” of the electric system. /d. at iii. The last general

obligation bond sale was in 1972, one year after the Legisla-

ture gave the District power to sell revenue bonds. Ariz.

Rev. Stat. ANN. § 45-1061 et seq. (Supp. 1980).

Because the District has financed its long-term debt

solely through the sale of revenue bonds since 1972, it esti-

mates that the general obligation bonds will be fully paid

off by the year 2006. OrriciAL STATEMENT 26. Significantly,

the growth of revenue bond issuance has further diminished

the importance of the landowners’ “risk.” By July, 1980,

out of $2 billion of long-term debt, only $240 million o

12%, was made up of general obligation bonds and United

States Government obligations. OrriciaL STATEMENT 25.

Appendix A.

E. The District’s Acreage-Voting System Re-

moves it from any Meaningful Public

Accountability.

Despite its significant and far-reaching activities, the

District is essentially unaccountable for its actions. The

acreage-based voting system has vested control of the Dis-

trict in the hands of a coterie of large farmers'' in our

predominately urban community. For example, in the 1974

election, 561 people voted 15,219.73 votes (acres). J.A. 32.

One Board member, Thomas P. Hurley, who has served at

least since 1970, owns 892.75 acres of land, Exhibit S; it

would take over 3,500 owners of one-quarter acre lots to

match his voting strength.

Because it is an agricultural improvement district, under

the Arizona Constitution, the District is exempt from regu-

lation by the Arizona Corporation Commission (Commis-

sion). Ariz. Const. art. 13, § 7; art. 15, § 2. Under Arizona

law, privately-owned utilities, such as Arizona Public Ser-

vice Co. and Tucson Electric Power Co. are extensively

regulated by the Arizona Corporation Commission. Ariz.

Const. art. 15; Ariz. Rev. Stat. Ann § 40-201 et seq.

'' When this action was filed, all District Board members were affili-

ated with farming enterprises and activities. Exhibit T.

Only token changes in the one acre, one vote system have ever been

made by the Legislature. Fractional voting for those owning less than one

acre of land, Ariz. Rev. Stat. Ann. § 45-983.C (Supp. 1980), has not

given the “electorate” any where near the voting strength of the large

landowners. See J.A. 32. The 1976 amendment, which added four new

directors, elected at large, with property owners entitled to cast one vote,

Ariz. Rev. Stat. Ann. § 45-965. D (Supp. 1980), has still left control of

the District in the hands of large landowners.

(1956). The Commission must prescribe “just and reason-

able” rates, Ariz. Const. art. 15, } 3, and is authorized to

fully regulate all aspects of utility service. Ariz. Rev. Stat.

ANN. § 40-321 (1956).

The Commission is composed of three Commissioners

who are popularly elected. Ariz. Const. art. 15, § 1. Any

person “directly and substantially affected by the proceed-

ings” may intervene before the Commission. Ariz. Admin.

Rul. and Reg. R14-3-105. Intervenors have full right to pre-

sent testimony, obtain discovery and cross-examine

witnesses. R14-3-103-109.

Parties dissatisfied with decisions of the Commission

may obtain judicial review. Ariz. Rev. Stat. ANN. § 40-254

(1956). Thus, the activities of the private utilities are sub-

ject to scrutiny by an elected body and ultimately by the

Arizona courts.

Unlike privately-owned utilities which are heavily regu-

lated, the District has untrammeled authority to exercise its

broad power and water functions absent any meaningful

degree of public control. The rate-setting authority of the

District is vested in its Board of Directors, Ariz. Rev. Star.

ANN. § 45-934 (1956), and it may make all decisions with

respect to the terms of service. See id. There is no provision

for intervention in District rate proceedings; the public may

only make oral or written “presentations.” Ariz. REV. STAT.

ANN. § 45-933.01.D.3 (Supp. 1980). Finally, there is no ex-

press statutory procedure for judicial review of District rate

decisions.

Appellants’ extended efforts to compare the District with

a privately-owned utility, totally ignore these fundamental

differences. Unlike the investor-owned utilities, there is vir-

tually no public control over the District by any regulatory

body.

SUMMARY OF ARGUMENT

Appellants erroneously contend that the Court of Ap-

peals misapplied the principles established by this Court in

Salyer Land Co. v. Tulare Lake Basin Water Storage Dis-

trict, 410 U.S. 719 (1973). Quite to the contrary, the Court

of Appeals carefully applied the requirements of Salyer,

and found that the Salt River Project District was not the

narrow, limited-purpose district whose land-based voting

system could be measured according to a rational basis test

as in Salyer.

In Salyer, the Tulare Lake Basin Water Storage District

(Tulare District) was carrying on water storage and delivery

operations for a 193,000 acre agricultural area in which only

77 people resided. No electric power was produced or sold

by the district. All costs of the water delivery operations

were charged against landowners in proportion to services

received. Over three-fourths of the land was owned by four

corporations. This Court concluded that because (1) no

public services were provided and (2) the district’s actions

disproportionately affected landowners as a group, a ra-

tional basis test would be applied in determining whether

the land-based voting system was constitutional.

In contrast with the district in Salyer, the Salt River

Project District not only provides electric service, but it

serves more than 300,000 customers. Additionally, it deliv-

ers about 60% of the water used for municipal purposes in

the Phoenix metropolitan area and possesses important

additional powers over water allocation and management

within and outside of its geographic area. Such activities

clearly constitute important public services. Salyer, 410

U.S. at 728-29; see Cipriano v. City of Houma, 395 U.S. 701

(1969).

Also unlike the water storage district in Salyer, 98% of

the costs of operation of the Salt River Project District are

borne by electric customers. And, since 1973, the District

has financed its capital improvements entirely from reve-

nue bonds which are secured by District electric revenues.

Only 12% of District long-term debt is secured by a lien on

the lands; further, the long-term debt has always been re-

tired by District electric revenues. This Court has

unequivocally held that a lien on land from municipal in-

debtedness is not sufficient to restrict the franchise to

landowners. City of Phoenix v. Kolodziejski, 399 U.S. 204

(1970).

The holding of the Ninth Circuit Court of Appeals in this

case was entirely consistent with Salyer. Unlike the limited

activity in Salyer of storing water and delivering it for agri-

cultural use, here the economy and lifestyle of central

Arizona are heavily affected by the activities of the-Salt

River Project District. Thus, the Court of Appeals correctly

held that “in view of the broad scope and impact of its ac-

tivities, the Salt River District cannot be characterized as

having a special limited purpose.” 613 F.2d at 183-84.

Also unlike the Tulare District which assessed all costs

against landowners, here virtually all costs are recovered

from District electric customers. The Court of Appeals cor-

rectly recognized that essential distinction. Jd. at 184. Other

federal courts and state courts have viewed Salyer in pre-

cisely the same manner as did the Court of Appeals."

Thus, because Salyer presents an entirely different situa-

tion from the case herein, the strict standard of review

enunciated in such cases as Kramer v. Union Free School

District No. 15, 305 U.S. 621 (1969), and Reynolds v. Sims,

'* The most pertinent of these is Choudhry v. Free, 131 Cal. Rptr.

654, 552 P.2d 438 (1976), in which the California Supreme Court de-

clared unconstitutional the acreage restrictions in the Imperial Irrigation

District. The case is discussed in more detail at pages 24-26, infra. See

Baker v. Regional High School District No. 5, 520 F.2d 799 (2d Cir.

1975) (Salyer would not apply to “general public services”); Johnson v.

Lewiston Orchards Irrigation District, 99 Idaho 501, 584 P.2d 646 (1978)

(district which received 66% of its revenue from domestic water sales

substantially affected all residents); Wright v. Town Board of Carlton,

41 A.D.2d 290, 342 N.Y.S.2d 577 (1973) (district which supplied water for

domestic use distinguished from Salyer because nonproperty owners

were interested in availability of water supply).

377 U.S. 533 (1964), applies. Under this standard the in-

quiry is whether nonproperty owners are substantially

affected by the District’s activities. City of Phoenix v. Ko-

lodziejski, supra. The essential electric and water

operations of the District do have an important and sub-

stantial impact on all residents of the District. Cipriano v.

City of Houma, supra.

Even if this Court was to apply the rational basis test,

the acreage-voting system of the District is clearly irra-

tional. The obligation to repay nearly all of the District’s

debt has nothing to do with land ownership; the debt is in

the form of revenue bonds secured by a lien on electric

power revenues for which the electric customers, not the

landowners, are liable.

The acreage-voting procedure is purportedly designed to

restrict participation in District affairs to those whose lands

are encumbered by District debt and to those receiving

water from the District, in proportion to the debt on their

land and water delivered. J.A. 35; Exhibit Q. However, be-

cause only individually-owned lands may be voted, 40% of

District land does not qualify for voting purposes in the

elections. J.A. 31. Yet the lien on District lands also applies

to the land which cannot be voted.

Further, voting is permitted regardless of whether the

landowner does in fact use District water. If the claimed

purpose of the one acre, one vote system is to connect vot-

ing strength to water use, the purpose is certainly not

served when the voting system fails to take into account

whether or not the voter actually uses District water.

The District claims that its voting system is an example

of “creativity and experimentation in local government.”

A.B. 40. To the contrary, since the early 1900’s, the land-

based voting system has not been significantly modified by

the Arizona Legislature to meet “changing urban condi-

tions.” Sailors v. Board of Education, 387 U.S. 105, 110-111

(1967). A “creative” response to what was a problem 70

years ago has become an unaccountable and inert political

structure exercising vast powers in the midst of a rapidly-

changing urban community. Despite the expanded author-

ity which the Legislature has given the District to meet the

demands of new growth and the new power to issue revenue

bonds, the Legislature has not conformed the District’s vot-

ing system to reflect its new functions and powers. The

“experiment” has lacked one essential ingredient—a system

of governance which provides for public accountability.

The District has evolved from an organization estab-

lished to satisfy the needs of an agricultural community

into a substantial governmental unit providing essential

electric and water services to a major metropolitan area.

That transformation must finally be recognized in its elec-

toral process. It is an anachronism to vest the control of

such an important public institution to those representing

solely agricultural interests. All segments of the community

are vitally interested in the decisions and actions of the

District; all must be allowed greater participation in the

election process."

'* The Arizona Legislature would have the initial opportunity to de-

vise a constitutionally-adequate voting system. Appellees do not believe

that it is up to this Court, or the district court on remand, to fashion a

constitutional voting scheme. All Appellees ask is a reasoned determina-

tion that the present system is unconstitutional. Upon such a

determination, the State of Arizona may engage in meaningful “experi-

mentation in local government” by devising a system which makes the

District accountable to those it governs and serves.

ARGUMENT

I. THE DISTRICT’S ONE ACRE, ONE VOTE

SYSTEM IS NOT WITHIN THE NARROW

EXCEPTION TO TRADITIONAL CONSTITU-

TIONAL PRINCIPLES.

A. This Court Has Looked with Disfavor

upon Conditioning the Right to Vote on

Property Ownership.

It is elemental that the right to vote is considered one of

the most sacred and important rights in our society. Yick

Wo v. Hopkins, 118 U.S. 356 (1886). This Court has stated:

[T]he right to exercise the franchise in a free and un-

impaired manner is preservative of other basic civil

and political rights, [and] any alleged infringement of

the right of citizens to vote must be carefully and me-

ticulously scrutinized.

Reynolds v. Sims, 377 U.S. 533, 562 (1964). A careful exam-

ination of voting requirements, other than reasonable

citizenship, age, and residency, becomes necessary because

of the potential danger of denying some citizens an effective

say in “governmental affairs which substantially affect their

lives.” Kramer v. Union Free School District No. 15, 395

U.S. 621, 627 (1969).

In a long series of decisions, this Court has firmly estab-

lished that conditioning participation in the election

process upon ownership of property is constitutionally im-

permissible. In Kramer v. Union Free School District No.

15, the Court invalidated the New York law which limited

voting in school district elections to owners or lessees of

taxable real property or parents of children enrolled in local

public schools. The statute was challenged by a bachelor

who neither owned nor leased taxable real property. The

Court never reached the issue of whether the exclusions

were necessary to promote a compelling state interest be-

cause it found that the classification of “primarily

interested” voters, even if permissible, was not drawn with

sufficient precision to achieve the articulated state goal.

In Cipriano v. City of Houma, 395 U.S. 701 (1969), this

Court invalidated a Louisiana law which gave only property

taxpayers the right to vote in elections to approve the issu-

ance of revenue bonds by a municipal utility. The Court

found that the operation of the city’s utility services af-

fected virtually every resident. 395 U.S. at 705. The impact

of the revenue bond issue was found to be unconnected to

one’s status as a property taxpayer because any “benefits

and burdens of the bond issue fall indiscriminately on prop-

erty owner and nonproperty owner alike.” Jd. App'ying the

“exacting standard of precision, wnunciated in Kramer, the

Court found that the challenged statute excl. “other-

wise qualified voters who are as substantially affected and

directly interested in the matter voted upon as those who

are permitted to vote.” 395 U.S. at 706.

In City of Phoenix v. Kolodziejski, 399 U.S. 204 (1970),

the Court struck down an Arizona constitutional provision

which limited voting to real property taxpayers in elections

authorizing the issuance of general obligation bonds. The

City of Phoenix claimed that only property taxpayers could

vote because under Arizona law property taxes were tc be

levied to service the bonds. The bonds were, in effect, a lien

on the real property; if other revenue sources were insuffi-

cient to make debt service payments, property taxes would

be used.

This Court carefully examined the interests of the non-

property owners. First, they had a substantial interest in

public facilities and services; second, revenues other than

property taxes were used to satisfy more than half the debt

service; and third, although the initial incidence of cost was

on the landowning taxpayer, the ultimate burden was

passed on to lessees of rental property in the form of higher

rents. Property taxes paid by business were borne by all

residents alike in the form of higher products and service

costs. The Court concluded that the “differences” between

their interests were not “sufficiently substantial to justify

excluding the latter [nonproperty owners] from the fran-

chise.” 399 U.S. at 209.

This Court has also held that voting could not be re-

stricted to property owners in a special election in a road

district to authorize the sale of bonds to build roads. Police

Jury of the Parish of Vermilion v. Hebert, 404 U.S. 807

(1971), rev’g mem., 258 La. 41, 245 So. 2d 349 (1971).

In Hill v. Stone, 421 U.S. 289 (1975), the Texas law limit-

ing the right to vote in city bond elections to persons

owning taxable property was declared unconstitutional. The

Court summarized the relevant law as follows:

The basic principle . . . is that as long as the election in

question is not one of special interest, any classifica-

tion restricting the franchise on grounds other than

residence, age, and citizenship cannot stand unless the

district or state can demonstrate that the classification

serves a compelling state interest.

Id. at 297 (citations omitted). As in the City of Phoenix

case, the Court concluded that although the initial cost

burden of the bonds would fall entirely on property taxpay-

ers, all members of the community, property owners and

nonproperty owners alike, ultimately share in the costs.

B. The District is not a Special-Purpose Unit of

Government as Described in Salyer.

1. The Tulare District and the Salt River Pro-

ject District are Totally Dissimilar.

In Salyer, this Court was presented with the Tulare Dis-

trict whose sole function was to plan and execute projects

for the acquisition, storage and distribution of water for

agriculture. In contrast, the Salt River Project District has

independent authority to provide electric utility service and

water management and delivery responsibilities for a large

urban area. Eighty-five percent of the land in the Tulare

District was owned by four corporations. In contrast, there

are over 359,000 property owners in the Salt River Project

District. J.A. 47. And of the only 77 people who resided in

the Tulare District, 66 were employed by one farm; 11 iived

in the remaining 165,000 acres. Transcript of oral argument

in Salyer at 36. In contrast, the Salt River Project District

includes the major portions of the Phoenix metropolitan

area. J.A. 32.

Costs of the Tulare District’s projects were assessed

against land strictly in accordance with the benefits re-

ceived by each parcel. In contrast, 98 percent of the Salt

River Project District’s revenues are derived from electric

customers without regard to land ownership. J.A. 36. In the

Tulare District, projects required the approval of a majority

of the votes cast, and also a majority of the voters. Salyer,

410 US. at 723 n.3. In contrast, no such safeguard exists to

protect all of the voters within the District. And “Tujnder

Arizona Law, the District Board has exclusive authority to

establish electric rates.” Exhibit K at 30.

The Salt River Project District’s powers are far more

extensive than the Tulare District. The Arizona Constitu-

tion and _ statutes place the District on a par with

municipalities:

[A]gricultural improvement, . . districts, .. shall be po-

litical subdivisions of the State, and vested with all the

rights, privileges and benefits, and entitled to the

immunities and exemptions granted municipalities and

political subsidivisions under this Constitution or any

law of the State or of the United States; ...

Ariz. Const. art. 13, § 7.

An agricultural improvement district ... is a public,

political, taxing subdivision of the state, and a munici-

pal corporation to the extent of the powers and

privileges conferred by this chapter or granted gener-

ally to municipal corporations by the constitution and

statutes of the state, including immunity of its prop-

erty and bonds from taxation.

Ariz. Rev. Stat. ANN. § 45-902 (1956). As incidents to its

city-like status, the District may bring condemnation pro-

ceedings and exercise the right of eminent domain, Ariz.

Rev. Stat. ANN. § 45-939 (1956), enter upon any land to

carry out its purposes, Ariz. Rev. Stat. ANN. § 45-940

(1956), and raise revenue through the levy of taxes, ARIz.

Rev. Stat. ANN. § 45-1011 et seq. (1956). Most important,

the District Board of Directors, appellants herein, has plen-

ary and exclusive power to direct District operations and

affairs. Ariz. Rev. Stat. ANN. §{ 45-935-937 (1956) (Supp.

1980).

Unlike the Tulare District which had no other function

than to store and distribute water for farming, the Salt

River Project District has broad authority to engage in elec-

tric power operations totally independent of its water

delivery activities. Under Arizona law, the District may,

without regard to reclamation activities, “provide power ...

for the use of the owners or occupants of the lands.” Ariz.

Rev. Stat. ANN. § 45-903.6 (1956). The District’s Board of

Directors is further authorized to execute contracts “[flor

providing or furnishing power ... for use of the owners or

occupants of land within the district.” Ariz. Rev. Start.

ANN. § 45-936. A. 3. (1956)."*

The foregoing statutes dispel the District’s argument that

its vast electric operations are nothing more than a business

venture of the landowners. Indeed, the Court of Appeals

correctly dismissed that contention:

[T]he scale of the District’s operations simply does not

permit the interpretation that the electric utility is a

side venture that the District dabbles in to pick up a

'* Appellants dwell at length on the parties’ stipulation that the crea-

tion of the District in 1937 was to carry out the original reclamation

activities of its predecessor, the Water Users’ Association. Of course, at

that time, the power activities of the Association and the District were

truly incidental to water delivery.

Even the District impliedly acknowledges its changed character and

emphasis. It has stated that “(t]he initial reason for the existence of the

Salt River Project was water supply.” Exhibit K at 7 (emphasis added).

little extra money in order to benefit the landowners.

The operation of the utility has taken on independent

significance.... [I]t would elevate form over sub-

stance to characterize the District as functioning solely

for the benefit of landowners."

613 F.2d at 184. Thus, the District’s electric operations

have an independent existence fully separate and distinct

from its water activities.

Even the District’s water functions are totally dissimilar

to the narrow agricultural purpose of the district in Salyer.

Although the District’s functions were once limited to

supplying water for farming, the mushrooming growth in

the Phoenix area affected the use to which District water

was put. When this action was filed, 40% of District water

was used for urban purposes. J.A. 48. The Court of Appeals

correctly observed that this water is “used and paid for in a

manner unrelated to agriculture or land ownership.” 613

F.2d at 184. The eight cities, which receive almost 60 per-

cent of their municipal water from the District, J.A. 35, pay

for the water from municipal water revenues. J.A. 50. Al-

though the quantity of water delivered to the cities is based

'* The only power activities of the District which are incidental to its

water functions are its hydro-electric generating facilities located at its

dams. Exhibit K at 8.

Referring to the reclamation project, which exists separate and apart

from the District, J.A. 20, the 1949 contract between the District and the

Water Users’ Association provides that “[iJt is recognized that the Salt

River Project is primarily an irrigation project, and that development

and generation of hydro-electric power therein is secondary,” ... Ex-

hibit H at § VII (a) (emphasis added).

The reclamation statutes citied by Appellants contain no authority for

the District to engage in the generation and sale of electricity wholly in-

dependent of reclamation activities. See 43 U.S.C. §§ 501, 522, 598.

Furthermore, in an opinion to an Arizona legislator, the Office of the Sol-

icitor, Department of the Interior, states that any “authority of the

District to build and operate thermal electric generating plants derives

from state law, not from Federal law.” Attached as Appendix A to the

Reply Brief filed in the Court of Appeals.

upon acreage,'’® the water is used in ways unrelated to land

ownership.

Appellants argue that the “use to which this water is put

once it is delivered to its owners is of no concern to the Dis-

trict....” A.B. 14. Despite this cavalier attitude, the fact

remains that the District controls the primary water supply

system for almost one and one half million people. The use

of District water for municipal purposes is markedly differ-

ent from the agricultural use of water in Salyer.

The District’s management of the 13,000 square mile

watershed which ultimately serves the Phoenix area has

taken on even greater significance in light of the recognized

long-term water shortages which face our community. The

Arizona Legislature recently enacted a comprehensive

groundwater code, noting:

The legislature finds that the people of Arizona are

dependent in whole or in part upon groundwater ba-

sins for their water supply and that in many basins

and sub-basins withdrawal of groundwater is greatly in

excess of the safe annual yield and that this is threat-

ening to destroy the economy of certain areas of this

state and is threatening to do substantial injury to the

general economy and welfare of this state and its citi-

zens.

Ariz. Rev. Stat. ANN. § 45-401.A. (Supp. 1980). The Salt

River Project District is located within an area designated

as requiring the active management of groundwater. ARIZz.

Rev. Stat. ANN. § 45-411.A.2 (Supp. 1980). Preserving Ari-

zona’s diminishing reserves of groundwater transcends the

interests of property owners alone.

In summary, the District’s tandem electric and water ac-

tivities are functionally different from the district in

Salyer. The District is not serving the water needs of an

agricultural area far removed from city life. To the con-

'® The cities accept delivery of water in amounts based upon land

which they own and urban land no longer receiving irrigation from the

District. J.A. 34.

trary, it is literally the “life support” system for the 13th

largest city in the United States.

2. The District Provides General Public Ser-

vices.

In finding that the water storage district in Salyer did

not exercise what would be considered “normal governmen-

tal authority,” this Court stated:

It provides no other general public services such as

schools, housing, transportation, utilities, roads, or

anything else of the type ordinarily financed by a mu-

nicipal body. App. 86. There are no towns, shops,

hospitals or other facilities, designed to improve the

quality of life within the district boundaries, and it

does not have a fire department, police, buses or

trains. Ibid.

410 U.S. at 728-29 (emphasis added). The District does

provide utility service; towns, shops and hospitals are lo-

cated within its boundaries.

Appellants argue that “[w]ater and electricity represent

the kinds of service that can be performed, and frequently

are, by private enterprise.” A.B. 34. Yet the Court specifi-

cally mentioned utilities as an example of a general public

service which would be outside the rule established in Sal-

yer. The cases preceding Salyer establish that this Court is

concerned with the manner in which government affects

people’s lives rather than the label attached to the activity.

Avery v. Midland County, 390 U.S. 474, 484 (1968) ([T]he

powers of the Commissioners Court include the authority to

make a substantial number of decisions that affect all citi-

zens, ...”); Hadley v. Junior College District of Metro-

politan Kansas City, 397 U.S. 50, 54 (1970) (“[T]hese pow-

ers ... have sufficient impact throughout the district to

justify the conclusion that the principle which we applied in

Avery should also be applied here.”’).

The most compelling legal authority directly contrary to

Appellants’ position is this Court’s decision in Cipriano uv.

City of Houma, supra. There the Court struck down prop-

erty ownership restrictions in elections called to approve

bond sales to finance extensions and improvements to the

city’s gas, water and electric system. Thus, it must be con-

cluded that because the District provides vital public

services it is outside of the narrow holding of Salyer.

3. The District’s Activities do not Dispropor-

tionately Affect Landowners.

The Court in Salyer carefully explained that all costs of

the Tulare District’s activities were borne by landowners.

All of the costs of district projects are assessed against

land by assessors in proportion to the benefits re-

ceived. Likewise, charges for services rendered are

collectible from persons receiving their benefit in pro-

portion to the services. ... Jn short, there is no way

that the economic burdens of district operations can

fall on residents qua residents, and the operations of

the districts primarily affect the land within their

boundaries.

410 U.S. at 729 (emphasis added). Salt River Project Dis-

trict operations are easily contrasted with Salyer. Virtually

all of the costs of the District’s water and power operations,

98%, J.A. 36, are paid by electric customers, without regard

to land ownership.

The District’s water operations are only partially related

to land ownership because 40% of District water is used for

urban purposes. J.A. 48. It makes little practical difference

that water is delivered first to municipalities which in turn

distribute the water to consumers because “the charges set

by the district obviously affect the rates set by the munici-

palities ....” Choudhry v. Free, 131 Cal. Rptr. 654, 552

P.2d 438, 441 n.6 (1976).

This Court has already acknowledged that the operation

of water and electrical systems serving an urban community

affect more than just property owners.

Of course, the operation of the utility systems—gas,

water, and electric—affects virtually every resident of

the city, nonproperty owners as well as property own-

ers. All users pay utility bills, and the rates may be

affected substantially by the amount of revenue bonds

outstanding. Certainly property owners are not alone

in feeling the impact of bad utility service or high

rates, or in reaping the benefits of good service and low

rates.

Cipriano v. City of Houma, 395 U.S. at 705.

Throughout their brief, Appellants argue that the one

acre, one vote system was designed to shield their “entre-

preneurial risk” and their “investment.” A.B. 20-28. But

the District’s balance sheet is devoid of any “equity.” Ex-

hibit L at 15. The landowners have invested none of their

own money in District operations. Their “risk” is limited to

the lien on District lands arising from the general obligation

bonds and loans owed to the United States Government.

As of January 2, 1976, the District’s total outstanding

long-term debt was $796 million. Exhibit K at 36. Of that

amount, only 36% of the long-term debt was made up of

general obligation bonds which are considered a lien upon

property in the District. Ariz. Rev. Stat. ANN. § 45-1047

(1956). By July 31, 1980, out of $2 billion in long-term

debt, general obligation bonds (and United States Govern-

ment obligations) were only $240 million or 12% of total

indebtedness. OrriciaL STATEMENT 25. All general obliga-

tion bonds will be fully paid off in 26 years. Id. at 26.

There is very little risk that the District would ever have

to levy against these lands to pay off its general obligation

bond debt. “In all years to date net electric revenues have

been more than sufficient to meet all debt service require-

ments.” Exhibit L at 18."

Thus, the claimed “entrepreneurial risk” is illusory. De-

spite the repeated rhetoric attributing to landowners a

significant financial stake in District activities, it can easily

be seen that such is certainly not the case. The active fi-

nancing of long term debt through the sale of revenue

bonds has made the landowners’ risk virtually nonexistent.

C. The California Supreme Court, Considering

Facts very Similar to Those Present Here,

Rejected Property-Ownership Restrictions.

The singular agricultural purpose of the Tulare District,

its remote location away from urban areas, and its sole

impact on landowners, was recently analyzed by the Cali-

fornia Supreme Court, under both state and federal law,

'’ Appellants express the fear that a new board of directors more rep-

res¢ntative of the public at large “could lower electric rates to a point

that an acreage assessment ... or an acreage tax ... would have to be

imposed.” A.B. 35. They complain that the owner of a 50 acre farm

would pay much more than a homeowner. This speculation is unfounded

for a number of reasons.

First, the general obligation bonds all contain covenants binding the

District to collect electric rates “sufficient at all times to pay all neces-

sary costs of the operation and maintenance of said electric system” and

“to pay the principal of and interest on all bonds of said District... .”

Resolution authorizing sale of $180,000,000 of General Obligation Bonds

at 27 (Feb. 10, 1970), attached as an Exhibit to Appellees’ Response to

Petition for Rehearing before the Court of Appeals. These covenants are,

of course, binding on any future Board of Directors. See City of Cleve-

land v. Cleveland City Ry. Co., 194 U.S. 517 (1904).

Second, there are obviously hundreds of thousands of homeowners

who would presumably make up any new voting constituency; what pos-

sible interest would they have in encouraging any new Board to set rates

so low as to jeopardize their land? The spectre of an acreage assessment

could be more ominous to a homeowner than to the farmer. See Stewart

uv. Parish School Board of the Parish of St. Charles, 310 F. Supp. 1172,

1179 (E. D. La. 1970), aff'd mem., 400 U.S. 884 (1970).

Finally, even if there were any merit to Appellants’ concern, this

Court has always held that it is impermissible to exclude voters from the

franchise because of the way they may vote. Evans v. Cornman, 398 U.S.

41%, 423 (1970); Carrington v. Rash, 380 U.S. 89, 94 (1965).

when it declared unconstitutional the acreage restrictions

for serving on the board of the Imperial Irrigation District,

in a case remarkably similar to this."* Choudhry v. Free,

supra. Although there was no freeholder requirement for

voting, members of the board of directors were required to

own property.

The court distinguished the Imperial Irrigation District

from the Tulare District in precisely the same manner that

the Ninth Circuit Court of Appeals concluded that Salt

River Project District is different:

1. The district “may produce or purchase electric

power ... without regard to whether such functions

are ancillary to irrigation ....”

552 P.2d at 443;

2. “[A]ssessments against land are not the sole means

by which the district’s expenses are paid. The dis-

@gict may collect charges for the sale of domestic

water, electric power, .. and such charges are paid

by both landowners and those who do not own land.

And it is authorized to pay its bonds from revenues

other than assessments.”

Id.;

3. “[T]here is a very great difference between the ac-

tual functions and effects of the water storage

district involved in Salyer and the district in the

present case.”

Id.

'* The California Supreme Court held the acreage restrictions uncon-

stitutional even though the original legislative purpose of such districts

was water delivery. Cal. Water Code § 20500 et seg. (1956). In fact, under

California law “an irrigation district’s main purpose is to develop, pre-

serve and conserve water....” City of Modesto v. Modesto Irrigation

District, 34 Cal. App. 3d 504, 110 Cal. Rptr. 111, 113 (1973). Further-

more, just like the Arizona cases ascribing business-like characteristics to

the Salt River Project District, the electric operations of California irri-

gation districts have been described as proprietary functions. Yolo v.

Modesto Irrigation District, 216 Cal. 274, 13 P.2d 908, 910 (1932).

Upon finding these distinctions between the Imperial Dis-

trict and the district in Salyer and upon considering the

impact of Imperial’s activities on the lives of local residents,

the court held the freeholder requirement unconstitu-

tional.'®

Since the directors of the district decide such issues

as rate increases for water and power, the distribution

of water between agricultural and nonagricultural uses,

and other matters which could vitally affect the eco-

nomic welfare of the residents as well as the environ-

ment in which they live, the bar of section 21100

imposes a substantial burden upon the right of fran-

chise.

Id. at 441 (emphasis added). The California Supreme Court

opinion is a well-reasoned and careful application of this

Court’s holding in Salyer. It offers important guidance for

this case because the facts forming the basis of the Chou-

dhry opinion are quite similar to the facts here.

D. The One Acre, One Vote System Fails to Meet

the Strict Standard of Review.

Because the Salt River Project District is not within the

narrow exception to traditional voting analysis set forth in

Salyer, its one acre, one vote system must be tested against

the strict standard of review called for in City of Phoenix v.

Kolodziejski, supra. Under this standard, the Court should

consider whether nonproperty owners are substantially af-

fected by the District’s activities. Kramer v. Union Free

'* If a voter who does not own property cannot constitutionally

be excluded from voting on a bond issue for the construction of a

library (Hil!) or bonds to be used by a municipal utility district

(Cipriano) a fortiori, he may not be deprived of the right to vote in

an election for director of an irrigation district, which exercises the

broad powers and provides the essential services rendered by Impe-

rial.

552 P.2d at 443.

School District No. 15, supra. It is clear that the interests

of nonproperty owners and the interests of property owners

are not sufficiently substantial to justify excluding the for-

mer from the franchise.

The lien on District lands is similar to the financial inter-

est of property taxpayers asserted in City of Phoenix. City

of Phoenix general obligation bonds are secured by the gen-

eral taxing power of the City. 399 U.S. at 208. And property

tax payments are relied upon to make debt service pay-

ments if other revenue sources are insufficient. Jd.

The Court concluded, however, that the interests of non-

property owners in the bond elections were not

substantially different from the interests of property own-

ers. Justice White, writing for the majority, stated:

[I]t is unquestioned that all residents of Phoenix,

property owners and nonproperty owners alike, have a

substantial interest in the public facilities and the ser-

vices available in the city and will be substantially

affected by the ultimate outcome of the bond election

at issue in this case.

Id. at 209. Likewise, all citizens are vitally interested in the

District elections because Appellants have exclusive author-

ity to make decisions regarding the District’s essential

water and power functions.

In City of Phoenix, half of the debt service was to be sat-

isfied from revenues other than property taxes. Jd. at 209-

210. The interest of landowners here is even more remote

because District debt service is financed solely through

electric rates. Exhibit L at 18.

The obvious interest which all citizens have in a reliable

supply of electricity and water has been expressly recog-

nized by this Court. Cipriano v. City of Houma, supra. All

citizens, whether they purchase electric service from the

District or not, are affected by its electrical operations be-

cause they undoubtedly purchase services and products

from others who do buy power from the District. Even in

those District areas served by Arizona Public Service Co.,

the District sells A.P.S. its power requirements. J.A. 37.

The claimed financial interest of District landowners was

conclusively rejected by the Court in Hill v. Stone, supra.

Justice Marshall wrote: “Even under a system in which the

responsibility of retiring the bonded indebtedness falls di-

rectly on property taxpayers, all members of the

community share the cost in various ways.” 421 U.S. at 299.

It is not enough for the District to show that property own-

ers are affected by its actions; it must also be shown that

nonproperty owners are substantially less interested in Dis-

trict elections. The District is simply unable to establish

this lesser interest.

II. THE ONE ACRE, ONE VOTE SYSTEM DOES

NOT EVEN MEET THE TEST OF REASON-

ABLENESS.

The purported purpose of the acreage-voting system is to

(1) permit voting on a “debt-proportionate” basis and (2) to

connect voting strength to water use. J.A. 35. Even under

the more lenient rational basis test, the one acre, one vote

system is unconstitutional. As the Court held recently, even

in special-district elections, the “classification of voters into

‘interested’ and ‘non-interested’ groups must still be rea-

sonably precise, ...”’ Lockport v. Citizens for Community

Action, 430 U.S. 259, 266 (1977).

The District’s voting system is predicated upon the so-

called “debt-proportionate’” system. Debt-proportionate

voting was explained by the District in a March 18, 1969,

Resolution. “[T]he privilege of voting is commensurate with

the burden of debt; that is, the more land a person owns

and puts forth as collateral, the more he has at stake, and

the greater influence he has in Project affairs.” Exhibit Q at

The dramatic reduction in recent years in the amount of

District debt secured by a pledge of lands within the Dis-

trict has completely destroyed the rationality of limiting

the franchise on the basis of acreage owned. District land-

owners now run a technical risk of being forced to repay

only about 12% of the District’s total indebtedness;”” _Dis-

trict electric customers are totally responsible for about

90% of the District’s debt, to be paid through power reve-

nues. Yet the District still clings to debt-proportionate

voting.

The privilege of voting to elect the governing officers of

this District is no longer commensurate with the burden of

debt. More than anything else, this fundamental shift in

the way the District is financing its activities totally under-

cuts the rationale for limiting the franchise to landowners

on the basis of acreage owned. Large landowners can, with-

out any regulatory or governmental scrutiny whatsoever,

saddle current and future customers with total responsibil-

ity to repay debts incurred to finance District operations.

These customers have absolutely no voice in the decision to

undertake this debt, except to the extent they own large

amounts of acreage in the District.

The voting system doesnot even achieve the purported

goal of authorizing voting commensurate with debt because

all landowners cannot participate in District elections in

proportion to land owned. Only about 141,000 acres or 60%

of District lands are owned by persons otherwise qualified

to vote and are thus eligible to be voted in the elections.

Ariz. Rev. Stat. ANN. § 45-909 (Supp. 1980); J.A. 31. Be-

cause the lien on District lands burdens corporate

landowners and not simply individual landowners, the goal

*° General obligations bonds contain covenants providing that electric

rates must be set at levels sufficient to pay all debt service. See footnote

17, supra.

of allowing those to vote in proportion to the debt on their

land is clearly frustrated by restricting voting to only lan-

downers who are also qualified electors.

In Salyer, all landowners, both corporate and individual,

were extended the franchise in elections for the water stor-

age district: “The franchise is extended to landowners

whether they reside in the district or out of it, and indeed

whether or not they are natural persons who would be en-

titled to vote in a more traditional political election.” 410

U.S. at 730 (emphasis added). This point was also consid-

ered by the court in Stewart v. Parish School Board of the

Parish of St. Charles, supra. This was an action to invali-

date a school bond election on the grounds that a Louisiana

statute unconstitutionally limited voting in the election to

qualified electors who were also property owners. The dis-

trict court succinctly stated the inconsistency in the

argument that restricting voting to quucified electors who

owned property was designed to protect the interests of

property taxpayers:

But if protection of the property taxpayer had been

the legislature’s chief interest, the law would not have

excluded business entities. These are the taxpayers

who pay the largest share of taxes in most voting dis-

tricts.

310 F. Supp. at 1178. Thus, the exclusion of business enti-

ties from the District’s voting scheme demonstrates

conclusively that the debt-proportionate voting system does

not achieve its purpose of allowing voting commensurate

with land ownership.

The acreage-voting system also bears little relation to the

water delivery functions of the District because Appellants

permit voting regardless of whether the voter actually uses

District water. In other words, the owner of a commercial

acre of land has the same vote as the owner of an agricul-

tural acre. If a purported basis of the voting system is to

connect voting to water use, it is irrational to permit voting

without any inquiry whatsoever into whether or not the

voter does in fact use District water.

III. THE ASSERTED BUSINESS CHARAC-

TERISTICS OF THE DISTRICT ARE NOT

CONSTITUTIONALLY RELEVANT. THE

VOTING SYSTEM MUST BE CONSID-

ERED IN LIGHT OF ITS IMPACT ON

PEOPLE’S LIVES TODAY, NOT ITS HIS-

TORIC PURPOSES.

A. Regardless of its Asserted Business Char-

acter, the District’s Voting System is not

Immune from Constitutional Scrutiny.

Implicit in Appellants’ brief is the suggestion that the

District is so like a business that even the reasonableness

standard used in Salyer has no applicability to it. But even

in Salyer, where the business attributes of the Tulare Dis-

trict were so apparent, the Court did not throw the

Constitution out the window.

The Court of Appeals summed up this important point

this way:

Salyer did not hold that the fourteenth amendment

did not apply to the water district. The Court assumed

there was state action and dealt with the question of

the requirements of the fourteenth amendment in that

situation. The issue is not whether the Salt River Dis-

trict is a state entity, but whether, having made the

decision to create the entity and provide for the elec-

tion of its directors, the state can deny the electoral

franchise to citizens whose economic interest and natu-

ral environment are vitally affected by the entity’s

operations.

613 F.2d at 184-85. Appellants do not even purport to de-

fend the “reasonableness” of the acreage-voting scheme.

The historic purpose and categorization of the District by

Arizona Courts are not and cannot be disputed. But what

Appellants overlook is that the “Constitution is concerned

with the practical consequences, not the formal categoriza-

tions, of state law.” North Carolina v. Alford, 400 U.S. 25,

37 (1970).

The fallacy of Appellants’ position is that constitutional

guarantees may not be abridged merely because a “busi-

ness” label is attached to governmental action; instead, the

Court examines the manner in which government affects

people’s lives:

[T]he Court has never acknowledged that the States

have power to do as they will with municipal corpora-

tions regardless of consequences. Legislative control of

municipalities, no less than other state power, lies

within the scope of relevant limitations imposed by the

United States Constitution.

Gomillion v. Lightfoot, 364 U.S. 339, 344-45 (1960). The

prerogative of the federal courts to review the constitution-

ality of voting schemes purporting to protect the interest of

special segments of society is implicit in Salyer.*'

Appellants’ argument that the economic subsidy to land-

owners resulting from the acreage-voting system is within

the realm of legislative discretion, totally misses the mark.

Of course, popularly elected governmental bodies should be

free to make economic and social policy (within constitu-

tional bounds). Where political units are directly

accountable to those affected by their activities broad lee-

way should be given to them.

But where government lacks that accountability it may

act in contravention of the interests and will of the people

which it serves. Economic, social and environmental deci-

sions affecting the entire population of central Arizona

** At oral argument, counsel for the Tulare District dwelled at length on

its business purpose. Transcript of oral argument 34, 40-41, 43. Even so,

appellants in Salyer were, “of course, entitled to have their equal protec-

tion claim assessed ... .”” Salyer 410 U.S. at 730.

cannot be constitutionaly restricted to a small clique repre-

senting one narrow segment of our community—large

landowners. The unrestrained and omnipresent power of

the District is not “within the scope of relevant limitations

imposed by the United States Constitution” when it is cou-

pled with virtual total unaccountability to the public at

large.

The Court of Appeals correctly noted that the acreage-

based voting system was not the constitutionally correct

way to insure that the District followed its purported pur-

poses:

In this Court the District makes repeated reference to

statutory and decisional authority indicating that the

District’s principal purpose and obligation is to pro-

vide water to the lands within it. If this legal

proposition is correct, then the district will] no doubt

comply with it or be subject to corrective action by the

courts or the Arizona legislature. It is not, however, an

argument that justifies trying to skew the electoral sys-

tem as an indirect way to produce that result.

613 F.2d at 185.

B. The District’s Heavy Reliance on Historic

Purpose is Misplaced.

The District would have the Court examine the constitu-

tionality of its acreage-voting scheme in light of

circumstances long since past. Although the purpose for

which the District was organized three quarters of a century

ago may explain why the land-based voting system still ex-

ists, this Court uniformly evaluates an equal protection

challenge to legislation in light of present-day conditions.

This rule was applied most forcefully by this Court in

Brown v. Board of Education, 347 U.S. 483 (1954), in deter-

mining whether separate but equal educational facilities

were constitutional. The Court refused to examine public

education under conditions of prior years:

In approaching this problem, we cannot turn the

clock back to 1868 when the Amendment was adopted,

or even to 1896 when Plessy v. Ferguson was written.

We must consider public education in light of its full

development and its present place in American life

throughout the Nation. ...

347 U.S. at 492-93. Time after time, this Court has stressed

the relevancy of present facts over the past.

In Chastleton Corp. v. Sinclair, 264 U.S. 543 (1924), an

action was brought to enjoin an order of the Rent Commis-

sion of the District of Columbia reducing rent for an

apartment building. The landlord complained that the

“emergency which existed in 1919” had ‘‘come to an end”

by 1922. The Court reversed the dismissal of the complaint,

stating the rule of law as follows: ““A law depending upon

the existence of ... [a] certain state of facts to uphold it

may cease to operate if the ... facts change, even though

valid when passed.”’ 264 U.S. at 547-48. See, e.g., City of

Rome v. United States, 48 U.S. L.W. 4463, 4470 (April 22,

1980); Leary v. United States, 395 U.S. 6, 38 (1969); Burrey

v. Embarcadero Improvement District, 97 Cal. Rptr. 203,

488 P.2d 395, 404 (1971).

Thus, the District’s lengthy historic survey does not un-

dercut in any way the contentions of the disenfranchised

residents that its voting system is unconstitutional. The

acreage-voting scheme must be measured against today’s

circumstances and the pervasive impact which the District

has on its residents in 1980. Because the focus of this

Court’s inquiry must be in the here and now, the conclusion

that the District’s voting system is unconstitutional is unes-

capable.

CONCLUSION

Appellants mistakenly characterize the inevitable result

of upholding the Court of Appeals’ decision as vesting con-

trol of the District in its electric customers. But the

question of remedy is a separate one from the question of

whether the current structure violates the Constitution.

Formulating an appropriate remedy to redress the constitu-

tional violation should initially be within the province of

the Arizona Legislature.

The evolution of the District has been reflected by many

legislative changes except one—its voting system. Because

the one acre, one vote scheme is predicated upon facts and

circumstances, which are now only of historic interest, it

has become constitutionally infirm. The District’s pivotal

electric and water functions substantially affect the lives of

all of its residents; it may not continue to carry out these

essential activites under the control of large landowners

alone.

Respectfully submitted,

Bruce MEYERSON

Amy J. GITTLER

ARIZONA CENTER FOR LAW

IN THE PUBLIC INTEREST

112 North Fifth Avenue

Phoenix, Arizona 85003

Tel. (602) 252-4904

Counsel for Appellees

December 20, 1980

APPENDIX A

OFFICIAL STATEMENT

SALT RIVER PROJECT ELECTRIC SYSTEM

REVENUE BONDS, 1980 SERIES B AT 25

Outstanding Long-Term Indebtedness

Outstanding long-term indebtedness at July 31, 1980 consisted of Prior Lien Bonds (including

loans from the United States of America), equipment contracts and Revenue Bonds, as shown be-

low. In all years to date, Revenues Available for Debt Service have been more than sufficient to

meet all debt service requirements and the District has never used its taxing power for the Prior

Lien Bonds.

Amount

(as of July 31, Future

Coupon % 1980) Maturities

General Obligation Bonds

Issues No. 6 through 14 1 to6 $ 229,600,000 1981-2003

Unamortized Bond Discount (2,280,334)

Total Net General Obligation Bonds Outstanding ..... $ 227,319,666

U.S. Government Obligations $ 13,029,137 1980-2004

Total Net Prior Lien Debt Outstanding ...................... $ 240,348,803

Electric System Revenue Bonds

1973 Series A and B 5 to6% $ 142,205,000 1981-2011

1974 Series A and B 5.7 to 7.6 140,000,000 1983-2012

1976 Series A, B, C and D 4% to 7.2 404,150,000 1981-2016

1977 Series A, B Refunding and C 4 to6% 394,215,000 1981-2017

1978 Series A, B and C 4.4 to7 317,900,000 1981-2018

1979 Series A, B and C 4% to7% 281,045,000 1983-2019

1980 Series A 7.4 to9% 125,000,000 1985-2020

Total Electric System Revenue Bonds Outstanding .. $1,804,515,000

Unamortized Bond Discount (27,061,667)

Total Net Electric System Revenue Bonds

Outstanding , $1,777,453,333

Equipment Contracts $ 1,290,439 1980-1983

Total Net Long-term Indebtedness ...............s0:-s0+ $2 019,092,575

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.