Oregon Advisory Opinions January 01, 1978: OP 7558

Advisory Opinion Text

DEPATRMENT OF JUSTICE

100 STATE OFFICE BUILDING

SALEM.OREGON 97310

TELEPHONE:(503)378-6368

January 5, 1978

No. 7558

This opinion is issued in response to questions presented by Mr. James E. Sexson, Director, Water Resources Department.

FIRST QUESTION PRESENTED

Under Oregon Laws 1977, ch 246, Sec.8(1), if a port commission is the water developer, does the state acquire a lien on all of the port's real property, or only on that portion of the port's real property in which the water conveyance facilities are located?

ANSWER GIVEN

The state acquires a lien on all of the port's real property.

SECOND QUESTION PRESENTED

Assuming secondary use of water to be municipal and industrial use, must the Water Resources Department secure a lien on the munic­ipal and industrial facilities benefited, and if so, how is the lien secured?

ANSWER GIVEN

No lien on property of secondary users is required.

THIRD QUESTION PRESENTED

Can a foreign corporation qualify as a secondary user? If a foreign corporation obtains water for industrial use from an irrigation district, who is the water developer?

ANSWER GIVEN

Chapter 246 does not distinguish between foreign and domestic corporations. A foreign corporation may qualify as a secondary user. A water developer is any person or organization listed in ch 246, Sec.1(6). Where a corporation, foreign or domestic, obtains water for industrial (secondary) use from an irrigation district, the district is the water developer.

FOURTH QUESTION PRESENTED

Can a foreign corporation participate in an irrigation district where the irrigation district is a water developer under Oregon Laws 1977, ch 246, and the foreign corporation is but one individual within the district?

ANSWER GIVEN

Yes .

DISCUSSION

The 1977 Oregon Legislature proposed, and the people approved in November, 1977, an amendment to the Oregon Constitution pro­viding for a Water Development Fund. SJR 1; Or Const art XI-I. The amendment directs the legislature to enact legislation to carry out the provisions of art XI-I. The legislature adopted implementing legislation, which is found in Oregon Laws 1977, ch 246. This opinion concerns questions raised in connection with ch 246.

We are first asked whether, if a port commission obtains water development funds under ch 246, the state must secure those funds with a lien on all of the port's real property, or only upon that portion of the port's real property on which the water conveyance facilities are located. We conclude that the state's lien must extend to all of the port's real property.

A port district may be a "water developer" under ch 246.

Oregon Laws 1977, ch 246, Sec.1(6)(L). Loans made under ch 246 to port districts acting as water developers are subject to security provisions found in Oregon Laws 1977, ch 246, Sec.3.

Section 8(1)(a) provides that:

" [w]hen a loan is made to a water developer other than a water developer described in para­graph (a), (b) or (c) of subsection (6) of section 1 of this Act [not applicable here] for the construction of a water development project under this Act, the State of Oregon has a lien for the amount of the unpaid balance of the loan. The lien created by this subsection attaches to the real property of the water developer , to the user charges, including interest, owed to or received by the water developer and to all real property, whether owned by the water developer or other persons, which is irrigated or drained by reason of the water development project ." (Emphasis added).

The section quoted above evidences a clear intent to secure water development fund loans with a lien on all real property of the water developer: ". . . The lien . . . attaches to the real property of the water developer, ..." The lien also extends to all real property, owned by the water developer or others, which is irrigated or drained by the water develop­ment project: "... and to all real property, whether owned [etc.] . . . which is irrigated or drained ..." (Emphasis added) This conclusion applies only to water developers other than those described in ch 246, Sec.1(6)(a)(b) and (c). An entirely different security requirement is applicable to these water developers, who include individuals who are Oregon residents, and partnerships or corporations for profit, subject to the provisions of ORS chapters 57, 68, or 69, whose principal income is from farming in Oregon. Under ch 246, Sec.8(2), a loan to such developers is secured by a first lien "upon such real property of the water developer as the director shall require for adequate security." The lien does not automatically attach to all property of the developer, but only to that selected by the director as sufficient and specified in the mortgage or security agreement.

The second question presented asks whether the Water Resources Department must secure a lien on the municipal and industrial facilities benefited by a secondary use. We conclude that no lien is required under ch 24 6 on property of secondary users.

Chapter 246 contemplates both primary and secondary purposes for water development projects. Irrigation and drainage constitute primary purposes. Oregon Laws 1977, ch 246 , Sec.1(5) (a), (b) . "Secondary uses" in conjunction with either irrigation or drainage are also permitted. Ch 246, Sec.l(5)(c). "Secondary use" is defined to include municipal and industrial water uses with a water development project as the source. Ch 246 , Sec.1(4) (c). All secondary uses must be compatible with the water development project; that is, they must be compatible with the primary project purposes of irrigation or drainage. Ch 246 Sec.1(4).

As noted above, ch 246, Sec.8 is very explicit in describing the property to which the lien securing a water development fund loan attaches. The lien applies to real property of the water developer, to user charges, including interest, owed to or re­ceived by the water developer, and to real property irrigated or drained by the project . There is no indication of legislative intent to extend the lien to real property of secondary users (i.e., uses not constituting irrigation or drainage). It is a general rule of statutory construction that the inclusion of specific matter in a statute tends to imply legislative intent to exclude related matters not mentioned. Smith v. Clackamas County , 252 Or 230, 448 P2d 512 (1969). However, while the lien does not extend to real property of secondary users, we note that a lien does attach to user charges and interest, including charges made to secondary users, either owed to or received by the water developer. Ch 246, Sec.8(1)(a).

The third and fourth questions involve treatment of foreign corporations under ch 246. We are asked whether a foreign corporation may qualify as a secondary user under the Act. The answer is yes. It is a general rule in Oregon that foreign corporations registered in this state "enjoy the same but no greater rights and privileges as a domestic corporation. ..." ORS 57.660. We find no indication in Oregon Laws 1977, ch 246 that foreign corporations may not participate in and benefit from water development projects. Indeed, the definition of "water developer" under ch 246 includes any "... corporation for profit subject to the provisions of ORS chapter 57, . . ." ORS ch 57 regulates both foreign and domestic corporations.

Article XI-I, Sec.1 contains a definition of "resident," from which it could be inferred that the underlying constitu­tional authority in some way restricts access by non-residents to the benefits derived from the Water Development Fund. However, the definition hangs in mid-air; there is no provision in the section or the entire article to which it is relevant. The explanation is that SJR 1, as introduced, provided for use of the fund to finance qualifying projects "upon lands owned by residents of the State of Oregon." This qualification was deleted from SJR 1 before its passage. The definition of "resident" thus became superfluous, but was left in by oversight. It has no significance.

The question is also raised whether a foreign corporation may participate in an irrigation district where the district is a water developer under ch 246 and the foreign corporation is but one individual within the district. Again the answer is yes. As noted above, Oregon law generally affords properly registered foreign corporations the same rights and privileges as are given domestic corporations. ORS 57.660. Irrigation districts are regulated by ORS ch 545. ORS 545.002(2) specifically recognizes that corporations may participate in irrigation districts. Neither this statute nor Oregon Laws 1977, ch 246 distinguish between foreign and domestic corporations.

A "water developer" is any person or organization listed in Oregon Laws 1977, ch 246, Sec.1(6). This list includes most irrigation and drainage districts, as well as corporations subject to ORS chs 57 and 61, including registered foreign corporations, whose principal income is from farming in Oregon. Any "water developer" may seek moneys from the water development fund created by Or Const art XI-I and ch 246 to implement a water development project. Oregon Laws 1977, ch 246, Sec.2.

As noted above, such a project must have as its principal purpose irrigation or drainage, but it may also provide water for such secondary purposes as municipal or industrial use, so long as such uses are compatible with irrigation or drainage. The water developer may arrange, by contract or otherwise, to provide water to secondary users such as corporations (foreign or domestic), governmental bodies or others. Mere use of water derived from a water development project does not, of course, make the secondary user a "water developer."

James A. Redden Attorney General

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