Oregon Advisory Opinions May 06, 1977: OAG 77-43 (May 6, 1977)

OAG 77-43.

Article XI-D of the Oregon Constitution outlines the authority of the state to develop electric energy, and to act in what ordinarily is considered a private capacity. In Section 2, it enumerates those activities which the State of Oregon is authorized and empowered to undertake. They include control, use, transmission, distribution and sale of electric energy; contracting with the United States for the purchase of electric energy; and fixing rates for the use of the electric energy.

It is appropriate to point out early in this opinion that the "grant" of authority contained in Article XI-D, §2 is to a great extent not a grant at all, but a recital of acts the legislature had power to authorize the state to perform even before adoption of the constitutional article. The legislature's power is plenary: that is, it may legislate on any matter it chooses, in any way it chooses, unless a constitutional provision can be found restricting its authority to act on the particular matter. Straw v. Harris , 54 Or 524, 103 P 777 (1909). The Oregon Constitution, unlike the United States Constitution, is a document of limitation, not of grant. Accordingly, if the legislature chooses to put the state into the business of generating, buying, distributing and selling electrical energy, it may do so without any constitutional authorization , except to the extent any constitutional limitation exists.

Before passage of Article XI-D, probably the only constitutional limitation on entry of the state into the power business was the debt limitation imposed by Or Const art XI, §7. Art XI, §6 (state not to assume debts of local governments) would also limit the manner in which the state might exercise its authority to enter into the power business.

Art XI-D, §2 contains nine paragraphs setting forth those things which the State of Oregon is "authorized and empowered" to do with respect to control and development of water power. Only paragraph 8, authorizing the state to incur debt up to one and one half percent of true cash value of property in the state taxed on an ad valorem basis, is clearly necessary to permit the state to do something otherwise prohibited to it.

What then of the other eight paragraphs? Are they simply surplus and unnecessary? Are they intended to specify the purposes for which indebtedness authorized by §2, para 8 may be incurred? Or are they intended to constitute limitations on the state's power, rather than grants; to provide that regardless of its former power, the state is authorized to carry out the functions described only within the framework of and subject to the limitations contained in Article XI-D?

Reading the Article as a whole, we conclude that the grants set forth in Section 2 must be construed to limit the state's power to perform the specified functions by requiring them to be exercised subject to the requirements of the Article, including Section 3.

Article XI-D, Section 3, provides:

"The legislative assembly shall, and the people may, provide any legislation that may be necessary in addition to existing laws, to carry out the provisions of this article; Provided, that any board or commission created, or empowered to administer the laws enacted to carry out the purposes of this article shall consist of three members and be elected without party affiliation or designation."

In a recent opinion, we stated that this language suggests the powers enumerated in Article XI-D may be administered only through a three member non-partisan elected body. 37 Op Atty Gen 1559 (1976). On two other occasions, the Attorney General has stated that such an elected body is required to carry out the functions of the article.(fn1)

If there were any doubt, an examination of the history of Article XI-D makes it clear that to the extent the state undertakes to exercise the powers enumerated, it must do so through an elected three man body. It is irrelevant that the wisdom of such a policy now may be open to debate. Cf. State ex rel Musa v. Minear , 240 Or 315, 319, 401 P2d 36 (1965).

Article XI-D, also known as the Grange Power Amendment, was enacted by the people of Oregon on November 8, 1932, through the initiative process. The amendment was another chapter in the public versus private power struggle which has dotted

Oregon history. At the time of the proposal, the Great Depression was in full swing. In the same election, Roosevelt and his "New Deal" won over Hoover. The Insull utility empire was collapsing. The Oregon Public Utility Commissioner, Charles Thomas, was holding hearings on the effect of affiliated interests on utility costs. In this atmosphere, public power advocates produced the Grange Power Amendment, purportedly empowering the state to enter the energy business to provide low cost electric energy, but at the same time prescribing conditions which they felt were for the protection of the public.

In interpreting an enactment adopted by initiative, it is relevant to consider the literature and statements addressed to the question whether people should vote for the measure. 2A Sutherland Statutory Construction, §48.19 (1973). Furthermore, in construing a constitutional amendment, statements made in the official Oregon Voter's Pamphlet are highly persuasive. State ex rel Chapman v. Appling , 220 Or 41, 68, 348 P2d 759 (1960); Port of Longview v. Taxpayers of Port of Longview , 85 Wash 2d 216, 533 P2d 128 (1975). Among other things, the stated purpose of Article XI-D as set forth in the Oregon Voter's Pamphlet was to authorize the State of Oregon to acquire and sell electric energy. With respect to Section 3 of the Article, the stated purpose declared:

". . . [C]ommission of three nonpartisan elected members to administer these powers." (Oregon Voter's Pamphlet for election of November 8, 1932, p. 67).

We found nothing in our research inconsistent with this official interpretation that the powers enumerated by Article XI-D would be administered by a three man elected body. For example, on November 7, 1932, the Oregon State Grange, sponsors of the amendment, ran a four column advertisement in the Morning Oregonian, a newspaper of general circulation, describing the principle features of the measure and stating in bold type:

"Who Is Most Responsible

"[A] commission elected by the people or one appointed by a governor? We believe in maintaining the rights of the people in a democratic form of government. We must not delegate too much of our power to the governor of our state. This amendment provides a commission for administration which shall be elected by the people and, therefore, responsible to the people. The legislature would provide the law for elections."

Likewise, articles in the Oregon Voter of October 22, 1932, page 12, and November 5, 1932, page 40, and in the Oregon Journal of October 17, 1932, page 6, assume the proposal requires a three man elected body.

Immediately after its adoption, the constitutional amendment was implemented by the 1933 legislature. Senate Bill 244 provided for a three man elected commission to administer the provisions of the new "State Power Act." Oregon Laws 1933, ch 357. This measure was thereafter the subject of a referendum and was defeated, leaving Article XI-D without implementation. Wieder v. Hoss , 143 Or 57, 21 P2d 227, 143 Or 122, 21 P2d 780 (1933).

The present Senate Bill 320 once again proposes to put the State of Oregon into the business of acquiring, distributing and selling electric energy. The provisions of the bill would be administered by an appointed official. As a general proposition a legislature has the power to engage in all aspects of civil government unless limited by the state or federal constitutions. A limitation in the state constitution upon the legislative power may be express or implied. State ex rel Chapman v. Appling , 220 Or 41, 53, 348 P2d 759 (1960). In our opinion, the enactment by initiative of Article XI-D is a limitation upon the authority of the legislature to authorize the state to enter into such an enterprise, outlining the conditions under which the venture can be undertaken. The requirements include administration by a three man body elected by the people. The fact that the Article does not expressly prohibit any other kind of administration is immaterial. Cf. State ex rel Chapman v. Appling , supra .

It is urged, and may persuasively be argued, that Article XI-D was adopted to authorize a specific proposed course of action--that is, entry by the state into the business of generating and transmitting hydroelectric power. It was contemplated that the state would build dams and transmission facilities; and even if the federal government did build the dams, as was understood to be a significant possibility, it was contemplated the state would be able to buy power only at the dam sites, and would be required to build its own transmission facilities.

The financing of such facilities would have been impossible, within the otherwise applicable debt limitation, without constitutional sanction. The constitutional provision was necessary only because construction, and the required financing of construction, was an integral part of the proposed course of action.

The Article was never implemented, the argument continues, and the proposed course of action was never taken. Any future entry by the state into the power distribution business which does not require borrowing and bonding, or any activity which would previously have been permissible, is still permissible regardless of any limitations contained in the Article. Article XI-D is simply not applicable to SB 320, inasmuch as the 1977 proposal is not comparable to the contemplated 1932 course of action, and will not require the incurring of any debt.

This argument is appealing, but we cannot avoid the fact that SB 320 proposes activities which are clearly within the purposes of Article XI-D, as set forth in Section 2, even though it does not include all those purposes. It appears most unlikely that a court will hold that the requirements of Section 3, applicable to the carrying out of "the purposes of this article," are to be disregarded if the state exercises many or even all the powers authorized in Section 2, paragraphs 1 to 7 and 9, so long as it does not lend the credit of the state as authorized by paragraph 8. In fact, the proposal discussed in 28 Op Atty Gen 141, n 1 supra , was for the participation by Oregon in interstate compact for development of hydroelectric

projects through revenue bonds. Lending of the state's credit as authorized by Section 2, paragraph 8, would not have been required, but the conclusion was that Section 3's requirement of a three man elected board would have been applicable.

It is nevertheless possible, though we think unlikely, that a court will hold that the Section 3 requirement will not be applicable. If the legislature deems that a single appointed administrator would be more desirable, it would seem to be prudent to add a provision to the bill specifying that if Section 3 is in fact held to be applicable, then the Governor shall appoint such a board, to serve until the next state-wide election, and providing a procedure for election of such a board at that next election.

1 28 Op Atty Gen 141 (1957), relating to interstate water development compacts, and 27 Op Atty Gen 96 (1955), relating to the extent to which the Oregon Constitution authorizes the state to engage in the power business.