20221020Reply Comments.pdf

SUNNYSIDE PARK UTILITIES‟ REPLY COMMENTS - 1

MARK R. FULLER (ISB NO. 2698)
DANIEL R. BECK (ISB NO. 7237)
PAUL L. FULLER (ISB NO. 8435)
FULLER & BECK
410 MEMORIAL DRIVE, SUITE 201
P.O. BOX 50935
IDAHO FALLS, ID 83405-0935
TELEPHONE: [phone]
EMAIL: [e-mail]
EMAIL: [e-mail]

ATTORNEY FOR RESPONDENT

BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION

DONALD SORRELLS,

Complainant,

v.

SUNNYSIDE PARK UTILITIES,
INC.,

Respondent.
______________________________
) Case No.GNR-U-22-03
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) SUNNYSIDE PARK UTILITIES’
) REPLY COMMENTS
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COMES NOW the Respondent, by its counsel of record, Paul L.
Fuller, and submits the following comments in response to Comments
from Commission Staff, dated October 13, 2022 (hereafter “Staff
Comments”). These comments are supported by the Declaration of
Doyle H. Beck submitted herewith.
1. STAFF CRITERIA
In the Staff Comments, five criteria were identified by Staff
as considerations for determining the jurisdiction of IPUC over
Sunnyside Park Utilities. These criteria are as follows:

RECEIVED
2022 October 20, PM 12:32
IDAHO PUBLIC
UTILITIES COMMISSION

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A. Is the Company a Non-Profit or a Co-op?
B. Does the Company operate for the service of the customers
and not for profit?
C. Is the Company owned by the water users?
D. Do the customers have control of the rates that the
Company charges?
E. Do the customers have control of the operations and
capital expenditures of the Company?
See Staff Comments, p. 2. Staff does not identify the source of
these criteria, or any legal basis for IPUC to apply these to its
jurisdictional analysis of Sunnyside Park Utilities. Based upon
Staff‟s comments submitted on May 12, 2022, it appears that this
list of criteria was simply created by the Staff, without any
reference to statutory authority. See Reply Comments of the
Commission Staff, p. 3.
The sole issue before the Board is whether the IPUC may
exercise jurisdiction over Sunnyside Park Utilities. This
Commission has previously recognized that its “jurisdiction and
authority over water systems derives from statute.” See Commission
Case JHW-W-04-01, Order No. 29526, p. 1. Specifically, IPUC
jurisdiction is governed by Idaho Code Section 61-104, which
defines the term “corporation” for purposes of IPUC jurisdiction.
Under this statute, the term “corporation” is clearly defined in
Idaho law to not include “a municipal corporation, or mutual
nonprofit or cooperative gas, electrical, water or telephone
corporation or any other public utility organized and operated for
service at cost and not for profit, whether inside or outside the

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limits of incorporated cities, towns or villages.” If SPU is a (1)
mutual nonprofit water corporation, (2) cooperative nonprofit
water corporation, or (3) any other public utility organized and
operated for service at cost and not for profit, then SPU is not a
corporation subject to IPUC jurisdiction. IPUC Staff and the
Commission do not have the authority to add criteria to the
statute to extend IPUC jurisdiction.
Under Idaho Code Section 61-104, the only relevant criteria
applied by the Staff are A (is the company a non-profit or co-op?)
and B (does the company operate for the service of customers and
not for profit?). Consideration of who owns SPU (Criteria C), who
controls the rates (Criteria D), and who controls operation of SPU
(Criteria E), are not appropriate considerations under Idaho Code
Section 61-104. Including new criteria in the definition of what
constitutes a “corporation” is the responsibility of the
legislature, not the Staff or this Board. This Board must follow
Idaho law as written by the Legislature, or request a change to
increase Board jurisdiction.
SPU believes that the only relevant jurisdictional question
before the Board is whether SPU is a corporation as defined by
Idaho Code Section 61-104. SPU has established that it is
organized as a nonprofit and operates at cost. See Amended Answer
to Formal Complaint, paras. 1 and 11, and Exhibits A, B, C, and D.
These facts were not disputed by Mr. Sorrells or the Staff. No

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consideration should be given to Staff imposed criteria which are
beyond the scope of I.C. § 61-104. Because SPU is a nonprofit, it
is not a corporation under I.C. § 61-104, meaning the IPUC does
not have jurisdiction over SPU.
In the event the Board disagrees with SPU‟s interpretation of
the statutory limitation of IPUC jurisdiction, SPU will also
address other issues raised in the Staff Comments.
2. SPU BOARD GOVERNANCE
Staff identifies various concerns indicating that there is a
potential for abuse of the customers by SPU. These concerns mirror
the concerns the customers addressed in PKS-W-15-01, which was
referenced in the Staff Comments. In Order 33603, the Board
rejected these same potential abuse concerns, and stated as
follows:
We appreciate various customers' concerns that the
Company's directors could self-deal and discriminate
against Company members, but find these comments
disregard provisions in the Idaho Nonprofit Corporation
Act that would guard against this. For example,
directors and officers must act in good faith (Idaho
Code §§ 30-30-618 and -623), may not be involved in an
unfair, conflict of interest transaction with the
Company (Idaho Code § 30-30-619), or obtain loans or
guarantees from the Company that are not similarly
available to all other customers/members (Idaho Code §
30-30-620). In addition, the Company's customers/members
have a right to inspect the Company's records, including
minutes, resolutions, and financial statements (Idaho
Code §§ 30-30-1101 through -1105), and to remove any
offending directors (Idaho Code§ 30-30-610).
See Order 33603, p. 6. SPU‟s Board is likewise governed by the

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Idaho Nonprofit Corporation Act, which mitigates the potential
abuse concerns expressed by the Staff. Customers can seek
protection from SPU officer and director malfeasance under the
Idaho Nonprofit Corporation Act.
Additionally, Staff expresses concern that the customers are
not directly involved in the election of SPU‟s Board Members.
Under Idaho Nonprofit Corporation Act, nonprofits may be organized
as nonprofits with members, or nonprofits without members. See
Idaho Code Section 30-30-604. SPU is a non-member nonprofit
organization. Under I.C. § 30-30-604(2), a non-member nonprofit‟s
directors are elected as provided in the Bylaws, and if no Bylaws
exist, directors are elected by the Board. Nothing in Title 61,
Idaho Code, distinguishes between a member and a non-member
nonprofit, and treats all nonprofits the same.
Staff states that Staff would recommend against regulation by
the Commission “[i]f the Company were to change the bylaws so that
every customer would be a member of the non-profit and have the
ability to vote on members of the Board….” See Staff Comments, p.
3. (Emphasis added). SPU believes that this is a totally
unreasonable and unconstitutional request for government agency
staff to make. Essentially, Staff is requesting that SPU give
itself away to its customers in order to avoid IPUC regulation.
While SPU was willing to convert to nonprofit status, given the
fact that SPU was always designed to be operated at cost and

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without a profit, asking SPU to gift the entire value of the
entity and its infrastructure to customers would constitute a
redistribution of SPU to the customers without compensation.
Customers include tenants who are not even owners of parcels
within the subdivision, who may cease such tenancy at the end of
their lease term. Compelling SPU to take this course of action
would constitute a governmental taking and a taxable gift to every
customer. Some customers may refuse such an unrequested gift and
the risk coming from owning a water company. SPU believes Staff‟s
recommendation to require transfer of ownership to the customers
in order to avoid IPUC regulatory jurisdiction does not fully
evaluate significant unintended consequences.
Notwithstanding the fact that SPU‟s customers are not
entitled to any control of SPU as a nonprofit, SPU has entered
into an Agreement which identifies the process of enacting rate
changes which allows customer involvement. This satisfies Criteria
D which Staff seeks to impose. The satisfying of Criteria D was
previously recognized by Staff in their original Staff Comments,
dated May 12, 2022, p. 4. In its own comments, Staff stated that
it “believes that the customers do have significant control over
the rates SPU charges.” Id. Nothing has changed in regards to the
Agreement giving significant customer control over SPU rate
changes, as already acknowledged by Staff. Staff gives no
explanation for this significant change of position. During SPU‟s

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twenty years of operation since 2002, Mr. Sorrells is the first
complaint filed by a customer, and even Mr. Sorrells makes no
complaints regarding the rates charged by SPU. Declaration of
Doyle Beck, para. 6. Staff‟s suggestion that SPU must communalize
its business in order to avoid IPUC regulation must be rejected.
3. WATER CORPORATION
Even if the Board determines that Sunnyside Park Utilities is
a corporation under Idaho Code Section 61-104, the Board must also
determine that SPU is a “Water Corporation” under Section 61-125.
This Section was originally adopted in 1913, and was reenacted in
1915. No changes have been made to the definition of “Water
Corporation” in over 100 years. In 1921, the Idaho Supreme Court
addressed Idaho Code Section 61-125 in Stoehr v. The Natatorium
Co., 34 Idaho 217, 200 Pac. 132 (1921), in a case where William
Stoehr was demanding that The Natatorium provide natural hot water
to heat Mr. Stoehr‟s home. The question addressed by the Stoehr
Court was whether The Natatorium was a public utility. The Idaho
Supreme Court decided that “[t]o hold that a water corporation is
a public utility, because it receives compensation for water owned
by it and furnished to a limited number of the inhabitants of
Boise, within a limited area, would be an unreasonable
interpretation of [Idaho Code Section 61-125, then identified as
C.S., Sec. 2392].” Id. at p. 221. Additionally, “[s]uch a
construction may involve the question of the constitutionality of

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the statutes.” Id. at p. 221. “In determining whether a
corporation is a public utility, we must not lose sight of the
basic principles underlying governmental control of business, nor
fail to appreciate and respect constitutional limits.” Id. at p.
221. To order a nonprofit entity to provide services to a non-
customer would be a taking, requiring compensation by the
government board making such a ruling.
The Stoehr Court stated that a corporation is only subject to
regulation as a public utility, “when and to the extent that the
business of such corporation becomes devoted to a public use.” Id.
at p. 221. The devotion to public use must be voluntarily assumed,
even where a monopoly exists. Id. at p. 221. “To hold that
property has been dedicated to a public use is „not a trivial
thing‟ (San Francisco v. Grote, 120 Cal. 60, 65 Am. St. 155, 52
Pac. 127, 41 L.R.A. 335), and such dedication is never presumed
„without evidence of unequivocal intention‟ (Niles v. Los Angeles,
125 Cal. 572, 58 Pac. 190).”Stoehr, 34 Idaho at 222; citing Allen
v. Railroad Commission, 179 Cal. 68, 85, 175 Pac. 466, 8 A.L.R.
249, 259. SPU has not become devoted to a public use, and does not
intend to dedicate any of its infrastructure to the service of the
general public. See Declaration of Doyle Beck, para. 7.
At no point in the Staff Comments, or any comments provided
by Mr. Sorrells, has there ever been “evidence of unequivocal
intent” on the part of SPU to be a public utility. SPU serves a

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limited number of customers within a single commercial/industrial
subdivision, and serves only 63.3% of the lots and less than 60%
of the acreage within the subdivision. See Declaration of Doyle
Beck, para. 4 and Exhibit “A”. SPU has declined to serve property
outside the subdivision. See Declaration of Doyle Beck, para. 5,
filed herewith. SPU has not become devoted to any public use, and
does not intend to dedicate any of its infrastructure to the
service of the general public. See Declaration of Doyle Beck,
para. 7. Nothing in the record establishes the unequivocal,
voluntary intent of SPU to dedicate its water system to the
public, and this public use issue should not be treated as
trivial. Absent evidence of unequivocal, voluntary intent to
become a utility devoted to public use, SPU is not a Water
Corporation under Idaho Code Section 61-125, as interpreted by the
Idaho Supreme Court, and is not subject to IPUC jurisdiction.
CONCLUSION
The IPUC must not lose sight of the basic principles
underlying governmental control of business, nor fail to
appreciate and respect its constitutional and statutory limits.
SPU is not a Corporation under Idaho Code Section 61-104 because
it is a nonprofit entity organized and operating at cost. SPU is
not a Water Corporation under Idaho Code Section 61-125, as
interpreted by the Idaho Supreme Court because SPU has never
expressed clear, unequivocal intent to dedicate itself to public

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use. Further, all potential abuse concerns raised by Staff are
mitigated by the provisions of the Idaho Nonprofit Corporation
Act, which imposes specific duties on SPU‟s Board of Directors
designed to protect the customers from abuse by the Directors.
None of the issues raised by Staff of potential abuse are based
upon customer complaints and Staff has already conceded that SPU
customers have significant control over SPU‟s rate changes. It is
therefore requested that the Idaho Public Utility Commission
determine that it does not have jurisdiction over the water system
operated by Sunnyside Park Utilities and dismiss Mr. Sorrells‟
Complaint.
DATED this 20th day of October, 2022.

/s/ Paul L. Fuller
Paul L. Fuller
Attorney for Sunnyside Park Utilities, Inc.

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CERTIFICATE OF SERVICE
I HEREBY CERTIFY that I served a true and correct copy of the following
described pleading or document on the persons listed below on this 20th day of October,
2022:
Document Served: SUNNYSIDE PARK UTILTIES’ REPLY
COMMENTS

Persons Served:

Paul B. Rippel Via Email
Austin O. Allen
HOPKINS RODEN CROCKETT
HANSEN & HOOPES, PLLC
428 Park Ave.
Idaho Falls, ID 83402
[e-mail]
[e-mail]

/s/ Paul L. Fuller
Paul L. Fuller
FULLER & BECK LAW OFFICES, PLLC