Electrical District Number Two

National Labor Relations Board - Board Decisions

Jun 16, 1976

224 N.L.R.B. 904 (N.L.R.B. 1976)

904 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
Electrical District Number Two, Pinal County, State
of Arizona and International Brotherhood of Elec-
trical Workers , Local Union 387 , Petitioner Case
28-RC-3080
June 16, 1976
DECISION ON REVIEW AND ORDER
BY CHAIRMAN MURPHY AND MEMBERS JENKINS
AND WALTHER
On January 15, 1976, the Regional Director for
Region 28 issued his Decision and Direction of Elec-
tion in the above-entitled proceeding in which he
concluded that, notwithstanding the Employer's pub-
lic characteristics, it was not a political subdivision of
the State of Arizona within the meaning of Section
2(2) of the Act' Accordingly, the Regional Director
directed an election among certain employees of the
Employer Thereafter, in accordance with Section
102 67 of the National Labor Relations Board Rules
and Regulations, Series 8, as amended, the Employer
filed a timely request for review contending, inter
aka, that the Regional Director erred in finding that
the Employer is not a political subdivision specifical-
ly exempted from the Board's jurisdiction under Sec-
tion 2(2) of the Act
On February 11, 1976, the National Labor Rela-
tions Board by telegraphic order granted the
Employer's request for review The Employer then
filed a brief, and the Petitioner requested that its
brief to the Regional Director, and its statement in
opposition to the Employer's request for review, be
considered as its brief on review
Pursuant to the provisions of Section 3(b) of the
National Labor Relations Act, as amended, the Na-
tional Labor Relations Board has delegated its au-
thority in this proceeding to a three-member panel
The Board has considered the entire record in this
case with respect to the issue under review, including
the briefs filed by the parties, and finds as follows
As found by the Regional Director, the Employer
was formed in 1923 for the purpose of supplying
electrical energy to a specific geographical area locat-
ed within Pinal County, Arizona As this land is
largely agricultural, the Employer was formed pri-
marily for the purpose of providing electricity to
pump water from below ground to irrigate the area
farmland The Employer also provides electrical
power for business and residential use within its geo-
1 Sec 2(2) of the Act provides in relevant part The term employer
shall not include any State or political subdivision thereof
graphic boundaries, but does not generate or pro-
duce any electrical power itself It purchases its pow-
er from various outside sources
The State of Arizona has established the procedure
for the formation of an electrical district in chapter 3
of its revised statutes Pursuant to that statute, a peti-
tion for the formation of an electrical district must
first be filed with the board of supervisors for the
county in which the proposed district is to be located
Such petition must be signed by at least one-third of
the number of resident freeholders within the pro-
posed district The county board of supervisors may
then authorize the calling of an election to determine
if the district should be formed and who should serve
on its board of directors
The board of supervisors then appoints three resi-
dent freeholders from the proposed electrical district
to act as an election commission for the purpose of
nominating nine resident freeholders from the pro-
posed electrical district to be candidates for election
as members of the board of directors of the proposed
electrical district Pursuant to the enabling statute,
persons qualified to vote at the election must be
property taxpayers of the proposed district who are
qualified electors in the State of Arizona and in the
proposed electrical district If the election results fa-
vor the organization of an electrical district the coun-
ty board of supervisors, by resolution, declares the
district duly organized and a certified copy of this
resolution is filed with the county recorder
Once the district has been organized, the district
requires that in order to be eligible to vote in district
elections, such as voting for succeeding directors an
individual must not only own real property within
the district but must own a minimum of five acres of
irrigable land within the district Thus, residents of
the district not meeting this requirement would not
be eligible in such elections
Regarding the finances and authority of the elec-
trical district, the record discloses that the operating
funds for the district come from various sources Pur-
suant to the enabling statute, electrical districts are
allowed to levy taxes for administrative expenses and
for refunding debts Additionally, a service charge
may be collected which is over and above the cost of
the electrical energy purchased by customers The
district has, on occasion, issued bonds which are ex-
empt from taxation, and it pays no taxes of any kind,
either state or Federal, on any real property it owns
or income it has earned Arizona law also provides
that electrical districts possess the power of eminent
domain, which includes authority not only to con-
demn private property but public property as well,
when an electrical district has a higher use for such
property than is presently being applied to it
224 NLRB No 124
ELECTRICAL DISTRICT NUMBER TWO 905
The constitution of the State of Arizona specifical-
ly provides that electrical districts are "political sub-
divisions" of the State
Pursuant to the Arizona open meeting law relating
to public bodies, the Employer permits the general
public to attend meetings of its board of directors
The district considers its documents public records
and annually files a certificate of estimate of expense
with the Pinal County Board of Supervisors The
Employer participates in the social security system,
but this participation is pursuant to state law which
provides that political subdivisions may contribute to
the program voluntarily The Employer has a sepa-
rate retirement plan for its employees,' but claims
that it could participate in the State's retirement plan
if it elected to do so
With regard to recall or removal of members of its
board of directors, the Employer asserts that the pro-
visions of the constitution of the State of Arizona
and the Arizona State Statutes pertaining to the re-
moval of public officials are applicable 3 However, it
appears that there has not been any decision by the
Supreme Court for the State of Arizona concerning
the applicability of the recall provisions to members
of the board of directors of electrical districts, and no
evidence was introduced to establish that a recall pe-
tition had ever been filed against any member of a
board of directors of any electrical district
In determining whether an entity falls within the
meaning of "political subdivision," the Board in-
quires into whether (1) the entity was created directly
by the State, so as to constitute a department or ad-
ministrative division of government, or (2) is admin-
istered by individuals who are responsible to public
officials or to the general public 4 The Employer con-
cedes that it was not created directly by the State of
Arizona The Regional Director concluded that the
Employer was not administered by individuals who
are responsible to public officials or to the general
public We disagree
The Regional Director found that, notwithstand-
ing its public characteristics, the Employer District
here was not administered by individuals who are
responsible to public officials or the general public,
2 One employee transferred from a state job continues his participation in
the state retirement plan
3 The constitutional article in question art VIII part 1 sec I provides as
follows
Every public officer in the State of Arizona holding an elec*ive office
either by election or appointment is subject to recall from such office
by the qualified electors of the electoral district from which candidates
are elected to such office Such electoral district may include the whole
State Such number of said electors as shall equal twenty five per cen
turn of the number of votes cast at the last preceding general election
for all of the candidates for the office held by such officer may by
petition which shall be known as a Recall Petition demand his recall
4 Natchez Trace Electric Power Association 193 NLRB 1098 (1971)
in view of the minimum landowning requirements of
the electorate in district elections The Regional Di-
rector concluded, as urged by Petitioner, that the
electorate did not include even the entire class of vot-
ers permitted by the enabling statute and therefore
the Board's test was not met
In the Hawkins County case,' the Supreme Court
concluded that the gas utility district involved therein
was a political subdivision primarily because the
commissioners administering the district were ap-
pointed by an elected county judge and were subject
to removal under the State's General Ouster Law,
thereby bringing the district squarely within the sec-
ond of the Board's tests Additionally, the Court also
considered numerous other factors in an effort to de-
termine whether the district operated in a manner
"so as to constitute a department or administrative
arm of government " The Court deemed that the fol-
lowing facts were relevant to the inquiry (1) the state
statute establishing the district referred to it as a
"municipality" or "public cooperative" with all of
the powers necessary for accomplishment of its pur-
pose capable of being delegated by the legislature,
(2) the district possessed the power of eminent do-
main which could be exercised even against other
governmental entities, (3) all district property and
revenue was exempt from all local taxes and from
Federal income tax, (4) social security benefits for
district employees were voluntary, (5) the district's
records were "public records," open to inspection,
and the district was required to make public disclo-
sure of its financial position, and (6) the individuals
charged with administration of the district's affairs
were appointed by an elected public official and sub-
ject to removal by either certain government officials
or the general public
Based on the factors the Court found relevant to
its determination in Hawkins County, many of which
are present here, we conclude, contrary to the Re-
gional Director, that the Employer is a political sub-
division of the State of Arizona and not an employer
within the meaning of the Act Thus, here, as in Haw-
kins County, (1) the state statute establishes the Dis-
trict as a political subdivision, (2) the District pos-
sesses the power of eminent domain, (3) all district
property and revenue is exempt from local and Fed-
eral income taxes, and (4) the District's records are
considered "public documents," and the general
public is permitted to attend meetings of its board of
directors While the individuals charged with the ad-
ministration of the District's affairs are not appoint-
ed by an elected public official nor subject to remov-
al by certain government officials , as in Hawkins
5 N L R B v The Natural Gas Utility District of Hawkins County Tennes
see 402 U S 600 (1971)
906 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
County, they are elected by the property owners and
apparently are subject to removal by the electorate of
the District and are therefore responsible to the elec-
torate Thus, the state statute provides that directors
can be removed by a majority of the qualified voters
"as provided by the Constitution and laws of the
State for the recall of county officers " 6
We do not agree with the Regional Director that a
different result is warranted in the instant case from
that in Hawkins County primarily on the ground that
the District is not "administered by individuals who
are responsible to public officials or the general pub-
lic, especially where, as here, the electorate for the
District's administrative body does not include even
the entire class of voters permitted by the enabling
statute " Our reading of the applicable statute indi-
cates that all property owners within the District are
eligible to vote in the election for the formation of
the District and the board of directors Although in
subsequent elections, after the District is formed, the
vote is limited to owners of 5 acres or more of irriga-
ble land within the District, we do not believe that
5
Title 45-1624 regarding the recall of directors provides as follows
A Director elected or appointed under this chapter shall be subject to
recall by the vote of a majority of the qualified electors of the division
which he represents The proceedings for recall shall be in all respects
as provided by the Constitution and laws of the State for the recall of
County officers
such a limitation on voting eligibility, in the other
circumstances present here, is sufficient to justify a
finding that the Employer is not a "political subdivi-
sion" of the State of Arizona Rather, we find it is
excluded under Section 2(2) of the Act In a similar
factual situation where voting was limited to proper-
ty owners, the United States Court of Appeals for the
Ninth Circuit, in denying enforcement of the Board's
order, found such limitation did not prevent the dis-
trict there from qualifying as a political subdivision
of the State 7
Accordingly, we find, contrary to the Regional Di-
rector, that the Employer is not an employer within
the meaning of Section 2(2) of the Act, and we shall
dismiss the petition herein
ORDER
It is herby ordered that the petition be, and it here-
by is, dismissed
7 N L R B v Lewiston Orchards Irrigation District 469 F 2d 698 (C A 9
1972) In Lewiston as here the procedure for forming a district required the
filing of a petition with the county and an election among eligible landown
ers in the proposed district There the Board in asserting jurisdiction con
eluded that the directors were not elected by qualified voters of the Dis
trict but by a special class of voters landowners for the benefit of the
particular number of landowners The court of appeals disagreeing with the
Board found the case fell within the purview of the Hawkins County deci
sion Member Jenkins does not rely on the Lewiston Orchards decision nor
the text for which it is cited in reaching his decision