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Show 554 THE APPROPRIATIVE RIGHT The distinction between classes of water service rendered by private contract companies and public utility companies, long established in ratemaking cases, is of fundamental importance when the question of public regulation of the commercial company rates is raised. Public utility rates and services are subject to public regulation, whether or not consumers have permanent water contracts with the companies, whereas rates fixed by contracts which in the technical legal sense are private contracts cannot be disturbed by public authority. The practical application of this principle involves some fine distinctions and legal technicalities. Investments in these private "profit" (so-called) water enterprises, while contributing substantially to the agricultural development of the West, were so generally unprofitable to the investors that new capital practically ceased to be available many years ago. Most of the going commercial enterprises were succeeded by public and private nonprofit organizations. Except in a few areas, not many are left. Public Supervision and Regulation of Water Supply Enterprises Statutes of various States provide for public supervision over organization and bond issues of irrigation districts. Other statutes govern the incorporation of water companies, both mutual and commercial. The so-called "blue-sky laws," or corporate security acts, of the Western States apply to mutual irrigation companies and to private contract commercial companies that seek to issue securities. In a few States, long-term securities may not be issued by public utility irrigation companies without approval of the State commission that has jurisdiction over the rates of such companies. This is of practical importance chiefly in California, in which State the provisions of the blue sky law do not apply to any security (other than an interest in a real estate development) the issuance of which has been authorized by the State Public Utilities Com- mission.576 Public Regulation of Rates and Services What enterprises are subject to public regulation.-An individual, as well as an association or formal organization or entity, may appropriate water for delivery to consumers.577 It follows logically that the venture of an individual who appropriates water for delivery to the general consumer public is engaged in public utility service of water and that it may thereby be classed as a public utility, subject to whatever regulation the State may provide for the service of water to the public.578 In most irrigation cases in which regulatory bodies have taken jurisdiction, however, organizations have been involved. 576Cal. Corp. Code § 25100(e) (Supp. 1970). 577 See "Appropriation of Water by Individuals and Organizations for Delivery to Consumers," supra. S78The Cal. Pub. Util. Code § § 2701 (West 1956)and 2704 (West Supp. 1970) provides that |
