The Washington Supreme Court approved of community mitigation projects funded by King County and located in Snohomish County to offset the impact of a wastewater plant that King County built in Snohomish County.  The Court largely approved all trial court rulings that the community mitigation expenses were part of the project cost and reversed the sole trial court ruling that a King County expense was unrelated to the sewage treatment goals.

Background

King County has been empowered to dispose of wastewater since 1992.  During the 1990s, King County began planning a regional wastewater plan, including construction of a new wastewater treatment plant.  In 2001, the State Department of Ecology approved King County’s plan and the new plant.  In 2003, King County selected a site in south Snohomish County to build the plant.

The two counties began negotiating, and litigating, about which county should bear the direct and indirect costs of the plant.  King and Snohomish Counties ultimately came to a global settlement agreement.  One provision was that King County would fund a variety of “community mitigation” projects, such as building a community center to replace a building to be demolished by the new plant, improving roads and funding habitat mitigation projects in a creek basin.  Separately, King County settled a suit against it by a StockPot Soups, a manufacturing facility close to the treatment plant site, by paying relocation costs and a $2 million job retention payment if the company remained an active employer in the area.

In 2008, Cedar River Water and Sewer District and Soos Creek Water and Sewer District (“the districts”) brought suit against King County, Snohomish County and 32 other entities acting as sewage utilities in King County to challenge the payments.  The districts raised a number of challenges, including against King County’s payments to Snohomish County as unrelated to the wastewater treatment plan project, King County’s use of sewage treatment revenue to StockPot Soups as a nonsewage related expense, King County’s sale of reclaimed water, King County’s alleged violation of trust and fiduciary obligations to the districts, and King County’s alleged violation of contractual and statutory duties to the districts.

The trial judge dismissed many of the claims through summary judgment and other rulings before trial, then dismissed most of the rest in rulings after a six-week bench trial.  However, the trial judge found that the $2 million job retention payment to StockPot Soups was not a part of the treatment plant project and should have come from nonsewage funding.

Analysis

The court unanimously affirmed all decisions by the trial court dismissing or rejecting claims and reversed the one decision, challenging the $2 million job retention payment, that went against King County.  Eight justices signed a majority that looked deeply into the merits to approve of the community mitigation and StockPot settlement expenses, which Justice McCloud concurred on the basis that the districts did not have standing to bring the suit.  Justice Pro Tem. J. Robin Hunt signed both the majority and the concurrence.

The Court first found that King County is not a fiduciary of the water and sewer district which contract with it for disposal of wastewater because there was not intent to create a trust or other fiduciary relationship.  The Court next held that the settlement and development agreement between King County and Snohomish County were together an integrated land use decision and the district’s challenge was therefore time barred by the Land Use Petition Act (“LUPA”).  he Court then found that summary judgment was appropriate against the district’s challenges of the community mitigation funding because there was no evidence in the record that showed any challenged project lacked a nexus to construction of the treatment plant.  In so holding, the Court noted that “community mitigation” is a term of no legal significance, but merely a reference term between the counties to describe various efforts to mitigate the adverse impact of the project.

The Court next held that King County is empowered to sell retreated water even though it is not a municipal water utility because sewage treatment plants must dispose of water somehow and the legislature had “strongly urged beneficial use of the resource.”  Then, the Court affirmed the trial court’s ruling that King County relocation and reestablishment payments to StockPot Soups were proper.  The Court reversed the trial court determination that the $2 million job retention payment was unrelated to the sewage treatment project.  The Court found that the payment was related to sewage treatment because a Snohomish County ordinance required King County to fund job retention projects as a condition for building the plant.  Finally, the Court affirmed various trial court rulings that upheld King County’s authority to charge sewer districts for related projects, allocate overhead under its own accounting formulas, and charge the Wastewater Treatment Division a fee for backing public bonds.

Commentary

The Court rested the weight of its opinion on the trial court’s fact finding that the King County expenditures were reasonably related to the goal of building and operating a sewage treatment plant.  Without finding a basis to overturn that essential finding of fact on review, the Court was able to resolve the case with well-established legal principles. As a consequence, the Court explicitly declined to reach a number of thornier issues which could have been presented on different facts.

First, the Court noted that it was not faced with the “interesting question” of whether improper mitigation payments could be immunized from review by placing them into a development agreement that was subject to the strict timeline for challenges established by LUPA.

Next the majority commented that the “interesting point” about standing raised in the concurrence was not briefed by the parties and therefore the Court would not reach the issue.  The concurrence would have held that one subdivision of Washington does not have standing to bring a takings claim against another subdivision of the state under the U.S. Constitution’s Fifth Amendment or Washington statute.

Finally, the Court decided to “leave for another day” the question of whether a third party may have standing to challenge the character of funds used in the settlement in light of case law that denies third parties standing to challenge the settlement itself.

This decision by the Supreme Court was an epilogue to the trial-level resolution of this case rather than the beginning of another chapter.