Responsible Growth NE Washington v. Pend Oreille Public Utility District No. 1 ( 2020 )

FILED
April 21, 2020
In the Office of the Clerk of Court
WA State Court of Appeals Division III
IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON
DIVISION THREE
RESPONSIBLE GROWTH *NE ) No. 36736-3-III
WASHINGTON; CITIZENS AGAINST )
NEWPORT SILICON SMELTER; )
THEODORE & PHYLLIS KARDOS; )
DENISE D. TEEPLES; GRETCHEN L. )
KOENIG; SHERYL L. MILLER; JAMES )
W. & ROSEMARY CHANDLER; and )
PAMELA BYERS LUBY, )
) UNPUBLISHED OPINION
Appellants, )
)
v. )
)
PEND OREILLE PUBLIC UTILITY )
DISTRICT NO. 1; PEND OREILLE )
COUNTY; and HITEST SAND, INC., )
)
Respondents. )
FEARING, J. — This appeal asks whether a public utility district (PUD) holds
authority to purchase land for a utility easement even though the PUD may have had the
ulterior motive to sell the land to a third party. The appeal also asks if a public utility
district’s sale of land is ultra vires if the district fails to follow the statutory requirement
of gaining approval of voters of the district or the demand that the land be unfit for PUD
purposes. We hold that Pend Oreille County PUD possessed authority to purchase the
parcel and its resale of the parcel was not ultra vires. We affirm the rulings of the
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superior court in dismissing the citizen challenge.
FACTS
In 1996, Public Utility District No. 1 of Pend Oreille County (Pend Oreille County
PUD, the PUD, or public utility district) purchased three parcels of land within the area
served by the PUD. The parties refer to the parcels in this litigation as parcels No. 17036,
No. 19183, and No. 19193. The PUD purchased the three parcels for a planned turbine
electricity plant, but the PUD never executed the plans. The PUD thereafter grew timber
on the land. Pend Oreille County owned an adjoining parcel known as Parcel No. 19182,
which parcel is the subject of this litigation.
On March 15, 2016, Pend Oreille County PUD conducted a public hearing, during
which the PUD’s board of commissioners declared the three parcels as surplus to the
PUD’s needs. Minutes from the March 15 meeting read:
Declaration of Surplus Real Property—District Lands. Based on
staff recommendation, a motion was made by Commissioner Knapp and
seconded by Commissioner Peterson to declare various District lands as
being no longer necessary, material to, or useful in the operations of the
District and, therefore, surplus to the needs of the District. The motion
passed unanimously.
Clerk’s Papers (CP) at 99 (emphasis in original). On August 31 and September 7, 2016,
Pend Oreille County PUD advertised the three surplus parcels for sale, but thereafter
received no purchase offers.
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On April 18, 2017, HiTest Sand, Inc. (HiTest) sent a letter to the PUD inquiring
about the three surplus parcels and requesting electrical service from the PUD for a
silicon smelter plant that HiTest proposed to build on the parcels. HiTest also expressed
interest in purchasing the adjacent fourth parcel, Parcel No. 19182, owned by Pend
Oreille County. The four parcels together comprise 186.3 acres. The April 18 letter did
not present an offer to buy the three parcels or solicit an offer from the PUD to sell the
parcels. Instead the letter constituted “a formal offer of contract for power supply
services from the District.” CP at 104.
Between April and July 2017, Amber Orr, Pend Oreille County PUD director of
engineering, discussed with the PUD staff, the PUD counsel, and HiTest staff about the
infrastructure needed to serve HiTest’s proposed silicon smelter plant. In a summary
judgment declaration, Orr averred:
5. I specifically recall conversations with District staff . . . in the
summer of 2017 where we discussed the existing underground electrical
distribution line and the need to specifically reserve an express easement
across the western portion of Parcel No. 19182, as part of the potential land
sale to HiTest.
6. I recall working with Ms. Gentle, as well as with District counsel,
Ms. Elizabeth Tellessen, in identifying the location and width for the
needed easement across Parcel No. 19182. These conversations occurred
before the August 1, 2017 meeting of the District’s Board of
Commissioners where they approved the sale of land to HiTest.
7. A true and correct copy of the District’s GIS map depicting the
location of the underground utility line is attached as Exhibit A. . . .
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8. Since the underground line ran along or near the border of the
District’s properties and the former County parcel [No. 19182], the District
never obtained a utility easement while the properties were held by public
entities. However, when HiTest expressed its interest in acquiring the
District properties and the County parcel [No. 19182], I believed it would
be easier for the District to obtain the easement by reservation rather than
trying to negotiate an easement from a future customer. It was for that
reason that the District acquired Parcel No. 19182 before selling it as
surplus once the easement was reserved.
CP at 79-80. Our copy of Exhibit A to Orr’s declaration is unreadable such that we
cannot discern whether the PUD utility line encroached on the county land, or, if not,
whether the line lay within feet of the county land such that the PUD would need an
easement to service the line. The declaration of Colin Willenbrock, the PUD general
manager, confirmed Orr’s testimony: “The District sought to acquire Parcel No. 19182
from Pend Oreille County to reserve an express easement on that property.” CP at 87.
On April 25, 2017, Pend Oreille County PUD and HiTest Sand signed a tentative
letter of intent, and HiTest deposited earnest money for the purchase of all four parcels
from the PUD, including Parcel No. 19182. At that time, the PUD did not own Parcel
No. 19182, but sought to purchase the parcel from Pend Oreille County. The letter of
intent declared, in pertinent part:
Consistent with the interest you conveyed during the meetings in
Newport on April 11, 2017, this Letter of Interest outlines some of the
major terms and conditions under which Public Utility District No. 1 of
Pend Oreille County (“District”) proposes to enter negotiations to sell the
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property described below to HiTest Sand, Inc., or at HiTest’s election,
Silica Investments, Inc. (collectively or in the alternative “Purchaser”).
1. Property: Approximately 186.3 acres of vacant land located south
of Newport, Washington, the “Property,” which contains: (a) One parcel of
13.83 acres (Property ID # 19182) which is currently owned by Pend Oreille
County, but is eligible to be surplused and conveyed to the District through
intergovernmental transfer. It is anticipated that the intergovernmental
transfer will take place prior to execution of the Purchase Agreement. In
the event an intergovernmental transfer cannot be approved by Pend Oreille
County, the District shall have no responsibility to acquire the 13.83 acres
and there shall be no refund of the LOI [letter of intent] Deposit; and (b)
Three parcels owned by the District (Parcel # 19183) of 39.0 acres, (Parcel
# 17036) of 80 acres, (Parcel # 19193) of 53.47 acres. The District’s
parcels have been surplused.
CP at 110.
On June 13, 2017, HiTest and Pend Oreille County PUD signed a revised letter of
intent. In the revised letter, the PUD removed Parcel No. 19182 from the list of property
being sold. The letter read, in part:
This letter is to confirm your conversation with Kim Gentle
regarding the Letter of Intent, dated April 25, 2017 (“Original LOI”). As
was discussed there has been a change in circumstances regarding the scope
of the Property, as defined in the Original LOI. This Revised Letter of
Intent reflects the change in circumstances, but all other portions of the
Original LOI not referenced below shall remain the same.
1. Property: Approximately 172.47 acres of vacant land located
south of Newport, Washington, the “Property,” which contains: Three
parcels owned by the District (Parcel # 19183) of 39.0 acres, (Parcel #
17036) of 80 acres, (Parcel #19193) of 53.47 acres, which District has
declared to be surplus property.
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CP at 115-16. On June 16, 2017, the PUD dispatched a draft purchase and sale
agreement to HiTest.
On June 20, 2017, the Pend Oreille County Board of Commissioners approved
Resolution 2017-22, which authorized the sale of Parcel No. 19182 to the Pend Oreille
County PUD. Section D and E of the resolution contained the following language:
D. The Board of [Pend Oreille] County Commissioners finds it is
not practical to build on property identified as Assessor’s Parcel No. 19182
as it is land-locked with no road access.
E. Pend Oreille County Public Utility District (PUD) has inquired
into the purchase of Assessor’s Parcel No. 19182 as it is adjacent to PUD
land and it contains an easement that impacts PUD operations.
CP at 106 (emphasis added).
During a board meeting on August 1, 2017, Pend Oreille County PUD Board of
Commissioners discussed the sale of the four parcels, including Parcel No. 19182. After
discussion and public input, the board of commissioners voted that Parcel No. 19182,
once subject to the easement, “was unfit for and no longer necessary or useful in systems
operations, such that it should be sold for its fair market value.” CP at 88. The board of
commissioners also adopted Resolution 1399, which authorized the PUD general manager
to negotiate with HiTest Sand for the sale of the combined four parcels. The PUD,
however, still did not own Parcel No. 19182. Resolution 1399 declared in relevant part:
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WHEREAS, Public Utility District No. 1 of Pend Oreille County
(“District”) surplused District lands with Parcel numbers 17036, 19183 and
19193 on March 15, 2016; and
....
WHEREAS, the District received inquiry and request for electric
service from HiTest Sands, Inc. on April 18, 2017; and
....
WHEREAS, the District sent a draft Purchase Agreement to HiTest
Sands, Inc. on June 16, 2017; and
WHEREAS, the District received authorization to purchase Pend
Oreille County land Parcel number 19182 at the tax assessed value on June
20, 2017; and
WHEREAS, the District now intends to sell the entire four parcel
package following final appraisal and due diligence to HiTest Sands, Inc.;
NOW, THEREFORE, BE IT RESOLVED by the Board of
Commissioners of Public Utility District No. 1 to authorize the general
manager to independently negotiate the final sale of Parcel numbers 17036,
19182, 19183 and 19193 for not less than the appraised value to HiTest
Sands, Inc.
CP at 132. The resolution did not mention purchasing Parcel No. 19182 from Pend
Oreille County for the purpose of acquiring a utility easement.
On August 2, 2017, Pend Oreille County transferred title to Parcel No. 19182 to
Pend Oreille County PUD by a tax title deed. The PUD purchased the parcel for the tax
assessed value. On August 21, 2017, the PUD and HiTest executed a real estate purchase
and sale agreement for the four parcels, for a price of $300,000.
The Pend Oreille County PUD hired a real estate appraiser, who appraised the four
parcels at $250,000. The PUD and HiTest Sand then entered an agreement for HiTest to
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purchase all four parcels for $300,000. On September 18, 2017, the PUD recorded a
special warranty deed that transferred all four parcels to HiTest Sand. The deed reserved
a utility easement for the PUD only across the west sixty feet of parcel 1 of the four
parcels. Parcel 1 was a parcel other than Parcel No. 19182.
On September 19, 2017, Pend Oreille County PUD issued a press release regarding
the sale of the land to HiTest. The press release proclaimed:
In June 2017, the PUD officially acquired the adjacent county
property with the intent to sell the entire package to HiTest. The PUD
Board of Commissioners authorized the sale of the land to HiTest at the
appraised price and that process closed on September 19.
CP at 157 (emphasis added). The release referenced Parcel No. 19182 as the adjacent
county property. The release did not mention the acquisition of an easement as a purpose
of purchasing Pend Oreille County’s adjacent parcel.
On April 23, 2018, appellants Citizens Against Newport Silicon Smelter and
Responsible Growth *NE Washington sent a letter to Pend Oreille County PUD.
The letter claimed that the purchase of Parcel No. 19182 by the PUD from Pend Oreille
County and the sale of the parcel from the PUD to HiTest Sand violated Washington
statutes. The organizations wrote that the PUD violated the law by purchasing Parcel No.
19182 for the sole purpose of selling the land to HiTest Sand. The organizations further
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contended that the PUD sold the parcel illegally because the PUD never declared the land
surplus or received a three-fifths vote from the PUD’s constituents.
Pend Oreille County PUD later noticed an error in its September 18, 2017, deed to
HiTest Sand. The PUD then corrected the deed to reserve a utility easement across Parcel
No. 19182. The fifteen feet easement covered 7.5 feet of Parcel No. 19182 along its
boundary with the adjoining transferred parcels and 7.5 feet of the adjoining parcels along
their borders with Parcel No. 19182. The PUD did not sign or initial, however, the
correction in the deed. The PUD simply struck the easement language on the September
2017, deed and attached an exhibit, Exhibit A, to describe the easement. Exhibit A read:
Subject to and reserving to the Grantor [the PUD] a perpetual
easement and right to enter, maintain, repair, rebuild, operate, and patrol the
existing underground electric power distribution lines over, in under and
through a right-of-way 15 feet in width being 7.5 feet on either side of the
boundary line between Parcels 2 [No. 19182] and 3 and extending south
through Parcel 4 to the southern boundary of Parcel 4, as well as reasonable
ingress and egress across the parcels to reach the easement area.
CP at 155. On May 14, 2018, the PUD refiled the deed and its corrected easement
description, with a cover sheet asking for re-recordation because of a scrivener error in
the easement reservation. The record does not reflect that HiTest consented to the
correction in the deed. No party challenges the validity of the corrected deed.
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On May 15, 2018, Pend Oreille County PUD Board of Commissioners adopted
Resolution 1411. Resolution 1411 noted that the PUD previously laid underground
distribution lines on, along, and through the western portion of Parcel No. 19182, that the
PUD needed an easement for the distribution lines, that the PUD sought to acquire Parcel
No. 19182 from Pend Oreille County to reserve an express easement for the existing
underground distribution line, and that Parcel No. 19182, once subject to the easement,
was no longer needed or useful for the PUD operations. Resolution 1411 added that the
board of commissioners previously made the stated determinations on August 1, 2017, at
a public meeting after extensive discussion. In his summary judgment declaration, the
PUD General Manager Colin Willenbrock stated: “Resolution 1411 affirmed and ratified
the District’s purchase of Parcel No. 19182, the determination that Parcel No. 19182 was
surplus to the District’s needs after reserving an express utility easement, and the sale of
Parcel No. 19182, along with the District Properties, to HiTest.” CP at 90.
PROCEDURE
On June 8, 2018, Citizens Against Newport Silicon Smelter, Responsible Growth
*NE Washington, and eight individuals (collectively “Responsible Growth”) filed a
complaint for a declaratory judgment that would declare void Pend Oreille County PUD’s
purchase and sale of Parcel No. 19182. Responsible Growth named the PUD, HiTest
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Sand, and Pend Oreille County as defendants in its complaint. Responsible Growth
sought a writ of prohibition precluding the PUD’s purchase and sale of the parcel.
Responsible Growth requested an order directing the PUD to return Parcel No. 19182 to
Pend Oreille County and directing HiTest Sand to return the other three parcels to the
PUD.
In its complaint, Responsible Growth alleged that Pend Oreille County PUD failed
to declare Parcel No. 19182 as surplus before selling the parcel to HiTest Sand and failed
to conduct an election of the PUD voters regarding the sale. Responsible Growth argued
that the PUD: (1) operated beyond its statutory authority in RCW 54.16.020 when it
purchased Parcel No. 19182 from Pend Oreille County, (2) operated beyond its statutory
authority in RCW 54.16.180 when it approved Resolution 1399 authorizing the sale of
Parcel No. 19182, and (3) operated beyond its statutory authority in RCW 54.16.180
when it conveyed Parcel No. 19182 to HiTest Sand in a package with three other parcels.
Pend Oreille County PUD moved for summary judgment to dismiss Responsible
Growth’s causes of action. In support of its motion, the PUD filed the declarations of
Amber Orr and Colin Willenbrock. Pend Oreille County and HiTest Sand joined the
PUD’s motion. In support of its joinder, HiTest argued that it was a bona fide purchaser
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of all four parcels. In turn, Responsible Growth filed a cross motion for summary
judgment.
The trial court granted the PUD’s summary judgment motion and denied
Responsible Growth’s motion. In the superior court’s written decision, the court noted:
Turning then to the ultra vires issue, both the Plaintiffs and
Defendants are requesting summary judgment based upon whether this
Court finds the Districts actions ultra vires or not. The only evidence before
the Court regarding the purpose of the purchase of Parcel No. 19182 is
found in the declarations of Colin Willenbrock, General Manager of the
PUD, and Amber Orr, Director of Engineering of the PUD. Both indicate
the purpose was to obtain an easement for the District. There was a need
for the easement if ownership of the parcel was to change from Pend Oreille
County to a private entity. There is no evidence presented that controverts
an easement was necessary for the District to continue its regular activities
and services. The fact that the District was aware HiTest wanted to
purchase all four parcels does not change these facts. There have been no
facts presented that purchasing the property was outside the authority of the
District. There has been no authority presented that makes it improper for
the District to purchase property knowing that it was going to turn around
and sell it in short order.
CP at 453. The trial court commented further:
While the manner in which the District acquired and then sold Parcel
No. 19182 was not similar to the process surrounding the other three parcels
in question, there is no indication the District operated outside the scope of
its authority to purchase and sell property no longer useful. The process
surrounding Parcel No. 19182 can be described as unusual or irregular.
Resolution 1399 from August, 2017 was entered after a public meeting was
held. That resolution referred to the purchase, authorized by the County
June 20, 2017, and the intent to sell all four parcels including No. 19182.
There was no specific language referring to this parcel as surplus.
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After the resolution, the District paid the County for the parcel, then
entered into a sale agreement with HiTest. The sale was complete mid
August, 2017, with the deed recorded September 18, 2017. On May 15,
2018, the District ratified their previous acts to purchase Parcel No. 19182,
declared it to be surplus after receiving a utility easement, and thereafter
selling Parcel No. 19182 along with the three other District parcels to
HiTest.
CP at 453. The trial court ruled:
The District has the authority to purchase property, create easements,
declare property to be surplus, and sell surplus property. While all of this
was not done following the procedure used for the prior parcels found to be
surplus, I cannot say the District acted outside it’s [sic] authority and
therefore its acts were ultra vires.
CP at 454. Because of this ruling, the trial court concluded that HiTest was a bona fide
purchaser “entitled to presume that the proceedings leading up to the sale of the parcels
were procedurally valid.” CP at 454.
LAW AND ANALYSIS
Purchase of County Parcel
We separate for purposes of analysis, the purchase of Parcel No. 19182 by Pend
Oreille County PUD from Pend Oreille County and the sale of the parcel by the PUD to
HiTest Sand. Responsible Growth maintains that the PUD acted outside of its statutory
authority when it acquired Parcel No. 19182 for the sole purpose of conveying it to a third
party. In response, the PUD argues that the undisputed evidence shows that it purchased
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Parcel No. 19182 for the purpose of securing a utility easement, a purpose for which a
PUD may acquire real property.
Public utility districts are municipal corporations governed by statute. Hite v.
Public Utility District No. 2, 112 Wash. 2d 456, 458, 772 P.2d 481 (1989). “A municipal
corporation’s powers are limited to those necessarily or fairly implied in or incident to
powers expressly granted by statute, and to those essential to the declared objects and
purposes of the corporation.” Hite v. Public Utility District No. 2, 112 Wash. 2d at 458-59.
If a municipal corporation acts in excess of its statutory authority, a complainant may
challenge its action as ultra vires. South Tacoma Way, LLC v. State, 169 Wash. 2d 118, 123,
233 P.3d 871 (2010). An ultra vires act is void on the basis that no power to act existed,
even when the government entity followed proper procedural requirements. South
Tacoma Way, LLC v. State, 169 Wash. 2d at 123; Ferlin v. Chuckanut Community Forest
Park District, 1 Wash. App. 2d 102, 108, 404 P.3d 90 (2017). Ultra vires is Latin for acting
beyond one’s legal authority.
We must decide whether Pend Oreille County PUD acted within its statutory
powers when it purchased Parcel No. 19182 from Pend Oreille County. The Washington
State Legislature authorized the creation of public utility districts in 1931. The enabling
legislation declared:
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The purpose of this act is to authorize the establishment of public
utility districts to conserve the water and power resources of the State of
Washington for the benefit of the people thereof, and to supply public utility
service, including water and electricity for all uses.
LAWS OF 1931 ch. 1, § 1. The enabling act further proclaimed:
The rule of strict construction shall have no application to this act,
but the same shall be liberally construed, in order to carry out the purposes
and objects for which this act is intended.
When this act comes in conflict with any provision, limitation or
restriction in any other law, this act shall govern and control.
LAWS OF 1931 ch. 1, § 11.
Chapter 54.16 RCW establishes a public utility district’s powers and authority.
RCW 54.16.020 authorizes a public utility district to:
purchase, acquire, lease, add to, maintain, operate, develop, and
regulate all lands, property, property rights . . . easements, [and] rights-of-
way . . . for generating electric energy by water power, steam, or other
methods.
(Emphasis added.) RCW 54.16.090 expands the grant of authority to a public utility
district:
It may acquire by gift, devise, bequest, lease, or purchase, real and
personal property necessary or convenient for its purposes, or for any local
district therein.
It may make contracts, employ engineers, attorneys, and other
technical or professional assistance; print and publish information or
literature; advertise or promote the sale and distribution of electricity or
water and do all other things necessary to carry out the provisions of this
title.
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(Emphasis added.)
We confront conflicting principles as to whether to construe a public utility
district’s powers broadly or narrowly. On the one hand, public utility districts are
municipal corporations. RCW 54.04.020; Sundquist Homes, Inc. v. Snohomish County
Public Utility District No. 1, 140 Wash. 2d 403, 410, 997 P.2d 915 (2000). Municipal
authorities cannot exercise powers except those expressly granted or those necessarily
implied from granted powers. Sundquist Homes, Inc. v. Snohomish County Public Utility
District No. 1, 140 Wash. 2d at 410.
On the other hand, the enabling legislation directed Washington courts to liberally
construe the statutes creating public utility districts, including those statutes that grant the
district powers. LAWS OF 1931 ch. 1, § 11. Furthermore, the law distinguishes between
proprietary and government functions of a municipal corporation, and courts construe the
powers of a municipal corporation broader when it functions in a proprietary or business
manner. Hite v. Public Utility District No. 2, 112 Wash. 2d at 459 (1989). When producing
and selling electricity, a municipal corporation acts in its proprietary capacity. Hite v.
Public Utility District No. 2, 112 Wash. 2d at 459; City of Tacoma v. Taxpayers, 108 Wash. 2d
679, 694, 743 P.2d 793 (1987); City of Wenatchee v. Chelan County Public Utility
District No. 1, 181 Wash. App. 326, 353-54, 325 P.3d 419 (2014). Strict construction is not
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required in the exercise of proprietary acts. Hite v. Public Utility District No. 2, 112
Wash. 2d at 459. Thus, in the context of providing electricity and related services, the courts
liberally construe a public utility district’s powers. Sundquist Homes, Inc., v. Snohomish
County Public Utility District No. 1, 140 Wash. 2d at 410 (2000); Shoulberg v. Public Utility
District No. 1 of Jefferson County, 169 Wash. App. 173, 179, 280 P.3d 491 (2012).
When acting as a private business, a municipal corporation “‘is implicitly
authorized to make all contracts and to engage in any undertaking which is necessary to
render the system efficient and beneficial to the public.’” Hite v. Public Utility District
No. 2, 112 Wash. 2d at 460 (quoting Puget Sound Power & Light v. Public Utility District
No. 1, 17 Wash. App. 861, 864, 565 P.2d 1221 (1997)). If a municipal utility’s action
comes within the purpose and object of the enabling statute and no express limitations
apply, this court leaves the choice of means used in operating the utility to the discretion
of municipal authorities. Hite v. Public Utility District No. 2, 112 Wash. 2d at 463. Thus,
we refuse to narrowly circumscribe the power of Pend Oreille County PUD to contract or
the authority to perform acts convenient to the distribution of electricity.
Pend Oreille County PUD avows that a public utility district, based on a broad
statutory grant of power, possesses authority to acquire property to secure an easement.
In turn, the PUD forwards the declaration testimony of Amber Orr and Colin Willenbrock
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for the factual proposition that the PUD acquired Parcel No. 19182 for the utility
easement. We agree that the declarations support such a finding. The PUD lacked any
easement across Parcel No. 19182, despite its underground transmission line being buried
under the parcel or adjacent to the parcel. If Pend Oreille County sold the parcel to
another party, the PUD would face the need to negotiate with the new owner to purchase
an easement or condemn a slice of the parcel to obtain the easement. The negotiations or
condemnation litigation could increase the costs to the PUD.
Responsible Growth contends that the record raises a question of fact as to whether
Pend Oreille County PUD actually purchased Parcel No. 19182 for the purpose of selling
the parcel to a third party, not for the purpose of obtaining an easement. Responsible
Growth emphasizes that no record contemporaneous to the PUD’s acquisition of the
parcel confirms the purchase as serving the goal of obtaining an easement. The PUD
adopted Resolution 1399 authorizing the purchase and sent a news release announcing the
purchase without any mention of an easement. The resolution and release solely
mentioned the acquisition of Parcel No. 19182 in order to sell four parcels in the
aggregate to HiTest Sand.
Responsible Growth also claims that the September 18, 2017, special warranty
deed for the transfer of Parcel No. 19182 by Pend Oreille County PUD to HiTest Sand
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failed to reserve an easement on Parcel No. 19182. Although we agree with this
contention, we disagree with the implied inference that the PUD could not have
purchased Parcel No. 19182 to obtain an easement because the September 18 deed never
reserved an easement in the parcel. Exhibit A to the May 14, 2018, correction deed
reserved a 7.5 foot easement on the west end of Parcel No. 19182.
We agree with Responsible Growth that at least a question of fact presents itself as
to whether Pend Oreille County PUD solely purchased Parcel No. 19182 for the purpose
of reselling the tract to HiTest Sand. The documentary evidence surrounding the
purchase suggests that the PUD wanted to combine Parcel No. 19182 with three
surrounding parcels it owned and then sell the combined parcels to HiTest Sand. On
September 19, 2017, Pend Oreille County PUD issued a press release regarding the sale
of the land to HiTest. The press release announced that the PUD purchased the adjoining
Pend Oreille County property with the intent to sell the tract to HiTest. The news release
omitted any mention of any intent to purchase Parcel No. 19182 in order to retain an
easement.
If we deemed the primary or only motivation behind the purchase of Parcel
No. 19182 by Pend Oreille County PUD relevant to our decision, we would remand for
trial the question of whether Pend Oreille County PUD purchased the real property for the
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purpose of reserving an easement, for the purpose of reselling to a third party, or whether
the PUD had mixed motives. But because the purchase of the tract from Pend Oreille
County facilitated the garnering of an easement, which easement promoted the
transmission of electricity in the neighborhood, we deem this dispute of facts immaterial.
We ask whether, assuming the sale to a third party was the sole purpose behind
Pend Oreille County PUD’s purchase of Parcel No. 19182, a Washington public utility
district possesses authority to purchase the real property when the purchase leads to the
immediate procurement of a utility easement. Responsible Growth focuses on the literal
language of RCW 54.16.020:
purchase, acquire, lease, add to, maintain, operate, develop, and
regulate all lands, property, property rights . . . easements, [and] rights-of-
way . . . for generating electric energy by water power, steam, or other
methods.
(Emphasis added.) Based on this language, Responsible Growth contends that the
purchase of Parcel No. 19182 must have been solely for the direct purpose of generating
electrical energy to escape the black hole of ultra viresness and that Pend Oreille County
PUD only sought to purchase the land to resell.
We recognize that in some instances the motivations behind government conduct
becomes relevant. For example, in the context of the equal protection clause, the
claimant must show some animus motivated the government entity’s conduct. State v.
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No. 36736-3-III
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Johnson, 194 Wash. App. 304, 309, 374 P.3d 1206 (2016). But, Responsible Growth cites
no case and we find no case that the motivation behind government action controls
whether some act is ultra vires. The doctrine of ultra vires focuses on whether a statute
authorizes a municipal corporation to perform an act, not whether the municipality
performed the act with wrong intent.
Responsible Growth may concede that a public utility district holds authority
to obtain an easement for a transmission line. Regardless, we so hold. In State ex rel.
Washington Water Power Co. v. Superior Court, 8 Wash. 2d 122, 111 P.2d 577 (1941), the
Evergreen State high court held that a public utility district held the authority to acquire
by condemnation the franchise of a private utility to use and maintain electrical lines. The
public utility district could not perform its function of supplying electricity without the
electrical lines and the right to use the lines.
The right of a city to acquire a water source and an easement over lands to lay its
water mains and pipes is not ultra vires. City of Springdale v. Fleming, 191 Ark. 1058,
89 S.W.2d 602, 602-03 (1936). We see no legal distinction between this city’s right and
the authority of a public utility purchasing land with the result that it can reserve an
easement to hang transmission lines.
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Pend Oreille County PUD could not perform its function without easements
entitling it to operate and maintain electrical lines. Construing the public utility district’s
powers liberally, the PUD held power to purchase a larger tract of land if such purchase
would conveniently effectuate the reservation of the easement from a portion of the tract
of land. Therefore, we conclude that the purchase of Parcel No. 19182 was not ultra
vires.
We agree with Responsible Growth that the legislature created public utility
districts to serve the public at large, not solely to benefit private interests. Nevertheless,
nothing precludes the public utility district from benefiting private interests when the
public utility district otherwise acts within its authority to serve the public.
Responsible Growth observes that Pend Oreille County, by selling Parcel No.
19182 to Pend Oreille County PUD rather than selling the parcel directly to HiTest Sand,
avoided the obligation of public bidding for the sale of property. RCW 36.35.150 allows
a Washington county to sell tax title property by direct negotiations, without a call for
bids, when the county sells to any governmental agency for public purposes. We agree
with Responsible Growth that the county averted public bidding, but this observation does
not render ultra vires the purchase by the public utility district of Parcel No. 19182.
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Responsible Growth argues that none of Pend Oreille County PUD’s records,
including the resolution authorizing the purchase of Parcel No. 19182, discloses intent to
purchase the land in order to reserve an easement. Once again, we decline to determine
the intent or intents of the public utility district. Also, Responsible Growth cites no
authority that demands that a public utility district or any municipal corporation must state
its intent in a resolution or board meeting minutes before purchasing land. We observe
that, although the county, not the PUD, adopted the resolution, Pend Oreille County
Board of Commissioner’s Resolution 2017-22 observed that the public utility district
inquired into the purchase of Parcel No. 19182 because it contains an easement that
impacts the public utility district’s operations.
Sale to HiTest Sand
Responsible Growth next asserts that Pend Oreille County PUD’s failure to obtain
voter approval before its sale to HiTest rendered the transaction ultra vires because of a
violation of RCW 54.16.180(1). Responsible Growth adds that the public utility district
alternatively did not determine Parcel No. 19182 to be surplus until eight months after the
sale, and, therefore, the public utility district again acted outside of its authority under
RCW 54.16.180(2). The PUD adopted the May 15, 2018 Resolution 1411, which
declared the tract surplus, months after the sale. Pend Oreille County PUD responds that
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it only violated procedural statutory provisions and thus the sale was not ultra vires. The
public utility district also highlights that RCW 54.16.180(2) does not require that sold
property be declared “surplus” and the PUD corrected any defect by Resolution 1411.
RCW 54.16.180 authorizes a public utility district to sell land only after three-
fifths voter approval. One exception to the vote requirement is the utility district’s sale of
unserviceable, inadequate, obsolete, worn out, or unfit property.
(1) A district may sell and convey, lease, or otherwise dispose of all
or any part of its works, plants, systems, utilities and properties, after
proceedings and approval by the voters of the district, as provided for the
lease or disposition of like properties and facilities owned by cities and
towns. The affirmative vote of three-fifths of the voters voting at an
election on the question of approval of a proposed sale shall be necessary to
authorize such a sale.
(2) A district may, without the approval of the voters, sell, convey,
lease, or otherwise dispose of all or any part of the property owned by it that
is located:
....
(b) Within or without its boundaries, which has become
unserviceable, inadequate, obsolete, worn out or unfit to be used in the
operations of the system and which is no longer necessary, material to, and
useful in such operations, to any person or public body.
We question whether any land is unserviceable, inadequate, obsolete, or worn out.
But we surmise that Parcel No. 19182 was unfit for use in the PUD’s operations.
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Pend Oreille County PUD concedes that it failed to obtain voter approval of its
sale of Parcel No. 19182 to HiTest. Nevertheless, it contends Parcel No. 19182 was no
longer necessary or useful and thus it needed no voter approval.
As earlier written, ultra vires acts are performed with no legal authority and are
characterized as void on the basis that no power to act existed, even when proper
procedural requirements are followed. South Tacoma Way, LLC v. State, 169 Wash. 2d at
123 (2010). Conversely, acts done without strict procedural or statutory compliance are
subject to a different review and often are not ultra vires. South Tacoma Way, LLC v.
State, 169 Wash. 2d at 123. Those acts may or may not be set aside depending on the
circumstances involved. South Tacoma Way, LLC v. State, 169 Wash. 2d at 123.
In South Tacoma Way, the Washington State Department of Transportation (DOT)
sold surplus property to an abutting landowner. At the time of the sale, several private
individuals owned property that bounded the land. By mistake, DOT provided no notice
to the other abutting property owners, contrary to statute. Because of the mistake, DOT
followed the statutory procedure for the sale of property to a single interested party, rather
than the procedure applicable when multiple landowners abut a property. Shortly after
the sale, one of the other abutting property owners sued to have the sale declared void.
The Supreme Court rejected this claim. The court held that, because DOT was generally
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authorized to sell surplus property, the sale was not ultra vires. Because DOT committed
no substantive statutory violation, and because the procedural failure did not contravene
the policy underlying the statute, the court concluded that DOT’s violation of the statutory
procedures did not render the contract automatically illegal and unenforceable. The
Washington Supreme Court characterized the policy behind the statute violated being
notice to all abutting landowners in order to prevent fraud and collusion.
In this appeal, Pend Oreille County PUD failed to follow statutory requirements
found in RCW 54.16.180 before selling Parcel No. 19182 to HiTest. Nevertheless,
similar to South Tacoma Way, the public utility district possessed general authority to
dispose of land. Therefore, we must perform an analysis as to whether the statutory
violations contravened the policy or policies underpinning the statute. In doing so, we
distinguish the rationales behind subsection 1 of the statute and subsection 2 of the
statute.
Responsible Growth asserts that two policies lie behind RCW 54.16.180(1):
(1) accountability to the voters of the district, and (2) prevention of fraudulent sales by a
public utility district. We recharacterize the first purpose as being resident voter’s
participation in the sale of property still useful to the district. We agree that a second
rationale for RCW 54.16.180(1) is to prevent fraud and collusion.
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No. 36736-3-III
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Pend Oreille County PUD sold Parcel No. 19182, after an open public meeting,
for more than its appraised value. The facts show no fraud. Therefore, the PUD did not
breach the policy behind RCW 54.16.180(1) of inhibiting fraud.
We note that voter accountability is furthered by Pend Oreille County PUD
commissioners facing voters at the next election. But we deem voter participation, not
accountability to voters, more of the purpose behind RCW 54.16.180(1). Responsible
Growth forwards no case that declares the failure of a government entity to submit an
action to a required vote to be ultra vires. Nevertheless, voting rights are important to
Washingtonians, and the PUD violated this strong public policy by selling Parcel No.
19182 without voter approval. If we deemed the tract to be useful to the PUD, we might
declare the sale to HiTest ultra vires.
RCW 54.16.180(2) expresses a policy of allowing a sale of useless property
without voter approval. The undisputed facts show Parcel No. 19182 to be useless to
Pend Oreille County PUD once it retained an easement across the west side of the tract.
The PUD confirmed the land’s uselessness by a retroactive resolution. We deem the
retroactive resolution to cure the failure of a vote and the late resolution to be a
procedural error that violated no underlying policy behind RCW 54.16.180. The parcel at
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No. 36736-3-III
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all relevant times remained unfit for the PUD purposes so the late declaration caused no
prejudice.
We reject the contention that the sale to HiTest of the unneeded tract was ultra
vires. Because we hold Pend Oreille County PUD to be authorized to sell Parcel No.
19182 to HiTest, we decline to address HiTest Sand’s argument that the court should
affirm the sale to it because of its status as a bona fide purchaser.
CONCLUSION
We affirm the superior court’s dismissal of Responsible Growth’s challenge to the
sale of Parcel No. 19182 to HiTest Sand.
A majority of the panel has determined this opinion will not be printed in the
Washington Appellate Reports, but it will be filed for public record pursuant to RCW
2.06.040.
_________________________________
Fearing, J.
WE CONCUR:
______________________________
Korsmo, A.C.J.
______________________________
Lawrence-Berrey, J.
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