AGO 2013 No. 2 - Aug 20 2013
DISTRICT, IRRIGATION—CONTRACTS—STATUTORY AUTHORITY—PUBLIC FUNDS —Authority Of Irrigation Districts To Indemnify The United States
Irrigation districts have the statutory authority to enter into contracts with the United States Bureau of Reclamation, but lack the statutory authority to indemnify the United States through such contracts.
August 20, 2013
|The Honorable Mark Schoesler
State Senator, District 9
PO Box 40409
Olympia, WA 98504-0409
AGO 2013 No. 2
Dear Senator Schoesler:
By letter previously acknowledged, you have requested our opinion on a question we paraphrase as follows:
Under RCW 87.03.140, may an irrigation district enter into a contract with the United States Bureau of Reclamation in which the irrigation district agrees to indemnify the United States?
No. Although irrigation districts have broad authority to contract with the United States, they do not have statutory authority to indemnify the United States Bureau of Reclamation. In the absence of express statutory authority to incur the financial risk of indemnification, RCW 87.03.475(1) precludes implication of such authority.
Irrigation districts are quasi-municipal corporations formed under RCW Title 87. Matthews v. Wenatchee Heights Water Co., 92 Wn. App. 541, 547-48, 963 P.2d 958 (1998). As a public agency, an irrigation district is limited to the powers expressly granted by statute “and powers which are ‘necessarily or fairly implied in or incident to the powers expressly granted, and also those essential to the declared objects and purposes of the corporation.’” Mun. of Metro. Seattle v. Amalgamated Transit Union, 118 Wn.2d 639, 643, 826 P.2d 167 (1992) (quoting Port of Seattle v. Utils. & Transp. Comm’n, 92 Wn.2d 789, 794-95, 597 P.2d 383 (1979)); RCW 87.03.005. If there is any doubt as to whether a power was granted to a municipal
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corporation, it must be denied. City of Tacoma v. Taxpayers of Tacoma, 108 Wn.2d 679, 692, 743 P.2d 793 (1987).
In considering the scope of agency authority, the courts have held that agencies lack the power to indemnify unless the authority is expressly or impliedly granted by statute. Barendregt v. Walla Walla Sch. Dist. 140, 26 Wn. App. 246, 249, 611 P.2d 1385, review denied, 94 Wn.2d 1005 (1980). This is particularly true “‘where the public treasury will be directly affected.’” Paopao v. Dep’t of Soc. & Health Servs., 145 Wn. App. 40, 51, 185 P.3d 640 (2008) (quoting State ex rel. Bain v. Clallam Cnty. Bd. of Commr’s, 77 Wn.2d 542, 548, 463 P.2d 617 (1970)). For example, in Barendregt, the Court of Appeals considered whether the Washington Director of Institutions’ statutory authority to enter agreements with school districts “‘at such times and under such circumstances and with such terms and conditions as may be deemed appropriate,’” allowed the Director to enter an agreement indemnifying a school district. Id. at 249 (quoting RCW 72.01.450). Noting that agencies lack the power to indemnify unless such authority is expressly or impliedly granted by statute, the court held that the broad authority to enter educational agreements did not provide commensurate authority to indemnify a school district. Id. at 250.
As with the statute addressed in Barendregt, irrigation districts have broad statutory authority to “enter into contracts for a water supply . . . and do any and every lawful act necessary to be done in order to carry out the purposes” of the state reclamation act. RCW 87.03.140. Under RCW 87.03.140, the board of an irrigation district may enter into “any obligation or contract with the United States” for construction, improvement, sale, operation, or maintenance of works for delivery of water “under the provisions of the state reclamation act, or under the provisions of the federal reclamation act, and all amendments or extensions thereof, and the rules and regulations established thereunder[.]” RCW 87.03.140. The statute further provides that an irrigation board may contract with the United States for a water supply or for general reclamation purposes under “any act of congress for reclamation purposes heretofore or hereafter enacted . . . or for the assumption of the control and management of the works[.]” RCW 87.03.140. Since the federal Bureau of Reclamation is an agency of the United States government, operating under the Department of the Interior, the power to contract with the United States includes authority to contract with the Bureau of Reclamation. 43 U.S.C. § 373a.
Although RCW 87.03.140 provides irrigation districts with broad authority to contract with the United States, it does not state that irrigation districts may assume the financial risk of indemnifying the United States for injuries or damages for which the United States would otherwise be liable. Interpretation of an irrigation district’s authority is further limited by RCW 87.03.475(1), which provides that an irrigation district “shall incur no debt or liability in excess of the express provisions” of the state reclamation act. In determining what statutory language the legislature intended to be sufficient to constitute an express grant of such authority, it is helpful to consider related statutes. Dep’t of Ecology v. Campbell & Gwinn, L.L.C., 146 Wn.2d 1, 11, 43 P.3d 4 (2002). RCW 87.48.010 states that an irrigation district may “indemnify
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the state of Washington against any and all losses and damages which the state of Washington may suffer, under any contract between the state of Washington and the United States relating to land settlement in said district.” RCW 87.03.015(4) provides that irrigation districts may “assume, as principal or guarantor, any indebtedness to the United States under the federal reclamation laws, on account of district lands.” Both of these statutes provide express authority to incur debt or liability. In contrast, although RCW 87.03.140 contains a broad grant of authority, it does not expressly state that an irrigation district may indemnify the United States or the Bureau of Reclamation.
As you noted in your request letter, the Attorney General has previously stated that, in the absence of express statutory authority, a municipal corporation may have implied authority to enter an indemnity agreement. AGO 2006 No. 11. In that opinion, we were asked to address the authority of a city to indemnify a county when entering an agreement to supervise criminal offenders. AGO 2006 No. 11, at 5. The legislature has provided authority in the Interlocal Cooperation Act for counties and cities to enter contracts or interlocal agreements for criminal justice services, and directed that the contracts consider the costs and revenue incident to such services. RCW 39.34.180(2). Our opinion read RCW 39.34.180(2) in conjunction with additional legislation and legislative history addressing the need to shift the fiscal impact of criminal justice costs between cities and counties and found that cities have authority to include indemnification for tort liability in contracts with a county. Based on this specific statutory structure and legislative history, the 2006 opinion reached a narrow conclusion that differs from the standard rule reflected in Barendregt.
A similar basis for inferring implied authority to indemnify is lacking with regard to irrigation districts. There is no legislative history and there are no related statutes indicating an intention to permit irrigation districts to indemnify the Bureau of Reclamation. To the contrary, the most recent legislative intent is expressed in RCW 89.12.050(2). That statute provides that an irrigation district may enter a contract for the transfer of maintenance and operation of a federal reclamation project, but such a contract “does not impute to the district negligence for design or construction defects or deficiencies of the transferred works.” RCW 89.12.050(2). The legislature amended the statute in 2013 to provide that any contract or agreement purporting to indemnify against liability for damages caused by or resulting from the negligent acts or omissions of the United States “is not enforceable unless expressly authorized by state law.” Laws of 2013, ch. 177, § 13(2). The Final Bill Report regarding the amending legislation explains that, “absent express authorization in state law,” any contract between an irrigation district and the United States that purports to indemnify liability for damages caused by the federal government is unenforceable. Final Bill Report on Second Substitute H.B. 1416, 63d Leg., Reg. Sess., at 5 (Wash. 2013). Although this statement relates to RCW Title 89, it strongly counsels against reading into RCW 87.03.140 an implied authority to indemnify. Moreover, our 2006 analysis of city authority was not limited by the application of a statute akin
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to RCW 87.03.475(1), which prohibits irrigation districts from incurring liability in excess of the express provisions of the state reclamation act. See State ex rel. Rice v. Bell, 124 Wash. 647, 650‑51, 215 P. 326 (1923) (applying the predecessor to RCW 87.03.475(1) and holding that “in the absence of express statutory authorization, no such authority will be implied”).
For these reasons, we conclude that irrigation districts have neither express statutory authority nor implied authority to enter contracts indemnifying the Bureau of Reclamation.
ROBERT W. FERGUSON
Anne E. Egeler
Deputy Solicitor General