Interlocal Agreements Between Ports
Governments in Washington have the power to join together to conduct joint activities through interlocal agreements authorized in Chapter 39.34 RCW. This powerful tool is often used by ports and other types of governments, such as cities, counties, fire districts, or public utility districts in order to share powers for activities that one participant could not do on its own; however, interlocal agreements can also be between two port districts seeking to combine their resources to better serve their constituents. Fire districts commonly use interlocal agreements between two or more districts for mutual aid agreements (agreements to share resources and staffing during complex or multiple emergencies); however, the use of interlocal agreements between the same types of municipal entities is not as common with other types of governments. This month’s column will discuss port districts teaming up and using interlocal agreements.
While perhaps not as common as fire districts, many ports already use the Interlocal Agreement Act to combine and cooperate on operations with other ports. In 2020, six port districts (Port of Whitman County, Port of Pasco, Port of Bellingham, Port of Skagit County, Port of Ridgefield, and Port of Kalama) entered into an interlocal agreement and formed Petrichor Broadband, LLC to expand broadband services in their communities. In 2019, the Port of Chelan County and the Port of Douglas County entered into an interlocal agreement and created the Chelan Douglas Regional Port Authority to combine their operations to better serve the citizens of both port districts. Similarly, the creation of the Northwest Seaport Alliance between the Port of Seattle and the Port of Tacoma was done by an interlocal agreement in 2015 to partner on marine cargo operations to better compete on a global scale. These are larger scale examples of two or more ports utilizing interlocal agreements for improving regional economic development; however, the use of interlocal agreements is not limited to these large scale economic development efforts – interlocal agreements can be used by two ports seeking to share staffing resources, providing emergency or disaster support, or similar operational activities.
Some other examples of ports utilizing interlocal agreements with other ports include:
- Sharing staff persons across two or more ports when the staffing needs at one port may not provide enough work for one employee;
- Sharing staff persons across two or more ports where that staff has a particular skill or expertise (e.g., one port has a large real estate portfolio and has a licensed real estate broker professional and shares some of that employees time with a port that has a smaller real estate portfolio);
- Ports agreeing to provide a staff person to act as an alternative SEPA 1 responsible official when another port’s internal SEPA responsible official cannot make the determination;
- Ports agreeing to share resources in the event of an emergency;
- Port agreeing to share resources for large events; and
- Ports collaborating to share resources to improve regional economic development (.e.g., one port has an abundance of land but no intermodal transportation connections and teams up with a port that has a developed transportation network, but does not have the land).
The legal required terms or provisions for interlocal agreements are outlined in RCW 39.34.030 and include:
- The agreement must be in writing;
- It must specify the duration or term of the agreement (could be perpetual and identify events of termination);
- Identify the legal entity, if any, created through the interlocal agreement and its delegated powers;
- The purpose or purposes;
- The manner of financing the budget and how the budget will be managed/maintained;
- How the agreement is terminated and how joint property (including monies) will be disposed or distributed;
- If no separate legal entity is being created, the agreement must include the following:
- Identify a joint board of persons from the ports responsible for administering the joint or cooperative undertaking;
- The manner of acquiring, holding and disposing of real and personal property used by the ports; and
- Any other specific deal points to accomplish the purpose of the agreement.
An interlocal agreement must be filed (recorded) with the county auditor (if the ports are in two or more counties it should be filed in all counties) or, alternatively, listed on the port’s websites. 2
Other laws and considerations ports should keep in mind when drafting interlocal agreements include:
- RCW 43.09.210(3) True and Full Value Test – this statute requires governments to receive “true and full value” for their services or property provided to another government. The Washington Supreme Court indicated that this statute prevents one government from subsidizing another government by providing “free services.” 3 “True and full value” does not necessarily mean fair market value, but some value should be exchanged, and the ports should make a good record to demonstrate the value each government receives from the agreement. This record can be made in recitals in the agreement itself, or otherwise in the resolution authorizing the agreement.
- Public Records – the interlocal agreement is a public record, of course, but keep in mind that the records of any entity or organization created between the two ports are also public records. The best practice is to set forth in the interlocal agreement how records will be managed.
- Supervision considerations – if employees are shared who provides direction to these employees (consider the event of port A’s employee working on port B’s property);
- Release and indemnification – hold harmless, release, defense and indemnification provisions concerning how the ports will share risks or transfer/be responsible for certain liabilities; Liability considerations – if employees are shared, consider potential liability implications for workplace injuries under Washington Worker’s Compensation – Title 51 RCW; and
- Dispute resolution and venue – hopefully, ports can avoid disputes; however, if one does arise, oftentimes ports prefer seeking alternatives to court, such as mediation or arbitration, to resolve issues. Ports can add an alternative dispute resolution clause into the interlocal agreement and elect which process or processes (mediation, arbitration, mediation first and then arbitration for issues not resolved in mediation, etc.) the ports will use to resolve any dispute. Should a dispute go to court, the parties can select an appropriate venue (county court) to hear the case. This may be straightforward in the case of two ports operating in the same county, but if ports are in different counties, identifying the court that will hear the case (the venue) in the agreement will avoid having to address this preliminary procedural issue down the road.
As always, if you have questions, work with your port’s legal counsel to address your specific questions. If you have a question for Knowing the Waters, please e-mail me at tschermetzler@csdlaw.com
1 State Environmental Policy Act, Chapter 43.21C RCW.
2 RCW 39.34.040.
3 State v. Grays Harbor County, 98 Wn.2d 606, 656 P.2d 1084 (1983).
