315 P.3d 1065
Wash.2013Background
- King County built the Brightwater wastewater treatment plant in south Snohomish County as part of a settlement with Snohomish County to resolve multiple lawsuits; King County agreed to approximately $70 million in "community mitigation" (parks, public safety, habitat, a community center) as part of the deal.
- Capital funding for Brightwater came primarily from bonds repaid largely by sewage treatment fees and capacity charges; proceeds were deposited into King County wastewater funds.
- Two sewer districts (Cedar River and Soos Creek) sued King County (and others), alleging among other claims that (a) King County violated fiduciary duties by using restricted sewage funds improperly, (b) community mitigation lacked the required nexus to sewage impacts and thus could not be paid from the Water Quality Fund, (c) King County unlawfully sold/distributed reclaimed water, (d) certain payments to StockPot Soups were improper, and (e) other fund-use and overhead allocation disputes.
- The trial court dismissed many claims on summary judgment (including LUPA timeliness issues) and after trial rejected most remaining challenges, but held a $2 million StockPot job‑retention payment was not properly chargeable to the Water Quality Fund.
- The Supreme Court reviewed de novo legal questions and substantial-evidence factual findings, affirmed almost all rulings, reversed only as to the characterization of the $2 million job‑retention payment (holding it was a necessary condition of approval and thus allowable), and remanded for further proceedings.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Fiduciary / trust status of Water Quality Fund | Fund is "restricted" and therefore King County owes trust/fiduciary duties; burden should shift to county | No intent or statute establishes a trust; modern law requires clear intent to create a trust; ordinary burden of proof applies | No fiduciary/trust relationship; plaintiffs retain burden of proof (affirmed) |
| LUPA timeliness & status of Settlement/Development Agreements | Settlement/development terms (including mitigation funding) are reviewable outside LUPA; plaintiffs’ claims are timely | Development agreement is a land‑use decision integrated with the settlement and subject to LUPA’s 21‑day time bar | Agreements are integrated and land‑use decisions; many challenges time‑barred under LUPA (affirmed) |
| Community mitigation nexus / use of Water Quality Fund | Many mitigation items lacked sufficient nexus to sewage‑plant impacts and thus cannot be charged to the Water Quality Fund | Counties provided unrebutted evidence that each project mitigates impacts of siting/operation; charter/code/contract permit such uses if nexus exists | Sufficient nexus shown as a matter of law/fact; mitigation chargeable to Water Quality Fund (affirmed) |
| Reclaimed water distribution and sale | County cannot use sewage funds to build/distribute reclaimed water or sell it because only municipal water utilities should perform distribution | Disposition/use of reclaimed water is integral to wastewater treatment; statutory scheme grants wastewater facilities exclusive rights and contemplates revenue use to offset utility costs | Selling/distributing reclaimed water is within county authority and revenues may offset wastewater utility costs (affirmed) |
| StockPot payments (relocation + $2M job retention) | Full payments, esp. $2M, were general/public benefits and not properly funded from sewage funds | Relocation and job‑retention payments were necessary conditions to obtain site and permits; relocation payments documented as actual costs | Relocation payments upheld; trial court erred to disallow the $2M job‑retention payment — it was a necessary condition of approval and may be charged (court reverses prior ruling re: $2M) |
| Culver Fund (water quality projects) | Culver Fund projects exceed sewage‑treatment scope and improperly use wastewater fees | Evidence showed Culver projects improve water quality and benefit wastewater operations; statutory authority and county policies support funding | Culver Fund projects found to have sufficient nexus to wastewater treatment and are permissible (affirmed) |
| Overhead allocation & credit‑enhancement fee | Allocation methodology and fee overcharge ratepayers; fee is a hidden tax; contract caps overhead | Allocation policy consistent with charter/code/GAAP; fee compensates county for bond backing and benefits wastewater fund; fee is regulatory, not a tax | Overhead allocation method and credit‑enhancement fee lawful; fee characterized as a fee, not a tax; no retroactive "true‑up" required (affirmed) |
Key Cases Cited
- Mun. of Metro. Seattle v. City of Seattle, 57 Wn.2d 446 (Wash. 1960) (historical context for Metro and regional sewage authority)
- Retired Pub. Emps. Council v. Charles, 148 Wn.2d 602 (Wash. 2003) (mere collection for a purpose does not create a trust absent intent)
- Okeson v. City of Seattle, 150 Wn.2d 540 (Wash. 2003) (test distinguishing regulatory fees from taxes)
- Dolan v. City of Tigard, 512 U.S. 374 (U.S. 1994) (exactions/nexus and rough proportionality principles)
- Nollan v. Cal. Coastal Comm’n, 483 U.S. 825 (U.S. 1987) (property‑condition nexus principle)
- City of Olympia v. Drebick, 156 Wn.2d 289 (Wash. 2006) (scope of mitigation authority under various statutes)
- Samuel’s Furniture, Inc. v. Dep’t of Ecology, 147 Wn.2d 440 (Wash. 2002) (LUPA timeliness principles)
- Indus. Indem. Co. of Nw., Inc. v. Kallevig, 114 Wn.2d 907 (Wash. 1990) (substantial‑evidence standard)
- Udall v. T.D. Escrow Servs., Inc., 159 Wn.2d 903 (Wash. 2007) (de novo review of legal questions)