Responsible Growth *ne Wash. v. Pend Oreille Pub. Util. Dist. No. 1

13 Wash.App.2d 517

466 P.3d 1122

RESPONSIBLE GROWTH *NE 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, Appellants,

v.PEND OREILLE PUBLIC UTILITY DISTRICT NO. 1; Pend Oreille County; and HiTest Sand, Inc., Respondents.

No. 36736-3-III

Court of Appeals of Washington, Division 3.

Ordered Published Date April 21, 2020

FILED JULY 2, 2020

Richard Kirk Eichstaedt, Gonzaga University School of Law, 721 N Cincinnati St., Spokane, WA, 99202-2021, Jedediah W. Barden, Barden & Barden, Po Box 8663, Spokane, WA, 99203-0663, for Appellants.

John Ray Nelson, Foster Garvey PC, 618 W Riverside Ave. Ste. 300, Spokane, WA, 99201-5102, Tyler Robert Whitney, Attorney at Law, Po Box 190, Newport, WA, 99156-0190, Joseph Anthony Rehberger, Cascadia Law Group PLLC, 606 Columbia St. Nw Ste. 212, Olympia, WA, 98501-1093, Stephen J. Tan, Cascadia Law Group, 1201 3rd Ave. Ste. 320, Seattle, WA, 98101-3075, Peter A. Witherspoon, James McPhee, Witherspoon Brajcich McPhee, PLLC, 601 W Main Ave. Ste. 714, Spokane, WA, 99201-0677, Nathan Graham Smith, Brian E. Kistler, Kutak Rock LLP, 510 W Riverside Ave. Ste. 800, Spokane, WA, 99201-0506, for Respondents.

PANEL: Judges Fearing, Korsmo, Lawrence-Berrey

Fearing, J. ¶ 1 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 superior court in dismissing the citizen challenge.

FACTS

¶ 2 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.

¶ 3 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.

¶ 4 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.

¶ 5 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....

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.

¶ 6 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 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.

¶ 7 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.

CP at 115-16. On June 16, 2017, the PUD dispatched a draft purchase and sale agreement to HiTest.

¶ 8 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).

¶ 9 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...