Case Name: Public Utility District No. 1 of Snohomish County, Respondent, v. Taxpayers of Snohomish County, Appellants; The City of Seattle, Respondent, v. Taxpayers of the City of Seattle, Appellants; The City of Tacoma, Respondent, v. Taxpayers of the City of Tacoma, Appellants; Public Utility District No. 1 of Grays Harbor County, Respondent, v. Taxpayers of Grays Harbor County, Appellants
Court: Washington Supreme Court
Jurisdiction: Washington
Decision Date: 1971-01-07
Citations: 78 Wash. 2d 724
Docket Number: No. 41579
Parties: Public Utility District No. 1 of Snohomish County, Respondent, v. Taxpayers of Snohomish County, Appellants. The City of Seattle, Respondent, v. Taxpayers of the City of Seattle, Appellants. The City of Tacoma, Respondent, v. Taxpayers of the City of Tacoma, Appellants. Public Utility District No. 1 of Grays Harbor County, Respondent, v. Taxpayers of Grays Harbor County, Appellants.
Judges: 
Reporter: Washington Reports
Volume: 78
Pages: 724–771

Head Matter:
[No. 41579.
En Banc.
January 7, 1971.]
Public Utility District No. 1 of Snohomish County, Respondent, v. Taxpayers of Snohomish County, Appellants. The City of Seattle, Respondent, v. Taxpayers of the City of Seattle, Appellants. The City of Tacoma, Respondent, v. Taxpayers of the City of Tacoma, Appellants. Public Utility District No. 1 of Grays Harbor County, Respondent, v. Taxpayers of Grays Harbor County, Appellants.
Anderson, Hunter, Carlson & Dewell, James P. Hunter, and Thomas R. Collins, for appellants.
Parker Williams, Edward D. Hansen, A. L. Newbould, Arthur T. Lane, Marshall McCormick, Paul J. Nolan, Omar S. Parker, and The Attorney General and Robert Hauth, Assistant, for respondents.
Reported in 479 P.2d 61.

Opinion:
Sharp, J.
Appellants prosecute this appeal from a summary judgment upholding the right of respondent municipal corporations to participate with four privately-owned power companies' in the construction, operation and financing of a coal-powered electric generating plant near Cen-tralia.
The agreement approved by the trial court was negotiated under the authority of RCW 54.44 declaring the public policy of permitting public and regulated private power agencies to participate together in the development of nuclear and other thermal power facilities. The project agreement provides that the municipal corporations are to own 28 per cent of the project and the privately-owned corpora tions are to own the remaining 72 per cent. The agreement further provides that one of the private companies will construct and operate the facility, as agent of the respective parties, but that the annual operating budget must be approved by 75 per cent of the ownership. Subsequent capital expenditures are to require unanimous ownership approval. Until the year 1982 all power allocated to respondents will be purchased by two agencies of the federal government and revenues derived therefrom will be shared according to ownership interests in the plant. After 1981 each owner will be able to draw out its proportionate share of power generated by the facility.
The most serious challenge to respondents' participation in the project is based upon article 8, section 7 of the state constitution. In asserting this challenge, appellants recognize that the agreement in question conforms to the detailed requirements of RCW 54.44 and therefore the challenge is addressed to the constitutionality of the statute itself. The genesis of this provision of our constitution is pertinent to the point in issue.
During the nineteenth century, state and local governments sought to obtain railroad linkage by the extension of public credit and loans for the development of railroad facilities. Typically, the planning of the facilities and the construction was left to the private companies involved. No public control was placed on the use of the public funds, nor were the railroads themselves subject to governmental regulation and control. In many instances this proved to be an improvident practice since, for example, many railroad lines were subsequently abandoned as unprofitable, leaving the local governments without recourse to recover their investments. For a review of this chapter in our nation's history, see Pinsky, State Constitutional Limitations on Public Industrial Financing: An Historical and Economic Approach, 111 U. Pa. L. Rev. 265 (1963); State Constitutional Provisions Prohibiting the Loaning of Credit to Private Enterprise — A Suggested Analysis, 41 U. Colo. L. Rev. 135 (1969). The result was the inclusion in many state constitutions of prohibitions similar to our article 8, section 7. Such prohibitions, however, did not preclude all financial agreements between public and private entities. Only those in which the public agency either (1) gives or lends its money or credit to, or in aid of, a private entity; or (2) directly or indirectly becomes the owner of stocks or bonds of the private entity, were prohibited. Appellant argues that the statute is unconstitutional in both respects.
The joint agreement before us, negotiated in strict conformity with the statute, does not constitute a loan of public money or credit to a private interest. In return for their investments, respondents receive ownership interests commensurate to the size of their investments. Rands v. Clarke County, 79 Wash. 152, 139 P. 1090 (1914). These ownership interests are amply protected by the terms and conditions of the agreement. But appellants argue that the financial participation of these public corporations in the project is "in aid of" private corporations, for it enables the private owners to obtain additional financing, otherwise unavailable. However, even if the private owners are "aided" by the respondents' participation, the issue is whether the aid comes in the form of gifts or loans of money or credit. We agree with the trial court's conclusion that the statute itself negates any such constitutionally prohibited gift or loan.
In carrying out the powers granted in this chapter, each such city or public utility district shall be severally liable only for its own acts and not jointly or severally liable for the acts, omissions or obligations of others. No money or property supplied by any such city or public utility district for the planning, financing, acquisition, construction, operation or maintenance of any common facility shall be credited or otherwise applied to the account of any other participant therein, nor shall the undivided share of any city or public utility district in any common facility be charged, directly or indirectly, with any debt or obligation of any other participant or be subject to any lien as a result thereof.
RCW 54.44.030. Respondents are purchasing an ownership interest, and not only is their liability limited to their own acts, but their investment is restricted to an indebtedness proportionate to their individual participation. There is no gift or loan of money or credit before us.
It is next urged that the statute and the joint-ownership agreement authorized thereunder violate that part of Const. art. 8, § 7, which provides that no municipal corporation shall "become directly or indirectly the owner of any stock in or bonds of any association, company or corporation." Appellants claim that the agreement constitutes the indirect ownership of stock in a private corporation by a municipal corporation, and the public agency's interest and right of control are essentially the same as a corporate shareholder. But this assertion overlooks the provisions of the agreement itself and the resulting relationship of the parties thereto. The agreement details the terms and conditions governing the construction, ownership, operation and maintenance of the project. Major management decisions are made by all participants, with the public participants having veto power. Furthermore, and significantly, the private participants themselves, are subject to regulation by the Washington Utilities and Transportation Commission. Far from being shareholders, subject to the overriding control of a shareholder majority, the parties hereto are tenants in common with clearly defined and enforceable rights to their respective project interests.
The appellants, nonetheless, contend that this provision not only prohibits ownership of stock in corporations, but also any type of joint ownership between public and private corporations. We cannot agree. The state constitution is not a grant, but a limit, on the legislature's law-making power. State ex rel. Todd v. Yelle, 7 Wn.2d 443, 110 P.2d 162 (1941); Hoppe v. State, 78 Wn.2d 164, 469 P.2d 909 (1970). The court is therefore reluctant to find a restriction on the legislature's power unless some limitation is found in the wording of the constitution itself. Article 8, section 7 does not expressly prohibit public municipalities from entering into joint-ownership agreements with private enterprise. The constitutions of several other states have expressly done so. Arizona Const. art. 9, § 7; Colorado Const. art. 11, § 2; Delaware Const. art. 8, § 8. Expressio unius est exclusio alterius. (The express mention of one thing implies the exclusion of the other.)
Finding no restriction in the language employed, can it be said that this constitutional enactment fairly implies a prohibition against such joint ownership agreements. Stated another way: Is this agreement the type of business relationship to which the stock-ownership prohibition was directed?
The prohibitions of article 8, section 7 were originally directed at the public financing of private industries whose development bore little relationship to the public interest. Since the adoption of Const. art. 8, § 7, the nature of municipal functions has changed drastically. New means for financing public works have been required for municipal corporations to fulfill their responsibilities. See 2 Antieau, Municipal Corporation Law, § 15 A.05, p. 4565 (1969).
In the present case, the public participants gain the direct benefit of a power source to meet their undisputed future needs. Public need, as a primary purpose behind joint projects must, of course, be recognized. See Whelan v. New Jersey Power & Light Co., 45 N.J. 237, 212 A.2d 136 (1965); Miles v. Eugene, 252 Ore. 528, 451 P.2d 59 (1969). We find the joint agreement to own and construct the project is in conformance with RCW 54.44, and does not violate Const. art. 8, § 7 of the constitution.
Appellants argue also that under State ex rel. PUD 1 v. Wylie, 28 Wn.2d 113, 182 P.2d 706 (1947), respondents' participation is arbitrary and capricious, since they seek to satisfy only future power and not present power needs. Appellants do not challenge respondents' determination that future power will be necessary for their districts; rather, they contend that future power needs do not justify present acquisition of power facilities.
In Wylie, we held that public utility districts have broad powers to acquire or construct additional power sources subject to the limitation that there be a reasonable need for the power so obtained. The PUD commissioners in Wylie made no claim that their district had a present or future need for additional power. This approach was again applied in State ex rel. PUD 1 v. Schwab, 40 Wn.2d 814, 246 P.2d 1081 (1952), in which defendant district was proposing to obtain additional power by acquiring a hydroelectric plant at Box Canyon. The purpose of the facility was to meet the district's future needs. In upholding the district's proposed acquisition, we said, at pages 823-24:
It is the duty of the commissioners to make reasonable provision for the future requirements of the district.
It is obvious that such a forecast of future conditions requires the exercise of judgment which cannot be immediately vindicated by positive proof. It is the commissioners of the district who are given the duty of exercising judgment in such matters. If they perform that duty, and if it is not shown that in doing so they acted arbitrarily or capriciously . . . their determination must be accepted by the courts in passing upon the question of whether the proposed project is unreasonably large or entirely inappropriate.
Although respondents will sell their share of the power for 12 years, it is undisputed that the primary purpose behind their ownership is the acquisition of power for their future and foreseeable needs. Intermediate sale of power to the federal government is only a beneficial use of the temporary surplusage. State ex rel. PUD 1 v. Schwab, supra. Respondents' acquisition of ownership in the project is not arbitrary or capricious.
Finally, it is argued that the joint agreement contemplates an unlawful delegation of authority since it states that Pacific Power and Light Company, a private participant, shall manage the construction and operation of the plant. The premise upon which this claim is based is that the legislature delegated discretionary powers solely to the respondents and that the agreement attempts to transfer these powers to a private agency. We do not agree.
The necessity of PUD commissioners assigning operational tasks to other bodies in contemplation of joint ownership projects was recognized in Roehl v. Public Util. Dist. 1, 43 Wn.2d 214, 261 P.2d 92 (1953). That case involved a joint agreement in conformance with RCW 54.16.200 among five public utility districts, which called for the joint planning and management of a system of power facilities. Each PUD placed one representative on a joint committee vested with the power to plan the system as well as construct and maintain it. We approved the agreement noting that "the designation of a management board seems especially necessary. It is, therefore, an arrangement clearly within the contemplation of the enabling legislation . . ." Roehl v. Public Util. Dist. 1, supra, at 241.
The role of Pacific in the present case is a much narrower one than the role of the executive committee in Roehl. Its function is to construct and operate a single plant. The project's yearly operating budget is subject to approval by 75 per cent of the ownership interests. No additional capital expenditures can be made by Pacific without unanimous approval of the owners. Pacific has only those powers necessary for ordinary plant operation; assignment of such powers to a single body is clearly the only means by which joint owners can effectively operate and maintain the facilities. We find this arrangement not to be a delegation of the statutory powers given the respondents. Rather, it is an appropriate and necessary assignment of ministerial duties contemplated by the legislature.
The decision of the trial court is affirmed.
Hunter, C. J., Finley, Hamilton, Neill, McGovern, and Stafford, JJ., concur.
The agreement of the participants consists of a number of interrelated contracts covering construction, ownership, coal and water supply, output allocation, etc. They are collectively termed herein in the singular as the "agreement."
"No county, city, town or other municipal corporation shall hereafter give any money, or property, or loan its money, or credit to or in aid of any individual, association, company or corporation, except for the necessary support of the poor and infirm, or become directly or indirectly the owner of any stock in or bonds of any association, company or corporation." Const. art. 8, § 7.