Okeson v. City of Seattle

• Decision Date: 18 January 2007
• Docket Number: No. 77888-4.,77888-4.
• Citation: 150 P.3d 556,159 Wn.2d 436
• Court: Washington Supreme Court
• Parties: Rud OKESON, Doris Burns, Walter L. Williams and Arthur T. Lane, individually and on behalf of the class of all persons similarly situated, Appellants, v. The CITY OF SEATTLE, Respondent.

150 P.3d 556

159 Wn.2d 436

Rud OKESON, Doris Burns, Walter L. Williams and Arthur T. Lane, individually and on behalf of the class of all persons similarly situated, Appellants, v. The CITY OF SEATTLE, Respondent.

No. 77888-4.

Supreme Court of Washington, En Banc.

Argued May 23, 2006.

Decided January 18, 2007.

David Florian Jurca, Richard S. White, Connie K. Haslam, Helsell Fetterman, LLP, Seattle, for Appellants.

William Howard Patton, Foster Pepper PLLC, Suzanne Lieberman Smith, Seattle

City Attorney's Office, Seattle, for Respondent.

Michael J. Robinson-Dorn, Elizabeth Thomas, Kirkpatrick & Lockhart Preston Gates Ell, Seattle, Amicus Curiae on behalf of Climate Solutions, Global Warming Action, National Resources Defense Council, NW Energy Coalition, Washington Environmental Council.

Douglas James Shaeffer, Seattle, Amicus Curiae Fred Hutchinson Cancer Research Center.

Peter George Ramels, Donald C. Woodworth, King County Prosecutor's Office, Seattle, for Amicus Curiae King County.

ALEXANDER, C.J.

¶ 1 In this class action on behalf of Seattle City Light ratepayers, we are asked to decide whether a municipal utility may mitigate the effects of its greenhouse gas emissions by paying public and private entities to reduce those entities' emissions. We hold that combating global warming is a general government purpose, albeit a meritorious one, and not a proprietary utility purpose. Therefore, such mitigation expenses must be borne by general taxpayers rather than utility ratepayers. Accordingly, we reverse the trial court's order granting summary judgment to Seattle.

I

¶ 2 Seattle City Light (City Light) is an electric utility owned and operated by the City of Seattle. On April 10, 2000, the Seattle City Council adopted Resolution 30144 in honor of the 30th anniversary of Earth Day. The resolution proclaimed in relevant part:

The City of Seattle supports the Earth Day 2000 initiative to focus attention on one of the world's most urgent environmental challenges: reducing greenhouse gases to help mitigate global warming.... The City of Seattle will reduce greenhouse gas emissions in its own operations and through community actions by:

1. Establishing a long-range goal of meeting the electric energy needs of Seattle with no net greenhouse gas emissions .... Immediately, City Light will meet growing demand with no net increase in greenhouse gas emissions by:

. . . .

. . . . Mitigating or offsetting greenhouse gas emissions associated with any fossil fuels used to meet load growth.

Clerk's Papers (CP) at 530.

¶ 3 Also in 2000, the City of Seattle negotiated to buy power from a gas-fired cogeneration plant owned by the City of Klamath Falls, Oregon. The City of Seattle estimated that its purchase of Klamath Falls power would be associated with up to 272,727 tons of carbon dioxide (CO2) emissions per year. Accordingly, the Seattle City Council adopted Resolution 30256, which cited the "no net impact" policy and directed City Light to "fully mitigate or offset" the emissions associated with the Klamath Falls contract. CP at 551, 552.

¶ 4 The following spring, City Light hired Climate Trust of Portland, Oregon, to solicit and evaluate proposals for "offset acquisition." CP at 660. Then in another step in the "no net increase" plan, the council adopted Resolution 30359, which stated:

WHEREAS, global warming represents a clear and increasingly imminent danger to the economic and environmental health of the world, and to specific qualities of life for the Seattle area including water supply, hydroelectric energy production, air quality, forest health, species protection and recreational activities; and

WHEREAS, local action to reduce greenhouse gas [GHG] emissions is consistent with Seattle's environmental commitments and its other high priority policy objectives ...; and

WHEREAS, energy production and consumption accounts for the vast majority of human-caused GHG emissions, and Seattle has an extraordinary opportunity to control its own electric energy future by virtue of its ownership of Seattle City Light; and

. . . .

... City Light, in consultation with the Advisory Committee comprised of experts from academic institutions, state and regional agencies, private business, City Light customers, and public interest organizations reached consensus on a method for calculating City Light's current and likely future GHG emissions and a process for mitigating those emissions; .. .

. . . .

... BE IT RESOLVED ... THAT:

. . . .

... City Light will expeditiously execute commitments to mitigate for all of the GHG emissions attributable to it.

CP at 560-61.

¶ 5 Resolution 30359 estimated that greenhouse gas emissions associated with City Light's power purchases and internal operations would total 362,976 metric tons a year from 2003 through 2005.¹ The resolution stated that it is more expensive to reduce emissions locally than in other areas. The resolution directed City Light to "immediately pursue the possibility of" paying others to reduce their emissions in order to offset City Light's own contributions to global greenhouse gas. CP at 562. The resolution also directed City Light to give priority to local emission-reduction projects "as long as they allow the total average cost to remain within $5/ton and preserve[ ] enough funds to meet the full mitigation obligation for that year." CP at 563.

¶ 6 Pursuant to the 2000 and 2001 resolutions, City Light entered a series of agreements to pay other entities to use cleaner fuels and, in return, to receive credit for the resulting greenhouse gas reductions.² Most of these agreements were with local entities such as King County Metro and the Washington State Ferries. An exception was a $650,000 contract with the DuPont Company to buy 300,000 tons of emission offsets from a DuPont plant in Kentucky. According to a City Light press release issued in November 2005, the contract made City Light "the first large electric utility in the country to effectively eliminate its contribution of harmful greenhouse gas emissions into the environment." Appellants' Br. at App. B-1.

¶ 7 While this greenhouse gas program was evolving, Rud Okeson, Doris Burns, Walter Williams and Arthur Lane (the ratepayers) brought a series of claims against the City of Seattle, alleging various misuses of City Light funds. They filed the first of several complaints in King County Superior Court in February 2002, challenging a 1999 ordinance that shifted responsibility for lighting Seattle streets from the city's general taxpayers to City Light ratepayers. This court agreed with the ratepayers that the shift was unlawful. See Okeson v. City of Seattle, 150 Wash.2d 540, 78 P.3d 1279 (2003) (Okeson I). The ratepayers then filed an amended complaint in December 2003, adding certain other claims that City Light improperly spends ratepayer money on nonutility purposes. In the second phase of the case, the trial court concluded that City Light could buy art to beautify its own facilities but not to benefit the general public. The Court of Appeals affirmed that ruling in Okeson v. City of Seattle, 130 Wash.App. 814, 125 P.3d 172 (2005) (Okeson II).

¶ 8 The ratepayers first challenged the legality of City Light's greenhouse-gas offset contracts in a second amended complaint filed in the fall of 2004. The ratepayers asked the trial court to: (1) prohibit City Light from spending any more funds on the biodiesel conversion programs, (2) order reimbursement of City Light for its funding of the programs, and (3) require refunds to ratepayers. On June 27, 2005, the city listed 21 possible witnesses related to the greenhouse gas claims. About a month later, over the city's objections, the ratepayers filed a third amended complaint purporting to be based on events that happened after the second amended complaint was filed. The third amended complaint alleged that City Light was negotiating or considering new GHG mitigation contracts that would: (1) constitute illegal gifts of public funds or, alternatively, unconstitutional taxes and (2) violate the local government accounting statute, RCW 43.09.210. In response to that broadening of claims, on August 26, 2005, Seattle disclosed additional possible witnesses. Both sides moved for summary judgment on the legality of the GHG offset contracts. On September 22, 2005, the ratepayers moved to strike declarations of six possible witnesses "because of Seattle's failure to make timely disclosure of those witnesses." CP at 1161.

¶ 9 On September 30, 2005, the trial court granted summary judgment to Seattle on the offset issue. In doing so, the trial court said:

I think that City Light has the authority to reduce its own emissions. It can do that by managing its own facilities, its own producing facilities, or it can spend money to have its emissions, its contribution reduced by someone else. This all makes sense only because of the unusual nature of the greenhouse gas canopy; the fact that it is an envelope around the entire globe; that it's not localized.

Verbatim Report of Proceedings at 32-33. Nearly a month later, the trial court granted the ratepayers' motion to strike the Seattle witness declarations as untimely disclosed.

¶ 10 The ratepayers appealed the summary judgment order. Seattle cross-appealed the order striking witness declarations. We accepted direct review of both of the challenged orders. Amici curiae King County, Fred Hutchinson Cancer Research Center, and a coalition consisting of Climate Solutions, Global Warming Action, National Resources Defense Council, Northwest Energy Coalition, and Washington Environmental Council ("environmental groups") filed briefs supporting Seattle's greenhouse gas emissions program.

¶ 11 The appellant ratepayers submitted a brief conceding that City Light has statutory authority to reduce greenhouse gas emissions from its own facilities. The ratepayers contended, however, that paying to reduce emissions...