Durango Transp., Inc. v. City of Durango

• Decision Date: 01 August 1991
• Docket Number: No. 88CA0165,88CA0165
• Citation: 824 P.2d 48
• Parties: DURANGO TRANSPORTATION, INC., Plaintiff-Appellant, v. CITY OF DURANGO, The Board of County Commissioners of the County of La Plata and Durango Transit Advisory Board, Defendants-Appellees. . II
• Court: Colorado Court of Appeals

Page 48

824 P.2d 48

DURANGO TRANSPORTATION, INC., Plaintiff-Appellant, v. CITY OF DURANGO, The Board of County Commissioners of the County of La Plata and Durango Transit Advisory Board, Defendants-Appellees.

No. 88CA0165.

Colorado Court of Appeals,

Div. II.

Aug. 1, 1991.

Rehearing Denied Sept. 5, 1991.

Certiorari Denied Jan. 27, 1992.

Law Office of Nancy P. Bigbee, Nancy P. Bigbee, Denver, for plaintiff-appellant.

Smith & West, David P. Smith, Durango, for defendants-appellees.

Gerald E. Dahl, Denver, for amicus curiae Colorado Mun. League.

Opinion by Judge DAVIDSON.

This case comes before us on remand from the Colorado Supreme Court for consideration of whether the intergovernmental agreement between the City of Durango and the County of La Plata is valid. Since we conclude the agreement is valid, we affirm the judgment of the trial court.

This action arose out of an intergovernmental agreement between the City of Durango (City) and La Plata County (County) which provided that the City would operate a mass transit system between areas in the City and the County. Pursuant to this agreement, the City establishes fares with advice and recommendation from the Transit Advisory Board which is made up of both City and County appointees.

Durango Transportation, Inc., (DTI) a private corporation which has authority from the Public Utilities Commission (PUC) to operate a mass transit system within the County, brought this action alleging that the defendants, the City, the County, and the Advisory Board, were infringing upon this authority. Among other things, DTI argued that the City could not operate beyond its jurisdiction without PUC authority and, thus, that the agreement which purports to allow such an operation is invalid.

The trial court dismissed DTI's complaint, holding that the PUC had no jurisdiction over the City and County's joint operation of a mass transit system within the County. Implicit in this holding was the finding that in operating a mass transit system, both the City and the County were operating as municipalities and were, therefore, exempt from PUC regulation when operating inside their respective boundaries. This court reversed the trial court's ruling on that issue, finding that counties were not municipalities and, therefore, were not exempt from PUC authority. Durango Transportation, Inc. v. City of Durango, 786 P.2d 428 (Colo.App.1989). That judgment was reversed by the Colorado Supreme Court which determined that the County here was functioning as a municipality in operating a transit system and was, thus, exempt from PUC jurisdiction when performing this activity within its boundaries. City of Durango v. Durango Transportation, Inc., 807 P.2d 1152 (Colo.1991).

On remand the sole remaining issue to be addressed is whether the intergovernmental agreement between the City and the County is valid.

I.

DTI first contends that the agreement is unlawful under the Colorado Constitution and statutory law. We disagree.

The constitutional provision governing intergovernmental agreements, Colo. Const. art. XIV, § 18(2)(a), provides as follows:

"Nothing in this constitution shall be construed to prohibit the state or any of its political subdivisions from cooperating or contracting with one another or with the government of the United States to provide any function, service, or facility lawfully authorized to each of the cooperating or contracting units, including the sharing of costs, the imposition of taxes, or the incurring of debt."

Similarly, the enabling statutory provision regarding such agreements states:

"Governments may cooperate or contract with one another to provide any function, service, or facility lawfully authorized to each of the cooperating or contracting units, including the sharing of costs, the imposition of taxes, or the incurring of debt, only if such cooperation or contracts are authorized by each party thereto with the approval of its legislative body or other authority having the power to so approve." Section 29-1-203(1), C.R.S. (1986 Repl.Vol. 12A)

DTI argues that the constitutional and statutory phrase "lawfully authorized to each" means that each contracting entity must be fully authorized to perform the subject activity. Essentially, DTI is arguing that this phrase means that the City can only contract with the County to perform those functions which the City could lawfully perform alone. Thus, according to DTI, although the City can operate a transit system within its own boundaries without PUC authority, pursuant to City & County of Denver v. Public Utilities Commission, 181 Colo. 38, 507 P.2d 871 (1973), it cannot operate beyond these boundaries and into the County without PUC authority. Therefore, it asserts that any agreement between the City and County which allows the City to operate in such a manner is invalid.

Defendants, however, contend that this phrase means only that each contracting entity must be lawfully authorized to perform the subject activity within its respective jurisdiction. Thus, according to defendants, since both the City and County are authorized to operate mass transit systems within their respective boundaries, the activity is "lawfully authorized to each" and the agreement is valid.

In our view, the phrase "lawfully authorized to each" is susceptible to either interpretation and, thus, is ambiguous. Therefore, to determine the meaning of this phrase, we must look to the statute as a whole and construe it in light of the legislative purpose it was designed to accomplish. Parfrey v. Allstate Insurance Co., 815 P.2d 959 (Colo.App.1991).

In addition, in determining the meaning of this phrase, effect must be given to other related statutory provisions, see Buck v. District Court, 199 Colo. 344, 608 P.2d 350 (1980), as well as to pre-existing case law on the subject. See People v. Green, 734 P.2d 616 (Colo.1987).

The legislative declaration to the enabling intergovernmental agreements statute provides that the purpose of this statute is:

"[To permit and encourage] governments to make the most efficient and effective use of their powers and responsibilities by cooperating and contracting with other governments, and to this end this [statute] shall be liberally construed." Section 29-1-201, C.R.S. (1986 Repl.Vol. 12A)

In addition, counties have not only the powers which are expressly conferred on them, but also such incidental implied powers "as are reasonably necessary to carry out powers expressly conferred." Adams County Golf, Inc. v. Colorado Department of Revenue, 199 Colo. 423, 610 P.2d 97 (1980); Farnik v. Board of County Commissioners, 139 Colo. 481, 341 P.2d 467 (1959).

Similarly, cities also have "such implied and incidental powers, authority, and privileges as may be reasonably necessary, proper, convenient, or useful" to carry out the powers and authority granted to them. Section 31-15-101(2), C.R.S. (1986 Repl.Vol. 12B); see also Colo. Const. art. XX, § 6.

In our view, this law demonstrates that cooperation between governmental entities through intergovernmental agreements should be encouraged and that the contracting entities should be deemed to possess the powers necessary to effectuate such agreements.

If the interpretation urged by DTI were adopted, then intergovernmental agreements could be made only when both entities had pre-existing functional and territorial authority to engage in the subject activity. Such an interpretation would place significant limits on the type of allowable intergovernmental agreements because at least one of the contracting entities would have to have pre-existing authority to operate outside its jurisdictional boundaries. In addition, if this interpretation were accepted, it would appear there would be no need for the constitutional or statutory provisions authorizing intergovernmental cooperation since at least one of the entities could perform the subject activity without the cooperation of the other.

In our view, to adopt this interpretation would not encourage governments to make the most efficient and effective use of their powers by cooperating and contracting with other governments as intended by the General Assembly. See § 29-1-201. Rather, we conclude it is more in accord with the statutory scheme to construe the phrase "lawfully authorized to each" to mean only that each entity must have the authority to perform the subject activity within its jurisdictional boundaries.

This interpretation also is consistent with other jurisdictions which have considered this issue. In discussing a statute governing intergovernmental agreements similar to the one in this case, the California Supreme Court, in City of Oakland v. Williams, 15 Cal.2d 542, 103 P.2d 168 (1940), rejected an interpretation similar to the one urged by DTI here. In that case, seven contiguous municipalities made an agreement to solve a sewage effluent problem common to all of them. The auditor of the City of Oakland challenged this agreement, claiming that it was invalid under the California intergovernmental agreement statute which provided that municipalities may enter into agreements authorized by their legislative bodies to "jointly exercise any power or powers common to the several contracting parties." City of Oakland v. Williams, supra (emphasis added).

The California Supreme Court disposed of the auditor's argument as follows:

"In substance, [the auditor] urges that the statute above referred to authorizing the joint exercise by municipalities of powers 'common' to them does not contemplate or permit the joint exercise of powers that may be separately or independently exercised by them, but only permits of the joint exercise of powers already possessed in common. Such a construction of the statute is strained and would render it meaningless. In other words, if municipalities possessed a power in common there would be no need for a statute authorizing their joint exercise. The statute means...