STATE EX REL. PNA v. STATE DEPT. OF TRANSP.

Decision Date09 November 2000
Docket NumberNo. 69432-0.,69432-0.
Citation12 P.3d 134,142 Wash.2d 328
CourtWashington Supreme Court
PartiesSTATE ex rel. PENINSULA NEIGHBORHOOD ASSOCIATION, Appellant, v. WASHINGTON STATE DEPARTMENT OF TRANSPORTATION; Sid Morrison, Secretary, Respondent.

Preston, Gates & Ellis, Stephen Alan Smith, Seattle, amicus curiae on behalf of Safe Passage Across Narrows Now, et al.

Shawn Timothy Newman, Olympia, Eugster, Haskell, Stephen Kerr Eugster, Spokane, Cornelius J. Peck, Seattle, for Appellant.

Christine Gregoire, Atty. Gen., Deborah L. Cade, Asst. Atty. Gen., Olympia, for Respondent.

GUY, C.J.

Peninsula Neighborhood Association (PNA) directly appeals from a declaratory and summary judgment finding the public-private transportation initiatives act (PPI Act), chapter 47.46 RCW, constitutional and the agreement between the Washington State Department of Transportation (WSDOT) and United Infrastructure Washington, Inc. (UIW) valid and enforceable. The issues before this court involve whether the PPI Act is constitutional, whether the advisory election and the rules adopted to implement the PPI Act are valid, and whether the agreement for the construction of a second Tacoma Narrows bridge is valid and enforceable. We affirm the trial court's ruling that the PPI Act is constitutional and that the challenge to the validity of the advisory election and the rules adopted to implement the PPI Act is barred by laches, but we reverse the trial court's ruling on the third issue and hold that the agreement violates existing state law and is therefore unenforceable.

The PPI Act was enacted in 1993. The goal of the act includes enhancement of the State's ability to provide an efficient transportation system by supplementing state transportation funds with private funds. RCW 47.46.010. The PPI Act authorizes the secretary of transportation to select up to six "demonstration project" proposals from private entities to test the feasibility of using the private sector to undertake public projects on behalf of WSDOT. RCW 47.46.030. The secretary is allowed to solicit proposals for new projects and negotiate agreements with private entities for the design, construction, operation, and maintenance of the facilities. RCW 47.46.030(1). Fourteen projects were submitted to WSDOT and six were selected to be demonstration projects. The project that is the subject of this litigation is the only remaining demonstration project; the other five projects have been terminated for various reasons.

The PPI Act has been amended several times since its initial enactment. The Legislature amended the PPI Act in 1995 requiring, among other things, a public involvement program and an advisory election. RCW 47.46.030(3), (11); Laws of 1995, 2d Ex.Sess., ch. 19, § 2. The next year the PPI Act was amended to require the advisory election be held on the preferred alternative identified under the State Environmental Policy Act (SEPA), chapter 43.21C RCW. RCW 47.46.030(4); Laws of 1996, ch. 280, § 1. The statutory amendments gave WSDOT no direction on how to administer the advisory elections, so WSDOT adopted administrative rules to set out how to do so. WAC 468-105-010 through XXX-XXX-XXX. After the 1996 legislative amendment calling for the advisory election to be on the "preferred alternative," WSDOT amended its rules to reflect that this would be the preferred alternative identified in the draft environmental impact statement (EIS). WAC 468-105-020(11). The procedure used in adopting these amendments was challenged before the Joint Administrative Rule Review Committee in late 1997.

When the advisory election was held in November 1998, 53 percent of the voters in the affected area voted in favor of the new bridge project being financed through tolls. Following the election, Secretary of Transportation Sid Morrison announced that WSDOT would proceed with negotiating an agreement with UIW for the new bridge. The agreement sets out provisions for construction, maintenance, and financing of the bridge.

The negotiated agreement requires UIW to create a "special purpose entity" (SPE) to be an independent nonprofit corporation issuing the tax-exempt bonds. UIW contracts with the SPE to establish WSDOT as the SPE's management services contractor, and they then assume the responsibilities for carrying out all of the SPE's project obligations. Clerk's Papers at 641-42; Agreement at Section 2.3(b)(ii). As the operations and maintenance contractor, UIW is responsible to operate and maintain both the existing bridge and the new bridge at all times beginning with the commencement of tolling activities. Clerk's Papers at 697-98; Agreement at Sections 8.2(c)(i)(B) and 8.2(d)(i)(B). Thus, UIW is both the sole source management services contractor and, under the operations and maintenance contract, the sole operator of the project. The costs incurred by UIW for these operating and maintenance costs are payable from the "total revenues" (this term includes gross toll revenues and other revenue sources). Clerk's Papers at 697-98; Agreement at Sections 8.2(c)(ii)(C) and 8.2(d)(ii)(B). Under the agreement, the total revenues must be applied first to pay these operating and maintenance costs. The use of the total revenues in this manner has priority over all other uses including payment of principal and interest on the project debt, replenishment of debt service reserve accounts, and payments into and/or replenishment of, renewal and replacement reserve accounts. Clerk's Papers at 748-50; Agreement at Section 15.7-.8.

The current project would convert the existing Tacoma Narrows bridge from a four-lane two-way bridge to a three-lane one-way bridge for westbound traffic going toward Gig Harbor. Eastbound traffic going toward Tacoma and I-5 would travel on a new three-lane one-way bridge to be built adjacent to the existing bridge. As the agreement provides, the project is to be funded through bonds issued by a nonprofit corporation controlled by the private developer. The bonds are to be paid through the charging of a round-trip toll. Clerk's Papers at 649; Agreement at Section 3.3(a)(ii).

PNA filed an action in the Thurston County Superior Court on July 6, 1999, alleging constitutional defects in the PPI Act and statutory violations by WSDOT in implementing the statute. PNA sought relief in the form of declaratory judgment and mandamus. In his oral ruling, Judge Daniel J. Berschauer dismissed all of PNA's claims and declared the PPI Act constitutional and the agreement between WSDOT and UIW valid and enforceable.

Judge Berschauer held that there were no genuine issues of material fact in dispute and the issues in the case could be resolved as a matter of law. In doing so he concluded that PNA did not demonstrate the unconstitutionality of the PPI Act beyond a reasonable doubt. He reasoned that allowing the PPI Act to authorize demonstration projects and WSDOT to identify toll bridges is not an unlawful delegation of legislative power to set or create transportation policy. Judge Berschauer found that WSDOT maintains complete authority to select any of the proposals submitted by the private entities. He reasoned that the general criteria set out in RCW 47.46.030 for selecting projects are sufficient to meet the constitutional challenge. Moreover, he found that the setting of tolls is an administrative function, so it is not a delegation of legislative authority.

In deciding the issues relating to the advisory election, Judge Berschauer ruled that the election is merely advisory so any irregularities do not invalidate it. He also ruled that PNA's challenge is barred by laches due to its waiting eight months to challenge the election. PNA also brought SEPA claims that Judge Berschauer dismissed without prejudice. Lastly Judge Berschauer found that even though WSDOT did not strictly comply with all Administrative Procedure Act (APA), chapter 34.05 RCW, requirements for promulgating rules, it had substantially complied with the APA and thus the rules were valid.

PNA appealed this decision to Division Two of the Court of Appeals on March 10, 2000. WSDOT filed a motion to transfer the appeal to this court and to accelerate review. The motions were granted and we will now decide the issues presented.

ISSUES

(1) Is the PPI Act a constitutional delegation of legislative authority to WSDOT in delegating authority to identify toll bridges and set toll rates?

(2) Did WSDOT substantially comply with the APA in adopting rules to implement the PPI Act?

(3) Did WSDOT exceed its statutory authority when it applied the PPI Act to develop a project that involves tolling the existing Tacoma Narrows bridge?

DISCUSSION

The first issue we will address is the constitutionality of the PPI Act. The agreement was made pursuant to the PPI Act and we therefore must first determine whether the act is constitutional. In making this determination we must decide whether the PPI Act is a constitutional delegation of legislative authority in allowing WSDOT to identify toll bridges and set toll rates.

The standard of review is to prove the unconstitutionality of the statute beyond a reasonable doubt. Island County v. State, 135 Wash.2d 141, 146, 955 P.2d 377 (1998). Because the statute is presumed to be constitutional, the burden is on the challenging party to prove, beyond a reasonable doubt, that it is unconstitutional. Id.; Citizens for More Important Things v. King County, 131 Wash.2d 411, 415, 932 P.2d 135 (1997); Erickson & Assocs., Inc. v. McLerran, 123 Wash.2d 864, 869, 872 P.2d 1090 (1994). This means that one challenging a statute must, by argument and research, convince the court that there is no reasonable doubt that the statute violates the constitution. Island County v. State, 135 Wash.2d at 147, 955 P.2d 377. The assumption is that the Legislature considered the constitutionality of its enactment and thus should be afforded some deference. Id. Though...

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