AUGUST 2022

Knowing the Waters

By Frank Chmelik of Chmelik Sitkin & Davis, P.S.

This month’s column is about “Delegation of Powers Resolutions” which was a lively topic at the recent executive directors’ seminar.

Everyone would agree that the commissioners acting together as the port commission in an open public meeting really do govern port districts.  In a sense, the first delegation of power came from the legislature in 1911 when the predecessor statute to RCW 53.12.010, provided that “the powers of the port district shall be exercised through a port commission consisting of three or, when permitted by this title, five members.”  In several small port districts (without an executive director or manager) this clear statement is the end of the governance discussion.  However, in most port districts the discussion necessarily continues with delegation of some of these powers to the executive director or the manager.

RCW 53.12.270 provides that “the commission may delegate to the managing official of a port district such administerial powers and duties of the commission as it may deem proper for the efficient and proper management of port district operations.”  Importantly, the statute goes on to provide that “any such delegation shall be authorized by appropriate [written] resolution of the commission, which resolution must also establish guidelines and procedures for the managing official to follow.”  Therefore, any broad delegation of powers (as opposed to a motion authorizing a port employee to take a specific action on a specific matter) must be in a written resolution – commonly called a delegation of powers resolution.

Consider why a port commission wants to delegate its powers to an executive director or manager.  It is efficient, it allows for the day-to-day operation of the port, it allows for the management of port staff and , importantly, it frees up the commissioners to consider the more complex and strategic aspects of the port.  Port commissioners and their time are finite resources.  If the time used on “routine management” issues when will there be time for the important discussions about where the port is headed?

From my perspective, the creation and annual review of the delegation of powers resolution is one of the port commissions’ most important duties.  It provides the legal basis for many port actions and it clearly focuses the commission on what is expected of its executive director or manager.  Without a clear delegation, I am always concerned that I will not be able to defend a port in legal actions arising from such things as adverse personal actions, contract disputes or lease defaults.  Skilled lawyers for an opposing party will look to see if they can challenge port actions on the basis that the executive director or the manager lacked the authority to act for the port or even authorize the litigation.

Generally, the delegation of powers resolutions ought to cover the full range of day-to-day operations of the port and be budget based. By budget based, I mean start from the proposition that any action of the executive director or manager acting consistent with the budget and its line items is presumed valid and any action outside the budget must be explained.  This, of course, puts a great premium on developing detailed operating and capital budgets to guide the operations of the port.

The items that are typically included in a delegation of powers resolution are:

A broad day-to-day operations charge

• Personnel management (hiring, firing, promotions and discipline) authority.

• Short term leases (the range we see in this area is between one and five years).

• Lease and contract enforcement.

• Purchasing within a specified budget line item or percentage of budget.

• The ability to execute routine utility easements.

• Approval of change orders for public works contracts within a set percentage.

• Collection of monies owed the port and settlement of minor claims for and against the port,

• Travel by port employees within the United States and Canada,

• Litigation and emergency actions.

• The ability to negotiate non-binding letters of intent or confidentiality agreements.

Think of a delegation of powers resolution as accomplishing two things.  First, it provides clear direction (and the legal authority) to the executive director or manager for the day-to-day operation of the port.  Second, it removes many routine issues from the port commission’s agenda thereby freeing up time for more strategic and complex matters.  The resolution should also identify which delegated powers the executive director or manager can “re-delegate” down to staff and which powers must be exercised personally by the executive director or manager.  For example, it is common to re-delegate a portion of the purchasing authority down to the staff and it is typical that the executive director or manager must make personnel decisions.

In my view, an annual review of the delegation of powers resolution by the commission and staff is essential to ensure that the resolution encompasses enough authority for day-to-day operations but not too much authority such that the commission is not making the important decisions.  I recommend putting this review on the list of actions taken at the start of each year.   Moreover, the amount of delegation may change when a new executive director or manager is hired or it may change based upon the past performance of the executive director or manager or it may change to reflect changing business practices.  A good example of a changing business practice is the explosion of businesses asking for “non-binding letter of intents” or “confidentiality agreements” before they go public with their plans.  Obviously, information received and documents signed are still subject to the Public Records Act, but if the delegation of powers resolution does not have this authority then these agreements may need to come to the commission in an open public meeting – so much for confidential preliminary discussion.   

Keep in mid that some commission duties are “non-delegable” which means the commission must take the action.  These include:

• Setting the lease bond policy for all port leases

• Sale of port property valued at over $10,000

• Setting commissioner compensation

• Revising commission districts

• Creating industrial development districts

• Adopting the budget

• Establishing the tax levy

The determination of what is “non-delegable” can be complicated but your port attorney can help with this analysis.

                Finally, I always advise executive directors, managers and commissioners that just because a power is in the delegation of powers resolution does not mean that the executive director or manager must use the authority.  Where there is any doubt as to the delegated authority or for an important or controversial decision consider bringing that decision before the commission.  After all, the commissioners are the elected officials charged by law with exercising the “powers of the port district.”

As always, please contact your port counsel with any questions regarding this topic.  And, if you have a particular question for a Knowing the Waters please email me at fchmelik@chmelik.com.