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Durango Transportation, Inc. v. City of Durango

Colorado Court of Appeals
824 P.2d 48, 1991 Colo. App. LEXIS 230, 15 Brief Times Rptr. 1057 (1991)
ELI5:

Rule of Law:

The phrase 'lawfully authorized to each' in Colorado's intergovernmental agreement law means that each participating governmental entity need only have the authority to perform the subject activity within its own respective boundaries, not that each must have the authority to perform the entire cooperative activity alone. Such agreements allow governmental units to combine their separate jurisdictional authorities to provide a service across their boundaries without seeking approval from external regulatory bodies like the Public Utilities Commission.


Facts:

  • Durango Transportation, Inc. (DTI) is a private corporation holding authority from the Public Utilities Commission (PUC) to operate a mass transit system within La Plata County.
  • The City of Durango (City) and La Plata County (County) entered into an intergovernmental agreement for the City to operate a mass transit system.
  • The planned transit system's service area included routes within both the City of Durango and the unincorporated areas of La Plata County.
  • Pursuant to the agreement, the City establishes fares with advice from a Transit Advisory Board, which consists of appointees from both the City and the County.
  • The agreement stipulated that the County would not contribute financially to the operation of the system or assume any liability arising from it.

Procedural Posture:

  • Durango Transportation, Inc. (DTI) sued the City of Durango and La Plata County in the trial court, alleging the intergovernmental agreement was invalid.
  • The trial court dismissed DTI's complaint, holding that the Public Utilities Commission (PUC) lacked jurisdiction over the joint transit operation.
  • DTI, as appellant, appealed to the Colorado Court of Appeals, which reversed the trial court, finding that counties were not exempt from PUC authority.
  • The City and County, as appellants, appealed to the Colorado Supreme Court.
  • The Colorado Supreme Court reversed the Court of Appeals, holding that the County was functioning as a municipality for transit purposes and was thus exempt from PUC jurisdiction for operations within its own boundaries.
  • The Colorado Supreme Court remanded the case to the Colorado Court of Appeals to decide the sole remaining issue: the validity of the intergovernmental agreement itself.

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Issue:

Does an intergovernmental agreement between a city and a county to operate a mass transit system, where the city's operation extends into the county's territory, violate Colorado's constitutional and statutory requirement that a cooperative function be 'lawfully authorized to each' contracting unit when the city, acting alone, lacks authority to operate outside its boundaries without PUC approval?


Opinions:

Majority - Judge Davidson

No, the intergovernmental agreement is valid because the requirement that a function be 'lawfully authorized to each' entity means only that each government must have the authority to perform the activity within its own jurisdiction, not throughout the entire combined territory. The court reasoned that the legislative purpose of the intergovernmental agreement statute is to encourage efficient cooperation between governments and should be liberally construed. Interpreting the statute to require that each party must have pre-existing authority to perform the entire function alone would render the statute meaningless, as there would be no need for cooperation. The court further reasoned that PUC oversight is unnecessary in this context because, unlike a city serving non-residents who lack political recourse, the citizens of the County are represented by their own elected officials who are party to the agreement, thus ensuring accountability through the electoral process. The agreement is also not invalid due to unequal participation, as the statute only requires the agreement to set forth the responsibilities of the parties, and 'lead agency' arrangements are a permissible form of cooperation.



Analysis:

This decision significantly broadens the power of local governments in Colorado to collaborate on regional projects by interpreting intergovernmental agreement statutes liberally. It establishes the key principle that governments can 'pool' or 'share' their individual, territorially-limited powers to create a combined authority that extends across their borders. This precedent empowers municipalities and counties to address regional issues like transportation, utilities, and public services more effectively, without needing to seek authority from state-level regulatory bodies that might otherwise have jurisdiction. The ruling effectively prioritizes local control and cooperation over centralized state regulation when the citizens of all participating jurisdictions have electoral accountability over the contracting parties.

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