Leonhardt, 060618 WVAGO, AGO 060618

• Case Date: June 06, 2018
• Court: West Virginia

Chairman Kent Leonhardt AGO 060618 No. 060618 West Virginia Attorney General Opinion State of West Virginia Office of the Attorney General June 6, 2018          Chairman Kent Leonhardt          Commissioner, West Virginia          Department of Agriculture          State Capitol Building 1, Room E-28          1900 Kanawha Blvd., East          Charleston, WV 25305          Dear Commissioner Leonhardt:          You have asked for an Opinion of the Attorney General about the binding nature of sponsorship and operation and maintenance agreements concerning almost 200 flood-control dams and channels across the State. This Opinion is being issued pursuant to West Virginia Code § 5-3-1, which provides that the Attorney General "shall give written opinions and advise upon questions of law, . . . whenever required to do so, in writing, by . . . any . . . state officer, board, or commission." To the extent this Opinion relies on facts, it is based solely upon the factual assertions set forth in your correspondence with the Office of the Attorney General.          In your letter, you explain that the federal Natural Resources Conservation Service ("NRCS") has worked with local "sponsoring organizations" in West Virginia—that is, local governments, and sometimes the State Conservation Committee ("SCC") or the West Virginia Conservation Agency ("WVCA") (collectively, the "Agencies")—to build 170 small-watershed dams and 22 flood control channels across the State. Broadly speaking, the NRCS paid the majority of up-front construction costs for these facilities, and required the sponsoring organizations to sign agreements providing that they would operate the dams and channels and provide annual, ongoing funding for their upkeep ("sponsorship agreements").          As many of the dams are now over 50 years old, the costs to maintain and repair these facilities continue to grow. You explain that although the Agencies do not have formal financial responsibilities under the various sponsorship agreements (either because they were never "sponsoring organizations," or the original agreements have since been modified), in recent years the Agencies have taken on an increasing share of the maintenance burden. Specifically, the Agencies have contributed $221,000 per year since fiscal year 2013 to match contributions from local government sponsors, and have provided an estimated $2 million in additional funding to address specific repair and maintenance needs.          In light of the critical role these dams and channels serve in protecting West Virginia residents from flooding—you estimate that over 60% of the State's residents benefits from these structures—your letter raises a series of concerns about the enforceability of sponsorship agreements, as well as the Agencies' authority to provide ongoing and emergency maintenance funding. These issues can be distilled into three legal questions:

First, whether sponsorship agreements are enforceable against local government sponsoring organizations as a matter of state or federal law, and if not, what elements must a sponsorship agreement include to be enforceable?

Second, whether the Agencies are required to fulfill the requirements of any sponsorship agreements that are not enforceable against local government sponsoring organizations, and whether state law authorizes the Agencies to enter agreements regarding dam and channel maintenance or otherwise provide for inspection, maintenance, or repair of these structures?

Third, whether local governments or private landowners who own the land on which these structures are built are liable for maintenance or emergency repairs as a matter of state law?

         We conclude that to the extent sponsorship agreements require annual, ongoing funding commitments, the restrictions on county- and municipal-debt in the West Virginia Constitution likely make them unenforceable, outside of limited, fact-specific circumstances, against local governments. Similarly, sponsorship agreements are likely not binding against the Agencies, although other statutory provisions provide some mechanisms by which the Agencies may help provide for ongoing maintenance needs. Finally, we conclude that responsibility for emergency repairs and upkeep is a fact-specific and ultimately unresolved question in the context of an invalid sponsorship agreement, but that in some cases a private landowner or local government may be liable for emergency repairs.          Enforceability of Existing Sponsorship Agreements          Your first set of questions asks whether sponsorship agreements—which in most cases were signed years ago by county commissions, municipalities, or other political subdivisions—are still enforceable against these local-government signatories. In light of the constraints in the West Virginia Constitution against incurring public debt, we conclude that they likely are not.          Our State's Constitution bars counties and municipalities from incurring debt "in any manner, or for any purpose," that in the aggregate exceeds "five per centum on the value of the taxable property therein." W.Va. Const. art. X, § 8. Any debt below this limit must be "submitted to a vote of the people" and approved by a three-fifths margin, and financed by an annual property tax sufficient to pay off the debt within thirty-four years. Id. Article X, Section 4 contains separate requirements governing debts of the State and state agencies. See, e.g., Winkler v. State Sch. Bldg. Auth., 189 W.Va. 748, 756, 434 S.E.2d 420, 428 (1993) (applying Section 4's restrictions to state agency). Although the requirements for lawfully incurring debt vary under Section 4 and Section 8, the "same rationale" applies in both contexts when determining the threshold question of what obligations constitute "debt." State ex rel. Clarksburg Mun. Bldg. Comm'n v. Spelsberg, 191 W.Va. 553, 556, 447 S.E.2d 16, 19 (1994); see also State ex rel. Cty. Com'n of Boone Cty. v. Cooke, 197 W.Va. 391, 396 nn.8-9, 475 S.E.2d 483, 488 nn.8-9 (1996).          The "underlying purpose of [constitutional] debt restrictions is to 'protect the fiscal integrity of the State [and counties] by prohibiting creation of any present indebtedness that would obligate subsequent legislatures to make appropriations.'" Spelsberg, 191 W.Va. at 557, 447 S.E.2d at 20 (citations omitted). The Supreme Court of Appeals has applied this principle in a functional, rather than formalistic, manner. In Winkler, for example, the Court concluded that revenue bonds that were to be paid through legislative appropriations from the general fund were debts, even though the bonds stated that the State had no legal obligation to pay them. 189 W.Va. at 760, 434 S.E.2d at...