What Happens When the Parties to an Interlocal Agreement End Up in a Dispute?

A partnership formed by an interlocal agreement has one similarity to a marriage relationship: when it’s formed everybody tends to be optimistic, and often the parties do not want to consider the possibility of conflicts or dissolution – but those drafting an interlocal agreement, and those responsible for administering the agreement, should discuss what could go wrong, and prepare accordingly.

When two or more local government entities in Washington enter into an interlocal agreement pursuant to the Interlocal Cooperation Act (chapter 39.34 RCW), it is because they believe they can cooperate for their mutual benefit. However, over time, the members of the legislative bodies of the entities change and the administrators of the entities change, so that, by the time serious problems arise, the original champions of the project are often long gone.

Additionally, factual and fiscal circumstances change over time. What seemed like an obviously beneficial policy direction when the agreement was formed can later turn out to be a financial or administrative liability. That’s when the attorneys representing the parties are called for assistance. The first step an attorney will take is to read the agreement very carefully.

Does the interlocal agreement concisely define the respective roles and responsibilities of all the parties? Does the agreement contain dispute resolution procedures? Is there a process for termination of the agreement? If not, it’s likely that resolving the problems will take longer and cost more.  (Termination provisions are supposed to be included, but often are not - see RCW 39.34.030(3)(e).)

Even though local government entities entering into an interlocal agreement want to think positively, it is prudent to anticipate that problems might develop, and if the agreement contains clauses that help you resolve disputes it is more likely that the joint undertaking can continue to provide the benefits that motivated the coordination of efforts.

Fortunately, most interlocal projects are relatively successful. There are frequently very good reasons for working together, whether the projects are relatively simple (such as joint purchasing or joint staff training) or quite complex (such as joint sewage treatment plant construction and operation, or a regional transit system).

Taking the time to anticipate problems that might develop is an essential step before entering into an interlocal agreement. It is often possible to draft clauses that will help you avoid potential pitfalls -- or help you abandon the project when it no longer meets the original objectives. These same considerations apply to most public contracts.