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Ask MRSC

June 2014

Ask MRSC

In the periodic Ask MRSC PHD (Public Hospital Districts) e-newsletter, MRSC consultants respond to questions posed by officials and staff of Washington public hospital districts. Submit your own question via our simple online form.

IN THIS ISSUE

  1. I believe I've seen an RCW, WAC, or AG opinion that grants an exemption to the open meetings law (executive session?) for hospital district boards to receive and review quality review and quality assurance reports on patient care issues. Is that correct?
  2. If a special election is held on a hospital district annexation matter, would the hospital district be required to pay for the election?
  3. What are the surety requirements related to the district's designation of its CFO or other person as district treasurer under RCW 70.44.171? Do you have examples of such bonds?
  4. Can the district have an executive session to interview CEO candidates, and can it protect the names of such candidates?
  5. I have a question regarding open meetings, minute taking, etc. - specifically regarding Board Strategic Planning sessions.
  6. I'm looking for guidance on a means to transfer assets (in this case surplus computers) to another public entity (a local school district), or if that's not feasible the format that an advertisement would have to take to advertise the surplus items for sale.
  7. How is MRSC funded to provide its services to local governments, including hospital districts?

1. I believe I've seen an RCW, WAC, or AG opinion that grants an exemption to the open meetings law (executive session?) for hospital district boards to receive and review quality review and quality assurance reports on patient care issues. Is that correct?

There's a provision in the hospital district statute, RCW 70.44.062, that, depending on the nature of the discussions/proceedings at issue, may apply here. RCW 70.44.062 allows the board of commissioners and its staff or agents to meet in executive session regarding certain matters. RCW 70.44.062 provides:

(1) All meetings, proceedings, and deliberations of the board of commissioners, its staff or agents, concerning the granting, denial, revocation, restriction, or other consideration of the status of the clinical or staff privileges of a physician or other health care provider as that term is defined in RCW 7.70.020, if such other providers at the discretion of the district's commissioners are considered for such privileges, shall be confidential and may be conducted in executive session: PROVIDED, That the final action of the board as to the denial, revocation, or restriction of clinical or staff privileges of a physician or other health care provider as defined in RCW 7.70.020 shall be done in public session.

(2) All meetings, proceedings, and deliberations of a quality improvement committee established under RCW 4.24.250, 43.70.510, or 70.41.200 and all meetings, proceedings, and deliberations of the board of commissioners, its staff or agents, to review the report or the activities of a quality improvement committee established under RCW 4.24.250, 43.70.510, or 70.41.200 may, at the discretion of the quality improvement committee or the board of commissioners, be confidential and may be conducted in executive session. Any review conducted by the board of commissioners or quality improvement committee, or their staffs or agents, shall be subject to the same protections, limitations, and exemptions that apply to quality improvement committee activities under RCW 4.24.240, 4.24.250, 43.70.510, and 70.41.200. However, any final action of the board of commissioners on the report of the quality improvement committee shall be done in public session.

Note that both subsections (1) and (2) above require that any final action of the board shall be held in public session in the context of the action described in those provisions. If the meeting to which you are referring falls within what is described in RCW 70.44.062, such a meeting can be held in executive session. However, regarding review of applicable reports, "any final action of the board of commissioners on the report of the quality improvement committee shall be done in public session."

To get a sense of how a court analyzes whether an executive session is permissible under RCW 70.44.062, the analysis in Cornu-Labat v. Hosp. Dist. No. 2 of Grant County, 177 Wn.2d 221 (2013), may be of interest. Although that decision primarily addresses whether certain documents were exempt from public disclosure under RCW 4.24.250 (documents prepared for and maintained by a regularly constituted peer review committee), RCW 70.41.200 (documents prepared for and maintained by a regularly constituted quality improvement committee), and/or chapter 42.56 RCW (Public Records Act), the court also touched on whether certain discussions/proceedings fell within the executive session provision of RCW 70.44.062. The discussions/proceedings at issue included a credentialing function. In relevant part, the court in the Cornu-Labat decision (at p. 234) explains:

Because QVMC [Quincy Valley Medical Center] is a small district hospital, it does not have a specific executive or credentialing committee. Instead, the entirety of the medical staff performs the functions that a committee of this sort would perform at a larger hospital. The medical staff meets on a regular basis. One of the duties of the medical staff under the QVMC bylaws is to evaluate the competency and qualifications of medical staff members. According to QVMC, the Cornu-Labat investigations were authorized by the medical staff, and Dr. Vance, Mr. Merred, and Mr. Gonzalez [a board commissioner] were acting as agents of this regularly constituted body. In Breda, we emphasized that the privilege in RCW 4.24.250 extends to "the records of committee members and agents." 103 Wn.2d at 904-05 (emphasis added).

In the section of the opinion addressing the executive session provision in RCW 70.44.062, the court focuses on whether the discussions at issue were part of "formal meetings and proceedings" that occurred consistent with RCW 70.44.062. In relevant part, the court explains (at p. 239):

QVMC appears to seek a blanket exemption for all documents related to the Cornu-Labat investigation because the investigation was conducted by "staff or agents" of the board. But, RCW 70.44.062(1) speaks to formal meetings and proceedings of the board or its agents, not casual discussions among those subject to the board's direction. This is clear in the language used. RCW 70.44.062(1) allows for the confidential meeting to be "conducted in executive session." "Executive session" is a "meeting, usu[ally] held in secret, that only the members and invited nonmembers may attend." Black's Law Dictionary 1495 (9th ed. 2009). This secret meeting is in contrast to the usual "public session" required by Washington's Open Public Meetings Act of 1971, chapter 42.30 RCW. Furthermore, as noted above, the word "proceedings" refers to "an official record or account" of a meeting. Webster's, supra, at 1807 (emphasis added). This language indicates the statute does not contemplate the confidentiality of anything less than a formal meeting of the board, its staff, or agents, and the PRA exemption protects only the official account of such a meeting.

Based on the court's analysis in the Cornu-Labat decision, and in the context of the situation you describe - related to meetings of the district board of commissioners - and the broader context of the requirements of the Open Public Meetings Act (OPMA) (chapter 42.30 RCW), for a discussion to be held by the board of commissioners in executive session consistent with RCW 70.44.062, that discussion in executive session must be held as part of a regular or special meeting of the board to review "the report or the activities of a quality improvement committee established under RCW 4.24.250, 43.70.510, or 70.41.200." Such an executive session can also include applicable district staff or agents. We recommend that you evaluate the discussions or proceedings at issue in this context to determine whether such discussions or proceedings fall within RCW 70.44.062.

More generally, there is another RCW provision that you may be referring to related to reviewing the performance of a public employee. That provision is included in the OPMA. Under RCW 42.30.110(1)(g), the board of commissioners can hold an executive session:

To evaluate the qualifications of an applicant for public employment or to review the performance of a public employee. However, subject to RCW 42.30.140(4), discussion by a governing body of salaries, wages, and other conditions of employment to be generally applied within the agency shall occur in a meeting open to the public, and when a governing body elects to take final action hiring, setting the salary of an individual employee or class of employees, or discharging or disciplining an employee, that action shall be taken in a meeting open to the public;

Based on your description, it sounds like the more applicable provision regarding the situation at issue here is RCW 70.44.062. However, RCW 42.30.110(1)(g), and the other grounds for holding an executive session set forth in RCW 42.30.110, are important to be familiar with because RCW 42.30.110 is directly applicable to various types of discussions that are conducted by hospital district boards (as well as by the governing bodies of other types of local governments). We recommend that you consult with the district's legal counsel regarding this issue as well.

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2. If a special election is held on a hospital district annexation matter, would the hospital district be required to pay for the election?

Regarding costs associated with an election, under RCW 29A.04.410 if a hospital district is holding a special election (here, related to a proposed annexation) and that election is held in conjunction with other elections held under RCW 29A.04.321 (which is applicable here) and 29A.04.330, the district would be liable for its proportionate share of the costs.

The county at issue is holding an election in November 2014 for several county and other offices. Here, for example, if the hospital district is planning for a special election in November 2014, since the election would be held in conjunction with other elections being held by the county, we interpret RCW 29A.04.410 to mean that the district would be liable for its proportionate share of the costs of its election.

Note also in this situation that an election held in November 2014 would be held at the time of the state general election, which would mean that there would likely be state measures or state and/or federal candidates on the ballot. As a result, RCW 29A.04.420 could be implicated which requires that a portion of the election costs be allocated to the state.

Regarding costs more specifically, note that RCW 29A.04.410 provides, in part:

In recovering such election expenses, including a reasonable pro-ration of administrative costs, the county auditor shall certify the cost to the county treasurer with a copy to the clerk or auditor of the city, town, or district concerned. Upon receipt of such certification, the county treasurer shall make the transfer from any available and appropriate city, town, or district funds to the county current expense fund or to the county election reserve fund if such a fund is established. Each city, town, or district must be promptly notified by the county treasurer whenever such transfer has been completed. However, in those districts wherein a treasurer, other than the county treasurer, has been appointed such transfer procedure does not apply, but the district shall promptly issue its warrant for payment of election costs.

We have consulted with the state elections office in the past regarding such costs, and that office has indicated that circumstances vary so election costs can differ from one jurisdiction to the next. For example, the costs of an election may depend on the size of the voting population and the method of voting. The BARS manual (related to accounting for local governments) describes the methodology for determining and allocating various costs. The general rule is that the county can charge for actual costs plus an allowable fixed overhead fee.

According to, for example, the BARS manual (presuming the district uses the GAAP method of accounting) section entitled, "Election Services" under the following GAAP Chart (Excel spreadsheet), costs the county can charge include costs related to salaries and wages, benefits, supplies, services, some equipment charges, and interfund charges. We recommend that you consult with the State Auditor's Office regarding such charges as well.

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 3. What are the surety requirements related to the district's designation of its CFO or other person as district treasurer under RCW 70.44.171? Do you have examples of such bonds?

With regard specifically to obtaining a surety bond, RCW 70.44.171 provides, in relevant part:

The treasurer of the county in which a public hospital district is located shall be treasurer of the district, except that the commission by resolution may designate some other person having experience in financial or fiscal matters as treasurer of the district. If the treasurer is not the county treasurer, the commission shall require a bond, with a surety company authorized to do business in the state of Washington, in an amount and under the terms and conditions which the commission by resolution from time to time finds will protect the district against loss. The premium on any such bond shall be paid by the district.

RCW 70.44.171 doesn't specify that the bond be for a specific dollar amount, and we didn't find any other provision in chapter 70.44 RCW more generally that sets the bond amount. However, there's another provision that we think applies with respect to bonding requirements for a public official for a hospital district. RCW 42.24.180(1) provides that a $50,000 bond is required for the auditing officer and "the officer designated to sign checks or warrants." Note, though, that the purpose of the bond is to provide financial protection for the district. As a result, the determination of the dollar amount of the bond shouldn't be dictated by the statutory minimum, but rather by the amount necessary to protect the district against the financial risk at issue.

In some local governments, more than one officer may be authorized to sign checks. RCW 42.24.180(1) states, in part:

The auditing officer and the officer designated to sign the checks or warrants shall each be required to furnish an official bond for the faithful discharge of his or her duties in an amount determined by the legislative body but not less than fifty thousand dollars;

Regarding examples of public official bonds, the following sample bonds for treasurers might be of interest from The Hartford Financial Services Group, Inc., from its Target Bonds - Washington (state) webpage:

Public Official Bonds

Treasurer (Hazard code 2)

- Public Official - WA 

- Public Official (Indefinite) 

We recommend that you also contact the State Auditor's Office to see what specific types of such bond forms that office recommends. We recommend that you consult with the district's legal counsel regarding such requirements as well.

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4. Can the district have an executive session to interview CEO candidates, and can it protect the names of such candidates?

You indicated that the board of commissioners is considering interviewing candidates for the CEO position. You inquired about whether the board can conduct the interviews in executive session, and whether the board can keep the names of the applicants confidential to ensure the district is able to make its selection from the best available talent.

On the issue of interviewing in executive session candidates for the CEO position, we're not aware of clear legal authority that definitively answers this question but we think there's a good argument that the commissioners can interview CEO candidates in executive session as part of their evaluation of such candidates. However, we have also recognized that there's a counterargument under Miller v. Tacoma, 138 Wn.2d 318 (1999), that such interviews must be done in open session.

The relevant provision of the Open Public Meetings Act (OPMA) (chapter 42.30 RCW) is RCW 42.30.110(1)(g), which authorizes an executive session: "To evaluate the qualifications of an applicant for public employment ... ." We have taken the position that this authorizes meeting in executive session to interview applicants for nonelected appointive office or employment based on the notion that interviewing comes within the concept of evaluating qualifications, in contrast to the express requirement in RCW 42.30.110(1)(h) that interviews for candidates for appointment to elective office be in an open meeting, and on a 3/1/90 Washington State Attorney General's Office memo from Richard Montecucco to Bob Hauth of MRSC (where he states in conclusory fashion: "We have also advised that the statute would allow a personal interview or a file review (resumes, etc.), both of which could take place in executive session.").

A contrary argument that we've heard is that, based on the definition of "evaluate" used by the Washington State Supreme Court in Miller v. Tacoma, an interview doesn't come within that definition. The definition of "evaluate" used by the Miller court is "to examine and judge concerning the worth, quality, significance, amount, degree, or condition of." Id. at 328. Under the contrary argument's interpretation of this definition, an interview is what would occur before the governing body evaluates a candidate, and therefore interviews cannot be held in executive session.

Recognizing that this matter is unclear in case law, we think the stronger argument is that such interviews may occur in executive session, though with the qualification that there's an argument to the contrary under the Miller decision. In support of our position, we note that the definition of "evaluate" used in Miller starts with the word "examine," which can be viewed as encompassing the act of interviewing. The questioning that can occur during a job interview can be said to be for the very purpose of examining how the applicant might be qualified for the job.

Also, we note that, unlike the requirement that interviews of applicants for appointment to elective office be in open session, there is an important policy that supports having interviews of applicants for nonelected office in closed session - a policy that's reflected in the Public Records Act (chapter 42.56 RCW) exemption for applications for public employment. See RCW 42.56.250(2). That policy is to protect such applicants from having to make public their applications when they may want to keep that fact private, "... including the names of applicants, resumes, and other related materials submitted with respect to an applicant." RCW 42.56.250(2). Applicants may have current jobs they may not wish to possibly jeopardize by enabling their employers to know of their application. Potentially qualified applicants may decide that applying for the job isn't worth the risk of informing their current employers. A policy of having interviews of applicants for nonelected office in executive session is consistent with the Public Records Act exemption that applies to the applications.

So, until the courts address this precise issue, which the Miller court did not, our position is that a governing body may meet in executive session to interview applicants for nonelected positions, with the qualification above noted.

On the issue of withholding the names of applicants for the CEO position, as above stated the Public Records Act (PRA) has a specific exemption under RCW 42.56.250(2) for:

All applications for public employment, including the names of applicants, resumes, and other related materials submitted with respect to an applicant;

If a request is made at this point for the names of the applicants for the CEO position, such a request is a request for information, not a request for a record, and the hospital district can keep the names confidential if it so chooses. If a PRA request is made, for example, for records that fall within the exemption in RCW 42.56.250(2), including application materials that contain the names of applicants, we think the district should indicate to the requester that it has such records but the records are exempt from disclosure under RCW 42.56.250(2).

We recommend that you consult with the district's legal counsel regarding this matter as well.

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5. I have a question regarding open meetings, minute taking, etc. - specifically regarding Board Strategic Planning sessions, and taking minutes at them. In the past, I've always taken general minutes of the discussion (not every single detail). It's a meeting where all the board members are present, so I have posted as well in the past. At such meetings, do we have to take minutes - or just list that a meeting came to order, list the topics, and then when it closed? How specific (even at regular board meetings) do the minutes have to be?

State law doesn't specify the level of detail that is to be included in the meeting minutes of the board of commissioners, so the board has reasonable discretion in this regard. The most applicable reference we found in chapter 70.44 RCW (which governs hospital districts) is in RCW 70.44.050, which provides in part:

All proceedings of the commission shall be by motion or resolution recorded in a book or books kept for such purpose, which shall be public records.

More generally, the Open Public Meetings Act (chapter 42.30 RCW) requires that a written record, in the form of (at least) written commission meeting minutes, be "promptly recorded" and be "open to public inspection" by the district. State law doesn't require the district to tape or audio (or video) record meetings, nor does it mandate a specific method or format for meeting minutes.

Specifically regarding meeting minutes, RCW 42.32.030 provides:

The minutes of all regular and special meetings except executive sessions of such boards, commissions, agencies or authorities shall be promptly recorded and such records shall be open to public inspection.

The board of commissioners has reasonable discretion to determine the level of detail for the board's meeting minutes and, as a result, there is variation from jurisdiction to jurisdiction on this matter. RCW 70.44.050 (referenced above) provides specific authority for the board to adopt rules for the conduct of its business, which can include requirements related to the official minutes of the meetings ("The commission ... shall by resolution adopt rules governing the transaction of its business ... .").

We recommend use of "action minutes" in which the primary purpose of the minutes is to capture the essential information (i.e., date, time, location, attendees from the governing body and staff) and to summarize the action that was taken and the decisions that were made at the meeting. This would include action taken related to any motions or resolutions that were discussed. We think it's generally counterproductive to try to describe in detail what was said at meetings, by the commissioners themselves and especially the public, because, inevitably, such descriptions will include inaccuracies, and dealing with such inaccuracies may unnecessarily consume valuable board time. Additionally, minutes that are too detailed demand staff time in preparing such minutes and that time could likely be better spent preparing less detailed minutes and focusing on other essential tasks.

There is some guidance on this issue in Robert's Rules of Order, Newly Revised, Section 48 (2000), which states that the minutes "should contain mainly a record of what was done at the meeting, not what was said by the members." Many local governments follow Robert's Rules of Order and look to that source for guidance.

We have found, in reviewing sample minutes from a variety of local governments, that generally cities, for example, follow the approach of focusing on recording official actions taken at meetings. Typically, comments by members of the public are briefly summarized regarding the topic addressed and whether the person spoke for or against the issue.

A helpful discussion of "action minutes" is discussed in an October 2009 article in our Council/Commission Advisor column entitled, Less Is More: Action Minutes Serve the City Best, by Ann G. Macfarlane, Professional Registered Parliamentarian. In part, that article, which is also applicable to other types of local governments, explains:

Robert's Rules of Order offers a simple guideline: minutes should record what is done, not what is said. The minutes should include decisions made, postponements, referrals to committee. They may also include a note that discussion was held, if the group wants to have it clear that they did their due diligence on a given issue. By keeping the minutes to this core of essential facts, energy and effort can be devoted to the larger issues that face all our civic bodies today.

Regarding more generally board policies and practices related to what type of record to prepare and maintain for board meetings, we recommend that you also consult with the district's legal counsel. The district's legal counsel may think it advisable to have a certain level of detail in the minutes, given that meeting minutes can be useful historical information, as well as key sources of information in situations in which legal action is brought challenging district action and/or decision-making.

Additionally, it could be that the district's legal counsel may regard certain types of meetings (e.g., meetings of the quality improvement committee under RCW 70.44.062) as a type of "quasi-judicial" activity for which more detailed recordkeeping is advisable and/or required. In other contexts related to other local governments that involve preparing a verbatim transcript for quasi-judicial hearings, for example, as a practical matter preparing such a transcript usually requires an audio or possibly a video recording.

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6. I'm looking for guidance on a means to transfer assets (in this case surplus computers) to another public entity (a local school district), or if that's not feasible the format that an advertisement would have to take to advertise the surplus items for sale.

A hospital district can transfer surplus computers to another local governmental entity, such as a school district, but, as described below in more detail, both districts must comply with certain requirements for such a transfer to be legally permissible.

As a starting point, the general provision in chapter 70.44 RCW (governing hospital districts) regarding conveyance (or sale) of property is in RCW 70.44.060(2), which provides the authority for the board of commissioners generally to convey or sell property, including equipment.

More specifically regarding "otherwise disposing of" surplus personal property, including equipment, RCW 70.44.320 provides:

The board of commissioners of any public hospital district may sell or otherwise dispose of surplus personal property of the district which the board has determined by resolution is no longer required for public hospital district purposes in such manner and upon such terms and conditions as the board in its discretion finds to be in the best interest of the district.

Under RCW 70.44.320, we think the hospital district has discretion and flexibility regarding the method to be utilized by the district when disposing of surplus personal property. An initial consideration is for the district to check whether it has adopted any policies of its own regarding such activities and to follow those policies (to the extent they are consistent with state law).

Regarding the specific process to proceed with to effectuate the transfer of the type of equipment at issue here (i.e., surplus computers), we recommend that the board of commissioners by resolution declare the equipment surplus and no longer required for the purposes of the district. For reasons described below, we think the resolution should also state, in the situation you describe, that the board in its discretion finds that it's in the best interest of the district to determine the fair market value (FMV) of the equipment, and to transfer the equipment to another municipality (such as a school district) for full value, upon such terms and conditions as are reasonable and are mutually agreed upon by the parties. The district can determine the FMV of the equipment by having an independent expert determine such surplus value.

RCW 39.33.010 gives the hospital district and the school district at issue, as municipalities, the authority to exchange or transfer such property "on such terms and conditions as may be mutually agreed upon by the proper authorities of the ..." municipalities concerned. RCW 39.33.010 doesn't specify a particular process that must be followed, unless the value of the property is more than fifty thousand dollars, which, we presume, is not the case here. See, RCW 39.33.020.

Note that although RCW 39.33.010 allows a hospital district to transfer property to another municipality "on such terms and conditions as may be mutually agreed upon," another provision, RCW 43.09.210, requires transfers of property between governments to be made for "full value." The term "full value" has been construed by the state attorney general as allowing for flexibility. See AGO 1997 No. 5.

For example, the attorney general explains that if two governments conduct negotiations concerning a particular type of property and arrive at a bargain by which the property will be transferred in exchange for some consideration (which could be a monetary payment, other property, services performed for the transferring government, or perhaps even relief from a burden), the courts would likely find that the transferring government received "full value," unless the actions of one or both governments were obviously irrational or arbitrary. Id. We recommend that you review AGO 1997 No. 5 (referenced above) because it provides a good description of how transfers can be legally effectuated. As above noted, if the value of the property is more than $50,000, other requirements could apply. See, e.g., RCW 39.33.020.

As a practical matter, the decision about how best to proceed depends upon the specific facts at issue, including the applicable statutory provisions (see above), and any local provisions the hospital district and the applicable school district have enacted that apply to such transactions. We recommend that you consult with the hospital district's legal counsel regarding this matter, as well as with the school district at issue regarding any policies their district may have regarding such activities.

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7. How is MRSC funded to provide its services to local governments, including hospital districts?

MRSC serves all cities, towns, and counties in the state through a biennial contract we have with the state that is administered by the Washington State Department of Commerce. Individual cities and counties pay no direct fees for MRSC programs. Instead, through 2012, programs were cooperatively funded out of a portion of the cities' distributions of the Washington State Liquor Board profits and the counties' distribution of the liquor excise tax. As a result of policy changes made by Initiative 1183 and the 2012 Washington State Legislature, beginning in FY 2013, MRSC's entire appropriation now comes directly from the state's liquor revolving account. The rest of the funding comes primarily from our MRSC Rosters program and contracts with special purpose districts and professional associations.

The following additional detail from our Strategic Plan may also be of interest:

Chapter 43.110 RCW (Local Government Research and Services Program) sets forth MRSC's basic responsibilities for municipal research and services.

RCW 43.110.030 addresses MRSC's contractual arrangement with the Washington State Department of Commerce for the provision of municipal research and services to cities, towns, and counties by:

  • Studying and researching city, town, and county government and issues relating to city, town, and county government;
  • Acquiring, preparing, and distributing publications related to city, town, and county government and issues relating to city, town, and county government;
  • Providing educational conferences relating to city, town, and county government and issues relating to city, town, and county government; and
  • Furnishing legal, technical, consultative, and field services to cities, towns, and counties concerning planning, public health, utility services, fire protection, law enforcement, public works, and other issues relating to city, town, and county government.

MRSC's contract with the state doesn't provide for or fund services for special purpose districts. MRSC's special district program is funded through contracts with associations of special districts, including the Association of Washington Public Hospital Districts, the Washington Association of Sewer and Water Districts, the Enduris risk pool, and the Washington State Transit Association.

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