OR OP-2005-3 2005-05-20

Could the Oregon DAS Risk Management Division provide liability insurance to the bistate Columbia River Gorge Commission and its members?

Short answer: Yes, if Risk Management determined that doing so was 'necessary or desirable for the efficient operation of state government' under ORS 278.405(1). The 2005 AG opinion concluded that ORS 278.405(1) gave Risk Management discretion to insure the bistate Commission and its members, even though the Commission was created by interstate compact and operated outside conventional state-agency lines, as long as Risk made the efficient-operation determination on the record.

Disclaimer: This is an official Oregon Attorney General opinion. AG opinions are persuasive authority but not binding precedent. This summary is for informational purposes only and is not legal advice. Consult a licensed Oregon attorney for advice on your specific situation.

Plain-English summary

The Columbia River Gorge Commission is a bistate body created by interstate compact between Oregon and Washington under the Columbia River Gorge National Scenic Area Act, Pub. L. 99-663. Both states adopted the compact (ORS 196.150 in Oregon; RCW 43.97.015 in Washington). The Commission's commissioners are appointed by the two states' governors and the affected counties; the Commission's funding comes from appropriations by both legislatures.

DAS asked whether its Risk Management Division had authority under ORS 278.405(1) to provide liability insurance to the Commission and its members. ORS 278.405(1) authorizes DAS to "provide all insurance coverages * * * which the department determines necessary or desirable for the efficient operation of state government."

The AG concluded yes, provided that Risk made an efficient-operation determination. The reasoning had two pieces:

Public-servant indemnity advances two policies the Oregon courts have repeatedly recognized. Indemnity encourages qualified people to accept public appointments and encourages them to execute their duties zealously. Welker v. TSPC, 152 Or App 190, 198 (1998); Gill v. SAIF, 314 Or 719, 724-25 (1992); Stevenson v. State of Oregon, 290 Or 3, 12-13 (1980). For the Commission, that means insurance helps Oregon's governor attract qualified members and helps the Commission attract qualified staff. By definition, that promotes Commission operation.
Promoting Commission operation can promote "the efficient operation of state government." That was the harder step. The Commission is a regional bistate body, not part of conventional Oregon state government. But the scenic area extends across both states; the bistate Commission is plausibly the most effective method available for consistent land-use management across the state line. If the Commission cannot attract qualified personnel, Oregon either has to participate in less efficient management mechanisms or accept worse outcomes. So Risk could rationally find that insuring the Commission helps Oregon state government operate efficiently.

The AG was careful that the determination was Risk's, not the AG's. The opinion offered analytical observations rather than a categorical yes/no. Three observations the opinion flagged for Risk to weigh:

Whether to cover only Oregon-appointed members and Oregon-based staff, or all members and staff regardless of which state appointed them. ORS 190.420 gives Oregon agencies authority to exercise their powers jointly with agencies in another state when that state's law allows. So Risk could potentially cooperate with its Washington counterpart.
Whether Risk's coverage was the most efficient way for Oregon to participate in addressing the Commission's needs that financially affect the state. Without Risk's coverage, the Commission would have to buy commercial insurance, and Oregon would foot half the cost (under the compact's 50-50 funding split). Self-insurance through Risk could be cheaper.
Whether Risk's standard policy approach was appropriate, or whether the bistate context required some custom structure.

The opinion emphasized that the efficient-operation finding was factual, not legal. The opinion pointed Risk at relevant considerations and made clear that a properly documented determination would satisfy ORS 278.405(1).

Currency note

This opinion was issued in 2005. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.

Background and statutory framework

ORS 278.405(1) authorizes DAS to "direct and manage all risk management and insurance programs of state government" and to "provide all insurance coverages * * * which the department determines necessary or desirable for the efficient operation of state government." The statute leaves the necessary-or-desirable determination to DAS, but the determination is bounded by the "efficient operation of state government" standard.

The interpretive method was PGE v. BOLI, 317 Or 606 (1993): plain-meaning ordinary words. "Efficient" means "marked by qualities, characteristics, or equipment that facilitate the serving of a purpose or the performance of a task in the best possible manner." The AG used Webster's directly because "efficient operation" is a term of common usage.

The Columbia River Gorge Commission was authorized by Congress and stood up by interstate compact. 16 U.S.C. § 544c(a)(1)(A). The commission membership structure: each governor appoints three voting members, and each of the six affected counties (three in Oregon, three in Washington) appoints one. Oregon-appointed members serve four-year terms subject to Senate confirmation. ORS 196.160. The compact (Article IV) provides that the Commission is funded by Oregon and Washington legislative appropriations.

The AG's case-law support pulled three pieces of the public-servant indemnity doctrine together. Stevenson v. State of Oregon, 290 Or 3 (1980), held that indemnification protects public officials acting in good faith. Gill v. SAIF, 314 Or 719 (1992), reinforced the indemnification policies behind state coverage. Welker v. TSPC, 152 Or App 190 (1998), specifically articulated the two policies: encouraging qualified people to accept public office and encouraging zealous execution of public duties. The opinion treated those policies as background context for the "efficient operation" analysis.

The AG raised ORS 190.420 as a tool. Subsection (1) provides: "Any power or powers, privileges or authority exercised or capable of exercise by a public agency in this state may be exercised and enjoyed jointly with any public agency in another state to the extent that the laws of the other state permit such joint exercise or enjoyment." For the Gorge Commission, ORS 190.420 opened the door to coordinated insurance with Washington's analogous risk-management agency. The opinion did not require that path, but flagged it as a possibility.

The opinion's footnotes laid out the operational details. The funding split is 50-50 between Oregon and Washington under the compact's Article IV. That financial overlap meant that any insurance the Commission bought commercially would cost Oregon half, providing the foundation for the "most efficient method" analysis Risk had to do.

Common questions

Q: At the time of this opinion, could DAS Risk just decide to cover the Gorge Commission?
A: Almost. ORS 278.405(1) required Risk to determine that doing so was "necessary or desirable for the efficient operation of state government." That's a factual judgment Risk had to make, but the AG signaled the determination was reachable on the record presented.

Q: Why was the Gorge Commission not just an Oregon state agency for these purposes?
A: The Commission was created by interstate compact between Oregon and Washington with consent from Congress. It operates as a regional agency, not as an Oregon-only entity. The opinion did not have to decide whether the Commission was technically part of Oregon state government, because the relevant question was whether insuring it advanced "the efficient operation of state government" regardless of the formal answer.

Q: How does insuring a Commission member promote efficient operation of Oregon state government?
A: By helping the governor attract qualified appointees and by encouraging those appointees to act decisively. Welker and the related cases recognize those two effects. For the Gorge Commission specifically, the bistate compact arguably gave Oregon the most efficient mechanism for cross-border land-use management. Sustaining the Commission's operational capacity therefore supported Oregon state government's ability to address gorge issues.

Q: Could Risk cover only Oregon-appointed members and Oregon-based staff?
A: That was a possibility the AG flagged for Risk to consider. Coverage scope was Risk's discretionary call. The opinion noted that ORS 190.420 also opened a path to coordinated coverage with Washington's analogous agency.

Q: Was the Commission required to buy private insurance otherwise?
A: Not required, but it was a likely alternative. Private coverage would cost the Commission, and Oregon would pay half of that cost under the compact's 50-50 funding rule. That financial point was relevant to whether self-insurance through Risk was the most efficient option for Oregon.

Q: What standard did the AG apply for "efficient operation"?
A: The plain-meaning Webster's definition: arrangements that facilitate the performance of a task in the best possible manner. The AG did not impose a strict-scrutiny test; the standard reflected DAS's discretionary management authority over state risk management.

Citations and references

Statutes and federal law:

ORS 190.420(1) (joint exercise of public-agency powers across state lines)
ORS 196.150 (Oregon's adoption of the Gorge compact)
ORS 196.160 (Senate confirmation of Oregon-appointed Commission members)
ORS 278.405(1) (DAS Risk Management authority)
16 U.S.C. § 544 et seq. (Columbia River Gorge National Scenic Area Act)
16 U.S.C. § 544c(a)(1)(A) (regional agency authorization)
16 U.S.C. § 544c(a)(3) (Senate confirmation requirement)
Pub. L. 99-663, 100 Stat. 4274 (the federal act)
RCW 43.97.015 (Washington's adoption of the Gorge compact)

Cases:

PGE v. BOLI, 317 Or 606 (1993), Oregon statutory construction methodology
Welker v. TSPC, 152 Or App 190 (1998), public-servant indemnity policies
Gill v. SAIF, 314 Or 719 (1992), public-employee indemnification framework
Stevenson v. State of Oregon, 290 Or 3 (1980), state liability for public-employee acts in scope of duties

Source

Original opinion text

HARDY MYERS

PETER D. SHEPHERD

Attorney General

Deputy Attorney General

DEPARTMENT OF JUSTICE
GENERAL COUNSEL DIVISION
May 20, 2005

David Hartwig, Administrator
Department of Administrative Services
State Services Division
155 Cottage Street NE
Salem, OR 97310
Re:

Opinion Request OP-2005-3

Dear Mr. Hartwig:

You ask whether the Risk Management Division (Risk), on behalf of the Department of Administrative Services (DAS), has authority under ORS 278.405 to provide liability insurance coverage to the Columbia River Gorge Commission (Commission) and its members.

For the reasons discussed below, we conclude that Risk may provide insurance coverage to the Commission and its members pursuant to its authority under ORS 278.405 if Risk determines that doing so promotes the efficient operation of state government.

Discussion

ORS 278.405(1) provides in pertinent part:

The Oregon Department of Administrative Services shall direct and manage all risk management and insurance programs of state government * * * . Authority granted the department in this section includes but is not limited to the following authority:

(1) To provide all insurance coverages * * * which the department determines necessary or desirable for the efficient operation of state government * * * . (Emphasis added.)

This statute does not provide DAS with unlimited discretion to provide insurance. Instead, it specifies that, as determined by DAS, the provision of insurance must be necessary or desirable for "the efficient operation of state government."

Under the method of statutory interpretation prescribed by the Oregon Supreme Court, we interpret statutory terms of common usage to have their "plain, natural and ordinary meaning." PGE v. Bureau of Labor and Industries, 317 Or 606, 611, 859 P2d 1143 (1993). As used in ORS 278.405(1), an "efficient" operation is one "marked by qualities, characteristics, or equipment that facilitate the serving of a purpose or the performance of a task in the best possible manner." WEBSTER'S THIRD NEW INTERNATIONAL DICTIONARY (1993) at 725.

The Oregon Court of Appeals has stated that the provision of indemnity to public servants effectuates two fundamental public policies: it encourages both qualified persons to accept public employment and the zealous execution of public functions, duties, and responsibilities. Welker v. TSPC, 152 Or App 190, 198, 953 P2d 403 (1998), vacated and rem'd on other grounds 332 Or 306, 27 P3d 1038 (2001); see also Gill v. SAIF, 314 Or 719, 724-25, 842 P2d 402 (1992); Stevenson v. State of Oregon, 290 Or 3, 12-13, 619 P2d 247 (1980). As public servants, it is reasonable to assume that Commission members and staff carry at least some concern about whether the good faith discharge of their duties will expose them to litigation and potential personal liability. It follows that the provision of insurance coverage for tort claims would likely have the effect of encouraging qualified persons to accept an appointment as a Commission member or employee, and encourage them to execute their responsibilities zealously. At the very least, providing insurance coverage should prevent qualified persons from rejecting appointment to, or employment with, the Commission due to concerns about liability. By helping to attract qualified personnel, providing insurance coverage would undoubtedly contribute to the efficient operation of the Commission.

However, the question that must be answered under ORS 278.405(1) is whether attracting qualified commissioners and staff would promote "the efficient operation of state government." Without addressing whether the Commission is part of Oregon state government, the determination that must be made is whether attracting qualified commissioners and staff through providing insurance coverage will promote state government's efficient operation, even if the Commission is not part of that government. This is a factual determination for Risk to make. We offer the following observations for your consideration.

The Commission acts with regard to the preservation and development of land in the Columbia River Gorge National Scenic Area, as delineated in 16 USC § 544b (scenic area). Because the scenic area extends into both Washington and Oregon, it appears reasonable to assume that their joint creation and support of a "regional agency" (16 USC § 544c(a)(1)(A)) represents one of the most efficient and effective methods by which to assure consistent management of land use issues across state boundaries. Therefore, in determining whether providing insurance coverage to the Commission and its members is "necessary or desirable for the efficient operation of state government," Risk may consider the likely effect on state government if the governor were unable to attract qualified members and the Commission were unable to attract qualified staff because of exposure to potential liability. In other words, would providing insurance coverage to the Commission and its members contribute to the efficient operation of state government by helping to sustain the Commission as a viable method for addressing land management issues within the scenic area?

Under this approach to the criteria for providing insurance coverage, Risk could consider whether coverage to the Commission and all of its members, as opposed to only Oregon based members and staff, would be necessary or desirable. In addressing issues about the scope of possible coverage, Risk may want to consider the authority provided by ORS 190.420 as a means by which Risk and its counterpart in Washington state government could cooperate in providing insurance.

Another way to approach the "efficiency" criteria in ORS 278.405(1) would be to consider the fact that Oregon would be responsible for half of the funding necessary to provide the Commission and its members with insurance coverage if it chose to seek such coverage from private insurance carriers, and also for half of the funding needed to cover the costs incurred by the Commission both in defending against claims of wrongdoing and in satisfying any judgments imposed against it. Risk may want to consider whether providing insurance coverage under ORS 278.405 represents the most efficient means for Oregon to participate in addressing the needs of the Commission that financially affect the state.

This office is available to address questions that Risk may have about exercising its authority under ORS 278.405(1) in relation to the Commission, including questions that pertain to pursuing a joint effort with Washington under ORS 190.420.

Sincerely,

Donald C. Arnold
Chief Counsel
General Counsel Division
DCA:KBC:naw:clr/GEN205039