Highlights Local agencies routinely require project applicants to agree to indemnification on application forms or as conditions of approval. These agreements or conditions of approval typically include language requiring an applicant to agree to defend, indemnify, protect and hold harmless the local agency in any action arising from the application. In San Luis Obispo Local Agency Formation Commission v. City of Pismo Beach ( San Luis Obispo), the Second Appellate District Court of Appeal of California struck down San Luis Obispo Local Agency Formation Commission's assertion that it had an "implied power" to contract for fees by inserting an indemnity agreement into its