OAG 97-8

March 7, 1997

Subject: Joint Sewer Agency - Rate Review Board - Approval of Rate Schedules

Written by: Thomas R. Emerson, Assistant Attorney General

Requested by: David C. Fowler, City Attorney; Robert M. Kirtley, County Attorney; Charles J. Kamuf, Attorney for the Regional Water Resource Agency

Syllabus: The proposed rate review board is not in conformity with state law to the extent that it contemplates approval of joint sewer agency rate schedules in a manner not in accordance with KRS 76.090.

Statutes construed: KRS 76.231 and KRS 76.090

Opinion of the Attorney General

Pursuant to KRS 76.231 the city and county adopted ordinances creating the Regional Water Resources Agency to administer a comprehensive waste water and storm water system for Owensboro and Daviess County.

A question arose as to who should have control over sewer and storm water fees and any increases in fees that would be recommended by the Regional Water Resources Authority Board. Four members of the Board are appointed by the city and three are appointed by the county. Under the existing ordinance the Board can recommend increases in fees but current fees would remain in effect until the increases have been approved by both the city and county. The city objects to the county “veto power” over rates applicable to city residents.

In an attempt to compromise the city and county have agreed to amend the ordinance by removing the mandate for county wide storm water management and control and providing for the creation of a “rate review board” to approve rate changes. The amended ordinance would give the city and county the authority, within their respective jurisdictions, to establish a separate and independent storm water utility under the management and control of the joint sewer agency. This will allow the city and county to provide storm water services within their respective jurisdictions and to regulate the fees for services through the Regional Water Resource Agency Board and the separate storm water utility ordinance to be enacted by the city.

Under the proposal the rate review board will be comprised of the members of the fiscal court and the city commission sitting as a single body. A simple majority of the members shall constitute a quorum. The rate review board shall approve or disapprove all rate changes recommended by the joint sewer agency board by a majority vote.

The first question is whether the rate review board is in conformity with KRS 76.231(4).

KRS 76.231 states that a city of the second class together with the county in which it is located may jointly establish a sewer agency for the purpose of providing sewer and drainage facilities within the city and county. In addition, all powers granted a metropolitan sewer district may be granted to the sewer agency except that such powers may be restricted or qualified in order to conform to the local needs of the city and county. Also the joint sewer agency shall be administered as a separate legal entity or by a jointly appointed administrator or joint board.

KRS 76.231(4) provides as follows:

The legislative body of the city and the fiscal court of the county shall establish a schedule of rates, rentals and charges to be collected from all real property served by the facilities of the sewer agency in the manner provided by KRS 76.090. If for whatever reason the city and county cannot agree to amendments to a rate schedule, the current schedule shall remain in effect until such time as an agreement can be reached.

The statutory subsection requires that the city and county establish a rate schedule pursuant to the provisions of KRS 76.090. Under KRS 76.090 the district, or in this situation, the joint sewer agency, may establish a schedule of rates. That statute also provides that prior to the final adoption or modification of the schedule, the joint agency shall adopt a proposed schedule and publish notice thereof pursuant to KRS Chapter 424. In addition, the statute states that the schedule shall not become final within the unincorporated areas until it has been approved by the fiscal court and it shall not become final within the city until approved by the city legislative body by ordinance. The schedules shall be uniform for all property falling within the same classification.

In Louisville & Jefferson Co. M.S.D. v. Joseph E. Seagram & Sons, 307 Ky. 413, 211 S.W.2d 122, 124 (1948), the court said in part in reviewing KRS 76.090:

The provision of the statute as to the schedule of rates applicable to property within the city being approved by ordinance does not provide for such a formal action in case of non-concurrence. It is true, as the appellees contend, that a municipal body must act in its corporate capacity and speaks only through and by its records. But the statutes do not provide for any affirmative disapproval of proposed charges. Obviously, non-action withholds approval, and the absence of a record of approval constitutes a negative. The hard fact and the crux of the matter is that the Board of Aldermen did not approve the schedule submitted to it. There was a pocket veto.

While not directly on point relative to the specific question, the case does seem to indicate that the rate schedule established by the district, or in this situation, the joint sewer agency, must be approved by the city and county legislative bodies before it takes place within their respective jurisdictions.

Under the proposal, a rate review board, consisting of the members of the fiscal court and the city commission, sitting as a single body, with a simple majority acting as a quorum, will approve or disapprove rate schedules recommended by the joint sewer agency. That is not the same thing as is required by KRS 76.090, which is approval of each of the legislative bodies for the areas within their respective jurisdictions.

Thus, the proposed rate review board is not in conformity with KRS 76.231(4) and KRS 76.090, to the extent that it contemplates approval of joint sewer agency rate schedules in a manner not in accordance with KRS 76.090. Rate schedules of the joint sewer agency, to be effective, must be approved by separate actions of the city and county legislative bodies. If each legislative body approves the schedule for the geographic area within its jurisdiction then the schedule is effective within those areas.



Thomas R. Emerson

Assistant Attorney General