Request By:
Rodney A. Miller, Esq.
313 Main Street
Fulton, Kentucky 42041
Opinion
Opinion By: Steven L. Beshear, Attorney General; By: Thomas R. Emerson, Assistant Attorney General
This is in reply to your letter raising a question concerning the interpretation and application of Kentucky's Interlocal Cooperation Act (KRS 65.210 to 65.300). The cities of Fulton, Kentucky and South Fulton, Tennessee are located next to each other on the Kentucky-Tennessee state line. They desire to enter into an agreement to establish a waste water disposal system for the two cities in accordance with the regulations and guidelines established under federal law. The plan has apparently been approved by the Kentucky Department of Natural Resources and Environmental Protection, Division of Water Quality Control, and by the U.S. Environmental Protection Agency. The city of Fulton intends to abandon its treatment facilities and to utilize the facilities of the city of South Fulton, located in Tennessee.
The two cities would like to enter into an interlocal agreement concerning the use of the treatment facilities which would probably be in the nature of a lease agreement. The services will be performed by South Fulton and Fulton will pay a designated sum for its share of the use of the system.
You refer to the provisions of KRS 65.250 which provide in part that a separate legal entity shall be created to administer the agreement or, if that is not done, the agreement shall contain a provision for an administrator or joint board responsible for administering the joint or cooperative undertaking.
Your specific question is as follows:
"Does Fulton have the authority to enter into such a contract with South Fulton, and if so, are the cities required under such an agreement to establish a separate entity, board or administrator to operate or control the sewage disposal system which will be totally owned by South Fulton?"
KRS 65.230 states that "public agency" means any political subdivision of this state, any agency of the state government or of the United States and any political subdivision of another state. KRS 65.240(1) provides in part that any power or powers, privileges or authority exercised or capable of exercise by a public agency of this state may be exercised and enjoyed jointly with any other public agency of this state and jointly with any public agency of other states or of the United States to the extent that the laws of the United States permit such joint exercise or enjoyment.
In OAG 79-309, copy enclosed, at page three, we said that Kentucky's Interlocal Cooperation Act permits two major types of agreements: (1) The joint conduct by two or more governmental units of a particular function or joint operation of a particular governmental facility, and (2) The provision of governmental services on a contractual basis by one unit of government to one or more additional governmental units. The first category is the joint agreement and the second category is the cooperative agreement.
Although KRS 94.160, dealing with the operation of a sewerage system by cities of the second to the sixth class, and KRS 94.291 et seq., dealing with public improvements generally in cities, have been repealed, we believe that cities such as Fulton, pursuant to the authority set forth in the municipal home rule bill (KRS 82.082) may provide sewage services for their inhabitants. Thus, Fulton, a "public agency" may contract for sewage services with another unit of government under the provisions of the Interlocal Cooperation Act.
In connection with the city of South Fulton, Tennessee, we direct your attention to Tennessee's Interlocal Cooperation Act (Tennessee Code Annotated, Vol. 3A, §§ 12-9-101 to 12-9-109). The Tennessee Act is similar to the Kentucky Act in many respects but we can only suggest that you consult with the Attorney General of Tennessee for an interpretation of that state's act and South Fulton's powers and authority under the act.
KRS 65.250 which sets forth the required contents of an interlocal agreement provides in part that the agreement shall specify the organization, composition, nature and purpose of any separate legal or administrative entity created to administer the undertaking. That same statute also states that if the agreement does not establish a separate legal or administrative entity to conduct the joint or cooperative undertaking, the agreement shall contain a provision for an administrator or joint board responsible for administering the joint or cooperative undertaking. While these provisions afford some flexibility as to the type and nature of the entity, unit or person created or authorized to administer the agreement, the statute does require that something or someone be designated to administer the agreement.
In OAG 79-309, at page three, we said that, generally, where either a joint or cooperative agreement is involved, the agreement may provide for either a separate legal entity or administrative entity to conduct the undertaking or it may utilize the existing administrative machinery of one or more of the governmental units which are parties to the contract. Under the arrangement you are proposing, we believe that the Kentucky Interlocal Cooperation Act would permit the utilization of the existing administrative machinery of the other "public agency, " which is supplying the service to Fulton for a designated fee, to serve as the administrative unit for the cooperative undertaking. Since the other "public agency" is building and will own the treatment system providing the service, it will undoubtedly have some sort of board or commission to operate the system which can then be designated as the administrator of the agreement.
Therefore, in conclusion, it is our opinion that the city of Fulton has the authority, under the Kentucky Interlocal Cooperation Act, to enter into a contractual agreement with another "public agency" to utilize that public agency's waste water disposal system for a designated fee. While the Kentucky Interlocal Act requires that someone or something be designated to administer the cooperative undertaking, we believe that the existing administrative machinery of the other "public agency, " which is to supply the service to Fulton for a designated fee, can be used to serve as the administrator of the cooperative undertaking. Since the other "public agency" in your proposed cooperative undertaking is a city in Tennessee, execution of the contemplated agreement will depend upon a ruling from the Attorney General of Tennessee that the city of South Fulton is authorized under that state's Interlocal Cooperation Act to participate. If an agreement is prepared, it must, of course, be submitted, for final approval, to the Attorneys General of both Kentucky and Tennessee.