April 3, 2006
Dear Utility Manager:
You have the following question: Are members of the city’s utility board required to be residents of the city?
The city’s utility board was established under the Electric Plant Law of 1935, which to this day requires members of the utility board to be residents of the city. The latest ordinance of the city governing the membership and manner of appointment of the utility board contains no residency requirement. However, it is my opinion that the city probably has the right to operate its utilities under the provisions of its charter authorizing the city to establish and operate utilities. A potential impediment to that action on the part of the city is the possibility that bond covenants may require the city to operate its utilities under the Electric Plant Law of 1935 until the bonds are paid.
Section 13-101 of the 1968 Municipal Code, reflects an ordinance, dated December 31, 1941, modified which provides that the city’s board of public utilities be appointed and organized under Title 6, Chapter 14, Tennessee Code Annotated, and that it operates the city’s electric system, waterworks and sewerage works, all to be governing and controlled by the provisions of the above statute.
Title 1, Chapter 15, of Tennessee Code Annotated, is the Electric Plant Law of 1935, which is now found in Tennessee Code Annotated, Title 7, Chapter 52. From its inception, the Electric Plant Law of 1935 has required members of the utility boards to be residents and property owners of the city. (Property ownership requirement for all but some special districts have been held to be unconstitutional by both federal and state courts everywhere in the United States. A municipal utility organized under the Electric Plant Law of 1935 probably does not qualify as a special district in which property ownership requirements are legal).
Section 13-101 of the Municipal Code was amended by Ordinance No. 2, dated May, 1992. That ordinance entirely amended the language in §13-102 of the Municipal Code. It no longer referred to the Electric Power Plant Law of 1935, but required that the members of the utility board be property owners and residents of the city along the same order, and consistent with, the language in the Electric Plant Law of 1935.
Ordinance No.11, dated 1994 (passed third reading 11-17-94), again entirely amended § 13-101 of the Municipal Code. This time it provided for a board of public utilities, the members of which were to be “customers of the utility and residents of Campbell County for not less than one (1) year next preceding the date of the appointment to said board. There is no reference in Ordinance No. 11, dated 1994, to the Electric Plant Law of 1935.
We must also note here that Private Acts 2002, Chapter 167, under which the City of is chartered in several places either expressly or impliedly authorizes the city to establish and operate utilities:
- Section 1.04(11): “Acquire, construct, own, operate and maintain....public utilities or any estate or interest therein, or any other utility or service to the municipality, and its inhabitants....”
- Section 1.04(15): “Establish, open, relocate, vacate, alter, widen, extend, grade, improve, repair, construct, reconstruct, maintain, light, sprinkle and clean public highways, streets boulevards, parkways, sidewalks, alleys, parks, public grounds, public facilities, libraries and squares, wharves, bridges, viaducts, subway tunnels, sewers and drains within or without the corporate limits....”
- Section 1.04(18) “Acquire, purchase, provide for, construct, regulate and maintain and do all things relating to all marketplaces, public buildings, bridges, sewers and other structures, works and improvement....”
As far as I can determine, the question of whether a municipality which has established and operated its utility system under the Electric Plant Law of 1935, can opt out of that statute, and operate its utility system under a different statute, or under its charter. As pointed out above, the City has charter provisions that would apparently support the establishment and operation of its utility system.
State ex rel. Patton v. City of Lexington, 626 S.W.2d 5 (1981), involves the question of whether a municipality could abolish the board of public utilities which was apparently established under the Electric Plant Law of 1935, and return it to the hands of the city’s
governing body. Yes, answered the Tennessee Supreme Court. Indeed, the Electric Plant Law contained a provision expressly providing that the utility could be operated by the board prescribed by that statute, or by the city’s governing body.
It was also held in Johnson City v. Allison, 362 S.W.2d 813 (1962), which established and operated its electric system under the Electric Plant Law of 1935, that the General Assembly could, by private act, change the way the electric board was appointed in only that city, without violating Article XI, § 8, of the Tennessee Constitution, which requires that legislation be general. Pointing to the fact that Tennessee case law has upheld special legislation that has a reasonable basis, the Court upheld the private act. A similar result was reached in the unreported case of Bowman v. Pemberton, 1991 WL 169186 (Tenn. Ct. App.).
It is difficult to determine whether the cities in those cases could have changed the membership and manner of appointment of the utility board by simply opting out of the Electric Plant Law of 1935, and electing to operate its utilities under their charter provisions, if any, providing for the establishment and operation of utilities. There is no provision in the Electric Plant Law of 1935 expressly providing that a city can take that action. But Patton, above, did observe that the power to repeal an ordinance or resolution is as broad as the power to enact that, except whether the ordinance or resolution in question is contractual in nature or whether it is adopted under a limited grant of authority. It seems clear that, generally, a resolution or ordinance adopted by a municipality to establish and operate its utilities under the Electric Plant Law is not contractual in nature. [Bond covenants may provide otherwise, and bind the city to operating its utilities under the Electric Plant Law of 1935 until the bonds are paid. On that point, see State ex rel. Barr v. Selmer, 417 S.W.2d 532 (1967).] But it can be argued that the Electric Plant Law of 1935 limits the governance of the utility system to one of two ways: (1) By the utility board selected according to that statute, or (2) By the city’s governing body, as is also prescribed by that statute (subject to any private act the General Assembly adopts that changes a particular provision of that statute for a particular city, assuming in all such cases that the private act has a reasonable basis so that it does not violate Article XI, § 8, of the Tennessee). Constitution.
The Electric Plant Law of 1935 itself takes some of the strength out of that argument. It provides that:
The powers conferred by this part shall be in addition and supplemental to the powers conferred by any other law. [Tennessee Code Annotated, § 7-52-133].
In Manning v. City of Lebanon, 124 S.W.3d 562 (Tenn. Ct. App. 2003), a question was whether the Slum Clearance Ordinance prescribed by Tennessee Code Annotated, § 13-21-101 et seq., was required to be a part of the Unsafe Building Abatement Code municipalities are authorized to adopt under Tennessee Code Annotated, § 6-54-502. No, held the Court, reasoning that the Slum Clearance ordinance itself provided that:
Nothing in this part shall be construed to abrogate or impair the powers of the courts or any department of any municipality to enforce any provisions of its charter or its ordinances or regulations, or to prevent or punish violations thereof, and the powers conferred by this part shall be in addition and supplemental to the powers conferred by any other law. [My emphasis.] [Tennessee Code Annotated, § 13-21-109]
If the powers bestowed upon municipalities by Electric Plant Law are in addition and supplemental to the powers conferred by any other law, presumably, a municipality can choose to use those other powers conferred by law to run its utilities, including, in the case of the City , the powers conferred by law under a particular municipality’s charter. Indeed, if it is within the authority of the General Assembly, by special legislation, to change the membership and the manner of appointment of the utility board under the Electric Plant Law of 1935, why could it not provide by private act that the city has the authority to establish and operate utilities, in terms broad and general enough that the city could determine the membership and manner of appointment of the utility board. Many, if not most, city charters contain such provisions, including the City Charter.
I think that if the city wishes to opt out of the Electric Plant Law of 1935 and operate its utilities under its charter, it ought to make such an intent clear by ordinance, rather than simply passing an ordinance that contains a utility board residency requirement (or lack of such requirement) different than the requirement prescribed by that law. If the city wishes to continue the operation of its utilities under the Electric Plant Law of 1935, but change the residency requirements of the board, it should consider a private act that accomplishes that result. But a note of caution needs to be issued on that alternative: Such private acts are in derogation of thegeneral law [Electric Power Plant Law of 1935] and must be supported by a reasonable basis in order to survive a challenge under Article XI, § 8 of the Tennessee Constitution. The reasonable basis in Allison was that in numbers and revenue, outside utility customers were approaching the inside utility users.
Sidney D. Hemsley
Senior Law Consultant