Can the Arkansas Department of Health force a water system to fluoridate by treating Delta Dental grant funds as 'available'?

Plain-English summary

Speaker of the House Davy Carter posed twelve sets of questions to AG Dustin McDaniel about Act 197 of 2011 (A.C.A. § 20-7-136), the Arkansas statute requiring water systems serving 5,000 or more "persons" to fluoridate their water once funds sufficient to pay capital start-up costs become "available from any source other than tax revenue or service revenue regularly collected" by the system.

The questions all circled the same core dispute: the Delta Dental of Arkansas Foundation runs a grant program in cooperation with the Department of Health to fund fluoridation equipment. The Department had concluded those grants count as "available" funds. The questions probed whether private grant conditions (refund-on-discontinuance clauses, 18-month deadlines, engineer-selection rights, etc.) deprived the funds of that status, and whether systems could be forced to accept the grant.

The AG's combined answers:

Threshold and counting (Q1). The "5,000 persons" threshold refers to human beings, not accounts. The Act does not specify a counting method, which the AG read as tacit authorization to use any reasonable approach. Commercial accounts can generally be ignored when counting people supplied.

Who determines start-up costs (Q2). The water system itself, because the Act premises the engineer-reasonableness check on someone having already "claimed" the start-up cost figure. The Act doesn't bar systems from hiring a third party to determine the estimate, and the relevant figure is an estimate, not actual cost.

Engineer selection (Q3). The civil engineer who certifies cost-reasonableness needs only to be "recognized" by the Department. The AG read that as permitting third-party selection and compensation. The engineer's authority comes from the Act itself, not from whoever pays the engineer.

Are conditioned grants "available" (Q4, 5, 11, 12). The Department concluded yes, and administrative interpretations of statutes the agency administers receive "considerable deference" and stand unless clearly wrong. The AG could not say the Department's reading was clearly wrong. Once available funds exist somewhere, a system supplying 5,000+ people must fluoridate. But the system is not required to accept Delta Dental's money in particular; it can find funds elsewhere.

Enforcement (Q5, 8, 12). The Act does not give Delta Dental any enforcement power. State enforcement runs through the Department's existing engineering-section policy, which uses progressive measures starting with a Notice of Violation. Enforcement targets failure to fluoridate, not refusal of any particular grant.

Cost overruns (Q6). If actual start-up costs exceed grant amounts, the system isn't obligated to fluoridate until adequate funds become available, and it cannot use tax revenue or service revenue to make up the gap. But the system must continue to use "reasonable best efforts" to find non-tax, non-service-revenue funds.

Grant deadlines and refund clauses (Q7, 10). The Act does not bar a system from agreeing to refund grant money if it stops fluoridating. If a grant is rescinded for missing a deadline, the amounts that would have been granted are no longer "available," and the system isn't in violation as long as it keeps trying. Repeal or invalidation of Act 197 would not force a system to discontinue fluoridation, since some systems were already fluoridating before the Act passed.

Audit and approval by third parties (Q9). The Act doesn't empower a third party like Delta Dental to audit or approve fund distribution. It also doesn't prohibit a system from entering into a contract that gives the counterparty those rights. The choice belongs to the system.

The overall framework: state-level mandate triggered by privately funded capital, with the Department deciding "availability" and the system retaining limited choice over funding source but no choice over compliance.

Currency note

This opinion was issued in 2014. 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. Arkansas's fluoridation regime, the Delta Dental grant program, and Department of Health enforcement practice have continued to evolve.

Common questions

Why does a private foundation grant trigger a state-law obligation? At the time of this opinion, A.C.A. § 20-7-136 made the fluoridation mandate conditional on funds being available "from any source other than tax revenue or service revenue regularly collected." Private grants count as that "other source." Once the Department determined Delta Dental funds were available, the trigger condition for the statutory mandate was satisfied.

Could a water system refuse Delta Dental's grant? At the time of this opinion, yes, the system could refuse Delta Dental in particular. But that didn't lift the fluoridation duty, since the duty turned on availability somewhere, not acceptance specifically.

What if the system can't find non-tax funds anywhere? The AG read the Act as implying a "reasonable best efforts" duty. A system that genuinely could not obtain non-tax start-up funds despite reasonable best efforts would not be in violation while continuing to try.

What happens if a project runs over the engineer's cost estimate? The system isn't obligated to fluoridate until adequate funds are available, and it cannot tap tax revenue or regular service revenue to cover the gap. The "reasonable best efforts" duty to obtain alternate funds continues.

Does the AG opinion bless Delta Dental's specific grant conditions? No. The AG declined to interpret the grant contract as a matter of policy ("this office follows a policy of not interpreting contracts in opinions except as required by statute"). The opinion addresses the statute and the Department's role, not the lawfulness of any particular grant term.

Why did the AG defer to the Department's interpretation? Brookshire v. Adcock and the broader Arkansas administrative-deference doctrine: an agency's interpretation of a statute it is charged with administering is given "considerable deference" and will not be overturned unless "clearly wrong." The AG cannot substitute his own reading where the agency's is defensible.

Background and statutory framework

Act 197 of 2011 (A.C.A. § 20-7-136) was the centerpiece of Arkansas's statewide fluoridation policy. The Act applies to "water systems" supplying 5,000 or more persons, and conditions the fluoridation mandate on the availability of capital start-up funds from a non-tax, non-service-revenue source. The General Assembly placed the Act in chapter 7 ("State Board of Health-Department of Health") of title 20 ("Public Health and Welfare").

Subsection (d)(1) covers the "available funds" trigger; subsection (d)(2) covers the engineer-reasonableness check on claimed start-up costs. The Department's Engineering Section, per its own published Fluoridation Questions & Answers, uses progressive enforcement starting with a Notice of Violation and potentially escalating to monetary penalties assessed by the State Board of Health.

The Delta Dental of Arkansas Foundation grant program, operated in cooperation with the Department of Health, was the most prominent source of "available" non-tax fluoridation funds in Arkansas at the time. Speaker Carter's questions reflect water-system concerns that the Delta program effectively made the statutory mandate operational across the state.

Citations

• A.C.A. § 20-7-136 (Supp. 2013) (fluoridation mandate)
• A.C.A. § 20-7-136(d)(1) (available funds condition)
• A.C.A. § 20-7-136(d)(2) (engineer reasonableness check)
• Act 197 of 2011 (enacting the fluoridation statute)
• Brookshire v. Adcock, 2009 Ark. 207, 307 S.W.3d 22 (administrative deference)
• Op. Att'y Gen. Nos. 2012-127, 2011-030 (policy against contract interpretation in opinions)
• Arkansas Department of Health Engineering Section, "Fluoridation Questions & Answers" (enforcement policy)

Source

• Landing page: https://arkansasag.gov/divisions/opinions-foia/attorney-general-opinions-search/

Original opinion text

STATE OF ARKANSAS

Tue ATTORNEY GENERAL
DustTIn McDANIEL

Opinion No. 2013-145

February 26, 2013

The Honorable Davy Carter
Speaker of the House

350 State Capitol

500 Woodlane Avenue

Little Rock, Arkansas 72201-1037

Dear Speaker Carter:

This is my opinion on your 12 sets of questions about a 2011 law (the “Act”)' that requires any water system supplying 5,000 or more “persons” to fluoridate water if “funds sufficient to pay capital start-up costs for fluoridation equipment . . . have become available from any source other than tax revenue or service revenue regularly collected” by the system.

Delta Dental of Arkansas Foundation (“Delta”) provides funds for fluoridation equipment under a grants program operated in cooperation with the Department of Health.’ It is my understanding that the Department has examined the Delta grants program and concluded that funds offered thereunder are “available” within the meaning of that word as used in the Act. The Act provides in essence that a system supplying 5,000 or more people must fluoridate once funds are available for start- up costs. The law does not require, and the Department does not take the view,” that a system must accept money from Delta or any other particular source. The

' Act 197 of 2011, codified at A.C.A. § 20-7-136 (Supp. 2013). The General Assembly specified the Act’s placement in Arkansas Code chapter 7, “State Board of Health-Department of Health,” of title 20, “Public Health and Welfare.”

? See generally Arkansas Department of Health Engineering Section, Fluoridation Questions & Answers, available at http://www. healthy. arkansas. gov/aboutA DH/RulesRegs/QA Fluoridation. pdf.

> See id.

323 CENTER STREET, SUITE 200 ¢ LITTLE Rock, ARKANSAS 72201 TELEPHONE (501) 682-2007 * Fax (501) 682-8084 INTERNET WEBSITE * http://www.ag.state.ar.us/

The Honorable Davy Carter
Speaker of the House
Opinion No. 2013-145

Page 2

Department’s position is merely that funds are available from Delta — a source other than taxes or regular service revenues — and therefore that the statutory condition to the fluoridation requirement has been met.

Question I — A.C.A. § 20-7-136 applies to “water systems” that supply water to “five thousand (5,000) persons or more”. For a rural water provider, is this five thousand (5,000) person threshold calculated by the number of residential accounts a system services or by an estimated number of people being served by through those accounts? If not by meter count, how is the five thousand (5,000) person census determined? Are all commercial water accounts excluded from any such calculation?

Given the public health context, it seems clear that “persons” refers to human beings, not accounts.

The Act does not say how to count people supplied. I take that as tacit legislative authorization to use any reasonable counting method. I understand that the Department has a general counting rule and recognizes other approaches when local conditions warrant.

I assume that systems potentially subject to the Act generally do not supply significant numbers of people only through commercial accounts. Thus it is my opinion that systems generally may ignore commercial accounts when counting people supplied. I understand that the Department takes the same view.

Question 2 — A water system that is required to fluoridate under this section is not required to fluoridate “until funds sufficient to pay capital start-up costs for fluoridation equipment for the system have become available from any source other than tax revenue or service revenue regularly collected...” Who determines what amount of monies meet the requirement of those “funds sufficient to pay capital start-up costs”? Can a non-governmental and/or non- profit entity be given this authority under the statute? Are the “capital start-up costs” defined by actual costs incurred for installation or can the funding availability be limited to a pre-construction estimate?

In my opinion, cach system that supplies 5,000 or more people must determine the amount of money necessary “to pay capital start-up costs for fluoridation

The Honorable Davy Carter
Speaker of the House
Opinion No. 2013-145
Page 3

equipment for the system... .” The Act provides that “{a] licensed civil engineer recognized or employed by the [Department] . . . shall determine . . . whether the capital start-up costs claimed . . . are reasonable.” The latter provision is premised on someone’s having already determined and stated (“claimed”) the system’s start- up costs. In my view, the Act implicitly recognizes that the system itself is best situated to make the determination and claim and requires it to do so.

In my opinion, the Act does not prohibit a system from retaining a third party to determine its start-up costs.

The Act contemplates that cost determination and claim will precede equipment purchase and installation. In my opinion, it accordingly requires determination and claim of estimated, not actual, start-up costs.

Question 3 — Can an organization similar to Delta Dental of Arkansas Foundation (“Delta Dental”) choose and compensate a licensed civil engineer to make the determinations provided under Section (d)(2) on behalf of the Arkansas Department of Health? If so, by what specific authority does Delta Dental acquire and/or hold this authority?

The Act provides that “[a] licensed civil engineer recognized or employed by the
[Department] .. . shall determine . . . whether the capital start-up costs claimed... are reasonable.” It clearly provides that the engineer need only be “recognized” by the Department, which in my opinion implies that he may be chosen and compensated by a third party.

The engineer’s authority to determine whether claimed start-up costs are reasonable is acquired and held by the Act’s own terms, following his recognition or employment by the Department. In my opinion, contrary to the premise of the last part of your question, a third party compensating the engineer does not acquire or hold any authority under the Act.

Question 4 — Pursuant to a fluoridation grant application submitted by a water service provider, Delta Dental has presented the water provider the attached ® “Grant Agreement” which “stipulates the conditions under which these funds

• Your request for my opinion did not include any attachments.

The Honorable Davy Carter
Speaker of the House
Opinion No. 2013-145

Page 4

are being granted”. A.C.A. § 20-7-136(d)(1) plainly provides for “capital start- up costs” but does not provide for conditioned or restricted funds. Do the conditioned grant funds made available by Delta Dental satisfy the “available funds” provision of A.C.A. § 20-7-136(d)(1). Does this administrative approval by Delta Dental of the grant application then allow for a water service provider to be compelled by the Arkansas Department of Health to accept those conditioned monies and to then meet the fluoridation requirement of A.C.A. § 20-7-136?

Question 5 — Can the Arkansas Department of Health effectively force the water service provider to accept the funds and its conditions, from Delta Dental under threat of violation of A.C.A. § 20-7-136 (by declaring that the conditioned funds are “available” under the statute)? If the water service provider does not wish to accept the conditioned and restricted funds from Delta Dental, what can be done to the water provider by either the State of Arkansas, through its various enforcement departments, or Delta Dental?

Question 7 — Delta Dental has included an 18 month deadline to complete the project, regardless of weather or other legitimate time affecting delays. Is the ability to place these types of funding restrictions included within A.C.A. § 20-7- 136? If the project were to take longer than 18 months and Delta Dental declared a default on the Grant Agreement, could the water service provider be deemed in violation of the statute if funds were rescinded and the project was unable to be completed?

Question 10 -— Is the funding restriction that threatens the recovery of these grant monies by Delta Dental in the event that the water service provider discontinues fluoridation within ten years of the date of the Grant Agreement within the authority of A.C.A. § 20-7-136?2 What if Act 197 of 2011 and A.C.A, § 20-7-136 was repealed by the Arkansas Legislature or deemed to be unconstitutional by the Arkansas Supreme Court?

Question 11 — Are funds that are approved by a non-governmental entity, subject to conditions and restrictions, and that are subject to refund demands deemed “available” for purposes of A.C.A. § 20-7-136(d) (1).

The Honorable Davy Carter
Speaker of the House
Opinion No. 2013-145

Page 5

Question 12 — Is a water service provider legally obligated to accept funds from Delta Dental? Is it proper for the Arkansas Department of Health to force water system providers to apply for and accept Delta Dental monies (and the accompanying conditions and restrictions) under threat of “enforcement actions”, threat of “administrative procedures” and threat of “hearings before the Arkansas Board of Health”? If so, what recourse does the Arkansas Department of Health have in the event that a water system does not apply to Delta Dental, or any other non-governmental entity, or chooses not to accept what they may deem as unreasonable conditions and restrictions, pursuant to A.C\A, § 20-7-136 or any other enforcement authority?

All of these questions primarily concern whether funds offered under the Delta grants program are “available” within the meaning of that word as used in the Act and, if so, whether systems are required to accept those funds or to fluoridate even if they are not required to accept them.

It is my understanding that the Department has examined the Delta grants program, including the terms and conditions on which grants are made, and determined that funds offered thereunder are “available” within the meaning of that word as used in the Act. An administrative body’s interpretation of a statute it is charged with administering is given considerable deference and will not be overturned unless clearly wrong.° I cannot say that the Department’s interpretation is clearly or even likely wrong in this instance.

In my view, the Act provides in essence that systems supplying 5,000 or more people must fluoridate their water once a determination has been made that funds are available. The Act does not, however, require a system to accept money from Delta or any other source in particular.

Whether a system is “effectively force[d]” to accept funds from Delta is a subjective inquiry. Money’s availability from one source does not prohibit a system from seeking it from another source, and nothing in the law requires a system to accept money from Delta or any other source in particular.

> See, e.g., Brookshire vy. Adcock, 2009 Ark. 207, 307 S.W.3d 22.

The Honorable Davy Carter
Speaker of the House
Opinion No. 2013-145

Page 6

In my opinion, the Act does not empower any third party, including Delta, to take any action against a system. Any state enforcement action against a system would presumably be for failing to fluoridate its water, not for refusing to accept money from any particular source. In that regard, a Department publication states:

The [Department’s] Engineering Section has an existing enforcement policy and will utilize that policy to seek compliance with the fluoridation regulations. The policy utilizes progressive enforcement measures beginning with a Notice of Violation but which can also include monetary penalties assessed by the Board of Health.°

In my opinion, were a grant rescinded, the amounts to have been granted would prove to be no longer available. In my opinion, the Act implies that each system supplying 5,000 or more people must continue to use its reasonable best efforts to obtain amounts — other than tax or service revenues — sufficient to pay start-up costs. A system would not, in my opinion, be deemed to be in violation of the Act while it was unable to do so, provided it continued to use its reasonable best efforts.

The Act does not, in my opinion, prohibit a system from agreeing to refund grant money upon the system’s cessation of fluoridation. I would not, however, expect the Act’s repeal or judicial invalidation to require a system to discontinue fluoridation and thus become subject to the refund obligation you describe. It is my understanding that some systems fluoridated their water before the Act’s enactment.

Question 6 — In referencing the specific conditions of the Delta Dental grant funds (as evidencing in the attachment'”), the award is for a specific amount of funds “up to but not to exceed” said amount. The amount approved is an engineer’s estimate. What if the actual cost of the equipment and labor associated with fluoridation implementation exceeds this amount? Would the Grantee (water service provider) then be required to use any available source of

° Arkansas Department of Health Engineering Section, Fluoridation Questions & Answers, available at http://www. healthy.arkansas.gov/aboutA DH/RulesRegs/QA Fluoridation.pdf.

” Your request for my opinion did not include any attachments.

The Honorable Davy Carter
Speaker of the House
Opinion No. 2013-145

Page 7

income, most likely service revenues, to make up for the insufficient funds and complete the project? If so, would the water service provider then be subject to scrutiny by its customers as acting in direct violation of A.C.A, § 20-7-136? If not, would a water service provider be in violation of the A.C.A. § 20-7-136 if the pre-construction estimate was insufficient to complete the project, and the water service provider was not able to find the additional, appropriate funding, nor able to complete the fluoridation project?

In my opinion, were actual start-up costs to exceed amounts available, the system would not be obligated to fluoridate until adequate funds became available.

In my opinion, a system may not use “tax revenue or service revenue regularly collected” to pay start-up costs.

As stated above, it is my opinion that the Act implies that a system must continue to use its reasonable best efforts to obtain — from sources other than tax or service revenues — amounts sufficient to pay start-up costs. A system would not, in my opinion, be deemed to be in violation of the Act while it was unable to do so, provided it continued to use its reasonable best efforts.

Question 8 — In the event of a technical violation of A.C.A. § 20-7-136 (and more specifically, the rules subsequently adopted by the State Board of Health), what could Delta Dental do to a water service provider under either the statute or the Grant Agreement?

In my opinion, the Act does not empower a third party like Delta to take any action against a system. A party’s rights and obligations under a contract are of course set forth in and governed by the contract. I do not have a copy of any contract relating to the Act. Even if I did, this office follows a policy of not interpreting contracts in opinions except as required by statute.®

Question 9 — Does A.C.A. § 20-7-136 allow or provide for a non-governmental and non-regulatory entity such as Delta Dental to audit and approve fund distribution, and review plan and specification changes, for this project?

§ See, e.g., Op. Att’y Gen. 2012-127, 2011-030.

The Honorable Davy Carter
Speaker of the House
Opinion No. 2013-145

Page 8

The Act does not empower any third party take such actions. Neither, in my opinion, does it prohibit a system from entering into a contract that may provide for a counterparty or third party to take such actions.

Assistant Attorney General J. M. Barker prepared this opinion, which I approve.

DM:JMB/cyh