Does the Arkansas Unclaimed Property Act treat a public water authority's customer deposits the same as a regulated utility's?

Plain-English summary

Representative Stu Smith asked whether a "public water authority" must follow the Arkansas Unclaimed Property Act (UPA) the same way an investor-owned electric or gas utility does for unclaimed customer deposits and refunds. Attorney General Leslie Rutledge said no, at least for the UPA's specific utility-deposit provision.

The reasoning chain runs through three statutes. The UPA in § 18-28-202(a)(12) presumes a utility's customer deposit or refund abandoned after one year. "Utility" under § 18-28-201(16) is defined by reference to entities regulated under § 23-1-101, which catalogs the public utilities subject to Arkansas Public Service Commission (PSC) jurisdiction. While the § 23-1-101 definition would, on its face, include water utilities, the Water Authority Act in § 4-34-109 explicitly exempts water authorities from PSC jurisdiction. So a water authority is not a "utility" for UPA purposes, and the one-year-deposit-abandonment rule does not apply to it.

The opinion did flag, in a footnote, that other UPA provisions about general "property" held by governmental entities might still reach a water authority, since a water authority is a "public body politic and governmental entity" under § 4-35-203(a)(1). That broader question was not asked and not decided.

Currency note

This opinion was issued in late 2021. The UPA, the PSC's enabling statutes, and the Water Authority Act may have been amended. Verify the current text of § 18-28-201(16), § 23-1-101, and § 4-34-109 before relying on the conclusion that a particular water authority sits outside the UPA's utility-deposit rule.

What this means for you

If you manage a water authority's finance function

Based on this opinion, the UPA's specific utility-deposit-abandonment rule (one year after the deposit becomes payable) does not apply to your customer deposits. That said, the AG explicitly left open whether other UPA provisions, the ones reaching tangible and intangible "property" generally held by a governmental entity, might capture some of your unclaimed funds. Get a written legal review before assuming a wholesale UPA exemption.

If you are a municipal water customer with an old deposit

The opinion narrows the path for recovering an old deposit through the Auditor of State's Unclaimed Property Division. If your provider is a Water Authority Act entity, the deposit may not have been remitted to the state at all. Contact the water authority directly first; they may be holding it under their own internal accounting.

If you advise water utilities or water authorities

The PSC-jurisdiction hinge in this opinion matters beyond the UPA. The Water Authority Act's blanket exemption in § 4-34-109 disqualifies authorities from any statutory regime that defines its scope by cross-reference to PSC-regulated utilities. Watch for similar definitional plumbing in tax, regulatory, and consumer-protection statutes.

Common questions

Q: What's the difference between a water authority and a water utility?
A: Per this opinion, a water authority formed under the Water Authority Act, Ark. Code Ann. § 4-35-101 et seq., is a public body politic, statutorily exempt from Arkansas Public Service Commission jurisdiction. A water "utility" usually refers to a private or investor-owned company subject to PSC rate regulation. Public water systems run by cities are yet another category. The term "public water authority" in this opinion specifically means the Water Authority Act version.

Q: What does the Unclaimed Property Act normally require for utility deposits?
A: Under § 18-28-202(a)(12), a deposit or refund owed to a subscriber by a "utility" is presumed abandoned one year after it becomes payable. The utility must report and remit it to the Auditor of State.

Q: What about other unclaimed money a water authority might be holding?
A: The AG declined to decide that broader question. Footnote 6 of the opinion notes that the UPA defines "property" broadly to include tangible and intangible property held by governmental agencies and instrumentalities. Whether and how those provisions reach a water authority's other unclaimed accounts requires a separate analysis.

Q: Are city-run water departments covered by the UPA's utility-deposit rule?
A: This opinion did not address city-run water departments. The analysis turned on the Water Authority Act's PSC exemption, which is specific to authorities formed under that Act. Other public-water arrangements need their own jurisdictional review.

Background and statutory framework

The Arkansas Unclaimed Property Act in Title 18, Chapter 28 puts a clock on dormant funds held by businesses and institutions. Different categories of property (bank accounts, payroll, gift certificates, utility deposits) get different dormancy periods before the holder must report and remit. The utility-deposit category in § 18-28-202(a)(12) carries one of the shortest dormancy periods, one year, because customers tend to forget about modest deposits when they move.

The UPA defines "utility" by cross-reference to § 23-1-101, the catalog statute that defines which entities the Public Service Commission regulates. Water-furnishing entities appear on the § 23-1-101 list, but the Water Authority Act in § 4-34-109 carves authorities out of PSC jurisdiction entirely. Because the UPA's "utility" definition tracks PSC-regulated utilities, the carve-out in § 4-34-109 has a knock-on effect: it removes water authorities from the UPA's specific utility-deposit rule.

That definitional architecture is consistent with the legislature's policy of letting water authorities operate as quasi-municipal entities, with their own boards and rate-setting authority, rather than under PSC oversight.

Citations and references

Statutes:

• Ark. Code Ann. § 18-28-201 et seq. (Arkansas Unclaimed Property Act)
• Ark. Code Ann. § 18-28-201(13) (definition of "property")
• Ark. Code Ann. § 18-28-201(16) (definition of "utility")
• Ark. Code Ann. § 18-28-202(a)(12) (one-year dormancy for utility deposits/refunds)
• Ark. Code Ann. § 4-35-101 et seq. (Water Authority Act)
• Ark. Code Ann. § 4-34-109 (PSC jurisdiction exemption for water authorities)
• Ark. Code Ann. § 4-35-203(a)(1) (water authority as public body politic)
• Ark. Code Ann. § 23-1-101 (catalog of regulated public utilities)
• Ark. Code Ann. § 23-1-101(9)(A)(ii) (water-furnishing entities within definition)
• Ark. Code Ann. § 23-2-301 (PSC supervisory authority)

Source

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

Original opinion text

Opinion No. 2021-064
December 28, 2021

The Honorable Stu Smith
State Representative
2605 Franklin Street
Batesville, AR 72501-7738

Dear Representative Smith:

This is in response to your request for my opinion on the following question concerning the Arkansas Unclaimed Property Act (Ark. Code Ann. § 18-28-201 et seq. (Repl. 2015 and Supp. 2019)):

Would the Arkansas Unclaimed Property Act apply to a "public water authority" as it would a "public utility"?

RESPONSE

I take it your question pertains to a water authority formed under the Water Authority Act (Ark. Code Ann. § 4-35-101 et seq. (Repl. 2016 and Supp. 2021)). With that understanding, the answer is "no" because a water authority is not a "utility" for purposes of the controlling definition of that term under the Arkansas Unclaimed Property Act (UPA).

DISCUSSION

The UPA applies to a "[d]eposit or refund owed to a subscriber by a utility . . . ." "Utility" is defined as "persons and corporations, or their lessees, trustees, and receivers, owning or operating in this state equipment or facilities as provided in § 23-1-101."

The referenced Code section 23-1-101 defines public utilities that are subject to the regulatory authority of the Arkansas Public Service Commission (PSC). "Public utility" as defined therein includes "persons and corporations . . . owning or operating in this state equipment or facilities for . . . furnishing water to or for the public for compensation." While this definition, standing alone, might include a water authority, the Water Authority Act specifically exempts water authorities from the jurisdiction of the PSC. Thus, a water authority is not a "public utility" as defined in Ark. Code Ann. § 23-1-101, which is the controlling definition according to the UPA.

It necessarily follows that the answer to your specific question is "no." The UPA would not apply to a water authority formed under the Water Authority Act.

Sincerely,

LESLIE RUTLEDGE
Attorney General

Note: You have not asked, and accordingly I have not considered at length, whether the UPA might otherwise apply to property held by a water authority. A water authority is a "public body politic and governmental entity of the State of Arkansas." Ark. Code Ann. § 4-35-203(a)(1) (Repl. 2016). As such, it might hold "property" as separately defined in the UPA, which includes tangible and intangible property held by a governmental agency or instrumentality. See Ark. Code Ann. § 18-28-201(13).