Can an Arkansas city require homeowners to hook up to private water, sewer, gas, or electric service?
Plain-English summary
Senator Joshua Bryant asked whether an Arkansas city can require its residents to connect to private utility companies for sewer, water, electric, or gas service. The AG concluded that such a requirement would probably be unlawful for either of two reasons: it would conflict with the state's exclusive regulation of utility service areas, or it would fail the reasonableness test that bounds municipal authority.
Conflict with state law. Utility service areas in Arkansas are heavily regulated at the state level. The Public Service Commission supervises every public utility (A.C.A. § 23-2-301). The Commission sets electric service areas (A.C.A. § 23-18-101(a)), approves gas utility expansions, and reviews water and sewer utility service areas. Other state agencies (Natural Resources Division of Agriculture, Department of Health, Division of Environmental Quality, Oil and Gas Commission) have parallel jurisdiction over various utility activities. A city ordinance directing residents to connect to a specific utility outside that utility's state-approved service area conflicts with this state regulatory scheme and is invalid (Op. 2004-273; Protect Fayetteville v. City of Fayetteville, 2017 Ark. 49).
The conflict analysis applies to all four utility types:
- Electric. Commission-set service areas, A.C.A. § 23-18-101(a).
- Gas. Commission approves construction and expansion (A.C.A. §§ 23-3-201(a), 23-18-510(a)(1), 23-18-511); Oil and Gas Commission and Division of Environmental Quality regulate extraction, refining, transport, storage.
- Water. Commission, Natural Resources Division (Arkansas Water Plan), and Department of Health all approve water utility service areas. The Arkansas Groundwater Protection and Management Act (A.C.A. § 15-22-902) gives the Natural Resources Division groundwater authority. And A.C.A. § 15-22-905(4) protects rural families' "almost totally dependent" reliance on wells. A mandate that would force connection to a public utility, eliminating the well option, conflicts with this protection.
- Sewer. Commission, Division of Environmental Quality, Department of Health all approve sewer service areas. The Arkansas Sewage Disposal Systems Act (A.C.A. § 14-236-101 et seq.) protects septic-system use. Op. 2003-241, 2003-147, and 2001-324 confirm that a property owner with a conforming septic system can continue to use it.
Reasonableness review. Even when an ordinance does not conflict with state law on its face, Arkansas courts review municipal ordinances for whether they are unreasonable, arbitrary, or capricious (Phillips v. Town of Oak Grove). The court analyzes what "necessity" exists for the legislation. The AG concluded that, while a necessity for forced connection might conceivably exist in narrow circumstances, it will be "extremely unlikely to exist in most situations."
The opinion does not cover municipally owned utilities. Municipal water and sewer utilities are excluded from the public-utility definition in A.C.A. § 23-1-101(9)(A)(ii) and (vi), and they have separate authority to require connection. The opinion is about privately owned utilities (including cooperatives operating under nonprofit status, and privately owned utilities under contract with municipalities).
What this means for you
City council members and mayors
Do not pass an ordinance requiring residents to connect to a privately owned water, sewer, gas, or electric utility. The mandate will conflict with state utility regulation and likely fail reasonableness review.
For municipally owned utilities, the analysis is different and not addressed here. Consult counsel on what legal authority exists to require connection to a city-owned system.
If your goal is to ensure utility service in a developing area, work with the relevant utility on Commission-approved service area expansion. State law gives utilities, not cities, the path to providing service in new areas.
Municipal attorneys
This opinion is your citation when council members propose a connection mandate. The conflict analysis is straightforward: the state has occupied this regulatory field through PSC, Health, Natural Resources, and Environmental Quality jurisdiction. Local ordinances inside that field are void.
Homeowners and rural property owners
If your city has tried to force you to connect to a private utility (especially one that would replace your well or septic system), this opinion supports your position. State law protects your right to use a well (§ 15-22-905(4)) and a conforming septic system (§ 14-236-101 et seq.).
Well owners and septic system owners
Your right to continue using your well or septic system is protected by state statute. A municipal ordinance that would force you to connect to a public or private utility is contrary to state law and unenforceable.
Real estate developers
In a development outside an existing utility's service area, you cannot count on the city to force connection to a private utility. The path forward is to coordinate with the utility on Commission-approved service area expansion before promising connections to your buyers.
Common questions
What is a "public utility" in Arkansas?
Per A.C.A. § 23-1-101(9), any entity that, for compensation, owns or operates equipment to produce, transmit, or furnish electricity or gas; divert, pump, or distribute water; or maintain a sewage collection or treatment system. Municipal water and sewer utilities are excluded. Small water and sewer utilities can opt into PSC jurisdiction.
Can a city require connection to its own water or sewer system?
That is a separate question. The opinion specifically addresses privately owned utilities. Mandates regarding municipally owned utilities have separate statutory authority and are not preempted by state utility regulation in the same way.
What does the Sewage Disposal Systems Act protect?
Property owners using conforming septic systems can continue to do so. Op. 2003-147 confirms the protection persists "unless a municipal sewer line reaches his property." Op. 2003-241 found a city ordinance requiring sewer connection invalid without a public-health inquiry.
What does § 15-22-905(4) protect?
The right of rural families to use wells for domestic water use. The statute recognized that rural families are "almost totally dependent" on wells. Removing the well option through forced connection is incompatible with this protection.
Could a city use eminent domain instead?
Eminent domain is a separate power, governed by separate statutes and constitutional limits. It is not the same as a mandate to connect to a private utility.
What if a private utility files a service-area expansion?
That goes through the PSC. If approved, the utility may extend service. But the city cannot mandate connection to a utility that is operating outside its approved area.
Background and statutory framework
Municipal authority. Cities have only the authority granted by the constitution or statute (Ark. Const. art. 12 § 4; A.C.A. §§ 14-43-601, 14-54-101, 14-55-102). Authority to legislate must be (1) within police powers, (2) not in conflict with state law, and (3) reasonable.
Public Service Commission jurisdiction. A.C.A. § 23-2-301; Centerpoint Energy v. Miller Cty. Cir. Ct., 370 Ark. 190 (2007).
Service area regulation. A.C.A. § 23-18-101(a) (electric); A.C.A. §§ 23-3-201(a), 23-18-510(a)(1), 23-18-511 (gas, water, sewer Commission approval); A.C.A. § 8-4-201 et seq. (DEQ); A.C.A. § 15-17-110 (Oil and Gas Commission); A.C.A. § 15-22-503(a), (e) (Natural Resources Division water); A.C.A. § 20-7-109 (Department of Health water and sewer review).
Well water protection. A.C.A. § 15-22-905(4); A.C.A. § 15-22-902 (Groundwater Protection and Management Act).
Septic system protection. A.C.A. § 14-236-101 et seq. (Sewage Disposal Systems Act); Ark. Att'y Gen. Op. 2001-324, 2003-147, 2003-241.
Reasonableness review. Phillips v. Town of Oak Grove, 333 Ark. 183, 968 S.W.2d 600 (1998).
Conflict-with-state-law. Ark. Att'y Gen. Op. 2004-273; Protect Fayetteville v. City of Fayetteville, 2017 Ark. 49, 510 S.W.3d 258.
Citations
All statutes and cases listed above; Ark. Att'y Gen. Op. 2001-324, 2003-147, 2003-241, 2004-273.
Source
Original opinion text
Opinion No. 2023-043
November 8, 2023
The Honorable Joshua Bryant
State Senator
Post Office Box 718
Rogers, Arkansas 72757
Dear Senator Bryant:
You have asked whether municipalities have authority to require property owners to connect to privately owned utilities for sewer, water, electric, or gas services. (I have combined your three questions into one. This opinion applies to utilities that are privately owned, cooperatively owned operating under nonprofit status, or privately or cooperatively owned under contract with municipalities.)
RESPONSE
In my opinion, as explained more fully below, such a requirement would probably be unlawful because it would either conflict with state law, not be supported by a genuine necessity, or both.
DISCUSSION
Municipal legislation of utilities is enforceable if the legislation (1) falls within municipalities' police powers, (2) does not conflict with other state law, and (3) is not unreasonable, arbitrary, or capricious. Because I believe the municipal legislation you ask about would conflict with state law or be unreasonable, I will limit my analysis to those elements.
- Conflicts with state law. Utilities are heavily regulated by state law. The first tier of regulation for all utilities is the Arkansas Public Service Commission. The Commission supervises "every public utility," even if it is not officially regulated. Under A.C.A. § 23-1-101(9), public utility is defined as any entity that, in exchange for compensation, owns or operates any equipment or facilities to:
- produce, transmit, or furnish electricity or gas;
- divert, pump, or distribute water (municipal water utilities are not included; small water utilities can petition to be included);
- or maintain a sewage collection or treatment system (municipal sewer utilities are not included; small sewer utilities can petition).
One common utility regulation is service areas. Because service areas are controlled by state law, any municipal attempt at regulation of service areas would conflict with state law.
1.1. Electric utilities. Under A.C.A. § 23-18-101(a), the Commission sets the service areas for electric utilities, and these utilities cannot sell electricity outside of their service areas without permission from the Commission. If a municipality required its citizens to connect to an electric utility outside of the service areas designated by the Commission, that legislation would impermissibly conflict with state law.
1.2 Gas utilities. While the Commission does not officially set service areas for gas utilities, these utilities must request permission from the Commission to construct, operate, or expand their equipment or facilities. During that process, the gas utility designates areas in which it intends to provide gas services. Once the utility's request is approved, the utility cannot vary from those service areas without the Commission's permission.
In addition, both the Arkansas Oil and Gas Commission and the Division of Environmental Quality of the Arkansas Department of Energy and Environment unofficially set service areas through their regulations of extracting, refining, moving, and storing oil and gas. If a municipality required its citizens to connect to a gas utility outside of the service areas approved by the Arkansas Public Service Commission, the Division of Environmental Quality, or the Arkansas Oil and Gas Commission, that legislation would impermissibly conflict with state law.
1.3. Water utilities. Service areas for water utilities are regulated by three state agencies. First, as with gas utilities, the Arkansas Public Service Commission provides approval for water utilities' service areas. Second, the Natural Resources Division of the Arkansas Department of Agriculture regulates service areas for water utilities through the Arkansas Water Plan. Water utilities cannot operate outside of their service areas without permission from the Division. Third, the Arkansas Department of Health approves water utilities' service areas through its review of new construction or modification of any water distribution facility. If a municipality required its citizens to connect to a water utility outside of the service areas designated by the Arkansas Public Service Commission, the Natural Resources Division, or the Arkansas Department of Health, that legislation would impermissibly conflict with state law.
Finally, because rural families are "almost totally dependent on wells for drinking water," A.C.A. § 15-22-905(4) protects these families' unlimited access to water through wells for domestic use. If a municipality required these families to connect exclusively to a water utility, that requirement would remove the families' option to use wells for water access. As such, that legislation would be incompatible with state law.
1.4. Sewer utilities. Service areas for sewer utilities are also regulated by three state agencies. First, as with gas and water utilities, the Arkansas Public Service Commission provides approval for sewer utilities' service areas. Second, the Division of Environmental Quality unofficially sets service areas through its regulation of water quality. Third, the Arkansas Department of Health approves sewer utilities' service areas through its review of new construction or modification of any sewer facility. If a municipality required its citizens to connect to a sewer utility outside of the service areas approved by the Arkansas Public Service Commission, the Division of Environmental Quality, or the Arkansas Department of Health, that legislation would impermissibly conflict with state law.
Finally, because one-third of Arkansans "depend on septic systems" for wastewater disposal, the Arkansas Sewage Disposal Systems Act protects their use of septic systems. If a municipality required these Arkansans to connect to a sewer utility, that legislation would remove their option to use septic systems for wastewater disposal. As such, that legislation would be incompatible with state law.
- Reasonableness. To the extent a municipal ordinance is crafted to avoid one of the foregoing conflicts with state law, a court would still review that ordinance for whether it was unreasonable, arbitrary, or capricious. When conducting that review, the court will analyze what "necessity" existed for the legislation. In my opinion, this review would include an examination, not just of what necessity exists to require a utility connection, but also of what necessity exists to require connection to a private utility. While it is conceivable that some such necessity might exist in limited situations, I believe it will be extremely unlikely to exist in most situations. Ultimately, the reasonableness review is highly factual and would be beyond the scope of an Attorney General's opinion.
Assistant Attorney General Jodie Keener prepared this opinion, which I hereby approve.
Sincerely,
TIM GRIFFIN
Attorney General