Can an Arkansas city require homeowners to hook up to private water, sewer, gas, or electric service?

Plain-English summary

State Senator Joshua Bryant asked whether Arkansas municipalities can require property owners to connect to privately owned sewer, water, electric, or gas utilities. The Attorney General said such a requirement would probably be unlawful because it would conflict with state law, lack genuine necessity, or both. Footnote 1 limits the opinion to privately owned utilities, certain nonprofit cooperatives, and private or cooperative utilities under contract with municipalities. It does not decide mandates involving a city-owned utility.

The AG identified a concrete conflict: if a city orders residents to connect to an electric, gas, water, or sewer utility outside that utility's state-approved service area, the ordinance would conflict with state law. He described how the Public Service Commission and other state agencies regulate service areas for the different utility types. This is an example of conflict with state law, not a finding that the state occupies every aspect of utility regulation or that every connection ordinance is void.

The opinion also discusses two kinds of existing service. It says A.C.A. § 15-22-905(4) protects rural families' domestic use of wells; an exclusive connection requirement that removes that option would be incompatible with state law. It says the Sewage Disposal Systems Act protects septic-system use and finds a mandate eliminating that option incompatible too. Footnote 32 cites earlier opinions with qualifications for septic systems, including compliance with law and whether a municipal sewer line reaches the property.

Even an ordinance avoiding those conflicts would face review for whether it is unreasonable, arbitrary, or capricious. The AG said a court would examine why connection is necessary and why it must be to a private utility. He considered genuine necessity extremely unlikely in most situations but said this review is highly factual and beyond an AG opinion.

What this means for you

City councils and municipal attorneys

Before considering a mandatory connection ordinance, identify the utility's ownership and the area in which state regulators have approved it to serve. The opinion addresses private and specified cooperative utilities. A proposed mandate outside an approved service area presents the conflict the AG describes. A mandate that removes domestic well or septic options raises the other conflicts he identifies. If those conflicts are avoided, the reason for requiring connection to a private utility still matters under the fact-specific reasonableness inquiry.

Homeowners with wells or septic systems

If a city tells you to connect to a private or covered cooperative utility, check what the ordinance requires and whether it would eliminate your existing option. The opinion identifies protection for rural domestic well use and septic-system use. It does not decide every homeowner's rights or say that every mandatory connection is unenforceable; the utility, service area, ordinance, and circumstances matter.

Developers and private utilities

Do not assume a city can require buyers to connect outside the utility's approved service area. The AG identified that as a conflict with state regulation for each utility type discussed. This opinion does not approve any specific expansion or connection arrangement.

Common questions

Does this opinion cover a city-owned water or sewer system?
No. Footnote 1 defines its scope as privately or cooperatively owned utilities, including those under contract with municipalities. Footnotes 7 and 8 note that municipal water and sewer utilities are excluded from the cited public-utility definition.

Does state regulation invalidate every city utility ordinance?
The AG did not reach that conclusion. He identified conflicts where a mandate crosses an approved service-area boundary and where it removes the protected well or septic options described in the opinion. He also identified a separate, fact-dependent reasonableness inquiry.

Can a city require a rural family to stop using its domestic well and connect exclusively to a water utility? The AG said an exclusive requirement that removes the family's well option would be incompatible with A.C.A. § 15-22-905(4). His question concerned connection to private or covered cooperative utilities.

What if an ordinance stays within the service area?
That avoids the particular outside-area conflict, but the opinion says a court would still review whether the mandate was reasonable and supported by a genuine necessity for connection to a private utility. The AG did not decide a particular ordinance.

Background and statutory framework

The opinion states three requirements for enforceable municipal utility legislation: within municipal police powers, no conflict with state law, and no unreasonable, arbitrary, or capricious action. It cites Phillips v. Town of Oak Grove, 333 Ark. 183, 968 S.W.2d 600 (1998), on municipal authority and reasonableness, and Protect Fayetteville v. City of Fayetteville, 2017 Ark. 49, 510 S.W.3d 258, on conflict with state law. It discusses Public Service Commission supervision under A.C.A. § 23-2-301 and electric service areas under § 23-18-101(a). Its well and septic discussion cites A.C.A. § 15-22-905(4) and § 14-236-101 et seq.

Citations

• A.C.A. § 23-2-301; § 23-18-101(a); § 15-22-905(4); § 14-236-101 et seq.
• Phillips v. Town of Oak Grove, 333 Ark. 183, 968 S.W.2d 600 (1998)
• Protect Fayetteville v. City of Fayetteville, 2017 Ark. 49, 510 S.W.3d 258
• Ark. Att'y Gen. Ops. 2004-273, 2003-241, 2003-147, 2001-324

Source

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

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. 1 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 (2) does not conflict with other state law, 3 and (3) is not unreasonable, arbitrary, or capricious. 4 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.

1. 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

1
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. 2 Phillips v. Town of Oak Grove, 333 Ark. 183, 189, 968 S.W.2d 600, 603 (1998).
3
Ark. Const., art. 12, § 4; A.C.A. §§ 14-43-601, 14-54-101, 14-55-102.
4
Phillips, 333 Ark. at 190, 968 S.W.2d at 604.

The Honorable Joshua Bryant
State Senator
Opinion No. 2023-043
Page 2

public utility,”5 even if it is not officially regulated. 6 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; 7 or • maintain a sewage collection or treatment system. 8

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, 9 and these utilities cannot sell electricity outside of their service areas without permission from the Commission.10 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. 11 1.2 Gas utilities. While the Commission does not officially set service areas for gas utilities,12 these utilities must request permission from the Commission to construct, operate, or expand their

5
A.C.A. § 23-2-301.
6
See Centerpoint Energy, Inc. v. Miller Cty. Cir. Ct., 2d Div., 370 Ark. 190, 203, 258 S.W.3d 336, 345 (2007) (explaining that A.C.A. § 23-2-301 gives the Commission “the power to ‘supervise and regulate every public utility
. . . and to do all things, whether specifically designated in this act, that may be necessary or expedient in the exercise of such power and jurisdiction’”). 7 Municipal water utilities are not included in this definition. A.C.A. § 23-1-101(9)(A)(ii). While small water utilities are also not defined as public utilities, a small water utility or its customers can petition to be included in the Commission’s jurisdiction. A.C.A. §§ 23-1-101(9)(A)(ii)(b), 23-1-101(9)(G). 8 Municipal sewer utilities are not included in this definition. A.C.A. § 23-1-101(9)(A)(vi). While small sewer utilities are also not defined as public utilities, a small sewer utility or its customers can petition to be included in the Commission’s jurisdiction. A.C.A. § 23-1-101(9)(G). 9 The statute includes several exceptions to these service areas, but most of the exceptions are also controlled by the Public Service Commission. A.C.A. § 23-18-101(a). See A.C.A. §§ 14-207-103, 23-3-203. See also Great Lakes Carbon Corp. v. Ark. Pub. Serv. Comm’n, 31 Ark. App. 54, 52, 788 S.W.2d 243, 248 (1990) (noting that Arkansas follows the “place and purpose of use” test for determining which electric utility can supply a facility when it covers two service areas under A.C.A. § 23-18-101(a)). 10 A.C.A. § 23-18-101(a).
11
See Ark. Att’y Gen. Op. 2004-273 (opining that municipalities cannot exercise their police powers to restrict the express legislative grant of authority given to a state agency). 12
Ark. Pub. Serv. Comm’n,
Gen. Serv. Rules, Rule 3.01(B), https://apps.apsc.arkansas.gov/rules/
general_service_rules_2016.pdf.

The Honorable Joshua Bryant
State Senator
Opinion No. 2023-043
Page 3

equipment or facilities. 13 During that process, the gas utility designates areas in which it intends to provide gas services. 14 Once the utility’s request is approved, the utility cannot vary from those service areas without the Commission’s permission. 15 In addition, both the Arkansas Oil and Gas Commission and the Division of Environmental Quality of the Arkansas Department of Energy and Environment 16 unofficially set service areas through their regulations of extracting, refining, moving, and storing oil and gas. 17 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. 18 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. 19 Second, the Natural Resources Division of the Arkansas Department of Agriculture regulates service areas for water utilities through the Arkansas Water Plan. 20 Water utilities cannot operate outside of their service areas without permission from the Division. 21 Third, the Arkansas Department of Health approves water utilities’ service areas through its review of

13
A.C.A. §§ 23-3-201(a), 23-18-510(a)(1), 23-18-511.
14
A.C.A. §§ 23-3-201(a), 23-18-510(a)(1), 23-18-511.
15
A.C.A. §§ 23-3-201(a), 23-18-502(c)(1), 23-18-502(e)(1).
16
The Division of Environmental Quality enforces the rules promulgated by the Arkansas Pollution Control and Ecology Commission. A.C.A. § 8-4-201(a). 17 Arkansas Oil and Gas Commission: A.C.A. § 15-17-110; Ark. Oil & Gas Comm’n, Gen. Rules, Rules B-1, D-17, D-22, D-23, https://www.aogc.state. ar.us/rules/RulesRegs.pdf.

Division of Environmental Quality: A.C.A. § 8-4-201 et seq.; Ark. Pollution Control & Ecology Comm’n, Rules 1.303, 1.305, Rule No. 1 – Prevention of Pollution by Oil Field Waste, https://www.adeq.state.ar.us/regs/files/rule-1- clean.pdf; Ark. Pollution Control & Ecology Comm’n, Rule 34.202, Rule No. 34 – State Water Permit Rule, https://www.adeq.state.ar.us /regs/files/rule-34-clean.pdf. 18 See Ark. Att’y Gen. Op. 2004-273 (opining that municipalities cannot exercise their police powers to restrict the express legislative grant of authority given to a state agency). 19 A.C.A. §§ 23-3-201(a), 23-18-510(a)(1), 23-18-511.
20
A.C.A. § 15-22-503(a): The Division handles “a comprehensive program for the orderly development and management of the state’s water and related land resources[.]” The Division also has authority over groundwater use under the Arkansas Groundwater Protection and Management Act. A.C.A. § 15-22-902. 21 Ark. Nat. Res. Comm’n, Water Plan Compliance Review Procedures, Rule 601.4, https://www.agriculture. arkansas.gov/wp-content/uploads/2020/05/tital_6_final1.pdf. See also A.C.A. §§ 14-208-102(b)(3), 15-22-223(a), 15-22-503(e).

The Honorable Joshua Bryant
State Senator
Opinion No. 2023-043
Page 4

new construction or modification of any water distribution facility. 22 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. 23 Finally, because rural families are “almost totally dependent on wells for drinking water,” 24 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. 25 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. 26 Second, the Division of Environmental Quality unofficially sets service areas through its regulation of water quality. 27 Third, the Arkansas Department of Health approves sewer utilities’ service areas through its review of new construction or modification of any sewer facility. 28 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

22
A.C.A. § 20-7-109; Ark. Dep’t of Health, Sections V(B), VI(A), VII(D), VIII(A), X(A), XI(A), XXI, Rules Pertaining to Public Water Systems, https://www.healthy.arkansas.gov/images/uploads/rules/PublicWaterSystems FINAL.pdf. 23 See Ark. Att’y Gen. Op. 2004-273 (opining that municipalities cannot exercise their police powers to restrict the express legislative grant of authority given to a state agency). 24 J. W. Looney, Enhancing the Role of Water Districts in Groundwater Management and Surface Water Utilization in Arkansas, 48 ARK. L. REV. 643, 643 (1995). See also Ark. Dep’t of Health, Public Water System FAQs, https://www.healthy.arkansas.gov/programs-services/topics/drinking-water-public-water-system-faqs (last visited Oct. 23, 2023) (explaining that extending a water system to a rural property is expensive because of differences in elevation, low pressures, or large distances between customers). 25 See Protect Fayetteville v. City of Fayetteville, 2017 Ark. 49, 10, 510 S.W.3d 258, 263 (explaining that an impermissible conflict exists when a municipal ordinance “is an obstacle to the objectives and purposes” of the state law). 26 A.C.A. §§ 23-3-201(a), 23-18-510(a)(1), 23-18-511.
27
A.C.A. § 8-4-201 et seq.; Ark. Pollution Control & Ecology Comm’n, Rule 3.501, Rule No. 3 – Licensing of Wastewater Treatment Plant Operators, https://www.adeq.state.ar.us/regs/files/rule-3-clean.pdf; Ark. Pollution Control & Ecology Comm’n, Rule 3, Rule No. 4 – Rule To Require a Disposal Permit for Real Estate Subdivisions in Proximity to Lakes and Streams, https://www.adeq.state.ar.us/regs/files/rule-4-clean.pdf; Ark. Pollution Control & Ecology Comm’n, Reguls. 6.202, 6.401, 6.402, 6.601, 6.602, Regulation No. 6 – Regulations for State Administration of the National Pollutant Discharge Elimination System (NPDES), https://www.adeq.state.ar.us/regs/files/ reg06_final_150918.pdf. 28 A.C.A. § 20-7-109; Ark. Dep’t of Health, Section VII(B), Rules Pertaining to General Sanitation, https://www. healthy.arkansas.gov/images/uploads/rules/Gen_Sanitation_Rule.pdf.

The Honorable Joshua Bryant
State Senator
Opinion No. 2023-043
Page 5

Environmental Quality, or the Arkansas Department of Health, that legislation would impermissibly conflict with state law. 29

Finally, because one-third of Arkansans “depend on septic systems” for wastewater disposal, 30 the Arkansas Sewage Disposal Systems Act protects their use of septic systems. 31 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. 32 As such, that legislation would be incompatible with state law.

2. 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. 33 When conducting that review, the court will analyze what “necessity” existed for the legislation. 34 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

29
See Ark. Att’y Gen. Op. 2004-273 (opining that municipalities cannot exercise their police powers to restrict the express legislative grant of authority given to a state agency). 30 Doug Thompson, Program To Help Area Homeowners Repair, Replace Septic Systems, ARKANSAS DEMOCRAT-GAZETTE (Feb. 7, 2021), https://www.arkansasonline.com/news/2021/feb/07/program-to-help-area- homeowners-repair-replace/ (quoting State Environmental Health Director at the Arkansas Department of Health). 31 A.C.A. § 14-236-101 et seq.
32
See Ark. Att’y Gen. Ops. 2003-241 (opining that city council may have improperly enacted ordinance requiring citizens to connect to municipal sewer line without an inquiry into public health); 2003-147 (opining that a property owner “who is using a septic system in compliance with state and local law may continue to do so unless a municipal sewer line reaches his property); 2001-324 (opining that, under the Sewage Disposal Systems Act, a property owner with a “conforming individual sewage disposal system will be allowed to continue [its] use”). 33 Phillips, 333 Ark. at 189, 968 S.W.2d at 603 (internal citations omitted).
34
Id.