After my city annexed an area, the city and a county water authority are both charging me for water-service inspections. Which one has the right to inspect and charge?
Plain-English summary
When an Arkansas city annexes territory, it often picks up an area that was already being served by a county water authority, water improvement district, or water association (the statute calls these "rural water services"). The annexation creates a regulatory overlap. Before Act 895 of 2017, both the city and the rural water service might have asserted authority to inspect, permit, or regulate water service in the newly annexed area. Some city residents were getting charged twice for the same inspection.
Act 895 of 2017 resolves the overlap by granting the municipality "exclusive" regulatory authority. The city has the exclusive right to:
- Inspect the water system within the municipality;
- Issue and regulate permits for the water system within the municipality;
- Regulate water service to property within the corporate limits of the municipality, even if the water service is part of the rural water service's assigned service area.
The rural water service can continue physical operations (setting meters, reading meters, supplying water) within the annexed area. But the regulatory functions (inspections, permits, service regulation) belong to the city.
The parties can contract around this default by mutual agreement, but absent such an agreement, the city's authority is exclusive.
What is a "rural water service"? A water association, water improvement district, or water authority that the municipality does not own.
What this means for you
If you are a city resident in an annexed area being charged twice for inspections
Under Act 895 of 2017, only the city has exclusive regulatory authority to inspect within the municipality. A rural water authority charging you for an inspection of property inside city limits is acting outside its statutory authority. Push back: cite this opinion and Act 895 to the rural water authority, request a refund, and copy your city attorney.
If you are a city council member or mayor
Annexed areas are within your exclusive water-regulatory authority. Inventory which annexations have brought rural-water-service territories within city limits and confirm your inspections, permits, and rate regulations are operating within your statutory authority. If a rural water authority is still issuing permits or doing inspections in your city, send a notice citing § 14-208-102(a)(1)(C).
If you are a city attorney
Two practical points:
1. The exclusive authority extends only to property within city corporate limits, not to property in the rural water service's broader service area outside city limits.
2. A mutual agreement with the rural water service can carve out alternative arrangements (city delegates inspection authority back, joint permitting, etc.). Document any such agreement in writing.
If you are a rural water authority board member or attorney
Your physical operations (setting meters, reading meters, supplying water) continue inside the annexed area. But you cannot legally inspect, permit, or regulate water service inside the city absent a written agreement with the city. Audit your billing in annexed areas; double-billing residents who already pay for city inspections exposes you to refund liability and potential litigation.
If you are a developer or property owner in an annexed area
For new construction or major water-service changes, work through the city's permit office, not the rural water authority. The city has the exclusive right to issue and regulate permits.
Common questions
What is "rural water service" under the statute?
A water association, water improvement district, or water authority that the municipality does not own. A.C.A. § 14-208-101(2).
Does Act 895 apply to all annexations or just future ones?
The statute applies to any rural water service operating within the annexed boundaries of a municipality, regardless of when the annexation occurred.
Can a rural water service still supply water to my house in the annexed area?
Yes. The statute lets rural water services "continue operations" inside the annexed area, including setting meters, reading meters, and supplying water. What changes is the regulatory authority, not the physical service.
Can the city and the rural water service share authority by agreement?
Yes. A.C.A. § 14-208-102(a)(1) makes the city's regulatory authority exclusive "unless the parties agree otherwise." Both sides can contract around the default.
Can the rural water authority still charge service rates?
The opinion is about regulatory authority, not rate authority. Service rates for water actually supplied by the rural water service are typically governed by the contract between the customer and the supplier, plus any applicable utility-regulator oversight. Inspection fees, by contrast, are within the city's exclusive regulatory authority.
What if I was charged for a duplicate inspection before Act 895 took effect?
Pre-2017 charges may have been authorized under prior law. Charges for inspections post-Act 895 by an entity other than the city are likely improper.
Can the city outsource inspections to the rural water authority?
Yes, by agreement. The city's authority is exclusive but the city can delegate by contract.
Background and statutory framework
Act 895 of 2017, codified at A.C.A. § 14-208-102.
A.C.A. § 14-208-101(2). Defines "rural water service" as a "water association, water improvement district, or water authority" that the municipality does not own.
A.C.A. § 14-208-102(a)(1). When a rural water service operates within the annexed boundaries of a municipality, the municipality has the "exclusive right" to:
- (A) Inspect the water system within the municipality.
- (B) Issue and regulate permits for the water system within the municipality.
- (C) Regulate water service to property within the corporate limits, even if the water service is part of the assigned service area of the rural water service.
The exclusive authority applies "unless the parties agree otherwise."
A.C.A. § 14-208-102(a)(1) also confirms that rural water services may "continue operations" (setting meters, reading meters, supplying water) in the annexed area.
Citations
Statutes:
- A.C.A. § 14-208-101 (definitions)
- A.C.A. § 14-208-102 (allocation of authority between municipality and rural water service in annexed areas)
Source
Original opinion text
BOB R. BROOKS JR. JUSTICE BUILDING
101 WEST CAPITOL AVENUE
LITTLE ROCK, ARKANSAS 72201
Opinion No. 2025-101
October 15, 2025
The Honorable Robin Lundstrum
State Representative
Post Office Box 14
Elm Springs, Arkansas 72762
Dear Representative Lundstrum:
I am writing in response to your request for my opinion on whether, under Act 895 of 2017, municipalities have the "exclusive right to conduct such services as inspections, issue and regulate water permits[,] and regulate water service within the municipality."
You report that after Act 895 passed, some city residents are being charged twice for the same water service inspection, once by the city itself and again by a county water authority.
RESPONSE
Yes, if a rural water service is providing water services within the annexed boundaries of a municipality, then the municipality has exclusive regulatory authority under Act 895 of 2017.
DISCUSSION
Under Act 895 of 2017, when a rural water service operates within the annexed boundaries of a municipality, that municipality has an "exclusive right" to:
- inspect the water system within the municipality;
- issue and regulate permits for the water system within the municipality; and
- regulate water service to property within the corporate limits of the municipality, even if the water service is part of the assigned service area of the rural water service.
A "rural water service" means a "water association, water improvement district, or water authority" that the municipality does not own. While rural water services may "continue operations" (i.e., setting meters, reading meters, and supplying water) in the annexed area, the municipality's regulatory authority is exclusive unless the parties agree otherwise.
Assistant Attorney General William R. Olson prepared this opinion, which I hereby approve.
Sincerely,
TIM GRIFFIN
Attorney General