When a Tennessee city annexes land in a Water and Wastewater Treatment Authority's service area, which statute controls who provides utility service?

Subject

Opinion No. 14-19, Municipality's Right to Provide Water Services in Annexed Territory, February 14, 2014

Plain-English summary

Two Tennessee statutes appeared to clash. Tenn. Code Ann. § 5-6-120, a clarification of the Water and Wastewater Treatment Authority Act in Tenn. Code Ann. §§ 68-221-601 to -618, declared a WWTA "the sole and exclusive provider" of water/wastewater services in its service area, with the WWTA holding "sole discretion" to cede any portion of its service area to another governmental entity. § 5-6-120(b) makes that authority "prevail over any other provision of law to the contrary." A city wanting to serve a WWTA service area would need a cession agreement from the WWTA.

Meanwhile, Tenn. Code Ann. § 6-51-111(a) gives an annexing municipality the "exclusive right" to perform utility functions in annexed territory, "notwithstanding § 7-82-301 or any other statute." § 6-51-111(e) gives the annexing municipality, by written notice to the current utility service provider, the right to purchase all or part of the existing utility system. If the parties can't agree on a price, the dispute goes to arbitration. The statute calls this procedure "the sole means by which the annexing municipality may acquire the facilities."

Rep. Susan Lynn asked which statute controls when a municipality annexes land within a WWTA's existing service area. The AG said § 6-51-111(e) controls.

The reasoning is implied repeal. Both statutes use "exclusive" and "sole" language; they cannot coexist when applied to the same territory. Hayes v. Gibson County, 288 S.W.3d 334, 337-38 (Tenn. 2009), and Cronin v. Howe, 906 S.W.2d 910, 912 (Tenn. 1995), confirm that when two statutes irreconcilably conflict, the later-enacted statute impliedly repeals the earlier one to the extent of the inconsistency.

The dates matter. § 6-51-111(e) was substantively amended in 2003 (2003 Tenn. Pub. Acts ch. 93) to expand from "electric service / electric distribution system" to "utility service / utility system," and to include "utility district" — a statutorily defined term reaching "authorities or instrumentalities of government created by public or private act having the authority to administer a water or wastewater facility" (Tenn. Code Ann. § 7-82-701(a)). A WWTA fits that definition. § 5-6-120 was last substantively amended in 1995 (1995 Tenn. Pub. Acts 77, § 1); the 2003 change to § 5-6-120 was non-substantive (just a "county executive" to "county mayor" terminology update under 2003 Tenn. Pub. Acts 90, § 1).

So the 2003 expansion of § 6-51-111(e), which postdates the 1995 substantive version of § 5-6-120 and now squarely covers WWTAs, impliedly repeals § 5-6-120 to the extent of the conflict. The WWTA must proceed under § 6-51-111(e)'s purchase-or-arbitration framework. Federal law may add overlays for certain rural utilities (cf. Tenn. Att'y Gen. Op. 07-124 (Aug. 16, 2007)), but the state-law answer is clear.

The opinion also notes City of Collegedale v. Hamilton Cnty. Water and Wastewater Treatment Auth., 2002 WL 1765776 (Tenn. Ct. App. July 31, 2002), which raised this same conflict pre-2003 amendment. The Court of Appeals didn't reach the conflict because the WWTA hadn't properly designated its service area before the annexation. The opinion treats the 2003 amendment as the later substantive enactment for the conflict presented.

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.

Anyone applying this 2014 opinion should check the current text of both statutes and later decisions.

Background and statutory framework

§ 5-6-120(a) (WWTA exclusivity). "From and after the creation of a water and wastewater treatment authority and the establishment of its service area, the authority shall be the sole and exclusive provider of its authorized services in its service area. . . . The authority may cede all or any portion of its functions or service area to another governmental entity upon the [authority's] board determining in its sole discretion that the public convenience and necessity require the same."

§ 5-6-120(b) (supremacy claim). "The authority granted in this section shall prevail over any other provision of law to the contrary for all water and wastewater service providers proposing to provide such services in the service area of the authority. Any city proposing to provide such services in the service area of the authority shall have authorization to do so only by filing a petition in the manner established by this section and receiving a cession by the authority."

§ 6-51-111(a) (annexing municipality exclusivity). "The annexing municipality, if and to the extent that it may choose, shall have the exclusive right to perform or provide municipal and utility functions and services in any territory that it annexes, notwithstanding § 7-82-301 or any other statute, subject however, to the provisions of this section with respect to electric cooperatives."

§ 6-51-111(e) (purchase-or-arbitrate). When the annexed territory is being served by a municipal utility system or other state instrumentality including a utility district, the annexing municipality "shall, by delivering written notice of its election to the municipal utility system or other state instrumentality, have the right to purchase all or any part of the utility system . . . then providing utility service to the area being annexed that the annexing municipality has elected to serve under this section." If price can't be agreed on, arbitration. The statute calls this "the sole means" by which the annexing municipality may acquire the facilities.

Utility district definition, § 7-82-701(a). Includes "authorities or instrumentalities of government created by public or private act having the authority to administer a water or wastewater facility." A WWTA fits.

Implied repeal doctrine. "[T]he Legislature is presumed to have knowledge of its prior enactments and to know the state of the law at the time it passes legislation." Cronin v. Howe, 906 S.W.2d 910, 912 (Tenn. 1995). "When two acts conflict and cannot be reconciled, the prior act will be repealed or amended by implication to the extent of the inconsistency between the two." Hayes v. Gibson County, 288 S.W.3d 334, 337 (Tenn. 2009). Repeals by implication are not favored but recognized when the conflict is irreconcilable.

The 2003 amendment, 2003 Tenn. Pub. Acts ch. 93. Expanded § 6-51-111(e) from "electric service" to "utility service" and added "utility district." This brought WWTAs within the statute's scope.

The 2003 non-substantive change to § 5-6-120. 2003 Tenn. Pub. Acts 90, § 1, changed "county executive" to "county mayor" throughout the Code, which reached § 5-6-120 incidentally. This is not a substantive amendment that resets the implied-repeal analysis.

Collegedale. Pre-2003 conflict case that the Court of Appeals decided on different grounds (the WWTA hadn't properly designated its service area). Mentioned for context, not as a controlling holding.

Common questions

Why did the General Assembly create this conflict?

The opinion does not identify a legislative reason for the conflict. It says the 2003 substantive amendment to § 6-51-111(e) extended that provision to utility services and utility districts, while the 2003 change to § 5-6-120 only updated terminology.

Does this opinion overrule the WWTA's exclusivity entirely?

The opinion holds that § 6-51-111(e) controls when a municipality annexes territory in a WWTA service area and seeks to provide water or wastewater service there. It says § 5-6-120 is repealed by implication only to the extent of that inconsistency. It does not decide a dispute without annexation.

What does the municipality have to do under § 6-51-111(e)?

Deliver written notice to the WWTA electing to provide service. The WWTA then must either negotiate a sale price for its facilities in the annexed area or proceed to arbitration. The opinion calls § 6-51-111(e) "the sole means" by which the annexing municipality acquires the facilities.

Could a WWTA argue that it never had its "service area" properly designated?

That was the Collegedale path. Whether designation is sufficient is fact-specific. A WWTA that hadn't formally designated its service area before annexation might lose on that ground rather than reach the implied-repeal question.

What about federal-law overlays for rural utilities?

Footnote 5 says federal law may bear on the rights of certain rural utilities and cites Op. 07-124. It does not decide a federal-law issue in this opinion.

Does this affect electric cooperatives?

§ 6-51-111(a) carves out electric cooperatives with its "subject however, to the provisions of this section with respect to electric cooperatives" clause. Different rules apply to them.

Citations

Statutory: Tenn. Code Ann. § 5-6-120; § 5-6-120(a), (b); § 6-51-111; § 6-51-111(a), (e); §§ 7-82-101 to -804; § 7-82-301; § 7-82-701(a); §§ 68-221-601 to -618; § 68-221-603(9); 1995 Tenn. Pub. Acts 77, § 1; 1998 Tenn. Pub. Acts ch. 586, § 1; 2003 Tenn. Pub. Acts 90, § 1; 2003 Tenn. Pub. Acts 93, § 1. Cases: Cronin v. Howe, 906 S.W.2d 910 (Tenn. 1995); Wilson v. Johnson County, 879 S.W.2d 807 (Tenn. 1994); Hayes v. Gibson County, 288 S.W.3d 334 (Tenn. 2009); State ex rel. Strader v. Word, 508 S.W.2d 539 (Tenn. 1974); Southern Constr. Co. v. Halliburton, 149 Tenn. 319, 258 S.W. 409 (1924); English v. Farrar, 206 Tenn. 188, 332 S.W.2d 215 (1960); Knox County Educ. Ass'n v. Knox County Bd. of Educ., 60 S.W.3d 65 (Tenn. Ct. App. 2001); City of Collegedale v. Hamilton Cnty. Water and Wastewater Treatment Auth., 2002 WL 1765776 (Tenn. Ct. App. July 31, 2002). Prior AG opinion: Tenn. Att'y Gen. Op. 07-124 (Aug. 16, 2007). Reference: 1A Sutherland Statutory Construction § 23.10 (7th ed. 2007).

Source

• Landing page: https://www.tn.gov/attorneygeneral/opinions.html
• Original PDF: https://www.tn.gov/content/dam/tn/attorneygeneral/documents/ops/2014/op14-019.pdf

Original opinion text

STATE OF TENNESSEE
OFFICE OF THE ATTORNEY GENERAL

February 14, 2014
Opinion No. 14-19

Municipality’s Right to Provide Water Services in Annexed Territory

QUESTIONS

1. Ifa municipality desires to provide water and/or wastewater services in
   territory annexed by the municipality where such territory is claimed to be within a “service area” of a Water and Wastewater Treatment Authority, must the municipality attempt to obtain the right to provide service pursuant to Tenn. Code Ann. § 5-6-120?

2. Ifa municipality desires to provide water and/or wastewater services in
   territory annexed by the municipality where such territory is claimed to be within a “service area” of a Water and Wastewater Treatment Authority, can the municipality require the Water and Wastewater Treatment Authority to proceed under Tenn. Code Ann. § 6-51-111?

OPINIONS

1. No. There is an irreconcilable conflict between the provisions of Tenn.
   Code Ann. § 5-6-120 and § 6-51-111. The later-enacted substantive provisions of Tenn. Code Ann. § 6-51-111(e) impliedly repeal Tenn. Code Ann. § 5-6-120 to the extent of the inconsistency between the two statutes. Therefore the situation is governed by Tenn. Code Ann. § 6-51-111(e).

2. Yes. The Water and Wastewater Treatment Authority is required to
   proceed under Tenn. Code Ann. § 6-51-111(e).

ANALYSIS

1. & 2. Both Tenn. Code Ann. § 5-6-120 and § 6-51-111 speak to the situation
   in which a municipality has annexed territory that is claimed to be within the existing “service area” of a Water and Wastewater Treatment Authority (WWTA) and the municipality wants to provide water and/or wastewater services in the annexed territory. Tenn. Code Ann. § 5-6-120(a) provides:

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The general assembly enacts this section as a statement of its intent that this section is a clarification of title 68, chapter 221, part 6.! From and after the creation of a water and wastewater treatment authority and the establishment of its service area, the authority shall be the sole and exclusive provider of its authorized services in its service area. . . . The authority may cede all or any portion of its functions or service area to another governmental entity upon the
[authority’s] board determining in its sole discretion that the public convenience and necessity require the same.

(Emphasis added). Tenn. Code Ann. § 5-6-120(b) provides:

The authority granted in this section shall prevail over any other provision of law to the contrary for all water and wastewater service providers proposing to provide such services in the service area of the authority. Any city proposing to provide such services in the service area of the authority shall have authorization to do so only by filing a petition in the manner established by this section and receiving a cession by the authority.

Tenn. Code Ann. § 6-51-111(a), which addresses the power of annexing municipalities to provide utility services in annexed territory, provides:

The annexing municipality, if and to the extent that it may choose, shall have the exclusive right to perform or provide municipal and utility functions and services in any territory that it annexes, notwithstanding § 7-82-3012 or any other statute, subject however, to the provisions of this section with respect to electric cooperatives.

(Emphasis added). Tenn. Code Ann. § 6-51-111(e) establishes the procedure to be followed “[i]f at the time of annexation, the annexed territory is being provided with utility services by a municipal utility system or other state instrumentality, including but not limited to, a utility district.”’ In that situation, Tenn. Code Ann.
§ 6-51-111(e) provides:

1 This is a reference to the Water and Wastewater Treatment Authority Act. See Tenn. Code Ann.
§§ 68-221-601 to -618. In accordance with this act, a WWTA may operate a water treatment facility, a wastewater treatment facility, or both. See Tenn. Code Ann. § 68-221-603(9).

2 This statute is part of the Utility District Law of 1937. See Tenn. Code Ann. §§ 7-82-101 to -804. 3 A “utility district” is defined in Tenn. Code Ann. § 7-82-701(a) to include “authorities or

instrumentalities of government created by public or private act having the authority to administer a water or wastewater facility.”

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[T]he annexing municipality shall, by delivering written notice of its election to the municipal utility system or other state instrumentality, have the right to purchase all or any part of the utility system of the municipal utility system or other state instrumentality then providing utility service to the area being annexed that the annexing municipality has elected to serve under this section.

If the annexing municipality and the current utility service provider cannot agree on a purchase price, the statute provides for that price to be determined through arbitration. The procedure specified in Tenn. Code Ann. § 6-51-111(e) is declared to be “the sole means by which the annexing municipality may acquire the facilities of a municipal utility system or other state instrumentality located in the annexed territory.”

Thus, both Tenn. Code Ann. § 5-6-120 and § 6-51-111 address the situation posited. Tenn. Code Ann. § 5-6-120(a) designates a WWTA as the “exclusive provider of its authorized services in its service area.” Yet, Tenn. Code Ann. § 6-51- 111(a) gives an annexing municipality the “exclusive right to perform or provide municipal and utility functions and services in any territory that it annexes.” Under Tenn. Code Ann. § 5-6-120(a), the WWTA has sole discretion to decide whether it wants to cede its authority to provides services to another provider. But under Tenn. Code Ann. § 6-51-111(e), once an annexing municipality provides notice of its election to provide service in the annexed territory, this statute authorizes the municipality to purchase any or all of the existing service provider’s facilities.

“(T]he Legislature is presumed to have knowledge of its prior enactments and to know the state of the law at the time it passes legislation.” Cronin v. Howe, 906 S.W.2d 910, 912 (Tenn. 1995) (citing Wilson v. Johnson County, 879 S.W.2d 807, 809 (Tenn. 1994)). Accordingly, it is an established rule of statutory construction that when “two acts conflict and cannot be reconciled, the prior act will be repealed or amended by implication to the extent of the inconsistency between the two.” Hayes v. Gibson County, 288 S.W.3d 334, 337 (Tenn. 2009) (quoting Cronin, 906 S.W.2d at 912, and citing State ex rel. Strader v. Word, 508 S.W.2d 539, 547 (Tenn. 1974), and Southern Constr. Co. v. Halliburton, 149 Tenn. 319, 258 S.W. 409, 412 (1924)). While repeals by implication are not favored, they are recognized by Tennessee courts “when the conflict between the statutes is irreconcilable.” Hayes, 288 S.W.3d at 338 (citing Cronin, 906 S.W.2d at 912, English v. Farrar, 206 Tenn. 188, 332 S.W.2d 215, 220 (1960), and Knox County Educ. Ass’n v. Knox County Bd. of Educ., 60 S.W.3d 65, 74 (Tenn. Ct. App. 2001)).

Clearly, both Tenn. Code Ann. § 5-6-120 and § 6-51-111 cannot be applied in a situation where an annexing municipality wants to provide water and/or wastewater services in annexed territory that is claimed to be within a WWTA’s existing “service area.”. A WWTA and an annexing municipality cannot both have

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the “exclusive” right to provide service in the same territory. And both statutes cannot provide the “sole” or “only” procedure to be followed in this situation. Thus, there is an irreconcilable conflict between the provisions of Tenn. Code Ann. § 5-6- 120 and § 6-51-111.

The last substantive amendment to Tenn. Code Ann. § 6-51-111 was in 2003. See 2003 Tenn. Pub. Acts 93. As relevant to the questions presented by this request, the 2003 amendment changed the scope of subsection (e) of the statute by having it apply not just to “electric service” and an “electric distribution system,” as when originally enacted in 1998, but more broadly to “utility service” and a “utility system.” Compare 2003 Tenn. Pub. Acts ch. 93, § 1, with 1998 Tenn. Pub. Acts ch. 586, § 1. The 2003 amendment also added the specific reference to a “utility district” in subsection (e), which, as noted, is statutorily defined to encompass “authorities or instrumentalities of government created by public or private act having the authority to administer a water or wastewater facility.”. Tenn. Code Ann. § 7-82-701(a).4

The last substantive amendment to Tenn. Code Ann. § 5-6-120 was in 1995. See 1995 Tenn. Pub. Acts 77, § 1. Although this statute was also amended in 2003, that change was one of form rather than substance. In 2003, the General Assembly decided that the title given the chief executive officer of a county would be “county mayor” instead of “county executive” and amended Tenn. Code Ann. § 5-6-101. See 2003 Tenn. Pub. Acts 90, § 1. Tenn. Code Ann. § 5-6-120 was implicated only because the act also directed the Tennessee Code Commission to make that change where “county executive” appeared elsewhere in the Code. Id. at § 2. This non- substantive change to Tenn. Code Ann. § 5-6-120 is not relevant in determining which statute has the later-enacted provisions applicable to the factual situation here. See 1A Sutherland Statutory Construction § 23.10 (7th ed. 2007) (the question is whether “the legislature intended in its later legislative action the unequivocal purpose to effect a repeal”).

Because there is an irreconcilable conflict between these two statutes, the later-enacted provisions of Tenn. Code Ann. § 6-51-111(e) impliedly repeal the provisions of Tenn. Code Ann. § 5-6-120 to the extent of the inconsistency between the two. As a result, when an annexing municipality wants to provide water and/or wastewater services in annexed territory that is claimed to be within a WWTA’s

• Prior to the 2003 amendment to Tenn. Code Ann. § 6-51-111(e), an issue about an alleged conflict
  between Tenn. Code Ann. § 5-6-120 and § 6-51-111 was raised by a WWTA and an annexing municipality in a case before the Court of Appeals. See City of Collegedale v. Hamilton Cnty. Water and Wastewater Treatment Auth., No. E2001-02041-COA-R3-CV, 2002 WL 1765776 (Tenn. Ct. App. July 31, 2002). The trial court had ruled in favor of the municipality, but the appellate court did not reach the issue, determining that Tenn. Code Ann. § 5-6-120(a) did not apply because the WWTA had not appropriately designated its “service area” before the municipality annexed the territory in question. Id. at *4.

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existing “service area,” the applicable statutory provisions are those in Tenn. Code

Ann. § 6-51-111(e).>

Requested by:

The Honorable Susan Lynn
State Representative

104 War Memorial Building
Nashville, Tennessee 37243

ROBERT E. COOPER, JR.
Attorney General and Reporter

JOSEPH F. WHALEN

Acting Solicitor General

BARRY TURNER
Deputy Attorney General

5 Federal law, however, may bear upon the rights of certain rural utilities in this situation. See

Tenn. Att’y Gen. Op. 07-124 (Aug. 16, 2007).