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 (the Water and Wastewater Treatment Authority Act, Tenn. Code Ann. §§ 68-221-601 to -618, as clarified) 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 2003 amendment to § 6-51-111(e) settled the question going forward.

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.

Tennessee annexation law and utility-service law have been amended significantly since 2014, including changes to the annexation framework itself. Anyone applying this opinion in a current dispute should check the current text of both statutes and the latest case law.

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?

It probably did not intend to. § 5-6-120 was passed earlier with the assumption that WWTAs would have priority. The 2003 amendment to § 6-51-111(e) expanded the annexation purchase regime broadly to "utility service" and "utility districts" without separately amending § 5-6-120. The conflict is the kind that arises when two statutory regimes evolve on different tracks.

Does this opinion overrule the WWTA's exclusivity entirely?

No. § 5-6-120 still applies when no annexation is involved. A non-annexation dispute over service in a WWTA's service area can still trigger § 5-6-120's "exclusive provider" framework and the cession-by-WWTA-discretion mechanism.

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?

The opinion flags Op. 07-124 (Aug. 16, 2007) for federal-law overlays involving certain rural utilities. Those can change the practical analysis for utility districts that receive federal funding.

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

Full opinion text unavailable from the official source. See the linked PDF or landing page above for the complete text.