If Baldwin County residents have any interest in regulating the state’s largest private utility, they’ll have to seek the assistance of local legislators. That’s the message GlenLakes residents got from the Alabama Public Service Commission during a meeting last month, when a state attorney told them their hands were tied.
Richard Dayton, president of the Lakeview Estates Property Owners Association (POA), said they are working with State Rep. Steve McMillan to propose price controls for Baldwin County Sewer Service (BCSS).
“We went up to Montgomery to meet with the Public Service Commission (PSC) and they were polite and listened, but their attorney for some reason takes an entirely different view of how the law has been written about Baldwin County and our attempt to get sewer prices regulated,” he said.
Lakeview Estates is one of five POAs in the 650-home Foley subdivision that filed a class action lawsuit against BCSS in 2014, alleging the utility violated a 1991 service agreement between Lakeview and BCSS’s predecessor, which limited tap fees and rates to an “average of South Baldwin County.”
When BCSS purchased the sewer system in GlenLakes in the early 2000s, it increased rates in the neighborhood 70 percent, from $32.50 to $54.50 per month. The plaintiffs’ class certification was denied in a summary judgment awarded by Judge Joseph Norton in May, but they have since appealed the decision to the Supreme Court.
“We’re kind of at a stalemate,” Dayton said. “We were told by [the PSC] we have to go back to the legislature to amend the current law so they can reread it and make another decision.”
Lagniappe sent specific questions to the office of PSC President Twinkle Cavanaugh, but they could not be addressed completely before deadline. Instead, the PSC provided a broad statement indicating: “The Commission regulates wastewater management entities pursuant to Ala. Code §§ 22-25B-1 through 22-25B-12 … which by definition is limited to entities that operate systems that are designed and permitted for subsurface discharge rather than surface discharge. In addition to the jurisdictional limitations based on the discharge location, there are also numerous exemptions [that] limit the regulatory scope so that only a small percentage of Alabamians live and work in places served by wastewater management entities regulated by the Commission. In the most general terms, the Commission regulates private wastewater service providers that operate systems that discharge to the subsurface.”
The PSC further said its scope is limited to “counties that do not have a local constitutional amendment authorizing the regulation of wastewater utilities. Where there is such a constitutional amendment, these sections of code ‘shall not apply’ and the Commission has no jurisdiction over wastewater service providers in that county that would otherwise be subject to regulation.”
In Baldwin County, Constitutional Amendment 781 essentially provides the limitation of PSC oversight. Although its language primarily reinforces BCSS’s ability to add new accounts anywhere it already provides service, and also permitted the county to collect a tax off of private sewer tap fees, it also states: “The Legislature may by general or local law provide for the regulation of wastewater utilities, whether privately owned or publicly owned, in the unincorporated area of the county. The regulation may include uniform minimum standards for the design, placement, construction, operation and maintenance of wastewater systems and the regulation of the establishment of reasonable and just rates for consumers and the wastewater utilities.”
In a letter to Dayton in October, Bay Minette attorney Harry Still wrote: “It is clear to me that the PSC is required to regulate BCSS unless the Legislature, or county, under [the amendment] chooses to enact another form of regulation in that area … if the Legislature or county chooses not to regulate BCSS under [the amendment], then the PSC must regulate in those areas where the county or Legislature does not … I believe the legislative intent was for all private sewers to be regulated. The exemption for counties with constitutional amendments was to make clear that they would not be subject to both, because there would be a potential conflict of laws or regulations.”
Dayton said he heard the PSC’s position, but could not rectify it with Still’s interpretation.
“To be honest, I cannot for the life of me believe the attorney for the state can take the view he has,” Dayton said. “It seemed to me they almost have to be ordered into action rather than take any action on themselves … It’s frustrating for all of us and we’re going to have to keep paddling away and keep [elected officials] on guard.”
Rep. McMillan said he attended the meeting alongside the GlenLakes residents and while he wasn’t familiar with Still’s opinion, “[the Legislature has] the authority to regulate” and “the Public Service Commission makes a pretty strong claim” based on its surface versus subsurface discharge argument.
Further, McMillan has spoken with officials in Shelby County, where a similar proposal was introduced yet defeated earlier this year, only to find BCSS’s rates — the highest in Baldwin County — are comparatively favorable.
“It’s kind of a darned if you do, darned if you don’t situation,” he said. “If we do put in the jurisdiction of the [PSC], the way they figure rates, ours could increase.”
But McMillan said he remains uneasy with the lack of financial disclosure incumbent upon private sewer systems, and additional oversight “would provide some comfort just knowing that somebody else is looking at it. Way back when I first started with this issue 20 years ago, there was a problem I felt should be addressed where you have one entity — the Health Department — looking at collection system and permitting it, while the [Alabama Department of Environmental Management] is responsible for treatment and discharge, but no one is looking at both, and the [PSC] is in a better position to do that because you could tie it into ratemaking and they have a system in place that’s proven to work.”
Dayton said their next step would be reaching out to other local legislators, including those in the Senate, to see if there is additional support.
“We’re just going through the process of trying to understand how to strengthen our case further,” he said, “There is a lot of legislation favorably worded for us, but it comes down to the interpretation of the state’s attorney.”
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