2023 Tennessee Code › Title 7 - CONSOLIDATED GOVERNMENTS AND LOCAL GOVERNMENTAL FUNCTIONS AND ENTITIES (§§ 7-1-101 — 7-91-104) › SPECIAL DISTRICTS (§§ 7-81-101 — 7-91-104) › Chapter 82 - UTILITY DISTRICT LAW OF 1937 (§§ 7-82-101 — 7-82-804) › Part 2 - CREATION (§§ 7-82-201 — 7-82-204) › Section 7-82-202 - Hearing and order of approval - Modification, merger or consolidation

(a)
(1)
The Tennessee board of utility regulation shall issue an order approving or disapproving the petition for the incorporation of the utility district within ninety (90) calendar days of receipt of the petition by the board, its agent or representative. If the board approves the petition, the board shall forward its order of approval and the original petition to the county mayor of any county in which the proposed district will serve. If the board fails to act on the petition within ninety (90) calendar days of receipt of the petition, the board, its agent or representative shall forward the original petition to the county mayor of any county in which the proposed district will serve. If the board disapproves the petition, the board shall not forward the original petition to the county mayor of any county in which the proposed district will serve, and the petitioners may pray and obtain an appeal from the order disapproving the petition as provided in §
7-82-204
.
(2)
Upon receipt of such petition, it is the duty of the county mayor to fix a time and place for a public hearing upon the convenience and necessity of the incorporation of the district to perform the services stated in the petition. The date of such hearing shall be not more than thirty (30) days after the receipt of the petition and its date, place and purpose shall be announced by the county mayor in a notice published not more than fifteen (15) days nor less than seven (7) days prior to the date of the hearing in a newspaper of general circulation in the proposed district, or if there be no such newspaper, then by posting such notice in five (5) conspicuous public places within the boundaries of the proposed district. If the boundaries of the proposed district include territory within five (5) miles of a city or town having a population of five thousand (5,000) or more, within three (3) miles of a city or town having a population of less than five thousand (5,000), or within three (3) miles of any water, sewerage or gas service facility of a county, city, town or utility district, notice by registered mail of the hearing, its purpose, date and place and the boundaries of the proposed district shall be given the mayor or chief executive officer of such county, city, town, and utility district at least ten (10) days before the hearing. The county mayor shall read the final comments of the board to persons at the public hearing and make copies available if requested by those in attendance.
(3)
If, at the public hearing, the county mayor finds that:
(A)
The public convenience and necessity requires the creation of the district; and
(B)
The creation of the district is economically sound and desirable,
the county mayor shall enter an order so finding, approving the creation of the district, designating it as "the ____________________ Utility District of ______________ County, Tennessee," defining its territorial limits, stating the service or services that the district shall be authorized to furnish, and appointing as commissioners of the district those persons nominated in the petition, of whom one (1) shall be appointed for a term of two (2) years, one (1) for a term of three (3) years, and one (1) for a term of four (4) years. Such order shall be subject to approval by a simple majority vote of the county legislative body of each county in which the district is created before it is filed with the county clerk and entered on record.
(b)
On the issue of whether the public convenience and necessity requires the creation of the district, the county mayor shall take into consideration the review and final comments of the board, and the ability of an existing utility district or an incorporated city or town to serve the area, and such existing utility district or city or town at the hearing may make known its intention to serve the area. In that event, the county mayor shall suspend action on the petition for sixty (60) days. Within the sixty (60) days, the existing utility district or city or town may submit to the county mayor its plans for serving the area, including the specific area to be served, the facilities to be installed, the services to be supplied, and a time schedule for completing installation of facilities to provide the services, and the county mayor, after considering such plans and hearing the views of the utility district's proponents on the plans, shall determine a reasonable time within which the existing utility district or city or town must provide the services. If either party thinks that the time is unreasonable, as determined by the county mayor, an appeal may be taken as provided in §
7-82-204
, to determine the time. If the existing utility district or city or town fails to provide the services within the time so determined, the county mayor, unless the county mayor decides that circumstances warrant an extension of time, may create the utility district, acting on the original petition, to serve such area as the county mayor decides it can reasonably be expected to serve. If no existing utility district or city or town presents such plans to the county mayor within the sixty (60) days, the petition shall be acted upon as otherwise provided by law.
(c)
Should a city or town exercise its prior right, as herein provided, to serve areas adjoining its boundaries within five (5) miles of a municipality of five thousand (5,000) or more in population or within three (3) miles of a municipality of less than five thousand (5,000) in population, the county mayor shall excise such areas from the boundaries of the proposed district, or strike from the petition and omit from the order the authority of the district to perform the service or services in such areas.
(d)
Upon the creation or recreation of any utility district as provided for in this chapter, the president of the utility district shall file with the secretary of state, the Tennessee board of utility regulation and with the register of deeds of the county or counties wherein the district is located, a true and correct copy of the order creating the utility district. The secretary of state shall maintain and keep a book for recording orders creating utility districts and all fees in connection with the recordings shall be paid by the district. Any amendments whatsoever to such order creating the utility district or any order merging, consolidating or re-creating a utility district shall be filed in like manner. The failure to so file a copy of such order or orders is a Class C misdemeanor. Whenever two (2) or more utility districts, individually located in counties having a population of not less than thirty-six thousand nine hundred ninety-five (36,995) and not more than thirty-seven thousand five (37,005) or not less than fifty-nine thousand four hundred twenty-five (59,425) nor more than fifty-nine thousand four hundred thirty (59,430), according to the 1970 federal census or any subsequent federal census, or any county having a metropolitan form of government, by resolution of the respective governing bodies of such utility districts, concur in the contraction of the territory served by one (1) of the utility districts in one (1) county and corresponding expansion of the territory served by the other utility district in another county into the county served by the contracting district, the respective utility districts shall petition the county mayor of the county wherein the utility district was created for an order permitting such modification of territory, if such modification shall result in greater efficiency and convenience in the furnishing of the services authorized by the order of creation. Upon being so petitioned, and upon entering an order modifying the boundaries of such district, the county mayor shall proceed in the manner provided in this subsection (d) and may, at such time, waive §§
7-82-602
and
7-82-607
, relative to selection and appointment of commissioners in such territory so waived and thereby invoke §
7-82-307
, relative to selection and appointment of commissioners in such territory, so that the commissioners so selected in the resulting multi-county districts are selected pursuant to §
7-82-307
pertaining only to single county districts.
(e)
(1)
(A)
Whenever two (2) or more utility districts by resolution adopted by the respective governing bodies concur in a merger or consolidation of such utility districts, or whenever a utility district by resolution of its governing body agrees or proposes to consolidate with a municipality or a county by transferring all of its property and obligations to the municipality or county, the governing body or bodies shall petition the county mayor of the county or counties in which they were created, or in case of multi-county utility districts, the county mayor of any county in which they are situated in whole or in part, for an order permitting the merger, consolidation or transfer of its franchise facilities, assets and obligations to a municipality or a county for the purpose of more efficiently and conveniently furnishing the service or services authorized by their order of creation. Upon the petition being filed, the county mayor or mayors shall proceed in exactly the same manner as provided in this chapter for the creation of a utility district, except as set forth in subsection (g).
(B)
Upon a finding that the public convenience and necessity requires the merger or consolidation of two (2) or more utility districts or the transfer of any utility district into a municipality or county and that the merger, consolidation or transfer is economically sound and feasible and in the public interest, an order shall be entered approving the merger, consolidation or transfer of the utility district or districts.
(i)
If the petition is for a merger, the order shall designate the surviving utility district, and the boundaries of the surviving utility district shall be the boundaries of the merging utility districts. The members of the board of commissioners of the surviving utility district shall continue to serve their existing terms of office subject to subdivision (e)(2).
(ii)
If the petition is for a consolidation of utility districts, the order shall designate the name of the newly created consolidated utility district as the ______________ Utility District of ______________ County or Counties, Tennessee, shall define its territorial limits and shall appoint the commissioners of the utility district, all in accordance with the requirements of this chapter for the creation of a utility district subject to subdivision (e)(2).
(iii)
If the petition is for the transfer of all franchises, assets and liabilities to a municipality or a county, then the utility district shall be dissolved and provision made in the order for an equitable distribution of the assets and for the termination of the existence of the utility district and shall establish the legal rights, duties and obligations of the entities and parties involved.
(iv)
The order shall provide that the surviving utility district in a merger, the newly consolidated utility district or the municipality or county to which a transfer is made shall assume the operation of the system or systems then being merged, consolidated or transferred and shall account for the revenues from the system or systems in such a manner as not to impair the obligations of the contract with reference to bond issues or other legal obligations of the utility district or districts, and shall fully preserve and protect the contract rights vested in the owners of the outstanding bonds, obligations or contractual interests.
(2)
Notwithstanding this section or any other law to the contrary, two (2) or more utility districts, each of which has a board of three (3) commissioners, that concur in a merger or consolidation of such utility districts may by agreement increase the size of the board of commissioners of the merged or consolidated utility district to five (5) commissioners in accordance with the requirements of this subsection (e). The merging or consolidating utility districts that agree to increase the size of the board of commissioners to five (5) commissioners shall include the agreement in their respective resolutions concurring in the merger or consolidation and shall state such agreement in the petition for merger or consolidation submitted to the county mayor. The petition for merger or consolidation shall name in the petition up to five (5) individuals to serve as commissioners for the merged or consolidated utility district proposed by such petition, each of whom shall be an existing commissioner of one (1) of the utility districts proposing to merge or consolidate and shall be qualified to serve in accordance with §
7-82-308(d)
. The county mayor or mayors conducting the hearing on the petition for merger or consolidation shall appoint such individuals, named in the petition for merger or consolidation, as commissioners for the merged or consolidated utility district, unless the county mayor or mayors find such individuals are not qualified to serve as commissioners under §
7-82-308(d)
. If the merging or consolidating utility districts do not name five (5) individuals who are qualified to serve as commissioners under §
7-82-308(d)
for the merged or consolidated utility district in the petition for merger or consolidation, then the county mayor or mayors shall appoint a sufficient number of individuals who are qualified under §
7-82-308(d)
to serve as commissioners for any seats not named by the merging or consolidating utility districts in the petition. The county mayor or mayors shall appoint one (1) commissioner for an initial two-year term, two (2) commissioners for initial three-year terms and two (2) commissioners for initial four-year terms.
(3)
Notwithstanding this section or any other law to the contrary, four (4) or more utility districts, each of which has a board of three (3) commissioners, that concur in a merger or consolidation of such utility districts may by agreement increase the size of the board of commissioners of the merged or consolidated utility district to seven (7) commissioners in accordance with the requirements of subdivision (e)(2). The county mayor or mayors shall appoint two (2) commissioners for initial two-year terms, two (2) commissioners for initial three-year terms and three (3) commissioners for initial four-year terms.
(f)
A municipality may acquire a utility district to be operated as a department separate from any other municipal utility. Whenever a utility district by resolution adopted by its governing body agrees or proposes to consolidate with a municipality as a separate department of such municipality by transferring all of its property and obligations to such municipality, it shall petition the county mayor of the county in which it was created for an order approving the resolution to permit such consolidation, merger, acquisition or transfer of its franchise facilities, assets and obligations to a municipal corporation for the purpose of more efficiently and conveniently furnishing the service or services authorized by its order of creation. Upon such petition being filed, such county mayor shall proceed in exactly the same manner as provided in this chapter for the creation of a utility district, and upon a finding that the public convenience and necessity requires consolidation, merger, acquisition or transfer and that the same is economically sound and feasible and in the public interest, an order shall be entered approving such resolution. Upon the approval of such resolution by order of the county mayor, such utility district shall be dissolved and the assets, obligations, legal rights and duties of such district shall become those of the department of the municipality. Such order shall provide that the department of the municipality shall assume the operation of the utility system and account for the revenues from the system in such a manner as not to impair the obligations of contract with reference to bond issues or other legal obligations of the district, and shall fully preserve and protect the contract rights vested in the owners of such outstanding bonds, obligations or contractual interests. Such department of the municipality shall be operated separately from any other utility department of the municipality. The governing body of the municipality shall be the governing board of such department and shall appoint an advisory committee on utilities if the area served by the utility district is outside the boundaries of the municipality. The governing body of the municipality shall, by ordinance, create such advisory committee to be composed of either former utility district commissioners or residents and customers of the utility system so acquired. The advisory committee members shall be appointed by the governing body of the municipality in the number and for the term specified by the ordinance. When the former utility district ceases to be a separate department and is merged with the other utility services of the municipality into one (1) utility system, such advisory committee may be dissolved. No portion of such utility district shall be made a part of a municipal utility service without consideration being paid to the department composed of such utility district.
(g)
Petitions for a merger or consolidation of utility districts or for a consolidation of a utility district with a municipality or county under subsections (e) and (f) shall be filed with the Tennessee board of utility regulation simultaneously with the filing of the petition with the county mayor or mayors under subsections (e) and (f). Such petitions are not subject to approval or disapproval by the Tennessee board of utility regulation as set forth in §
7-82-201(a)
and subsection (a) and are not subject to approval by the county legislative body or bodies as set forth in subdivision (a)(3)(B).
(h)
Petitions for re-creation of a utility district for the purpose of redefining its incorporated boundary shall be filed with the Tennessee board of utility regulation simultaneously with the filing of the petition with the county mayor or mayors. Such petitions are not subject to approval or disapproval by the Tennessee board of utility regulation as set forth in §
7-82-201(a)
and subsection (a) and are not subject to approval by the county legislative body or bodies as set forth in subdivision (a)(3)(B).
Amended by 2023 Tenn. Acts, ch. 463, s 10, eff. 7/1/2023.
Amended by 2015 Tenn. Acts, ch. 179, Secs.s 2, s 3 eff. 7/1/2015.
Amended by 2015 Tenn. Acts, ch. 179, s 1, eff. 7/1/2015.
Acts 1937, ch. 248, § 2; C. Supp. 1950, § 3695.27; Acts 1959, ch. 166, § 1; 1968, ch. 529, § 2; 1973, ch. 183, § 1; impl. am. Acts 1978, ch. 934, §§ 16, 22, 36; Acts 1979, ch. 430, § 1; modified; T.C.A. (orig. ed.), § 6-2604; Acts 1989, ch. 591, § 113; 1995, ch. 64, §§ 3-9; 2000, ch. 648, § 1; 2003 , ch. 90, § 2; 2005, ch. 61, § 1; 2009 , ch. 320, §§ 2-4.