Opinion ID: 1198948
Heading Depth: 1
Heading Rank: 5

Heading: Analysis of Exclusivity

Text: Exclusivity in municipal services received judicial endorsement early on in Kansas. In O'Neal v. Harrison, 96 Kan. 339, 150 Pac. 551 (1915), this court upheld a Hutchinson ordinance that allowed the city to award an exclusive contract for garbage removal. The O'Neal court set a theme for resolution of this case by observing: Monopolies, or any restraints on trade, are against public policy, but this is a rule of the common law and does not tie the hands of the legislature. 96 Kan. at 342. Here the theme of exclusivity was orchestrated by the adoption of the Act. K.S.A. 19-3502 bars creation of new municipally owned and operated water supply and distribution systems in the District's territory after the District is formed. K.S.A. 19-3502 also provides that the district created by the Act shall be located in territory outside the limits of any territory served by or included within the limits of any previously organized municipally-owned and operated public water supply and distribution system. Before the District can serve a territory within the limits of a previously organized water supply and distribution system, it has to purchase or condemn the territory. See K.S.A. 19-3502; K.S.A. 19-3508; K.S.A. 19-3511; K.S.A. 19-3517; K.S.A. 19-3518. We conclude that the legislature reasoned that a territory cannot be served by two water districts at the same time. The provisions of the Act must be construed together, that is, in pari materia. See Todd v. Kelly, 251 Kan. 512, 516, 837 P.2d 381 (1992). We note: K.S.A. 19-3502 (the district will not cover area of previously established water utility and no new water utility may be established in water district's area); K.S.A. 19-3509 (the district has exclusive control over the water supply and distribution facilities); and K.S.A. 19-3517 (procedure for purchase or acquisition of existing water supply and distribution system). The provisions of the Act, when read together, require the conclusion that the legislature intended the District to be granted an exclusive service area. In Water District No. 1 v. Robb, 182 Kan. at 7, we summarized the public purpose for establishing the district that is the plaintiff here. There is no municipal water supply or distribution system, or any other public corporation or subdivision of the state located in the District which has any water supply or distribution facilities. All water service in the District, as well as sanitary sewer facilities, are furnished by the Kansas City Suburban Water Company, Inc., upon which the population of the District is entirely dependent. Because of the thickly populated nature of the District, it is in great need of fire protection and fire hydrants throughout substantially all its area because of the distribution of population over the area. At the present time this need has been reasonably provided for, no residence in the District being far removed from a fire hydrant. The water service furnished by the private water company in the past has at times proved inadequate for the needs of the Water District. Until the last year or so, there were frequent interruptions in service and a restricted supply of water which required rationing. 182 Kan. at 7. Water is more than a convenience, it is essential to public health and for fire protection. Operation of a water supply and distribution system is a central function of local government. Creation of a district necessarily involves drawing boundaries. The Act requires the county commission to find that the boundaries of the territory are sufficiently described before a hearing on a petition for creation of the water district can be set. K.S.A. 19-3503. When the water district annexes territory or extends its boundaries, K.S.A. 19-3512 requires that annexation resolutions and petitions be filed with the county clerk and the register of deeds of all counties in which a portion of the district lies. The existence of a boundary implies that there is a protected service area. If not, the purpose of describing specific boundaries and recording the descriptions with the county clerk and register of deeds would have little purpose. Additional reasons beyond the statutory language of the Act weigh toward our exclusive service area conclusion. The Act names what it creates, a water district. District means a territorial division (as for administrative or electoral purposes), and derives from Middle Latin districtus, meaning jurisdiction, district. Webster's Ninth New Collegiate Dictionary 368 (1991). 2 McQuillin, Municipal Corporations § 7.08 (3d ed. 1996) says: It is firmly established that there cannot be, at the same time, within the same territory, two distinct municipal corporations, exercising the same powers, jurisdiction, and privileges. The rule does not rest on any theory of constitutional limitation, but instead on the practical consideration that intolerable confusion instead of good government would obtain in a territory in which two municipal corporations of like kind and powers attempted to function coincidentally.... [M]unicipal corporations organized for different purposes may include the same territory. Neither party has suggested the possibility of either a change of municipal boundary, or a request by the Club to be deannexed from the District. We note, however, that while K.S.A. 19-3504 (boundary extensions when 51% of the landowners petition for inclusion) and K.S.A. 19-3512 (mechanism whereby existing territories being served by adjoining water utilities may be annexed) provide for enlarging the boundaries of the District, there are no corresponding provisions to allow deannexation from District boundaries. The absence of deannexation authority in the Act and the K.S.A. 19-3509 mandatory provision that the District shall provide water to its inhabitants support our exclusivity conclusion. The only source of funding for the District is from current revenues and financing from revenue bonds. K.S.A. 19-3516. The District has no ability to issue general obligation bonds or to levy any taxes. The capital improvements built to serve the Club and other water users were financed by the District with the anticipation that those costs would be recovered through future revenues derived from user fees. The Club intends to purchase water from another water utility (a supply system) and transport treated water through a pipeline (a distribution system) into the District's boundaries. The phrase supply and distribution system used throughout the Act supports the trial court's distinction that the Club may not use a pipeline to bring treated water into the District's boundaries. K.S.A. 19-3509 provides in part: The water district board shall establish, manage, purchase, construct, operate, maintain and have the exclusive control of the water supply and distribution facilities and establish rules necessary for the safe, economical, efficient establishment, operation, maintenance and management of such water supply and distribution system. We hold that the District has an exclusive right to provide treated pressurized water by pipeline within the District's boundaries. The Club is seeking a conditional deannexation. It wishes to continue to take advantage of District services for fire protection and domestic service, but deannex itself from the District for the purposes of irrigating its golf course; this it cannot do.