Louisville & Jefferson County Metropolitan Sewer District v. Tarrytowne Sanitation Co.

818 S.W.2d 267, 1991 Ky. App. LEXIS 51, 1991 WL 62468
CourtCourt of Appeals of Kentucky
DecidedApril 26, 1991
DocketNo. 89-CA-2389-MR
StatusPublished
Cited by3 cases

This text of 818 S.W.2d 267 (Louisville & Jefferson County Metropolitan Sewer District v. Tarrytowne Sanitation Co.) is published on Counsel Stack Legal Research, covering Court of Appeals of Kentucky primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Louisville & Jefferson County Metropolitan Sewer District v. Tarrytowne Sanitation Co., 818 S.W.2d 267, 1991 Ky. App. LEXIS 51, 1991 WL 62468 (Ky. Ct. App. 1991).

Opinion

HOWERTON, Judge.

Louisville and Jefferson County Metropolitan Sewer District (MSD) appeals from a declaratory judgment of the Jefferson Circuit Court holding that MSD will be required to pay just compensation to Tarry-towne Sanitation Company (TSC) for the transfer of its sewer system. MSD alleges that the court erred because TSC was required by its sewer permits to make connection to MSD’s comprehensive sewer system without compensation. It also claims that the court erred in ruling that a trust indenture between TSC and Citizens Fidelity Bank & Trust Company terminated upon the enactment of recent amendments to KRS Chapter 278. Finally, MSD argues that the court erred by applying KRS 65.-115 to this case and that in the event the statute is applicable, MSD is required only to pay compensation for bare legal title. Although we might not have concurred in everything contained in the declaratory judgment of the Jefferson Circuit Court entered October 12, 1989, we nevertheless find no reversible error on the basis of the allegations in MSD’s brief. We affirm.

In August 1965, TSC applied for a permit to the Kentucky Water Pollution Control Commission to construct sanitary sewers [268]*268and a sewage treatment plant for a subdivision that was being developed in Jefferson County. The permit was issued subject to all of the terms and conditions contained in it, and it required TSC to fully comply with all federal and state laws and rules and regulations relating to the abatement, prevention, or control of water pollution. Additional permits for extensions to the collection system were subsequently issued. In 1971, a second construction permit was issued which required TSC to abandon its collection and treatment system, if and when a comprehensive sewer system became available to that area of the county. The requirement was not protested, and TSC did not request a hearing or ruling on that concession.

On January 11, 1982, the United States Environmental Protection Agency (EPA) issued a discharge permit to TSC which was valid until February 1987. That permit required connection to a comprehensive sewer system if the system could treat the effluent in a more cost-effective manner and serve the area of TSC’s facility.

In September 1983, the EPA delegated its authority to administer Kentucky pollution discharge systems to the Kentucky Natural Resources and Environmental Protection Cabinet (Cabinet). The Cabinet accepted that delegation pursuant to KRS 224.034. In accordance with a water quality management plan, discharges into Pond Creek in Jefferson County were to be phased out. TSC’s sewage treatment plant was inconsistent with the Water Quality Management Plan for Jefferson County.

By 1985, MSD had extended its collection system to the area of TSC, and it has been determined by the Cabinet, the Franklin Circuit Court, and now the Jefferson Circuit Court that MSD is capable of treating the effluent discharged by TSC in a more cost-efficient manner and that the MSD sewage collection system has reached the boundary of the TSC facility. The Cabinet has denied TSC’s application for a renewal of its discharge permit, which expired in 1987, and its system must now be merged with the MSD system.

The trial court held, and we agree, that TSC must cease its sewage treatment process and that MSD may acquire the sewer collection system, but that MSD must pay just compensation to TSC. Sections 13 and 242 of the Kentucky Constitution prohibit the taking of private property for public use without just compensation to the owner. The Jefferson Circuit Court also determined that KRS 65.115, which became effective July 15, 1986, requires compensation and provides for a taking through the eminent domain procedures in Kentucky. KRS 65.115 provides in pertinent part as follows:

(1) The provisions of any other law ... notwithstanding, if any ... special district ... furnishes, or proposes to furnish, sewage treatment utility services to customers of another sewage treatment utility by means of all or any part of the installations owned or paid for by such other sewage treatment utility, then such ... district ... taking over or proposing to take over the customers, shall pay just compensation for such installations prior to the time the customers are taken over.

We believe the legislature anticipated the problems presented in this case, and it determined that despite anything to the contrary, MSD would have to pay “just compensation” for whatever it actually takes.

The big question is, what is being taken? This will generally be determined by the circumstances in each particular case. There are several relevant questions. Is the acquisition merely the dedicated public easements containing sewer lines which have been fully paid for by the abutting and using property owners? Is the acquisition an established utility and profitable business? Or, is it something in between? Who owns the easements, if anyone? Who will provide the access to the existing easements, if access is necessary? We do not have all of the answers or even all of the questions.

In this case, however, the Jefferson Circuit Court held that TSC, and not Citizens as trustee, had all of whatever rights and entitlements there might be. It also held that MSD must pay fair market value for [269]*269any easement across TSC property, if necessary, for connecting to the existing sewer lines. It further held that MSD need not pay for the treatment plant, nor for the taking of TSC customers. The court held that, pursuant to KRS 65.115, MSD must pay for “all or any part of the installation” that it takes, and in this case, that will be the sewer lines. What value TSC has in the actual sewer lines is yet to be determined in the eminent domain proceedings, if the parties remain unable to agree on just compensation.

TSC neither appealed nor cross-appealed from the decision. MSD did appeal, and it argues that it should not have to pay any compensation, or at worst, it should pay only for “bare legal title.” As to these points, we agree with Judge Revell and affirm.

While we agree with MSD that TSC must allow connection to MSD's comprehensive sewer system, we disagree that it must be without compensation. MSD attempts to argue that KRS 65.115 is inapplicable because MSD is not exercising its eminent domain powers. At this point, however, TSC continues to operate, and while it must allow connection to MSD, it does not intend to provide for the connection until MSD complies with the statute. If MSD proceeds to take, it must pay. Although just compensation may be a nominal amount in some cases, the amount for this situation is yet to be determined in the eminent domain proceeding.

KRS 65.115 specifically applies to special districts such as MSD, and it requires compensation to be paid prior to TSC being compelled to connect its lines to the MSD system.

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818 S.W.2d 267, 1991 Ky. App. LEXIS 51, 1991 WL 62468, Counsel Stack Legal Research, https://law.counselstack.com/opinion/louisville-jefferson-county-metropolitan-sewer-district-v-tarrytowne-kyctapp-1991.