The Honorable Jay Bradford State Senator P.O. Box 8367 Pine Bluff, Arkansas 771611-8367
Dear Senator Bradford:
This is in response to your request for an opinion concerning the proper application of Act 272 of 1997. That act requires annual private audits of water and sewer service providers to be filed with the Division of Legislative Audit. Your question inquires as to whether a particular sewer system must comply with this law.
It is my opinion that the answer to this question is "yes," if in fact the sewer system in question is a sewer improvement district as you have indicated.
The relevant portion of Act 272 of 1997 provides as follows:
(a) Any county, municipality, improvement district, or other entity receiving public funds or public grants that provides water or sewage services and having at least one hundred (100) service connections shall procure an annual financial audit of the system.
(b) Such audits shall be conducted following each system's fiscal year end and shall include a management letter.
(c) Each such entity shall choose and employ accountants, in good standing with the Arkansas State Board of Public Accountancy, to conduct these audits in accordance with Government Auditing Standards issued by the Comptroller General of the United States. [Emphasis added].
You have noted that the system in question, which you also refer to elsewhere as a "sewer improvement district," has one hundred and thirty-seven service connections, and it "receive[s] no public funds or any outside private funding of any kind." You also note that it is governed by three commissioners appointed by the Jefferson County Judge, which according to my research, is a procedure for the creation of a suburban sewer improvement district. See, e.g., A.C.A. §§14-249-102 and 14-121-301.
As you have noted, the system in question has the requisite number of service connections to trigger applicability of the act. You note, however, that it receives no "public funds." The relevant language of the act, in my opinion, however, applies to any "county, municipality, [or] improvement district" without regard to the funding requirement. That is, it is my opinion that the language "receiving public funds or public grants" modifies the words "or other entity" and not the words "county, municipality, [or] improvement district." This is in conformity with the rule of statutory construction that referential and qualifying phrases, where no contrary intention appears, relate only to the last antecedent. McCoy v. Walker, 317 Ark. 86, 876 S.W.2d 252 (1994).
The information you have supplied indicates that the sewer system in question is an improvement district. If this is in fact the case, and it services at least one hundred connections, it is my opinion that it must comply with Act 272 of 1997.
The foregoing opinion, which I hereby approve, was prepared by Deputy Attorney General Elana C. Wills.
Sincerely,
WINSTON BRYANT Attorney General
WB:ECW/cyh