Request By:
R. Michael Yates, Esq.
P.O. Box 300
122 Clinton Street
Hickman, Kentucky 42050
Opinion
Opinion By: Robert F. Stephens, Attorney General; By: Thomas R. Emerson, Assistant Attorney General
This is in response to your letter, in your capacity as attorney for the Hickman-Fulton County Riverport Authority, raising several questions concerning the operation of the riverport authority.
You state that the riverport authority will have sixty-ton scales installed on its "public facility." Two potential lessees of the authority's property will be interested in shipping grain and you ask whether the authority can deny these shippers access to its scales. Use of the scales will involve a charge to be paid to the authority by those utilizing the facilities. The authority maintains that it cannot deny access to the scales merely because these particular customers are in the grain business. The issue was raised by two local grain companies who want the authority to deny the shippers access to the scales.
In connection with the purpose, duties and powers of a riverport authority, KRS 65.530(1) provides:
"The purposes of the authority shall be to establish, maintain, operate and expand necessary and proper riverport and river navigation facilities, and to acquire and develop property, or rights therein within the economic environs of the riverport or proposed riverport to attract directly or indirectly river-oriented industry. It shall have the duty and such powers as may be necessary or desirable to promote and develop navigation, river transportation, riverports and riverport facilities, and to attract industrial or commercial operations to the property held as industrial parks."
KRS 65.610(1) states:
"The authority may contract with any person or governmental agency for the use of the riverport and riverport facilities. Such contract shall not prevent, restrict or hamper the general use of the riverport by the public."
KRS 65.630 provides:
"The exercise of any power granted to a riverport authority in KRS 65.510 to 65.650 is hereby declared to be a public function, exercised for a public purpose, and as a matter of public necessity, and any real or personal property, or rights therein, acquired by a riverport authority and used in the manner and for the purposes enumerated in KRS 65.510 to 65.650 is hereby declared to be acquired and used for public purposes and as a matter of public necessity."
In OAG 77-16, copy enclosed, we said in part as follows:
"We think that the provisions of KRS 65.510 through 65.650 indicate without any doubt that the subject Riverport Authority is a public or governmental agency or corporation with specifically assigned duties and powers relating to clearly defined public purposes. See KRS 65.630. It is not a private corporation. It exists solely for public purposes. The Riverport Authority is a public corporation and it became so by the act of the legislature in enacting KRS 65.510 et seq. . . ."
In Dalzell v. Bourbon County Board of Education, 193 Ky. 171, 235 S.W. 360 (1921), the court said that a public corporation is created for the accomplishment of certain purposes and its powers are those bestowed by statutes and such implied powers as can be reasonably inferred from the specifically expressed powers and the objects to be attained by its creation. In Davisworth v. City of Lexington, 311 Ky. 606, 224 S.W.2d 649 (1949), the court stated that where a public corporation is involved, the public interest requires that all of its acts be reasonable and nondiscriminatory in regard to those constituting its public to whom its duties are owed.
Therefore, after considering the purposes for which a riverport authority is created and keeping in mind that it is a public, rather than a private, corporation existing for public purposes, it is our opinion that the riverport authority cannot arbitrarily deny grain shippers access to its scales. Anyone interested in using the scales who is willing to meet the general standards imposed by the riverport authority (such as payment of the required fee) and who is among those firms, persons or organizations the authority was created to serve and assist should be afforded the opportunity to utilize the facilities of the authority.
Your next question involves two potential lessees who are interested in constructing grain storage facilities on their leased property. They may also wish to purchase grain on this leased property and you ask whether the riverport authority may restrict such purshases in the lease agreement. This matter is also being raised by two local grain companies.
KRS 65.530(3) provides as follows:
"The authority shall also have power, from time to time, to fix rates, charges or fees by contract, or by publishing general rates, charges or fees for commercial vendors, concessionaires or other persons for the use or occupancy of riverport facilities under such terms and conditions as it may deem to be in the best interest of maintaining, operating or expanding necessary riverport facilities, and the public use thereof."
As you will recall, a riverport authority in the exercise of its powers is performing a public function, exercised for a public purpose (KRS 65.630). While it may contract for the use of its facilities, such contracts shall not prevent, restrict or hamper the general use of the riverport by the strict or hamper the general use of the riverport by the public (KRS 65.610). Among the purposes of a riverport authority are the promotion and development of riverports, riverport facilities, and river transportation and attracting industrial or commercial operations to the property held as industrial parks.
While we do not have all the pertinent facts involving the proposed lease, as a general principle we do not see how the restrictions on purchasing grain would be in keeping with the riverport's purposes as a public corporation performing its statutorily created public functions or in the best interests of the authority or the public.
Your last question involves rates set by the riverport authority for shipping grain on its conveyor. Apparently the rates to be established by the authority are lower than those set by private firms in the area. You ask whether the private firms can force the authority to increase its prices and whether the authority's prices must be in a range compatible with those of the private firms for the same or similar services.
KRS 65.530(2) provides in part that the authority shall establish and fix reasonable rates, charges and fees for the use of its facilities which are to be published. In fixing those rates, fees and charges the authority may consider such factors as the total capital investment of the authority, the revenue needed to properly maintain its facilities, the revenue needed properly to expand the riverport and its facilities, the portion of the facilities utilized by the licensee or contracting party and its customers, and the volume and type of business conducted. Any party aggrieved by the rates, charges and fees may appeal from the action of the authority to the circuit court within the time period set forth in the statute.
We do not have enough specific information to determine the reasonableness of the particular rates involved. In setting its rates the authority should adhere to the statutory requirements. The rates must be reasonable and the statute has suggested some of the factors to consider in establishing reasonable rates. There is nothing in the statute suggesting that the rates of the riverport authority are governed or influenced by the rates set by private firms for the same or similar services. Any party aggrieved by the authority's rates may appeal and, ultimately, that is the only method to test the reasonableness of the rates established by a particular riverport authority under the specific facts and circumstances surrounding its operations and actions.