Request By:
Martha Belwood
State Agency for Social Security
Department for Human Resources
Frankfort, Kentucky 40601
Opinion
Opinion By: Robert F. Stephens, Attorney General; Martin Glazer, Assistant Attorney General
You seek an opinion of this office as to whether the East Kentucky Utilities, Inc. is a political subdivision for social security purposes as defined in KRS 61.410-61.500.
You have forwarded its Articles of Incorporation and By-Laws. We also procured a lease agreement between Floyd County and the corporation.
According to its Articles of Incorporation, the corporation's basic purpose is to provide oil, gas, and other utilities. It has been set up as a nonprofit Chapter 273 corporation.
The membership (under its By-Laws) shall be the members of the Floyd County Fiscal Court, the County Judge/Executive, by virtue of their offices, and any person 25 years of age having at least five years experience in the natural gas utility business as operator, manager, billing clerk, or related services.
According to the lease agreement, Floyd County owns the waterworks and gas system which it acquired in 1953 via revenue bonds. It previously leased the system to another utility system (Ohio-Kentucky Utilities, Inc.). That prior system has relinquished its lease agreements to the present corporation, East Kentucky Utilities Inc.
East Kentucky Utilities has agreed to assume the debts of the prior lessee and to service its customers.
As we understand it, all the members of the East Kentucky Utilities, Inc., are the members of the Floyd County Fiscal Court, including the County Judge/Executive.
KRS 61.420(5), in part, defines "political subdivision" as:
". . . in addition to counties, municipal corporations, and school districts, includes instrumentalities of the Commonwealth, of one or more of its political subdivisions. . . ." (Emphasis supplied.)
There is no doubt that Floyd County is a political subdivision of the Commonwealth of Kentucky.
We have reviewed previous opinions of this office relative to other entities under similar circumstances. The opinions turn on the particular fact situations.
For example, in OAG 70-226, we advised that the Gateway Area Development District was not a "political subdivision" within the meaning of KRS 61.410, et seq. but was a nonprofit corporation which contracted with the Commonwealth to perform a government service.
However, in OAG 75-319, we advised that the Somerset-Pulaski County Tourist and Convention Commission was an administrative agency of the county government.
Likewise, in OAG 75-497, we advised that the jackson Purchase Local Officials' Organization, Inc. is a political subdivision for social security purposes.
Here, Floyd County owns the utility plant. The operation of a utility is a governmental service. The nonprofit corporation's total membership are the members of the fiscal court and County Judge/Executive. The courts have long recognized that a governmental unit may perform a governmental function and operate through a special nonprofit corporation or other similar entity. See, for example,
Turnpike Authority of Kentucky v. Wall, Ky., 336 S.W.2d 531 (1960);
Warren County Fiscal Court v. Warren County Tuberculosis Sanitorium Corporation, Ky., 272 S.W.2d 331 (1954) (a hospital),
Baker v. City of Lexington, Ky., 273 S.W.2d 321 (1954) (a park swimming pool) and
Carter v. Taylor, Ky., 231 S.W.2d 601 (1950) (a school).
Thus, it is our opinion that East Kentucky Utilities is performing the function of an instrumentality of Floyd County in providing utility services to the county, using the county's own plant. Its employees are, therefore, covered for social security purposes through Floyd County.