Request By:
Donald Duff, Esq.
212 Washington Street
P.O. Box 1160
Frankfort, Kentucky 40602
Opinion
Opinion By: David L. Armstrong, Attorney General; Thomas R. Emerson, Assistant Attorney General
This is in reply to your letter raising questions relative to the Interlocal Cooperation Act. You are concerned with the extent of the authority that may be exercised by local governmental units under the Interlocal Cooperation Act. You state that by virtue of a joint agreement at least one cooperating unit of government is operating a hot mix bituminous asphalt plant with a paving crew. You want to know to what extent, if any, such an undertaking may compete with private enterprise to provide such services.
Your first question is as follows:
"May a cooperative unit, under the Interlocal Cooperation Act, own and operate a hot mix bituminous asphalt plant for constructing and maintaining the roads and streets for which the member public agencies are responsible."
The Interlocal Cooperation Act (KRS 65.210 to 65.300) provides that "public agencies" may enter into agreements with one another for joint or cooperative action to provide services and facilities in a manner and pursuant to forms of governmental organization that will accord best with geographic, economic, population and other factors influencing the needs and development of local communities. "Public agency" in part means any political subdivision of this state and would, therefore, include counties and cities. See KRS 65.220 and 65.230.
In OAG 79-309, copy enclosed, at page one, we said in part that the Interlocal Cooperation Act envisions that governmental units may exercise certain powers jointly, provided each unit participating in the joint activity has the statutory authority to exercise such powers separately or unilaterally. KRS 67.083(3)(t) authorizes counties to enact measures concerning the providing of streets and roads, bridges, tunnels and related facilities. KRS 94.360 which for many years gave cities complete control over their streets and public ways was repealed in 1980 but the enactment of municipal home rule (KRS 82.082) would enable cities to provide for the construction and maintenance of their streets.
Thus, in our opinion, cities and counties through the utilization of the Interlocal Cooperation Act may own and operate a hot mix bituminous asphalt plant for constructing and maintaining the roads and streets for which the member public agencies are responsible.
Your second question asks:
"May a cooperative unit furnish and/or place hot mix bituminous asphalt for non-member 'public agencies'?"
While "public agencies" may enter into agreements executed under the Interlocal Cooperation Act, assuming they can exercise unilaterally those functions they seek to exercise collectively, the agreements, including the benefits to be obtained therefrom, are limited to those units of government who have satisfied the statutory requirements of KRS 65.210 to 65.300 and are actually parties to the agreements.
Your third question reads:
"May a cooperative unit furnish and/or place hot mix bituminous asphalt for persons, firms or entities that are not 'public agencies, ' as defined by the Act?"
An agreement under the Interlocal Cooperation Act is a joint or cooperative undertaking between or among those governmental entities who have become parties to a formal agreement by satisfying the statutory requirements of KRS 65.210 to 65.300. The agreement is limited to public agencies and cannot be extended to include nonpublic agencies. An interlocal agreement represents an attempt to solve, improve or correct legitimate governmental problems and concerns. It does not grant governmental entities new or additional powers and it does not authorize them to perform functions normally associated with private business. Other than for their own legitimate needs governmental units are not generally in the business of producing and distributing asphalt.
In McQuillin Mun. Corp. (3rd Ed.), Vol. 12, § 36.02 it is stated that in the absence of express legislative sanction a municipal corporation has no authority to engage in any independent business enterprise or occupation, such as is usually pursued by private individuals. However, the government's engaging in enterprises usually owned and operated by private individuals has been sanctioned when the public interest so requires. In addition, McQuillin, supra, states:
". . . The opinion has been given that as long as the city refrains from extending its activity into active competition with private enterprise in dealing with others it should be allowed considerable latitude in providing for itself those things necessary to carry on a legitimate municipal function if there are valid reasons for becoming a self-supplier. . . ."
See also 56 Am. Jr. 2d Municipal Corporations, Etc., § 210.
Your last question is as follows:
"Where particular public agencies have entered into a written agreement to own and operate a hot mix bituminous asphalt plant, may other public agencies become members of the cooperative unit solely for the purpose of obtaining quotes or bids from the original unit for the furnishing and/or placing of hot mix (i.e., a price list recipient who has no involvement with the control or operation of the plant) ?"
We are not sure we fully understand your question. If such an arrangement as you have described has actually occurred we suggest you furnish us with a copy of the agreement so that we might determine its nature and scope and how it is to be administered. In other words, we need more specifics as to what the agreement in question permits and encompasses. At this point we can only direct your attention to OAG 79-309, pages two to three, dealing with the basic types of interlocal agreements, and pages three to four concerning the administration of an interlocal agreement.