Lori B. Libby, Center for Public Management and Regional Affairs, Miami University
In Ohio, water systems are owned and operated by a governing body that was statutorily or legally granted the authority to be "in the water business." Such authority is granted by state statute, by local charter, or by a legal incorporation. The Ohio Environmental Protection Agency issues permits to operate to owners who construct and operate systems that comply with design standards and environmental regulations.
Public Systems (Governmental)
Counties have legal authority, granted by the Ohio Revised Code, to "preserve and promote public health and welfare" (ORC 6103.02). This means that a county can own, operate, and maintain a water supply treatment and distribution system. Having the legal authority also includes the power to fix reasonable rates and to adopt, publish, administer, and enforce rules and regulations necessary for providing water service.
Incorporated municipalities, both cities and villages, can also "construct or acquire waterworks for supplying water to the municipal corporation and its inhabitants and extend the waterworks system outside of the municipal corporation limits" (ORC 717.01). This authority is granted through "home rule" powers of local self-government and is granted by statutory provision or local charter.
Although townships do not have the authority to own and operate a water system, a township may contract to receive service from a county system, or individual residents may receive service from a nearby existing system, or residents may join together to form a water district.
Special Districts
Another form of water system authority is a special district. Water districts are created in a variety of ways. Interested parties, such as potential customers and/or a potential supplier, can legally incorporate for the purpose of supplying water. This is a private, legal agreement where members agree to fund the provision of water supply and distribution system through the contribution of fees and charges.
A regional water district, formed under section 6119 of the Ohio Revised Code, is also a legal entity but is more like a governmental institution, with the authority to assess tax levies to construct, maintain, or improve the system and is eligible for financial assistance from other intergovernmental sources.
Both types of special districts are often compared to other investor-owned utilities where the revenues generated from user charges or assessments are expected to fund the operation of the system.
Private Systems (Nongovernmental)
Many water systems are established with no relationship to a governmental authority. Individual wells serving a business or institution are one example. Mobile home parks that treat and distribute water to its residents are another example. Other examples are homeowner associations and recreational/vacation communities that form a water system under some legal agreement. Such systems are able to own and operate a water supply and treatment system, but still must meet environmental standards and generate revenues for construction, operation, and maintenance.
Water systems are governed by a legislative body or board of trustees elected by either citizens or customers.
In counties, the board of county commissioners may have legislative authority to provide water service to the unincorporated areas of the county. They may form or join a regional water district or may join with a municipality within county boundaries or an adjoining county. While the commissioners are ultimately responsible for the system, administrative responsibilities are fulfilled by the appointment of a county sanitary engineer. The commissioners can identify an individual as sanitary engineer or establish a department under the direction of a utilities superintendent.
In cities, the council or commission, as the legislative body, defines how water service is to be provided. Generally, it is the legislative authority that is responsible for setting rates. Often an administrator, utilities superintendent, or department head is appointed and responsible for administrative functions.
For villages under the statutory plan of government, a separate administrative authority for public services and utilities is required, called the board of public affairs. This board of public affairs is responsible for supplying necessary public utilities, such as water works, electricity, natural gas, and other similar public utilities. For water systems, the board is responsible for the supply and treatment of water, the collection of all payments, the appointment of necessary employees, and is authorized to adopt policies and regulations necessary to operate and protect a system that is safe, economical, and efficient. The authority to set rates is retained by the village council, as the legislative authority.
For regional water districts, powers are vested in a board of trustees, who are responsible for the system. The function of the board of trustees is similar to governmental public systems; qualified individuals are hired to be responsible for the administrative functions and day-to-day operations of the system.
In general, the system owner or operating authority of a water system has been charged with protecting the general health and welfare of citizens by providing for a water treatment and distribution system that meets environmental standards and operates in a fiscally responsible manner that is accountable to its customers who are citizens, taxpayers, or members. Often this is accomplished by hiring or appointing a person or entity to be responsible for the administrative functions of the system. The establishment of governing principles or policies can ensure that the following elements are addressed.
Alternate structural arrangements are possible. A system owner/operating authority may decide to purchase water from an existing source and maintain a distribution system, lease a facility rather than construct and maintain their own treatment plant, or contract with an external provider for the operation of their facility. Although advantages are associated with each alternative, it is necessary to point out that these do NOT absolve an entity from the ultimate legal responsibility and ultimate accountability for providing public services, such as water.