On April 12, 2012, the Kansas Supreme Court upheld a law regulating the state’s one-call notification system for underground utilities. The law was challenged under several constitutional claims raised by Kansas One-Call System, Inc., the private company which operates the notification system.
“One-call” programs have been instituted in all 50 states to protect communities from damage to persons, property and environmental resources resulting from damage to underground facilities. One-call centers serve as a clearinghouse for excavation activities to inform owners and operators of underground facilities that excavation is planned so that they can mark their lines in order to avoid damage.
Like many state one-call systems, the Kansas notification system began as a voluntary association of utility companies seeking to protect their assets and the communities in which they operate. The system was formally enacted as a state program by statute in 1993, which made membership in the system mandatory for all utility providers.
In 2008, the Kansas Legislature amended the Kansas Underground Utility Damage Prevention Act (KUUDPA) to require the notification center to comply with the Kansas Open Records Act (KORA) and the Kansas Open Meetings Act (KOMA) and to adhere to specific levels of pricing for categories of utilities. Kansas One-Call System, Inc. (One-Call) balked at the increased administrative and reporting requirements and fixed pricing measures and filed suit against the State of Kansas (State) over the constitutionality of the 2008 amendments. The State won summary judgment from the trial court, and One-Call appealed.
One-Call claimed that some of the 2008 amendments to KUUDPA violated:
- the one-subject rule contained in the Kansas Constitution;
- the separation of powers doctrine;
- the Fourteenth Amendment to the United States Constitution right to equal protection; and
- the Fifth and Fourteenth Amendments to the U.S. Constitution, which prohibit the taking of private property for public use without just compensation.
The one-subject rule
One-Call claimed that the 2008 amendments to KUUDPA violated Article 2, § 16 of the Kansas Constitution, also known as the one-subject rule. To violate the single subject rule, a bill must have two dissimilar subjects that have no legitimate connection with each other. The purpose of the one-subject rule is to prevent legislative abuses in which several legislators combine their unrelated proposals and present them as separate provisions of one bill. The underlying public policy principle is to prevent the passage of an initiative that would have failed on its own.
One-Call asserted that House Bill 2637 contained two subjects: (1) the requirement that One-Call comply with KORA and KOMA, and (2) the utilities themselves. It claimed that the two subjects were too dissimilar to have any relationship or connection between them and claimed that in order to be included, both subjects were required to be named in the title of the legislation. The Court held that one-subject rule was not violated, and stated, “the broad topic of utilities is listed in the title of House Bill 2637 and serves as the larger umbrella category under which the KUUDPA falls. And House Bill 2637's multiple and diverse subjects are related and germane to one another under the all-encompassing category of utilities.”
Separation of Powers Doctrine
In its second constitutional challenge, One-Call claimed that the 2008 amendments to KUUDPA violate the separation of powers doctrine because that legislation was adopted after the Kansas Legislature had delegated legislative authority to the KCC under the 2006 amendment to the KUUDPA. The Court held that the separation of powers doctrine was not violated because the power delegated to the Kansas Corporation Commission to adopt rules and regulations was administrative, rather than legislative in nature.
Equal Protection Claim
One-Call argued that some of the 2008 amendments to KUUDPA caused it to be treated differently from other private and nonprofit corporations without any rational basis. The Fourteenth Amendment to the U.S. Constitution guarantees equal protection under the law “to any person,” and the Kansas Constitution Bill of Rights § 1 uses similar language. One-Call claimed that it was being treated differently than every other private not-for-profit corporation in Kansas. Most of One-Call’s argument focuses on the application of KOMA and KORA to it.
This argument also failed. The Court distinguished the notification center as a public, rather than private non-profit agency, citing the explicit language in K.S.A. 2011 Supp. 66-1805(l). The Court noted the important public service served by the notification center and the authority of the legislature to protect the lives and property around underground utilities. The Court held that the legislature had the authority to write into law differences that exist in those areas in which public power is exerted.
Fifth Amendment Violation
In its takings claim, One-Call argued that the fee provisions of the amendments fix rates that amount to confiscation. One-Call claimed that the fee structure established through the 2008 legislation amounted to a taking without just compensation. Under the 2008 amendments, tiers were established to set fees for various utilities participating in the notification system. Under the law, tier 2 facilities (water utilities) can only be charged 50% of what tier 1 facilities (other utilities) are charged for the notification service. Additionally, a tier 3 facility (large water utilities with their own “one-call system”) owes the notification center only $500 annually.
The Court held that since there is no statute that requires One-Call (the private corporation) to run the notification center (the public entity), there is no taking because no private property is being used for a public purpose. The Court noted that One-Call voluntarily agreed to participate in a price-regulated program or activity, and there is no legal requirement that it must operate the notification center. Accordingly, the takings claim failed.