County denies breach; city may bring lawsuit

By Trent Moore The Cullman Times

CULLMAN — Cullman County officials have denied any breach of contract in response to a threat of legal action from the City of Cullman over a water supply dispute.

Cullman Mayor Max Townson said the city could pursue a lawsuit against the county as early as this month if the matter is not resolved.

City attorney Roy Williams plans to meet with the Cullman Utility Board’s bond counsel Nick Greenwood soon and consider which course of action would be best for the city.

“We’ll let him look over [the county’s letter] and he’ll tell us what he thinks we need to do,” Townson said. “I don’t know exactly what we’re going to do next ... But, we could take legal action as soon as the next few weeks.”

The city has taken issue with a county proposal to develop a well in southeast Cullman County, because the county is bound by contract to acquire water exclusively from the city. The well would serve as a supplementary water supply, and also be mixed with water bought from the city in an effort to improve water quality.

 In a letter sent to county officials last month, the city alleged the county’s actions “at a minimum constitute an anticipatory breach” of the current contract, which does not expire until Sept. 2030.

Cullman County Attorney Dan Willingham sent a response to the city Monday defending the county’s actions.

“First and foremost, Cullman County refutes absolutely your assertion that the County is in breach of its obligations arising under the current water purchase agreement with the City of Cullman,” Willingham said. “The County has under consideration acquisition of a groundwater well in the Holly Pond area to assist the County in complying with EPA requirements in respect of water quality and provide a back-up source of water for use on an emergency basis.”

Townson said he is concerned about the county’s plan to add well water to the water purchased from the city.

“From day one, we didn’t want them intermingling water,” he said. “We believe it could cause problems by trying to put the well water in with the treated city water.”

Willingham said the county is required by the State of Alabama to provide adequate and safe water for public health and safety purposes — which justifies the addition of the well.

“Any actions by the County to provide a well as a back-up source of water for emergency use is only in furtherance of its obligations to its water customers and is not in violation of a requirements contract,” he said. “The Water Purchase Agreement does not by its terms prevent or restrict the County from acquiring, and financing, a source of water for use on an emergency basis under circumstances wherein the City cannot, for any reason, supply sufficient water of acceptable quality to the County.”

Townson said the city has no problem with the county having a well for emergencies — only with it being used as a supplementary water source.

“I don’t think you should stop anyone from digging a well, as long as it is only used in drought conditions,” he said.

Under the current purchase contract, the county is only allowed to use water from other sources if the city’s supply is critically low.



Exclusivity

Willingham was also concerned because the city does not require an exclusivity contract for all water customers — most notably the VAW water system and the City of Hanceville.

“We have become aware that the City has failed to require or enforce that VAW or Hanceville be obligated to purchase water from the City under an arrangement or agreement substantially similar to the agreement to which the County is subject,” he said. “These actions by the City constitute a breach of its obligations to the County to require that other municipalities which are water customers of the City purchase water on identical rates and terms to which the County is required to so purchase.”

Townson said the two water customers in question are not bound by exclusivity agreements. The VFW purchases water from a separate supplier to provide water to another region of their coverage area, while Hanceville only buys a small amount on an as-needed basis.

“They are under a different kind of contract, but everyone pays the same price,” Townson said.

By keeping the contract with the county exclusive, Willingham alleged the county has been forced to shoulder too much.

“These breaches by the City have resulted in a proportionately higher financial burden being placed on the County with respect to purchases from the City's water system and constitute a shift from the fundamental assumptions on which the agreements between the City and the County were entered into,” he said.

Townson said exclusivity and a long-term contract is important because it keeps rates lower for all wholesale customers.

“When you establish credit and sign for bonds, it’s based on water usage and revenues,” he said. “When you say you’re going to buy this much, then try to circumvent and get it elsewhere, it hurts all the customers.”

Willingham said the county would also like to see a copy of the city’s own water purchase agreement with the utilities board, to ensure all customers are purchasing water at cost.

“The wholesale cost of water is set by the engineers and auditors, so we are happy to provide all of that information,” Townson said in response. “The city sells that water at cost.”

Though discussions between the city and county have stalled in recent months, Willingham said county officials are still willing to open a dialog to reach a solution.

County commissioner Doug Williams echoed those sentiments in a follow-up interview.

“We just hope they’ll sit down and talk with us,” he said.

Disputes arose last year when the city began moving forward to create a supplemental water reservoir at Duck River. County officials offered an alternate plan to pull water from Smith Lake.

City officials still hope to sign the county to a new contract — running through 2035 — to support the Duck River plan. Every current water customer except for the county commission has signed a new contract.

“They know the facts,” Townson said. “The facts are: Will they renew their contract for another five years through 2035? It is the most affordable option and will keep water rates from going straight out of the ceiling.”

County commissioner Doug Williams said he is only trying to do what is best for county residents.

“We’re obligated by law to take care of everyone in Cullman County and that’s why we’re pursuing the well,” he said. “The city’s bully approach isn’t working. We’re elected to do what’s best for everyone and that’s what we’re trying to do.”

Cullman County Commission Chairman James Graves — who is in favor of the Duck River plan — said he only hopes some middle ground can be found before things escalate further.

“I think we owe it to the chicken farmers, residents and everyone in this county to sit down, reach a consensus and give the best product at the best possible price we can,” he said. “Hopefully, we can just do what’s right.”



* Trent Moore can be reached by e-mail at trentm@cullmantimes.com, or by telephone at 734-2131, ext. 225.

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