§ 46-30-5. Merger - Effective date - Transfer of assets and assumption of liabilities. (a) After petition by the small water supply system to the governing agency and subject to the approval of the governing board of the public water supply system and the governing board of the governing agency, or, in the case of a municipally owned system, the approval of the majority of the entire town or city council, the public water supply system shall be merged with and into the governing agency. Upon the merger, the governing board of the governing agency or, in the case of a municipally owned system, the approval of the majority of the entire town or city council, agrees to accept and the governing board of the public water supply system agrees to transfer to the governing agency all rights and benefits accrued to the public water supply system arising out of federal assistance or federal funding available to public water supply systems.

(b)(1) It shall be the obligation of the governing board of the public water supply system to disclose to the governing agency all obligations, liabilities, and lawsuits pending against the entity. The governing agency shall have the right to include the obligations into the construction of the annexation fee to fairly apportion the costs to the customer base of the public water supply system.

(2) It is not the intent of this legislation to assume the principal business of the small public water supply system other than the serving of potable water. The governing agency shall have the right to refuse to accept any obligations, liabilities, and lawsuits pending against the entity relating to other parts of the small public water system's activities.

(3) The customers annexed to the governing agency shall be subject to the same rules, regulations, municipal, state, and federal laws to which all other customers of the governing agency are subject.

(c) The governing board of the public drinking water system is hereby authorized to and shall pass such resolutions, enter into such agreements, and do all things deemed useful and necessary by it to effectuate the merger; and the governing board of the governing agency is hereby authorized and may pass such resolutions, enter into such agreements, and do all things useful and necessary by it to effectuate the merger. Nothing in this subsection shall permit the governing agency of any municipally owned system to enter into any agreements or to adopt any resolutions which require city or town council approval.

(d) Upon completion, the merger shall be certified to the secretary of state by the chief executive officer of the governing agency.

(e) Upon the annexation of the public water supply system and the governing agency, the governing agency shall assume responsibility for the planning, construction, operation, and maintenance of the appropriate facilities, water mains and appurtenances of the public water supply system.

(f) If the governing agency accepts any obligations, liabilities, and/or lawsuits as referenced under subsection (b), the governing agency shall also be responsible and liable for all liabilities, obligations, and/or lawsuits of the public water supply system pertaining to water supply; and any claim existing or action or proceeding pending by or against the public water supply system may be prosecuted as if the annexation had not taken place, or the governing agency may be substituted in its place. Neither the rights of creditors nor any liens upon the property of the public water supply system shall be impaired by the merger. The annexation as provided for herein shall not impair the obligation of any contract or agreement or alter existing bargaining units nor abate any suit, action, or other proceeding lawfully commenced by or against the public water supply system, or any member of its governing board in relation to the discharge of his or her official duties, but a court of competent jurisdiction may, on motion filed within twelve (12) months after the effective date of the annexation, allow such a suit, action, or proceeding to be maintained by or against the annexed public water supply system or any member of its governing board in relation to the discharge of his or her official duties. Upon completion of the merger, all user charges, fees or rates assessed by the governing agency as a result of the merger shall be subject to the approval of the public utilities commission.

History of Section. (P.L. 1995, ch. 267, § 1.)