Higher Nonresident Rates Might Be Justified

The Town of Torrey, a municipal corporation in Wayne County, Utah, operates a municipal water system that provides culinary water to town residents and nonresidents. The plaintiffs were county residents who owned property outside the town limits. In 1995, the town council approved a resolution providing for both residential and commercial out‐of‐town hookups for the plaintiffs' property. Included was a new rate schedule that imposed higher connection fees in most cases and higher use rates for nonresidents than residents. The plaintiffs brought this suit seeking a declaration requiring Torrey to charge residents and nonresidents the same rates. The trial court upheld the rate schedule, denying the plaintiffs' claims that enacting the rates unlawfully discriminated against them. The appellate court said that municipalities may provide water service to nonresidents at reasonable rates. But the court also said that the municipality must establish a reasonable basis for charging higher rates. According to the court, higher rates may be justified by a variety of circumstances, such as the greater costs associated with providing service to nonresidents. Another justification might be that residents of the town as a class made or are making contributions to the system that nonresidents have not made or are not making. Thus, the court remanded the case to the trial court to address whether the disparate rates charged nonresidents were justified.