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Rehearing sought on water fees repayment

Hernando County will ask a judge to decide a second time whether former Florida Water Services customers in Spring Hill are owed millions in regulatory fees.

Rather than appeal to a higher court, the County Commission chose Tuesday to seek a rehearing of the case, which for now will remain in the county court system.

Former Judge Peyton Hyslop, who last week ordered that the fees be repaid, will not preside, however. Hyslop was voted from office in August and stepped down Monday.

Brooksville lawyer Joe Mason, who represents Spring Hill residents Nicholas and Ann Morana in the class-action lawsuit, said the decision to ask for a rehearing could be a stall tactic while a higher appeal is considered.

Mason speculated, however, that the commission, despite the urgent advice of County Attorney Garth Coller to fight on, might be wary of how an appeal would play politically with Spring Hill residents.

"I still don't understand how you can tell . . . voters that we don't want to give you your refund," said Mason, who stands to earn as much as $1-million in the case. "I think the elected county commissioners need to be sensitive to that."

At issue is about $3-million in regulatory fees that customers paid to the county beginning in 1994, when Hernando began to regulate the Florida Water utility. Under state law, the money is meant to cover regulatory expenses, and is not considered revenue.

When the county purchased the utility in October 2003, the Moranas argued in their lawsuit, Hernando became owner and not regulator and was obligated to refund the fees. Last Wednesday, Hyslop agreed, pointing to what he said were incompatible provisions in changes the county had made to its utility law shortly before the purchase.

Those changes, which Mason argues violate state law, freed the county to keep the fund, rather than return the money to customers. It also broadened how money from the fund could be spent. Instead of solely for regulation, it could now be used to operate the system and cover acquisition costs.

Among the issues raised in the lawsuit that Hyslop did not rule on was whether the county had made illegal expenditures from the fund for costs not associated with regulation.

Given the unwillingness of some judges to reconsider decisions made by their predecessors and the clear instructions in state law that such regulatory funds must be returned to customers when a utility is sold, Mason said whoever was given the case was unlikely to grant a rehearing.

Meanwhile, county attorneys argue that their revisions are consistent with state law and that Hyslop failed to read them carefully. If he had, they say, Hyslop would have seen that the county has the right to hold on to the money.

Tuesday, Coller sought to dispel what he said were several misconceptions surrounding the case. First, he said, continuing the battle over the fund in the courts would not waste taxpayers' money. Second, he said, defying Hyslop's ruling would not rob citizens of a victory.

In fact, Coller argued, by rejecting the decision, the county could help prevent up to $1-million in public money going into Mason's pocket as a fee for handling the case. Further, he argued, the entire pot could be used to improve the system and benefit customers.

Coller also stressed what seemed to him an important principle: that politics be kept out of his work as much possible. He urged the board not to bow to political pressure, but to recognize that the county be free to create and interpret its own laws.

"There is a right, and there is a wrong," he told the board. "And you have a duty, I believe, to challenge every wrong under the law."

Coller then announced his intention to seek a rehearing, to which the board did not object. The attorney said no appeal would be filed without the consent of the commission.

Will Van Sant can be reached at (352) 754-6127 or