The City of Pensacola is the defendant in a lawsuit, which claims illegal charges for delivery of natural gas.
Dr. Eric Frank, a Pensacola chiropractor, alleges the city through the utility Pensacola Energy has been levying a tax on its customers in the guise of mandatory franchise fees for the use of city-owned property.
“He [Frank] called me one day and said ‘What’s a franchise fee?’ said attorney Artie Shimek,
“And when I realized when he was talking in the context of a natural gas charge, I didn’t think anything of if and told him ‘I don’t know.’ I looked into it and this is what I found.”
For the most part, franchise fees are legitimate charges by local governments, to utilities for their use of public rights-of-way. But not in this particular case, says Shimek.
“The natural gas utility itself [Pensacola Energy] is an arm of the city. In essence, what’s happening here is the city is charging itself a franchise fee and passing it onto the customers. That’s not legal. If it’s not a valid fee, then it is a tax.”
Under the Florida Constitution, says Shimek, a tax cannot be imposed by a city unless it’s authorized by the Constitution or the Legislature. Pensacola’s franchise fee ordinance was first enacted in 1970. The City Council passed two others in 1988 and ‘91. All three remain on the books today.
The lawsuit seeks relief in three areas, starting with an injunction declaring the three such ordinances unconstitutional, and therefore void.
“The second one is an injunction to prohibit the city from charging its natural gas customers franchise fees now and in the future,” Shimek says. “And the third one is to reimburse those customers for the franchise fees they were billed and paid during the relevant statute of limitations period.”
In the 45 years since the franchise fee’s been in effect, Shimek estimates up to $35 million has been collected by the City of Pensacola. But he adds they can only go back about 4-5 years because of the statute of limitations.
And if Artie Shimek gets his way, the case will receive class-action status.
“Dr. Frank has filed this suit on behalf of himself,” Shimek said. “What we’ve been able to ascertain is the customers who have identical issues faced in this lawsuit is between 12,000 and 13,000 people. And because of the sheer number and the commonality of issues, then it’s ripe for a class action.”
A spokesman for the city says neither City Attorney Lysia Bowling nor City Administrator Eric Olson will comment on the lawsuit at this time, pending a review.
