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July 30, 2008

No city oversight for MSD

Concluding that the Metropolitan Sewer District is a public corporation that acts independently of Metro government, the Kentucky Court of Appeals has affirmed the decision of a lower court saying the agency does not have to comply with city ethics rules. 

In a 10-page opinion issued July 18, the court upheld the May 2007 decision of Jefferson County Circuit Court Judge A.C. McKay Chauvin, who ruled that the quasi-governmental agency is a public corporation with an independent financial stream and the ability — as dictated by state law — to enter into any number of projects and professional agreements without the consent of Metro government. And although Mayor Jerry Abramson appoints the members of the MSD board of directors (which also requires Metro Council approval), they are not agents of city government. Incidentally, the Ethics Commission is appointed the same way.

The decision stems from an April 2006 lawsuit filed by MSD to prevent the Ethics Commission from investigating a complaint filed nearly four years ago against its director, Bud Schardein, and others. The complaint, made by former MSD engineer Sarah Lynn Cunningham, alleged that Schardein, MSD board member William Gray, MSD chief engineer Derek Guthrie, Metro Councilman Bob Henderson, D-14, and his legislative aide, Larry Mattingly, had — among other things — given political favors on MSD jobs and illegally laid off a group of employees (including Cunningham) who attempted to bring those favors to light. That complaint was dismissed earlier this year. 

MSD’s lawsuit was a companion to a broader one brought by Cunningham and three co-workers, who sued their former employer over their dismissal. In January 2007, a jury ruled Schardein and MSD had violated a state law that protects whistleblowers; however, the jury awarded no damages. MSD, which is funded primarily by ratepayers in Jefferson County, has spent well over $300,000 on legal fees associated with the case, according to records obtained by LEO Weekly through open records requests. 

LEO Weekly attempted to reach the attorney for the Metro Ethics Commission and its chairwoman, as well as the legal affairs representative for MSD. None returned phone calls by deadline.