FILED
United States Court of Appeals Tenth Circuit
MAR 22 2001
PATRICK FISHER
Clerk PUBLISH
UNITED STATES COURT
OF APPEALS
TENTH CIRCUIT
RURAL WATER DISTRICT
NO. 1, ELLSWORTH
COUNTY, KANSAS,
commonly known
as Post Rock Rural
Water District,
also known as
Ellsworth County
Rural Water District
No. 1,
Nos. 98_3337,
98_3340,
Plaintiff_Appellant
and Cross_ Appellee, 99_3075 & 99_3084
v.
CITY OF WILSON,
KANSAS,
Defendant_Appellee
and Cross_ Appellant.
APPEAL FROM UNITED
STATES DISTRICT COURT
FOR THE DISTRICT OF
KANSAS
(D.C. No.
CV_96_1297_WEB)
Victor S. Nelson, of
Victor S. Nelson, P.A., Wichita, Kansas, for the appellant.
Allen G.
Glendenning, of Watkins, Calcara, Rondeau, Friedeman, Bleeker, Glendenning & McVay, Chtd, Great Bend,
Kansas, for the appellee.
Before HENRY,
BRISCOE, Circuit Judges, and ALLEY, District Judge.(1)
(1) The Honorable
Wayne E. Alley, United States District Judge for the Western District of Oklahoma, sitting by designation.
HENRY, Circuit
Judge.
Plaintiff Rural
Water District No. 1, Ellsworth County, Kansas (commonly
known as Post Rock
Rural Water District) brought this case alleging that
defendant City of
Wilson, Kansas, (the City) violated 7 U.S.C. º 1926(b) by
providing domestic
water service to customers in Post Rock's service area. Post
Rock sought
declaratory and injunctive relief under 28 U.S.C. ºº 2201 and 2202.
Post Rock appeals
the district court's refusal to grant a permanent injunction
preventing the City
from providing domestic water service in Post Rock's service
area. Post Rock also
appeals the district court's refusal to award all of its
attorney fees and
expenses under 42 U.S.C. º 1988. The City cross_appeals the
district court's
decision to grant a contingent injunction concerning the City's
provision of water
service in the Purma Addition. The City further appeals the
district court's
award of partial attorney fees to Post Rock under º 1988. We
exercise
jurisdiction pursuant to 28 U.S.C. º 1291, and affirm in part, reverse in
part, and remand.
I.
The City is a
municipal corporation in Ellsworth County, Kansas. Post
Rock is a rural
water district formed on March 5, 1979. Post Rock has the legal
right pursuant to 7
U.S.C. º 1926(c) to provide water service "to all of Ellsworth
County except the
incorporated cities, including the City of Wilson as it existed
on March 5,
1979." Aplt. App. I at 147. The City owns and operates
groundwater wells,
water treatment systems, and water distribution systems
within the Wilson
city limits and within areas annexed into the City since
January 1995. Pursuant
to º 1926(c), customers within Post Rock's service area
must receive water
service from Post Rock or provide their own water; they may
not connect to the
City water system unless Post Rock is unable to provide
service or releases
them from the water district.
To receive water
service, Post Rock requires prospective customers to
submit an
application for a benefit unit, accompanied by an $800 application fee.(2)
This purchase of a
benefit unit makes the prospective customer a part owner of
the district. With a
portion of the application fee, Post Rock hires an
independent
engineering firm to determine whether the customer can be
adequately served by
Post Rock "without curtailing service to existing Post Rock
customers. If the engineer
finds that there is sufficient capacity to serve the
potential user and
determines what additions will be required to the system, Post
Rock then calculates
the cost of adding the potential user to the system." Aplt.
App. I at 151. Under
this policy, the customer pays all of the costs of adding his
property to Post
Rock's water system.
(2) Alternatively,
the potential customer may pay for an engineering study without filing an application.
This appeal concerns
three properties in Post Rock's service area: the
Purma Addition, the
Prairie Estates Addition, and the Branda property. Purma
Addition is located
outside the 1979 Wilson city limits. On April 20, 1995, the
City annexed Purma
Addition. In December 1995, the City extended its
municipal water
system to Purma Addition and in July 1997, it began providing
water service to the
two duplexes in Purma Addition. Although Post Rock had
the ability to
deliver water to Purma Addition, Post Rock had no water pipes in
Purma Addition at
the time of trial. At the time of trial, no one in Purma
Addition had made a
formal application to Post Rock for water service. A Post
Rock study showed it
would take two to five days to establish service to the
duplexes, at a cost
of $32,000.
Prairie Estates
Addition is also located outside the 1979 Wilson city limits.
At the time of
trial, the City had not annexed Prairie Estates, but had studied the
feasibility of
running water pipes into the area. At the time of trial, Post Rock
had not received a
formal application for water service from anyone in Prairie
Estates. Post Rock
had no water pipes in Prairie Estates, but there was testimony
that it would take
three to six days to provide water service. At the time of trial,
no houses had been
built in Prairie Estates and none were planned in the
immediate future.
Post Rock could not state whether it would have the capacity
to serve Prairie
Estates in the future.
The Branda property
was annexed into the City in 1992. Before January
19, 1995, the City
provided water service only to a house on the property. After
January 19, 1995,
the City also provided service to another building on the
property. At the time
of trial, Post Rock had not received an application for
water service and
had not done a cost analysis of providing water service to the
property.
On February 6, 1997,
Post Rock filed an amended complaint in federal
district court
alleging the City violated 7 U.S.C. º 1926(b) by providing water
service in Post
Rock's service area and seeking declaratory and injunctive relief
under 28 U.S.C. ºº
2201 and º 2202. In its trial brief, Post Rock asserted it was
entitled to relief
under 42 U.S.C. º 1983 and requested attorney fees pursuant to
42 U.S.C. º 1988.
After a bench trial,
the district court entered judgment on October 27,
1998, concluding
that Post Rock properly brought its claim for a violation of º
1926(b) under 42 U.S.C.
º 1983. The district court determined that the City was
encroaching on Post
Rock's service area, but concluded that Post Rock was not
making service
available because it charged customers for building water system
infrastructure. The
district court entered a contingent injunction as to Purma
Addition, enjoining
the City from providing water service if Post Rock agreed to
provide service at a
reasonable cost. The district court denied Post Rock relief as
to Prairie Estates
because Post Rock had not shown when, if ever, there would be
domestic water users
in that area and whether Post Rock would have the capacity
to serve those
users. The district court also denied Post Rock relief as to the
Branda property
because Post Rock had not shown it could serve the property and
had not made service
available. Post Rock filed a motion for attorney fees,
expenses, and expert
witness fees under º 1988. The district court concluded that
Post Rock was a
prevailing party under º 1988 and awarded Post Rock 25 percent
of its claimed fees
and expenses because it had prevailed on only a portion of its
claim.
II.
Post Rock appeals
the district court's denial of injunctive relief, which we
review for abuse of
discretion. See Roe v. Cheyenne Mountain Conference
Resort, Inc., 124
F.3d 1221, 1230 (10th Cir. 1997). "The discretionary decision
is `not left to a
Court's "inclination," but to its judgment; and its judgment is
to
be guided by sound
legal principles.'" Id. (quoting Albemarle Paper Co. v.
Moody, 422 U.S. 405,
416 (1975)). "The court's discretion is to be exercised in
light of the
purposes of the statute on which plaintiff's suit is based." Id. To
the
extent the district
court determined questions of law in interpreting a statute, we
exercise de novo
review. Ute Indian Tribe v. Utah, 114 F.3d 1513, 1520 (10th
Cir. 1997).
Protection from
competition under 7 U.S.C. º 1926(b)
Post Rock is a rural
water district incorporated by the Ellsworth County
Board of County
Commissioners to develop and provide water service to the rural
residents within its
territory, pursuant to Kan. Stat. Ann. º 82a_613 (1997).
Kansas law
authorizes rural water districts to borrow money from the federal
government. Kan.
Stat. Ann. º 82a_619(b) (1997). "As part of the Consolidated
Farm and Rural
Development Act, 7 U.S.C. ºº 1921_2009n, Congress authorized
the Secretary of
Agriculture to make or insure loans to nonprofit water service
associations for
`the conservation, development, use, and control of water.'"
Sequoyah County
Rural Water Dist. No. 7 v. Town of Muldrow, 191 F.3d 1192,
1194 (10th Cir.
1999) (quoting 7 U.S.C. º 1926(a)), cert. denied, 120 S. Ct.
1532, 1548 (2000).
In accordance with these provisions, Post Rock borrowed
money from the
Farmer's Home Administration (FmHA).(3)
Section 1926 applies
to rural water districts receiving loans from the
FmHA. That statute
provides that "[t]he service provided or made available
through any such
association shall not be curtailed or limited by inclusion of the
area served by such
association within the boundaries of any municipal
corporation or other
public body." 7 U.S.C. º 1926(b). By enacting º 1926(b),
Congress intended to
protect rural water districts from competition to encourage
rural water
development and to provide greater security for and thereby increase
the likelihood of
repayment of FmHA loans. See Sequoyah County, 191 F.3d at
(3) The FmHA is now
known as the Rural Utilities Service, an agency of the United States Department of Agriculture.
See 7 C.F.R. 1780.3(a).
1196; Bell Arthur
Water Corp. v. Greenville Utils. Comm'n, 173 F.3d 517, 523
(4th Cir. 1999).
Section 1926(b) is broadly construed to protect rural water
districts from
competition with other water service providers. See Adams County
Reg. Water Dist. v.
Village of Manchester, Ohio, 226 F.3d 513, 518 (6th Cir.
2000) (stating that
º 1926(b) "should be given a liberal interpretation that
protects rural water
associations indebted to the FmHA from municipal
encroachment")
(internal quotation marks omitted); Bell Arthur, 173 F.3d at 520,
526 (noting Congress
intended by enactment of º 1926(b) to protect from
competition the
territory served by a rural water district); Lexington_South
Elkhorn Water Dist.
v. City of Wilmore, 93 F.3d 230, 235 (6th Cir. 1996) (noting
that º 1926(b) is
given a liberal interpretation to protect rural water districts);
Jennings Water, Inc.
v. City of North Vernon, 895 F.2d 311, 315 (7th Cir. 1989)
(detailing the
legislative history of º 1926(b)). "[S]ection 1926(b) `indicates a
congressional mandate
that local governments not encroach upon the services
provided by
[federally indebted water] associations, be that encroachment in the
form of competing
franchises, new or additional permit requirements, or similar
means.'"
Glenpool Util. Servs. Auth. v. Creek County Rural Water Dist., 861
F.2d 1211, 1214
(10th Cir. 1988) (quoting City of Madison v. Bear Creek Water
Ass'n, 816 F.2d
1057, 1059 (5th Cir. 1987)).
The City does not
dispute that it provided water service in Post Rock's
service area, but
argues that º 1926(b) does not apply in this case. "[T]o receive
the protection
against competition provided by º 1926(b) a water association
must (1) have a
continuing indebtedness to the FmHA and (2) have provided or
made available
service to the disputed area." Sequoyah County, 191 F.3d at
1197. The parties
stipulated that Post Rock was indebted to the FmHA. The
parties also
stipulated that Purma Addition, Prairie Estates Addition, and the
Branda property were
located in Post Rock's service area. Accordingly, the
narrow issue
remaining is whether Post Rock made service available to those
areas.
Consideration of
cost
The district court
determined that the City was encroaching on Post Rock's
service area, but
concluded that Post Rock failed to make water service available
because of its
requirement that the customer pay all costs necessary to establish
water service,
including the extension of infrastructure. Post Rock contends the
reasonableness of
the cost to be borne by a prospective customer is not a relevant
inquiry in
determining whether Post Rock made water service available for
purposes of º
1926(b).
Although the
district court determined that Post Rock could physically
provide service to
Purma Addition, it concluded that "conditioning service on the
user's agreement to
pay unreasonable fees is not `making service available.'"
Aplt. App. I at 160.
Post Rock does not dispute that it requires customers to pay
the entire cost of
establishing water service. Post Rock does not pay for any
water line
extensions necessary to establish new water service. In the case of
Purma Addition, Post
Rock's engineer estimated it would cost $32,000 to connect
water service to the
duplexes, which would be paid by the customers. This
estimated cost would
be for construction of a service line to the duplexes, not a
main line. Although
the duplex owners would pay the cost, Post Rock would be
able to use the line
to serve future users. If Post Rock needed to make
improvements to its
system to serve a new customer, such as installing a pumping
station, the
prospective customer would pay for that improvement. However,
Post Rock indicates
that even if it joined additional users, it would not pro rate so
as to reimburse some
of the $32,000.00 cost to the initial two duplex owners.
In order to
determine whether a water association has made service
available, the focus
is "primarily on whether the water association has in fact
`made service
available,' i.e., on whether the association has proximate and
adequate `pipes in
the ground' with which it has served or can serve the disputed
customers within a
reasonable time." Sequoyah County, 191 F.3d at 1203
(emphasis added).
"[A] water association meets the `pipes_in_the_ground' test by
demonstrating `that
it has adequate facilities within or adjacent to the area to
provide service to
the area within a reasonable time after a request for service is
made.'" Id.
(quoting Bell Arthur, 173 F.3d at 526). "This is essentially an
inquiry into whether
a water association has the capacity to provide water service
to a given customer."
Id.
Nevertheless, in
spite of this focus on pipes_in_the_ground, we do not agree
with Post Rock that
the costs of water service are completely irrelevant in
determining whether
it has made services available under º 1926(b). As the
district court
observed, Congress intended º 1926(b) not only to safeguard the
viability of rural
water associations but also to encourage rural water
development by
expanding the number of potential users, resulting in lower costs
per user. See Scioto
County Reg'l Water Dist. No. 1 v. Scioto Water, Inc., 103
F.3d 38, 40 (6th
Cir. 1996) (citing the Fifth Circuit's explanation of the dual
purposes of º
1926(b)_to "`[s]afeguard the viability and financial security of
such
associations'" and to "`encourage water development by expanding
the
number of potential
users'") (quoting City of Madison, Miss. v. Bear Creek
Water Ass'n, 816
F.2d 1057, 1060 (5th Cir. 1987)).
The legislative
history of the statute reflects this concern with costs. See
Sen. Rep. No. 566
(1961), reprinted in 1961 U.S.C.C.A.N. 2243, 2309 (stating
that, "[b]y
including service to other rural residents, the cost per user is reduced
and the loans are
more secure in addition to the community benefits of a safe and
adequate supply of
running household water" and that "[t]he committee
understands that
there are areas where several rural settlements can more
economically combine
their efforts to establish an adequate water source by
developing a common
reservoir and pipeline at a cost to the users considerably
below the cost
attendant to independent facilities serving each community")
(emphasis added).
Moreover, the phrase
used by Congress in the statute_"service . . . made
available" does
not exclude consideration of costs. The word "available" means
"capable of
being employed with advantage of or turned to account, hence
capable of being
made use of, at one's disposal, within one's reach." 1 Oxford
English Dictionary
at 812 (2d ed. 1989). Thus, with regard to a statute enacted
in part to reduce
the cost per user, we cannot agree that providing services at a
grossly excessive
cost renders them "available." Cf. Metz v. Tusico, Inc., 167 F.
Supp. 393, 397 (E.D.
Va. 1958) (construing the statement in a contract that
"water is
available to the property" as indicating that water was "obtainable
at a
reasonable
cost") (emphasis added).
Accordingly, we
conclude that even though a rural water district has
"adequate
facilities within or adjacent to the area to provide service to the area
within a reasonable
time after a request for service is made,'" Sequoyah County,
191 F.3d at 1201
(quoting Bell Arthur, 173 F.3d at 526), the cost of those
services may be so
excessive that it has not made those services "available" under
º 1926(b). Although
the costs of services need not be competitive with the costs
of services provided
by other entities, the protection granted to rural water
districts by º
1926(b) should not be construed so broadly as to authorize the
imposition of any
level of costs. There is some point at which costs become so
high that assessing
them upon the user constitutes a practical deprivation of
service. Just as there
are limits on how long a period of time a water district may
take to provide
service (i.e. a "reasonable amount of time"), so there are limits
on
how much it can
charge for that service and still be considered to have "made [it]
available."
In articulating a
standard for determining whether the costs of a water
district's services
are excessive, the decisions of Kansas courts provide guidance.
Those courts have
concluded that water rates may not be "unreasonable,
excessive, and confiscatory."
Bodine v. Osage County Rural Water District No.
7, 949 P.2d 1104,
1110 (Kan. 1997); see Shawnee Hills Mobile Homes, Inc. v.
Rural Water Dist.
No. 6, 537 P.2d 210, 217 (Kan. 1975). In an unpublished
decision (which is
not precedential but which we find persuasive, see 10th Cir.R.
36.3), this circuit
has taken a somewhat similar approach. See Pittsburg County
Rural Water Dist.
No. 7 v. City of McAlester, No. 98_7148, 2000 WL 525942, at
**4 n.7 (10th Cir.
May 2, 2000) (concluding that a water district's practice of
requiring customers
to pay for facility improvements was not "per se
unreasonable"
but did raise questions in need of "further factual
development").
We therefore
conclude that, if the city can show that Post Rock's rates or
assessements were
unreasonable, excessive, and confiscatory, then the water
district has not
made services available under º 1926(b).
The Kansas decisions
indicate that several factors are relevant in making
this determination: (1)
whether the challenged practice allows the district to
yield more than a
fair profit; (2) whether the practice establishes a rate that is
disproportionate to
the services rendered; (3) whether other, similarly situated
districts do not
follow the practice; (4) whether the practice establishes an
arbitrary
classification between various users. See Shawnee Hills, 537 P.2d at
218_21. No one
factor is dispositive, and the determination of whether the
practice is
excessive, unreasonable, and confiscatory depends on an assessment of
the totality of the
circumstances. See id. Applying this standard, we examine
each property
individually in order to determine whether Post Rock has made
service available
under º 1926(b).
Purma Addition. The
district court concluded as a matter of law that
requiring the owners
of the Purma Addition duplex to pay the $32,000 for
constructing a water
line was unreasonable. As a result, the court concluded, Post
Rock had not made
service available under º 1926(b). The district court did not
cite any evidence
from the record and it did not provide any explanation for its
conclusion. There is
no indication that the court considered the factors outlined
by the Kansas
courts.
Accordingly, we
conclude that the case should be remanded to the district
court for further
consideration of Post Rock's imposition of the $32,000 fee. On
remand the City
should be afforded an opportunity to show that Post Rock's
practice was excessive,
unreasonable, and confiscatory. If the City makes such a
showing, then the
court should conclude that the water district has not "provided
or made [service]
available." See 7 U.S.C. º 1926(b). Absent such a showing by
the City, the water
district will be entitled to relief under º 1926(b).
Prairie Estates
Addition. The district court denied Post Rock any relief for
Prairie Estates. The
district court concluded that Post Rock failed to establish
when, if ever, there
would be water users in Prairie Estates and whether Post
Rock would have the
capacity to serve those users. At the time of trial, there was
no development in
Prairie Estates and none was planned in the near future. The
district court
properly concluded that an injunction concerning Prairie Estates
would be premature.
Although the City planned to run water pipes into Prairie
Estates for fire
protection, this was a permissible action that did not encroach on
Post Rock's service
rights. See Rural Water Dist. No. 3 v. Owasso Utils. Auth.,
530 F. Supp. 818,
823 (N.D. Okla. 1979) (noting "[t]here is nothing in the Act
[º 1926] itself to
preclude the Owasso Utilities Authority from maintaining a
water line for the
purposes of fire protection only"); Kan. Stat. Ann. º 80_1513(c)
(1997) (requiring
city to provide fire protection services to annexed territory).
Post Rock failed to
show it had the ability to provide service to Prairie Estates
and that the City
encroached on its service area.
Branda property. The
district court denied Post Rock's request for
injunctive relief as
to the Branda property. The district court determined that
Post Rock failed to
show it could serve the Branda property, had made no effort
to extend service to
the property, and had not commissioned an engineering study
to determine if
service was feasible. Based on these findings, the district court
concluded that Post
Rock had not made service available to the Branda property.
On appeal, Post Rock
does not dispute these findings and conclusions. The
district court did
not err in denying Post Rock relief as regards the Branda
property.
Denial of
declaratory judgment
The district court
denied Post Rock's request for a declaratory judgment
that º 1926(b)
applied to all property surrounding the City as long as Post Rock
was indebted to the
FmHA and had the capacity to serve additional water users.
This court reviews
the denial of declaratory relief for abuse of discretion.
Johnson v. Thompson,
971 F.2d 1487, 1498 (10th Cir. 1992). In denying
injunctive relief
for Prairie Estates, the district court noted that its "legal ruling
will apply equally
to the Prairie Estates addition should that area ever be
developed."
Aplt. App. I at 161. Whether Post Rock is entitled to provide
exclusive water
service in Prairie Estates will depend on whether it has the
ability to serve the
area; this has not yet been established and cannot be
established until
there are water customers in the area. The district court did not
abuse its discretion
in denying Post Rock declaratory relief.
Award of attorney
fees, expenses, and costs
The district court
awarded Post Rock partial attorney fees under 42 U.S.C.
º 1988. The City
appeals the award of attorney fees, arguing that Post Rock's
claim for an
injunction under º 7 U.S.C. º 1926(b) is not cognizable under 42
U.S.C. º 1983 and
therefore does not support an award of attorneys' fees under
42 U.S.C. º 1988.(4)
As noted above, the
record requires further factual development as to
whether Post Rock's
imposition of costs on the owners of the Purma Addition
duplex was
"unreasonable, excessive, and confiscatory" such that it did not
make
services available
under º 1926(b). Accordingly, it is unclear at this point
whether Post Rock
will prevail on its claim for injunctive relief as to the Purma
Addition and
whether, as a result, it will request an award of attorneys fees as the
prevailing party
under 42 U.S.C. º 1988.
However, in the
event that Post Rock does prevail on this claim, the district
court will be
required to resolve the question of whether Post Rock is entitled to
attorneys fees.
Because the issue has been fully briefed, we will address it here.
(4) Post Rock has
filed a cross_appeal of the amount of the award. However, in light of our decision to remand Post Rock's claim as
to the Purma Addition to the district
court for further proceedings, that cross_appeal is moot.
Although we
generally review an award of attorney fees for abuse of discretion,
we consider de novo
the district court's legal conclusions underlying the award of
fees. Brandau v.
Kansas, 168 F.3d 1179, 1181 (10th Cir.), cert. denied, 526 U.S.
1132 (1999).
Section 1988(b)
allows for an award of attorney fees in an action to
enforce 42 U.S.C. º
1983. The district court concluded that actions for violations
of º 1926(b) are
properly brought under º 1983. Although Post Rock's complaint
did not mention º
1983, Post Rock may recover attorney fees under º 1988 if its
complaint contained
allegations sufficient to support a º 1983 action. See Haley
v. Pataki, 106 F.3d
478, 481 (2d Cir. 1997); Thorstenn v. Barnard, 883 F.2d 217,
218 (3d Cir. 1989).
The issue is whether
Post Rock's complaint stated a claim that would be
cognizable under º
1983. Section 1983 provides that
[e]very person who,
under color of any statute, [or] ordinance . . . of any State . . . subjects, or causes to be subjected, any citizen
of the United States or other person
within the jurisdiction thereof to the
deprivation of any rights, privileges, or immunities secured by the Constitution and laws, shall be liable to
the party injured in an action at law,
suit in equity, or other proper proceeding for redress.
The City contends
that Post Rock, as a quasi_municipality,(5) cannot bring a º 1983
(5) The Kansas
Supreme Court has concluded that a rural water district is "incorporated as a quasimunicipal
corporation by declaration of the board of the commissioners of the county in which the water district is
located." Dedeke v. Rural Water
Dist. No. 5, 623 P.2d 1324, 1331 (Kan. 1981) (citing Kan. Stat.Ann. 82a_616).
The powers of a rural water district are prescribed by statute, the water district enjoys the power of eminent
domain, and "[i]n law and in fact, a
rural water district exercises the powers of a public utility,"
"subject to state regulation and
control." Id.
claim against the
City, a municipality. The City also asserts that Post Rock is not
a
"citizen" or "other person" under º 1983.
A political
subdivision of a state may not bring certain constitutional
challenges against
another political subdivision. See Branson Sch. Dist. RE_82 v.
Romer, 161 F.3d 619,
628 (10th Cir. 1998) (noting that "a municipality may not
bring a
constitutional challenge against its creating state when the
constitutional
provision that
supplies the basis for the complaint was written to protect
individual rights,
as opposed to collective or structural rights"); Housing Auth. v.
City of Ponca City,
952 F.2d 1183, 1190 (10th Cir. 1991) (noting that "a political
subdivision of a
state may not challenge the validity of an act by a fellow
political
subdivision under the Fourteenth Amendment unless such an action is
expressly authorized
by the creating state"); United States v. Alabama, 791 F.2d
1450, 1454_55 (11th
Cir. 1986) (noting that generally "creatures of the state have
no standing to
invoke certain constitutional provisions in opposition to the will of
their
creator"); South Macomb Disposal Auth. v. Township of Washington, 790
F.2d 500, 505 (6th Cir.
1986) (noting that "a political subdivision of a state
cannot challenge the
constitutionality of another political subdivision's ordinance
on due process and
equal protection grounds").
This court in Ponca
City reasoned that because "political subdivisions are
creatures of the
state, they possess no rights independent of those expressly
provided to them by
the state. Hence, unless expressly granted the ability by its
creating state, a
political subdivision cannot assert federal constitutional rights in
opposition to state
action." 952 F.2d at 1192. The reasoning of Ponca City is
inapplicable here.
Post Rock is asserting a violation of federal statutory law, not
a constitutional
violation. The State of Kansas has authorized Post Rock to
borrow money from
the FmHA, which brings Post Rock under the rubric of
º 1926.
We next address
whether Post Rock, a quasi_municipality, may bring a
º 1983 action
against the City for its alleged violation of º 1926. The Supreme
Court has held that
municipalities are "persons" for purposes of being sued under
º 1983. Board of
County Comm'rs of Bryan County v. Brown, 520 U.S. 397,
403 (1997); Monell
v. Dep't of Soc. Servs., 436 U.S. 658, 689_90 (1978). Other
circuits have
stated, post_Monell, that while a municipality may be sued under
º 1983, it may not
bring an action under the same provision. See Rockford Bd.
of Educ., Sch. Dist.
No. 205 v. Illinois State Bd. of Educ., 150 F.3d 686, 688
(7th Cir. 1998)
(noting that "a city or other municipality cannot bring a suit under
42 U.S.C. º
1983"); Randolph County v. Alabama Power Co., 798 F.2d 425, 425_
26 (11th Cir. 1986)
(stating that "we have subsequent to Monell continued to
hold that a
municipality has no cause of action under section 1983"). A review
of those cases,
however, shows they involved claims by municipalities of
constitutional
violations, which generally cannot be asserted by municipalities
under any statute.
See City of East St. Louis v. Circuit Court for Twentieth
Judicial Circuit,
986 F.2d 1142, 1144 (7th Cir. 1993) (stating that
"[m]unicipalities cannot challenge state action on federal
constitutional grounds
because they are not
`persons' [and] . . . cannot invoke the protection of the Fifth
or Fourteenth
Amendments"); Appling County v. Municipal Elec. Auth., 621 F.2d
1301, 1308 (5th Cir.
1980) (stating that "[t]he Monell decision does not call into
question the
principle that a city or county cannot challenge a state statute on
federal
Constitutional grounds"). In this case, Post Rock is claiming a
statutory
violation. Section
1983 provides a private cause of action for violations of
federal statutes, as
well as for constitutional violations. Maine v. Thiboutot, 448
U.S. 1, 4 (1980).
This court has held that "a political subdivision [may] sue its
parent state when
the suit alleges a violation by the state of some controlling
federal law."
Branson, 161 F.3d at 630. It follows that Post Rock can sue the
City under º 1983
for violations of º 1926.
In Monell, the
Supreme Court relied on legislative history to conclude that
a municipality may
be sued under º 1983. The Court explained that before the
Civil Rights Act was
passed Congress had stated that "`in all acts hereafter
passed . . . the
word "person" may extend and be applied to bodies politic and
corporate . . .
unless the context shows that such words were intended to be used
in a more limited
sense.'" Monell, 436 U.S. at 688 (quoting Act of Feb. 25,
1871, º 2, 16 Stat.
431). We agree with the Sixth Circuit that "in light of
Monell, it would be
a strained analysis to hold, as a matter of statutory
construction, that a
municipal corporation was a `person' within one clause of
section 1983, but
not a `person' within another clause of that same statute."
South Macomb, 790
F.2d at 503. Post Rock is not precluded from bringing an
action under º 1983
simply by its status as a quasi_municipality.
Availability of º
1983 for violation of º 1926(b)
While Post Rock is
not precluded as a quasi_municipality from bringing a
º 1983 action for
violation of a federal statute, we must next determine whether a
violation of º
1926(b) gives rise to a federal right enforceable through a º 1983
action. Section 1983
protects certain rights conferred by federal statutes.
Blessing v.
Freestone, 520 U.S. 329, 340 (1997). "In order to seek redress
through º 1983,
however, a plaintiff must assert the violation of a federal right,
not merely a
violation of federal law." Id. The court looks at three factors to
determine whether a
particular statutory provision gives rise to a federal right:
(1) "Congress
must have intended that the provision in question benefit the
plaintiff," (2)
"the plaintiff must demonstrate that the right assertedly protected
by the statute is
not so `vague and amorphous' that its enforcement would strain
judicial
competence," and (3) "the statute must unambiguously impose a
binding
obligation on the
States." Id. at 340_41.
All of these factors
support the conclusion that º 1926(b) gives rise to a
federal right.
Section 1926(b) serves to prohibit competition with rural water
districts; this
indicates that Congress intended the provision to benefit rural water
districts such as
Post Rock. See Bell Arthur, 173 F.3d at 520 (stating º 1926(b)
was enacted to
protect nonprofit water service associations and hence, the federal
loans made to them,
by "protecting the territory served by such an association
facility against
competitive facilities"); but see Wayne, 36 F.3d at 529 (stating
that "[t]he
overwhelming weight of authority is that the purpose of the statute is
to protect rural
water service users access to clean, safe water"). This right
against competition
and the requirements for protection of the right are defined
by the statute and
are not so vague and amorphous that its enforcement would
strain judicial
competence. The statute unambiguously imposes a binding
obligation on
municipal corporations, which are political subdivisions of the
state, to not
compete with rural water districts.
Even though º
1926(b) creates an individual right, there is only a
rebuttable
presumption that the right is enforceable under º 1983. Blessing, 520
U.S. at 341. A right
is not enforceable under º 1983 if Congress "`specifically
foreclosed a remedy
under º 1983.'" Id. (quoting Smith v. Robinson, 468 U.S.
992, 1005, n.9
(1984)). Congress may expressly preclude such a remedy by
forbidding recourse
to º 1983 in the statute itself. Id. Congress can also
impliedly preclude a
º 1983 remedy by creating a comprehensive enforcement
scheme that is
incompatible with individual enforcement under º 1983. Id.
With these
principles in mind, we conclude that Congress has not
foreclosed a º 1983
remedy for violations of º 1926(b). Section 1926(b) does not
itself forbid
recourse to º 1983. Moreover, "Congress provided no enforcement
mechanism for
protecting the right that º 1926(b) creates. Thus, pursuant to
º 1983, º 1926(b)
gives rise to a private right of action on the part of rural water
service users."
Wayne, 36 F.3d at 529; see North Alamo Water Supply Corp. v.
City of San Juan, 90
F.3d 910, 917 (5th Cir. 1996) (noting that "[s]ection 1926(b)
does not create or
specify a remedy for the enforcement of violations, but an
injunction has been
the principal tool employed by the courts with which to
enforce the statute
and prevent violations"). As a result, the district court did not
err in concluding
that Post Rock properly brought its action for violation of
º 1926(b) under
º1983. In the event that Post Rock prevails on remand on its
claim for injunctive
relief as to the Purma Addition, it will be entitled to an
award of a
reasonable amount attorneys fees under 42 U.S.C. º 1988.
III.
The judgment of the
district court as to the Purma Addition is VACATED
and the case is
REMANDED for the district court for further proceedings. The
judgment of the
district court as to the Prairie Estates Addition and the Branda
property is
AFFIRMED.
Nos. 98_3337, 98_3340,
99_3075, 99_3084
Rural Water Dist.
No. 1 v. City of Wilson
BRISCOE, Circuit
Judge, concurring and dissenting:
I concur in the
majority opinion except for its holding regarding the Purma
Addition that cost
to the customer of establishing water service is relevant in
determining whether
Post Rock has made services available under º 1926(b).
Rather than reverse
and remand for further consideration of whether Post Rock's
imposition of a
$32,000 cost upon the owners of the Purma Addition duplex was
excessive,
unreasonable, and confiscatory, I would reverse and remand with
directions to the
district court to enjoin the City from providing water service in
the Purma Addition
and to reassess the amount of attorney fees awarded to Post
Rock as a prevailing
party under 42 U.S.C. º 1988.
The proper test in
determining whether Post Rock made service available
under º 1926(b) is
the "pipes in the ground" test enunciated in Sequoyah County
Rural Water District
No. 7 v. Town of Muldrow, 191 F.3d 1192 (10th Cir. 1999),
cert. denied, 120 S.
Ct. 1521 (2000), i.e., whether Post Rock had "adequate
facilities within or
adjacent to the area to provide service to the area within a
reasonable time
after a request for service [was] made." Id. at 1203.
This court has held
that to receive the protection against competition provided by º 1926(b) a water association must (1) have a
continuing indebtedness to the FmHA
and (2) have provided or made available
service to the disputed area. [Citation omitted.] The purpose of
the second inquiry is to determine
whether the disputed customers are
within the water association's service area . . . . Doubts about whether a water association is entitled to
protection from
competition under º
1926(b) should be resolved in favor of the
FmHA_indebted party seeking protection for its territory. See North Alamo Water Supply Corp. v. City of San
Juan, Tex., 90 F.3d 910, 913 (5th Cir.
1996) ("The service area of a federally indebted water association is sacrosanct. Every federal
court to have interpreted º 1926(b)
has concluded that the statute should be liberally interpreted to protect FmHA_indebted rural water
associations from municipal
encroachments.").
Id. at 1197. The
cost of water service provided by Post Rock should not be
compared to the cost
of water service provided by the City because this would
impermissibly create
competition with the rural water district. See S. Rep. No.
566, 87th Cong., 1st
Sess., reprinted in 1961 U.S.C.C.A.N. 2243, 2309 (noting
that º 1926(b)
exists to "protect[] the territory served by such an association
against competitive
facilities"). Similarly, the cost to the customer of
establishing service
cannot be considered in determining whether the rural water
district has made
service available for purposes of protecting it against
encroachment by a
city water district under º 1926(b).
This conclusion does
not leave rural water customers without a remedy.
Cost might be a
relevant factor in an action against Post Rock by rural water
customers under
state law. Kansas statutes provide for release of lands from the
water district's
service area "[i]f it becomes apparent that certain lands included
within a district
cannot be economically or adequately served by the facilities of
the district."
Kan. Stat. Ann. º 82a_630 (1997). Rural water customers can also
bring an action in
state court challenging the reasonableness of rates set by rural
water districts. As
the Kansas Supreme Court has noted, the rural water district
"is not free to
exact whatever rate it sees fit to impose" and "rates must be
reasonable in the sense
that they are not excessive or confiscatory." Shawnee
Hills Mobile Homes,
Inc. v. Rural Water Dist. No. 6, 537 P.2d 210, 216_17 (Kan.
1975); see Bodine v.
Osage County Rural Water Dist. #7, 949 P.2d 1104, 1110
(Kan. 1997) (noting
that "a water user who is subject to the rates [between a City
and the rural water
district] may still challenge the rates as improper if the
litigant can
overcome the rates' presumption of validity and prove that the rates
are unreasonable,
excessive, and confiscatory"). However, this cost inquiry is
not relevant in
determining whether the City violated º 1926(b).
The district court
concluded Post Rock was a prevailing party under 42
U.S.C. º 1988 and
awarded partial attorney fees on its limited success. As I
would conclude the
district court erred in ruling against Post Rock concerning the
Purma Addition, I
would also remand for the district court to reassess the extent
to which Post Rock
prevailed and the amount of attorney fees warranted.
I would reverse the
district court's judgment as to the Purma Addition and
remand to the
district court with directions to enjoin the City from providing
water service in
that area and to reassess the extent to which Post Rock prevailed
and award reasonable
attorney fees accordingly.