UNITED STATES COURT OF APPEALS

TENTH CIRCUIT

__________________________

PITTSBURG COUNTY RURAL WATER DISTRICT NO. 7, an agency and legally constituted authority of the State of Oklahoma,

Plaintiff-Appellant,

v.

CITY OF MCALESTER, a municipality; THE MCALESTER PUBLIC WORKS AUTHORITY, a public trust; KENNETH W. SHERILL; LINDA F. SHERILL; CITY OF MCALESTER; BAR-19; BLESSINGS CORP., d/b/a Edison Plastics; MIG, INC.; SOUTHWEST OKLAHOMA BOX COMPANY; TRI-CAT, INC.; SIMMONS POULTRY FARMS, INC.; DENNIS DEFRANGE; TERRY KINYON; PITTSBURG COUNTY REGIONAL EXPOSITION AUTHORITY; PITTSBURG COUNTY BOARD OF COMMISSIONERS, a/k/a Board of County Commissioners of Pittsburg County, Oklahoma; H.G. GILLIAM; BILL WEBBER; OBEN WEEKS; THUNDERCREEK GOLF COURSE TRUST AUTHORITY,

Defendants-Appellees.

OKLAHOMA MUNICIPAL LEAGUE; NATIONAL LEAGUE OF CITIES,

Amici Curiae.

No. 98-7148

(E.D. Okla.)

(D.Ct. No. 97-CV-185-B)

ORDER AND JUDGMENT*

Before BALDOCK and BRORBY, Circuit Judges, and REAVLEY,** Senior Circuit Judge.

Plaintiff-Appellant Pittsburg County Rural Water District No. 7 (District) appeals the district court's entry of summary judgment in favor of Defendants- Appellees City of McAlester, Oklahoma, and McAlester Public Works Authority, a public trust (City).1 The District brought this action under 42 U.S.C. § 1983, claiming the City violated the District's exclusive right, obtained pursuant to 7 U.S.C. § 1926(b), to provide water to customers within its service area. The District also sought declaratory and injunctive relief in relation to: (1) the City's sale of water to the District; (2) the City's sale of water to the District's claimed customers; and (3) the County Commissioners' efforts to deannex portions of the disputed area from the District's territory. Finally, the District brought several related state claims and sought various damages for past and future violations of § 1926(b). We exercise jurisdiction under 28 U.S.C. § 1291 and reverse.

BACKGROUND

The facts of this case are remarkably similar to those of our recent case, Sequoyah County Rural Water Dist. No. 7 v. Town of Muldrow, 191 F.3d 1192 (10th Cir. 1999), cert. denied, 120 S. Ct. 1532, 120 S. Ct. 1548 (2000). In this case, the Board of County Commissioners of Pittsburg County, Oklahoma, incorporated the District on April 26, 1966 to "develop[] and provid[e] an adequate rural water supply ... to serve and meet the needs of rural residents within the territory of the district."2 Okla. Stat. Ann. tit. 82, § 1324.3. In order to help rural water districts carry out that mission, Oklahoma law authorizes districts to borrow money from the federal government. See Okla. Stat. Ann. tit. 82, § 1324.10(A)(4). In turn, the federal government makes loans available to districts pursuant to 7 U.S.C. § 1926(a).

The District first took advantage of these federal loans, administered by the Farmer's Home Administration (FmHA),3 in 1967 by borrowing $300,000. The District remained continuously indebted to FmHA until February 24, 1989, when the District borrowed funds from the First National Bank and Trust Co. of McAlester, Oklahoma, in order to repurchase its outstanding debt to FmHA.4 Subsequent to repurchase, the notes were marked "SATISFIED IN FULL – FmHA." The District is once again indebted to FmHA pursuant to a loan obtained on June 15, 1994.

Periods of indebtedness are important because § 1926(b) protects rural water districts indebted to FmHA from competition or other encroachments in their service area:

The 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, or by the granting of any private franchise for similar service within such area during the term of such loan; nor shall the happening of any such event be the basis of requiring such association to secure any franchise, license, or permit as a condition to continuing to serve the area served by the association at the time of the occurrence of such event.

7 U.S.C. § 1926(b). Congress included this language "to assist in protecting the territory served by such an association facility against competitive facilities, which might otherwise be developed with the expansion of the boundaries of municipal and other public bodies into an area served by the rural system." S. Rep. No. 87-566, reprinted in 1961 U.S.C.C.A.N. 2243, 2309. This provision not only encourages rural water development, but also provides the federal government greater security in its loans. See Sequoyah, 191 F.3d at 1196. In order to receive the protection of § 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." Id. at 1197. Therefore, our analysis necessarily hinges on determining whether the City began providing water to customers in the District's territory while the District was indebted to FmHA, and if so, whether the District "made service available" to those customers at that time.

Based on the dates of the District's various loans, the disputed customers can be split into three camps: (1) those the City first served during the original period of the District's indebtedness, July 3, 1967 to February 24, 1989; (2) those first served between February 24, 1989 and June 15, 1994; and (3) those first served after June 15, 1994, when the District incurred its latest debt to FmHA. While this dispute includes several smaller properties, the bulk of the suit involves the individual businesses inhabiting an industrial park outside McAlester. The parties agree the City began providing water to at least one industrial park resident – Edison Plastics – during the first time period. The City extended service to two additional businesses during the second period: Southern Star (Simmons Foods) and Tri-Cat. Finally, at least five businesses were added as City customers after June 15, 1994: Southeastern Oklahoma Box, Central Garden, BAR-19 Foods, Vision Manufacturing, LLC (Hawk Boats), and Quality Fishing, Inc.

Recognizing these stipulations, the district court granted the City's summary judgment motion, denied the District's competing summary judgment motion, and granted various motions to dismiss via two separate orders issued November 26, 1997 and September 30, 1998. The district court's decisions, while dealing with a plethora of issues, focused on the two remaining elements the District needed to prove in order to qualify for § 1926(b) protection: the District's indebtedness to FmHA, and the District's ability to make service available to the customers in question.

The district court first examined the impact of the District's repurchase of its debt in 1989 and determined any protections afforded the District under § 1926(b) were extinguished at that time along with its indebtedness to FmHA. Because the District became indebted to FmHA again in 1994, the district court decided the only actionable claims at issue were based on actions taken by the City after June 15, 1994. The court then turned to the issue of whether the District had made service available, and found the District had not done so because it did not have a line in proximity to the disputed areas "capable of delivering water in sufficient quantities to service the disputed territory." In addition, the court based its decision on the District's assertion it will require individual customers to pay for any line extensions needed to provide service. Based on these findings, the district court determined the District did not qualify for the protections of § 1926(b).5

DISCUSSION

We review the district court's grant of summary judgment de novo, applying the same legal standard used by the district court. Summary judgment is appropriate "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed. R. Civ. P. 56(c). When applying this standard, we view the evidence and draw reasonable inferences therefrom in the light most favorable to the nonmoving party.

Simms v. Oklahoma ex. rel. Dep't of Mental Health & Substance Abuse Serv., 165 F.3d 1321, 1326 (10th Cir.) (further internal citations and quotation marks omitted), cert. denied, 120 S. Ct. 53 (1999). When reviewing cross-motions for summary judgment, "our review of the record requires that we construe all inferences in favor of the party against whom the motion under consideration is made," in this case the District. Andersen v. Chrysler Corp., 99 F.3d 846, 856 (7th Cir. 1996).

I. 7 U.S.C. § 1926(b) Claim

The district court entered its orders in this case without the benefit of our recent Sequoyah decision, and both parties agreed at oral argument Sequoyah is dispositive of many of the issues before us in this appeal. Therefore, we will resist the temptation to exhaustively repeat the thorough analysis put forth in that opinion and keep our discussion brief.

As in Sequoyah, the parties here disagree about the effect of the District's repurchase of its debt from FmHA. The District argues the repurchase had no effect, that they were continuously indebted to FmHA from the time of the first loan in 1967, and therefore they satisfy the first requirement of § 1926(b) protection for the entire period in question. The City responds by defending the district court's ruling that the repurchase extinguished the District's debt to FmHA, and therefore the District cannot bring claims for actions taken by the City prior to June 15, 1994, when the District again became indebted to FmHA.6 We rejected both arguments in Sequoyah.

The District's position is flawed because it fails to recognize the significance of the repurchase of the notes. Section 1926(b) protection "does not extend ... to issuer repurchases when the underlying debt to the government is simultaneously canceled or retired." Sequoyah, 191 F.3d at 1200. The District's debt was discharged in this case as evidenced by the "SATISFIED IN FULL" marks on the notes. See id. Therefore, the District was not indebted to FmHA from February 24, 1989, the date of the repurchase, to June 15, 1994, the date of the most recent loan, and cannot claim § 1926(b) protection for this time period.

While the District's position ignores the impact of the repurchase, the City and the district court totally disregard the first period of indebtedness. Adopting this approach "would defeat the purpose of [§ 1926(b)] because a water association which repurchased ... its debt but which otherwise met the statutory requirements would have no recourse for encroachments that occurred or began while it was indebted to the government. Such a rule clearly would defy the language of § 1926(b)." Id. Because the district court determined the repurchase extinguished the District's § 1926(b) protection for the preceding period of indebtedness, we must reverse and remand for further proceedings consistent with Sequoyah and this order and judgment.

We must also reverse and remand because the district court applied the wrong standard to determine whether the District made service available to the disputed customers. We have stated the "made service available" requirement of § 1926(b) "should focus 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." Id. at 1203. In making this inquiry, we have emphasized "[d]oubts about whether a water association is entitled to protection from competition under § 1526(b) should be resolved in favor of the FmHA-indebted party seeking protection for its territory." Id. at 1197. While the district court correctly chose to apply the "pipes in the ground" test, it did so in an inappropriately restrictive manner.

The court stated the "pipes in the ground" test required more than a line in place proximate to the disputed area, but also required "that line [] be capable of delivering water in sufficient quantities to service the disputed territory." The court went on to hold that "[g]iven the fact that [the District] does not have adequate lines in place to service the [industrial park], this Court finds that it has not made service available as that term is intended under § 1926(b)." We agree the adequacy of the District's facilities, or its "capacity to provide water service to a given customer," is an important aspect of the "pipes in the ground" test. Id. at 1203. However, the district court seems to have limited its examination to the District's ability to provide service today, when "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 Water Corp. v. Greenville Util. Comm'n, 173 F.3d 517, 526 (4th Cir. 1999)) (emphasis added). The District provided a sworn affidavit from an expert who stated the time (ranging from 0 to 90 days) it would take for the District to install the appropriate facilities for the various disputed customers. At the very least, the district court must address the reasonableness of the time estimates on remand. We note the evidence may present genuine issues of material fact, thus rendering a summary disposition inappropriate.7 See id. at 1203-06.

II. Injunctive Relief

In its First Amended Complaint, the District stated it acquires all of its water from the City, and claimed the City threatened to stop these sales. The District also claimed it could not obtain a sufficient water supply to meet its customers' needs from other sources. The District argued the City's termination of water sales, if carried out, would violate federal antitrust statutes, and thus sought injunctive relief to prevent such termination. The district court rejected this argument, stating the Local Government Antitrust Act of 1984, specifically 15 U.S.C. § 35,8 excludes cities from civil liability under federal antitrust laws. The court's statement is accurate, as far as it goes; however, it was error to conclude 15 U.S.C. § 35 shields municipalities from claims for injunctive relief. See Thatcher Enter. v. Cache County Corp., 902 F.2d 1472, 1477 (10th Cir. 1990) (§ 35 "does not preclude declaratory or injunctive relief."). See also Cohn v. Bond, 953 F.2d 154, 158 (4th Cir. 1991), cert. denied, 505 U.S. 1230 (1992); Sandcrest Outpatient Serv., P.A. v. Cumberland County Hosp. Sys., Inc., 853 F.2d 1139, 1142 (4th Cir. 1988); Montauk-Caribbean Airways, Inc. v. Hope, 784 F.2d 91, 95 (2d Cir.), cert. denied, 479 U.S. 872 (1986). While the court briefly discussed the parameters of the closely related doctrine of state action immunity, which could provide an alternative ground for denying the District's claims, its decision rested solely on this misinterpretation of § 35. Therefore, the district court must also reexamine the injunction issue on remand, with a focus on whether the City qualifies for state action immunity under the unique facts of this case.

The district court did not reach several issues, most notably whether the county commissioners' deannexation orders are preempted by § 1926(b), because the court determined the District did not qualify for § 1926(b) protection. While we agree with the district court's observation that "federal preemption may preclude the use of the state statute providing for deannexation so long as the [District] qualifies for the protections of § 1926(b)," we decline the District's invitation to decide this and other issues, including what remedy, if any, is appropriate. These issues are best left to the district court to consider in the first instance.9

In addition, we note in its reply brief the City takes issue with several district court rulings dealing with statute of limitations issues and the availability of § 1983 relief under the facts of this case. We have not considered these arguments because "a party may not attack a decision with a view toward enlarging his or her own rights or lessening the rights of an adversary absent a cross appeal." Hansen v. Director, OWCP, 984 F.2d 364, 367 (10th Cir. 1993). See Lombardi v. SBA, 889 F.2d 959, 962 (10th Cir. 1989) (statute of limitations question not properly before court when appellees did not raise issue on cross- appeal).

Accordingly, we REVERSE the district court's Orders and REMAND for further proceedings consistent with this Order and Judgment.

Entered by the Court:

WADE BRORBY

United States Circuit Judge