Opinion ID: 221719
Heading Depth: 2
Heading Rank: 1

Heading: Logan-1 has a continuing indebtedness under loans it obtained from the USDA

Text: On appeal, Guthrie does not dispute that Logan-1 has been continually indebted, since 1976, on loans obtained from the USDA. [1] Instead, Guthrie argues that Logan-1's indebtedness is invalid. More specifically, Guthrie claims that § 1926(b)'s protection against competition is contrary to the Oklahoma Constitution, which provides that [t]he Legislature shall pass no law granting to any association, corporation, or individual any exclusive rights, privileges, or immunities within this State. Okla. Const. art. 5, § 51. While the Oklahoma legislature has authorized Logan-1, under Okla. Stat. tit. 82, § 1324.10(A)(4), to enter into loan agreements with the USDA, [2] see Sequoyah Cnty., 191 F.3d at 1194, Guthrie contends that § 1324.10(A)(4) violates Okla. Const. art. 5, § 51 to the extent it authorizes Logan-1 to enter into loans that must, as a matter of federal law, protect the rural water district from competition under 7 U.S.C. § 1926(b). The Oklahoma Supreme Court accepted our certification of this question, see Rural Water Sewer & Solid Waste Mgmt., Dist. No. 1 v. City of Guthrie, 344 Fed.Appx. 462 (10th Cir.2009) (unpublished), and concluded that a rural water district could agree to § 1926(b)'s protection without violating the Oklahoma Constitution. See Rural Water Sewer & Solid Waste Mgmt., Dist. No. 1 v. City of Guthrie, 253 P.3d 38, 41 (Okla.2010). In reaching that conclusion, the Oklahoma Supreme Court determined the following: The Oklahoma legislature enacted statutes that permit the creation of rural water districts with designated service areas, but the legislature has not provided these districts with an exclusive franchise to provide water service in those areas. See id. at 45-46 & 46 n. 10. The state legislature also authorized these rural water districts to borrow money and enter into contracts. See id. at 46. And in borrowing money, a district may obtain financing from the USDA, even if such an agreement requires § 1926's protection from competition. See id. at 46-47. That protection, however, is granted, not by the state legislature, but instead by Congress. See id. at 44-48, 52 (relying on Glenpool, 861 F.2d at 1216). Therefore, article 5, section 51 is neither implicated nor violated as no action by the Oklahoma Legislature has been taken that grants an exclusive right to a water district. Id. at 48. Moreover, § 1926(b)'s protection is a qualified not an exclusive right, limited in time and in scope by preclud[ing] competitive water services only while a district remains indebted to the USDA [and] to the extent that a competitor's services would curtail or limit the indebted district's ability to provide water services and repay its loans. Id. at 49. Further, noting that a rural water district can only invoke § 1926(b)'s protection if it has made water service available, the Oklahoma Supreme Court determined that, [a]t most, section 1926(b) ordains a dual water authority function within a municipal area for a period of time. Id. at 49-50. In light of the Oklahoma Supreme Court's resolution of our certified question, we affirm the district court's determination that Logan-1's § 1926(b) protection does not violate the Oklahoma Constitution. Logan-1 has thus established that it has been continually and validly indebted, since 1976, on loans obtained from the USDA.