Court Opinion

ID: 3025965
Source: CourtListenerOpinion
Date Created: 2015-10-13 22:34:45.556158+00
Date Added: 2024-06-11T11:47:48.211031
License: Public Domain

United States Court of Appeals
                           FOR THE EIGHTH CIRCUIT
             ___________

             No. 99-1895
             ___________

Concerned Irrigators; Harold Nelson;      *
Laurie Barnaud,                           *
                                          *
      Plaintiffs - Appellants,            *
                                          *
      v.                                  *
                                          *
Belle Fourche Irrigation District; Gary   *
Brunner; Darrell Cox; Steve Gatzke;       *
Harlan Palo; Arthur Persche; Robert       *
Ruff; Walter Stumpf, Individually         *
and in Their Official Capacity as the     *
Board of Directors of the Belle           *
Fourche Irrigation District,              *
                                          *
      Defendants - Appellees.             *

             ___________

                                              Appeals from the United States
             No. 99-1922                      District Court for the
             ___________                      District of South Dakota.

Concerned Irrigators; Harold Nelson;      *
Laurie Barnaud,                           *
                                          *
      Plaintiffs - Appellees,             *
                                          *
      v.                                  *
                                          *
Belle Fourche Irrigation District; Gary   *
Brunner; Darrell Cox; Steve Gatzke;      *
Harlan Palo; Arthur Persche; Robert      *
Ruff; Walter Stumpf, Individually        *
and in Their Official Capacity as the    *
Board of Directors of the Belle          *
Fourche Irrigation District,             *
                                         *
      Defendants - Appellants.           *
                                    ___________

                              Submitted: February 14, 2000

                                   Filed: January 2, 2001
                                    ___________

Before BEAM and JOHN R. GIBSON, Circuit Judges, and PRATT,* District Judge.
                            ___________

JOHN R. GIBSON, Circuit Judge.

      This case involves the Belle Fourche Irrigation District's method of assessing
construction debt and operation and maintenance (O & M) costs to the landowners in
the District. Concerned Irrigators, a landowners' association, and Harold Nelson and
Laurie Barnaud, individual landowners, appeal the district court's1 grant of summary
judgment to the District. The appellants (collectively, Concerned Irrigators) argue that
the District is violating both federal law, which requires construction charges to be
equitably apportioned, and state law, which requires assessments to be made with
regard to the benefit received. We affirm.

      *
        The Honorable Robert W. Pratt, United States District Judge for the Southern
District of Iowa, sitting by designation.
      1
       The Honorable Richard H. Battey, United States District Judge for the District
of South Dakota.

                                          -2-
       The United States Bureau of Reclamation constructed the Belle Fourche
Irrigation Project in the early part of the twentieth century to deliver water to the arid
lands of western South Dakota. After its completion, the project was operated by the
Bureau. In 1949, the Belle Fourche Irrigation District, an organization formed by the
landowners whose lands were irrigated by the project, took over the project's operation
and maintenance.

       The District annually assesses the landowners within the District to cover each
landowner's share of construction debt and O & M costs. Over the years, the District
and the Bureau have entered into several different contracts that require, among other
things, repayment of construction costs. Four contracts are relevant to this dispute:
the 1949 contract, the 1963 Keyhole contract, the 1971 contract, and the 1984 contract.

       Under the 1949 contract, those who owned less productive land were assessed
at a lower rate for both construction debt and O & M costs:

      All assessments, tolls, or other charges against individual tracts in the
      District for the purpose of paying the District's obligations shall be fixed
      for the different classes of land at such ratios as may be determined by the
      District's Board of directors: Provided, That all assessments shall be
      within the percentage ratios as follows, all ratios being based on a ratio
      of 100 for class 1 land:
                               Class 1 - 100
                               Class 2 - 88-92
                               Class 3 - 60-65
                               Class 4 - 40-50

Class 1 lands are the most productive; Class 4 lands are the least productive.

       In 1963, the Bureau and the District entered into a contract that allowed the
District to receive water from the newly constructed Keyhole Reservoir in Wyoming.
The Keyhole contract amended the 1949 contract to provide for payment of Keyhole

                                           -3-
construction debt and Keyhole O & M costs. The assessment method for these charges
was the same as the method provided in the 1949 contract.

       The District's board of directors proposed a different method of assessment in
1970. Under this proposal, the O & M costs were to be assessed equally based on the
number of irrigable acres owned. Those who owned less productive land would no
longer be assessed at a lower rate for O & M costs. In addition, the ratios for the land
classes, which would still be used to assess construction debt, were to change. After
the board passed the resolution, it submitted the proposal to the landowners for a vote.
Of the 549 eligible voters, 363 voted, with 200 in favor of the change. The District and
the Bureau then entered into a new contract in 1971, which modified both the 1949
contract and the 1963 Keyhole contract. The 1971 contract incorporated the new
assessment method:

      The assessments to pay annual operation, maintenance, and replacement
      costs and assessments for any and all special or reserve funds shall be
      assessed equally against all irrigable acres irrespective of land
      classification. All assessments, tolls, or other charges against individual
      tracts of land in the District for the purpose of paying annual construction
      installments due under all contracts shall be fixed for the different classes
      of land at such ratios as may be determined by the District Board of
      Directors: Provided, That all assessments shall be within the percentage
      ratios as follows, with all ratios being based on a ratio of 100 for Class 1
      lands:
                               Class 1 - 100
                               Class 2 - 65-80
                               Class 3 - 10-25
                               Class 4 - 1-10

       In 1983, Congress enacted a law that designated the project as the Belle Fourche
Unit of the Pick-Sloan Missouri Basin Program, allowing the project to benefit from the

                                          -4-
sale of hydroelectric power in the basin.2 The purpose of the law was to modernize and
improve the irrigation facilities in the District and to promote recreation and fish and
wildlife preservation. The Bureau and the District entered into a new contract in 1984
to establish a new repayment plan for construction debt. By its terms, the contract
superseded the 1949 contract and a 1976 contract that is not relevant here. The 1963
Keyhole contract was incorporated into the 1984 contract. The 1971 contract was not
mentioned; however, the District continued to assess the landowners in accord with its
provisions.

       Today, the District assesses O & M costs equally per irrigable acre, as provided
by the 1971 contract. The District assesses construction debt proportionally based on
land class, but whether it is using the ratios from the 1971 contract is not clear.

       Nelson and Barnaud filed suit individually and on behalf of Concerned Irrigators,
an association of Class 3 and 4 landowners within the District. Concerned Irrigators
alleged that the District's method of assessment is improper and in violation of its
contractual and statutory obligations. The district court found that the 1971 contract
was valid, that the 1984 contract did not supersede the 1971 contract, and that the
District's assessment of O & M costs complies with its contractual obligations. The
court also found that the District's assessment of construction debt complies with
federal law. Concerned Irrigators appeals the court's grant of summary judgment for
the District. The District cross-appeals, arguing that the district court lacked
jurisdiction to review the assessment rates.

      2
        Act of Nov. 17, 1983, Pub. L. No. 98-157, 97 Stat. 989 (authorizing
rehabilitation of the Belle Fourche irrigation project).

                                          -5-
                                              I.

        Citing Flint v. United States, 906 F.2d 471 (9th Cir. 1990), the District argues
that the authority to set assessments is a discretionary function of the Bureau of
Reclamation and that the district court therefore lacked jurisdiction to review the
assessment method. In Flint, the Ninth Circuit held that the Administrative Procedure
Act precluded review of the Secretary of the Interior's discretionary act of setting
maximum O & M charges because there were no meaningful standards against which
to judge the action. 906 F.2d at 475-76. Here, Concerned Irrigators is challenging
decisions made by the District, not by the Secretary or the Bureau. Flint does not speak
to the setting of assessments by a private irrigation district, and the district court did not
lack jurisdiction to review the District's method of assessment.

                                             II.

      We review a grant of summary judgment de novo. Richmond v. Fowlkes, 228
F.3d 854, 857 (8th Cir. 2000). We view the evidence in the light most favorable to the
nonmoving party, upholding summary judgment if there are no genuine issues of
material fact and the moving party is entitled to judgment as a matter of law. Id.; Fed.
R. Civ. P. 56(c).

                                             A.

      Concerned Irrigators argues that the District's equal assessment of O & M costs
and proportional assessment of construction debt does not comply with state law

                                             -6-
provisions requiring assessments to be made according to the benefit received.3 See
S.D. Codified Laws §§ 46A-7-1 and 46A-7-5 (1999).

       The District need not assess the landowners according to the benefit received if
its contract with the Bureau requires a different method of assessment. South Dakota
law authorizes an irrigation district to assess in accord with the terms of its contract
with the United States. S.D. Codified Laws § 46A-7-7 (1999).4 The question we must
answer, then, is whether the District's contract with the Bureau establishes a method
of assessment.

      3
       The District argues that state law does not apply to the operation of a federal
reclamation project, citing Ivanhoe Irrigation District v. McCracken, 357 U.S. 275, 291
(1958). This argument is without merit. The Reclamation Act provides:
      Nothing in this Act shall be construed as affecting or intended to affect or
      to in any way interfere with the laws of any State or Territory relating to
      the control, appropriation, use, or distribution of water used in irrigation,
      or any vested right acquired thereunder, and the Secretary of the Interior,
      in carrying out the provisions of this Act, shall proceed in conformity with
      such laws . . . .
43 U.S.C. § 383 (1994). Reclamation projects are therefore subject to state law, so
long as that law is not inconsistent with federal law. See California v. United States,
438 U.S. 645, 670-79 (1978); South Delta Water Agency v. United States, 767 F.2d
531, 536-37 (9th Cir. 1985).
      4
       In full, this section provides:
      Whenever any irrigation district, organized under the laws of this state,
      shall have contracted with the United States for a supply of water for the
      irrigation of lands within the district, the construction of irrigation or
      drainage works, or the operation thereof, or both, or other purposes
      authorized by law, the board of directors is authorized to make the
      assessments intended to meet the obligations of the district under such
      contract in accordance with the method and terms as provided by such
      contract, and no apportionment of benefits by the director of equalization
      shall be necessary when so provided in said contract.
S.D. Codified Laws § 46A-7-7 (1999).

                                          -7-
                                            B.

        Under the 1971 contract, which modified the method of assessment found in the
1949 and 1963 contracts, the District assessed O & M costs equally for each irrigable
acre and construction debt proportionally, using new ratios for the different land
classes. Concerned Irrigators argues that the 1971 contract is invalid for three reasons:
(1) it was not judicially confirmed as required by federal law, (2) it was not approved
by a majority vote of the affected landowners as required by state law, and (3) it was
superseded by the 1984 contract.

       Federal law gives the United States authority to enter into repayment contracts
with irrigation districts, but specifies that these contracts are not "binding on the United
States until the proceedings on the part of the district for the authorization of the
execution of the contract with the United States shall have been confirmed by decree
of a court of competent jurisdiction, or pending appellate action if ground for appeal
be laid." 43 U.S.C. § 511 (1994). Even if the United States is not bound by the 1971
contract because it was not judicially confirmed, the contract is not necessarily invalid.
Cf. Restatement (Second) of Contracts § 7 & cmt. a (1979) (where a party has the
power to avoid the legal relations created by a contract, that contract is voidable but
not void). There is no evidence that the United States has ever attempted to escape any
obligation created by the contract. The lack of judicial confirmation does not invalidate
the 1971 contract.

       Concerned Irrigators also argues that because a majority of all landowners in the
District did not vote in favor of the 1971 contract, it is not valid. South Dakota law
gives the board of directors of an irrigation district

       the power and authority to enter into any contract with the United States
       supplementing or amending any original contract with the United States,
       said original contract having been entered into pursuant to the provisions

                                            -8-
      of chapters 46A-4 to 46A-7, inclusive; provided, that such supplementary
      or amendatory contract does not increase the amount of principal
      indebtedness of the district to the United States as it exists at the date of
      the supplementary or amendatory contract.

S.D. Codified Laws § 46A-6-8 (1999). South Dakota law also provides that no
election or judicial confirmation is required for a supplementary or amendatory contract
entered into under section 46A-6-8. S.D. Codified Laws § 46A-6-9 (1999). It is
sufficient if the board of directors authorized the execution of the contract by
resolution. Id.

       The 1971 contract is supplementary to the 1949 and 1963 contracts, and it did
not change the amount owed to the United States. Thus, it was within the power of the
District's board of directors to authorize the contract by resolution, which it did. The
landowner vote was legally unnecessary and does not change the analysis.

        Finally, Concerned Irrigators argues that the 1984 contract, which does not
mandate a particular assessment method, supersedes the 1971 contract. To support this
argument, Concerned Irrigators relies on the law that authorized rehabilitation of the
Belle Fourche project, which states: "The Secretary of the Interior . . . is authorized to
negotiate and execute an amendatory repayment contract with the Belle Fourche
irrigation district . . . . This contract shall replace all existing contracts between the
Belle Fourche irrigation district and the United States." Act of Nov. 17, 1983, Pub. L.
No. 98-157, § 2(a), 97 Stat. 989.

       The following provision from the 1984 contract is the complete discussion of
prior contracts between the District and the Bureau:

      This contract shall replace in entirety the two existing contracts between
      the United States and the District covering repayment of costs of Belle
      Fourche Unit, Contracts Nos. IIr-1555 [the 1949 contract] and 14-06-600-

                                           -9-
      1949A [the 1976 contract]. . . . Contract No. 14-06-600-6979 [the 1963
      Keyhole contract] is attached as Exhibit B and by reference is made a part
      of this contract.

Exhibit B is the 1963 Keyhole contract in its original form. The 1984 contract does not
mention the 1971 contract.

        The 1971 contract modified both the 1949 contract, which is superseded by the
1984 contract, and the 1963 Keyhole contract, which is incorporated into the 1984
contract. Once the 1963 contract was modified by the 1971 contract, it ceased to exist
in its original form. At that point, the District began assessing in accord with the 1971
contract. The District and the Bureau incorporated the 1963 contract into the 1984
contract, and there is no reason to infer that they intended to resurrect the earlier
method of assessment. While they did attach the 1963 contract in its original form, the
fact that the District continued to assess the landowners in accord with its 1971
contract obligations after entering into the 1984 contract serves to reinforce the most
logical conclusion: That is, the 1963 contract currently exists in only one form, as
modified by the 1971 contract.5

      Concerned Irrigators argues that the Bureau and the District could not have
intended for the 1971 contract to remain in effect because portions of it conflict with
the 1984 contract and that it makes no sense that only the method of assessment would

      5
        In its brief, Concerned Irrigators alleges that the District might not be assessing
construction debt in accord with the ratios provided in the 1971 contract, which could
imply that the 1971 modifications to the 1963 Keyhole contract were not incorporated
into the 1984 contract. By conceding that the District may be using the 1971 ratios to
assess construction debt, Concerned Irrigators fails to raise a genuine factual dispute
on this point. In any event, there is no question that the District is assessing O & M
costs equally in accord with the 1971 contract, and this fact is a sufficient basis on
which to rest our conclusion that the 1963 contract no longer exists in its original form.

                                           -10-
survive. We need not determine whether the entire 1971 contract is still in effect
because the only provision at issue here is the method of assessment. This provision
is still in effect as a modification of the 1963 contract, regardless of whether the
remainder of the 1971 contract has survived.

      Because the District's contract with the Bureau provides a method of assessment,
the District need not comply with South Dakota's benefit-received requirement.
Instead, the District is bound by the assessment method found in the 1963 Keyhole
contract, as modified by the 1971 contract and as incorporated into the 1984 contract.

                                           C.

      Finally, Concerned Irrigators argues that federal law requires the District to
equitably apportion construction costs according to the land's productive value and that
the District is not complying with this requirement. 43 U.S.C. § 462 (1994) provides:

      The irrigable lands of each new project and new division of a project
      approved, after December 5, 1924, shall be classified by the Secretary
      with respect to their power, under a proper agricultural program, to
      support a family and pay water charges, and the Secretary is authorized
      to fix different construction charges against different classes of land under
      the same project for the purpose of equitably apportioning the total
      construction cost so that all lands may as far as practicable bear the
      burden of such cost according to their productive value.

43 U.S.C. § 461 (1994) provides:

      The construction charges which shall be made per acre upon the entries
      and upon lands in private ownership which may be irrigated by the waters
      of any irrigation project shall be determined with a view of returning to
      the reclamation fund the estimated cost of construction of the project, and
      shall be apportioned equitably.

                                          -11-
Section 462 authorizes the Secretary of the Interior to fix different construction charges
for different classes of land without imposing any requirement that the Secretary do so.
Because this section refers specifically to the Secretary, it does not apply to the
assessment for construction debt made by the District. In any event, the District does
assess construction debt differently for the different classes of land, and these
classifications are based on the land's productivity. Section 461 simply requires
construction charges to be apportioned equitably. The District's proportional
assessment of construction debt based on land class does not fall afoul of this standard.

      Concerned Irrigators also argues that the law authorizing rehabilitation of the
Belle Fourche project governs the District's method of assessment. During the
rehabilitation,

      the rates of charge to land class in the unit shall continue to be as
      established in the November 29, 1949 repayment contract with the
      district, as subsequently amended and supplemented; thereafter, such
      rates of charge and assessable acreage shall be in accordance with the
      amortization capacity and classification of unit lands as then determined
      by the Secretary.

Act of Nov. 17, 1983, Pub. L. No. 98-157, § 2(c), 97 Stat. 989. Kent Heidt, a Bureau
of Reclamation group leader, testified that this provision "allow[s the Bureau] to set a
total payment amount for the district . . . ." Heidt also testified that the Bureau's 1995
analysis of the payment capacity of the land in the District, undertaken pursuant to Pub.
L. No. 98-157, "would have been used as a basis for determining the total payment of
the district." The manager of the District testified that the purpose of determining "the
amortization capacity of the lands within the district was to set [the] overall repayment
capacity of the district." The 1995 analysis and Pub. L. No. 98-157 do not prescribe
a method of assessment. Instead, they are concerned with the District's total payment
to the United States.

                                          -12-
                        *          *          *

We affirm the district court's grant of summary judgment to the District.

A true copy.

      Attest:

         CLERK, U.S. COURT OF APPEALS, EIGHTH CIRCUIT.

                                  -13-