City of Madison, Miss. v. Bear Creek Water Ass'n, Inc.
| Decision Date | 15 May 1987 |
| Docket Number | No. 86-4552,86-4552 |
| Citation | 816 F.2d 1057 |
| Parties | CITY OF MADISON, MISSISSIPPI, Plaintiff-Appellant, v. BEAR CREEK WATER ASSOCIATION, INC., Defendant-Appellees, United States of America, through its agency, Farmers Home Administration, Intervenor-Appellee. |
| Court | U.S. Court of Appeals — Fifth Circuit |
E. Stephen Williams, Stephen W. Rimmer, Michael T. Parker, Jackson, Miss., for plaintiff-appellant.
Leslie J. England, Rapid City, S.D., for amicus Rapid City.
James H. Herring, Canton, Miss., Michael T. Parker, Jackson, Miss., for amicus Miss. Mun. Assoc.
Laura E. Frossard, Dept. of Justice, Appellate Section, Land & Natural Resources, Washington, D.C., L.A. Smith, III, Asst. U.S. Atty., Jackson, Miss., Martin W. Matzen, Atty., Dept. of Justice, Appellate Section, Land & Natural Resources, Washington, D.C., for U.S.
James P. Coleman, Ackerman, Miss., for amicus curiae Miss. Rural Water Assoc.
Louis T. Rosenberg, San Antonio, Tex., for amicus curiae Green Valley Water Supply Corp. and Texas Rural Water Supply Assoc.
Appeal from the United States District Court For the Southern District of Mississippi.
Before THORNBERRY, GEE, and JONES, Circuit Judges.
The City of Madison, Mississippi ("Madison"), appeals from the district court's grant of summary judgment in favor of Bear Creek Water Association, Inc. ("Bear Creek"), and the Farmers Home Administration ("FmHA"). Because we agree with the district court that 7 U.S.C. Sec. 1926(b) precludes municipal condemnation of a water association's facilities during the term of its indebtedness to the FmHA, we affirm.
In the early 1970's, Bear Creek, a nonprofit corporation, was organized to seek a certificate of public convenience and necessity from the Mississippi Public Utility Commission to operate a rural water utility. As the proposed certificated area was within one mile of the city limits of Madison, the city's acquiescence was necessary before the certificate could be issued. In 1971, the city agreed to relinquish its rights in the area, and Bear Creek received the certificate of public convenience. Since this time, Bear Creek has installed and operated the water system in the certificated area, financed by five loans from FmHA. 1
However, during this time the City of Madison has grown substantially, and its boundaries now include a part of the area served by Bear Creek. In 1985, the city instituted eminent domain proceedings to condemn Bear Creek's facilities located within city limits as well as Bear Creek's certificate to operate in that area. This area includes approximately 40% of Bear Creek's customers, and 60% of Bear Creek's water supply facilities, including its water plant, wells, and feeder mains. FmHA subsequently intervened and the case was removed to federal court pursuant to 28 U.S.C. Secs. 1444 and 2410.
In July 1986, the district court granted Bear Creek's motion for summary judgment on the ground that because Bear Creek was indebted to FmHA, 7 U.S.C. Sec. 1926(b) applied and precluded the city's condemnation action. The city now appeals.
We review summary judgments in the same manner as the district court, in terms of whether there is any genuine issue of material fact and whether appellee was entitled to judgment as a matter of law. McCrea v. Hankins, 720 F.2d 863 (5th Cir.1983).
Regarding water associations indebted to FmHA, 7 U.S.C. Sec. 1926(b) provides:
The service provided or made available through any such association shall not be curtailed or limited by the inclusion of the area 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 said loan; nor shall the happening of 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.
The district court held that this provision prohibits cities such as Madison from curtailing the services of funded water associations, be it through annexation, franchise, or condemnation. Madison argues that because the statute does not expressly prohibit condemnation, Sec. 1926(b) only protects such associations from competition from municipalities, and thus does not preclude such entities from exercising their right of eminent domain.
We disagree. The statute unambiguously prohibits any curtailment or limitation of an FmHA-indebted water association's services resulting from municipal annexation or inclusion. This language indicates a congressional mandate that local governments not encroach upon the services provided by such associations, be that encroachment in the form of competing franchises, new or additional permit requirements, or similar means. To read a loophole into this absolute prohibition, as Madison would have us do, and allow a city to do via condemnation what it is forbidden by other means, would render nugatory the clear purpose of Sec. 1926(b). See Moore Bayou Water Association, Inc. v. Town of Jonestown, 628 F.Supp. 1367 (N.D.Miss.1986) ().
Madison contends that this construction of the statute is untenable because it leads to the "plainly absurd" result that FmHA-financed water authority could avoid condemnation even if it owed only $1.00 on its government loan. However, it was Congress, and not this Court, that literally proscribed interference by competing facilities with the rural water authority "during the term of said loan." The city's logic also assumes Sec. 1926(b) must somehow be construed to effectuate the local condemnation power. Pursuing such logic, we might decide that so long as the condemnation does not "unduly interfere" with the water authority's payment obligations to FmHA, or with its ability to service rural water users, the condemnation may proceed. Such a result, however, would have a perverse impact upon both the rural water authority and the would-be condemnor. In each case, the contending parties could raise and seek adjudication of the fact issue concerning the extent of interference that would result from condemnation. A condemnation case impinging on a rural water authority could easily involve both state and federal court litigation, high legal fees and considerable delay, to the ultimate detriment of the municipality, the rural water authority, and the consumers of water service. A bright-line rule which prohibits condemnation throughout the FmHA loan term at least creates certainty for the municipal planner and the rural water authority, even if it limits the municipality's options.
Madison, however, argues that our interpretation of Sec. 1926(b) is contrary to the legislative history of that provision. While we need not resort to legislative history where, as here, the statutory language is unambiguous and yields no absurd results, see Steere Tank Lines, Inc. v. I.C.C., 724 F.2d 472, 477 (5th Cir.1984), we note that our interpretation of Sec. 1926(b) comports with the purposes found in its legislative history:
By interpretation, loans cannot now be made unless a major part of the use of the facility is to be by farmers. This section would broaden the utility of this authority somewhat by authorizing loans to associations serving farmers, ranchers, farm tenants, and other rural residents. This provision authorizes the very effective program of financing the installation and development of domestic water supplies and pipelines serving farmers and others in rural communities. By including service to other rural residents, the cost per user is decreased and the loans are more secure in addition to the community benefits of a safe and adequate supply of running household water. A new provision has been added to assist in protecting the territory served by such an association against competitive facilities, which might otherwise be developed with the expansion of municipal and other public bodies into an area served by the rural system.
S.Rep. No. 566, 87th Cong., 1st Sess., reprinted in 1961 U.S.Code Cong. & Admin.News 2243, 2309. This history indicates two congressional purposes behind Sec. 1926: 1) to encourage rural water development by expanding the number of potential users of such systems, thereby decreasing the per-user cost, and 2) to safeguard the viability and financial security of such associations (and FmHA's loans) by protecting them...
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