Moore Bayou Water Ass'n, Inc. v. Town of Jonestown, DC85-144-NB-O.

• Decision Date: 05 February 1986
• Docket Number: No. DC85-144-NB-O.,DC85-144-NB-O.
• Citation: 628 F. Supp. 1367
• Parties: MOORE BAYOU WATER ASSOCIATION, INC., Plaintiff, v. TOWN OF JONESTOWN, MISSISSIPPI, et al., Defendants.
• Court: U.S. District Court — Northern District of Mississippi

628 F. Supp. 1367

MOORE BAYOU WATER ASSOCIATION, INC., Plaintiff, v. TOWN OF JONESTOWN, MISSISSIPPI, et al., Defendants.

No. DC85-144-NB-O.

United States District Court, N.D. Mississippi, Delta Division.

February 5, 1986.

James H. Herring, Canton, Miss., Shed Roberson, Clarksdale, Miss., for plaintiff.

Tyree Irving, Greenville, Miss., for defendants.

MEMORANDUM OPINION

BIGGERS, District Judge.

The present cause comes before the court on the motion of plaintiff, Moore Bayou Water Association, Inc., for summary judgment against the defendants, the Town of Jonestown, Mississippi and its Mayor and Board of Aldermen, on its prayer for declaratory and injunctive relief made pursuant to its claim under 7 U.S.C. § 1926(b). Having considered the pleadings, memoranda, and affidavits submitted by the parties hereto, and being fully advised in the premises, the court is now in a position to rule on the motion.

The plaintiff, Moore Bayou Water Association, Inc. (Moore Bayou), is a non-profit corporation created and existing under the laws of the State of Mississippi and is engaged in operating a private rural water system in an area located within Coahoma and Quitman Counties. On September 3, 1974, the Mississippi Public Service Commission granted to Moore Bayou a permanent and exclusive certificate of public convenience and necessity to provide water services in certain areas located in the above named counties, including the areas immediately adjacent to the Town of Jonestown. Moore Bayou received funding from the Farmers Home Administration (FmHA) in the form of a loan, pursuant to 7 U.S.C. § 1926 for construction of the water facilities.

On January 2, 1981, Jonestown annexed a certain area served by Moore Bayou. As a consequence of the annexation, various municipal services were made available to the residents of the annexed area with the exception of water services which continued to be provided by Moore Bayou.

On March 20, 1984, Jonestown informed Moore Bayou by letter that it intended to take Moore Bayou's exclusive service rights and water facilities located within the town boundaries through eminent domain proceedings unless a satisfactory price could be agreed upon. Moore Bayou then filed the present action in this court on June 5, 1985 alleging that Jonestown and its governing body, acting under color of law, intended to infringe upon Moore Bayou's exclusive service area through eminent domain proceedings in violation of 7 U.S.C. § 1926(b), and to wrongfully deprive Moore Bayou of its vested property rights and the benefits of its exclusive certificate of public convenience and necessity without due process of law in violation of 42 U.S.C. §§ 1983 and 1985 and the Fifth and Fourteenth Amendments to the United States Constitution. Moore Bayou seeks declaratory and injunctive relief in order to prevent the defendants from infringing upon Moore Bayou's exclusive certificate of public convenience and necessity and from owning and operating a water system in Moore Bayou's exclusive service area. Moore Bayou has now moved for summary judgment on the issue of whether Jonestown is prevented, by virtue of 7 U.S.C. § 1926(b), from condemning Moore Bayou's water facilities and right to provide water services to areas located within the corporate limits of Jonestown.

Title 7, 1926(b) provides in pertinent part:

(b) 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....

The above provision rather clearly states that municipalities or any other government body may not curtail the water services offered by a rural water association indebted to the FmHA. Thus, it is Moore Bayou's contention that section 1926(b) has preempted the Mississippi law which enables the defendants to institute condemnation proceedings in an effort to obtain the right to provide water services to the area in question.

In response, the defendants argue that while section 1926(b) appears at first glance to bar them from condemning plaintiff's rights and facilities as long as the plaintiff remains indebted to the FmHA, reference must also be made to the legislative history and the underlying purpose of section 1926(b). Considering section 1926(b) in its proper context and not in a vacuum, it is argued, would necessarily lead to the conclusion that this section would operate to bar the defendants from pursuing their contemplated action only where it is found that such action would necessarily and significantly impair the ability of Moore Bayou to repay the FmHA loan.

Reference is thus made to the legislative history of 7 U.S.C. § 1926(b) contained in the U.S.Code Congressional and Administrative News, 87th Cong., 1961, Vol. 2, pages 2243, 2309, which states:

By interpretation loans to associations 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

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