Wednesday, September 02, 2009

Tenth Circuit certifies questions to Oklahoma Supreme Court

In what might be the first significant federal-court acknowledgment of a significant legal hurdle for Section 1926(b) protection claimed by rural water districts, the Tenth Circuit has certified two critical questions of Oklahoma law to the Oklahoma Supreme Court. On August 24, 2009, the Tenth Circuit entered an order in the Guthrie appeal. You will recall that the Guthrie appeal began in February 2008 when the U.S. District Court for the Western District of Oklahoma certified an appeal in the Guthrie litigation. The Tenth Circuit heard oral argument in November 2008.

At issue here is whether Oklahoma rural water districts hold the required state-law authority to bind the State of Oklahoma to the monopoly protections found in Section 1926(b). This issue has been a focus of municipalities' defenses against rural water district litigation for the last five years, and has been described by rural water advocates as "cutting edge."

In its August 24, 2009 order, the Tenth Circuit recognized that this is an issue of state law. Relying on a statutory framework that allows federal courts to send questions of state law to state supreme courts, the Tenth Circuit sent two questions to the Oklahoma Supreme Court.

First, the Tenth Circuit asks: "Whether Okla. Const. art. 5, § 51 precludes Logan-1 from either entering into loan agreements with the USDA that include 7 U.S.C. § 1926(b)'s protection from competition, or enforcing its claimed § 1926(b) protection against other Oklahoma water districts?"

Second, the Tenth Circuit asks: "If either is so, whether there is a police power or public safety exception to the Oklahoma Constitution, art 5, § 51's prohibition against exclusive rights, privileges or immunities that would, nevertheless, validate Logan-1's loan agreements with the USDA that include the § 1926(b) protection from competition in this case involving provision of a rural public water service?"

These questions will be critical in several other pending cases, including disputes arising in both Oklahoma and Kansas.

The Oklahoma Supreme Court has ordered the parties to file opening briefs by September 21, 2009.