CONCERNED IRRIGATORS,
Harold Nelson, and Laurie Barnaud,
Plaintiffs,
v.
BELLE FOURCHE IRRIGATION DISTRICT,
Gary Brunner, Darell Cox, Steve Gatzke, Harlan Palo, Art Persche, Robert Ruff, and Walter
Stumpf,
Individually and in Their Official Capacity as the Board of Directors of the Belle Fourche
Irrigation District.
Defendants.
United States District Court
District of South Dakota
Western Division
CIV. 98-5028
MEMORANDUM OPINION
AND ORDER
Scott D. McGregor, Viken, Viken, Pechota, Leach & Dewell, Rapid
City, SD
Attorney for Plaintiffs
Gordon Verne Goodsell, Martin Jacob Jackley
Gunderson, Palmer, Goodsell & Nelson, LLP, Rapid City, SD
Attorneys for Defendants
Filed Jan 14, 1999
Richard H. Battey, Senior District Judge
I. PROCEDURAL HISTORY
[¶1] On February 13, 1998, Harold Nelson ("Nelson") and Laurie Barnaud ("Barnaud") individually and as representatives of Concerned Irrigators, filed a complaint in South Dakota state court against the Belle Fourche Irrigation District ("the District") and its associated board members.(fn1) The complaint alleges that the District is improperly assessing various costs to District landowners in violation of its contractual and statutory obligations. Concerned Irrigators is an association of landowners and irrigators from within the District. The District filed notice of removal with this Court on March 16, 1998 (Docket #1). Both sides have filed cross-motions for summary judgment (Docket #15 & Docket #19), raising issues for this Court that require the statutory interpretation of federal and state law, as well as the interpretation of contracts entered into pursuant to federal reclamation law. Accordingly, this Court has jurisdiction to proceed pursuant to 28 USC § 1331.
II. FACTS
[¶2] The following facts appear to be undisputed. The Belle Fourche Irrigation Project ("the Project") was constructed pursuant to the Reclamation Act of 1902 by the United States Bureau of Reclamation ("the Bureau").(fn2) Plaintiffs' Material Facts ("PSMF") at 1; Defendants' Material Facts ("DSMF") at 2. The purpose of the project was to promote farming through the delivery of water to the arid lands of western South Dakota (specifically lands in Butte and Meade County). PSMF at 2; DSMF at 2-3. Construction of the Belle Fourche irrigation works was completed before July 1, 1917. PSMF at 2; DSMF at 3. The Project was initially managed and operated by the Bureau. PSMF at 2.
[¶3] By 1949, the landowners serviced by the Project formed the Belle Fourche Irrigation District and thereafter took over the operation and maintenance of the Project from the Bureau. PSMF at 2; DSMF at 4. This transition was provided for by a contract between the Bureau and the District ("the 1949 Contract"). See Exhibit B, DSMF & Exhibit 4, Plaintiffs' Exhibits in Support of Summary Judgment ("Plaintiffs' Exhibits") (1949 Contract); see also PSMF at 2. In addition to requiring that the District assume responsibility for the operation and maintenance ("O & M") of the Project, the 1949 Contract also mandated that the District repay the United States for the Project's construction costs. PSMF at 2; DSMF at 3. Under the terms of the 1949 Contract, the District (through its elected board of directors) was to assess each landowner within the District for O & M costs and the construction debt. PSMF at 2-3; DSMF at 4-5. O & M costs are the costs necessarily expended to deliver water to each irrigable acre.(fn3) PSMF at 3; DSMF at 4. Construction debt is the debt assessed to the District, by the Bureau, for the District's portion of the Project's construction costs. PSMF at 3; DSMF at 3.
[¶4] Under the terms of the 1949 Contract, the land within the District was divided into four separate classes, based upon the land's production capability. Class 1 lands are the most productive, while Class 4 lands are the least productive.(fn4) Under this scheme, the 1949 Contract contained the following provision:
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
Hence, under the 1949 Contract, both O & M expenses and construction costs were to be assessed according to the land classification outlined above. Those owning poorer quality land were to be assessed less of the O & M and construction debt costs then neighbors owning land with a better production capacity. The funds assessed were then gathered by the District and paid to the Bureau.
[¶5] The District obtained additional water following construction of the Keyhole Reservoir in Wyoming. PSMF at 3; DSMF at 5. The conditions for delivery of the Keyhole water were outlined in a 1963 contract between the District and the Bureau ("the 1963 Contract") which accordingly amended the terms of the 1949 Contract to provide for the supplemental repayment of Keyhole construction costs as well as the new O & M expenses generated by the increased delivery of water. See Exhibit C, DSMF (1963 Contract). The terms under which the District was to assess O & M expenses and construction debt were not altered by the 1963 Contract.
[¶6] On May 5, 1970, the District's board of directors passed a resolution requesting that the Bureau amend the 1949 and 1963 Contracts in two significant ways. PSMF at 4-5. First, the District sought to amend Article 11 of the 1949 Contract and its identical provision under Article 8 of the 1963 Contract in order to assess O & M costs equally, regardless of land class. Under this new scheme owners of Class 3 and Class 4 lands would no longer pay a lesser percentage of O & M expenses than Class 1 and Class 2 landowners. O & M costs were to be assessed based simply on the number of irrigable acres owned, not on the land classification. Second, the District sought to alter the ratios by which individual land classes were required to pay their portion of the construction debt. Id. In this respect, the District sought to supersede the previously-quoted provision pertaining to repayment ratios, implementing instead a repayment scale that favored owners of lower class lands. This new provision states:
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 purposes 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%
See Exhibit D, DSMF & Exhibit 5, Plaintiffs' Exhibits (1971 Amendment) (emphasis added). Once the resolution was passed by the Board, it was put to a vote of all qualified landowners within the District. PSMF at 5. Of the 549 voters eligible to cast a ballot, 363 persons voted, with 160 ballots being cast against the contract and 200 ballots cast for the contract. Id. Three ballots were declared spoiled. Id. Accordingly, the 1971 Amendment was considered to have been approved.
[¶7] On March 16, 1971, following the tabulation of the election results, the District and the Bureau signed the 1971 Amendment. PSMF at 4; DSMF at 5. Thereafter the District assessed O & M costs equally among all classes of landowners, though it continued to assess (under the new ratios) construction repayment debt based upon the class of land owned by individual District members. The basic scheme outlined by the 1971 Amendment is still being used by the District today. PSMF at 7; DSMF at 7.
[¶8] On November 17, 1983, Congress enacted Public Law ("Pub. L.") No. 98-157. See Exhibit 7, Plaintiffs' Exhibits (Pub. L. No. 98-157). This law reauthorized the Project as the "Belle Fourche Unit" of the Pick-Sloan Missouri Basin Program. PSMF at 6. The purpose of Pub. L. No. 98-157 was to refurbish the irrigation facilities of the District with an aim toward recreation and fish and wildlife preservation. PSMF at 6; DSMF at 7. For this purpose, Congress appropriated the sum of $42 million. Pursuant to Pub. L. No. 98-157, the Bureau and the District entered into a new contract on October 10, 1984 ("the 1984 Contract") to effectuate the intent of Congress and establish a new repayment plan for the construction debt. See Exhibit E, DSMF & Exhibit 1, Plaintiffs' Exhibits (1984 Contract). The interpretation of this contract and its relationship to the prior contracts is, in large part, the matter presented to this Court through both cross-motions for summary judgment.(fn5)
III. SUMMARY JUDGMENT STANDARD
[¶9] Under Rule 56(c) of the Federal Rules of Civil Procedure, a movant is entitled to summary judgment if the movant can "show that there is no genuine issue as to any material fact and that [the movant] is entitled to judgment as a matter of law." In determining whether summary judgment should issue, the facts and inferences from those facts are viewed in the light most favorable to the nonmoving party, and the burden is placed on the moving party to establish both the absence of a genuine issue of material fact and that such party is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(c); Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 106 S. Ct. 1348, 1356-57, 89 L. Ed. 2d 538 (1986). Once the moving party has met this burden, the nonmoving party may not rest on the allegations in the pleadings, but by affidavit or other evidence must set forth specific facts showing that a genuine issue of material fact exists.
[¶10] In determining whether a genuine issue of material fact exists, the Court views the evidence presented based upon which party has the burden of proof under the underlying substantive law. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 106 S. Ct. 2505, 2513, 91 L. Ed. 2d 202 (1986). The Supreme Court has instructed that "summary judgment procedure is properly regarded not as a disfavored procedural shortcut, but rather as an integral part of the Federal Rules as a whole, which are designed to 'secure the just, speedy, and inexpensive determination of every action.'" Celotex Corp. v. Catrett, 477 U.S. 317, 327, 106 S. Ct. 2548, 2555, 91 L. Ed. 2d 265 (1986). The nonmoving party "must do more than show that there is some metaphysical doubt as to the material facts," and "[w]here the record as a whole could not lead a rational trier of fact to find for the nonmoving party, there is no 'genuine issue for trial.'" Matsushita, 106 S. Ct. at 1356.
[¶11] The trilogy of Celotex, Anderson, and Matsushita provides the Court with a methodology in analyzing motions for summary judgment. See generally 1 Steven A. Childress & Martha S. Davis, Federal Standards of Review § 5.04 (2d ed. 1991) (discussing the standards for granting summary judgment that have emerged from Matsushita, Celotex, and Anderson).
IV. PRELIMINARY DISCUSSION
[¶12] Plaintiffs seek summary judgment requesting that this Court enter a judgment declaring: (1) that the 1971 Amendment between the District and the Bureau is void and unenforceable; (2) that the O & M expenses of the District cannot be assessed equally among all landowners of the District and must, instead, be assessed in accordance with the benefits received by the various land classes; and (3) that the District, its Board of Directors, and individual defendants have not assessed O & M expenses and the construction repayment obligation of the District in the method and manner required by state and federal law and the District's contract with the Bureau. In addition, plaintiffs urge the Court to enter an order: (1) directing the District to immediately reassess all lands in the District for their appropriate proportional share of the O & M expenses and construction repayment obligations of the District in the method and manner required by state and federal law and the District's contract with the Bureau; and (2) directing the District to refund to plaintiffs the amount by which they have been overcharged by defendants for O & M expenses and construction repayment costs.
[¶13] Before addressing the merits of plaintiffs' summary judgment motion, the Court addresses several of the District's preliminary arguments. The District urges, as a threshold matter: (1) that this Court lacks jurisdiction to review the Bureau's discretionary actions; (2) that plaintiffs Barnaud and Nelson lack standing as representatives of Concerned Irrigators to challenge the actions of the District; and (3) that plaintiffs have failed to properly exhaust their administrative remedies within the Bureau prior to filing suit. The Court has considered each of these arguments in turn and concludes that they are without merit.
[¶14] A. Lack of Jurisdiction
[¶15] The District's contention that this Court is being asked to adjudge a discretionary decision of the Bureau is without merit. The Court is not being asked to review a discretionary agency decision. Rather, the Court is being called upon to interpret federal reclamation and South Dakota laws, and the contracts that the District and the Bureau have entered into in regard to such laws. The Court does have jurisdiction under 28 USC § 1331.
[¶16] B. Lack of Standing
[¶17] It is the District's position that Concerned Irrigators is "an undefined group" and that therefore there exists an unidentified injury and a lack of redressibility.(fn6) The Court does not agree.
[¶18] It is well settled that the test of standing focuses on whether the party seeking to bring a complaint before a federal court "is a proper party to request an adjudication of a particular issue." Flast v. Cohen, 392 U.S. 83,100, 88 S. Ct. 1942, 1952-53, 20 L. Ed. 2d 947 (1968). Thus, "[t]o be a proper litigant, the party must have 'alleged such a personal stake in the outcome of the controversy as to assure that concrete adverseness which sharpens the presentation of issue.'" Defenders of Wildlife v. Hodel, 851 F2d 1035, 1038 (8th Cir. 1988) (quoting Duke Power Co. v. Carolina Envtl. Study Group, Inc., 438 U.S. 59, 72, 98 S. Ct. 2620, 2630, 57 L. Ed. 2d 595 (1978)). To ensure this requisite adverseness, the Supreme Court has specified three substantive requirements for standing. The party must show he personally has suffered some actual or threatened injury as a result of the defendant's conduct. Valley Forge Christian College v. Americans United for Separation of Church and State, Inc., 454 U.S. 464, 472, 102 S. Ct. 752, 758-59, 70 L. Ed. 2d 700 (1982). The injury must be "fairly" traceable "to the challenged action, and it must be likely to be addressed by a favorable decision." Id.
[¶19] Both Barnaurd and Nelson are members of the District and own Class 4 land within its borders. As owners of Class 4 land they, as well as the members of Concerned Irrigators, are arguably being assessed more than their proper share of O & M costs and construction debt, thereby causing economic injury. Further, Barnuard and Nelson individually and as representatives of Concerned Irrigators allege that the defendant District, in making these assessments, is failing to comply with federal and state law, as well as its own contractual obligations to the Bureau. Under this analysis, a judgment by the Court declaring the District's assessments to be violative of federal and state law, accompanied with an order directing the District to reassess all lands in the District for their appropriate share of O & M cost and construction debt would clearly serve to redress plaintiffs' grievances.
[¶20] C. Exhaustion of Administrative Remedies
[¶21] The District contends that plaintiffs have failed to exhaust their administrative remedies before the Bureau. In support of its position, the District relies upon 43 C.F.R § 426.22 (1991) which provides the Bureau's regulations dealing with agency decisions and appeals.(fn7) These regulations, however, apply only to appeals that are made upon notice of a final determination made by the Bureau's regional director. Plaintiffs are not challenging a Bureau determination, nor is the Bureau a party to this action. Rather, plaintiffs are challenging the legality of the District's actions in regard to O & M and construction debt assessment. There is simply no Bureau remedy to be exhausted.
V. MERITS OF SUMMARY JUDGMENT MOTION
[¶22] A review of the exhibits and pleadings in this case reveals the three major issues for this Court's consideration(fn8):
1. Whether the 1971 Amendment between the District and the Bureau is valid and enforceable?
2. If the 1971 Amendment is enforceable, were the relevant provisions pertaining to the assessment of O & M and construction costs amended or replaced by the 1984 Contract?
3. Are the O & M costs and construction debt payments being assessed by the District in a method and manner outlined in the District's contracts with the Bureau as well as in accordance with federal reclamation law?
[¶23] The material facts are not in dispute. The dispute involves questions of contract law and statutory construction. It is well settled that the interpretation of an unambiguous contract is a matter of law appropriately resolved on summary judgment. 27A Federal Procedure, § 62:746, at 513 (1996); see also Calvello v. Yankton Sioux Tribe, 884 NW2d 108, 111 (S.D. 1998); State Farm Mut. Auto. Ins. v. Vostad, 520 NW2d 273, 275 (S.D. 1994). Likewise, matters of statutory construction are also questions of law, properly resolved on summary judgment. See Stover v. Critchfield, 510 NW2d 681, 683 (S.D. 1994); State v. Harris, 494 NW2d 619, 622 (S.D. 1993).
[¶24] A. The Validity of the 1971 Amendment
[¶25] Plaintiffs urge that O & M costs cannot be assessed equally among landowners in the District as mandated in the 1971 Amendment, but instead must be assessed according to either the productive value of the land or according to the benefits received. Plaintiffs base this assertion on two statutes. First, federal reclamation law requires that the construction costs of irrigation projects be apportioned equitably according to the "productive capacity of the land" (thus under the Class 1 - 4 rating system). See 43 U.S.C § 461-62 (emphasis added). Second, South Dakota law, in a somewhat analogous provision, requires that where a contract between the Bureau and the District is silent respecting the method and manner of making assessments, such assessments "shall be spread upon the lands in proportion to the benefit received." See SDCL 46A7-7; 46A-7-1.(fn9)
[¶26] While the Court agrees with plaintiffs' characterization of these two statutes, both are inapplicable in this case. The terms of 43 USC § 461-62 apply only to the costs assessed by the District for repayment of construction costs. The statute offers no guidance as to the assessment of O & M costs. In fact, the Court's review of federal reclamation law fails to uncover any statute mandating that O & M costs be assessed based upon either the productive capacity of the land or the benefits received thereto. See, e.g., 43 USC § 492 (O & M assessments to be made against each irrigable acre of land); 43 USC § 390hh(a) (requiring that O & M assessments "shall be at least sufficient to recover all operation and maintenance charges which the district is obligated to pay to the United States"); see also Nampa & Meridian Irrig. Dist. v. Bond, 268 U.S. 50, 45 S. Ct. 383, 384, 69 L. Ed. 843 (1925). Accordingly, the Court finds no statutory reason why O & M costs cannot be assessed equally among the landowners within the District.
[¶27] Plaintiffs also contend that the relevant contracts between the District and the Bureau are silent as to the manner of O & M assessment and urge that under SDCL 46A-7-7 and 46A-7-1, O & M costs must be assessed based upon the benefits received through the delivery of water.(fn10) Under South Dakota law, where a contract between an irrigation district and the Bureau is silent, SDCL 46A-7-1 acts to require that assessments be made in accordance with the benefits received from the assessment. In order to make this assertion, plaintiffs argue that the 1971 Amendment, which expressly mandated that O & M costs be assessed equally against all irrigable acres irrespective of land classification, is null and void. Plaintiffs contend that the 1971 Amendment is invalid because they believe that it was not passed by a "necessary majority vote of all the owners of the land affected," and further, that it was not judicially confirmed. See 46A-7-13; 43 USC § 511. The Court does not agree.
[¶28] The terms of the 1971 Amendment amended and superseded Article 8 of the 1963 Contract (along with Article 11 of the 1949 Contract). The purpose behind this amendment was two-fold. First, the District sought to assess O & M costs equally among all landholders, and secondly, the District altered the ratios by which the various land classes were to be assessed construction debt. The 1971 Amendment was properly passed by resolution of the District's board and it did not increase the principal indebtedness of the District to the Bureau. See Exhibit D, DSMF (board resolution & 1971 Amendment). Accordingly, South Dakota law does not require that such an amendatory contract be put to a vote or be judicially confirmed to be binding. See SDCL 46A-6-8; 46A-6-9.(fn11)
[¶29] Nonetheless, assuming that the contract was subject to a vote of qualified District members, the Court cannot agree with plaintiffs' interpretation SDCL 46A-7-13.(fn12) Plaintiffs contend that in order to approve a contract (or in this case an amendment to a previous contract) the statute requires that a true majority of all eligible voters must vote for approval; a majority of those casting ballots is not enough.(fn13) Because the terms of the statute, when viewed alone, are ambiguous, the Court must engage in the process of statutory construction to determine the intent of the law, being careful to avoid an absurd result. See Moss v. Guttormson, 551 NW2d 14, 17 (S.D. 1996) ("[I]n construing statutes together it is presumed that the legislature did not intend an absurd or unreasonable result").
[¶30] With these rules in mind and upon a review of SDCL Chapters 46A-4 through 46A-7, the Court concludes that when SDCL 46A-7-13 is viewed in the context of other statutory enactments on the same subject matter, plaintiffs' construction of the statute would, indeed, lead to an absurd result. Moss, 551 NW2d at 17 (citing U.S.West Communications Inc. v. Public Utilities Comm'n, 505 NW2d 115, 122-23 (S.D. 1993)). Of the four chapters dealing with irrigation districts, at least eight statutes require a vote of District members for the approval of various measures. Of these statutes, every one requires only a majority of the votes cast for approval.(fn14)
[¶31] Finally, the Court notes that the 1971 Amendment, once approved by the voters, was duly executed by both the District and the Bureau, and despite subsequent contracts, the terms have been enforced for over two decades. See Hisgen v. Hisgen, 554 NW2d 494 (S.D. 1996) (contracting parties' acts in regard to contract should be given great weight). In view of this history, and the laws of statutory construction applied above, the Court concludes that the 1971 Amendment was enforceable at the time of its execution. A question does remain as to whether the 1971 Amendment was either replaced or superseded by the terms of the 1984 Contract.
[¶32] B. The Effect of the 1984 Contract
[¶33] Following the congressional passage of Pub. L. No. 98-157, the District and the Bureau entered into the 1984 Contract. Citing SDCL 46A-7-7 and 46A-7-1(fn15) plaintiffs argue that the terms of the 1984 Contract are silent as to the assessment of O & M expenses and construction repayment debt, and therefore the District must assess these costs according to the benefits received by the landowner. Article 3 of the 1984 Contract states:
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. I1r-1555 [the 1949 Contract] and 14-06-600-1949A [the 1976 Contract Amendment]. Contract No. 14-06-600-6979 [the 1963 Contract] covering water entitlements and payments for Keyhole Unit shall remain in effect.
See Exhibit E, DSMF & Exhibit 1, Plaintiffs' Exhibits (1984 Contract). While the Court agrees that the 1984 Contract is in itself silent as to the manner of assessment,(fn16) the contract has also expressly incorporated the 1963 Contract (and thereby its 1971 Amendment) which terms do clearly outline the manner in which such assessments are to be made.
[¶34] The Court recognizes that the 1984 Contract does not expressly adopt the terms of the 1971 Amendment; however it also does not expressly replace the 1971 Amendment, though it expressly replaces two other previous contracts. Plaintiffs urge, however, that the 1984 Contract does expressly replace the 1971 Amendment. This is simply incorrect. The two government contract numbers singled out for replacement by the 1984 Contract do not refer to the 1971 Amendment, but rather to the 1949 Contract and the 1976 Contract. See footnote 5. Further, upon the execution of the 1971 amendatory contract, the terms of the 1963 Contract were superseded and replaced. Thus, an adoption of the 1963 Contract became in fact an adoption of the contract as amended by the 1971 Amendment. This result is further bolstered by the actions of the District and the Bureau, who have continued to act in accordance with the terms of the 1971 Amendment up to the present date.
[¶35] As the foregoing discussion has shown, the 1963 Contract, as amended by the 1971 Amendment, expressly states that O & M costs are to be assessed equally among all landowners, regardless of class. Further, the contracts outline the ratio by which each class of landowner is to be assessed construction debt repayment. Accordingly, plaintiffs' argument that South Dakota law must be applied as a means by which to flesh out a necessary, but silent provision in the 1984 Contract is without merit. In light of this conclusion, the final issue to be considered asks whether or not the District is in compliance with the terms of these contracts in their manner and means of assessment of O & M costs and construction debt payments.
[¶36] C. The District's Compliance with its Contractual Obligations
[¶37] The 1963 Contract (as amended by the terms of the 1971 Amendment) mandates that O & M costs be assessed equally among all landowners in the District, regardless of land class. Neither party disputes that O & M costs are being assessed equally.
[¶38] Plaintiffs also urge that the District's assessment of the construction debt repayment is not in compliance with the terms of the relevant contracts. The Court disagrees. Federal reclamation law dictates that construction debt repayment be apportioned "equitably" and in proportion to the production capacity of the land. See 43 USC §§ 461-62. To assure this equitable apportionment, the District must make sure that the construction debt is assessed within the ratios outlined by the relevant contracts discussed above.(fn17) The Court notes that it is the Bureau's position (as the federal agency responsible for overseeing repayment of construction debt) that the District is in compliance with both federal law and its contractual obligations in regard to the assessment of construction debt. See Deposition of Kent Heidt ("Heidt Depo.") at 28-29 (Bureau of Reclamation representative).(fn18)
[¶39] To effectuate its assessment responsibilities, the District sends questionnaires to each class of landowner seeking information as to what the member considers to be a fair differential. Oliver Depo. at 54-55. Also considered are any relevant studies regarding land capacity that have been conducted by the Bureau, any survey results received from District landowners, the District's budgetary requirements, and the opinion of individual board members as to what they believe is a fair differential. Id. at 54-56. Given the efforts made by the District to effect an equitable assessment within the bounds of the land classifications established in the 1971 Amendment, the Court can see no reason to dispute the Bureau's position that the District is in full compliance with its contractual and statutory obligations. Accordingly, plaintiffs' assertion that the board is acting in an improper manner is without merit.
VI. CONCLUSION
[¶40] Because the 1971 Amendment was passed by proper resolution of the District's board of directors, and did not increase the principal indebtedness of the District to the Bureau, there was no need for it to be judicially confirmed or approved by the District voters as plaintiffs have urged. See SDCL 46A-6-8. However, even if the 1971 Amendment were required to be put to a vote, the Court is satisfied that the measure was validly passed by a necessary majority vote of the District members. Moreover, because the 1984 Contract expressly adopted the terms of the 1963 Contract (as modified by the 1971 Amendment), the Court concludes, contrary to plaintiffs' assertions, that the District is contractually obligated to assess O & M costs equally among all landowners, regardless of land classification. A review of the District's actions in assessing
O & M costs and construction debt, in light of the Bureau's position, has convinced the Court that the District is in compliance with its contractual and statutory duty. Based on the foregoing discussion, it is hereby
[¶41] ORDERED that plaintiffs' motion for summary judgment (Docket #19) is denied.
[¶42] IT IS FURTHER ORDERED that the District's motion for summary judgment (Docket #15) is granted. Judgment shall be entered in favor of the District.
Footnotes
1. Board members Gary Brunner, Darrell Cox, Steve Gatzke, Harlan Palo, Art Persche, Robert Ruff, and Walter Stumpf are named both individually and in their official capacity as the Board of Directors of the Belle Fourche Irrigation District.
2. See Reclamation Act of 1902, ch. 1093, §§ 1-10, 32 Stat. 388-90 (codified as amended at 43 USC §§ 372, 373, 383, 391, 392, 411, 416, 419, 421, 431, 432, 439, 461, 491, 498 (1988)).
3. O & M costs include a host of miscellaneous expenses including labor costs for ditch riders, crews, and worker's compensation insurance; materials costs such as gravel for roads and herbicide for weed control; as well as the costs associated with the running of the District's office, such as staff, office products, and utilities. DMF at 4.
4. Federal law requires that construction repayment costs for the Project be apportioned "equitably" among the lands of the District based on their productive value. See 43 USC §§ 461-62.
5. The Court is aware of at least three other amendatory contracts entered into between the Bureau and the District. None of these contracts, however, have any bearing on the questions currently before the Court. A 1976 Contract (No. 14-06-600-1949A) obligated the District to repay an additional $4,000 per year as a result of operation and maintenance cost savings resulting from modifications to the Belle Fourche Dam. The 1996 and 1998 Contracts (No. 5-07-60-WR170, Amendment 1 & 2) addressed the general construction repayment obligation due to additional funding for rehabilitation and project betterment and provided for a reduction in construction debt payments.
6. Concerned Irrigators is an association of Class 3 and Class 4 landowners who seek to challenge the District's compliance with its statutory and contractual obligation. Barnuard and Nelson have filed suit both individually and as representatives of Concerned Irrigators.
7. The Court would note that the section cited by the District has been superseded by 43 CFR § 426.24 (1997). Despite a change in the wording, however, much of the effect of § 426.22 is preserved in the new provision.
8. The Court recognizes that these issues may appear to be overly simplistic; however, each will serve as an umbrella under which all the relevant matters presented can be addressed with some semblance of clarity.
9. SDCL 46A-7-7 states in pertinent part:
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 that district, the construction of irrigation or drainage works, or the operation thereof . . . 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 by the assessor shall be necessary when so provided in said contract. (emphasis added).
SDCL 46A-7-1 states in pertinent part:
For the purposes of defraying the expenses of the organization of the irrigation district, and for the . . . and for the purpose of defraying all expenses related to the care, operation, management, repair, and improvement of such portions of its canal and works. . . the board of directors thereof may either fix rates of tolls and charges and collect the same from all persons using such works for irrigation or other purposes, or may provide for the payment of such expenditures by assessments therefor, or by both such tolls and assessments; if by assessment, such levy shall be made upon the completion and equalization of the assessment roll in accordance with the benefit received . . . . (emphasis added).
10. Plaintiffs are essentially arguing that the benefits received through their payment of O & M costs are synonymous with the requirement that construction costs be assessed based on the productive capacity of the land. Thus, they contend that under South Dakota law, O & M costs must be assessed based on the Class 1-4 rating system. Under this scheme, owners of Class 4 land, for example, would be assessed considerably less for O & M expenses than owners of Class 1 lands.
11. SDCL 46A-6-8 states in pertinent part:
The board of directors of any irrigation district established and organized under and by virtue of the laws of South Dakota, whenever deemed advisable and to the best interests of the district, shall have the power and authority to enter into any contract with the United States supplementing or amending any original contract . . . 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 (emphasis added).
SDCL 46A-6-9 states in pertinent part:
In case any supplementary or amendatory contract shall be made with the United States under § 46A-6-8, no election shall be necessary, nor shall the board of directors of such irrigation district be required to proceed to a judicial confirmation of the making of such contract and the terms thereof. It shall be sufficient . . . for the board of directors of any irrigation district to authorize the execution of the same by its president and secretary by appropriate resolution adopted at any regular or special meeting of the board of directors (emphasis added).
12. SDCL 46A-7-13 states in pertinent part:
[T]he provisions of such a contract shall govern such district in making its assessments, provided such contract has been approved by the necessary majority vote of the owners of the land affected at an election properly called for such purpose (emphasis added).
13. Under plaintiffs' interpretation, the 1971 Amendment could only have been approved by a majority of the 579 qualified voters eligible to cast ballots. Thus, 275 voters would have had to cast ballots for the measure (a true majority of all those eligible to vote). However, at the time of the election, only 363 votes were actually cast and the measure was approved by a majority of those casting ballots.
14. See SDCL §§ 46A-4-61; 46A-4-71; 46A-4-85; 46A-5-4; 46A-6-4; 46A-6-7; 46A-6-24; 46A-7-3.
15. See footnote 9.
16. Article 5(a) of the 1984 Contract states:
The obligation of the District to pay annual construction charges to the United States as provided in this contract is a general obligation of the District as a whole, notwithstanding the manner in which the District may distribute the obligation among the District's landowners or water users and notwithstanding the default of individual landowners or water users in their obligations to the District.
Article 7(b) of the 1984 Contract states:
The District, without expense to the United States, shall continue to care for, operate, and maintain the transferred works in full compliance with the provisions of this contract, and in such manner that the transferred works will remain in sound operating condition.
17. Historically, the District maintained a $2.18 differential in construction debt repayment assessments between Class 1 and Class 4 lands based upon the ratios outlined in the 1971 Amendment to the 1963 Contract. See Deposition of Randy Oliver at 5 (Belle Fourche Irrigation District Manager). The differential between Class 1 and Class 4 landowners was increased to $7 in 1997 to reflect an increase in construction debt repayment obligation and landowner concerns. Id. at 51.
18. As an employee of the Bureau, Kent Heidt is group leader for contracts and environment. His responsibilities include ensuring repayment of water surface contracts in the Great Plains region, land management, power contracts, recreational management, and National Environment Act compliance. Heidt Depo. at 6.