from the United States District Court for the District of
Kansas (D.C. No. 2:14-CV-02399-JAR)
M. Harris, Doyle Harris Davis & Haughey, Tulsa, Oklahoma
(Michael D. Davis and S. Max Harris, Doyle Harris Davis &
Haughey, Tulsa, Oklahoma; and John W. Nitcher, Riling
Burkhead & Nitcher, Lawrence, Kansas, with him on the
briefs), appearing for Appellant.
L. Tideman (Mark A. Samsel, with him on the brief), Lathrop
& Gage LLP, Overland Park, Kansas, appearing for
BRISCOE, MATHESON, and PHILLIPS, Circuit Judges.
BRISCOE, Circuit Judge.
Rural Water District No. 4, Douglas County, Kansas
("Douglas-4") appeals the district court's
order granting summary judgment in favor of Plaintiff City of
Eudora, Kansas ("Eudora") in this declaratory
judgment action. This is the third appeal arising out of a
dispute between Douglas-4 and Eudora over which entity can
provide water service to certain areas near Eudora, Kansas
(the "Service Area"). See Rural Water Dist. No.
4, Douglas Cty. v. City of Eudora (Eudora II),
720 F.3d 1269 (10th Cir. 2013); Rural Water Dist. No. 4,
Douglas Cty. v. City of Eudora (Eudora I), 659
F.3d 969 (10th Cir. 2011). We exercise jurisdiction pursuant
to 28 U.S.C. § 1291 and affirm.
2002, Douglas-4 was the water service provider for the
Service Area, but was running low on water. Douglas-4 decided
to purchase water from an adjacent rural water district,
"Johnson-6." The project required laying new pipes
and building additional pumping stations at an estimated cost
of $1.25 million. To finance the project, Douglas-4 received
initial approval for a $1.25 million loan from the Kansas
Department of Health and Environment (KDHE) with a fixed rate
and twenty-year term.
same year, Eudora annexed the Service Area. The annexation
positioned Eudora to potentially assume Douglas-4's water
customers pursuant to Kan. Stat. Ann. (K.S.A.) § 12-527
(1987), a Kansas statute that permits municipalities to
replace a rural water district as the water service
that it was facing a potential loss of customers,
Douglas-4's governing board reduced its KDHE loan to $1
million and sought the remaining $250, 000 from a private,
USDA-guaranteed loan. Douglas-4 believed that such a loan
would come with federal protection under 7 U.S.C. §
1926(b), which prevented municipalities from assuming water
customers while a USDA-guaranteed loan was in repayment.
Douglas-4 eventually secured a USDA-guaranteed loan for $250,
000 from First State Bank & Trust and proceeded with the
Johnson-6 project. Both the KDHE loan and the USDA-guaranteed
loan had twenty-year repayment terms, beginning in 2004 and
ending in 2024.
2004 and 2007, Douglas-4 and Eudora entered into negotiations
in an attempt to resolve the disputed Service Area, but the
discussions were not successful. In September 2007, Eudora
moved to enforce its rights under K.S.A. § 12-527 to
replace Douglas-4 as the water service provider for the
September 27, 2007, Douglas-4 filed suit in the United States
District Court for the District of Kansas to prevent Eudora
from taking its water customers in the Service Area.
Douglas-4 argued that 7 U.S.C. § 1926(b) provided
protection to rural water districts like Douglas-4, and
K.S.A. § 82a-619(g) gave Douglas-4 the authority to
accept such protection.
time, § 82a-619(g) had two clauses. The first clause
allowed Douglas-4 to "cooperate with and enter into
agreements with the secretary of the United States department
of agriculture or the secretary's duly authorized
representative necessary to carry out the purposes of its
organization, " and the second clause allowed Douglas-4
"to accept financial or other aid which the secretary of
the United States department of agriculture is empowered to
give pursuant to 16 U.S.C.A., secs. 590r, 590s, 590x-1,
590x-a and 590x-3, and amendments thereto." K.S.A.
§ 82a-619(g) (1997).
ten-day trial, the district court directed the jury to
determine "whether the loan guaranteed by [the]
Federal Government was necessary." Eudora I,
659 F.3d at 977 (quoting the record) (alteration in
original). The jury returned a special verdict in favor of
Douglas-4, concluding the loan guaranteed by the federal
government was necessary, and Eudora appealed.
Eudora I, we distinguished the private bank's
loan from the federal government's