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.
