Pottawatomie County Rural Water District No 3 v. Fallin et al
ORDER denying 4 Defendants' Motion to Dismiss (as more fully set out). Signed by Honorable Vicki Miles-LaGrange on 2/24/2017. (ks)
IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF OKLAHOMA
RURAL WATER DISTRICT NO. 3,
an agency of the State of Oklahoma,
MARY FALLIN, Governor of the
State of Oklahoma, in her
official capacity, and J. DAVID
BURRAGE, Chairman of the Oklahoma
Department of Transportation, in his
Case No. CIV-16-659-M
Before the Court is Defendants’ Motion to Dismiss, filed July 17, 2016. On July 20,
2016, plaintiff filed its response, and on August 5, 2016, defendants replied. Based on the
parties’ submissions, the Court makes its determination.
On June 15, 2016, plaintiff Pottawatomie County Rural Water District No. 3 (the
“District”) filed this action, pursuant to 42 U.S.C. § 1983, seeking declaratory and injunctive
relief against defendants Mary Fallin (“Gov. Fallin”), Governor of the State of Oklahoma, and J.
David Burrage (“Burrage”), Chairman of the Oklahoma Department of Transportation,
On February 18, 1997, the District was formed, pursuant to the Rural Water, Sewer, Gas
and Solid Waste Management Districts Act (“Rural Water Act”). The District is an agency of the
The alleged facts set forth are taken from plaintiff’s Original Complaint and Application
for Declaration and Injunctive Relief [docket no. 1].
State of Oklahoma, and its principal office and place of business is located in Pottawatomie
County, Oklahoma. On August 10, 2001, pursuant to the Rural Water Act, the District borrowed
over $1,000,000.00 from the United States Department of Agriculture (“USDA”). 2 The District
alleges that, pursuant to 7 U.S.C. § 1926(b) (“§ 1926(b)”), the District has the federal right to be
the exclusive water service provider in all areas for which the District has the legal right to
provide water service. 3 Further, the District alleges that “the State of Oklahoma, by empowering
the District to borrow money from the USDA, bound the State and all of its subdivisions, to
comply with the provisions of § 1926(b).” Compl. ¶ 8.
The District alleges that Defendants, acting in furtherance of and for the Oklahoma
Department of Transportation (“ODOT”), have violated § 1926(b) by requiring the District to
prove to the satisfaction of ODOT that the District is in fact a rural water district before it will
allow the District to have access to state highways and rights-of-way for water line construction
purposes. The District further alleges that the requirements imposed by Defendants include
complying with Okla. Stat. tit. 69, § 1401, a statute which is facially not applicable to the
The District alleges it remains indebted to the USDA on said loan.
§ 1926(b) states:
(b) Curtailment or limitation of service prohibited
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; nor shall the happening of any such event be the basis of
requiring such association to secure any franchise, license, or
permit as a condition to continuing to serve the area served by the
association at the time of the occurrence of such event.
7 U.S.C. § 1926(b).
District.4 The District alleges that Okla. Stat. tit. 82, § 1324.10(A)(8) grants the District the
statutory right to use the State’s highways and rights-of-way and mandates that the State and
ODOT concur in the location of water lines constructed by the District, and that the State’s use
of inapplicable statutes is pretext to interfere with the water service provided by the District and
directly results in reducing the customer pool of the District, in violation of § 1926(b).
Defendants now move for this Court to dismiss this matter on the following basis: (1)
Defendants contend that Gov. Fallin should be dismissed from this action as she has no
connection to the acts and statutes the District alleges were violated and, therefore, pursuant to
the Eleventh Amendment, is immune from suit in this matter; (2) the Court should abstain from
hearing this matter under the Younger Abstention Doctrine5; and (3) this matter should be
dismissed, pursuant to Federal Rule of Civil Procedure 12(b)(6), as the District has failed to state
a claim upon which relief can be granted.
Eleventh Amendment immunity
Defendants contend that Gov. Fallin should be dismissed from this matter as she has no
connection to the acts and statutes complained of and, therefore, is immune from suit in this
matter, pursuant to the Eleventh Amendment. Specifically, Defendants contend that the District
Okla. Stat. tit. 69, § 1401 pertains to the use of highways, rights-of-way, and easements
by public utilities or cable television systems.
On May 23, 2016, the State of Oklahoma filed an action against the District in
Oklahoma County District Court, State of Oklahoma. In the state court action, the State of
Oklahoma sought a temporary injunction barring the District from making use of or constructing
infrastructure on any of the State’s highways or rights-of-way. The District advised the Court
that on December 5, 2016, the state court granted the District’s motion to dismiss and dismissed
the State’s case against the District in state court. Since the state court matter has been dismissed
of, the Court finds that it is not necessary to abstain from hearing this matter.
relies on Gov. Fallin’s general authority, pursuant to the Oklahoma Constitution article VI,
section 8, which states:
The Governor shall cause the laws of the State to be faithfully
executed, and shall conduct in person or in such manner as may be
prescribed by law, all intercourse and business of the State with
other states and with the United States, and [s]he shall be a
conservator of the peace throughout the State.
Okla. Const. art. VI, § 8, to assert its claim that Gov. Fallin violated § 1926(b). The District
contends that the Ex parte Young exception applies in this matter and, therefore, this suit against
Gov. Fallin is appropriate.
The Eleventh Amendment prohibits suits against states, including state officials in their
official capacity. See Muscogee (Creek) Nation v. Okla. Tax. Com’n, 611 F.3d 1222, 1227 (10th
Cir. 2010). The United States Supreme Court recognized an exception barring Eleventh
Amendment immunity when a state official is sued in his or her official capacity to enjoin an
ongoing violation of federal law. See id. at 1232 (quoting Ex parte Young, 209 U.S. 123, 159-60
(1908)). To determine when the Ex parte Young exception applies “a court need only conduct a
straightforward inquiry into whether the complaint alleges an ongoing violation of federal law
and seeks relief properly characterized as prospective.” Id. (internal quotations and citations
Having carefully reviewed the parties’ submissions, the Court finds that the District has
sufficiently alleged facts barring Gov. Fallin from exercising her right to Eleventh Amendment
immunity in this matter. The District alleges that Gov. Fallin, along with Burrage, has violated §
1926(b) by imposing new extra-statutory requirements on the District which has resulted in an
interference in the operations of the District and reduction of the District’s customer pool.
Further, the District seeks prospective injunctive and declaratory relief. As the District has
alleged that Gov. Fallin has violated § 1926(b), a federal law, and seeks injunctive and
declaratory relief to remedy the violation, the Court finds that the District’s allegations are
sufficient to allow this action to proceed against Gov. Fallin in her official capacity.
Rule 12(b)(6) dismissal
Regarding the standard for determining whether to dismiss a claim pursuant to Federal
Rule of Civil Procedure 12(b)(6), the United States Supreme Court has held:
To survive a motion to dismiss, a complaint must contain sufficient
factual matter, accepted as true, to state a claim to relief that is
plausible on its face. A claim has facial plausibility when the
plaintiff pleads factual content that allows the court to draw the
reasonable inference that the defendant is liable for the misconduct
alleged. The plausibility standard is not akin to a “probability
requirement,” but it asks for more than a sheer possibility that a
defendant has acted unlawfully. Where a complaint pleads facts
that are merely consistent with a defendant’s liability, it stops short
of the line between possibility and plausibility of entitlement to
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (internal quotations and citations omitted). Further,
“where the well-pleaded facts do not permit the court to infer more than the mere possibility of
misconduct, the complaint has alleged – but it has not shown – that the pleader is entitled to
relief.” Id. at 679 (internal quotations and citations omitted). Additionally, “[a] pleading that
offers labels and conclusions or a formulaic recitation of the elements of a cause of action will
not do. Nor does a complaint suffice if it tenders naked assertion[s] devoid of further factual
enhancement.” Id. at 678 (internal quotations and citations omitted). “While the 12(b)(6)
standard does not require that Plaintiff establish a prima facie case in her complaint, the elements
of each alleged cause of action help to determine whether Plaintiff has set forth a plausible
claim.” Khalik v. United Air Lines, 671 F.3d 1188, 1192 (10th Cir. 2012). Finally, “[a] court
reviewing the sufficiency of a complaint presumes all of plaintiff’s factual allegations are true
and construes them in the light most favorable to the plaintiff.” Hall v. Bellmon, 935 F.2d 1106,
1109 (10th Cir. 1991).
Defendants contend that the District has failed to state a claim against them, as the
District does not allege that Defendants have taken any anti-competitive actions against it in
violation of § 1926(b). “Congress enacted [§ 1926(b)] as a part of a federal statutory scheme to
extend loans and grants to certain associations providing soil conservations practices, water
service or management, waste facilities, or essential community facilities to farmers, ranchers,
and other rural residents.” Glenpool Util. Servs. Auth. v. Creek Cty. Rural Water Dist. No. 2, 861
F.2d 1211, 1214 (10th Cir. 1988). Further,
§ 1926(b) indicates a congressional mandate that local
governments not encroach upon the services provided by [federally
indebted water] associations, be that encroachment in the form of
competing franchises, new or additional permit requirements, or
similar means. . . [T]he type of encroachment contemplated by §
1926(b) is not limited to the traditional guise of an annexation
followed by the city’s initiation of water service. It encompasses
other forms of direct action that effectively reduce a water
district’s customer pool within its protected area.
Rural Water Dist. No. 4, Douglas Cty., Kan. v. City of Eudora, Kan., 659 F.3d 969, 985 (10th
Having carefully reviewed the District’s Complaint, and presuming all of the District’s
factual allegations are true and construing them in the light most favorable to the District, the
Court finds that the District has alleged sufficient facts establishing a plausible claim against the
Defendants. In its Complaint, the District specifically alleges:
The Defendants, acting in furtherance of and for the Oklahoma
Department of Transportation (ODOT) have engaged in conduct
which has limited, curtailed and encroached upon the services
provided or made available by the District. This conduct is in the
form of new extra-statutory requirements imposed on the District
to prove to the satisfaction of ODOT that the District is in fact a
rural water district before it will allow the District to have access to
State highways and rights-of-way for water line construction
purposes. The new requirements the State seeks to impose on the
District to comply with [Okla. Stat. tit. 69, § 1401], which is not
facially applicable to the District. [Okla. Stat. tit. 82, §
1324.10(A)(8)] grants the District the statutory right to use the
State’s highways and rights-of-way and mandates that the State
and ODOT concur in the location of water lines constructed by the
District. The State’s use of inapplicable statues is a pretext to
interfere with the water service provided by the District, and
directly results in reducing the customer pool of the District, in
direct violation of 7 U.S.C. § 1926(b).
The State’s conduct here is part of a plan and scheme to evade the
State’s or ODOT’s statutory obligation owed the District pursuant
to [Okla. Stat. tit. 69, § 1403(F)], which mandates that the
State/ODOT pay for the cost of replacing the District’s water lines
under the circumstances specified in the statute. The State, as a
means to avoid this financial obligation, has falsely contended that
the District is not a rural water district, despite being provided and
made aware of (a) final and non-appealable Orders from the Board
of County Commissioners of Pottawatomie County creating the
District in 1997, and expanding the territory of the District in 2008
and (b) final and non-appelable Order from the Oklahoma Water
Resources Board, which found as a fact, and as a matter of law,
that the District was validly formed and existing rural water district
under the Rural Water Act. The result of the actions of the State
has directly functioned to interfere in the operations of the District,
and therefore the State has, in violation of federal law, encroached
on, limited and curtailed the water service provided and made
available by the District which has in turn resulted in the reduction
of the District’s customer pool.
Compl. ¶¶ 12 & 13. The Court finds that, at this stage of the litigation, the District’s factual
allegations allow the Court to draw a reasonable inference that Defendants’ actions of requiring
the District to prove that it was a rural water district prior to allowing the District access to the
state’s highways and rights-of-way for water line construction is the type of direct action that
could effectively reduce the District’s customer pool. Therefore, the Court finds that the
District’s Complaint should not be dismissed.
Accordingly, for the reasons set forth above, the Court DENIES Defendants’ Motion to
Dismiss [docket no. 4].
IT IS SO ORDERED this 24th day of February, 2017.
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