Eudora News and Information – www.eudorareporter.com
The City of Eudora has won the appeal of the Rural Water District Number 4 lawsuit over rights to water service in an annexed southern portion of town.
The lawsuit began in 2007 when the Rural Water District sued the city in District Court, stating the city was poaching customers by annexing areas south of Kansas Highway 10 along County Road 1061. The Rural Water district had secured loans backed by the USDA to support building infrastructure to support services in these areas. Federal law prohibits municipalities from poaching rural water district customers while the federal loan is in repayment. Kansas state law has a provision that says USDA loan guarantees cannot be obtained unless the guarantee was “necessary.”
In the original lawsuit, the Rural Water District prevailed over the city and the city appealed the ruling to the 10th Circuit Court in Denver. The Court of Appeals reversed that verdict based on an error in a jury instruction and returned the case to U.S. District Court. Soon after the appeal, the State Legislature removed the term “necessary” from state law.
At the crux of all the arguments was if the loan backed by the USDA was necessary. According to court documents, the Rural Water district had secured the money for expansion from the Kansas Department of Health and Environment. Once Eudora started to look at future expansion via annexation, the Rural Water District decided to seek $250,000 less from KDHE and sought private loans for the quarter of a million and have the UDSA back those loans to fulfill state statutes and keep Eudora from infringing on Rural Water District customers.
When the case returned to the District Court, it was ruled that the change in state law did not apply retroactively. The case then went back to the Court of Appeals and earlier this week they issued the ruling that upheld the District Courts finding that the state statute did not apply retroactively. Therefore, the District was still bound by the “necessary” requirement which the judges found it had not met.
Reaction to the decision was mixed.
“We are relieved and appreciative the court understood our case and the fact they the city acted properly,” Eudora City Administrator Mike Press said. “The court confirmed our belief in that all along we were correct in our argument.”
The Rural Water District was a little more subdued on reaction to the 10th Circuit Court of Appeals findings.
“We do not have any comment on the ruling at this time,” Scott Schultz, representative of Rural Water District 4 stated. “We are studying our options to see where we may go from here.”
When asked if they may pursue further options in a court of law, Schultz said that no decisions have been made yet and they will take time to evaluate the situation to see if they attempt to proceed forward.