Is it a sewer or a Ford?
By Michael Howell
A hearing was held last Thursday, August 24, before District Court Judge James Haynes in the case of Citizens for Fair Water (CFW) versus the Bitter Root Irrigation District (BRID). The case arose from a controversy over the ownership, operation and maintenance of the Three-Mile Gravity Irrigation System now that the 30-year bond that financed the installation of the system has expired. The system was installed in 1986 and serves approximately 3,700 acres consisting of 529 parcels owned by approximately 414 users.
BRID notified users of the gravity feed system in 2013 that when the bond expired in 2016, their obligations to operate and maintain the system under the bond agreement would cease, at which point the users of the system would have to decide how to proceed. The BRID board of directors presented the option of forming a sub-district within BRID as one way to move forward. Or they could simply operate and maintain things themselves.
The BRID board made an effort to educate the users about their options and a movement was begun by some of the users to gather signatures from at least 60% of the users on a petition to become a sub-district.
Many users, however, questioned either option. They claimed that BRID was always the owner of the system and still was following the expiration of the bond payments and there was no reason to choose between the two options proposed. The issue was contentious with one group pushing hard for signatures and the other group following up and getting signatures removed once the issue of ownership was “explained” to them. The vote was about as close as one could get, but failed to get the required 60% to form the sub-district.
In October of 2015, CFW filed suit asking for a declaratory judgment that BRID owns the Three Mile Gravity Irrigation System and that no legal entity outside of BRID has the complete and sole obligation to maintain and operate the system as part of its overall irrigation regime. BRID counters that it has never owned the system and since the contractual obligation in the bonding agreement to operate and maintain it has expired, it no longer has the obligation to operate it or maintain it. The irrigation company claims to have acted only as a “sponsor” to assist its members in the Three Mile area in accessing resources to construct the system. Attorneys for each side in the case, Jack Tuholske for CFW and David Marquette for BRID, filed briefs in January asking for Summary Judgment in their favor.
Initially, at last Thursday’s hearing on the motion and cross-motion, Judge Haynes questioned whether it was wise to turn the matter over to the Court to make a decision based on law, instead of hearing and weighing testimony at trial and have a jury decide, or better yet, simply working out a compromise solution.
He said typically a declaratory judgment action is over documents and is determined on that basis, but this seems to be over other issues that are not made clear in the record. He said that, based on his examination of the entire record, neither party ever even considered the issue of who pays for operation and maintenance after the payment contract expires. He said they were basically asking him to “divine” an answer concerning the intentions of the parties to the contract.
“Is this a case for summary judgment?” he asked.
Both attorneys argued that it was ripe for summary judgment and the decision could be based on the record and the law.
Haynes began then by inquiring into the question of ownership and who the entity or “group” was that was involved with BRID in creating the system.
Tuholske argued that there were some individuals involved but no formal group signed anything. In his brief he argued that BRID “sponsored” the financing for the system in order to make the improvements necessary to fulfill its obligation to deliver water to the Three Mile users at the end of the line who were chronically shorted. He argues that the water saved by the gravity system benefits the entire system as it was designed to and Three Mile users should not separately be required to pay for operation and maintenance from now on. It should be shared by the entire BRID system.
Although over 60% of the users in the area did vote to form a district at the time, Tuholske said in court, “they agreed to take on the debt, not the ownership of the system.”
Haynes also inquired as to why BRID would take on the task of maintaining the five lines after the contract expired.
Marquette said that it was a compromise that was reached to keep things going in which BRID took responsibility for the underground part and the users took responsibility for the above ground part. He said if the users would agree to form a sub-district, then BRID would agree to own the system.
Tuholske noted that the users had already rejected that option. He said if the issue was going to become something other than ownership and get into the question of intentions then maybe it should go to trial on that issue.
The attorneys then disagreed on the issue of whether BRID benefited and how much from the construction of the system. Tuholske again said that if the issue was something other than ownership, if it was over the question of whether it benefited BRID and how much, then that might be an issue for trial as well.
Haynes said, “It still would not give us the answer we need.”
But, he said, after examining 27 years of minutes and piles of documents and the Bitterroot Decree, “there is no statute, no document that answers this question.”
Haynes goes on to reason that, since both parties have come to agreement that it will be BRID that does the operation and maintenance, the real remaining question is just who pays for it.
He likened one interpretation of the contract to be like the lease-to-buy option on a vehicle. When the lease contract is paid off the vehicle is owned by the leasing party. But in the case of something like a sewer system, he said, ownership is not transferred to the people who paid once the construction is paid off.
“One sentence thirty years ago would have resolved this,” said Marquette.
“So, is it like a sewer or like a Ford?” asked Haynes.
He said he was reluctant to force a solution on people who have already voted to decline it. Overall, though, he had asked very hard questions of both sides without clearly indicating a prevailing argument. Concerning the matter really at issue, who pays for future operation and maintenance, he reiterated, he would only acknowledge that no clear statute or document answers the issue so they are asking him to “divine” a matter of law. He said he just wanted it to be clear to the people in the audience that it was their own attorneys who were asking him to do this.
He said, “One side is going to lose big and it may not come out how a lot of good people are expecting.”
Asked by the judge if he had any sort of proposal, Marquette said that he would prepare one and discuss it with the other party. Tuholske agreed to discuss a proposal and they were given thirty days to report back to the court.