January 24, 1983
Mr. Warren R. Neufeld
Secretary
Department of Water and Natural Resources
Joe Foss Building
Pierre, South Dakota 57501
Official Opinion No. 83-03
Irrigation districts
Dear Secretary Neufeld:
You have requested an official opinion from this office in regard to the following factual situation:
FACTS:
The Department of Water and Natural Resources has received inquiries from the Lake Andes-Wagner Irrigation District concerning the procedure for establishing a new district within the present district or re-establishing the boundaries of the present district and the ramifications of such action on the landowners and the district's bonded debt.
. . . .
The irrigation district, within the next two years, intends to establish a new district or exclude some of the present lands to conform with the boundaries of a project presently under study. Because of the potential problems that may result from the district's current bonded indebtedness, the district has requested the Department of Water and Natural Resources to determine the district's responsibilities and evaluate its alternatives.
Based on the above facts, you have asked the following questions:
QUESTIONS:
(1) Do SDCL Chapters 46-12 through 46-15, inclusive, preclude interested parties from organizing an irrigation district to construct and operate a project that lies wholly or partially within another existing irrigation district?
(2) When lands are excluded from an irrigation district pursuant to SDCL Chapter 46-12, are those lands obligated to debts incurred before such lands were excluded?
(3) If the irrigation district's boundary lines were changed, by what governing body would the landowners in the areas excluded from the district be regulated in determining the amount of taxes that will be levied on the land to retire the original bond?
a. What is the legal recourse of these landowners if they believe that the tax levied is unfair?
IN RE QUESTION NO. 1:
SDCL 46-12-20 clearly contemplates the possibility of organizing a new irrigation district which lies wholly or partially within the boundaries of an existing irrigation district. That statute provides in pertinent part:
and no board of county commissioners of any county including any portion of such district shall, after the date of the organization of such district, permit another district to be formed including any of the lands of such district, without the consent of the board of directors thereof.
Therefore, my answer to your first question is NO.
IN RE QUESTION NO. 2:
My answer to this question is based upon two assumptions. First I assume that the land is to be excluded from the district pursuant to a petition filed under SDCL 46-12-64. Secondly, I assume that the bonds in question were issued after July 1, 1976, and that the resolution authorizing the bond issuance contained no covenants pertinent to the question asked. See SDCL 46-12-67; SDCL 46-14-14.1. Based upon those assumptions, it is my opinion that when land is properly excluded from an irrigation district, that land is no longer liable for the debts incurred before the land was excluded.
SDCL 46-12-71 provides that when an order is entered by the board of directors excluding lands from an irrigation district, 'the district shall be and remain an irrigation district as fully, to every intent and purpose, as it would be . . . had the lands excluded therefrom never constituted a portion of the district.' In fact, SDCL 46-12-72 goes on to provide for the possibility of a refund of assessments paid prior to the exclusion:
In case of the exclusion of any lands under the provisions of this chapter, there shall be refunded, to any and all persons who have paid any assessment or assessments to such district for any lands so excluded, any sum or sums so paid. Such payments shall be made in the same manner as other claims against such district and from such fund or funds as the board of directors may designate; but where such parties have realized benefits from the organization and operation of the district, the value of such benefits shall be deducted from the assessments paid in by such person and the balance, if any, refunded.
I find support for this interpretation by virtue of the fact that bondholder consent is a likely prerequisite to such an exclusion of land. See SDCL 46- 12-67. Such consent would certainly not be necessary if the lien of the bonds followed the land.
Although SDCL 46-14-18 provides that the district's 'real property shall be and remain liable' to be assessed for bond payments, that applies only to lands within the district while those lands remain in the district. It does not apply to lands properly excluded from the district. Any other interpretation would render SDCL 46-12-72 meaningless.
Nor do I believe that the lien on real property created by an assessment requires a different conclusion. See SDCL 46-15-1; 46-15-33. SDCL 46- 12-72 clearly contemplates a refund of assessments. Furthermore, the entire thrust of SDCL Chapters 46-12 through 46-15, inclusive, is that lands not benefited by the district either should not be in the district or should not be required to pay for a benefit not received. See, e.g., SDCL 46-12-10; 46- 12-12; 46-12-72; 46-12-74.1; 46-12-75; 46-15-1; 46-15-31. Therefore, my answer to your second question is NO.
IN RE QUESTION NO. 3 AND QUESTION NO. 3a:
In light of my answer to Question 2, I do not believe that an answer to Question 3 or to Question 3a is necessary.
Respectfully submitted,
Mark V. Meierhenry
Attorney General
