Can a private nonprofit corporation that provides rural water supply in Oklahoma reorganize itself as a public Rural Water District if it was formed on or after December 1, 1988?

Plain-English summary

Oklahoma has two kinds of entities that supply water to rural residents:

1. Rural Water Districts (RWDs). Public nonprofit entities created under the 1963 Rural Water Districts Act (now the Rural Water, Sewer, Gas and Solid Waste Management Districts Act). They are formed by petition to the county board of commissioners, become bodies politic and corporate of the State of Oklahoma, can borrow money, issue bonds, set rates, and exercise eminent domain.

2. Nonprofit Water Corporations (NWCs). Private nonprofit corporations organized under the Oklahoma General Corporation Act for the same purpose of supplying water. They sprang up in the late 1960s as an alternative to RWDs (in part because a federal loan program for RWDs was discontinued).

In 1989, the Legislature created a procedure for an existing NWC to reorganize as an RWD (codified at 82 O.S. §§ 1324.30 to 1324.35). The NWC's board votes its members on a proposal to reorganize, then petitions the county BOCC to establish the new district.

Representative Gerrid Kendrix asked whether this reorganization process is available to NWCs formed on or after December 1, 1988. The AG's answer: no.

The reasoning is textual. Section 1324.31 says: "Pursuant to the provisions of [the reorganization procedure], any corporation which was formed prior to December 1, 1988, may organize and constitute a district." The "prior to December 1, 1988" language is a date limitation. To read the statute as also applying to corporations formed after that date would render the date limitation meaningless. Under standard Oklahoma statutory construction (Rickard v. Coulimore, 2022 OK 9), every word and sentence must be given effect; date limitations cannot be ignored.

The opinion acknowledges (in footnote 5) that "[i]t is fair to question why the Legislature included this date limitation, and why it selected December 1, 1988 as the appropriate cutoff." But once the statutory language is plain, that question is for the Legislature, not the AG.

What this means for you

If you are a director of a Nonprofit Water Corporation formed before December 1, 1988

The reorganization pathway under 82 O.S. §§ 1324.30 to 1324.35 is available to you. The process: your board votes its members on a reorganization proposal (with the proposal setting out reasons, advantages, disadvantages, territory, and a representation that the corporation will dissolve upon reorganization). With majority approval (members and secured creditors), the board petitions the relevant county Board of County Commissioners to establish the District. The process then resembles standard Water District formation, with extra steps for handling existing corporate property and liabilities.

If you are a director of a Nonprofit Water Corporation formed on or after December 1, 1988

This streamlined reorganization pathway is not available to you. To convert to a Water District structure, you would have to use one of these alternative routes:

• Two-step approach. Form a new Water District under the standard Rural Water Act (82 O.S. § 1324.4) by petition of two or more landowners, then dissolve the existing corporation and transfer its assets and liabilities to the District. This is more complex and requires careful planning around debt covenants, contracts, and water rights.
• Legislative remedy. Seek an amendment to 82 O.S. § 1324.31 that removes or extends the date limitation. The opinion notes that the date is a legislative choice with no clearly articulated reason.
• Stay as a Nonprofit Water Corporation. NWCs have many of the same legal protections as Water Districts (excise tax exemption under 18 O.S. § 863, exclusion from public utility regulation under 17 O.S. § 151, etc.). Whether converting is worth the effort depends on your specific situation.

If you are an attorney advising a rural water entity

Run the formation date as the first question. If pre-December 1, 1988, the streamlined reorganization pathway is available. Otherwise, walk through the alternatives with the client. Be careful around:

• Existing debt covenants (will the District assume the NWC's bonds?)
• Water rights (some are tied to the corporate entity)
• Contracts with municipal water suppliers (which may have change-of-control or assignment provisions)
• Federal grant requirements (some grants made to NWCs must be repaid or transferred under specific terms)

If you are a county commissioner

When a NWC formed before December 1, 1988 files a reorganization petition under § 1324.32, you have the same procedural role as you would for an original RWD formation. Hold the public hearing, evaluate whether the petition meets statutory criteria, and approve or deny on the merits. You cannot waive the December 1, 1988 cutoff for newer corporations.

If you are an Oklahoma legislator

The opinion explicitly invites legislative attention: "It is fair to question why the Legislature included this date limitation." If members want to extend the streamlined reorganization pathway to newer NWCs, the path is statutory amendment. The amendment could remove the date entirely, extend it (e.g., to 2025), or set a rolling cutoff (e.g., corporations formed at least 10 years ago).

Common questions

Q: What is the legal difference between an RWD and a NWC?
A: An RWD is "a body politic and corporate and an agency and legally constituted authority of the State of Oklahoma" formed by county commissioner approval. A NWC is a private nonprofit corporation under the Oklahoma General Corporation Act. They have similar statutory protections (excise tax exemption, exclusion from PUC regulation, eminent domain) but differ in governance structure (board of directors elected by members vs. board of directors elected by users) and in their relationship to state government.

Q: Why does the date limitation exist?
A: The opinion does not know. It notes that legislators sometimes pick dates without articulating reasons (citing 70 O.S. § 3-132 as another example). The cutoff for pre-existing entities is common in transitional legislation; it suggests the 1989 enactment was meant to bring the then-existing NWCs into the public-district framework, not to create an ongoing conversion option.

Q: Can a NWC formed after December 1, 1988 do anything to access this pathway?
A: Not under § 1324.31 as written. The corporation could merge with or be absorbed by a pre-1988 NWC, but that is fact-specific and not directly addressed in the opinion.

Q: What if I don't know when my NWC was formed?
A: Check your articles of incorporation on file with the Oklahoma Secretary of State. The original filing date governs.

Q: Is the reorganization pathway the only way to dissolve a NWC and transfer its assets to an RWD?
A: No. Standard nonprofit dissolution under the Oklahoma General Corporation Act is available. The streamlined pathway in §§ 1324.30 to 1324.35 just provides a coordinated process specifically for NWC-to-RWD conversion.

Q: Could a court rule differently?
A: A court could read the statute differently in litigation, but the AG's textual analysis is straightforward and consistent with Oklahoma's standard statutory-construction rules. Any litigant would have a hard time getting around the "prior to December 1, 1988" language.

Q: What is the practical effect of being a Water District vs. a Nonprofit Water Corporation?
A: For most operational purposes, similar. Both can build infrastructure, set rates, borrow money, exercise eminent domain. Differences include: governance structure, board composition rules, ability to issue tax-exempt revenue bonds (RWDs have clearer authority), and treatment under certain federal loan and grant programs.

Background and statutory framework

Oklahoma's rural water supply legal framework has two parallel tracks. The Rural Water Districts Act (1963), now the Rural Water, Sewer, Gas and Solid Waste Management Districts Act, lets two or more landowners petition the county BOCC to form a Water District. With BOCC approval, the District is incorporated as a body politic and corporate. The District can borrow money, apply for grants, adopt rate structures, build infrastructure, and obtain water rights.

In 1968, the Legislature enacted a new framework for Oklahoma nonprofit corporations. With its breadth and flexibility, the framework was used by rural residents and water suppliers to form Nonprofit Water Corporations as an alternative to Water Districts. NWCs proliferated quickly, and the Legislature passed several amendments through the 1970s and 1980s to give NWCs many of the same protections as RWDs (excise tax exemption, exclusion from public utility regulation, mortgage filing rules, road relocation cost protections).

In 1989, the Legislature added §§ 1324.30 to 1324.35 to provide a coordinated process for NWCs to reorganize as RWDs. The process was tailored to existing NWCs at that time. The "prior to December 1, 1988" cutoff in § 1324.31 limited the streamlined pathway to NWCs already in existence when the legislation was passed.

The AG opinion is a pure textual analysis: the Legislature wrote a date limitation; the limitation must be given effect; corporations formed after the date cannot use the streamlined pathway. Rickard v. Coulimore (2022) and In re Initiative Petition No. 397 (2014) supply the canonical Oklahoma rules: every word in a statute should be given effect, and statutory language must be read in its plain and ordinary meaning.

Citations and references

Statutes:
- 82 O.S. §§ 1324.1 to 1324.26 (Rural Water Act)
- 82 O.S. §§ 1324.30 to 1324.35 (Reorganization)
- 18 O.S. §§ 1001 to 1144 (Oklahoma General Corporation Act)

Cases:
- Deer Creek Water Corp. v. City of Oklahoma City, 82 F.4th 972 (10th Cir. 2023)
- Rickard v. Coulimore, 2022 OK 9, 505 P.3d 920
- In re Initiative Petition No. 397, 2014 OK 23, 326 P.3d 496

Source

• Landing page: https://oklahoma.gov/oag/opinions/ag-opinions/2025/15.html
• Original PDF: https://oklahoma.gov/content/dam/ok/en/oag/opinions/ag-opinions/2025/AG%20Opinion%202025-15.pdf

Original opinion text

GENTNER DRUMMOND
ATTORNEY GENERAL
ATTORNEY GENERAL OPINION
2025-15

The Honorable Gerrid Kendrix
Oklahoma House of Representatives, District 52
2300 N. Lincoln Blvd., Rm. 347
Oklahoma City, OK 73105

December 4, 2025

Dear Representative Kendrix:

This office has received your request for an Attorney General Opinion in which you ask, in effect, the following question:

May a private nonprofit corporation formed for the purpose of providing water to rural residents in Oklahoma reorganize as a rural water district pursuant to the provisions of title 82, sections 1324.30 to 1324.35 of the Oklahoma Statutes if the corporation was formed on or after December 1, 1988?

I. SUMMARY

No. Based on the plain language of title 82, section 1324.31 of the Oklahoma Statutes, a private nonprofit corporation formed for the purpose of providing water to rural residents in Oklahoma may use the procedures set forth in title 82, sections 1324.30 to 1324.35 to reorganize as a rural water district only if the corporation was formed prior to December 1, 1988.

II. BACKGROUND

While the statutory analysis of your question is straightforward, it is helpful to begin with some historical background regarding rural water districts and nonprofit corporations that have been formed to serve a similar function.

A. Rural Water Districts.

In 1963, the Legislature enacted the Rural Water Districts Act to provide a means to establish "[p]ublic nonprofit rural water districts" to develop infrastructure to assure adequate water supply to residents of the district. Expanded and recodified in 1972 as the Rural Water, Sewer, Gas and Solid Waste Management Districts Act (the "Rural Water Act"), the statute sets forth the process to form a rural water district ("District" or "Water District") beginning with a petition filed with the relevant county clerk by any two or more landowners. The petition must outline the Water District's boundaries and state that (1) District residents lack adequate water supply, (2) such deficiency may be addressed through improved infrastructure, and (3) sufficient water is available to the District by private purchase or appropriation by the Oklahoma Water Resources Board ("OWRB"). The petition is then set for a public hearing before the board of county commissioners ("BOCC") for the county in which the largest portion of the Water District's territory is located. With BOCC approval, the District is incorporated as "a body politic and corporate and an agency and legally constituted authority of the State of Oklahoma for the public purposes set forth in [the Act]." Once formally constituted, the Water District may borrow money and apply for grants, adopt a rate structure, construct or improve infrastructure, and obtain water rights.

B. Nonprofit Rural Water Corporations.

Separately, in 1968, the Legislature enacted a new statutory framework governing nonprofit corporations. The statute allowed for the formation of nonstock corporations for any lawful purpose "not involving pecuniary gain." Such an entity could be formed by any three or more natural persons able to enter into contracts, and once formed, the entity had the capacity and powers of any other corporation formed under Oklahoma's corporation laws. These powers included, among others, the ability to enter into contracts, acquire and convey property, borrow money, and issue bonds and notes.

Given the breadth and flexibility of this statute, it was used by rural residents, or those serving rural residents, to form nonprofit rural water corporations ("Nonprofit Water Corporations") as an alternative to Water Districts. Based on this office's review, it appears that Nonprofit Water Corporations began to spring up almost as soon as the nonprofit corporation statute was enacted. Likewise, beginning in 1970, the Legislature on several occasions passed amendments to ensure that Nonprofit Water Corporations received similar treatment to Water Districts. As a result, there evolved over time two separate types of entities, one a public body needing approval by a BOCC, one a private corporation, that serve much the same purpose.

III. DISCUSSION

Your question involves legislation enacted in 1989, codified at title 82, sections 1324.30 to 1324.35. Together, these provisions establish a process by which a Nonprofit Water Corporation may reorganize as a Water District formed under the Rural Water Act. To begin the process, the board of directors of the Nonprofit Water Corporation must submit for a vote of its members a proposal that sets out, among other things, its reasons for reorganizing as a Water District, the advantages and disadvantages of the proposal, the territory involved, and a representation that the corporation will voluntarily dissolve upon reorganization as a Water District. If approved by a majority vote of members (and secured creditors), the board then petitions the relevant BOCC to establish the District. The process then proceeds in a manner similar to that of any other Water District, with additional measures to deal with corporate property and liabilities.

Your question stems from a particular provision in this 1989 enactment:

Pursuant to the provisions of [title 82, sections 1324.30 to 1324.35], any corporation which was formed prior to December 1, 1988, may organize and constitute a district subject to the provisions of the [Rural Water Act].

82 O.S.2021, § 1324.31 (emphasis added). You ask whether this provision disallows Nonprofit Water Corporations formed on or after December 1, 1988 from utilizing the procedures described above to reorganize as a Water District. Based on the plain language of the statute, the answer is yes.

The "primary goal in reviewing a statute is to ascertain legislative intent, if possible, from a reading of the statutory language in its plain and ordinary meaning." Additionally, "[a] statute must be read to render every part operative and to avoid rendering parts superfluous or useless." Here, the Legislature chose to include a date limitation in the statute: Nonprofit Water Corporations formed before December 1, 1988 may take advantage of these procedures to reorganize as a Water District. To construe the statute as allowing corporations formed after that date to do the same is to ignore the Legislature's date limitation entirely. Put simply, why include a date limitation if it has no effect? Because this office "must interpret legislation so as to give effect to every word and sentence," the only reasonable conclusion is that the Legislature intended the provisions of title 82, sections 1324.30 to 1324.35 to be available only to Nonprofit Water Corporations formed before December 1, 1988.

It is, therefore, the official Opinion of the Attorney General that:

Only a nonprofit corporation formed before December 1, 1988, and otherwise meeting the requirements set forth in 82 O.S.2021, § 1324.30, is eligible to reorganize as a rural water district using the procedures set forth in 82 O.S.2021, §§ 1324.30 to 1324.35.

GENTNER DRUMMOND
ATTORNEY GENERAL OF OKLAHOMA

ETHAN SHANER
DEPUTY GENERAL COUNSEL