IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
_____________________
No. 96-50204
Summary Calendar
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POST OAK SPECIAL UTILITY DISTRICT,
Plaintiff-Appellee,
v.
CITY OF COOLIDGE, TX,
Defendant-Appellant.
_________________________________________________________________
Appeal from the United States District Court
for the Western District of Texas
(W-95-CV-62)
_________________________________________________________________
September 13, 1996
Before KING, DUHÉ, and BARKSDALE, Circuit Judges.
PER CURIAM:*
The district court granted the motion for summary judgment
filed by Post Oak Special Utility District (“Post Oak”) in its
suit against the City of Coolidge, Texas (“Coolidge”) under 7
U.S.C. § 1926(b), holding that Post Oak has clearly “made
available” its water services to Coolidge, and Coolidge cannot
*
Pursuant to Local Rule 47.5, the court has determined that
this opinion should not be published and is not precedent except
under the limited circumstances set forth in Local Rule 47.5.4.
now seek to supplant Post Oak as its supplier of potable water.
Coolidge appeals. Finding no error, we affirm.
I. BACKGROUND
Post Oak is a special utility district that provides water
service to rural customers and is financed by loans from the
Farmers Home Administration (“FmHA”), an agency of the federal
government.1 Since at least 1986, Coolidge has purchased water
from Post Oak pursuant to a written contract between the parties.
In 1992, Coolidge contracted with a third-party supplier, Bistone
Municipal Supply District (“Bistone”), to supply a portion of the
city’s water needs. Coolidge claims it entered into this
contract with Bistone because Coolidge found Post Oak’s service
inadequate.
Post Oak sought a declaratory judgment that Coolidge must
purchase its water from Post Oak and an injunction prohibiting
Coolidge from purchasing water from any other source, including
Bistone. Post Oak contends that under 7 U.S.C. § 1926(b),
Coolidge cannot purchase water from any other source during the
term of Post Oak’s indebtedness to the FmHA. Coolidge maintains
that it is entitled to purchase water from alternative sources,
including Bistone.
1
The FmHA is now known as the Rural Utilities Service
Administration. However, in this opinion, we will continue to
refer to the agency as FmHA.
2
Both parties filed motions for summary judgment. The trial
court granted Post Oak’s motion and denied Coolidge’s motion.
Coolidge moved for relief from the operation of the order, and
the court denied this motion as well. Coolidge has appealed the
denial of both motions.
II. DISCUSSION
A. SUMMARY JUDGMENT
1. Standard of Review
We review the granting of summary judgment de novo, applying
the same criteria used by the district court in the first
instance. Texas Medical Ass’n v. Aetna Life Ins. Co., 80 F.3d
153, 156 (5th Cir. 1996). Summary judgment is proper "if the
pleadings, depositions, answers to interrogatories, and
admissions on file, together with the affidavits, if any, show
that there is no genuine issue as to any material fact and that
the moving party is entitled to judgment as a matter of law."
FED. R. CIV. P. 56(c). Questions of statutory interpretation are
questions of law and thus reviewed de novo. Estate of Bonner v.
United States, 84 F.3d 196, 197 (5th Cir. 1996).
2. Analysis
As in any case involving construction of a statute, we begin
with the language of the statute itself. See Phillips v. Marine
Concrete Structures, Inc., 895 F.2d 1033, 1035 (5th Cir. 1990).
Section 1926(b) provides:
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The service provided or made available through any
such [rural water] 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 [FmHA] loan . . . .
7 U.S.C. § 1926(b) (emphasis added).
Courts have broadly interpreted this provision. As we
recently stated, “The service area of a federally indebted water
association is sacrosanct. Every federal court to have
interpreted § 1926(b) has concluded that the statute should be
liberally interpreted to protect FmHA-indebted rural water
associations from municipal encroachment.” North Alamo Water
Supply Corp. v. City of San Juan, 90 F.3d 910, 915 (5th Cir.
1996).
The legislative history of § 1926(b) indicates two
congressional purposes for the legislation: “1) to encourage
rural water development by expanding the number of potential
users of such systems, thereby decreasing the per-user cost, and
2) to safeguard the viability and financial security of such
associations (and FmHA’s loans) by protecting them from the
expansion of nearby cities and towns.” City of Madison v. Bear
Creek Water Ass’n, Inc., 816 F.2d 1057, 1060 (5th Cir. 1987).
The statute accomplishes these goals by forbidding encroachment
on the rural water association’s service area either “(1) through
expansion of a municipal or other public water system or (2)
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through introduction of new or expanded service by a private
supplier.” CSL Utils., Inc. v. Jennings Water, Inc., 16 F.3d
130, 135 (7th Cir. 1993), cert. denied, 115 S. Ct. 65 (1994).
Thus, the statute prevents another supplier, whether public or
private, from being substituted for or displacing the service of
a rural water association. Id.
The trial court granted summary judgment for Post Oak. The
court concluded that because Post Oak had made its service
available to Coolidge, Coolidge’s contract with Bistone allowed
Bistone to displace Post Oak’s service and thus violates
§ 1926(b).2 We agree with the district court’s analysis.
In North Shelby Water Co. v. Shelbyville Mun. Water & Sewer
Comm’n, 803 F. Supp. 15 (E.D. Ky. 1992), the court concluded that
the rural water company made service available to certain
residential subdivisions, even though it had never actually
provided water, by installing water distribution lines near or
within the subdivisions. Id. at 21-22. The court looked to
state law and determined that, because of the proximity of the
water lines to the subdivisions, state law obligated the rural
water company to provide water to subdivision customers who
applied for its service. Id. Thus, by incurring this obligation
2
The district court also concluded that summary judgment
for Post Oak was proper because, in addition to service “made
available,” Post Oak’s service qualified as “service provided”
under § 1926(b). We affirm only on the service “made available”
prong of § 1926(b) and do not reach the “service provided” prong.
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to provide water to the subdivisions, the water company “made
available” its services to the subdivisions. Id. at 22; see also
Glenpool Util. Servs. Auth. v. Creek County Rural Water Dist. No.
2, 861 F.2d 1211, 1214 (10th Cir. 1988)(finding that rural water
association “‘made [service] available’ by virtue of its line
adjacent to the property and its responsibilities to applicants
within its territory”), cert. denied, 490 U.S. 1067 (1989).
The case at bar is very similar to Shelby. Post Oak and
Coolidge are parties to a contract that obligates Coolidge to pay
for at least 12 million gallons of water per year from Post Oak
and obligates Post Oak to provide water to Coolidge “in such
quantity as may be required by [Coolidge].” Post Oak has “made
available” to Coolidge the opportunity to purchase all the water
it requires. Coolidge’s contract with Bistone cuts into the
potential amount of water Post Oak can sell to Coolidge. That
violates a fundamental tenet of § 1926(b), which is to protect
FmHA-indebted rural water associations from competition from
other suppliers. See Bear Creek, 816 F.2d at 1059; Jennings
Water, Inc. v. City of North Vernon, 682 F. Supp. 421, 425 (S.D.
Ind. 1988), aff’d, 895 F.2d 311 (7th Cir. 1989); Rural Water
Dist. #3 v. Owasso Utils. Auth., 530 F. Supp. 818, 823-24 (N.D.
Okla. 1979).
Coolidge makes several arguments in response to this
analysis. First, Coolidge contends that because the contract
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only obligates it to purchase 12 million gallons of water per
year from Post Oak, the 12 million gallons constitutes the
service available; therefore Coolidge can purchase additional
quantities of water from other sources. Because Coolidge plans
to continue purchasing the 12 million gallons annually from Post
Oak, Coolidge argues that its contract with Bistone will not
encroach upon Post Oak. However, Post Oak’s undisputed summary
judgment evidence shows, and Coolidge admits, that Coolidge
purchased much more than 12 million gallons per year solely from
Post Oak until after it entered into the new contract with
Bistone. This shows that the contract allows Coolidge to
purchase more than 12 million gallons per year. Therefore, Post
Oak has “made available” services sufficient to supply all of
Coolidge’s water needs, and § 1926(b) prohibits Coolidge from
encroaching on this by contracting with Bistone.3
Second, Coolidge maintains that § 1926(b) does not preclude
it from maintaining a supplemental water supply for purposes
other than household purposes. According to Coolidge, because it
3
The district court ruled that the Post Oak-Coolidge
contract is a requirements contract, obligating Coolidge to
purchase and Post Oak to supply all of Coolidge’s water
requirements. Coolidge disputes this conclusion, claiming that
the contract requires only that Coolidge purchase at least 12
million gallons of water annually. Whether the contract is a
requirements contract is irrelevant to our analysis because the
parties’ prior conduct indicates that the contract at least
allows Coolidge to purchase more than 12 million gallons
annually. Thus, we do not reach the issue of whether the Post
Oak-Coolidge contract is a requirements contract.
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uses the water supplied by Bistone for fire, commercial, and
industrial uses, and because § 1926(b) applies only to water for
household use, § 1926(b) does not prohibit its agreement with
Bistone. Coolidge cites no precedent for its proposition;
instead, it relies on language from a Senate report discussing
how the statute will benefit farmers and rural residents. This
language does not preclude the interpretation that the statute
could benefit other groups as well. The legislative history, as
discussed above, makes abundantly clear that § 1926(b) is to be
liberally construed to protect rural water associations from
competition. The statute provides no exceptions. Indeed, we
recently characterized the service area of an FmHA-indebted water
association as “sacrosanct.” North Alamo, 90 F.3d at 915.
Furthermore, as the district court pointed out, Coolidge’s own
summary judgment proof indicates that the water provided from
Bistone is used for residential purposes. Thus, Coolidge does
not even live up to its own standard for an exception to
§ 1926(b).
Finally, Coolidge asserts an argument based on the speed
with which Post Oak is paying its FmHA debt. Section 1926(b)
protects rural water associations “during the term of such loan.”
Coolidge maintains that because “Post Oak has failed to
diligently reduce” its debt, requiring Coolidge to purchase water
from Post Oak during the term of the loan would make Coolidge
8
“infinitely bound” to Post Oak, which is surely not what Congress
had in mind. Again, Coolidge asserts no authority for this
proposition. Congress placed no maximum loan term in the
statute. The statute is clear that it applies “during the term
of such loan.” Had Congress wanted a maximum loan term, it could
have easily inserted one.4
B. RELIEF FROM OPERATION OF ORDER
After the district court granted Post Oak’s motion for
summary judgment, Coolidge moved for relief from the operation of
the order, requesting “1) consent of the Court to use Bistone
water in emergency situations where Post Oak water is not
available or is not fit for consumption; and 2) consent of the
Court to purchase 50,000 gallons of water per week from Bistone
to keep an emergency system viable.” The court denied the
motion.
Apparently, Coolidge is making an equitable argument, but
Coolidge fails to identify the exact theory it bases its argument
upon. Again, Coolidge cites no authority for its argument. At
least one circuit court has refused to apply principles of equity
to block application of the statute, arguing that the very strong
public interest promoted by § 1926(b) is more important than
4
Coolidge also argues that Post Oak’s water service “is so
inadequate it fails to constitute ‘service provided.’” However,
because we do not reach the “service provided” issue, see supra
note 2, we need not address this argument.
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individual equitable concerns. See Jennings Water, Inc. v. City
of North Vernon, 895 F.2d 311, 316-17 (7th Cir. 1989) (equitable
estoppel). We agree. We have previously refused “[t]o read a
loophole into this absolute prohibition” provided by § 1926(b),
Bear Creek, 816 F.2d at 1059, and we will not begin now.
III. CONCLUSION
For the foregoing reasons, we AFFIRM the district court.
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