Transcript Who is in the HOUSE? -The Experts Among Us

1926(b)
Mike Keegan,
Analyst, Rural Water
www.ruralwater.org
Who is in the HOUSE?
-The Experts Among Us
-USDA Officials
-Attorneys
-Celebrity Cases
-Municipality
-Rural Water Districts
The Plan
-Background
-Resources
-Latest Key Cases/Rulings
-Stay Friends & Out of Court
-Circle of 5ths
What is 7 USC Sec.1926(b)
The service provided or made available through any such
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 loan; nor shall the happening of
any such event be the basis of requiring such association to
secure any franchise, license, or permit as a condition to
continuing to serve the area served by the association at the
time of the occurrence of such event.
NOTE: “provide service or made available” -leaves unclear the definition of “service area”
Who Has the Protection
1) System that is indebted to
USDA
2) System who “service area” is
being curtailed
Why Do We Have It
1. Protect the government investment (repayability)
2. Growth is Good -- Allows advancement of
mission – more hook-ups means more and
cheaper water in the county
3. Clear protection to avoid legal cost on
small supplies
Big Cases (6 Circuits)
10th Pittsburg County #7 v. McAlester 2003
6th Le-Ax v. City of Athens, 2003
10th Ellsworth County v. City of Wilson, 2003
4th James Island PSD v. Charleston 2001
8th Rural Water #1 v. Sioux Center 2000
*4th Bell Arthur v. Greenville 1999
*10th Glenpool v. Creek County 1998
5th City of Madison v. Bear Creek 1987
6th Lex-South Elkhorn v. Willmore 1996
*5th North Alamo v. City of San Juan 1996
7th CSL Utilities v. Jennings Water 1993
Resources
Key Case Law Rulings #1
Service Area is Sacrosanct
1. “The service area of a federally indebted
water association is sacrosanct." North
Alamo Water Supply, 5th Circuit.
2. “Every” federal court has concluded 1926(b)\
should be “liberally interpreted” to protect
indebted systems from encroachment.
3. “Doubts” in the case are to be determined in
Favor Rural Water District.
Key Case Law Rulings #2
Making Service to Growth
1. (10th, 4th , etc.) “inherent in the concept of
providing service or making service
available is the capability of providing
service or at a minimum, of providing
service within a reasonable time”.
2. Proximate and adequate “pipes in the
ground” with which it has served or can
serve the disputed customers within a
reasonable time. (Steve Harris)
Key Case Law Rulings #2
Making Service to Growth
3) How big, how close, and how soon, must the
water be to the area in dispute? Answer is not
scientific (reasonableness). It is not comparing
who can provide service the cheapest, but simply
whether the water district can provide service for
reasonable charges. (Harris)
4) Capacity? Fire, Sewer, Cheaper?
5) Service Does Not Have to Be Free - charges can
be significantly larger than city and still satisfy
§1926(b) standards. (Harris)
Key Case Law Rulings #3
Ellsworth,
th
Kansas-10 (2003)
• Connection charges are not unreasonable,
excessive or confiscatory under a four
factor state law test before it can obtain
federal protection.
1. yield more than a fair profit;
2. rate is proportionate to the services;
3. similarly situated districts; and
4. doesn’t establish arbitrary
classifications between users.
Key Case Law Rulings #5
Le-Ax, Ohio –
th
6
(2003)
No Offensive Use 1926… “when a district’s boundaries are
geographically determined by the state, it cannot use §
1926(b) to obtain new customers outside that … we do not
consider here a case where the state has not defined the
boundaries of its water districts or associations”
Dissent: “The flaw in the majority is that it conflates a
political boundary with a service boundary... the majority has
not cited any case where a court found that a water district’s
political boundary, as opposed to its service boundary, is
relevant to defining the area protected by § 1926(b)..... the
water district’s state-defined political boundaries to be
irrelevant.
Staying Out of Court
• If you intend on serving outside their
political boundary, you need to annex the
area - particularly in the 6th Circuit.
Steve Harris emphasis on planning ahead to:
(1) expand district boundaries to the max,
(2) expand lines to satisfy the adjacency test,
(3) expand water lines to have ability to serve,
(4) establish a fair rate structure (not
“confiscatory”)
Getting Along (Steve Harris)
•
The simple solution to these somewhat vague standards, is to plan far
ahead. Water districts must plan and anticipate the needs of residential
developers and industrial customers. Water districts must make their
presence known and play an active role in community development, just
as other utilities do, such as providers of electricity, gas or sewer. Water
districts must invest in themselves by extending their lines as far as
practicable, and securing the maximum water available for long term
future needs. This also requires planning for delivery. Having lines in the
ground is not enough - water districts must have an adequate water
supply coupled with lines of sufficient size to deliver required volumes
at requisite pressure. Doing so will readily satisfy the burden of proof of
making service available. It must be remembered that federally indebted
water districts have an affirmative duty to make service available to all
applicants in there service area who can be legally and feasibly served.
(Steve Harris, Esq.)
How to Get Along
• I Stayed Outta Court by…….
• I Coulda Stayed Outta of
Court by……
• I Worked it Out with My
Neighbors by……
More Participation
• Question the Experts?
• Anything failed to Mention?
Misc. Items
•
“Le-Ax also has the option of changing its boundaries
pursuant to the procedures specified in Ohio Code ”
•
we agree with the district court that Bell Arthur was
not entitled to protection for the Ironwood area
because it did not have the capacity to serve that
area, nor did it have the capacity to provide such
service within a reasonable time after the request
for service was made.
•
Chesapeake Ranch, MD contesting curtailment of ground
water in current case before the 4th Circuit.