Le-Ax Water District v. City of Athens, Ohio

GIBBONS, Circuit Judge,

dissenting.

I agree with the majority’s well-reasoned analysis contained in sections II.A. through II.C. of its opinion. Based upon this analysis, I would affirm the district court’s judgment. While the arguments contained in section II.D. of the majority’s opinion may be sound policy, in my view, the result reached by the majority is inconsistent with the statute’s language as interpreted by this court’s binding precedent.

The majority is correct when it says in section II.D. that “ § 1926(b) can be used only as a shield to defend against invasion *711 rather than as a sword to wage one.” (Majority Op. at 707.) The majority errs, however, in defining the area that § 1926(b) protects from invasion.

As the majority correctly explains in section II.B. of its opinion, § 1926(b) protects the area where the association “has provided or made service available.” (Majority Op. at 705, quoting Adams County Reg’l Water Dist. v. Vill. of Manchester, 226 F.3d 513, 517 (6th Cir.2000).) It is relatively easy to determine the area where the association has provided service, but it is not obvious what the statute means by “service ... made available.” 7 U.S.C. § 1926 (b). As the majority correctly explains in section II.C. of its opinion, however, this difficult issue has already been addressed by our court.

In Lexington—S. El khorn Water District v. City of Wilmore, Kentucky, we held that:

whether an association has made service available is determined based on the existence of facilities on, or in the proximity of, the location to be served. If an association does not already have service in existence, water lines must either be within or adjacent to the property claimed to be protected by Section 1926(b) prior to the time an allegedly encroaching association begins providing service in order to be eligible for Section 1926(b) protection.

93 F.3d 230, 237 (6th Cir.1996). In addition to the requirement that the association have “pipes in the ground” within or adjacent to the area in question, the association must also have the legal right under state law to serve the area in question to benefit from the monopoly power afforded by § 1926(b). Id. at 235-36.

Le-Ax, as the majority holds, “has clearly satisfied both of these requirements” as to the disputed area in this case. (Majority Op. at 706.) First, Le-Ax has a water line immediately adjacent to the University Estates development. (Majority Op. at 707.) The uncontradicted evidence is that this line has been in place since Le-Ax’s creation over twenty years ago. (JA at 66-67.) Moreover, the uncontradicted evidence demonstrates that this line was designed with surplus capacity to serve future growth throughout the area, including the area encompassing the University Estates development. (JA at 69.) As the district court found in its thorough and well-reasoned opinion, “Plaintiffs distribution lines that make service available to the UE development are already in place, and have been in place since the Plaintiffs creation over twenty years ago — long before the City of Athens was interested in the right to distribute water to the region in question.” (JA at 21.) Second, as the majority explains, Ohio law permits Le-Ax to serve the University Estates development. (Majority Op. at 707.)

Because Le-Ax maintains a water line with excess capacity immediately adjacent to the University Estates development (and has done so for over twenty years, anticipating future growth) and because Le-Ax has the right under state law to serve the University Estates development, the University Estates development is within Le-Ax’s service area that is protected from invasion by § 1926(b), as interpreted by our holding in Lexington—S. El khorn. Therefore, Le-Ax is using § 1926(b) in this case as a shield to protect an area where it has made service available for over twenty years. Nevertheless, the majority withholds protection under § 1926(b) because the University Estates development is not within Le-Ax’s state-defined political boundary.

The majority, however, fails to explain why it matters where state law places Le-Ax’s boundaries for purposes other than providing service. The flaw in the majori *712 ty’s analysis is that it conflates an association’s political boundary with an association’s service boundary. Because state law grants Le-Ax the legal right to serve the University Estates development, University Estates is within Le-Ax’s state-defined service boundary. Moreover, because Le-Ax has made service available to the University Estates development via a water line with excess capacity immediately adjacent to the development, Le-Ax is entitled to the protection of § 1926(b) under our holding in Lexington—S. El khorn. 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). 1 Congress could have limited the protection offered by § 1926(b) to an association’s state-defined political boundary; instead, Congress chose to limit the statute’s protection to where the association has provided service or made service available.

In Lexington—S. El khorn, we rejected the argument that an association’s state-defined political boundary is relevant to determining the area protected by § 1926(b). In Lexington—S. El khorn, the City of Wilmore, Kentucky, did not dispute that it extended its water lines into part of the plaintiff water district’s territorial area. 93 F.3d at 232 . The water district, Lexington—S. Elkhorn, claimed that § 1926(b) protects its territorial area from invasion by the city’s water lines. Id. at 234. The district court ruled in favor of the city, rejecting the water district’s argument that its territorial boundary was relevant to § 1926(b). Id. We affirmed, holding that § 1926(b) protects only that area where the water district has provided service or made service available by maintaining water lines nearby. Id. at 237. We found the water district’s state-defined political boundaries to be irrelevant. Id. at 238 (looking to state law only to determine if the water district had the legal right to serve the area and finding it unnecessary to decide whether the disputed area was within the water district’s state-defined boundaries).

The majority criticizes Le-Ax’s “expansive” vision of § 1926(d), which, according to the majority, would give an association “monopoly status” to serve any area where it could provide service. (Majority Op. at 709.) The majority’s criticism is more appropriately directed toward Congress, because § 1926(d) by its plain terms grants an eligible association monopoly status to serve any area where service is “made available” by the association. 7 U.S.C. § 1926 (b). This court’s binding precedent holds that service is “made available” under § 1926(d) wherever the association has the legal right to serve and the present ability to serve because it has sufficient pipes in the ground within or adjacent to the area. Lexington—S. El khorn, 93 F.3d at 237 . Because there is no basis in the statute or our precedent for the majority’s addition of an additional element to a plaintiffs claim under § 1926(b), I dissent.

. In the absence of any authority, the majority seems to base its analysis upon a student law review note that advocates the repeal of § 1926(b). (Majority Op. at 708, citing Scott Hounsel, Note: Water Associations and Federal Protection Under 7 U.S.C. § 1926(b): A Proposal to Repeal Monopoly Status, 80 Tex. L.Rev. 155 (2001).)