Background
Jefferson County planned a new jail near Madison, Indiana. Dupont Water Company, a federally indebted rural water association, had a three- or four-inch water main at the site, while Madison had a twelve-inch main across the street. Because 7 U.S.C. § 1926(b) protects service provided or made available by certain federally indebted associations from municipal competition, Dupont claimed an exclusive right to supply the jail.
Beginning in 2020, the County and its project manager repeatedly communicated with Dupont about the jail’s substantial water needs, the larger infrastructure required, and a high-volume rate. Dupont never supplied an infrastructure plan, rate quote, or proposed contract. The County eventually obtained service from Madison, and Dupont sued Madison and asserted a counterclaim against the County. The district court granted summary judgment to Madison and the County because no reasonable jury could find that Dupont had made water service available to the jail.
The Court’s Holding
The Seventh Circuit affirmed. It held that the undisputed communications between the County, its project manager, and Dupont constituted a request for water service. The County did not need to submit Dupont’s ordinary application for service, particularly because the jail was an unusually large project requiring new infrastructure and special pricing.
Dupont did not provide or make service available within a reasonable time after that request. It remained inactive for years and did not investigate feasible infrastructure options until after filing suit and after the jail was operating. Expert estimates prepared during litigation could not overcome that historical record. Because Dupont failed the “pipes in the ground” prong of the Seventh Circuit’s physical-capability test, § 1926(b) did not prohibit Madison from serving the jail.
The court declined Madison’s invitation to overrule Jennings Water and narrow § 1926(b) to the forms of competition expressly identified in the statutory text. It nevertheless questioned whether that precedent grants rural water associations excessively broad monopolies and stated that the issue may warrant reconsideration in an appropriate future case.
Key Takeaways
- A customer’s sustained project-specific communications can constitute a request for water service even without a standard application.
- A federally indebted rural water association must be capable of providing service within a reasonable time after the request; asserting an exclusive service right is not enough.
- Litigation-generated feasibility evidence cannot erase years of actual inaction following a service request.
- The Seventh Circuit left Jennings Water intact but signaled concern that its broad interpretation of § 1926(b) may extend beyond the statute’s text.
Why It Matters
The decision grounds § 1926(b)’s physical-capability inquiry in what a utility actually did after receiving a service request when the historical record supplies a concrete answer. Rural water associations cannot preserve federal protection for a prospective customer merely by claiming territorial exclusivity while failing to develop infrastructure, pricing, or a service proposal within a reasonable time.
The opinion also flags a possible future reassessment of Seventh Circuit precedent treating § 1926(b) as a broad bar against municipal competition. That discussion did not alter the governing law or the holding in this case.