Tri-Township Water Dist. v. City of Trenton

576 F.Supp.3d 591

TRI-TOWNSHIP WATER DISTRICT, Plaintiff,

v.CITY OF TRENTON, ILLINOIS, Defendant.

Case No. 19-cv-414-RJD

United States District Court, S.D. Illinois.

Signed December 20, 2021

Joseph D. Brandmeyer, John L. Gilbert, Sandberg, Phoenix, et al., Edwardsville, IL, for Plaintiff.

Alvin C. Paulson, Becker, Paulson et al., Belleville, IL, for Defendant.

MEMORANDUM AND ORDER

DALY, Magistrate Judge:

This matter is before the Court on the parties’ cross-motions for summary judgment (Docs. 38 and 40). For the reasons set forth below, Plaintiff's motion is DENIED and Defendant's motion is GRANTED .

Factual Background ¹

On November 3, 1993, the Circuit Court of the Third Judicial Circuit entered an "Order Fixing Results of Election and Declaring Establishment of a Public Water District to be Known as The Tri-Township Water District Located in Madison and Clinton Counts, Illinois" ("Order") (see Doc. 39-1). In effect, this Order deemed and certified Plaintiff, Tri-Township Water District, as an "organized public water district, a public corporation and political subdivision of the State of Illinois," and established Plaintiff's jurisdictional boundaries.

According to the Order, Plaintiff's boundaries include, in relevant part, sections of the northern part of Sugar Creek Township located in Clinton County, Illinois, including a majority of Section 17, and the entirety of Sections 18 and 13 of Sugar Creek Township. Plaintiff currently operates, maintains, and manages approximately 330 miles of water lines and provides water service to approximately 1,270 properties within its jurisdiction.

In March 2017 and May 2019, Defendant passed certain ordinances that annexed into the City certain parcels of land located in Plaintiff's service area in Section 18 that are the subject of this lawsuit (hereinafter referred to as "the Properties") (see Docs. 39-5 and 39-6). On May 16, 2019, the Illinois Environmental Protection Agency issued an operating permit to Defendant to extend its water main to the Properties and Defendant has completed construction, installation, and extension of its water lines to service the Properties. It is undisputed that the Properties are located in Plaintiff's jurisdictional boundaries and within one mile of Defendant's corporate limits.

Plaintiff asserts it has exclusive jurisdiction to serve the Properties in dispute pursuant to 7 U.S.C. § 1926(b). In support of its position, Plaintiff contends 7 U.S.C. § 1926(b) applies and preempts 65 ILCS 5/11-151-3. Defendant disagrees. Defendant asserts the only relevant fact is that on November 3, 1993, the disputed area was within one mile of the City of Trenton's corporate boundary. Defendant asserts § 1926(b) does not invalidate Illinois state law, and contends Plaintiff is attempting to abuse § 1926 to gain additional territory. Plaintiff initiated this action on April 12, 2019, and seeks declaratory relief finding Plaintiff has exclusive jurisdiction to service the area in dispute pursuant to 7 U.S.C. § 1926(b). Plaintiff also seeks a permanent injunction to prevent Defendant from providing water service to customers located within Plaintiff's service area, or enter a permanent injunction requiring Defendant to pay to Plaintiff the revenue Plaintiff would have received had Defendant not wrongfully provided water service to customers in Plaintiff's service area.

Plaintiff and Defendant filed cross motions for summary judgment that are now before the Court.

Summary Judgment Standard

Summary judgment is appropriate only if the moving party can demonstrate "that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." FED. R. CIV. P. 56(a) ; Celotex Corp. v. Catrett , 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986) ; see also Ruffin-Thompkins v. Experian Information Solutions, Inc. , 422 F.3d 603, 607 (7th Cir. 2005). The moving party bears the initial burden of demonstrating the lack of any genuine issue of material fact. Celotex , 477 U.S. at 323, 106 S.Ct. 2548. Once a properly supported motion for summary judgment is made, the adverse party "must set forth specific facts showing there is a genuine issue for trial." Anderson v. Liberty Lobby, Inc. , 477 U.S. 242, 250, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). A genuine issue of material fact exists when "the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Estate of Simpson v. Gorbett , 863 F.3d 740, 745 (7th Cir. 2017) (quoting Anderson , 477 U.S. at 248, 106 S.Ct. 2505 ). In assessing a summary judgment motion, the district court views the facts in the light most favorable to, and draws all reasonable inferences in favor of, the nonmoving party. Apex Digital, Inc. v. Sears, Roebuck & Co. , 735 F.3d 962, 965 (7th Cir. 2013) (citation omitted).

Discussion

In support of its motion, Plaintiff relies on 7 U.S.C. § 1926(b), which provides:

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.

By way of background, § 1926 was enacted as part of a federal statutory scheme to extend loans to certain associations providing water service or management, soil conservation practices, or other essential community services to rural residents. Jennings Water, Inc. v. City of North Vernon, Ind. , 895 F.2d 311, 314-15 (7th Cir. 1989) (citation omitted). The purposes of § 1926(b) are to encourage rural water development and to safeguard the interest of the United States in having its loans repaid. Jennings Water, Inc. v. City of North Vernon, Ind. , 682 F.Supp. 421, 426 (S.D. Ind. Mar. 29, 1988) (citation omitted).

In order to establish a violation of 7 U.S.C. § 1926, a plaintiff must show that: (1) it is an association within the meaning of the statute; (2) it has a qualifying outstanding loan obligation; (3) it has provided or made service available to the disputed area; and (4) a competing entity curtailed or limited service in the area to which the plaintiff was providing service or making service available. Brown County Water Utility, Inc. v. Town of Nashville, Ind. , Case No. 1:17-cv-02134-TWP-TAB, 2019 WL 2123461, at *7 (S.D. Ind. May 15, 2019).

It is undisputed that Plaintiff is an "association" within the meaning of § 1926, and that it is and has been indebted to the United States Department of Agriculture at all times from 2001 to present.

Section 1926 does not specifically define what it means for an association to have "provided" or "made available" service. As such, courts have applied various tests to determine whether a water association has provided or made service available. Although the Seventh Circuit has not considered this question and defined the same, the majority of circuits that have include as part of their analysis whether the association has the legal right under state law to provide service. See Chesapeake Ranch Water Co. v. The Board of Commissioners of Calvert County , 401 F.3d 274, 281 (4th Cir. 2005) ("For purposes of § 1926(b), to prove that it has provided or made available service, a water association must demonstrate that (1) it is physically capable of serving the area in dispute, (2) it has the legal right under state law to do so, and (3) the disputed area is within the geographic boundaries of the association's existing franchise area."); Pittsburg County Rural Water Dist. No. 7 v. City of McAlester , 358 F.3d 694, 715 (10th Cir. 2004) ("where the federal § 1926 protections have attached, § 1926 preempts local or state law that can be used to justify a municipality's encroachment upon disputed area in which an indebted association is legally providing service under state law.") (internal quotations and citation omitted); Le-Ax Water Dist. v. City of Athens, Ohio , 346 F.3d 701, 707 (6th Cir. 2003) (requiring a water association to demonstrate that: (1) it is physically capable of serving the area; (2) it has the legal right under state law to do so; and (3) the disputed area is already within the geographic boundaries of the association's franchise area); Rural Water System No. 1 v. City of Sioux Ctr. , 202 F.3d 1035, 1037 (8th Cir. 2000) ("Making service available has two components: (1) the physical ability to serve an area; and (2) the legal right to serve an area.") (citation omitted); North Alamo Water Supply Corp. v. City of San Juan, Tex. , 90 F.3d 910, 916 (5th Cir. 1996) ("We hold that the Utility's state law duty to provide service is the legal equivalent to the Utility's ‘making service available’ under § 1926(b).")

In support of this position, and as noted by the court in Lexington-South Elkhorn Water Dist. v. City of Wilmore, Ky. , ensuring a water district has a legal right to serve an area as a requirement for "providing" or making available" service stems from federal regulations, which provide that an indebted association is required, "[t]o provide adequate service to all persons within the service area who can feasibly and legally be served." 7 C.F.R. § 1942.17(n)(2)(vii) ; 93 F.3d 230, 235 (6th Cir. 1996). The undersigned agrees with this reasoning and finds that whether a water association is "providing" or "making available" service necessarily depends on whether it has a legal right under state law to do so² .

In adopting this position, it follows that courts look to state law to define an association's protected service area under § 1926. In other words, a water district can only receive § 1926(b) protection for an area if it had a legal...