        RECOMMENDED FOR FULL-TEXT PUBLICATION
             Pursuant to Sixth Circuit Rule 206               2    Le-Ax Water District v.                     No. 02-3016
     ELECTRONIC CITATION: 2003 FED App. 0365P (6th Cir.)           City of Athens, Ohio
                 File Name: 03a0365p.06
                                                              Ohio, Dennis M. O’Toole, Stephen P. Bond,
                                                              BAUMGARTNER & O’TOOLE, Elyria, Ohio, for Amici
UNITED STATES COURT OF APPEALS                                Curiae.
               FOR THE SIXTH CIRCUIT                            MOORE, J., delivered the opinion of the court, in which
                 _________________                            KEITH, J., joined. GIBBONS, J. (pp. 17-20), delivered a
                                                              separate dissenting opinion.
 LE -AX WATER DISTRICT,            X
             Plaintiff-Appellee, -                                                _________________
                                    -
                                    -  No. 02-3016                                    OPINION
            v.                      -                                             _________________
                                     >
                                    ,                           KAREN NELSON MOORE, Circuit Judge. The defendant
 CITY OF ATHENS, OHIO ,             -
          Defendant-Appellant. -                              City of Athens, Ohio (“Athens”) appeals the district court’s
                                                              grant of summary judgment and of a declaratory judgment to
                                   N                          the plaintiff Le-Ax Water District (“Le-Ax”), as well as the
       Appeal from the United States District Court           district court’s denial of Athens’s own motion for summary
      for the Southern District of Ohio at Columbus.          judgment. University Estates owns 825 acres of property
   No. 00-01328—Algenon L. Marbley, District Judge.           outside of, but nearby, both Athens and Le-Ax. Both Athens
                                                              and Le-Ax wish to supply water to University Estates, which
                  Argued: June 12, 2003                       seeks to develop its property into a golf-course community.
                                                              After University Estates made arrangements for Athens to
          Decided and Filed: October 10, 2003                 supply the necessary water, Le-Ax, a predominantly rural
                                                              water district, brought this lawsuit, claiming that Athens’s
Before: KEITH, MOORE, and GIBBONS, Circuit Judges.            agreement to provide water service to University Estates
                                                              violated Le-Ax’s rights under 7 U.S.C. § 1926(b). For the
                   _________________                          reasons that follow, we REVERSE the district court’s grant
                                                              of summary judgment and of a declaratory judgment to Le-
                        COUNSEL                               Ax, and we also REVERSE the district court’s denial of
                                                              summary judgment to Athens. We REMAND this case to the
ARGUED: Garry E. Hunter, LAW DIRECTOR, Athens,                district court so that it may enter judgment in favor of Athens
Ohio, for Appellant. Orla E. Collier III, BENESCH,            and dismiss the case.
FRIEDLANDER, COPLAN & ARONOFF, Columbus, Ohio,
for Appellee. ON BRIEF: Garry E. Hunter, LAW
DIRECTOR, Athens, Ohio, for Appellant. Orla E. Collier III,
BENESCH, FRIEDLANDER, COPLAN & ARONOFF,
Columbus, Ohio, for Appellee. Barry M. Byron, Willoughby,

                             1
No. 02-3016                     Le-Ax Water District v.      3    4    Le-Ax Water District v.                      No. 02-3016
                                  City of Athens, Ohio                 City of Athens, Ohio

                      I. OVERVIEW                                 state court under OHIO REV . CODE ANN . § 6119.051. In
                                                                  contrast, Athens has begun the process of changing its
A. Factual History                                                boundaries to include University Estates. On October 16,
                                                                  2000, Athens’s City Council authorized a development
  The Le-Ax Water District is a rural water district that was     agreement with University Estates, pursuant to which Athens
created by a judicial order upon a petition filed in the Athens   would annex University Estates and provide it with water.
County Court of Common Pleas in 1980, pursuant to OHIO            J.A. at 117-22 (Ordinance and Development Agreement).
REV . CODE ANN . § 6119.01. Joint Appendix (“J.A.”) at 71-
72. As a water district, Le-Ax is an independent political           Standing in Athens’s way, however, is this lawsuit — for
subdivision of the State of Ohio, governed by OHIO REV .          Le-Ax also wishes to supply University Estates with water
CODE ANN . § 6119. Le-Ax’s territory was described in the         and claims that 7 U.S.C. § 1926(b) vests Le-Ax with the right
petition approved by that court.                                  to serve University Estates. Although Le-Ax does not
                                                                  currently supply University Estates with water (the property
   Le-Ax, as a rural water district, assumed the debt that its    as of yet has no access to water from any supplier) and does
predecessor owed to the United States Department of               not currently have lines extending into University Estates’s
Agriculture (“USDA”). As a result, Le-Ax has been indebted        territory, Le-Ax claims that it could supply University Estates
to the USDA since its inception. Le-Ax subsequently               with water almost immediately. Le-Ax refers to an eight-inch
incurred another debt to the USDA when it sold revenue            water main that it owns, which is immediately adjacent to the
bonds to the Rural Economic and Community Development             University Estates site. Supplemented by two nearby storage
Service (“RECDS”), which was formerly known as the                tanks, the eight-inch transmission line, Le-Ax claims, can
Farmers Home Administration (“FmHA”). Bonds were                  provide water to University Estates at a rate far exceeding the
issued on February 26, 1997, in the principal amount of           estimates of University Estates’s expected usage. A pressure-
$6,844,000 (at 4.5% interest), that will expire on February 1,    reducing valve, a tap in, and a pumping station will be
2037. J.A. at 309. The loans were not made in order to help       necessary to connect the eight-inch main to University
Le-Ax finance the University Estates project and apparently       Estates. However, there was unrebutted testimony that the
have no connection in any way to the University Estates           valve is an apparently minor and inexpensive addition and the
transaction.                                                      tap-ins and the pumping station (as part of the water apparatus
                                                                  internal to the site) are to be provided by the developer of the
  University Estates owns 825 acres of property, all of which     property, not the water supplier. J.A. at 553 (Dep. Test. of
is outside the boundaries of both Le-Ax and Athens.               John Collins).
University Estates plans to develop this property into a golf
course and approximately 800 homes. The property is close         B. Procedural History
to the boundaries of both Le-Ax and Athens; it borders
Athens on Athens’s northern side, and is, at its closest point,      On November 16, 2000, Le-Ax filed this lawsuit in the
1400 feet (roughly one third of a mile) from Le-Ax’s              United States District Court for the Southern District of Ohio,
boundary. J.A. at 230 (Aff. of Steven Mullaney). Le-Ax has        alleging that the proposed water supply arrangement between
taken no formal steps to change its boundaries to include         Athens and University Estates would violate 7 U.S.C.
University Estates’s property, such as by filing a petition in    § 1926(b). Upon cross-motions for summary judgment and
No. 02-3016                     Le-Ax Water District v.      5    6      Le-Ax Water District v.                     No. 02-3016
                                  City of Athens, Ohio                   City of Athens, Ohio

an in-court hearing, the district court granted summary           306(b), now codified at 7 U.S.C. § 1926(b), protected the
judgment to Le-Ax and issued a declaratory judgment that the      recipients of such loans from competition, to a certain extent.
provision of water from Athens to University Estates would        The text of section 306(b) reads:
violate 7 U.S.C. § 1926(b). This timely appeal followed.
                                                                      The service provided or made available through any such
                      II. ANALYSIS                                    association shall not be curtailed or limited by inclusion
                                                                      of the area served by such association within the
A. Standards of Review                                                boundaries of any municipal corporation or other public
                                                                      body, or by the granting of any private franchise for
   This court reviews a grant of summary judgment de novo.            similar service within such area during the term of such
Bukowski v. City of Akron, 326 F.3d 702, 707 (6th Cir. 2003).         loan; nor shall the happening of any such event be the
Although the district court’s denial of a motion for summary          basis of requiring such association to secure any
judgment is usually treated as a nonappealable interlocutory          franchise, license, or permit as a condition to continuing
order, when “an appeal from a denial of summary judgment              to serve the area served by the association at the time of
is presented in tandem with a grant of summary judgment,              the occurrence of such event.
this court has jurisdiction to review the propriety of the
district court’s denial of summary judgment.” Hamad v.            7 U.S.C. § 1926(b).          This provision prevents local
Woodcrest Condo. Ass’n, 328 F.3d 224, 235 (6th Cir. 2003)         governments from expanding into a rural water association’s
(quotation omitted). The district court’s denial of summary       area and stealing its customers; the legislative history states
judgment based on purely legal grounds is reviewed de novo.       that the statutory provision was intended to protect “the
Id. at 235-36. Summary judgment is appropriate where the          territory served by such an association facility against [other]
“pleadings, depositions, answers to interrogatories, and          competitive facilities” such as local governments, as
admissions on file together with the affidavits, if any, show     otherwise rural water service might be threatened by “the
that there is no genuine issue as to any material fact and that   expansion of the boundaries of municipal and other public
the moving party is entitled to a judgment as a matter of law.”   bodies into an area served by the rural system.” S. Rep. No.
Fed. R. Civ. P. 56(c).                                            87-566, at 67 (1962), reprinted in 1961 U.S.C.C.A.N. 2243,
                                                                  2309.
B. Background to 7 U.S.C. § 1926(b)
                                                                    The concept of economies of scale is an integral part of
   Over forty years ago, Congress passed the Agricultural Act     § 306(b)’s rationale; by protecting a rural water association’s
of 1961, Pub. L. No. 87-128, 75 Stat. 294, which sought to        customer base, the provision allows such associations to
preserve and protect rural farm life in a number of respects.     spread their fixed costs over a large group of users. In so
Title III of the Act (which is known as the Consolidated Farm     doing, the statute aims to prevent rural water costs from
and Rural Development Act) was concerned largely with             becoming prohibitively expensive to any particular user, to
issues of agricultural credit. Title III contained two sections   develop a system providing fresh and clean water to rural
that are at issue here, sections 306(a) and 306(b). Section       households, and to protect the federal government as insurer
306(a) of the Act, now codified at 7 U.S.C. § 1926(a), made       of the loan. Id. (“By including service to other rural residents,
federal loans available to water service associations. Section    the cost per user is reduced and the loans are more secure in
No. 02-3016                      Le-Ax Water District v.      7    8       Le-Ax Water District v.                           No. 02-3016
                                   City of Athens, Ohio                    City of Athens, Ohio

addition to the community benefits of a safe and adequate          this language in a variety of ways. Different circuits use
supply of running household water.”); see also Lexington–S.        different factors to determine whether a water association can
Elkhorn Water Dist. v. City of Wilmore, 93 F.3d 230, 233 (6th      invoke the protections of § 1926, including whether the water
Cir. 1996) (stating that the Act “safeguard[s] the financial       association has the physical ability to serve the area in
viability of rural associations and Farmers Home                   question, and whether it has a legal duty or legal right to do
Administration loans” and “encourage[s] rural water                so.
development by expanding the number of potential users”).
We have stated that this “provision ‘should be given a liberal       To determine whether service was made available, many
interpretation that protects rural water associations indebted     courts begin with a “pipes in the ground” or “physical ability”
to the FmHA from municipal encroachment.’” Lexington–S.            approach that examines whether the water association has the
Elkhorn, 93 F.3d at 235 (citation omitted).                        physical means presently to serve the area. This inquiry asks
                                                                   whether the association can demonstrate “‘that it has adequate
  In order to state a claim under § 1926(b), a plaintiff must      facilities within or adjacent to the area to provide service to
establish “that 1) it is an ‘association’ within the meaning of    the area within a reasonable time after a request for service is
the Act; 2) it has a qualifying outstanding FmHA loan              made.’” Sequoyah County Rural Water Dist. No. 7 v. Town
obligation; and 3) it has provided or made service available in    of Muldrow, 191 F.3d 1192, 1203 (10th Cir. 1999) (citation
the disputed area.” Adams County Reg’l Water Dist. v. Vill.        omitted). The Tenth Circuit has adopted this approach but
of Manchester, 226 F.3d 513, 517 (6th Cir. 2000). The first        has also required that the water association have the right
two elements are not in dispute here; the parties agree that Le-   under state law to serve the area in question. Id. at 1202 n.8.
Ax is an “association” within the meaning of the Act and that      The Eighth Circuit applies this same test, requiring that a
Le-Ax has a qualifying outstanding FmHA loan obligation.           water association show both that it has the physical means to
The only element in controversy here is whether Le-Ax              serve the area and that it has a legal right to do so. Rural
satisfies the third element of the test.                           Water System #1 v. City of Sioux Center, 202 F.3d 1035, 1037
                                                                   (8th Cir.), cert. denied, 531 U.S. 820 (2000).
C. The “Has Provided or Made Service Available”
   Requirement                                                       Neither of those circuits requires that a water association
                                                                   have a legal duty to serve in order to receive protection under
  The key question is whether Le-Ax satisfies the                  § 1926. That is, however, the approach of the Fourth Circuit,
requirement that the association “has provided or made             which apparently requires both a state-law duty to serve and
service available in the disputed area.” Id. at 517.               a physical ability to serve. Bell Arthur Water Corp. v.
Unfortunately, the statute and the legislative history provide     Greenville Utils. Comm’n, 173 F.3d 517, 525-26 (4th Cir.
no help in explaining this phrase, which is derived from the       1999).1 The Fifth Circuit has adopted a far looser approach,
statute itself. See 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,             1
159 (2001) (noting that the statute does not define “provided            The Fourth Circuit in Bell Arthu r reports that we also have adopted
or made available”). Without any guidance from Congress or         this approach. See Bell Arthur Water Corp. v. Greenville Utils. Comm’n,
                                                                   173 F.3d 517 , 526 (4th Cir. 1999). As we explain below, however, the
the Supreme Court, federal appellate courts have interpreted       Bell Arthur court was apparently misreading our decision in Lexington–S.
No. 02-3016                           Le-Ax Water District v.            9    10   Le-Ax Water District v.                     No. 02-3016
                                        City of Athens, Ohio                       City of Athens, Ohio

apparently holding that service is made available through                     to serve the area. As even Athens seems to acknowledge,
either a state-law duty to serve or a physical ability to serve.              Ohio law permits water districts “[t]o supply water to users
N. Alamo Water Supply Corp. v. City of San Juan, 90 F.3d                      within and without the district.” OHIO REV . CODE ANN .
910, 916 (5th Cir.), cert. denied, 519 U.S. 1029 (1996).                      § 6119.01(A) (emphasis added). Under the plain text of this
                                                                              statute, which Athens has not even attempted to distinguish,
   As the above analysis makes clear, the circuits are in                     Le-Ax has the right to provide service outside its boundaries.
conflict as to what they require. In Lexington–S. Elkhorn, we                 Second, Le-Ax has the physical ability to serve University
adopted the same two-part approach that the Eighth and Tenth                  Estates within the meaning of our “pipes in the ground” test.
Circuits have taken.          The first requirement under                     It is undisputed that Le-Ax has water lines “within or adjacent
Lexington–S. Elkhorn is the “pipes in the ground”                             to” the relevant property that could meet University Estates’s
requirement. In Lexington–S. Elkhorn, we plainly stated that                  needs. Le-Ax currently has an eight-inch line immediately
“[i]f an association does not already have service in existence,              adjacent to University Estates, and also has water storage
water lines must either be within or adjacent to the property                 tanks that augment the system. Athens’s only argument is
claimed to be protected by Section 1926(b) prior to the time                  that some additional work would have to be done before Le-
an allegedly encroaching association begins providing service                 Ax could supply University Estates with water. Athens points
in order to be eligible for Section 1926(b) protection.”                      out that Le-Ax’s own expert testified that Le-Ax would need
Lexington–S. Elkhorn, 93 F.3d at 237 (emphasis added). The                    a pressure-reducing valve, some tap-ins, and a pumping
second requirement of Lexington–S. Elkhorn is that the water                  station in order to supply University Estates with water. The
district must have the legal right under state law to serve the               pressure-reducing valve is apparently a minimal addition that
area in question. Id. at 235-36 (noting that “Lexington-South                 costs roughly $2,000, and the tap-ins and pumping station
Elkhorn admits that it has not obtained . . . from the Kentucky               would be provided by University Estates, regardless of
Public Service Commission [the right] to construct facilities                 whether Athens or Le-Ax supplied the water. To argue, as
or to serve customers within portions of the disputed areas,”                 Athens does, that water service must be available immediately
which “distinguish[es] this case from other cases in which                    (evidently in the sense that someone at University Estates
courts have upheld water districts’ rights to Section 1926(b)                 must be able to go over to the faucet and turn on the water),
protection”). Because neither of these requirements was met,                  would be to ignore our statement in Lexington–S. Elkhorn that
we dismissed the water district’s claim under § 1926(b). Id.                  the “made available” requirement is satisfied not only when
at 238 (stating that because the plaintiff “has not established               the pipes are “within,” but also when they are merely
its authorization to serve the disputed properties or its ability             “adjacent to” the property. The evidence here admits of only
to provide the service,” it cannot be said to have “made                      one conclusion, that Le-Ax “has adequate facilities within or
service available”).                                                          adjacent to the area to provide service to the area within a
                                                                              reasonable time after a request for service is made.”
  In this case, Le-Ax has clearly satisfied both of these                     Sequoyah County, 191 F.3d at 1203 (quotation omitted); cf.
requirements. First, under state law, Le-Ax has a legal right                 Bell Arthur, 173 F.3d at 526 (holding that service was not
                                                                              made available when the water district only had a six-inch
                                                                              pipeline running near the disputed area and a fourteen-inch
Elkho rn. W e have only required (like the Tenth Circuit) a state-law right   pipeline was necessary to serve the area); Glenpool Util.
(not duty) to serve the area to invoke § 1926.                                Servs. Auth. v. Creek Cty. Rural Water Dist., 861 F.2d 1211,
No. 02-3016                     Le-Ax Water District v.     11    12   Le-Ax Water District v.                      No. 02-3016
                                  City of Athens, Ohio                 City of Athens, Ohio

1213 (10th Cir. 1988) (holding that service was made              determined by the state, we hold that a rural water district
available when the water district had a water line that ran       cannot use § 1926(b) as a sword to force new customers who
within fifty feet of the property), cert. denied, 490 U.S. 1067   are outside that geographic area to receive water service
(1989).                                                           through the rural water district.
D. Offensive and Defensive Uses of Section 1926                     We begin with the text and legislative history of 7 U.S.C.
                                                                  § 1926(b). The text of the statute states that “[t]he service
   Having established the physical ability to serve University    provided or made available through any such association shall
Estates and a legal right to do so under state law, Le-Ax         not be curtailed or limited by inclusion of the area served by
argues that it is therefore entitled to summary judgment. We,     such association within the boundaries of any municipal
however, believe that Le-Ax cannot properly invoke the            corporation.” 7 U.S.C. § 1926(b). The statute’s use of
protections of 7 U.S.C. § 1926(b). Central to our conclusion      phrases like “curtailed” and “limited” to describe the
is the fact that Le-Ax is not seeking to use the statute to       municipality’s interference with the rural water association
protect its users or territory from municipal incursion in this   suggests that a rural water association must already be
case. It instead is seeking to use the statute to foist an        providing service to an area before the protections of
incursion of its own on users outside of its boundary that it     § 1926(b) apply. The statute’s language provides no support
has never served or made agreements to serve. To grant Le-        for Le-Ax’s claim that it has a right to curtail or limit
Ax what is essentially monopoly status over property that it      Athens’s own service to University Estates. See Hounsel,
has never served (or contracted to serve), and that is outside    supra, 80 TEX . L. REV . at 159 (arguing that the statutory text
of its boundary, we believe, would be wholly inconsistent         suggests “that it is the existing customers of the association
with the statute’s text and legislative history, as well as our   that are off-limits to competing municipalities”).
case law. Ultimately, we agree with Athens that § 1926(b)
can be used only as a shield to defend against invasion rather       The legislative history also makes it clear that the statute
than as a sword to wage one.                                      was only meant to protect rural water associations from the
                                                                  outside threat of local governments taking their customers —
   This case presents unique facts. Le-Ax has brought this        not as a weapon for water associations to use to recruit new
lawsuit under 7 U.S.C. § 1926(b), claiming that Athens has        users outside of their boundaries. The legislative history
improperly curtailed or limited Le-Ax’s activities by             states that the section was “added to assist in protecting the
contracting to provide University Estates with water. Athens,     territory served by such an association facility against
however, is not attempting to serve users within Le-Ax’s          competitive facilities, which might otherwise be developed
boundary. Nor is Athens attempting to steal Le-Ax’s               with the expansion of the boundaries of municipal and other
customers that may be outside of Le-Ax’s boundary. Instead,       public bodies into an area served by the rural system.” S.
Athens is merely seeking to persuade unserved users to sign       Rep. No. 87-566, at 67 (1962), reprinted in 1961
up with Athens (rather than Le-Ax) for water service.             U.S.C.C.A.N. 2243, 2309. The legislative history casts the
Believing Athens’s action to be outside of the statute’s          statute’s purpose in a defensive light. It plainly suggests that
intended prohibition, we hold today that a claim under            the goal of the statute is only to protect territory already
§ 1926(b) has not been established under these circumstances.     served by a rural water association from municipal expansion
When a rural water district’s boundaries are geographically       into the rural water association’s area; it does not give
No. 02-3016                      Le-Ax Water District v.     13    14    Le-Ax Water District v.                       No. 02-3016
                                   City of Athens, Ohio                  City of Athens, Ohio

credence to Le-Ax’s hypothesis that the statute can be used to        Our conception of § 1926(b) is also consistent with the
recruit unwilling new users outside of the rural water             results in cases both in this circuit and in other circuits.
association’s boundary. Cf. Hounsel, 80 TEX . L. REV . at 159-     Virtually all of the cases involving § 1926(b) involve
60 (“[T]he claim that an indebted association could extend its     competitors who attempt to serve customers within the rural
federal protection beyond its actual or operative service area     water district’s state-law authorized boundaries, which is
has no support in the legislative history.”).                      simply not the case here. See Lexington–S. Elkhorn, 93 F.3d
                                                                   at 232 (holding that although Lexington–S. Elkhorn was
   The distinction between “offensive” and “defensive” uses        “offering to provide water service to customers located within
of the statute is also embedded, although somewhat                 the Water District’s boundaries,” it did not violate the statute
implicitly, in our cases. Even our broad statements about          because the water district was neither licensed to reach those
§ 1926(b)’s applicability have always involved an element of       customers nor had the facilities to do so); Sequoyah County,
actual encroachment on a water association’s existing area or      191 F.3d at 1201 n.7, 1204 (holding that there was a genuine
users. See Lexington–S. Elkhorn, 93 F.3d at 235 (stating the       issue for trial on whether the water district could adequately
section “‘indicates a congressional mandate that local             supply the water to the disputed territories, but “assum[ing]
governments not encroach upon the services provided by             that the disputed customers are within Plaintiff’s territory as
such associations, be that encroachment in the form of             it is defined by state law”); N. Alamo, 90 F.3d at 913
competing franchises, new or additional permit requirements,       (involving users and property that “lie within the Utility’s
or similar means’”) (citation omitted) (emphasis added);           Certificated Area”); Rural Water Dist. No. 1, Ellsworth
Adams County, 226 F.3d at 519 (stating “‘that the statute          County v. City of Wilson, 243 F.3d 1263, 1267 (10th Cir.
should not be construed narrowly to prohibit municipal             2001) (involving properties within the water district’s state-
encroachment only if technically by annexation or grant of         law boundary).
franchise, but should be applied broadly to protect rural water
associations indebted to FmHA from competition from                   Le-Ax argues that § 1926(b) should apply whenever a rural
expanding municipal systems’”) (citation omitted) (emphasis        water association has the capability of serving users that could
changed).      We, in fact, presumed the element of                also be served by some other entity. This vision of § 1926(b)
encroachment in our version of the “pipes in the ground” test,     is expansive indeed. It would essentially give Le-Ax
where we stated that “water lines must either be within or         monopoly status not only within its boundaries and among its
adjacent to the property claimed to be protected by Section        current users, but also would extend that status to wherever
1926(b) prior to the time an allegedly encroaching                 Le-Ax could provide service. When questioned by the panel
association begins providing service in order to be eligible for   at oral argument, Le-Ax did not dispute that, under its view of
Section 1926(b) protection.” Lexington–S. Elkhorn, 93 F.3d         § 1926(b), it was entitled by federal law to the exclusive right
at 237 (emphasis added). The repeated use of the term              to provide service to any unincorporated area that it could
“encroachment” suggests that the statute is only invoked           physically serve. Were we to uphold Le-Ax’s claim in this
properly when the municipality is attempting to provide water      case, we would be holding that this federal law, originally
service to a rural water association’s users or within its         meant to protect water associations from undue intrusion,
boundary.                                                          somehow gives them this sort of roving monopoly status.
                                                                   Without support in the statute’s text, the legislative history, or
No. 02-3016                             Le-Ax Water District v.           15     16     Le-Ax Water District v.                                No. 02-3016
                                          City of Athens, Ohio                          City of Athens, Ohio

in relevant precedent, we are reluctant to take such a broad                        We hasten to point out that we are not leaving Le-Ax in a
step.                                                                            difficult position. The current users and service area of Le-
                                                                                 Ax are still sacrosanct under § 1926(b). Le-Ax still can
  Considering the statute’s text and history as well as our                      attempt to persuade University Estates to become its customer
own precedents, we must conclude that Le-Ax has not                              using normal competitive means. Le-Ax also has the option
presented a claim under § 1926(b). We hold that when a rural                     of changing its boundaries pursuant to the procedures
water district’s boundaries are geographically determined by                     specified in OHIO REV . CODE ANN . § 6119.051, which allows
the state, a rural water district cannot use § 1926(b) to obtain                 a water district, in some circumstances, to seek to expand its
new customers outside that geographic area.                                      boundaries by filing a petition in the court of common pleas.
                                                                                 We simply hold that federal law does not compel University
  Because the distinction between offensive and defensive                        Estates to be served by Le-Ax. Finding this to be the
uses can be difficult to delineate, we take care to limit the                    inexorable conclusion of our analysis of the statute’s text,
scope of our holding. This is not a case where a defendant                       history, and interpretative case precedent, we dismiss Le-Ax’s
has intruded on a water association’s actual or operative                        claim.
service area; the evidence is clear that University Estates was
never a customer of Le-Ax, University Estates never arranged                                              III. CONCLUSION
to have water provided by Le-Ax, and no part of University
Estates was ever within Le-Ax’s state-law service boundary.                        For the foregoing reasons, we REVERSE the district
Moreover, no state law requires University Estates to be                         court’s grant of summary judgment and of a declaratory
served only by Le-Ax or requires Le-Ax to serve University                       judgment to the plaintiff, and REVERSE the district court’s
Estates. We also take care to point out that Le-Ax’s                             denial of summary judgment to the defendant. We
boundaries are clearly defined by state law; we do not                           REMAND this case to the district court so that it may enter
consider here a case where the state has not defined the                         judgment in favor of Athens and dismiss the case.
boundaries of its water districts or associations.2

    2
      A few states (including at least one in our o wn circuit) app arently
do not create boundaries for their water districts. See Sco tt Hounsel,
Note: Water A ssociations a nd F ederal Protection Und er 7 U.S.C.
§ 1926(b): A Proposal to Repeal Monopoly Status, 80 T EX . L. R EV . 155,
163 (2001) (explaining that “[t]oday, the ability to determine the service
area of any water supplier is further complicated by state statutes, which
may or may not attach geographical boundaries when authorizing a utility
to provide water under state regulations”). Kentucky, for example,
evide ntly does not prescribe boundaries for its water districts; as a result,   delineate North Shelby’s territory” and not ad dressing the m atter); see
the bounda ries of a water district or association cannot defined by state       also Ho unsel, supra, 80 T EX . L. R EV . at 163 n.39 (contrasting Mississippi,
law but on ly by practice. See N. Shelby Water Co. v. Shelbyville Mun .          which does prescribe geographical bo unda ries with K entuck y, which does
Water & Sewer Com m’n, 803 F. Supp. 15, 21 -22 (E.D. Ky. 1992 ) (noting          not). Because Ohio in this case has prescribed the boundaries of the Le-
that an administrative officer of the state had testified that “[t]here is no    Ax water d istrict, we do not consid er here the ram ifications of an
operative definition under Kentucky law of the phrase ‘service area’ to          unbounded water district for purposes of § 192 6(b).
No. 02-3016                     Le-Ax Water District v.     17    18   Le-Ax Water District v.                      No. 02-3016
                                  City of Athens, Ohio                 City of Athens, Ohio

                     _______________                                association does not already have service in existence,
                                                                    water lines must either be within or adjacent to the
                        DISSENT                                     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
  JULIA SMITH GIBBONS, Circuit Judge, dissenting. I                 Section 1926(b) protection.
agree with the majority’s well-reasoned analysis contained in
sections II.A. through II.C. of its opinion. Based upon this      93 F.3d 230, 237 (6th Cir. 1996). In addition to the
analysis, I would affirm the district court’s judgment. While     requirement that the association have “pipes in the ground”
the arguments contained in section II.D. of the majority’s        within or adjacent to the area in question, the association must
opinion may be sound policy, in my view, the result reached       also have the legal right under state law to serve the area in
by the majority is inconsistent with the statute’s language as    question to benefit from the monopoly power afforded by
interpreted by this court’s binding precedent.                    § 1926(b). Id. at 235-36.

   The majority is correct when it says in section II.D. that        Le-Ax, as the majority holds, “has clearly satisfied both of
“§ 1926(b) can be used only as a shield to defend against         these requirements” as to the disputed area in this case.
invasion rather than as a sword to wage one.” (Majority Op.       (Majority Op. at 9.) First, Le-Ax has a water line
at 11.) The majority errs, however, in defining the area that     immediately adjacent to the University Estates development.
§ 1926(b) protects from invasion.                                 (Majority Op. at 10.) The uncontradicted evidence is that this
                                                                  line has been in place since Le-Ax’s creation over twenty
  As the majority correctly explains in section II.B. of its      years ago. (JA at 66-67.) Moreover, the uncontradicted
opinion, § 1926(b) protects the area where the association        evidence demonstrates that this line was designed with
“has provided or made service available.” (Majority Op. at 7,     surplus capacity to serve future growth throughout the area,
quoting Adams County Reg’l Water Dist. v. Vill. of                including the area encompassing the University Estates
Manchester, 226 F.3d 513, 517 (6th Cir. 2000).) It is             development. (JA at 69.) As the district court found in its
relatively easy to determine the area where the association has   thorough and well-reasoned opinion, “Plaintiff’s distribution
provided service, but it is not obvious what the statute means    lines that make service available to the UE development are
by “service . . . made available.” 7 U.S.C. § 1926(b). As the     already in place, and have been in place since the Plaintiff’s
majority correctly explains in section II.C. of its opinion,      creation over twenty years ago – long before the City of
however, this difficult issue has already been addressed by       Athens was interested in the right to distribute water to the
our court.                                                        region in question.” (JA at 21.) Second, as the majority
                                                                  explains, Ohio law permits Le-Ax to serve the University
  In Lexington–S. Elkhorn Water District v. City of Wilmore,      Estates development. (Majority Op. at 10.)
Kentucky, we held that:
                                                                    Because Le-Ax maintains a water line with excess capacity
  whether an association has made service available is            immediately adjacent to the University Estates development
  determined based on the existence of facilities on, or in       (and has done so for over twenty years, anticipating future
  the proximity of, the location to be served. If an              growth) and because Le-Ax has the right under state law to
No. 02-3016                         Le-Ax Water District v.         19    20    Le-Ax Water District v.                      No. 02-3016
                                      City of Athens, Ohio                      City of Athens, Ohio

serve the University Estates development, the University                     In Lexington–S. Elkhorn, we rejected the argument that an
Estates development is within Le-Ax’s service area that is                association’s state-defined political boundary is relevant to
protected from invasion by § 1926(b), as interpreted by our               determining the area protected by § 1926(b). In Lexington–S.
holding in Lexington–S. Elkhorn. Therefore, Le-Ax is using                Elkhorn, the City of Wilmore, Kentucky, did not dispute that
§ 1926(b) in this case as a shield to protect an area where it            it extended its water lines into part of the plaintiff water
has made service available for over twenty years.                         district’s territorial area. 93 F.3d at 232. The water district,
Nevertheless, the majority withholds protection under                     Lexington–S. Elkhorn, claimed that § 1926(b) protects its
§ 1926(b) because the University Estates development is not               territorial area from invasion by the city’s water lines. Id. at
within Le-Ax’s state-defined political boundary.                          234. The district court ruled in favor of the city, rejecting the
                                                                          water district’s argument that its territorial boundary was
  The majority, however, fails to explain why it matters                  relevant to § 1926(b). Id. We affirmed, holding that
where state law places Le-Ax’s boundaries for purposes other              § 1926(b) protects only that area where the water district has
than providing service. The flaw in the majority’s analysis is            provided service or made service available by maintaining
that it conflates an association’s political boundary with an             water lines nearby. Id. at 237. We found the water district’s
association’s service boundary. Because state law grants Le-              state-defined political boundaries to be irrelevant. Id. at 238
Ax the legal right to serve the University Estates                        (looking to state law only to determine if the water district
development, University Estates is within Le-Ax’s state-                  had the legal right to serve the area and finding it unnecessary
defined service boundary. Moreover, because Le-Ax has                     to decide whether the disputed area was within the water
made service available to the University Estates development              district’s state-defined boundaries).
via a water line with excess capacity immediately adjacent to
the development, Le-Ax is entitled to the protection of                      The majority criticizes Le-Ax’s “expansive” vision of
§ 1926(b) under our holding in Lexington–S. Elkhorn. The                  § 1926(d), which, according to the majority, would give an
majority has not cited any case where a court found that a                association “monopoly status” to serve any area where it
water district’s political boundary, as opposed to its service            could provide service. (Majority Op. at 14.) The majority’s
boundary, is relevant to defining the area protected by                   criticism is more appropriately directed toward Congress,
§ 1926(b).1 Congress could have limited the protection                    because § 1926(d) by its plain terms grants an eligible
offered by § 1926(b) to an association’s state-defined political          association monopoly status to serve any area where service
boundary; instead, Congress chose to limit the statute’s                  is “made available” by the association. 7 U.S.C. § 1926(b).
protection to where the association has provided service or               This court’s binding precedent holds that service is “made
made service available.                                                   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. Elkhorn, 93 F.3d at 237. Because there is
    1
                                                                          no basis in the statute or our precedent for the majority’s
     In the absence of any autho rity, the majority seems to b ase its    addition of an additional element to a plaintiff’s claim under
analysis upon a student law re view no te that ad vocates the repeal of   § 1926(b), I dissent.
§ 192 6(b). (M ajority Op . at 12, citing Sco tt Hounsel, N ote: Water
Associations and Fede ral P rotection Under 7 U .S.C. §1926(b): A
Proposal to Repeal Monopoly Status, 80 Tex. L. Rev. 155 (2 001).)
