*Pursuant to Local Rule 47.5, the court has determined that

this opinion should not be published and is not precedent except

under the limited circumstances set forth in Local Rule 47.5.4.

IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

_____________________

No. 96-50204

Summary Calendar

_____________________

POST OAK SPECIAL UTILITY DISTRICT,

Plaintiff-Appellee,

v.

CITY OF COOLIDGE, TX,

Defendant-Appellant.

_________________________________________________________________

Appeal from the United States District Court

for the Western District of Texas

(W-95-CV-62)

_________________________________________________________________

September 13, 1996

Before KING, DUHÉ, and BARKSDALE, Circuit Judges.

PER CURIAM:*

The district court granted the motion for summary judgment

filed by Post Oak Special Utility District (“Post Oak”) in its

suit against the City of Coolidge, Texas (“Coolidge”) under 7

U.S.C. § 1926(b), holding that Post Oak has clearly “made

available” its water services to Coolidge, and Coolidge cannot
 

1 The FmHA is now known as the Rural Utilities Service

Administration. However, in this opinion, we will continue to

refer to the agency as FmHA. 

2

now seek to supplant Post Oak as its supplier of potable water.

Coolidge appeals. Finding no error, we affirm.

I. BACKGROUND

Post Oak is a special utility district that provides water

service to rural customers and is financed by loans from the

Farmers Home Administration (“FmHA”), an agency of the federal

government.1 Since at least 1986, Coolidge has purchased water

from Post Oak pursuant to a written contract between the parties. 

In 1992, Coolidge contracted with a third-party supplier, Bistone

Municipal Supply District (“Bistone”), to supply a portion of the

city’s water needs. Coolidge claims it entered into this

contract with Bistone because Coolidge found Post Oak’s service

inadequate. 

Post Oak sought a declaratory judgment that Coolidge must

purchase its water from Post Oak and an injunction prohibiting

Coolidge from purchasing water from any other source, including

Bistone. Post Oak contends that under 7 U.S.C. § 1926(b),

Coolidge cannot purchase water from any other source during the

term of Post Oak’s indebtedness to the FmHA. Coolidge maintains

that it is entitled to purchase water from alternative sources,

including Bistone.
3

Both parties filed motions for summary judgment. The trial

court granted Post Oak’s motion and denied Coolidge’s motion. 

Coolidge moved for relief from the operation of the order, and

the court denied this motion as well. Coolidge has appealed the

denial of both motions.

II. DISCUSSION

A. SUMMARY JUDGMENT

1. Standard of Review

We review the granting of summary judgment de novo, applying

the same criteria used by the district court in the first

instance. Texas Medical Ass’n v. Aetna Life Ins. Co., 80 F.3d

153, 156 (5th Cir. 1996). Summary judgment is proper "if the

pleadings, depositions, answers to interrogatories, and

admissions on file, together with the affidavits, if any, show

that there is no genuine issue as to any material fact and that

the moving party is entitled to judgment as a matter of law." 

FED. R. CIV. P. 56(c). Questions of statutory interpretation are

questions of law and thus reviewed de novo. Estate of Bonner v.

United States, 84 F.3d 196, 197 (5th Cir. 1996).

2. Analysis

As in any case involving construction of a statute, we begin

with the language of the statute itself. See Phillips v. Marine

Concrete Structures, Inc., 895 F.2d 1033, 1035 (5th Cir. 1990). 

Section 1926(b) provides:
4

The service provided or made available through any

such [rural water] 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 [FmHA] loan . . . . 

7 U.S.C. § 1926(b) (emphasis added). 

Courts have broadly interpreted this provision. As we

recently stated, “The service area of a federally indebted water

association is sacrosanct. Every federal court to have

interpreted § 1926(b) has concluded that the statute should be

liberally interpreted to protect FmHA-indebted rural water

associations from municipal encroachment.” North Alamo Water

Supply Corp. v. City of San Juan, 90 F.3d 910, 915 (5th Cir.

1996). 

The legislative history of § 1926(b) indicates two

congressional purposes for the legislation: “1) to encourage

rural water development by expanding the number of potential

users of such systems, thereby decreasing the per-user cost, and

2) to safeguard the viability and financial security of such

associations (and FmHA’s loans) by protecting them from the

expansion of nearby cities and towns.” City of Madison v. Bear

Creek Water Ass’n, Inc., 816 F.2d 1057, 1060 (5th Cir. 1987). 

The statute accomplishes these goals by forbidding encroachment

on the rural water association’s service area either “(1) through

expansion of a municipal or other public water system or (2)
 

2 The district court also concluded that summary judgment

for Post Oak was proper because, in addition to service “made

available,” Post Oak’s service qualified as “service provided”

under § 1926(b). We affirm only on the service “made available”

prong of § 1926(b) and do not reach the “service provided” prong.

5

through introduction of new or expanded service by a private

supplier.” CSL Utils., Inc. v. Jennings Water, Inc., 16 F.3d

130, 135 (7th Cir. 1993), cert. denied, 115 S. Ct. 65 (1994). 

Thus, the statute prevents another supplier, whether public or

private, from being substituted for or displacing the service of

a rural water association. Id.

The trial court granted summary judgment for Post Oak. The

court concluded that because Post Oak had made its service

available to Coolidge, Coolidge’s contract with Bistone allowed

Bistone to displace Post Oak’s service and thus violates

§ 1926(b).2 We agree with the district court’s analysis. 

In North Shelby Water Co. v. Shelbyville Mun. Water & Sewer

Comm’n, 803 F. Supp. 15 (E.D. Ky. 1992), the court concluded that

the rural water company made service available to certain

residential subdivisions, even though it had never actually

provided water, by installing water distribution lines near or

within the subdivisions. Id. at 21-22. The court looked to

state law and determined that, because of the proximity of the

water lines to the subdivisions, state law obligated the rural

water company to provide water to subdivision customers who

applied for its service. Id. Thus, by incurring this obligation
6

to provide water to the subdivisions, the water company “made

available” its services to the subdivisions. Id. at 22; see also

Glenpool Util. Servs. Auth. v. Creek County Rural Water Dist. No.

2, 861 F.2d 1211, 1214 (10th Cir. 1988)(finding that rural water

association “‘made [service] available’ by virtue of its line

adjacent to the property and its responsibilities to applicants

within its territory”), cert. denied, 490 U.S. 1067 (1989).

The case at bar is very similar to Shelby. Post Oak and

Coolidge are parties to a contract that obligates Coolidge to pay

for at least 12 million gallons of water per year from Post Oak

and obligates Post Oak to provide water to Coolidge “in such

quantity as may be required by [Coolidge].” Post Oak has “made

available” to Coolidge the opportunity to purchase all the water

it requires. Coolidge’s contract with Bistone cuts into the

potential amount of water Post Oak can sell to Coolidge. That

violates a fundamental tenet of § 1926(b), which is to protect

FmHA-indebted rural water associations from competition from

other suppliers. See Bear Creek, 816 F.2d at 1059; Jennings

Water, Inc. v. City of North Vernon, 682 F. Supp. 421, 425 (S.D.

Ind. 1988), aff’d, 895 F.2d 311 (7th Cir. 1989); Rural Water

Dist. #3 v. Owasso Utils. Auth., 530 F. Supp. 818, 823-24 (N.D.

Okla. 1979).

Coolidge makes several arguments in response to this

analysis. First, Coolidge contends that because the contract
 

3 The district court ruled that the Post Oak-Coolidge

contract is a requirements contract, obligating Coolidge to

purchase and Post Oak to supply all of Coolidge’s water

requirements. Coolidge disputes this conclusion, claiming that

the contract requires only that Coolidge purchase at least 12

million gallons of water annually. Whether the contract is a

requirements contract is irrelevant to our analysis because the

parties’ prior conduct indicates that the contract at least

allows Coolidge to purchase more than 12 million gallons

annually. Thus, we do not reach the issue of whether the Post

Oak-Coolidge contract is a requirements contract.

7

only obligates it to purchase 12 million gallons of water per

year from Post Oak, the 12 million gallons constitutes the

service available; therefore Coolidge can purchase additional

quantities of water from other sources. Because Coolidge plans

to continue purchasing the 12 million gallons annually from Post

Oak, Coolidge argues that its contract with Bistone will not

encroach upon Post Oak. However, Post Oak’s undisputed summary

judgment evidence shows, and Coolidge admits, that Coolidge

purchased much more than 12 million gallons per year solely from

Post Oak until after it entered into the new contract with

Bistone. This shows that the contract allows Coolidge to

purchase more than 12 million gallons per year. Therefore, Post

Oak has “made available” services sufficient to supply all of

Coolidge’s water needs, and § 1926(b) prohibits Coolidge from

encroaching on this by contracting with Bistone.3

Second, Coolidge maintains that § 1926(b) does not preclude

it from maintaining a supplemental water supply for purposes

other than household purposes. According to Coolidge, because it
8

uses the water supplied by Bistone for fire, commercial, and

industrial uses, and because § 1926(b) applies only to water for

household use, § 1926(b) does not prohibit its agreement with

Bistone. Coolidge cites no precedent for its proposition;

instead, it relies on language from a Senate report discussing

how the statute will benefit farmers and rural residents. This

language does not preclude the interpretation that the statute

could benefit other groups as well. The legislative history, as

discussed above, makes abundantly clear that § 1926(b) is to be

liberally construed to protect rural water associations from

competition. The statute provides no exceptions. Indeed, we

recently characterized the service area of an FmHA-indebted water

association as “sacrosanct.” North Alamo, 90 F.3d at 915. 

Furthermore, as the district court pointed out, Coolidge’s own

summary judgment proof indicates that the water provided from

Bistone is used for residential purposes. Thus, Coolidge does

not even live up to its own standard for an exception to

§ 1926(b).

Finally, Coolidge asserts an argument based on the speed

with which Post Oak is paying its FmHA debt. Section 1926(b)

protects rural water associations “during the term of such loan.” 

Coolidge maintains that because “Post Oak has failed to

diligently reduce” its debt, requiring Coolidge to purchase water

from Post Oak during the term of the loan would make Coolidge
 

4 Coolidge also argues that Post Oak’s water service “is so

inadequate it fails to constitute ‘service provided.’” However,

because we do not reach the “service provided” issue, see supra

note 2, we need not address this argument.

9

“infinitely bound” to Post Oak, which is surely not what Congress

had in mind. Again, Coolidge asserts no authority for this

proposition. Congress placed no maximum loan term in the

statute. The statute is clear that it applies “during the term

of such loan.” Had Congress wanted a maximum loan term, it could

have easily inserted one.4

B. RELIEF FROM OPERATION OF ORDER

After the district court granted Post Oak’s motion for

summary judgment, Coolidge moved for relief from the operation of

the order, requesting “1) consent of the Court to use Bistone

water in emergency situations where Post Oak water is not

available or is not fit for consumption; and 2) consent of the

Court to purchase 50,000 gallons of water per week from Bistone

to keep an emergency system viable.” The court denied the

motion.

Apparently, Coolidge is making an equitable argument, but

Coolidge fails to identify the exact theory it bases its argument

upon. Again, Coolidge cites no authority for its argument. At

least one circuit court has refused to apply principles of equity

to block application of the statute, arguing that the very strong

public interest promoted by § 1926(b) is more important than
10

individual equitable concerns. See Jennings Water, Inc. v. City

of North Vernon, 895 F.2d 311, 316-17 (7th Cir. 1989) (equitable

estoppel). We agree. We have previously refused “[t]o read a

loophole into this absolute prohibition” provided by § 1926(b),

Bear Creek, 816 F.2d at 1059, and we will not begin now. 

III. CONCLUSION

For the foregoing reasons, we AFFIRM the district court.