PUBLISHED

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

CHESAPEAKE RANCH WATER 

COMPANY,

Plaintiff-Appellant,

v.  No. 04-1205

THE BOARD OF COMMISSIONERS OF

CALVERT COUNTY,

Defendant-Appellee. 

Appeal from the United States District Court

for the District of Maryland, at Greenbelt.

Alexander Williams, Jr., District Judge.

(CA-03-2527-8-AW)

Argued: November 30, 2004

Decided: March 16, 2005

Before WILKINS, Chief Judge, SHEDD, Circuit Judge,

and Norman K. MOON, United States District Judge

for the Western District of Virginia,

sitting by designation.

Affirmed by published opinion. Chief Judge Wilkins wrote the opinion, in which Judge Shedd and Judge Moon joined. 

COUNSEL

ARGUED: William Roger Truitt, PIPER RUDNICK, L.L.P., Baltimore, Maryland, for Appellant. Jefferson Vaughan Wright, MILES &
STOCKBRIDGE, P.C., Baltimore, Maryland, for Appellee. ON

BRIEF: John E. Griffith, Jr., Dorothy M. Guy, PIPER RUDNICK,

L.L.P., Baltimore, Maryland, for Appellant. E. Hutchinson Robbins,

Jr., Todd M. Reinecker, MILES & STOCKBRIDGE, P.C., Baltimore,

Maryland, for Appellee. 

OPINION

WILKINS, Chief Judge: 

The Chesapeake Ranch Water Company (Chesapeake) appeals an

order of the district court granting summary judgment in favor of the

Board of Commissioners of Calvert County, Maryland (the County)

in this action seeking protection under a provision of the Consolidated

Farm and Rural Development Act of 1961 (CFRDA), see 7 U.S.C.A.

§ 1926(b) (West 1999). Chesapeake argues that § 1926(b) prohibits

the County from providing water service to two new commercial

developments presently under construction adjacent to Chesapeake’s

service area. Finding no merit to Chesapeake’s arguments, we affirm.

I.

A recitation of the facts appears in the opinion of the district court.

See Chesapeake Ranch Water Co. v. Bd. of Comm’rs of Calvert

County, 301 F. Supp. 2d 424, 425-26 (D. Md. 2004). We recount

them briefly here.

Chesapeake is a nonprofit water association formed in 1960 to provide drinking water and fire protection services to citizens in Calvert

County. In 1961, the County, which under Maryland law has plenary

authority over water and sewer matters within its borders, see Md.

Ann. Code art. 25, §§ 3(c), 3D(b) (Supp. 2004), granted Chesapeake

authority to provide water service to a subdivision known as Chesapeake Ranch Estates. On three subsequent occasions during 1998 and

1999, the County expanded Chesapeake’s franchise area to include

lots in Lusby Town Square, a subdivision adjacent to Chesapeake

Ranch Estates. 

2 CHESAPEAKE RANCH v. BOARD OF COMMISSIONERS
In response to substantial growth in Calvert County, a number of

new developments are being constructed in the county. At issue here

are two new developments, the Lusby Town Center and the Patuxent

Business Park, which are under construction adjacent to, but not

within, Chesapeake’s existing franchise area. In 2001, Chesapeake

presented a formal offer to the County to provide water service to the

new developments. The County rejected the offer. Instead, the County

resolved to and has begun the process of extending the County-owned

Solomons water facility to provide service to the new developments.

The Solomons facility is located approximately two miles from the

developments. 

Alleging that the County’s proposed extension of the Solomons

facility violates both § 1926(b) and Maryland state law, Chesapeake

filed this action seeking broad injunctive relief to prevent the County

from continuing with its plan to provide service to the new developments. The district court granted summary judgment in favor of the

County on the federal claim, ruling that § 1926(b) afforded Chesapeake no basis for relief against the County. The court then declined

to exercise supplemental jurisdiction over the remaining state law

claims, see 28 U.S.C.A. § 1367(c)(3) (West 1993), dismissing those

claims without prejudice.1

II.

The CFRDA is part of the Agricultural Act of 1961, which Congress enacted for the purposes, among others, of improving and protecting farm prices and promoting agricultural development. See S.

Rep. No. 87-566, at 1 (1961), reprinted in 1961 U.S.C.C.A.N. 2243,

2243. Section 1926 of the CFRDA "specifically authorizes federal

loans to nonprofit water service associations to promote the ‘conservation, development, use, and control of water’ to assist farmers,

ranchers, farm tenants, and other rural residents." Bell Arthur Water

Corp. v. Greenville Util. Comm’n, 173 F.3d 517, 519 (4th Cir. 1999)

(quoting 7 U.S.C.A. § 1926(a)(1)). "By including water service to

‘other rural residents’ as part of an agricultural program, Congress

intended (1) to reduce peruser cost resulting from the larger base of

1Chesapeake does not challenge on appeal the dismissal of its state law

claims. 

CHESAPEAKE RANCH v. BOARD OF COMMISSIONERS 3
users, (2) to provide greater security for the federal loans made under

the program, and (3) to provide a safe and adequate supply of water."

Id. at 519-20. 

Congress sought to protect federally indebted, nonprofit water

associations from "competitive facilities, which might otherwise [be]

developed with the expansion of the boundaries of municipal and

other public bodies into an area served by the rural system." S. Rep.

No. 87-566, at 67, 1961 U.S.C.C.A.N. at 2309. Accordingly, Congress enacted § 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. 

7 U.S.C.A. § 1926(b). To qualify for protection under § 1926(b), the

water association must establish that (1) it is an "association" within

the meaning of the CFRDA, (2) it has a qualifying federal loan outstanding, and (3) it has provided water service or made it available to

the disputed area. See Le-Ax Water Dist. v. City of Athens, Ohio, 346

F.3d 701, 705 (6th Cir. 2003). 

The protection afforded by § 1926(b) is limited to the area in which

the association provides or makes available water service and to the

time period during which its federal loan is outstanding. See Bell

Arthur, 173 F.3d at 520. Additionally, § 1926(b) protects against only

certain forms of competitive behavior, including "curtailment or limitation of the associations’ service areas through annexation or through

the imposition of conditions for service such as the requirement of a

franchise, license, or permit." Id.

Chesapeake argues that summary judgment in favor of the County

was inappropriate for three reasons: (1) the County’s plan to provide

4 CHESAPEAKE RANCH v. BOARD OF COMMISSIONERS
service to the new developments would limit or curtail Chesapeake’s

service by invading a location to which Chesapeake has made service

available; (2) the County’s plan to tap into the aquifer from which

Chesapeake presently draws its water supply would limit or curtail

Chesapeake’s ability to serve its existing franchise area; and (3) disputed issues of material fact existed as to the scope of Chesapeake’s

franchise area. We address each of these arguments in turn.

A.

Chesapeake first argues that § 1926(b) affords it the exclusive privilege of providing water service to the new developments. As a

threshold matter, we note that neither party disputes that Chesapeake

is a qualifying "association" under the statute. Nor do the parties

question that Chesapeake has a qualifying federal loan outstanding.

Therefore, this issue turns on whether Chesapeake has provided or

made available water service to the new developments.

The district court ruled that because the new developments were

not within the geographic boundaries of the franchise area formally

granted to Chesapeake by the County, § 1926(b) did not afford Chesapeake the exclusive privilege of serving the new developments. The

court reasoned that Chesapeake could not use the protections of

§ 1926(b) "offensively" to expand the geographic boundaries of its

franchise area; the statute could only be used "defensively" to protect

the territory already within its franchise area. See Chesapeake Ranch

Water, 301 F. Supp. 2d at 427-29. Chesapeake contends that the district court interpreted § 1926(b) too narrowly. Because the locations

of the new developments were adjacent to Chesapeake’s existing

franchise area, and because Chesapeake was physically capable of

providing water service to the new developments, Chesapeake contends that it had already made available water service to the developments, and thus it was entitled to protection under § 1926(b) from

competition by the County. We disagree. 

The test for whether a water association has provided or made

available water service for purposes of § 1926(b) varies among the

courts of appeals. Some courts have held that a water association has

provided or made available service if it can demonstrate (1) the physical capability to provide service to the area within a reasonable time,

CHESAPEAKE RANCH v. BOARD OF COMMISSIONERS 5
and (2) the legal right under state law to serve the area. See Rural

Water Sys. #1 v. City of Sioux Ctr., 202 F.3d 1035, 1037 (8th Cir.

2000); cf. Sequoyah County Rural Water Dist. No. 7 v. Town of Muldrow, 191 F.3d 1192, 1203 (10th Cir. 1999) (focusing primarily on

whether water association "has proximate and adequate ‘pipes in the

ground’ with which it has served or can serve the disputed customers

within a reasonable time"). Other courts permit an association to

prove that it has provided or made available service by demonstrating

that it has a duty (not merely a right) under state law to provide service to the disputed area. See North Alamo Water Supply Corp. v. City

of San Juan, Tex., 90 F.3d 910, 915-16 (5th Cir. 1996) (per curiam);

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

2, 861 F.2d 1211, 1214 (10th Cir. 1988) (holding that water association had made available water service "by virtue of its line adjacent

to the property and its responsibilities to applicants within its territory" (emphasis added)).2

 The test articulated by the Sixth Circuit in

Le-Ax is the most stringent, requiring a water association to demonstrate that (1) it is physically capable of serving the area,3

 (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. See Le-Ax, 346 F.3d at 707. 

We are persuaded that the three-part test articulated by the Sixth

Circuit in Le-Ax best effectuates Congress’ intent in passing

§ 1926(b). As in all cases of statutory interpretation, our inquiry

2

In Bell Arthur, 173 F.3d at 526, a panel of this court suggested that

Lexington-South Elkhorn Water Dist. v. City of Wilmore, 93 F.3d 230,

235-37 (6th Cir. 1996), and Glenpool stood for the proposition that a

legal duty under state law was required in all cases in order to invoke the

protections of § 1926(b). This suggestion, however, was not necessary to

the holding in Bell Arthur, and subsequent cases have made clear that

while a legal duty is one way to demonstrate that water service has been

made available, it is not a prerequisite to invoking § 1926(b) in every

case. See Le-Ax, 346 F.3d at 706 n.1 ("We have only required (like the

Tenth Circuit) a state-law right (not duty) to serve the area to invoke

§ 1926."). 

3Bell Arthur makes clear that this circuit already requires at least a

showing of physical capability to provide service within a reasonable

time of request. See Bell Arthur, 173 F.3d at 526. 

6 CHESAPEAKE RANCH v. BOARD OF COMMISSIONERS
begins with the text of the statute. See Barnhart v. Sigmon Coal Co.,

534 U.S. 438, 450 (2002). "[I]n analyzing the meaning of a statute,

we must first determine whether the language at issue has a plain and

unambiguous meaning." Holland v. Big River Minerals Corp., 181

F.3d 597, 603 (4th Cir. 1999) (internal quotation marks omitted). Section 1926(b) states that water service "provided or made available" by

any qualifying water association "shall not be curtailed or limited" by

certain municipal action. 7 U.S.C.A. § 1926(b). Because § 1926 does

not include an express definition of "provided or made available," we

look to the ordinary or natural meaning of the terms. See FDIC v.

Meyer, 510 U.S. 471, 476 (1994). To "provide" ordinarily means "to

make available," to "furnish," to "supply," or to "equip." Webster’s

Encyclopedic Unabridged Dictionary of the English Language 1556

(2001). To "make available" ordinarily means to "render" "suitable or

ready for use." Id. at 142, 1161 (defining "make" and "available" in

relevant parts). As noted above, Chesapeake presses upon us a broad

interpretation of "made available" that would include any area that

Chesapeake is physically capable of serving. 

Mindful that "courts should venture beyond the plain meaning of

the statute only in those rare instances in which there is a clearly

expressed legislative intent to the contrary, in which a literal application of the statute would thwart its obvious purpose, or in which a literal application of the statute would produce an absurd result,"

Holland, 181 F.3d at 603 n.2 (citations omitted), we believe that

Chesapeake’s interpretation of § 1926(b) would contravene the intention of Congress in passing the statute and would lead to an absurd

result. The legislative history of § 1926(b) indicates that Congress

intended for the statute "to assist in protecting the territory served by

such an association facility against competitive facilities, which might

otherwise be developed with the expansion of the boundaries of

municipal and other public bodies into an area served by the rural system." S. Rep. No. 87-566, at 67, 1961 U.S.C.C.A.N. at 2309. This

explanation "casts the statute’s purpose in a defensive light," suggesting "that the goal of the statute is only to protect territory already

served by a rural water association from municipal expansion into the

rural water association’s area." Le-Ax, 346 F.3d at 708. 

Moreover, "nothing is better settled than that statutes should

receive a sensible construction, such as will effectuate the legislative

CHESAPEAKE RANCH v. BOARD OF COMMISSIONERS 7
intention, and, if possible, so as to avoid an unjust or an absurd conclusion." In re Chapman, 166 U.S. 661, 667 (1897). Therefore, we

will not construe § 1926(b) in a manner that leads to absurd results.

See Nixon v. Mo. Mun. League, 124 S. Ct. 1555, 1564 (2004); United

States v. Davis, 53 F.3d 638, 642 (4th Cir. 1995). To give Chesapeake

the exclusive right to provide service to adjacent areas based solely

on its physical capability of providing such service would give Chesapeake the ability to expand its exclusive franchise area unilaterally

and limitlessly. Under the rule Chesapeake presses upon us, once a

water association is granted authority to serve some area—no matter

how small—it could then expand its monopoly indefinitely by simply

developing the physical capability to serve locations beyond its original franchise area. As put by the County, such a rule would "allow

Chesapeake to become the ‘kudzu vine’ of utility companies growing

at the will or whim of Chesapeake throughout the County simply

through the installation of water lines to the edges of its ever expanding service area." Br. of Appellee at 19. As the Le-Ax court recognized, "[t]his vision of § 1926(b) is expansive indeed." Le-Ax, 346

F.3d at 709. We doubt that Congress intended such a result. 

Rather, we believe that the test articulated by the Sixth Circuit, by

requiring a water association invoking § 1926(b) to demonstrate that

the disputed area is within the geographic boundaries of the association’s existing franchise area, see id. at 707, best effectuates Congress’ intent in passing § 1926(b). We therefore adopt the Le-Ax test

as our own. 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.

As the new developments were not within the geographic boundaries

of Chesapeake’s existing franchise area, we affirm the decision of the

district court granting summary judgment in favor of the County on

this issue.4

4We acknowledge but do not decide a related issue: whether the County’s plan to provide service to the new developments qualifies as an

infringing action under § 1926(b). As noted above, § 1926(b) prohibits

only certain forms of competitive behavior. Because the new develop8 CHESAPEAKE RANCH v. BOARD OF COMMISSIONERS
B.

Next, Chesapeake argues that it is entitled to injunctive relief to

prevent the County from tapping into and depleting the aquifer from

which Chesapeake draws its water to service its existing customers.

By depleting the aquifer, Chesapeake contends, the County would

curtail or limit the service provided by Chesapeake in violation of

§ 1926(b). Indeed, the County has applied for permission from the

state to drill new wells within 2,500 feet of Chesapeake’s existing

wells. Nevertheless, the district court rejected Chesapeake’s argument, finding the possibility of harm from depletion of the aquifer too

speculative as a matter of law to sustain relief under § 1926(b). Chesapeake argues that the district court ignored the affidavit of an expert

submitted by Chesapeake in opposition to summary judgment. The

expert, a hydrogeologist with 23 years’ experience, averred that the

County’s proposed wells "will cause significant interference to one or

more of Chesapeake’s existing wells . . . ." J.A. 215. This expert opinion, argues Chesapeake, provided a sufficient dispute of material fact

to withstand summary judgment. The County embraces the district

court characterization of the harm as "speculative." It points out that

it has merely applied to the state for permission to drill the wells; it

has not yet made a final decision where (or even whether) to drill

them. 

Even assuming that the County would tap into the aquifer and

thereby impair Chesapeake’s ability to serve its existing customers,

we conclude that § 1926(b) provides no relief against the County. As

noted above, § 1926(b) prohibits only certain forms of competitive

behavior, including "curtailment or limitation of the associations’ service areas through annexation or through the imposition of conditions

ments were already within the County’s borders, the County has not

annexed the land on which the new developments sit and would have no

reason to do so. Cf. Le-Ax, 346 F.3d at 703 (noting in the context of a

§ 1926(b) claim that the disputed area was outside both parties’ borders).

Nor has the County imposed conditions upon Chesapeake for the privilege of providing service to the new developments. As neither party has

addressed this issue in its briefs, and as our disposition of this case does

not turn on this issue, we decline to resolve it. 

CHESAPEAKE RANCH v. BOARD OF COMMISSIONERS 9
for service such as the requirement of a franchise, license, or permit."

Bell Arthur, 173 F.3d at 520 (emphasis added). Simply tapping into

an aquifer, even in a way that impairs a qualifying water association’s

ability to provide service, is not an infringing action under the statute.

We therefore affirm the decision of the district court granting summary judgment in favor of the County on this issue.

C.

Finally, Chesapeake argues that the district court ignored a disputed issue of material fact involving the precise scope of Chesapeake’s existing franchise area, i.e., whether the new developments

were already within the geographic boundaries of its franchise area.

Chesapeake points to arguably vague language in the original document from the County defining the boundaries of its franchise area.

Chesapeake also notes that it provides service to several customers

located outside of the Chesapeake Ranch Estates. 

Chesapeake raised this argument for the first time while opposing

summary judgment before the district court. The district court dismissed the argument as an attempt to "create a dispute of material

fact by now attempting to re-interpret language in a contract entered

into over 40 years ago." Chesapeake Ranch Water, 301 F. Supp. 2d

at 429. The decision of the district court on this issue was correct. On

three occasions after the 1960 grant, Chesapeake applied for, and the

County granted, expansions of the original franchise area. In each of

these agreements between Chesapeake and the County, the understanding of the parties as to the scope of the original franchise area

was clear. Each of the agreements referred to the scope of the original

franchise area as encompassing "the Chesapeake Ranch Estates Subdivision." J.A. 98, 99, 101. That Chesapeake occasionally provided

service to customers outside of its franchise area did not, by itself,

expand the scope of the franchise area. Only the County has authority

to expand the scope of an association’s franchise area. See Md. Ann.

Code art. 25, § 3D(b). We therefore affirm the decision of the district

court on this issue.

III.

For the reasons stated above, we affirm the decision of the district

court granting summary judgment in favor of the County.

AFFIRMED

10 CHESAPEAKE RANCH v. BOARD OF COMMISSIONERS