### IN THE UNITED STATES COURT OF APPEALS FOR THE FIFTH CIRCUIT

No. 16

- 51282

GREEN VALLEY SPECIAL UTILITY DISTRICT , Plaintiff

–

Appellant ,

versus CITY OF CIBOLO, TEXAS , Defendant

– Appellee

.

Appeal from the United States District Court for the Western District of Texas

Before HIGGINBOTHAM , SMITH , and HAYNES , Circuit Judges

. JERRY E. SMITH, Circuit Judge :
Green Valley Special Utility District (“Green Valley”) seeks an injunc

tion , claiming that 7 U.S.C. § 1926(b) prohibits the City of Cibolo from en

cro ach ing on its sewer service . Because the district court’s interpretation is incon sistent with the statute’s plain language, w e reverse and remand its dis

missal of the complaint. United States Court of Appeals Fifth Circuit 

### FILED August 2, 2017 Lyle W. Cayce Clerk Case: 16-51282 Document: 00514100024 Page: 1 Date Filed: 08/02/2017No. 16

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2 I. The Public Utility Commission of Texas (“PUC”) issues c ertificates of

c onvenience and n ecessity ( “ CCNs ” ), which give holders the exclusive right to provide water or sewer service within particular service areas. 1 Green Valley is a special utility district 2 with a service area encompassing p a rt s of Guada

lupe, Comal, and Bexar Counties. Green Valley holds two CCNs: one for water service and one for s ewer service. In 2003, Green Valley obtained a $584,000 loan from the United States to fund its water service. That loan, which remains outstanding, is secured by Green Va lley’s water utility revenues.
The c ity is a municipality located in Guadalupe and Bexar Counties. In March 2016, it applied for a CCN to provide sewer service to all of Cibolo, including portions within Green Valley’s service area. Granting the applica

tion would require the PUC to strip Green Valley of the right to provide sewer

serv ice to those areas of Cibolo currently wit hin Green Valley’s service area. The application is for sewer service only; if granted, it would not disturb Green Valley’s water service. Section 1926 is the statute governing the U.S. Department of Agricul

ture’ s water and sewer utility loan program. Green Valley claims that the appli cation violates § 1926(b) , which prohibits municipalities from encroach ing on services provided by utilities with outstanding loans : 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 ser

vice wit hin such area during the term of such loan; nor shall the hap

pening of any such event be the basis of requiring such association to

1 See T EX

. W ATER C ODE § 13.242 (a) (setting forth the general requirement that utili

ties obtain CCNs before providing water or sewer service).

2 See id. § 65.011 ( providing for the creation of special utility district s ). Case: 16-51282 Document: 00514100024 Page: 2 Date Filed: 08/02/2017No. 16

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3 secure any franchise, license, or permit as a condition to continuing to serve the area served by the association at the ti me of the occurrence of such event. § 1926(b). In May 2016, Green Valley sued for injunctive and declaratory relief, alleg ing that § 1926(b) protects both its sewer and water service from munici

pal encroachment. The c ity moved to dismiss under Federal Rule of Civil Procedure 12(b)(6), claiming t hat § 1926(b)’s protection extend s only to services secured by an association’s federal loan

— in this case, only Green Valley’s water service. The district court dismissed though reject ing the c ity’s inter

pret a tion of the statute. It found that “§ 1926(b) protects only the service for which the loan was made

— the funded service

— regardless of what secures the loan.” The court gave Green Valley an opportunity to amend its complaint to specify which of its servic es are funded by federal loan proceeds. In August 2016, Green Valley filed an amended complaint in which it explained that the federal loan funded only its water service and elaborated on its earlier theories for why § 1926(b) should be interpreted to proh ibit muni ci

palities from encroaching on any services made available by federally indebted utilities. The c ity filed a second motion to dismiss , which the court granted.

II. This is a tight question of statutory interpretation. Section 1926(b) pro

hib its the curtailment or limitation of “[t]he service provided or made avail able through any such association.” § 1926(b). W he re a CCN imposes a duty on a util ity to provide a service, that utility has “provided or made avail able” that service under § 1 926(b), 3 and both sides agree that Green Valley qualifies as

3 N. Alamo Water Supply Corp. v. City of San Juan , 90 F.3d 910, 915

– 16 (5th Cir. 1996) (per curiam)

. Case: 16-51282 Document: 00514100024 Page: 3 Date Filed: 08/02/2017No. 16

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4 an “association

. ” The dispute is over the meaning of “service,” which the stat

ute does not define. Green Valley cla ims that § 1926(b)’s protection ex tend s to any service made available by a federally indebted utility. The dis trict court decided, to the con trary, that § 1926(b) applies only to services that are funded by federal loans. We have never con sidered a case with these facts, though we have hel d that § 1926(b) “should be liber ally interpreted to protect [ federally] indebted rural water associations from municipal encroachment.” 4 The only circuit that has considered this issue found that § 1926(b) applies only to “the type of service financed by the quali fying federal loan.” 5 “When interpreting statutes, we begin with the plain language used by the drafters.” 6 T he plain language of § 1926(b) is dispositive.
The statute refers to “[t]he service provided or made available through any such associa tion.” T h e parties urge us to read “service” in one of the fol

lowing three ways : (1) as a noun that refers to a combined water

- and

- sewer service ; (2) as a noun that refers to a specific service

— either a water service or a sewer service

— made available by a federally indebted utility; or (3) as a noun that refers to a specific service made available by a federally indebted utility and financed through the federal loan program. Green Valley favors the fir st two readings; the c ity, the district court, and th e Eighth Circuit adopt the third. The trouble with the third reading is that the statute does not include any language limiting “service” to those services that have received f ederal

4 Id. at 915.

5 See Pub. Water Su pply Dist. No. 3 v. City of Lebanon , 605 F.3d 511, 520 (8th Cir. 2010). The court did not clarify what it meant by “financ ed,” explaining that “we need not decide whether it is the type of service which provides the collateral for the loan or the type of service for which the loan was made that is entitled to protection

. ” See id. at 520 n.9.

6 United States v. Uvalle

- Patrici o , 478 F.3d 699, 703 (5th Cir. 2007) (quoting United States v. Williams , 400 F.3d 277, 281 n.2 (5th Cir. 2005)). Case: 16-51282 Document: 00514100024 Page: 4 Date Filed: 08/02/2017No. 16

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5 financ ing . The statute refers just to “[t]he service.” See § 1926(b). Under either of the first two readings , Green Valley wins. If “service” encompasses what Green Valley desc ribes as its “integrated” water

- and

- sewer service, then § 1926(b) protects its sewer service from municipal encroach

ment. 7 If “service” refers to a specific service made available by a federally indebted utility, it must encompass Green Valley’s sewer service , which is a “service provided or made available” by a federally indebted utility.
The c ity claims that Congress’s use of the definite article “the” before “service , ” combined with the use of the singular form of the noun, implies that the statute is referring to a specific service

— the service “provided or made available by the federal debt .” 8 We disagree.
The presence of a definite article c an affect a statute’s meaning

. 9 But, for two reasons, Congress’s use of “the” in § 1926 (b) is not decisive. First, it is consistent with “service” referring to an in tegrated water

- and

- sewer service

. Second, if “service” refers to a specific service , it mu st be possible to read it as referring to more than one service. Otherwise, if an association received fed

eral loans for both its water and sewer service, only one of th em wo uld be able to receive § 1926(b)’s protection

. If “service” refers to a specific service but can be used iteratively , then both Green Valley’s water and sewer service can be examples of “[t]he service made available through any such association.” Thus , the use of “the” in § 1926 (b) is consistent with all three readings of “se rvice.”

7 Green Valley notes that its water and sewer services share employees, a board of directors, a general manager, and an operating account.

8 The c ity’s claims track the Eighth Circuit’s reasoning in Pub lic Water Supply , 605 F.3d at 519

– 21.

9 See , e.g., Brooks v. Zabka , 168 Colo. 265 , 269 (1969) (“ It is a rule of law well estab

lished that the definite article ‘the’ particularizes the subject w hich it precedes. It is a word of limitation as opposed to the indefinite or generalizing force of ‘a’ or ‘an.’ ”)

. Case: 16-51282 Document: 00514100024 Page: 5 Date Filed: 08/02/2017No. 16

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6 Congress used both “service” and “services” throughout § 1926 . The c ity claims that if Congress wanted to safeguard all services made available by a federally indebted utility, it would have used “services,” not “ service, ” in § 1926 (b). But thoug h “each part or section of a statute should be construed in connection with every other part or sectio n to produce a harmonious whole,” 10 it is not evident what conclusions we can draw from Congress’s various uses of “service ” and “service s ” in § 1926

. The statute uses “service” seven times out

side § 1926(b): three times as part of a proper noun, 11 twice as a verb (“service the loan”), 12 once as an apparently countable noun , 13 and once as an apparently uncountable noun. 14 T he statute refers to “services” four times, but none of those references is obviously describing water or sewer services: The word is used twice to refer to broadband services, 15 once to refer to “small

- scale exten

sion services” for water and sewer projects, 16 and once to ref er to “services .

. . of local governments and local economic development organizations.” 17 None of this sheds much light on the meaning of “service” in § 1926(b).
The c ity points out that § 1926(b) prohibits “the granting of any private franchise for simi lar service within such area during the term of such loan.” § 1926(b) (emphasis added). It urges the court to read that prohibition in

10 Uvalle

- Patricio , 478 F.3d at 703 (quoting Williams , 400 F.3d at 281 n.2).

11 See 7 U.S.C. § 1926(a)(9) (“Public Health Service Act”); id

. § 1926(a)(13) (“Soil Con

ser vation Service”); id. § 1926(a)(22)(A)(ii) (“Rural Utilities Service”).

12 See id. § 1926(a)(24)(B)(i); id. § 1926(a)(24)(B)(ii).

13 See id. § 1926(a)(20)(E) ( “local broadband service”).

14 See id. § 1926(a)(4)(B) (defining “project” to “include facilities providing central ser

vice or facilities serving ind ividual properties, or both.”).

15 See id. § 1926(a)(20)(E) (referring to “common carrier facilities and services” and “affordable broadband services”).

16 See id. § 1926(a) (2)(B)(i)(II).

17 See id. § 1926(a)(23)(A). Case: 16-51282 Document: 00514100024 Page: 6 Date Filed: 08/02/2017No. 16

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7 tandem with the prohibition on municipal encroachment on federally indebted utilities’ service areas. The c ity claims that “similar service” should be under

stood to refer to a similar variety of a specific service

— that is, a water service is similar to another water service , and a sewer service is similar to another sewer service

— and claims that the “similar service” req uirement must apply to municipalities as well as to private entities. But th at logic assume s that “ser vice” refers to the federally finance d service. If “service” refers to any ser

vice made available by a federally indebted utility, then “similar serv ice” refers
to any services that are similar to th ose provided by the utility. Section 1926(b) has two purposes : “ (1) to encourage rural water develop

ment 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

. . . by protecting them from the expansio n of nearby cities and towns.” 18 Green Valley’s interpretation is consistent with tho se purposes. A utility that is protected from municipal encroachment will be able to achieve greater economies of scale, thereby decreasing its per

- user costs, and will be less vulnerable to financial d isruptions than would a utility that is not protecte d from municipal encroachment.
It is possible that Congress intended to limit § 1926(b)’s protection to services directly financed by a federal loan. Such a policy would provide feder

ally indebted utili ties with substantial benefits while , at the same time , allow

ing other service providers to compete with federally indebted utilities in the provision of non

- federally financed services. But § 1926(b)’s plain language does not limit the statute’s protect ion to services that have received federal financing.

18 N. Ala mo , 90 F.3d at 915. Case: 16-51282 Document: 00514100024 Page: 7 Date Filed: 08/02/2017No. 16

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8 III. We decline the city’s invitation to read adjectives into § 1926(b)

. The judg ment of dismissal is REVERSED and REMANDED. 19

19 Because both of the readings of “service” that Green Valley favors are consistent with the plain language of t he statute, we do not decide which one to adopt. Case: 16-51282 Document: 00514100024 Page: 8 Date Filed: 08/02/2017