From: "Steven M. Harris" <steve.harris@commercialaw.com>

To: "Mike Keegan" <keegan@bookcase.com>

Subject: Re: USCsec1926b

Date: Sat, 26 Mar 2005 11:37:22 -0600

Mike: Chesapeake simply adopted the 3 part test articulated in Le-Ax and

thus adds nothing new to the status of 1926(b) law. Le-Ax made it clear

that it was narrowly applying its reasoning to water districts which had a

state defined boundary (and makes no ruling applicable to districts that

have no political boundaries).

The dissent in Le-Ax is in accord with the 10th Circuit decision in Pitt-7,

namely that once 1926(b) protection attaches, the protected service area is

defined not by state political boundaries but rather by where the district

has made service available or could do so within a reasonable time.

To answer your question as to who "should" obtain the right to serve, we

have argued many times to the 10th Circuit in favor of a "bright line rule"

(i.e. that the political boundaries of a district (in those instances where

they exist) should define the protected area). The 10th Circuit rejected

this argument in favor of a customer by customer analysis as to whether the

"made service available" test has been met. The reasoning behind a bright

line rule (as adopted in North Alamo by the 5th Circuit) makes the

determination of a protected area "black and white". This would prevent

protracted and expensive litigation which always occurs when litigating the

"made service available" test. However neither the 6th nor the 4th Circuit

stated that if the customer was inside the political boundary - that

automatically equates to a protected service area. They simply added another

restriction, that regardless of whether the district has made service

available, the political boundary is the outer limit of protection - beyond

which normal market forces apply.

I do not attach much significance to Chesapeake because (1) it merely

adopted Le-Ax, (2) does not apply to districts that have no political

boundaries, and (3) water districts rarely serve outside their political

boundaries in areas that are likely to encounter competition from a

municipality. It appears to me that if the district were serving outside

its political boundary, that the area for which service had been made

available - would result in a decision by the Court that this additional

area would also be protected. I of course, recommend to districts that they

act early in annexing areas they intend to serve. From the city's

perspective, Le-Ax and Chesapeake are only a slightly more narrow

interpretation of 1926(b) than that expressed by the 8th and 10th Circuits.

Best regards

Steve Harris

From: "Steven M. Harris" <steve.harris@commercialaw.com>

To: "Mike Keegan" <keegan@bookcase.com>

Cc: "Mike Davis" <mike.davis@commercialaw.com>

Subject: Re: USCsec1926b

Date: Thu, 17 Mar 2005 16:42:06 -0600

Mike: The 4th Circuit illustrates the subtle differences in thinking between the various circuits. The 8th and 10th Circuits take a more expansive and liberal interpretation of 1926(b) than do the 4th and 6th Circuits. Confining 1926(b) protection to the political boundaries of water districts is generally not something water districts should be concerned about since (1) they rarely sell water outside their political boundaries and (2) those with long range plans expand their boundaries to anticipate future growth (something I strongly recommend water districts do). Many jurisdictions do not have political boundaries. Chesapeake would be essentially irrelevant to those districts.

When LeAx was first published I urged water districts to act early in expanding their political boundaries. Chesapeake is simply a "second warning" from another Circuit. Water districts must plan at least 15-20 years or longer into the future and re-evaluate those long range plans annually.

I disagree with the rather narrow interpretation the Court gives to 1926(b) when it comes to the level of interference that will be tolerated and deemed not a violation of 1926(b). Unfortunately municipalities are very creative in creating mechanisms to evade 1926(b) by frustrating a District in its Congressional mandate to provide water service. Interference comes in an endless variety of flavors. The most dramatic examples are seen in the Pitt-7 case as well as the recent decisions from the Missouri Court of Appeals (Robertson and Horn cases). Those Courts soundly rejected efforts by the cities to orchestrate an "end-run" around 1926(b) protection - and perhaps the 4th Circuit would have done the same with the facts reported in those cases.

Best regards

Steve Harris