Academic journal article Texas Law Review

Water Associations and Federal Protection under 7 U.S.C. Sec 1926(b): A Proposal to Repeal Monopoly Status

Academic journal article Texas Law Review

Water Associations and Federal Protection under 7 U.S.C. Sec 1926(b): A Proposal to Repeal Monopoly Status

Article excerpt

1. Introduction

Across the United States, metropolitan areas have continued to spread outward creating a pattern of development that consumes more and more land.1 Over the past century, the growth of U.S. cities has been characterized by suburbanization,2 as land outside the urban core has been developed into residential properties for many who work in the city. Since World War II, it has been commonly argued that the federal government has played a large role in fueling this conversion of rural land outside metropolitan areas into suburban development.3

Each increase in the amount of urban land results from the conversion of rural properties, either agricultural or undeveloped. In many cases, farmers who are trapped or hurt by changing economic conditions have found speculators and residential developers to be willing buyers when their land is in the path of urban expansion.4 As suburbanization continues, rural

areas closest to the urban fringe will inevitably face the piecemeal conversion of farms and other properties,5 as population growth allows for more intense use of land. For example, rural counties closer to metropolitan areas have experienced greater population growth and economic development than more remote rural counties.6

Water and sewer service, supported by centralized infrastructure, is a necessary element for the conversion of rural land into urban land that can support higher population density. The availability of sewers fueled the historic rush towards suburbanization as early federal programs supported the building of new suburban systems instead of repairing older urban sewers.7 Today, the process of converting rural land differs across the country, and developers must pay attention to the differences in the provision of water and utility services; developers may look to either a city, special district, or private utility company for water.8

Against the backdrop of urban expansion, the federal government has not been entirely unconcerned with the decline of rural areas and their water systems.9 Despite federal support for suburbia, federal support for farms has been one impediment to urban land consumption. This Note addresses one particular pro-rural policy in which the Farmers Home Administration (FmHA) makes loans to rural water associations.10 Beginning in 1961, the program provided water-infrastructure loans to rural areas and small towns that could not obtain credit elsewhere. For some rural areas, the existence of federal lending to water associations allowed for utility financing without incorporation.

Forty years after its inception, the federal loan program has taken on a more anti-urban (or anti-suburban) stance as associations that receive loans also receive federal protection from competing water providers, including other cities. This Note contends that, because of expanding interpretations by the federal judiciary, as well as changes in state administrative programs, the federal protection for rural water associations, embodied in 7 U.S.C. 1926(b), no longer serves a useful purpose for affected rural property owners and nearby municipalities. In areas along the urban fringe where competition exists among water providers, the federal government has thrown its weight behind water associations that are often incapable of meeting the water demands of urban land development. As a result, the existence of protected rural water suppliers has retarded land development on the urban fringe, both within the confines of the rural water association and neighboring areas that are destined for higher urban uses. Part II of this Note details the legislative history of the lending program for rural water facilities; Part III reviews federal case law interpreting section 1926(b); Part IV explores the economicdevelopment problems created by judicial expansion of section 1926(b); Part V examines the relationship between the provision of water services and urban sprawl; Part VI argues primarily for repeal of section 1926(b); Part VII concludes. …

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