‘Water wars’ continue as rural water district sues the city of Woodward

The city of Woodward is the latest Iowa municipality to be sued for allegedly infringing on the rights of one of Iowa’s rural water districts.

Like others before it, the case pits the financial needs of rural areas served by water districts against neighboring cities that are attempting to capitalize on commercial development along their borders.

In 1921, Congress enacted the Consolidated Farm and Rural Development Act to ensure that residents of far-flung rural areas would have access to water. The act enabled the United States Department of Agriculture Rural Development, or USDA-RD, to make loans to rural water districts. The districts were granted the exclusive right to provide water service in their territories, effectively barring municipalities from trying to compete for service.

In recent years, that exclusivity has led to conflicts as cities expand into previously undeveloped areas that remain within the boundaries of the water districts.

The Xenia Rural Water District, incorporated in 1977 as a nonprofit, has received funding from the USDA-RD to construct water lines in an area north of the city of Woodward and surrounding the state-run Woodward Resource Center for disabled adults. The district says its territory also includes an area south of Woodward that encompasses a business park.

According to a lawsuit filed last week by Xenia in U.S. District Court, the city of Woodward contacted Xenia in 2019 and asked whether the water district wanted to retain its right to serve its long-dormant business park, which was then on the verge of being developed. Xenia alleges it responded by asserting its right to serve the business park, which it had been doing since 1982 using pipes it had installed.

Earlier this year, Xenia learned of new development activity in the business park and in September the district’s CEO wrote to the city’s mayor, Todd Folkerts, and reminded him of Xenia’s stance that it had the exclusive right to serve the business park with water.

Folkerts’ response was blunt. “Xenia has never requested to serve this area, the city has never waived its right to serve this area, and is not doing so now,” Folkerts wrote. “The city intends to serve, and will serve, the business park as is its right. Whether Xenia has pipes in the ground is irrelevant.”

The lawsuit filed last week by Xenia seeks a declaration establishing that it has the exclusive right to provide water service in its territory, including the Woodward business park and the Woodward Resource Center. It also seeks a permanent injunction enjoining the city from constructing any infrastructure for the provision of water service with Xenia’s territory.

The city has yet to respond, but it’s not the first time Woodward and the water district have clashed.

Xenia has been providing water services to the areas surrounding the Woodward Resource Center since 1982, but the center itself once supplied and treated its own water that was drawn from a well. In 2017, the center asked Xenia for a proposal to extend water services to the center, at least on an emergency-only basis. In late 2020, Xenia became aware that the center had been annexed into the city of Woodward and that the center was considering contracting with the city as a non-emergency source for water.

Xenia’s legal counsel contacted city officials and warned them the center was located in Xenia’s protected territory, regardless of the annexation. The center then entered into an agreement with Xenia to construct the infrastructure necessary for the supply of water, and since last spring it has provided the center with all of its water.

As one element of the newly filed lawsuit, Xenia argues that “Woodward’s annexations and statements to Xenia make it clear Woodward has taken steps, and continues to take steps, to provide water service to current and prospective future customers in Xenia’s Protected Water Service Territory.”

A key issue in the litigation is the 1987 state law that says before a water district can supply water to an area within two miles of a city’s boundaries, the district must give the city an opportunity to serve the area. Last summer, a federal judge asked the state’s justices to rule on whether Iowa rural water districts have a legal right to provide water service to areas that are within two miles of the city limits of an Iowa municipality.

The questions arose as part of a lawsuit between the city of Johnston and the Xenia Rural Water District, which have been fighting for more than two years over the right to provide water service to areas just outside the Johnston city limits.

The court found that since 1987, Iowa law has granted cities the primary right to provide water service in areas within two miles of their city limits if they were not already being served by a rural water district.

A rural water district that wants to extend service to such areas must first request the city’s approval, the court ruled. “The two-mile rule was enacted to allow cities room to grow and also to resolve turf battles like this between cities and rural water districts,” the court stated, adding that the federal law “acts as a shield protecting a rural water district’s existing customers, not as a sword to strike down the state’s two-mile rule for new infrastructure.”

The Johnston lawsuit remains active in U.S. District Court. In August, the city of Johnston filed a brief with the court arguing that the water district, having failed to prevail on key issues in the case, was “searching for a legal theory to advance its interests by continually changing tack or attempting to twist words to find meanings which are not present or contrary to law.”

One element of the Supreme Court’s decision in the Johnston case could come into play in the Woodward case.

The court’s ruling states that if a water district or association “has pipes and infrastructure in the ground and wants to improve that infrastructure or wants to connect new customers to already existing infrastructure and pipelines,” it may not be required to first give the city an opportunity to serve the area.”