United States Court of Appeals For the Seventh Circuit ____________________ No. 22-2942 WASHINGTON COUNTY WATER COMPANY, INC., Plaintiff-Appellant, v. CITY OF SPARTA, ILLINOIS, Defendant-Appellee. ____________________

Appeal from the United States District Court for the Southern District of Illinois. No. 20-cv-1052 — Nancy J. Rosenstengel, Chief Judge. ____________________

ARGUED JUNE 2, 2023 — DECIDED AUGUST 8, 2023 ____________________

Before FLAUM, BRENNAN, and ST. EVE, Circuit Judges. ST. EVE, Circuit Judge. The Agriculture Act of 1961 author- ized the United States Department of Agriculture (“USDA”) to provide loans to rural water associations to decrease the cost and ensure an adequate supply of safe water for farmers and other rural residents. To ensure that these associations could repay their loans, Congress enacted 7 U.S.C. § 1926(b), which prohibits municipalities and others from selling water in an area that a USDA-indebted rural water association has 2 No. 22-2942 “provided or made available” its service. In order to be enti- tled to protection under § 1926(b), the rural water association must have the physical capability to provide service to the disputed area and a legal right to do so under state law. Washington County Water Company (“WCWC”) is a rural water association that sells potable water to several counties in southern Illinois. The Village of Coulterville is adjacent to these counties. In 2019, due to the deteriorating state of its wa- ter treatment facility, Coulterville explored the possibility of buying water from either WCWC or the City of Sparta. Coul- terville ultimately decided to buy water from Sparta because it was not convinced that WCWC could provide enough wa- ter to satisfy its residents’ demand. When WCWC learned of this decision, it filed a complaint in federal district court alleg- ing that § 1926(b) prohibited Sparta from selling water to Coulterville because WCWC had made its service available to Coulterville. The district court granted summary judgment in favor of Sparta, holding that WCWC was not entitled to § 1926(b) protection because it did not have a legal right to provide water to Coulterville under Illinois state law. I. Background A. Statutory Framework As part of the Agricultural Act of 1961, Congress passed the Consolidated Farm and Rural Development Act, which, among other things, promotes the “conservation, develop- ment, use, and control of water” to help farmers and other ru- ral residents obtain access to affordable and adequate quanti- ties of safe water. 7 U.S.C. §§ 1921, 1926(a)(1). It does this by No. 22-2942 3 authorizing the USDA 1 to provide loans to rural water asso- ciations or utilities “to finance specific projects for works for the development, storage, treatment, purification, or distribu- tion of water ….” § 1926(a)(2)(A)(i). Congress passed § 1926(b) of the Act to protect these USDA-indebted associations from certain forms of competition and ensure that they could repay their loans. Under § 1926(b), [t]he service provided or made available through any such association shall not be curtailed or limited by in- clusion 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 continu- ing to serve the area served by