Earlier this month, a dispute between the Xenia Rural Water District and the City of Johnston over their service territories resulted in an Iowa Supreme Court ruling. The rural water district must obtain approval from the city to provide water service within two miles of the city limits. Both entities wished to provide water to customers on the North side of Johnston, a Des Moines suburb, and had claims supported by state or federal law that needed to be reconciled. 

Their disagreement could not be resolved out of court, and therefore the lawsuit was filed in federal district court who then certified certain questions for the Iowa Supreme Court to answer about Iowa law. 

As a rural water provider, Xenia has a contract with Polk County since 1990 that gave Xenia rights to provide water within a specified boundary of Polk County. Parts of the boundaries in this contract overlap with the Johnston city limits and areas where Johnston wishes to expand their service.  Xenia wanted to expand their water service to new customers in the disputed area.

Xenia argued that the federal law applicable to their USDA water facility loan prevented Johnston from providing water to parties who fell within the boundaries of Xenia’s contract. This federal law states that if recipients of these loans provide water to an area, and the area later becomes incorporated into a different public body (such as a city expanding its boundaries, bringing the land within their city limits), the loan recipients may continue to provide water to the area during the term of their loan. 

Johnston argued that Iowa law states that a city has first rights to provide water to parties within 2 miles of their city limits unless a city waives those rights. Iowa law prevents Xenia from providing water to parties within two miles of Johnston.

In reconciling federal and state law, the Iowa Supreme Court ruled that the neither the federal law nor the Polk County contract superseded the Iowa law limitation on providing water service within 2 miles of a city’s limits. Xenia wanted to expand service to a new area instead of preserving existing Xenia customers; therefore, the federal law did not apply. Xenia is subject to the 2-mile rule and for any land within 2 miles of Johnston, the city has first rights to provide water services. Xenia has the right to provide water to any party within the boundaries of its Polk County contract if the customers are further than 2 miles from city limits.

The case returns to federal district court for further proceedings.