City of Madison prevails in water dispute as judge scolds utility company

A federal appeals court has rejected a Dupont water utility provider’s protest that it should have been the exclusive seller to a nearby jail, with a judge noting that the company “sat on its hands for years” after service was requested.

On Wednesday, the 7th Circuit Court of Appeals affirmed summary judgment in favor of the City of Madison, which had been entangled in litigation with Dupont Water Co., a rural water association with some monopoly rights because of its outstanding debt to the federal government. The lawsuit arose after Dupont accused Jefferson County of seeking water from Madison — and argued that Dupont alone should have been the lawfully exclusive seller for the area.

Dupont’s lawyer did not immediately respond to a request for comment on the court’s ruling.

Madison Mayor Bob Courtney said he is pleased with the court’s ruling and hopes the decision brings an end to three years of legal challenges that cost local taxpayers “hundreds of thousands of dollars in legal expenses.”

“Throughout this process, the City’s position has been that DuPont was seeking to expand its service territory rather than simply defend its existing rights,” Courtney said in a statement provided by a city spokesperson. “We are hopeful that this ruling brings an end to these legal challenges and allows the City to move forward focused on the important work of serving our community.”

In 2020, Jefferson County selected a site near Madison’s city limits to build a new jail. Since the jail needed water, the two potential suppliers for the area were the City of Madison and Dupont.

Since Dupont has certain monopoly rights under federal statute, the county tried getting the jail’s water from Dupont. However, the company failed to build the necessary infrastructure or quote a price after many months of communication, according to the court.

So, the county awarded the project to Madison, which had a much larger water main that met the jail’s needs. According to court documents, Dupont had a three- or four-inch water main, while Madison had a 12-inch water main.

The county and its construction manager tried negotiating with Dupont to connect its existing, smaller water mains to Madison’s larger one, according to court documents. The project’s construction manager gave Dupont until Nov. 6, 2020, to provide any plans, but the company did not propose a solution to the water main problem.

After more failed attempts to get a detailed plan from Dupont for the project, the Jefferson County Council voted in May 2021 to support getting the jail’s water from Madison.

Although it had lined up services with Madison, the county continued trying to work with Dupont to serve the jail, according to the court.

“But nothing came together,” the opinion stated.

After another year of failed communications with the company, the county started buying water from Madison for the jail in December 2022.

A few months later, in March 2023, Dupont sued Madison, accusing the city of violating 7 U.S.C. § 1926(b) — an “unusual” statute that protects certain associations from municipal competition, according to the court.

Dupont argued that because it had water pipes near the project area and could provide service within a reasonable time, it had the “absolute right to be the exclusive seller of water” to the jail.

But the U.S. District Court for the Southern District of Indiana and the 7th Circuit concluded that Dupont failed to meet its burden in proving that it “provided or made available” water to the area.

“As a matter of historical fact, Dupont did not provide water to the jail ‘within a reasonable time after a request for service,'” Circuit Court Judge Rebecca Taibleson wrote in Wednesday’s opinion. “Instead, Dupont sat on its hands for years, doing nothing much other than asserting its monopoly rights, while the County built the jail and Madison procured water for it.”

Dupont also asserted that the county never completed an official application, which it said was necessary to secure water services.

Taibleson called that way of reasoning “absurd” and “Kafka-esque.”

The case is Dupont Water Company, Inc. v. City of Madison, Indiana, 25-3131.