Under federal law [7 U.S.C. § 1926(b)], private water associations that receive federal loans for water infrastructure improvements also receive federal protection from encroachment by competitors, namely neighboring cities. Because the 1961 law is poorly worded, the scope of federal protection is unclear, yet the federal judiciary has transformed private water associations into monopoly providers for their service areas, even when actual service is inadequate or incomplete. Worse, states have been helpless in trying to regulate competition among providers in rural areas—particularly as development pressures grow from suburbanization—because their rules are preempted.  Results from Texas and other states show that land development has been retarded because these private water associations are either unwilling or unable to provide water for denser urban development within their monopoly area. Consequently, the Note argues for repeal or amendment of 1926(b).