(a) (1) (A) Unless otherwise agreed between a municipality that owns or operates a water service and a rural water service, the inclusion by annexation of any part of the assigned service area of a rural water service within the boundaries of any Arkansas municipality shall not in any respect impair or affect the rights of the rural water service to continue operations and extend water service throughout any part of its assigned service area unless a municipality that owns or operates a water service elects to purchase from the rural water service all customers, distribution properties, and facilities located within the municipality reasonably utilized or reasonably necessary to serve customers of the rural water service within the annexed areas under this chapter, excluding water sources, treatment plants, and storage serving customers outside the annexed areas.

(B) As used in this subdivision (a)(1), "continue operations" means to continue setting meters, reading meters, and supplying water.

(C) Under this section, a municipality has the exclusive right with regard to water service provided by the rural water service to:

(i) Conduct inspections of the water system within the municipality;

(ii) Issue and regulate permits for the water system within the municipality; and

(iii) Regulate water service to property within the corporate limits of the municipality, even if the water service is part of the assigned service area of the rural water service.

(2)

(A) Unless otherwise agreed between a municipality that owns or operates a water service and a rural water service, a municipality may not undertake or begin construction, operation, or extension of any equipment or facilities for the supplying of water service to the annexed areas without complying with this chapter.

(B) The affected rural water service is entitled to injunctive relief for any violation of this chapter.

(b)

(1) The municipality shall give written notice to the rural water service prior to the municipality's acquiring from the rural water service all customers, distribution properties, and facilities reasonably utilized or reasonably necessary to serve customers of the rural water service within the annexed areas.

(2) The municipality and the rural water service shall meet and negotiate in good faith the terms of the acquisition, including, as an alternative, granting the rural water service an agreement to serve the annexed area or portions of the annexed area.

(3)

(A) Before an acquisition under this chapter by the municipality occurs, the municipality shall receive approval from the Arkansas Natural Resources Commission that the action complies with the Arkansas Water Plan under § 15-22-503.

(B) The commission shall:

(i) Approve the application under the Arkansas Water Plan if it determines the requirements of § 15-22-223(b)(2)(B) are satisfied, including costs derived from negotiation or appraisal;

(ii) Issue a letter to the municipality that the proposed action is exempt from review under the Arkansas Water Plan; or

(iii) Deny the application under the Arkansas Water Plan if it determines the requirements of § 15-22-223(b)(2)(B) are not satisfied.

(c) An agreement reached under this chapter shall comply with § 15-22-223.

(d) This chapter shall not limit applicable federal law, including without limitation 7 U.S.C. § 1926(b) [repealed].

(e) If a municipality that owns or operates a water service has an area within its corporate limits that is served by another municipality's water service, the municipality may elect to purchase from the other municipality's water service all customers, distribution properties, and facilities located within the municipality using the procedures under this subchapter.