Delaware County Regional Wastewater District v. Muncie Sanitary District

• Court: Indiana Court of Appeals
• Decided: July 22, 2020
• Docket: 19A-EX-2964
• Status: Published

Opinion

FILED Jul 22 2020, 8:54 am

CLERK Indiana Supreme Court Court of Appeals and Tax Court

ATTORNEYS FOR APPELLANT ATTORNEYS FOR APPELLEES Jeremy L. Fetty Barry A. Hall Aleasha J. Boling Muncie, Indiana Indianapolis, Indiana Mark R. McKinney Kent M. Frandsen Muncie, Indiana Lebanon, Indiana Randall C. Helman Chief Deputy Consumer Counselor Indianapolis, Indiana

Karol H. Krohn Deputy Consumer Counselor Indianapolis, Indiana

William I. Fine Indiana Utility Consumer Counselor Indianapolis, Indiana

Curtis T. Hill, Jr. Attorney General of Indiana Indianapolis, Indiana

Aaron T. Craft Deputy Attorney General Indianapolis, Indiana

Beth E. Heline General Counsel Indiana Utility Regulatory Commission Indianapolis, Indiana

Court of Appeals of Indiana | Opinion 19A-EX-2964 | July 22, 2020 Page 1 of 21 Jeremy Comeau Assistant General Counsel Indiana Utility Regulatory Commission Indianapolis, Indiana

Steve Davies Assistant General Counsel Indiana Regulatory Commission Indianapolis, Indiana

Christopher L. Bills Muncie, Indiana

IN THE COURT OF APPEALS OF INDIANA

Delaware County Regional July 22, 2020 Wastewater District, Court of Appeals Case No. Appellant, 19A-EX-2964 Appeal from the v. Indiana Utility Regulatory Commission Muncie Sanitary District, et al., The Honorable James F. Huston, Chairman Appellees. The Honorable David E. Ziegner, Sarah E. Freeman, Stefanie Krevda, David Oder, Commissioners. The Honorable David E. Veleta, Senior Administrative Law Judge Cause No. 45055

Court of Appeals of Indiana | Opinion 19A-EX-2964 | July 22, 2020 Page 2 of 21 Altice, Judge.

Case Summary [1] The Common Council of the City of Muncie (City Council) passed Muncie

City Ordinance 16-2015 (the Ordinance), which, with certain exceptions,

granted the Muncie Sanitary District (MSD) an exclusive license to provide

sewer service to customers in unincorporated areas within four miles of the

city’s municipal corporate boundaries (the Regulated Territory). 1 Pursuant to

Ind. Code § 8-1.5-6-9, MSD filed a petition with the Indiana Utility Regulatory

Commission (the Commission) for approval of the Ordinance. As is relevant to

this appeal, the Delaware County Regional Wastewater District (DCRWD)

intervened and asserted that the Regulated Territory included areas within

DCRWD’s existing sewer service territory. Following a hearing, the

Commission granted MSD’s petition, approving the Ordinance with certain

amendments. DCRWD now appeals, asserting that the Commission lacked the

statutory authority to approve the Ordinance and its order was contrary to law.

[2] We affirm.

Facts & Procedural History [3] MSD is a municipal department of sanitation created pursuant to an ordinance

adopted under Ind. Code § 36-9-25-1(b) in 1968. MSD provides sewer service

1 In visual terms, the Regulated Territory forms a donut shape around Muncie.

Court of Appeals of Indiana | Opinion 19A-EX-2964 | July 22, 2020 Page 3 of 21 to over 27,000 residential, institutional, industrial, and commercial customers

within the Muncie corporate boundaries as well as some customers in

unincorporated areas around the city through sewer service agreements.

[4] DCRWD is a regional district created in 1976 by order of the Stream Pollution

Control Board (SPCB), predecessor to Indiana Department of Environmental

Management (IDEM), pursuant to Ind. Code Chapter 19-3-1.1. SPCB’s order

provided that DCRWD’s service territory consisted of:

all the territory in Delaware County except the territory currently being serviced by the Muncie Sanitary District, the two areas proposed to be annexed by the Muncie Sanitary District, and the territory within the corporate limits of the Towns of Eaton, Yorktown, Albany, Gaston, and the sewer service area of the Town of Selma, Delaware County, Indiana.

Exhibits Vol. 2 at 120. DCRWD has continuously operated pursuant to the

statutory authority in Ind. Code Chapter 19-3-1.1 and its successor statutes

found in Ind. Code Article 13-26 (the IDEM Statutes). 2 DCRWD serves

approximately 3000 customers in rural areas of Delaware County. DCRWD

owns its own collection system but does not have a wastewater treatment

facility (WWTF), and it contracts for treatment of its collected wastewater with

three entities, including MSD.

2 The IDEM Statutes are found in Title 13 Environment, Article 26 Regional Water, Sewage, and Solid Waste Districts. Ind. Code § 13-26-1-1 provides that any area may be established as a regional sewer district to provide for the collection, treatment, and disposal of sewage inside and outside the district.

Court of Appeals of Indiana | Opinion 19A-EX-2964 | July 22, 2020 Page 4 of 21 [5] I.C. § 36-9-2-18 allows municipalities, including MSD, to “exercise powers” –

in this case, provide sewer service – within four miles of their boundaries.

Pursuant to that authority, the City Council on July 10, 2015 passed the

Ordinance, which provides:

Upon the adoption of this Ordinance, [MSD] shall hold an exclusive license to furnish sewer service within the Regulated Territory, and all other utilities are expressly prohibited from furnishing sewer service within the Regulated Territory, except for those customers located in the Regulated Territory that are connected to another sewer utility as of the date this Ordinance is adopted.

Exhibits Vol. 1 at 32. The Ordinance addressed the possibility of areas of

“disputed” territory:

[T]he General Assembly in enacting Indiana Code § 8-1.5-6 has recognized that in exercising its future development planning Indiana municipalities will encounter disputed areas of claimed service exclusivity and has provided an administrative solution to said conflicts by a resolution procedure under the jurisdiction of the Indiana Utility Regulatory Commission[.]

Exhibits Vol. 1 at 31. Ind. Code Chapter 8-1.5-6 (the Regulated Territories

Statutes), referred to in the Ordinance, was enacted in 2014 and is found in

Title 8 Utilities and Transportation, Article 1.5 Municipal Utilities, Chapter 6

Utility Service in Regulated Territories. At issue in this appeal is whether the

Commission had the authority under the Regulated Territories Statutes to

approve the Ordinance giving MSD the license to provide sewer service in parts

of DCRWD’s already-existing service territory. This presents us with an issue

Court of Appeals of Indiana | Opinion 19A-EX-2964 | July 22, 2020 Page 5 of 21 of first impression, and we discuss the Regulated Territories Statutes more fully

in the Discussion section of this opinion.

[6] The Ordinance provided that it was not effective or enforceable until approval

from the Commission was secured. See also I.C. § 8-1.5-6-9(b) (municipality

may not enforce a regulatory ordinance until the Commission issues an order

approving it). On February 27, 2018, MSD filed a petition with the

Commission seeking approval of the Ordinance. Pursuant to I.C. § 8-1.5-6-

9(b), a petition must include: (1) a description of the service territory established

in the regulatory ordinance; (2) proposed rates and charges for the services to be

provided in the service territory; (3) a list of any administrative or judicial

proceedings involving the regulatory ordinance; and (4) a list of any utilities

actually or potentially affected by the regulatory ordinance. (Emphasis added).

[7] As to utilities actually or potentially affected, MSD’s petition stated in part:

9. [DCRWD] currently operates as a regional district established under Ind. Code § 13-26 in Delaware County, Indiana.

10. The four mile area outside of Muncie’s corporate boundaries includes an area of overlap with the territory established as the DCRWD. The MSD provides sewage treatment services for DCRWD through contractual agreement.

11. Ordinance 2015-16 does not claim jurisdiction over new or existing customers with the DCRWD service area. Ordinance 2015-16 does claim exclusive jurisdiction over customers within four miles outside of Muncie’s corporate boundaries that were

Court of Appeals of Indiana | Opinion 19A-EX-2964 | July 22, 2020 Page 6 of 21 not within an existing district or currently already being served by another utility at the time of the Ordinance’s passing.

12. The MSD currently serves in excess of 27,000 customers within the corporate boundaries of the City of Muncie and in excess of 1,700 customers in the unincorporated area around the City of Muncie through sewer service agreements. To do so, The MSD has built and maintained its systems such that it is ready and able to offer service to all customers within the Ordinance 2015-16 regulated territory who may reasonably request service. . ..

Exhibits Vol. 1 at 26 (emphasis added). With regard to rates, the petition stated

that the proposed rates for the Regulated Territory would be the same as the

rates that apply to all MSD customers and those approved by the Board of

Sanitary Commissioners.

[8] On March 26, 2018, DCRWD filed its petition to intervene, asserting that

DCRWD had substantial interests in that cause because MSD was seeking

approval of the Ordinance “authorizing it to provide sewer service in certain

unincorporated areas of Delaware County, which include areas where

DCRWD is already providing service or is in a better position to provide

service.” Appellant’s Appendix Vol. 2 at 35. On April 11, 2018, the Commission

granted DCRWD’S petition to intervene. 3 The Commission adopted an agreed

3 Liberty Regional Waste District (LRWD) and the Town of Yorktown also intervened. MSD treats the wastewater of LRWD and has since 1978. Any service disputes between those two entities and MSD were resolved and are not expressly at issue in this appeal. Therefore, we focus the facts on those relevant to the issues involving DCRWD.

Court of Appeals of Indiana | Opinion 19A-EX-2964 | July 22, 2020 Page 7 of 21 procedural schedule, with an evidentiary hearing ultimately occurring on

January 17, 2019.

[9] Prior to the hearing, the parties pre-filed evidence with the Commission. The

Office of Utility Consumer Counselor (OUCC) filed the direct testimony and

accompanying exhibits of Carl Seals, Utility Analyst in the OUCC’S

Water/Wastewater Division, voicing the OUCC’s position in favor of the

Ordinance. MSD filed the direct testimony and accompanying exhibits of

Michael R. Cline, P.E., member of MSD’s Board of Sanitary Commissioners.

DCRWD filed the direct testimony of John Brooke, member of DCRWD’s

Board of Trustees. 4 At the January 17, 2019 evidentiary hearing, the

Commission admitted the pre-filed testimony and exhibits from the various

parties and heard live testimony from, among others, Cline, Brooke, and Seals.

[10] In determining whether to approve an ordinance, the Commission is required to

consider public interest factors as set forth in I.C. § 8-1.5-6-8(g), which include:

(1) the ability of another utility to provide service in the regulated territory; (2)

the effect of a Commission order on customer rates and charges for service

provided in the regulated territory; (3) the effect of the Commission’s order on

present and future economic development in the regulated territory; (4) the

history of utility service in the regulated territory, including any contracts for

utility service entered into by the municipality that adopted the regulatory

4 LRWD and the Town of Yorktown also filed direct testimony of witnesses and exhibits.

Court of Appeals of Indiana | Opinion 19A-EX-2964 | July 22, 2020 Page 8 of 21 ordinance and any other municipalities, municipal utilities, or utilities; and (5)

any other factors the commission considers necessary.

[11] Here, evidence was presented that MSD provides sewage treatment service to

DCRWD. MSD owns 91 miles of combined sewer pipe, 245 miles of separate

storm sewer pipe, and 306 miles of separate sanitary sewer pipe. MSD has one

treatment plant, 26 lift stations, and 4 Army Corps of Engineers Flood Stations.

MSD’s treatment plant is a Class 4 plant, with 24-million gallons per day

capacity and is about 40 acres in size. MSD has approximately 200 employees.

In addition to providing service to the city of Muncie, MSD had been providing

sewer service to some households outside of the city boundaries after being

approached by homeowners whose septic systems failed or were failing. MSD

was also providing service to Cowan Community Schools, as their system was

in disrepair. DCRWD had been offered to provide service to Cowan but

ultimately did not proceed in doing so.

[12] At the time of the hearing, DCRWD was collecting wastewater for around 3000

customers in rural Delaware County. Its collection system consisted of over

187,000 lineal feet of gravity sewer lines, over 114,000 lineal feet of force main,

over 20,000 feet of 8-24” pipe, and over 140 lift stations and grinder pumps.

DCRWD contracts with three providers to treat the collected wastewater:

Chesterfield, Yorktown, and MSD. DCRWD presented evidence that it had

entered into an interlocal agreement with LRWD regarding construction of a

WWTF to serve those two districts and had completed a preliminary

engineering report regarding the proposed project. DCRWD also presented

Court of Appeals of Indiana | Opinion 19A-EX-2964 | July 22, 2020 Page 9 of 21 evidence that it had a long-term plan to increase customer base and had over $1

million set aside for future projects and had a bond reserve for that purpose.

[13] Cline’s submitted rebuttal testimony characterized DCRWD’s plans to build a

new treatment plant as speculative. MSD provided discovery responses from

DCRWD, which in Cline’s view illustrated that, even if DCRWD built its own

treatment plant, it would be sized to serve existing, not new, customers. In

response to DCRWD’s concerns about not being able to expand, Cline stated

that if a territory dispute would arise over existing or future customers in need

of sewer service in the four-mile area, MSD would be willing to work with

other sewer providers, including DCRWD and LRWD, to discuss the most cost

effective and readily available service to the customer, suggesting that “MSD

would be willing to establish a joint Committee of Board members from

DCRWD, LRWD, and MSD to meet and resolve these disputes in a manner

consistent with the public interest.” Exhibits Vol. 2 at 107.

[14] During the hearing, MSD agreed to amend the Regulated Territory in several

respects: First, it agreed to exclude the territory where LRWD was currently

providing service. Second, MSD entered into a stipulation with Yorktown

specifying that MSD would not seek to serve areas within Yorktown’s

boundaries. Third, MSD agreed to expressly exclude from its Regulated

Territory the area where DCRWD was currently providing wastewater service.

[15] On July 18, 2019, DCRWD filed a petition to reopen the record, requesting that

the Commission allow it to present additional evidence that had come to light

Court of Appeals of Indiana | Opinion 19A-EX-2964 | July 22, 2020 Page 10 of 21 since the January 2019 evidentiary hearing. The Commission granted the

motion, and conducted an additional evidentiary hearing on October 21, 2019,

during which DCRWD and MSD provided supplemental testimony. DCRWD

presented evidence concerning federal grand jury indictments against a Muncie

employee and a Muncie contractor. MSD responded that the ongoing

investigation is not of Muncie itself, but of certain individuals who may have

acted inappropriately.

[16] The Commission issued its final order on November 27, 2019, approving the

Ordinance with the above-mentioned three amendments to the regulated

territory. The Commission’s final order made findings on the public interest

factors set out in I.C. § 8-1.5-6-8(g). With regard to the ability of another utility

to provide service in the regulated territory, the Commission found that MSD

was able to provide service to the public in the Regulated Territory and

DCRWD was unwilling or unable to provide service to the Regulated Territory.

With regard to rates that would be charged, the Commission found that MSD’s

rate would be less than or comparable to DCWRD’s rate. As to the effect on

present and future economic development, the Commission found that the

Ordinance would promote economic growth by providing certainty of service to

customers and developers, and using MSD as a single provider of service would

eliminate confusion as to what entity was responsible. The Commission

observed that the Delaware County Health Department (DCHD) had contacted

MSD about providing service to some homeowners and

Court of Appeals of Indiana | Opinion 19A-EX-2964 | July 22, 2020 Page 11 of 21 [p]resently numerous homes in the Burlington area are on pump and haul orders from the DCHD. Because of this, homeowners are incurring additional monthly costs, which is an economic burden. This burden could affect the economic wellbeing and growth of the [] Regulated Territory … the only other utility claiming the ability to serve customers in the [] Regulated Territory, DCRWD, could not do so on a timely basis … delay in service to customers in need does not provide for the economic wellbeing of the [] Regulated Territory.

Appellant’s Appendix Vol. 2 at 31. As to the history of utility service in the

Regulated Territory, the Commission found that MSD had invested in

infrastructure, engineering, and construction over the years, including to handle

the Cowan schools, which had been offered to but ultimately not pursued by

DCRWD. The Commission determined that the public interest would be

served by the passing of the Ordinance and approved it. DCRWD now

appeals.

Discussion & Decision [17] Acting under the Regulated Territories Statutes, specifically I.C. § 8-1.5-6-6, the

Commission approved the Ordinance that, with certain exceptions, granted

MSD an exclusive license to provide sewer service within the Regulated

Territory. DCRWD asserts that the Commission “did not have the authority to

disturb the territory granted to DCRWD by the SPCB pursuant to [the IDEM

Statutes].” Appellant’s Brief at 5. The sole issue DRRWD raises on appeal “is

the Commission’s jurisdiction and authority to issue its order authorizing MSD

to operate in DCRWD’s service territory[.]” Reply Brief at 7.

Court of Appeals of Indiana | Opinion 19A-EX-2964 | July 22, 2020 Page 12 of 21 [18] This court reviews Commission orders using a multi-tiered standard. 5 N. Ind.

Pub. Serv. Co. v. U.S. Steel Corp., 907 N.E.2d 1012, 1016 (Ind. 2009); Citizens

Action Coal. of Ind., Inc. v. Indianapolis Power & Light Co., 74 N.E.3d 554, 562

(Ind. Ct. App. 2017). First, the court determines whether the Commission’s

findings of basic fact are supported by substantial evidence. U.S. Steel Corp., 907

N.E.2d at 1016. In conducting that review we neither reweigh the evidence nor

assesses the credibility of witnesses and consider only the evidence most

favorable to the Commission’s findings. Id. Second, we determine whether the

Commission’s order contains “specific findings on all the factual

determinations material to its ultimate conclusions” and whether the

Commission’s conclusions of ultimate fact are reasonable. Id. (citation

omitted). The Commission’s orders are also “subject to review as contrary to

law,” and “this constitutionally preserved review is limited to whether the

Commission stayed within its jurisdiction and conformed to the statutory

standards and legal principles involved in producing its decision, ruling, or

order.” Hamilton Se. Utilities, Inc. v. Ind. Util. Regulatory Comm’n, 135 N.E.3d

902, 908 (Ind. Ct. App. 2019), trans. denied. “Any issue regarding [t]he

[IURC]’s jurisdiction ... is a legal question that [appellate courts] review de

novo.” Tyus v. Indianapolis Power & Light Co., 134 N.E.3d 389, 398 (Ind. Ct.

App. 2019) (internal quotations omitted). “This third tier, a review of whether

5 The Commission is expressly excepted from the Administrative Orders and Procedures Act. Ind. Code § 4- 21.5-2-4(a)(8).

Court of Appeals of Indiana | Opinion 19A-EX-2964 | July 22, 2020 Page 13 of 21 the Commission’s action was contrary to law, is precisely what DCRWD has

requested in this appeal.” 6 Reply Brief at 9.

[19] DCRWD’s argument is that “the IDEM [S]tatutes, under which DCRWD was

created and now operates, should govern DCRWD’s rights within its own

statutorily granted territory[,]” not the Regulated Territories Statutes, and to the

extent that they conflict, DCRWD argues that the IDEM Statutes should

control. Reply Brief at 14. We begin by examining the Regulated Territories

Statutes, pursuant to which the Commission issued its order.

[20] The legislature passed the Regulated Territories Statutes in 2014. I.C. § 8-1.5-6-

3 defines a “regulatory ordinance” as “an ordinance adopted by a municipality

that: (1) asserts the exclusive authority of a municipal utility to provide service

within a regulated territory; or (2) prohibits another utility from providing

utility service in the regulated territory.” Under both subsections (1) and (2),

the Ordinance at issue is a “regulatory ordinance”’ because it asserts the

exclusive authority for MSD to provide sewer service within the four miles

outside the corporate boundaries of Muncie and because it prohibits any other

utility from providing service in that area where they are not already serving.

6 While DCRWD notes “the disputed nature” of a number of facts that MSD and the Commission present as undisputed in their appellate briefs, DCRWD states that “the Commission’s fact finding in this matter is not the issue that DCRWD has raised with the Court on appeal” and that this court’s “analysis should not even reach the Commission’s fact finding because the Commission acted outside of its jurisdiction in issuing its order.” Appellant’s Reply Brief at 7, 17 (emphasis added); see also id. at 8 (“This case presents the purely legal issue of the limitations on the Commission’s jurisdiction.”). Given DCRWD’s repeated affirmations that the Commission’s findings are not at issue in this appeal, we do not address the sufficiency of the evidence supporting the Commission’s factual findings.

Court of Appeals of Indiana | Opinion 19A-EX-2964 | July 22, 2020 Page 14 of 21 I.C. § 8-1.5-6-2 defines “regulated territory” to be “the area outside the

corporate boundaries of a municipality described in: (1) I.C. § 36-9-2-18; or (2)

I.C. § 36-9-23-36.” The four-mile area at issue is a “regulated territory” because

it is an area outside of the corporate boundaries of Muncie as described by I.C.

§ 36-9-2-18.

[21] I.C. § 8-1.5-6-9(b) provides that “[a] municipality may not enforce a regulatory

ordinance until the commission issues an order” and “[t]he municipality shall

petition the commission for approval of the regulatory ordinance[.]” The

petition must include, among other things, a list of any utilities actually or

potentially affected by the regulatory ordinance. I.C. § 8-1.5-6-9(b)(4) (emphasis

added). I.C. § 8-1.5-6-4 defines the term “utility” as “any utility” that provides

“wastewater service … regardless of whether that utility is under the jurisdiction

of the commission for the approval of rates and charges.” Thus, DCRWD is a

“utility” within the statute’s definition as it provides wastewater service in the

Regulated Territory. By requiring the petitioner to list any other affected

utilities, the statute recognizes a possible overlap in service from competing

utilities.

[22] I.C. § 8-1.5-6-9(c) provides that, after notice and hearing, the Commission:

shall issue an order resolving all issues presented in the petition described in subsection (b), including the enforceability of the regulatory ordinance in the manner that the commission determines is in the public interest. In making a determination of the public interest, the commission shall consider the factors set forth in section 8(g) of this chapter.

Court of Appeals of Indiana | Opinion 19A-EX-2964 | July 22, 2020 Page 15 of 21 In determining the public interest under Section 8(g), the Commission is

required to consider: (1) the ability of another utility to provide service in the

regulated territory; (2) the effect on customer rates; (3) the effect on economic

development, (4) the history of utility service in the regulated territory; and (5) any

other factors the Commission considers necessary. I.C. § 8-1.5-6-8(g)

(emphases added). That the statute requires the Commission to consider the

history of the utilities providing service in the area and the ability of other

utilities to provide service demonstrates that the Regulated Territories Statutes

contemplate competing territorial claims for the Commission to resolve.

[23] I.C. § 8-1.5-6-6 addresses jurisdiction and is the authority under which the

Commission acted to approve the Ordinance. It provides:

Notwithstanding any other provision in this title or IC 36, the offering or provision of service by a utility in a regulated territory is under the jurisdiction of the [C]ommission as set forth in sections 7, 8, 9, and 10 of this chapter.

(Emphases added.) This section reflects that the Commission has jurisdiction

of the “provision of service by a utility” – and as already stated DCRWD is a

utility within the meaning of the statute – “in a regulated territory” – which the

disputed four-mile area is. We agree with the Commission that “[t]he General

Assembly passed the Regulated Territories Statute[s] in 2014 for the purpose of

making the Commission the referee in disputes over service in regulated areas.”

Appellee Commission’s Brief at 14.

Court of Appeals of Indiana | Opinion 19A-EX-2964 | July 22, 2020 Page 16 of 21 [24] In support of its assertion that it should prevail in the dispute with MSD,

DCRWD relies on City of North Vernon v. Jennings Northwest Regional Utilities,

829 N.E.2d 1 (Ind. 2005). There, the Court was presented with a territorial

dispute, in which a municipality, North Vernon, was expanding its sanitary

service outside of its municipal boundaries and into the territory of a regional

wastewater district, Jennings Northwest Regional Utilities (JNRU), which was

established by IDEM order under the IDEM Statutes. The order creating

JNRU excluded North Vernon’s corporate boundaries from the JNRU service

area, but North Vernon had already been providing service outside of its

corporate boundaries at the time JNRU was created, creating an overlap

between JNRU’S service area and North Vernon’s service area. After North

Vernon secured a 30-year agreement to provide services to a school in the

overlapping territory, JNRU sought a declaratory judgment that it had the

exclusive right to serve the school.

[25] In arguing that it was entitled to provide the services, North Vernon relied on its

broad powers under the Home Rule Act, I.C. §§ 36-1-3-1 to -9, which grants

municipalities not only all powers granted to it by statute, but also “all other

powers necessary or desirable in the conduct of its affairs, even though not

granted by statute.” I.C. § 36-1-3-4(b)(2). The Home Rule Act also contains

limiting language, however, providing that “a unit may exercise any power it

has to the extent that the power: (1) is not expressly denied by the Indiana

Constitution or by statute; and (2) is not expressly granted to another entity.”

I.C. § 36-1-3-5(a)(1)-(2). Relying on the “expressly granted to another entity”

Court of Appeals of Indiana | Opinion 19A-EX-2964 | July 22, 2020 Page 17 of 21 language, JNRU argued that because IDEM had “expressly granted” it

authority to provide service in the area, the Home Rule Act did not provide

relief to North Vernon.

[26] The Jennings Court observed that “disputes of this kind ordinarily are resolved

during administrative proceedings,” but there existed “no . . . statutory dispute

resolution mechanism for territorial boundary disputes between municipalities

and regional district.” Jennings, 829 N.E.2d at 7. Consequently, the Court

explained:

We must therefore reconcile the broad-ranging authority granted municipalities under the Home Rule Act and Indiana Code section 36-9-23-36 (granting municipalities the authority to provide sewer services “in areas within ten (10) miles outside its corporate boundaries”) with the powers granted regional districts under Indiana Code sections 13-26-1 to -14. In doing so we conclude that where there is an overlap between the service area of a regional district and the service area of a municipality, and absent a resolution during the IDEM permitting process, under the “expressly granted” provision of the Home Rule Act, the district prevails unless the municipality was already providing services to the area at the time the district’s service area was created.

Id. Because, there, the town of North Vernon was already providing service to

the disputed area when JNRU was created, North Vernon prevailed.

[27] DCRWD urges that, unlike North Vernon, MSD was not already providing

service to the now disputed areas and, under the reasoning of Jennings, it should

prevail. We disagree that Jennings controls here. Jennings was decided nine

Court of Appeals of Indiana | Opinion 19A-EX-2964 | July 22, 2020 Page 18 of 21 years before the enactment of the Regulated Territory Statutes, and the Court

conducted its analysis in the absence of any dispute-resolution mechanism

created by the legislature. In fact, the Jennings Court expressly recognized that

the lack of an existing dispute resolution mechanism required it to reconcile the

Home Rule Act provisions with the powers granted to regional districts by the

IDEM Statutes. By enacting I.C. § 8-1.5-6-6, the legislature specifically put the

provision of service by a utility in a regulated territory or the approval of a

regulatory ordinance under the jurisdiction of the Commission.

[28] As noted by MSD and the Commission, the creation of the Regulated

Territories Statutes appears to be in direct response to another territorial dispute

case, Town of Newburgh v. Town of Chandler, 999 N.E.2d 1015, 1021 (Ind. Ct.

App. 2013), trans. denied, which involved a dispute between two municipal

sewer service providers that, for decades, had been providing service in the four-

mile ring outside their respective boundaries pursuant to I.C. §§ 36-9-2-17, -18, -

19. The towns’ respective four-mile rings somewhat overlapped. In April

2007, Newburgh adopted an ordinance stating that it had an exclusive license to

furnish sewer service in the regulated territory, and six weeks later, Chandler

adopted a similar ordinance. A developer approached both towns about

providing service to a new subdivision in the overlapping area, and ultimately,

the developer contracted for service with Chandler, prompting Newburgh to sue

the developer for violating its ordinance. Chandler responded by suing

Newburgh seeking a declaratory judgment that Newburgh’s ordinance could

not prohibit Chandler from providing services in the overlapping area. Both

Court of Appeals of Indiana | Opinion 19A-EX-2964 | July 22, 2020 Page 19 of 21 towns argued that the provisions of Ind. Code Chapter 36-9-2 granted them the

statutory power to regulate and provide service in the four miles outside their

towns, and both had passed ordinances to do so.

[29] On appeal, this court discussed the Jennings case but found that Jennings

involved a dispute between a municipality and a regional sewer district, unlike

the dispute between the two municipalities in Chandler. The Chandler court

ultimately found for Newburgh but observed:

Resolution of disputes like the one before us by a commission in the executive branch could likely produce more effective and efficient results. The creation of such mechanisms, however, is in the domain of the legislature and not the courts.

Chandler, 999 N.E.2d at 1021. Chandler was decided on December 23, 2013,

rehearing was denied in February 2014, and transfer was denied in July 2014.

In March 2014, the Regulated Territories Statutes became effective, vesting the

Commission with the authority to resolve all issues raised in a petition to

approve a regulatory ordinance, which may include addressing other utilities

that are or could provide service in the area, and places the provision of service

by a utility in a regulated territory under the jurisdiction of the Commission.

I.C. §§ 8-1.5-6-6, -9(c).

[30] DCRWD urges that the Regulated Territories Statutes do “not purport to

withstand – nor [] even mention – the contrary provisions of Ind. Code Art. 13-

26 and its predecessor statutes, under which DCRWD was created[,]” and

therefore the Commission did not have the authority “to override” those

Court of Appeals of Indiana | Opinion 19A-EX-2964 | July 22, 2020 Page 20 of 21 statutes. Appellant’s Brief at 20, 23. We disagree. The IDEM Statutes that

DCRWD relies on concern establishment and regulation of regional waste

districts, and while they address objections at the time a district is established,

those statutes do not address resolution of competing territorial claims between

an existing waste district and another wastewater utility. The Regulated

Territories Statutes do so.

[31] In sum, the Regulated Territories Statutes task the Commission, when

presented with a petition to approve a regulatory ordinance, with resolving

territorial disputes by considering any utilities that are actually or potentially

affected by a regulatory ordinance (including regional districts), evaluating their

ability to provide service and their history of service, and making a decision that

is in the best interest of the public. Accordingly, we find that in this case the

Commission had the jurisdiction and authority to approve the Ordinance and

its order was, therefore, not contrary to law.

[32] Judgment affirmed.

Bailey, J. and Crone, J., concur.

Court of Appeals of Indiana | Opinion 19A-EX-2964 | July 22, 2020 Page 21 of 21