                                                                        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
