                                                                               FILED
                                                                           Jan 09 2020, 7:47 am

                                                                               CLERK
                                                                           Indiana Supreme Court
                                                                              Court of Appeals
                                                                                and Tax Court




      ATTORNEYS FOR APPELLANT                                    ATTORNEYS FOR APPELLEE
      Mark J. Crandley                                           Gregory A. Neibarger
      Lester Parvin Price                                        Margaret M. Christensen
      Barnes & Thornburg LLP                                     Bingham Greenebaum Doll LLP
      Indianapolis, Indiana                                      Indianapolis, Indiana

                                                                 David T. McGimpsey
                                                                 Bingham Greenebaum Doll LLP
                                                                 Jasper, Indiana



                                                  IN THE
          COURT OF APPEALS OF INDIANA

      MGPI of Indiana, LLC,                                      January 9, 2020
      Appellant-Plaintiff,                                       Court of Appeals Case No.
                                                                 19A-PL-393
              v.                                                 Appeal from the
                                                                 Dearborn Circuit Court
      South Dearborn Regional Sewer                              The Honorable
      District,                                                  James D. Humphrey, Judge
      Appellee-Defendant.                                        Trial Court Cause No.
                                                                 15C01-1805-PL-44



      Kirsch, Judge.


[1]   MGPI of Indiana, LLC (“MGPI”) challenged a rate setting ordinance (“the

      Ordinance”) adopted by the South Dearborn Regional Sewer District (“the

      District”) and upheld by the District Authority of Dearborn County (“The


      Court of Appeals of Indiana | Opinion 19A-PL-393 | January 9, 2020                           Page 1 of 41
      District Authority”). The Dearborn Circuit Court issued an order upholding

      the District Authority’s ruling.


[2]   On appeal, MGPI raises four issues, which we restate as:


              I.       Whether approval of the Ordinance by the Indiana
                       Department of Environmental Management (“IDEM”)
                       was required;


              II.      Whether the District failed to consider MGPI’s interests
                       when it enacted the Ordinance;


              III.     Whether the Ordinance violated MGPI’s vested interest;
                       and


              IV.      Whether the Ordinance is arbitrary and capricious.


[3]   We affirm.1


                                  Facts and Procedural History
                     The South Dearborn Regional Sewer District is Created

[4]   In 1971, the Board of Trustees of the District filed a plan of operation with the

      Dearborn Circuit Court for a proposed regional sewer district. Following a

      hearing, the court issued an order (“the 1972 order”) and found “that the

      proposed District is necessary, and that it and the plan of operation of the




      1
       Oral argument was heard on this case on December 3, 2019 in the Indiana Court of Appeals courtroom in
      Indianapolis, Indiana. We commend counsel on the quality of their written and oral advocacy.

      Court of Appeals of Indiana | Opinion 19A-PL-393 | January 9, 2020                          Page 2 of 41
      District is conducive to the public health, safety, convenience and welfare,

      and that the plan for the operation of the District is economical, feasible,

      fair and reasonable.” Appellant’s App. Vol. II at 33. The court also found

      that “the only users of the sewage system of said District having an

      intermittent flow of at least one million (1,000,000) gallons per day are the

      Joseph E. Seagram & Sons, Inc. plant [(“Seagram”)] and the Schenley

      Distillers, Inc. plant [(“Schenley”)].” Id. The court accepted the proposed plan

      and created the District as a political subdivision for the area within the

      boundaries of the City of Lawrenceburg (“Lawrenceburg”), the Town of

      Greendale (“Greendale”), and the City of Aurora (“Aurora”). Both Seagram

      and Schenley had an intermittent daily sewage flow of at least one million

      gallons, and each was designated as a member of the District. The District was

      to be governed by a board of trustees consisting of, among others, 1) the mayors

      of Aurora, Greendale, and Lawrenceburg, and 2) a representative from

      Seagram and a representative from Schenley. The court stated that each trustee

      “shall hold office so long as he meets the criteria or until the qualification of his

      successor.” Id.


                      The 1972 Contract Creates Vested Interest for Seagram

[5]   In May of 1972, Seagram, Schenley, and the other members of the District

      signed a contract that described how the District would operate (“the 1972

      Contract”). The 1972 Contract required Seagram to pay “an amount equal to

      Court of Appeals of Indiana | Opinion 19A-PL-393 | January 9, 2020          Page 3 of 41
      22.8% of the fixed operations and maintenance costs plus such proportional

      amount of the variable operational costs as the metered influent from Seagram

      bears to the total influent, and also such charges as may be assigned for the

      maintenance of Industrial Interceptors Nos. l and 2.” Id. at 73. The 1972

      Contract also gave Seagram a vested interest in the District’s design capacity:

      “Seagram . . . shall have a vested interest in the respective allocation of design capacity

      as set forth in Item 9.2 of this agreement of which it may not be divested of said

      interest without its consent.” Id. at 78 (emphasis added). Item 9.2 of the 1972

      Contract set Seagram’s design capacity at 22.8%. Id. at 72.


                                     Subsequent Sales of the Distillery

[6]   Pernod Ricard USA (“Pernod”) bought Seagram’s interest in the distillery, and

      in October of 2002, Pernod entered a contract with the other members of the

      District (“the 2002 Contract”). The 2002 Contract continued the right to a

      vested interest, stating that Pernod “shall have a vested interest in the respective

      allocation of design capacity as set forth in section 2.2 of this contract and may

      not be divested of said interest without its consent.” Id. at 99. Section 2.2 of

      the 2002 Contract stated that Pernod’s portion of the vested interest was 28%.

      Id. The 2002 Contract also gave Pernod the right to assign its rights to a

      purchaser of the distillery: “If Pernod sells its Lawrenceburg plant, Pernod may

      assign its interest in this contract to the purchaser in which event the purchaser

      shall be substituted for Pernod as a party to this contract and Pernod shall be

      released and discharged from its obligations hereunder.” Id. at 110. After it

      bought the distillery, Pernod signed a new contract with the District in which

      Court of Appeals of Indiana | Opinion 19A-PL-393 | January 9, 2020                Page 4 of 41
      Pernod disclaimed its vested ownership interest in the distillery and became a

      retail customer of the District’s sewer services. Appellant’s App. Vol. III at 68.


[7]   In June of 2007, Pernod sold the distillery to Lawrenceburg Distillers Indiana,

      LLC (“LDI”) by special warranty deed. The sale to LDI was subject to the

      2002 Contract. Exhibit C listed “Recorded Exceptions – Dearborn County.”

      Id. at 126. The final exception referred to the 2002 Contract: “Contract

      between the City of Lawrenceburg, the City of Aurora, the City of Greendale,

      [Pernod], and [the District], recorded December 22, 2002 in Official Record

      Book 56, Page 1392 of the Dearborn County, Indiana.” Id. at 127.


                                       LDI Sells Distillery to MGPI


[8]   On December 21, 2011, LDI sold the distillery to MGPI by special warranty

      deed. Appellant’s App. Vol. II at 147. The deed made the transaction subject to

      the 2002 Contract. Id. at 157.


[9]   Bill Neyer (“Neyer”), the plant manager for the District’s sewer facility,

      testified:


              During the change of ownership between the predecessor of LDI
              to MGPI, there were several changes. Instead of being an owner
              which had a shared interest in all capital projects, they became a
              retail customer. They also gave up their seat on the board, as
              well, as part of that change. So, they no longer had a voting
              interest, they no longer had capital responsibility and they paid
              up on all the outstanding debt that they had. So, that was a
              pretty significant change to the way operations occurred.



      Court of Appeals of Indiana | Opinion 19A-PL-393 | January 9, 2020          Page 5 of 41
       Appellant’s App. Vol. III at 68.


[10]   Neyer also testified that, at some point after MGPI bought the distillery, it gave

       up all ownership interest in the distillery:


               So initially the District had, as has been stated, five members.
               When Schenley ceased to operate, they ceded their ownership to
               the District. There was no compensation provided to them for
               that ownership. It became jointly owned by the remaining four
               members. There was a disbursement of that membership of
               percentages, and then later the distillery, MGPI, not at that time,
               it was very early when they took ownership, they did not want to
               own a wastewater plant or have part ownership and liability for
               it, so they fulfilled all their obligations to the facility for any debt
               that they were a party to and ceded their ownership, which was
               then uniformly split between the remaining three members.


       Id. at 58. Neyer then testified that, after MGPI surrendered its ownership

       interest in the District, it signed a contract with the District in 2011, which

       expired at some point in 2013. Id. at 58-59.


[11]   On September 18, 2017, the District’s attorney sent a letter to Ken Carrier of

       MGPI, stating that MGPI had surrendered its ownership interest in the District:

       “Just as MGPI at one time decided it no longer wanted to be a co-owner of [the

       District], so the [District] Board has decided that they would no longer have

       any “customers” other than [Lawrenceburg, Greendale, and Aurora].” Id. at

       147 (emphasis added). The District agreed to extend the current sewage rates

       until a cost of service study of the District was completed. Id. at 147-48.




       Court of Appeals of Indiana | Opinion 19A-PL-393 | January 9, 2020             Page 6 of 41
                                              Cost of Service Study

[12]   The District hired Crowe Horwath LLP (“Crowe”) to conduct a cost of service

       study (“the Cost of Service Study”); Crowe began the study in February of 2016

       and completed it in October of 2017. Id. at 155.


               The purpose of this [Cost of Service Study] is to estimate the
               [District’s] cash flow and financial capacity to meet its on-going
               revenue requirements for operation and maintenance expenses
               and to make capital improvements to the [District’s] system. In
               addition, this [Cost of Service Study] also identifies the costs
               associated with serving various customers of the [District].


       Id. at 167. During the study, Crowe participated in several meetings with the

       District’s Board of Directors, and representatives of MGPI attended many of

       those meetings. Id. at 155.


[13]   After Crowe completed the Cost of Service Study, the attorney for the District

       wrote the aforementioned September 18, 2017 letter to MGPI, stating that the

       District could no longer afford to negotiate directly with MGPI to establish

       MGPI’s sewer rates and that MGPI would now be a customer of Lawrenceburg

       and have to negotiate its rights with Lawrenceburg, which would, in turn,

       negotiate its rates with the District:


               At the time the March letter was sent, the [District] Board did
               believe we would be entering into a new agreement with MGPI;
               however, as information from the Cost of Service (COS) study
               being conducted by Crowe Horwath LLP (Crowe) started to
               become available to the [District] Board, it became evident that
               keeping MGPI as a customer was not economically feasible to
               [the District]. As such, discussions at our monthly meetings
       Court of Appeals of Indiana | Opinion 19A-PL-393 | January 9, 2020           Page 7 of 41
        ultimately shifted to having MGPI become a customer of either
        the City of Greendale or the City of Lawrenceburg.
        Representatives from MGPI were present at all of these meetings
        and were well aware that the [District] Board was looking to
        move in a different direction. Just as MGPI at one time decided
        it no longer wanted to be a co-owner of [the District], the
        [District] Board has decided that they would no longer have any
        customers other than the three (3) cities.


        ....


        Extending your current rates until the [Cost of Service Study] is
        completed was a courtesy that [the District] extended to MGPI
        because of the long relationship that we shared. However, as
        there is no agreement in place, we are under no obligation to
        continue servicing MGPI as a customer and can turn MGPI over
        to Lawrenceburg at any time. We have chosen not to do that
        because, the [District] Board believes, the completion of the [Cost
        of Service Study] must occur before any drastic changes are
        made.


        [The District] is happy to continue to service MGPI until such
        time, but MGPI will ultimately become a customer of the City of
        Lawrenceburg as the [District] Board has no desire to continue
        servicing MGPI as a customer of [the District] once the [Cost of
        Service Study] has been completed.


        The [District] Board came to this conclusion after many months
        of discussions. I cannot stress enough that representatives from
        MGPI were present at all of these meetings and the ultimate
        decision of the [District] Board should not be a surprise.


Id. at 147-48.



Court of Appeals of Indiana | Opinion 19A-PL-393 | January 9, 2020         Page 8 of 41
                                The District Board Enacts the Ordinance

[14]   Based on the information gained from the Cost of Service Study, on February

       13, 2018, the District Board enacted an Ordinance that set new sewage rates for

       Lawrenceburg, Greendale, and Aurora. It did not set rates for MGPI or

       recognize MGPI as a direct customer of the District.


[15]   The Ordinance provided:


               WHEREAS, pursuant to Indiana Code § 13-26-5-2(7), the [South
               Dearborn Regional Sewer District] may “[f]ix, alter, charge, and
               collect reasonable rates and other charges in the area served by
               the [D]istrict’s facilities to every person whose premises are,
               whether directly or indirectly, supplied with water or provided
               with sewage or solid waste services by the facilities . . .”;


               WHEREAS, Indiana Code § 13-26-11-8 requires that the boards
               of regional water sewage, and solid waste districts establish, by
               ordinance, “just and equitable rates or charges for the use of and
               the service provided by a works”;


               WHEREAS, the current amounts paid by the Cities of Aurora,
               Greendale, and Lawrenceburg were established by a Sewer User
               Agreement dated August 8, 2007 and which was effective as of
               July 1, 2007;


               WHEREAS, the South Dearborn Regional Sewer District
               believes it to be in the best interests of the South Dearborn
               Regional Sewer District and the Cities of Aurora, Greendale, and
               Lawrenceburg to establish nondiscriminatory, just, and equitable
               sewage treatment rates rather than continuing to use the billing
               structure established by the Sewer User Agreement;



       Court of Appeals of Indiana | Opinion 19A-PL-393 | January 9, 2020           Page 9 of 41
        WHEREAS, in an effort to establish nondiscriminatory, just, and
        equitable sewage treatment rates, the South Dearborn Regional
        Sewer District engaged the services of Crowe Horwath LLP on
        February 9, 2016 to perform a Rate Review and a Cost of Service
        Study which would allow the South Dearborn Regional Sewer
        District to establish sewage treatment rates;


        WHEREAS, the Crowe Horwath LLP Rate Review and Cost of
        Service Study was completed on October 27, 2017 and it
        recommends that the sewage treatment rates for South Dearborn
        Regional Sewer District customers be established as follows:


        ....


        1. Pursuant to the authority granted by Indiana Code § 13-25-5-
        2(7) and the procedure outlined in Indiana Code § 13-26-11 et
        seq., the South Dearborn Regional Sewer District may establish
        sewage treatment rates that are nondiscriminatory, just, and
        equitable.


        2. The recommendations of the Crowe Horwath LLP Rate
        Review and Cost of Service Study are hereby approved and
        accepted. Pursuant to said Cost of Service Study, the sewage
        treatment rates shall be established as follows:


        ....


        5. The South Dearborn Regional Sewer District finds that the
        requirements for the adoption of initial rates as found in Indiana
        Code § 13-20-11 et seq., most notably the notice requirement
        found in Indiana Code § 13-26-11-12 and the Public Hearing
        requirement found in Indiana Code § 13-26-11-11, were adhered
        to prior to the adoption of this Ordinance.



Court of Appeals of Indiana | Opinion 19A-PL-393 | January 9, 2020        Page 10 of 41
               6. Additionally, the South Dearborn Regional Sewer District
               finds that the factors outlined in Indiana Code § 13-26-11-2(a)
               have been considered before the passage of this Ordinance and
               that the rates established by this Ordinance are
               nondiscriminatory, just, and equitable pursuant to Indiana Code
               § 13-26-1l-9.


               7. The sewage treatment rates as established by this Ordinance
               shall not take effect until the 1st day of January 2019, unless an
               earlier date is agreed to by the Cities of Aurora, Greendale, and
               Lawrenceburg by amendment to this Ordinance.


       Id. at 18-23. The District did not seek approval of the Ordinance from IDEM.


                         MGPI Appeals Ordinance to the District Authority

[16]   On March 13, 2018, MGPI appealed the Ordinance to the District Authority.

       Id. at 7-10. In its petition, MGPI alleged the following:


               9. The rates and charges established by the Ordinance are not just
               and equitable in at least the following respects:


               a. The rate applied in the Ordinance to treat biochemical oxygen
               demand (BOD), including total suspended solids, results in over
               charging by approximately $600,000 above the revenue
               requirement established by the rate study and allocated through
               the cost of service on which the Ordinance claims to be based;


               b. The Ordinance unfairly allocates the costs for phosphorus
               removal to [MGPI];


               c. The methodology upon which the Ordinance is written
               arbitrarily departs from the traditional method that uses a base
               concentration of BOD and a base concentration of total

       Court of Appeals of Indiana | Opinion 19A-PL-393 | January 9, 2020           Page 11 of 41
               suspended solids representative of domestic sewage, above which
               a surcharge is applied;


               d. The Ordinance provides for pH testing which does not follow
               [Environmental Protection Agency (“EPA”)] protocols; and


               e. The Ordinance will result in an increase to [MGPI’s] user fees
               substantially higher than the 16.06% reduction for the City of
               Aurora, the 32.66% increase for the City of Greendale, and the
               24.4% increase for the City of Lawrenceburg.


               10. The Ordinance inappropriately eliminates [MGPI] as a
               customer of the [District], eliminates [MGPI’s] use of previously
               vested capacity, and constitutes an unlawful taking of [MGPI’s]
               property without due process.


               11. The District Authority should find that the rates and charges
               as set forth in the Ordinance are not just and equitable.


               12. The District Authority should declare that [the District]
               should continue to serve [MGPI] directly as a ratepayer.


               13. The District Authority should declare the Ordinance null and
               void as it relates to [MGPI], and, if appropriate, recommend that
               [the District]’s representatives and [MGPI]’s representatives meet
               to resolve allocations and service issues.


       Id. at 8-10.


[17]   At the April 4, 2018 hearing before the District Authority, John Skomp

       (“Skomp”), the District’s expert, confirmed that the Cost of Service Study -- and

       therefore the Ordinance -- did not consider MGPI. Id. at 44. He confirmed that


       Court of Appeals of Indiana | Opinion 19A-PL-393 | January 9, 2020      Page 12 of 41
       the rates under the Ordinance “are not going to be applied to MGPI. They

       weren’t intended to.” Id. Because of the Ordinance, Skomp stated that the

       District now has only “three wholesale customers. That’s all they have is just

       the three customers,” the three municipalities. Id. at 41. He admitted that the

       Cost of Service Study did not consider service to MGPI: “If we were to have

       assumed that MGPI was gonna be a customer of the District, we would have

       done the [C]ost of [S]ervice [S]tudy differently because we would have had then

       one retail customer and three wholesale customers.” Id. at 45.


[18]   Skomp also testified that it was not possible, based on the rate study, to

       determine what MGPI would be paying for services as a customer of

       Lawrenceburg:


               The rate study was not developed in such a way that these rates
               could be applied to them. So, when they take the rates from the
               study and say this is what our bill would be, that’s inaccurate. . . .
               You cannot take this rate study, or even the results of Mr.
               Roper’s letter, and say that based upon this or that, this is what
               MGPI will be paying. They will be paying rates based upon the
               rates that are passed by the City of Lawrenceburg. We’re
               currently working with the City of Lawrenceburg to develop
               rates, charges, and doing a rate study there. It’s not complete. I
               don’t even have preliminary results at this point in time, but
               that’s who will be billing MGPI for their service. So, as you look
               this not only goes to the concerns of the petition, but also Mr.
               Roper’s letter here. They try to take the rates from this study or
               the rates that Mr. Roper analyzed and say this is what MGPI’s
               bill will be, and that’s just not correct.


       Id. at 44-45.


       Court of Appeals of Indiana | Opinion 19A-PL-393 | January 9, 2020          Page 13 of 41
[19]   At that same hearing, MGPI presented the sworn statement of Ralph Roper

       (“Roper”). Id. at 223. Roper identified alleged deficiencies in the Ordinance,

       including that it would: 1) result in overcollection of revenue by the District by

       about a half million dollars because the Ordinance took a rate from one

       category of discharge and applied it to a different category without any analysis

       for the switch; 2) charge for the removal of phosphorus when MGPI’s

       discharges do not add phosphorus to the District’s system; 3) apply a short-cut

       protocol for testing the pH of wastewater instead of a required procedure

       promulgated by the EPA; and 4) charge MGPI for nearly forty percent of the

       District’s revenue even though MGPI discharges only about twenty-nine

       percent of the total wastewater in the system. Id. at 223, 225-26, 230.


[20]   After considering argument and evidence from both sides, the District

       Authority upheld the Ordinance, finding that the Ordinance was enacted

       pursuant to the proper procedure and that the rates were just and equitable

       (“the District Authority Order”). Id. at 81-82. In pertinent part, the District

       Authority stated:


               No issues were raised by [MGPI] in regards to the procedure
               followed by [the District] and all evidence presented indicates
               that the [District] did follow the proper procedure for the
               adoption of the Ordinance; therefore, the District Authority
               makes the determination, pursuant to Indiana Code § 13-26-11-
               13(f)(1) that the [District] did follow the procedure required by
               Indiana Code § 13-26-11 et seq. when it adopted Ordinance 2018-
               01; and




       Court of Appeals of Indiana | Opinion 19A-PL-393 | January 9, 2020        Page 14 of 41
               As noted in Indiana Code § 13-26-11-9(b), “. . . initial rates and
               charges established after notice and hearing under this article are
               prima facie just and equitable.” [MGPI] had the burden of
               showing that the rates and charges were not just and equitable
               but failed to do so. Therefore, the District Authority makes the
               determination, pursuant to Indiana Code § 13-26-11-13(f)(2) that
               the sewer rates and charges established by the [District]
               Ordinance 2018-01 are just and equitable rates and charges,
               according to the standards set forth in Indiana Code § 13-26-11-9.


               Based upon the foregoing, the District Authority, that being the
               Dearborn County Board of Commissioners, does hereby
               SUSTAIN THE ORDINANCE ESTABLISHING THE RATES
               AND CHARGES as written pursuant to Indiana Code § 13-26-
               11-l3(g)(1).


       Id.


[21]   On May 16, 2018, MGPI appealed the District Authority Order to the

       Dearborn Circuit Court, alleging, in part, that the Ordinance: 1) would result

       in excessive revenue for the District; 2) unfairly allocated cost of phosphorous

       removal to MGPI; 3) failed to follow protocols issued by the EPA for

       measuring pH levels; and 4) would increase MGPI’s user fees. Appellant’s App.

       Vol. II at 25-26. Thus, MGPI requested both preliminary and permanent

       injunctions and, in the alternative, filed a complaint (“alternative complaint”)

       for 1) taking a vested capacity, 2) breach of contract, 3) breach of fiduciary duty,

       and 4) unjust enrichment. Id. at 26-31. On October 31, 2018, the District filed

       a motion for summary judgment but only on allegations in the alternative

       complaint. Id. at 6.


       Court of Appeals of Indiana | Opinion 19A-PL-393 | January 9, 2020       Page 15 of 41
[22]   On December 6, 2018, the trial court conducted a hearing on MGPI’s appeal

       from the District Authority, and on December 27, 2018, it denied MGPI’s

       appeal and upheld the Ordinance. Id. at 11-13. The trial court ruled, in part:


               3. MGPI failed to meet its burden of proof to establish that the
               District’s passing of the Ordinance, and the subsequent
               affirmation by the District Authority, were arbitrary, capricious,
               an abuse of discretion, unsupported by the evidence, or in excess
               of statutory authority.


               4. While not required to do so and irrespective of any deference
               to the District Authority, the Court concludes based on its
               independent evaluation of the evidence that the Ordinance, and
               the subsequent affirmation by the District Authority, were not
               arbitrary, capricious, an abuse of discretion, unsupported by the
               evidence, or in excess of statutory authority.


               ....


               6. The District presented substantial evidence that the Ordinance
               complied with the requirements of Indiana Code § 13-26-11-9(a).


               7. Irrespective of any deference to the District Authority, the
               board of trustees of the District, in adopting the Ordinance
               establishing sewer rates and charges, followed the procedure
               required by I.C. § 13-26-11-1 et seq.


               8. Irrespective of any deference to the District Authority, the
               sewer rates and charges established by the board of trustees of the
               District by the Ordinance are just and equitable rates and
               charges, according to the standards set forth in I.C. § 13-26-11-9.


       Id. at 11-12.

       Court of Appeals of Indiana | Opinion 19A-PL-393 | January 9, 2020        Page 16 of 41
[23]   On January 9, 2019, MGPI asked the trial court to enter final judgment on its

       ruling, pursuant to Trial Rule 54(B), and to stay all proceedings. Id. at 8. On

       February 11, 2019, the trial court granted the request, determining “that there is

       no just reason for delay and directs entry of judgment in [the District’s] favor on

       Count I of [MGPI’s] complaint.” Id. at 14. The trial court also granted

       MGPI’s motion for stay, although the trial court did not stay the pending

       hearing on the District’s motion for summary judgment: “Other than the

       pending summary judgment hearing, the Court hereby ORDERS that all other

       proceedings before this Court shall be stayed pending remand of the matter

       from the appellate courts.” Id. On March 27, 2019, the trial court conducted a

       hearing on the District’s motion for summary judgment and asked the parties to

       file proposed orders by April 10, 2019. Id. at 10. This court acquired

       jurisdiction over this matter on April 4, 2019. See Ind. Appellate Rule 8. We

       will provide additional facts as necessary.


                                       Discussion and Decision
[24]   A district authority reviews an ordinance as follows:


               (g) After the district authority hears the evidence produced and
               makes the determinations set forth in subsection (f), the district
               authority, by a majority vote, shall:


               (1) sustain the ordinance establishing the rates and charges;


               (2) sustain the petition; or




       Court of Appeals of Indiana | Opinion 19A-PL-393 | January 9, 2020           Page 17 of 41
               (3) make any other ruling appropriate in the matter, subject to the
               standards set forth in section 9 of this chapter.


       Ind. Code § 13-26-11-13(g). A district authority’s ruling may be appealed to the

       circuit, superior, or probate court, and that court shall determine one or both of

       the following: 1) whether the district’s board of trustees followed the proper

       procedures in adopting the ordinance; and 2) whether the sewer rates and

       charges are equitable. Ind. Code § 13-26-11-13(h).


[25]   Just and equitable rates are those that: 1) produce sufficient revenue to pay all

       expenses incident to the operation of the works; 2) produce sufficient revenue to

       provide the sinking fund for the liquidation of bonds or other evidence of

       indebtedness; 3) produce sufficient revenue to provide adequate money to be

       used as working capital, as well as money for making improvements; and 4)

       “give due consideration to the interests of the ratepayers.” Ind. Code § 13-26-11-9(a)

       (emphasis added). “Rates and charges too low to meet the financial

       requirements described in subsection (a) are unlawful. The initial rates and

       charges established after notice and hearing under this article are prima facie just

       and equitable.” Ind. Code § 13-26-11-9(b) (emphasis added).


               The standard for judicial review of the District’s action is
               whether it was arbitrary, capricious, or contrary to law. . . .
               Under this narrow standard of review, we will not intervene in a
               local legislative process, [if it is] supported by some rational basis.
               We will find a municipal entity’s action arbitrary or capricious
               only if it is patently unreasonable. In short, judicial review of
               whether a governmental agency has abused its rulemaking
               authority is highly deferential. We are not permitted to substitute

       Court of Appeals of Indiana | Opinion 19A-PL-393 | January 9, 2020           Page 18 of 41
                 our judgment for the municipality’s discretionary authority.
                 Rather, we may only determine whether the municipality is
                 acting within its statutory authority.


       Yankee Park Homeowners Ass’n, Inc. v. LaGrange Cty. Sewer Dist., 891 N.E.2d 128,

       130-31 (Ind. Ct. App. 2008) (internal quotations and citations omitted), trans.

       denied.


            I.       Was IDEM’S Approval of the Ordinance Required?
[26]   MGPI argues that the Ordinance is void as a matter of law because the

       Ordinance changed the “purpose” of the District’s plan, and, therefore,

       approval of the Ordinance by IDEM was required. Indiana Code section 13-26-

       1-2 describes the process of seeking permission from IDEM to change a district

       plan and IDEM’s authority regarding such requests:


                 (a) At any time after the creation of a district, the district, after
                 motion by the district’s board, may file a petition with the
                 department requesting the approval of the department permitting
                 the district to:


                 (1) increase or add to the district’s purposes or modify the district plan
                 approved by the department;


                 (2) abandon or surrender all or part of a purpose or plan
                 approved by the department; or


                 (3) subject to IC 13-26-4-1, increase the number of persons
                 serving on the board of trustees.


                 (b) The department may:

       Court of Appeals of Indiana | Opinion 19A-PL-393 | January 9, 2020                     Page 19 of 41
               (1) approve;


               (2) modify and approve; or


               (3) reject;


               a request received under this section.


       Ind. Code § 13-26-1-2 (emphasis added). See Fox v. Green, 856 N.E.2d 86, 88

       n.1 (Ind. Ct. App. 2006) (“IC 13-26-1-2 contemplates approval by IDEM for

       any modifications to its plan and IC 13-26-5-2, which sets forth the powers of a

       regional wastewater district, does not appear to grant a district the power to

       unilaterally make changes to its plan without IDEM approval.”); see also Clay

       Twp. of Hamilton Cty. ex rel. Hagan v. Clay Twp. Reg’l Waste Dist., 838 N.E.2d

       1054, 1066-67 (Ind. Ct. App. 2005) (final authority for appointment of

       additional trustees to regional waste district board rests with IDEM).


[27]   As to what constitutes a district’s “purpose,” Indiana Code section 13-26-1-1

       provides:


               Any area may be established as a regional water, sewage, or solid
               waste district under this article for one (1) or more of the
               following purposes:


               (1) To provide a water supply for domestic, industrial, and public
               use to users inside and outside the district.


               (2) To provide for the collection, treatment, and disposal of
               sewage inside and outside the district.

       Court of Appeals of Indiana | Opinion 19A-PL-393 | January 9, 2020       Page 20 of 41
               (3) To provide for the collection, treatment, and disposal of solid
               waste and refuse inside and outside the district.


       Id.2


[28]   MGPI argues that the Ordinance changed the purpose of the plan because it

       eliminated MGPI as a direct user and that this violates one of the purposes of

       the 1972 Order -- to give direct sewer services to users whose daily intermittent

       flow exceeded one million gallons per day, which at the time described MPGI’s

       predecessor in interest, Seagram. In support, MGPI points to the following

       language in the 1972 Order:


               IT IS FURTHER FOUND that the only users of the sewage
               system of said district having an intermittent flow of at least one
               million (1,000,000) gallons per day are the Joseph E. Seagram & Sons,
               Inc., plant and the Schenley Distilleries, Inc., plant.


               ....


               2. That the Board of Trustees shall be composed of . . . a member
               designated by each user of the sewage treatment facilities of said district
               which said user(s) has an intermittent flow of at least one million
               (1,000,000) gallons per day or more into the sewage system.




       2
        Although enacted in 1996, this statute applies to any district established by “an order of the court before
       February 17, 1972.” Ind. Code § 13-26-3-1. The District was established by court order on January 26, 1972.
       Appellant’s App. Vol. III at 86.



       Court of Appeals of Indiana | Opinion 19A-PL-393 | January 9, 2020                            Page 21 of 41
               3. That each of said Trustees shall hold office so long as he meets
               the criteria or the qualification of his successor.


       Appellant’s App. Vol. II at 33 (emphasis added). MGPI thus argues that because

       the Ordinance eliminated MGPI as a direct user of the District, the Ordinance

       changed the purpose of the plan because the Ordinance no longer guarantees

       direct service to a user with an intermittent daily flow of at least one million

       gallons.


[29]   In response, the District argues that it was unnecessary to obtain IDEM’s

       permission to enact the Ordinance because the Ordinance did not change or

       modify the plan or the purpose of the plan. The District argues that the

       Ordinance did not change the purpose of the plan because the purpose of the

       plan, as explained in the 1972 Order, was to provide sewage and wastewater

       services, nothing more, and under the Ordinance, the District is still providing

       services for sewage and wastewater treatment. The District relies on Indiana

       Code section 13-26-1-1, which defines the purpose of a regional sewage district,

       in part, as “[t]o provide for the collection, treatment, and disposal of sewage

       inside and outside the district.” Id.


[30]   We agree with the District. The Ordinance did not change the District’s plan

       because under the Ordinance, the District still provides sewage and wastewater

       treatment services. See Appellant’s App. Vol. III at 18-23. MGPI does not dispute

       this. The Ordinance does not repudiate any of the terms of the 1972 Order as to

       the delivery of sewage and wastewater treatment. See Appellant’s App. Vol. II at


       Court of Appeals of Indiana | Opinion 19A-PL-393 | January 9, 2020        Page 22 of 41
       33. Therefore, the District was not required under Indiana Code section 13-26-

       1-2 to obtain permission from IDEM to enact the Ordinance.


              II.      Did the District Fail to Consider MGPI’s Interests?
[31]   MGPI argues that the District failed to consider MGPI’s interests as a rate

       payer when it adopted the Ordinance and, thus, did not set just and equitable

       rates. See Ind. Code § 13-26-11-9(b); Ind. Code § 13-26-11-13(f).


[32]   Just and equitable rates are rates that:


               (1) produce sufficient revenue to pay all expenses incident to the
               operation of the works, including maintenance cost, operating
               charges, upkeep, repairs, and interest charges on bonds or other
               obligations;


               (2) produce sufficient revenue to provide the sinking fund for the
               liquidation of bonds or other evidence of indebtedness and
               reserves against default in the payment of interest and principal
               of bonds;


               (3) produce sufficient revenue to provide adequate money to be
               used as working capital, as well as money for making
               improvements, additions, extensions, and replacements; and


               (4) give due consideration to the interests of the ratepayers.


               (b) Rates and charges too low to meet the financial requirements
               described in subsection (a) are unlawful. The initial rates and
               charges established after notice and hearing under this article are
               prima facie just and equitable.



       Court of Appeals of Indiana | Opinion 19A-PL-393 | January 9, 2020        Page 23 of 41
               (c) Nothing in this section shall prohibit a district authority from
               examining the methodology or process by which rates and
               charges were derived.


       Ind. Code § 13-26-11-9 (emphasis added).


       Regional districts “have broad discretion to enact ordinances establishing its

       rates and charges.” Taylor v. Fall Creek Reg’l Waste Dist., 700 N.E.2d 1179, 1184

       (Ind. Ct. App. 1998), trans. denied. “Rates for sewage works may be determined

       by a combination [of the foregoing six factors] or other factors that the board

       determines is necessary to establish nondiscriminatory, just, and equitable rates

       or charges.” Ind. Code § 13-26-11-2(a)(7).


[33]   MGPI argues that the District did not consider MGPI’s interests because the

       Ordinance does not mention MGPI or establish the rates that MGPI would

       incur now that it would need to negotiate its rates with Lawrenceburg.

       Appellant’s App. Vol. III at 18-23. In support, MGPI refers to the testimony of

       Skomp, the District’s expert witness, at the April 10, 2018 hearing before the

       District Authority. Skomp testified that the rates in the Ordinance would not

       apply to MGPI because the Ordinance was not intended to apply to MGPI:


               These rates are not going to be applied to MGPI. They weren’t
               intended to. The rate study was not developed in such a way that these
               rates could be applied to them. So, when they take the rates from the
               study and say this is what our bill would be, that’s inaccurate.
               The District came through, and as part of this study, and as part
               of their process of doing other things, there was a decision made
               that MGPI would become a customer of the City of
               Lawrenceburg. You cannot take this rate study, or even the

       Court of Appeals of Indiana | Opinion 19A-PL-393 | January 9, 2020         Page 24 of 41
               results of [Roper’s] letter, and say that based upon this or that,
               this is what MGPI will be paying.


       Id. at 44 (emphasis added).


[34]   In response, the District appears to claim that because MGPI’s contract with

       the District had expired in 2013 -- see Appellant’s App. Vol. III at 58-59 -- MGPI

       was no longer a customer of the District, and the District was not required to

       consider MGPI’s interests in establishing the Ordinance. See Appellee’s Br. at 14.

       However, the District claims that it did consider MGPI’s interests, even if it was

       not required to do so. The District cites Skomp’s testimony that MGPI’s

       representatives attended and were heard at meetings before the Ordinance was

       enacted: “MGPI was at most of those meetings that I attended, and meeting

       with them, and so the customers did hear what was going on, and due

       consideration was given to the things they were saying and what they needed.”

       Appellant’s App. Vol. III at 38, 155, 158.


[35]   The District also quotes the following language from Skomp’s Supplement to

       show that the District considered MGPI’s interests:


               During this time, Crowe had numerous meetings with the Board
               (which consisted of owner-ratepayers) and elected officials or
               representatives of the ratepayers. At many of those meetings,
               policy discussions were conducted regarding how various
               changes in the rate structures would affect the customers’
               monthly bills. Those discussions included how MGPI could be billed
               on a going-forward basis and the impact that would have on the monthly
               bills of whichever city may accept MGPI as a retail customer.



       Court of Appeals of Indiana | Opinion 19A-PL-393 | January 9, 2020           Page 25 of 41
                As discussions were on-going, changes were made and rates and
                charges were adjusted to give due consideration to the comments
                of the customers regarding how the proposals affected their
                various interests.


       Id. at 158 (emphasis added).


[36]   The District claims the Cost of Service Study took MGPI’s interests into

       account in other ways: listing MGPI’s accounts receivable to the District;

       noting the District’s liability in the form of the payable amount of MGPI’s

       depreciation fund; MGPI’s operating income; the necessary adjustment to

       operating income to allow conversion of MGPI to a retail customer of

       Lawrenceburg, and the adjustment to Lawrenceburg’s flow total once MGPI

       became a customer of Lawrenceburg. Id. at 169, 170, 175, 178, 179, 184.3


[37]   We reject MGPI’s claim that the District did not take MGPI’s interests into

       account when enacting the Ordinance. The foregoing evidence proves

       otherwise. Of particular note are the following: (1) MGPI’s presence at many

       meetings where the proposed Ordinance was discussed; (2) that “due

       consideration was given to the things [the customers] were saying”; and (3) that

       “discussions included how MGPI could be billed on a going-forward basis.” Id.

       at 155, 158. Finally, the Skomp Supplement establishes, by implication, that




       3
         The District argues that MGPI has waived its argument that the Ordinance did not consider MGPI’s
       interests because the District claims MGPI did not raise this argument during the April 10, 2018 hearing
       before the District Authority. See Appellant’s App. Vol. III at 24-80. We reject this argument based on the
       following parts of the record that establish that MGPI did, in fact, raise this issue: Appellant’s App. Vol. II at
       169-74; Appellant’s App. Vol. III at 84-85.

       Court of Appeals of Indiana | Opinion 19A-PL-393 | January 9, 2020                                    Page 26 of 41
       the District did consider the possibility that the Ordinance would raise MGPI’s

       rates. This is apparent from the statement in Skomp’s Supplement that the

       District considered how the new method of billing MGPI would “impact . . .

       the monthly bills of which every city may accept MGPI as a retail customer.”

       Id. at 158. A reasonable inference from this statement is that the District

       weighed the possibility that the Ordinance could increase the rates of both

       MGPI and the city that accepted MGPI as a retail customer and, nonetheless,

       chose to enact the Ordinance. Accordingly, we reject MGPI’s claim that the

       District failed to consider MGPI’s interests when it enacted the Ordinance.


                III. Did the Ordinance Violate MGPI’s Vested Interest?
[38]   MGPI argues that the Ordinance took away its vested interest in the District.

       MGPI contends that the vested interest in the District ran with the land, i.e., the

       distillery, and that with the successive sales of the distillery, that vested interest

       passed to successive purchasers and thus now vests in MGPI. It argues:


                The vested capacity naturally ran with the land, as no entity other
                than the owner of the distillery could exercise those rights.
                Through a number of transactions, the distillery and all rights
                associated with it passed from Pernod to LDI and finally to
                MGPI. Each transfer passed the entire distillery, the real
                property, and all of its associated rights to the next owner. That
                included the right to the vested capacity.


       Appellant’s Br. at 21 (emphasis added). MGPI reiterated this point in its reply

       brief:




       Court of Appeals of Indiana | Opinion 19A-PL-393 | January 9, 2020          Page 27 of 41
               Reading the deeds to pass the vested capacity comports with the
               context in which those transactions occurred. The vested
               capacity serves a core function for the distillery by providing
               ready access to wastewater service that the owner needs to brew
               spirits. That contractual right is only useful to the current owner
               of the distillery. To ensure the distillery can continue to operate, the
               vested capacity naturally passed from owner to owner under the deeds. .
               . . Each transfer therefore passed the entire distillery, the real
               property, and all of its associated rights. That included the right
               to the vested capacity. And the 2002 Contract was recorded with the
               county recorder, which would be unnecessary unless it was intended to
               run with the land and be binding.


       Appellant’s Reply Br. at 21-22 (emphasis added).


[39]   MGPI also argues that the vested interest in the District passed to it via the

       successive deeds and contracts that eventually resulted in MGPI’s purchase of

       the distillery. MGPI highlights the following language in the 1972 Contract:

       “Seagram . . . shall have a vested interest in the respective allocation of design

       capacity . . . of which it may not be divested of said interest without its

       consent.” Appellant’s App. Vol. II at 78. MGPI claims it stands in the shoes of

       Seagram and bears the same rights that Seagram did, and contends this vested

       capacity was part of the exchange that led to the creation of the District. MGPI

       also argues that its predecessors became part of the District by paying for part of

       the infrastructure the District needed to operate. Appellant’s App. Vol. III at 102-

       03.


[40]   MGPI observes that the deeds by which the distillery was transferred included

       explicit statements that made the deeds subject to the 1972 Contract and the


       Court of Appeals of Indiana | Opinion 19A-PL-393 | January 9, 2020             Page 28 of 41
       2002 Contract. In the latter contract, Pernod and the District agreed that

       Pernod would hold a vested interest in the District. Appellant’s App. Vol. II at

       99. MGPI notes that the deeds for each sale of the distillery state that the

       distillery is conveyed subject to the “[c]ontract between the City of

       Lawrenceburg, the City of Aurora, the City of Greendale, [Pernod] and [the

       District].” Id. at 127, 157.


[41]   The District responds that MGPI has no vested interest in the District and that

       it never had such an interest. First, the District argues that the relevant

       exception in the deed did not sufficiently manifest an intent to assign the vested

       interest. The District is referring to Exception 20 to the deed by which Pernod

       conveyed the distillery to LDI, which stated: “Contract between the City of

       Lawrenceburg, the City of Aurora, the City of Greendale, [Pernod], and [the

       District], recorded December 22, 2002 in Official Record Book 56, Page 1392 of

       the Dearborn County, Indiana.” Id. at 127. Similarly, the District argues that

       the deeds did not incorporate the exception by reference. The District contends

       that it was necessary for MGPI to produce a formal assignment of rights to

       establish such an intent.


[42]   “In determining whether an assignment has been made, the question is one of

       intent. A written agreement assigning a subject matter must manifest the

       assignor’s intent to transfer the subject matter clearly and unconditionally to the

       assignee.” E & L Rental Equip., Inc. v. Gifford, 744 N.E.2d 1007, 1011 (Ind. Ct.

       App. 2001). The District argues that the only reasonable interpretation of

       Exception 20 is that it refers to exceptions to the warranty of title granted in the

       Court of Appeals of Indiana | Opinion 19A-PL-393 | January 9, 2020        Page 29 of 41
       LDI deed itself (the deed by which LDI acquired the distillery from Pernod). In

       support, it relies on the following authority: American Energy Corp. v. Datkuljak,

       882 N.E.2d 463, 477 (Ohio Ct. App. 2007) (“An exception is the retention of an

       existing right or interest, by and for the grantor, in real property being granted

       to another.”); Ashcroft v. Eastern Railroad Co., 126 Mass. 196, 198 (Mass. 1879)

       (“The operation of an exception in a deed is to retain in the grantor some

       portion of his former estate, which by the exception is taken out of or excluded

       from the grant . . . .”); Exception, Black’s Law Dictionary (10th ed. 2014) (“The

       retention of an existing right or interest, by and for the grantor, in real property

       being granted to another.”).


[43]   The District also argues that Pernod gave away its vested right, so the exception

       to the deed that MGPI claims passed along the vested right had no effect. In

       support, the District relies on the testimony of Neyer, the plant manager of the

       District’s sewage treatment facility:


               During the change of ownership between the predecessor of LDI
               to MGPI, there were several changes. Instead of being an owner
               which had a shared interest in all capital projects, they became a
               retail customer. They also gave up their seat on the board, as
               well, as part of that change. So, they no longer had a voting
               interest, they no longer had capital responsibility and they paid
               up on all the outstanding debt that they had.


       Appellant’s App. Vol. III at 68.


[44]   The District additionally argues that through various user agreements, MGPI

       surrendered all ownership interests, again relying on Neyer’s testimony:

       Court of Appeals of Indiana | Opinion 19A-PL-393 | January 9, 2020        Page 30 of 41
               MGPI . . . very early [after] they took ownership, they did not
               want to own a wastewater plant or have part ownership and
               liability for it, so they fulfilled all their obligations to the facility
               for any debt that they were a party to and ceded their ownership,
               which was then uniformly split between the remaining three
               members.


       Id. at 58. Neyer then testified that after MGPI surrendered its ownership

       interest, it signed a contract with the District in 2011 that expired at some point

       in 2013. Id. at 58-59. The District also highlights the September 18, 2017 letter

       from the District’s attorney to Ken Carrier of MGPI, in which the District’s

       attorney alleged that MGPI had surrendered its ownership interest in the

       District: “Just as MGPI at one time decided it no longer wanted to be a co-owner of [the

       District], so the [District] Board has decided that they would no longer have any

       ‘customers’ other than [Lawrenceburg, Greendale, and Aurora].” Id. at 147

       (emphasis added).


[45]   We reject MGPI’s argument that the vested interest ran with the land. In

       Columbia Club, Inc. v. American Fletcher Realty Corp., 720 N.E.2d 411, 418 (Ind.

       Ct. App. 1999), trans. denied, this court stated that even if the parties intend for

       an interest to run with the land, that interest will not run with the land if it does

       not concern some interest or estate in the land itself.


               Analysis of a covenant to determine whether it runs with the land
               typically involves two inquiries: (1) whether the covenant is one
               which, under any circumstances, may run with the land; and (2)
               whether it was the intention of the parties as expressed in the
               agreement that it should run with the land. Conduitt [v. Ross], 26
               N.E. 198 [(Ind. 1885)]. The Indiana Supreme Court has held

       Court of Appeals of Indiana | Opinion 19A-PL-393 | January 9, 2020             Page 31 of 41
               that “[a] covenant may contain apt words to make it a continuing
               covenant, yet if its nature or the subject matter of it is such that it does
               not concern some interest or estate in land, either existing or created by it,
               it cannot run with the land.” Id. at 199.


       Id. at 418 (emphasis added). A covenant running with the land is a covenant

       “intimately and inherently involved with the land, and therefore binding

       subsequent and successor grantees indefinitely, which cannot be separated from

       the land and transferred without it. The chief examples are these: 1) covenants

       for the building and use of walls; 2) covenants for the building and use of party-

       walls; 3) covenants for leaving open of ways or parks; 4) covenants restricting

       buildings to a particular line; and 5) covenants restricting the kinds of buildings

       in a specified locale.” Covenant Running with The Land, Black’s Law Dictionary

       (10th ed. 2014).


[46]   Columbia Club held that a covenant would run with the land where: “(1) the

       covenantor and covenantee intend it to run; (2) the covenant touches and concerns

       the land; and (3) there is privity of estate between subsequent grantees of the

       original covenantor and covenantee.” Columbia Club, 720 N.E.2d at 418

       (emphasis added) (citing Moseley v. Bishop, 470 N.E.2d 773, 776 (Ind. Ct. App.

       1984)). Columbia Club then explained that a covenant touches and concerns the

       land only if the covenant is logically connected to the property:


               Unless a real covenant’s benefit “touches and concerns” some
               estate in land, the benefit cannot run to the covenantee’s grantee.
               Similarly, unless the burden “touches and concerns” some estate
               in land, the burden cannot run. We have held that the “touch
               and concern” requirement ensures that one purchasing land will

       Court of Appeals of Indiana | Opinion 19A-PL-393 | January 9, 2020                 Page 32 of 41
               be bound by his grantor’s contract only where the contract has
               some logical connection to his use and enjoyment of the land.
               Moseley, 470 N.E.2d at 777. Therefore, a successor to the
               covenantor’s interest in property may be bound by the covenant
               if it is logically connected to that property interest. Id.
               Conversely, a successor to the covenantee’s property interest may enforce
               the covenant if it is logically connected to his property. Id. The “touch
               and concern” requirement is the only essential requirement for
               the running of covenants which focuses on an objective analysis
               of the contents of the covenant itself, rather than the intentions
               and relationships between the parties.


               The clearest example of a covenant that “touches and concerns”
               the land is one which calls for a party to do, or refrain from
               doing, a physical act on the land. We have held that a covenant
               to maintain a tile drain was logically connected to the land
               because the drain was buried on the land. Id. Moreover, the
               Indiana Supreme Court held that a covenant to pay for any
               additions made to a party wall ran with the land because the
               covenant was created in the instrument that created the right to
               use the wall. Conduitt, 26 N.E. at 199.


       Columbia Club, Inc., 720 N.E.2d at 420-21 (emphasis added).


[47]   In Columbia Club, we found that an indemnification clause touched and

       concerned the land and thus ran with the land. In that case, the downtown

       Indianapolis Columbia Club and several real estate developers entered an

       agreement related to the construction of the Bank One Tower on property next

       to the Columbia Club’s property. In the agreement, Columbia Club granted

       easements to the developers that were necessary for the developers to complete

       construction, and the developers agreed to indemnify Columbia Club for any

       damages to Columbia Club’s property from the construction. At some point,
       Court of Appeals of Indiana | Opinion 19A-PL-393 | January 9, 2020            Page 33 of 41
       Columbia Club discovered damage to its property from the construction project

       and sued the developers. The developers, however, had sold their interests to a

       third party. In affirming the trial court’s grant of summary judgment to the

       developers, we held that the developers were no longer responsible for damage

       to the Columbia Club’s property because both the easement that Columbia

       granted to the developers and the indemnification clause “touched and

       concerned” the land and now belonged to the third party that had purchased

       Bank One Tower. We explained:


               We believe that the covenant to indemnify the Columbia Club
               for damages arising from construction of the Bank One Tower
               and accompanying parking garage is logically connected to both
               the Columbia Club’s property upon which the social club is built
               and the property upon which the Bank One Tower and
               accompanying parking garage is built. Thus, we hold as a matter
               of law that the “touch and concern” requirement is satisfied for
               the covenant to run with the land.


       Id. at 421.


[48]   As noted in Columbia Club, both Moseley and Conduitt addressed the touch-and-

       concern requirement. In Moseley, we held that the requirement was fulfilled

       with a covenant to maintain a tile drain on farmland because the covenant was

       logically connected both to property in which the drain was buried and to land

       served by the drain. Moseley, 470 N.E.2d at 777. In Conduitt, our Supreme

       Court held that a covenant to pay for any additions made to a party wall

       touched and concerned the land because the covenant was created in the

       instrument that created the right to use the wall. Conduitt, 26 N.E. at 199.

       Court of Appeals of Indiana | Opinion 19A-PL-393 | January 9, 2020      Page 34 of 41
[49]   Here, we conclude that the vested interest in the District did not touch and

       concern the land. It was not, in and of itself, logically connected to the land, nor

       was it inherently involved with the land. The vested interest was an interest

       created in a separate entity, the District and the District’s physical plant. The

       1972 Contract makes this clear: Seagram “shall have a vested interest in the

       respective allocation of design capacity as set forth in Item 9.2 of this agreement

       of which it may not be divested of said interest without its consent.” Appellant’s

       App. Vol. II at 78. While the vested interest undoubtedly served Seagram’s

       commercial interests, this does not mean that the vested interest was logically

       related to the land or an interest that inhered in the land itself. The vested

       interest did not touch or concern the land.


[50]   Columbia Club, Moseley, and Conduitt reinforce our conclusion. Columbia Club

       observed that the clearest example of a covenant touching and concerning the

       land is a covenant that calls a party to do, or refrain doing, a physical act on the

       land. Columbia Club, 770 N.E.2d at 420-21. Moseley involved such a covenant

       because it required maintaining a drainage tile on farmland was thus inherently

       connected to the farmland. Moseley, 470 N.E.2d at 777. Likewise, Conduitt

       involved such a covenant because it required payments for additions to a wall

       where the covenant was created in the document that created the right to use

       the wall. Conduitt, 26 N.E. at 199. The easement and indemnification clause in

       Columbia Club were inherently connected to the Columbia Club’s property.

       Columbia Club, 720 N.E.2d at 421. Here, however, the logical connection

       between the vested interest in the District and the land is wholly lacking. The

       Court of Appeals of Indiana | Opinion 19A-PL-393 | January 9, 2020        Page 35 of 41
       vested interest did not touch or concern the land and did not pass to MGPI as a

       covenant that ran with the land.


[51]   We also reject MGPI’s argument that it holds the vested interest in the District

       because of the series of deeds and contracts that eventually resulted in MGPI’s

       purchase of the distillery. Even if, at one point, MGPI held the vested interest

       through these contracts and deeds, MGPI eventually disclaimed that interest.

       Neyer, the plant manager for the District’s sewer facility, testified:


               MGPI . . . did not want to own a wastewater plant or have part
               ownership and liability for it, so they fulfilled all their obligations
               to the facility for any debt that they were a party to and ceded
               their ownership, which was then uniformly split between the
               remaining three members.


       Appellant’s App. Vol. III at 58. Neyer also testified that MGPI became a retail

       customer of the District. Id. at 68. Further, the September 18, 2017 letter from

       the District’s attorney to Ken Carrier of MGPI also stated that MGPI had

       surrendered its ownership interest in the District: “Just as MGPI at one time

       decided it no longer wanted to be a co-owner of [the District], so the [District] Board

       has decided that they would no longer have any ‘customers’ other than

       [Lawrenceburg, Greendale, and Aurora].” Id. at 147 (emphasis added).


[52]   In its reply brief MPGPI argues, for the first time, that Neyer’s testimony was

       not competent evidence: “Mr. Neyer is a stranger to these transactions and

       does not even purport to address the language of the deeds. His lay

       understanding cannot override the legal question to be determined by


       Court of Appeals of Indiana | Opinion 19A-PL-393 | January 9, 2020           Page 36 of 41
       examining the language of the deeds themselves.” Appellant’s Reply Br. at 22.

       Not only did MGPI fail to object to Neyer’s testimony, MGPI has failed here to

       support its challenge to Neyer’s testimony with cogent argument. Therefore,

       MGPI’s claim that Neyer’s testimony was not competent evidence is waived.

       See Basic v. Amouri, 58 N.E.3d 980, 984-85 (Ind. Ct. App. 2016).


[53]   Furthermore, Neyer’s testimony and the letter from the District’s attorney are

       sufficiently competent to provide rational support for the decisions of the

       District Authority and the trial court. See Yankee Park, 891 N.E.2d at 1030-31.

       Evidentiary standards are relaxed in administrative proceedings. See Oriental

       Health Spa v. City of Fort Wayne, 526 N.E.2d 1019, 1022 (Ind. Ct. App. 1988),

       trans, denied; see also Guy v. Universal Atlas Cement Co., Div. of U. S. Steel Corp., 143

       Ind. App. 318, 321, 240 N.E.2d 497, 498 (1968). Neyer’s testimony and the

       letter to Ken Carrier meet this relaxed standard. Thus, the decisions of the

       District Authority and the trial court to uphold the Ordinance on this ground

       were not arbitrary and capricious or patently unreasonable but were supported

       by a rational basis. See Yankee Park, 891 N.E.2d at 1030-31.


                     IV. Is the Ordinance Arbitrary and Capricious?
[54]   MGPI contends that the Ordinance is arbitrary and capricious because it results

       in rates that are not just and equitable. We “will not intervene in a local

       legislative process [if it is] supported by some rational basis.” Borsuk v. Town of

       St. John, 820 N.E.2d 118, 122 (Ind. 2005). We will find a municipal entity’s

       action arbitrary or capricious only if it is “patently unreasonable.” South Gibson


       Court of Appeals of Indiana | Opinion 19A-PL-393 | January 9, 2020            Page 37 of 41
       Sch. Bd. v. Sollman, 768 N.E.2d 437, 441 (Ind. 2002). In short, “[j]udicial review

       of whether a governmental agency has abused its rulemaking authority is highly

       deferential.” Ind. High Sch. Athletic Ass’n, Inc. v. Carlberg, 694 N.E.2d 222, 234

       (Ind. 1997).


[55]   MGPI relies on the testimony of its expert, Roper, to establish that the rates are

       arbitrary and capricious. Roper addressed three factors that resulted in an

       improper rate calculation. First, Roper maintained that the Ordinance would

       result in overcollection of revenue because the Cost of Service Study abandoned

       the biological oxygen demand (“BOD”) method for setting rates and replaced it

       with loading rates based on pounds of “total loadings.” Appellant’s App. Vol. III

       at 225-26. The Ordinance defines “total loadings” as “pounds . . . calculated

       from BOD and TSS,” where TSS stands for “total suspended solids” or “the

       total suspended matter that floats on the surface of, or is suspended in: water,

       wastewater, or other liquid[.]” Id. at 21. Roper explained that the “total

       loading” charges are not limited to BOD but are based on BOD and TSS

       combined. Id. at 225. Roper claimed that although the District switched to this

       total-loadings standard, it did not conduct a separate analysis to determine what

       the total loadings rate should be because the Ordinance simply incorporated the

       $0.30 per pound BOD charge into the new framework measuring total loadings.

       Id. at 13-15, 18-21. Roper claimed this would result in an overcollection of

       more than half a million dollars. Id. at 225-26.


[56]   Second, Roper claimed that the Cost of Service Study improperly calculated a

       rate based on the costs of removing phosphorus from wastewater. Id. at 226-27.

       Court of Appeals of Indiana | Opinion 19A-PL-393 | January 9, 2020        Page 38 of 41
       MGPI contends phosphorous removal should not factor into its rates because

       MGPI discharges no phosphorus into its wastewater. Id. at 227. Third, Roper

       contended that the Cost of Service Study failed to apply guidelines promulgated

       by the EPA, which again will result in overcharges. Id. at 228-30. Roper

       referred to EPA guidelines for pH testing of wastewater discharges. Id. at 229-

       30. This standard requires what is known as a “grab sample.” Id. However,

       Roper explained, the Ordinance deviates from this guideline by using

       “composite samples” collected over twenty-four hours. Id. Because pH

       samples of wastewater are unstable over time, Roper explained it is important

       that only fresh samples are tested. Id. at 230. Using composite samples reduces

       the accuracy of the tests at the risk of the consumer. Id. Thus, Roper described

       the method used by the District as a “short-cut protocol.” Id. at 233.


[57]   Based on these alleged problems with the Cost of Service Study, Roper

       calculated that MGPI’s rates would be higher under the Ordinance. He found

       that while MGPI discharges only about twenty-nine percent of the total

       wastewater load in the system, it would provide forty percent of the District’s

       revenue. Id. at 230.


[58]   In response, the District correctly observes that MGPI’s argument asks us to

       reweigh the evidence instead of using the highly deferential standard of asking

       whether the Ordinance was arbitrary and capricious. See Carlberg, 694 N.E.2d

       at 234. The District highlights evidence that supported the rulings below. First,

       the District’s expert, Skomp, testified that the Ordinance would produce

       adequate, not excessive revenue. Id. at 36-37. Skomp explained that the

       Court of Appeals of Indiana | Opinion 19A-PL-393 | January 9, 2020       Page 39 of 41
       estimated annual revenue from the rates is within $6,400 or 0.2% of the

       estimated annual revenue requirement. Id. at 39-40. Second, Skomp clarified

       why phosphorous removal is included in rate calculation for all users even

       though MGPI discharges no phosphorous into its wastewater. He explained

       that phosphorus removal costs were allocated this way because all flow, except

       for stormwater-only flow, goes through the phosphorus removal process and the

       phosphorous content of incoming flow is irrelevant. Id. at 159.


[59]   Third, the District rejects MGPI’s argument that the Ordinance is arbitrary and

       capricious because it allows the District to use alternatives to grab-sample

       testing when necessary. The District argues that the Ordinance makes clear

       that pH is to be tested by the grab-sample method: “the pH from any 24-hour

       grab sample shall not be outside the range of 5.5-9.5.” Appellant’s App. Vol. II at

       166. However, even if a grab sample is sometimes impractical to collect, which

       the District contends is highly unlikely, allowing the use of a composite sample

       should not invalidate the Ordinance. At most, the District argues that the

       language allowing for composite sample testing should be stricken from the

       Ordinance. Further, the District claims MGPI has not alleged or presented any

       evidence that the District has ever tested pH via a composite sample. Thus, it

       argues that MGPI’s argument here is hypothetical and not ripe for review. See

       In re Paternity of M.G.S, 756 N.E.2d 990, 1004 (Ind. Ct. App. 2001), trans. denied.


[60]   Finally, the District rejects MGPI’s argument that the Ordinance is arbitrary

       and capricious because it will supposedly result in MGPI providing forty

       percent of the District’s revenue while only discharging twenty-nine percent of

       Court of Appeals of Indiana | Opinion 19A-PL-393 | January 9, 2020       Page 40 of 41
       the District’s total wastewater load. The District claims that MGPI’s argument

       is specious because MGPI would not be subject to the Ordinance’s rates, but

       since MGPI is now a direct customer of Lawrenceburg, MGPI’s rates will be

       set by Lawrenceburg, not the Ordinance. Skomp’s Supplement stated: “the

       rates and charges approved in the Ordinance . . . would not be applied to a bill

       to MGPI and[,] therefore, cannot be used to determine how MGPI will be

       impacted.” Appellant’s App. Vol. III at 162.


[61]   The evidence provided a rational basis for the Ordinance. Accordingly, we

       reject MGPI’s argument that the Ordinance is arbitrary and capricious.


                                               VI. Conclusion
[62]   There was a rational basis for the District Authority to uphold the Ordinance

       and for the trial court to affirm the District Authority’s ruling. Thus, we decline

       to intervene in this local, legislative matter. See Yankee Park, 891 N.E.2d at

       1030-31. The District was not required to obtain permission from IDEM to

       enact the Ordinance, the District considered MGPI’s interests in enacting the

       Ordinance, and the Ordinance was not arbitrary and capricious. Finally, the

       vested interest did not run with the land to MGPI and even if MGPI once held

       the vested interest through the series of sales of the distillery that eventually

       resulted in MGPI’s purchase of the distillery, MGPI eventually disclaimed that

       vested interest. Accordingly, we affirm the trial court.


[63]   Affirmed.


       Baker, J., and Crone, J., concur.
       Court of Appeals of Indiana | Opinion 19A-PL-393 | January 9, 2020         Page 41 of 41
