                                                                       FILED
                                                                  Dec 31 2018, 11:08 am

                                                                       CLERK
                                                                   Indiana Supreme Court
                                                                      Court of Appeals
                                                                        and Tax Court




ATTORNEY FOR APPELLANT                                    ATTORNEYS FOR APPELLEE
J. David Agnew                                            INDIANA-AMERICAN WATER
Lorch Naville Ward LLC                                    COMPANY
New Albany, Indiana
                                                          David L. Pippen
                                                          General Counsel
                                                          Indiana-American Water
                                                          Company
                                                          Greenwood, Indiana

                                                          Peter J. Rusthoven
                                                          Nicholas K. Kile
                                                          Hillary J. Close
                                                          Barnes & Thornburg LLP
                                                          Indianapolis, Indiana

                                                          ATTORNEYS FOR APPELLEE
                                                          CITY OF CHARLESTOWN
                                                          Karl L. Mulvaney
                                                          Alex E. Gude
                                                          Bingham Greenebaum Doll LLP
                                                          Indianapolis, Indiana

                                                          David T. McGimpsey
                                                          Bingham Greenebaum Doll LLP
                                                          Jasper, Indiana



                                            IN THE
    COURT OF APPEALS OF INDIANA




Court of Appeals of Indiana | Opinion 18A-EX-844 | December 31, 2018                       Page 1 of 27
      NOW!, Inc.,                                               December 31, 2018
      Appellant-Intervenor,                                     Court of Appeals Case No.
                                                                18A-EX-844
              v.                                                Appeal from the Indiana Utility
                                                                Regulatory Commission
      Indiana-American Water                                    Hon. James F. Huston, Interim
      Company, Inc., and the City of                            Chairman
      Charlestown, Indiana,                                     Hon. Sarah E. Freeman,
                                                                Commissioner
      Appellees-Petitioners,                                    Hon. Angela Rapp Weber,
      and                                                       Commissioner
                                                                Hon. David E. Ziegner,
      Indiana Office of Utility                                 Commissioner
      Consumer Counselor,
                                                                Hon. Carol Sparks Drake,
      Appellee-Respondent.                                      Administrative Law Judge

                                                                Cause No. 44976



      Sharpnack, Senior Judge.


                                      Statement of the Case
[1]   The City of Charlestown, Indiana, executed an agreement to sell its water

      utility to Indiana-American Water Company, Inc., subject to approval by the

      Indiana Utility Regulatory Commission. NOW!, Inc., a not-for-profit entity

      opposed to the sale, filed a petition asking the IURC to reject the agreement.

      Charlestown and Indiana-American filed a separate petition asking the IURC

      to approve the sale.


[2]   The IURC consolidated the petitions, determined that the sale of the water

      utility was in the public interest, and issued an order approving the transaction.


      Court of Appeals of Indiana | Opinion 18A-EX-844 | December 31, 2018                  Page 2 of 27
      NOW appeals. We conclude the IURC’s order is supported by the facts and

      fulfills statutory requirements. We affirm.


                                                     Issues
[3]   NOW raises three issues, which we restate as:


              I.       Whether the IURC erred in determining that the purchase
                       price for the utility was reasonable.


              II.      Whether the IURC erred in determining that Charlestown
                       substantially complied with the statute requiring that
                       information related to utility appraisals be made available
                       to the public.


              III.     Whether the IURC erred in determining that Charlestown
                       complied with the statute governing public hearings to
                       discuss sales of municipal utilities.


                                Facts and Procedural History
[4]   Charlestown is a community of approximately 8,000 people in Clark County,

      Indiana. The city has owned and operated a water utility for over fifty years.

      The utility’s equipment consists of a well field, four raw water wells, 15,000 feet

      of raw water transmission main, a 1.5 million gallon ground storage tank, a

      pump station and treatment facility, a 250,000 gallon stand pipe, a 500,000

      gallon elevated tank, approximately 290,000 feet of water mains, 488 valves,

      and 296 hydrants. The system serves 2,898 metered accounts.




      Court of Appeals of Indiana | Opinion 18A-EX-844 | December 31, 2018       Page 3 of 27
[5]   Over the years, Charlestown neglected to maintain its water distribution

      system, and as a result manganese and other minerals have built up in storage

      tanks and water mains, causing some utility customers to see “brown water” in

      their taps. Appellant’s App. Vol. 3, p. 6. The city also experienced water main

      leaks. The problem was exacerbated by Charlestown’s failure to maintain

      adequate records, such as a map of the water system, prior to 2000.


[6]   Charlestown officials, including Mayor G. Robert Hall, attempted to correct the

      problems, but as of 2017 they still encountered two to three water main leaks

      per month and eight to ten complaints of brown water per month. The mayor

      consulted with an engineer, who estimated that eliminating the brown water

      problem and addressing other defects would cost $7.2 million. City officials

      ultimately concluded that Charlestown could not fix the water utility’s failing

      infrastructure without a large increase in customer rates.


[7]   Indiana-American is an Indiana corporation based in Greenwood, Indiana, that

      provides water utility services to approximately 300,000 customers across

      Indiana, including in Clark County. In the spring of 2016, Mayor Hall met

      with Indiana-American to discuss the sale of Charlestown’s water utility. City

      officials concluded Indiana-American could fix the utility infrastructure

      problems with fewer increases in customer rates because the company could

      spread improvement costs across its entire customer base.


[8]   While discussions were ongoing, Charlestown’s engineering contractor,

      Saegesser Engineering, obtained appraisals of the water utility. The appraisers’


      Court of Appeals of Indiana | Opinion 18A-EX-844 | December 31, 2018    Page 4 of 27
       reports were provided to Charlestown in November 2016. The appraisers

       “recertified” their reports and returned them to Charlestown on April 1, 2017.

       Appellant’s App. Vol. 3, p. 18. The appraisers valued the utility’s property at

       $13,449,711. Id. at 158.


[9]    Charlestown and Indiana-American negotiated a purchase agreement, subject

       to the IURC’s approval of the transaction and the IURC’s recognition of the

       full purchase price in Indiana-American’s net original cost rate base.

       Charlestown agreed to turn over all the utility’s assets, except the well fields,

       which Charlestown would lease to Indiana-American by separate agreement.

       Indiana-American agreed to pay $13,403,711 for Charlestown’s water system,

       an amount equal to the total appraised value minus the appraised value of the

       wells and well pumps that Charlestown would retain and lease to Indiana-

       American. Appellant’s App. Vol. 2, pp. 16-17.


[10]   The Charlestown City Council held a meeting on April 3, 2017, during which

       they scheduled a public meeting for May 11, 2017, to discuss the sale. Notice

       of the meeting was published in the local newspaper on April, 11, 2017. The

       notice stated that a copy of “the appraisal” was available for review in the

       Charlestown Clerk-Treasurer’s office. Appellee Charlestown’s App. Vol. 2, p.

       125.


[11]   The public meeting was held as scheduled. On July 3, 2017, the city council

       introduced an ordinance to sell the utility and then adopted the ordinance on

       July 6, 2017.


       Court of Appeals of Indiana | Opinion 18A-EX-844 | December 31, 2018       Page 5 of 27
[12]   On July 7, 2017, NOW filed a complaint against Charlestown and Indiana-

       American under IURC cause number 44964, asking the IURC to reject the

       utility sale. On August 17, 2017, Charlestown and Indiana-American filed a

       joint petition and case-in-chief under IURC cause number 44976. Charlestown

       and Indiana-American asked the IURC to approve their transaction and to

       include the purchase price and related costs in Indiana-American’s rate base for

       ratemaking purposes. The IURC consolidated the cases under cause number

       44976, granting NOW permission to intervene.


[13]   Next, NOW moved to strike or dismiss Charlestown and Indiana-American’s

       case-in-chief. The Indiana Office of the Utility Consumer Counselor (OUCC),

       an entity that represents the public in IURC proceedings, appeared in the case

       and moved to dismiss Charlestown and Indiana-American’s joint petition. The

       IURC denied the motions of NOW and the OUCC. NOW next filed a motion

       for summary judgment.


[14]   The IURC presided over a three-day evidentiary hearing, during which

       Charlestown, Indiana-American, NOW, and the OUCC presented evidence.

       After the hearing, the parties submitted proposed orders. The IURC issued an

       order concluding, in relevant part:


               1. Joint Petitioners are authorized to consummate the
                  acquisition of the Charlestown Water System by Indiana-
                  American on the terms described in the Asset Purchase
                  Agreement and as discussed herein.




       Court of Appeals of Indiana | Opinion 18A-EX-844 | December 31, 2018   Page 6 of 27
        2. The acquisition of the Charlestown Water System by Indiana-
           American on the terms and conditions described in the Asset
           Purchase Agreement and in the evidence is in the public
           interest as defined in Ind. Code § 8-1.5-2-6.1(d) and (e), and
           the same is approved.


        3. Indiana-American is authorized to record for ratemaking
           purposes as net original cost rate base of the assets being
           acquired an amount equal to the full purchase price, actual
           incidental expenses, and other actual costs of acquisition
           reasonably incurred, allocated among utility plant in service
           accounts as Indiana-American proposed.


        4. Indiana-American is authorized to charge customers currently
           served by the Charlestown Water System the current rates and
           charges and apply the same rules and regulations for water
           service and private and public fire service applicable in
           Indiana-American’s Area One rate group on file with and
           approved by the Commission, as the same are in effect from
           time to time.


        5. Indiana-American is authorized to reflect the acquisition of
           the Charlestown Water System on its books and records as of
           the closing by making the accounting and journal entries
           described in Attachment GMV-R1, as adjusted to actual,
           reasonable incidental expenses and other actual costs of the
           acquisition.


        6. The net original cost, as defined herein, of the acquired
           property shall be used for accounting, depreciation, and rate
           base valuation purposes after closing.


        7. Indiana-American is authorized to apply its depreciation
           accrual rates on and after the closing date of the acquisition to


Court of Appeals of Indiana | Opinion 18A-EX-844 | December 31, 2018       Page 7 of 27
                    depreciable property purchased from Charlestown pursuant to
                    the Asset Purchase Agreement.


                8. Indiana-American is authorized to encumber the properties
                   comprising the Charlestown Water System with the lien of
                   Indiana-American’s mortgage indenture.


                9. The relief sought in NOW’s Amended Complaint is denied.


                10. NOW’s Motion for Summary Judgment is denied.

                                                                                      1
       Appellant’s App. Vol. 2, pp. 51-52. This appeal followed.


                                      Discussion and Decision
                                          I. Standard of Review
[15]   The General Assembly created the IURC primarily as a fact-finding body with

       the technical expertise to administer the regulatory scheme devised by the

       legislature. N. Ind. Pub. Serv. Co. v. U.S. Steel Corp., 907 N.E.2d 1012, 1015 (Ind.

       2009). The IURC’s assignment is to ensure that public utilities provide

       constant, reliable, and efficient service to the citizens of Indiana. Id.


[16]   When reviewing an IURC order, we must first determine whether the order

       contains “specific findings on all the factual determinations material to its

       ultimate conclusions.” Ind. Gas Co. v. Ind. Fin. Auth., 999 N.E.2d 63, 66 (Ind.



       1
        The OUCC is not participating in this appeal. We have included the OUCC in the case’s caption because
       “[a] party of record in the trial court or Administrative Agency shall be a party on appeal.” Ind. Appellate
       Rule 17(A).

       Court of Appeals of Indiana | Opinion 18A-EX-844 | December 31, 2018                              Page 8 of 27
       2013) (quotation omitted). We then determine whether the findings of fact are

       supported by substantial evidence in the record. Id. We neither reweigh the

       evidence nor assess the credibility of witnesses, and we consider only the

       evidence most favorable to the IURC’s findings. Id. Factual findings will stand

       unless no substantial evidence supports them. U.S. Steel, 907 N.E.2d at 1016.


[17]   Both Charlestown and Indiana-American claim that we should defer to the

       IURC’s interpretations of statutes that it is charged with enforcing. To the

       contrary, the Indiana Supreme Court recently held that appellate courts review

       questions of law de novo, with “no deference” to an administrative tribunal.

       NIPSCO Indus. Group v. N. Ind. Pub. Serv. Co., 100 N.E.3d 234, 241 (Ind. 2018),

       on reh’g. “Separation-of-powers principles do not contemplate a ‘tie-goes-to-the-

       agency’ standard for reviewing administrative decisions on questions of law.”

       Id.


                                 II. Reasonableness of Sale Price
[18]   NOW argues that the IURC misapplied the statutes that govern the sale of

       utilities. Specifically, NOW claims that the IURC erred in determining that the

       sale price of Charlestown’s water utility was reasonable, as that term is defined

       by statute, and further claims that the proposed sale cannot move forward

       unless Charlestown residents approve the transaction in a referendum.


[19]   The parties agree that Charlestown’s proposed sale of its water utility is

       governed by Indiana Code section 8-1.5-2-1 et seq., which governs the sale of



       Court of Appeals of Indiana | Opinion 18A-EX-844 | December 31, 2018     Page 9 of 27
utilities by municipalities. In particular, Indiana Code section 8-1.5-2-6.1

(2016) governs the sale of “nonsurplus utility property.” It provides:


        (a) This section applies to a municipality that adopts an
        ordinance under section 5(d) of this chapter after March 28,
        2016.


        (b) Before a municipality may proceed to sell or otherwise
        dispose of all or part of its nonsurplus utility property under an
        ordinance adopted under section 5(d) of this chapter, the
        municipality and the prospective purchaser must obtain the
        approval of the commission under this section.


        (c) As part of the sale or disposition of the property, the
        municipality and the prospective purchaser may include terms
        and conditions that the municipality and the prospective
        purchaser consider to be equitable to the existing utility
        customers of:


        (1) the municipality’s municipally-owned utility; and


        (2) the prospective purchaser;


        as applicable.


        (d) The commission shall approve the sale or disposition of the
        property according to the terms and conditions proposed by the
        municipality and the prospective purchaser if the commission
        finds that the sale or disposition according to the terms and
        conditions proposed is in the public interest. For purposes of this
        section, the purchase price of the municipality’s nonsurplus
        utility property shall be considered reasonable if it does not
        exceed the appraised value set forth in the appraisal required
        under section 5 of this chapter.
Court of Appeals of Indiana | Opinion 18A-EX-844 | December 31, 2018         Page 10 of 27
        (e) The following apply to the commission’s determination under
        subsection (d) as to whether the proposed sale or disposition
        according to the proposed terms and conditions is in the public
        interest:


        (1) If:


        (A) the municipality’s municipally owned utility petitions the
        commission under IC 8-1-30.3-5(d); and


        (B) the commission approves the municipality’s municipally
        owned utility’s petition under IC 8-1-30.3-5(c);


        the proposed sale or disposition is considered to be in the public
        interest.


        (2) If subdivision (1) does not apply and subject to subsection (h),
        the commission shall consider the extent to which the proposed
        terms and conditions of the proposed sale or disposition would
        require the existing utility customers of either the prospective
        purchaser or the municipality’s municipally owned utility, as
        applicable, to pay rates that would subsidize utility service to the
        other party’s existing customers. If the commission determines
        that:


        (A) the proposed terms and conditions would result in a subsidy
        described in this subdivision; and


        (B) the subsidy would cause the proposed terms and conditions
        of the proposed sale or disposition not to be in the public interest;


        the commission shall calculate the amount of the subsidy that
        would result and shall set forth in an order under this section
        such changes to the proposed terms and conditions as the
Court of Appeals of Indiana | Opinion 18A-EX-844 | December 31, 2018         Page 11 of 27
        commission considers appropriate to address the subsidy. The
        prospective purchaser and the municipality shall each have thirty
        (30) days from the date of the commission’s order setting forth
        the commission’s changes to either accept or reject the changes.
        If either party rejects the commission’s changes, the proposed
        sale or disposition is considered not to be in the public interest.


        (3) In reviewing the proposed terms and conditions of the
        proposed sale or disposition under either subdivision (1) or (2),
        the commission shall consider the financial, managerial, and
        technical ability of the prospective purchaser to provide the utility
        service required after the proposed sale or disposition.


        (f) As part of an order approving a sale or disposition of property
        under this section, the commission shall, without regard to
        amounts that may be recorded on the books and records of the
        municipality and without regard to any grants or contributions
        previously received by the municipality, provide that for
        ratemaking purposes, the prospective purchaser shall record as
        the net original cost rate base an amount equal to:


        (1) the full purchase price;


        (2) incidental expenses; and


        (3) other costs of acquisition;


        Allocated in a reasonable manner among appropriate utility plant
        in service accounts.


        (g) The commission shall issue a final order under this section
        not later than two hundred ten (210) days after the filing of the
        parties’ case in chief.


Court of Appeals of Indiana | Opinion 18A-EX-844 | December 31, 2018        Page 12 of 27
        (h) In reviewing a proposed sale or disposition under subsection
        (e), the commission shall determine whether the factors set forth
        in IC 8-1-30.3-5(c) are satisfied as applied to the proposed sale or
        disposition of the municipality’s nonsurplus municipally owned
        utility property for purposes of section 5(m) of this chapter. If the
        commission determines that the factors set forth in IC 8-1-30.3-
        5(c):


        (1) are satisfied as applied to the proposed sale or disposition,
        section 5(g) through 5(k) of this chapter does not apply to the
        municipality’s ordinance adopted under section 5(d) of this
        chapter; or


        (2) are not satisfied as applied to the proposed sale or disposition:


        (A) section 5(g) through 5(k) of this chapter applies to the
        municipality’s ordinance adopted under section 5(d) of this
        chapter; and


        (B) the question as to whether the sale or disposition should be
        made must be submitted to the voters of the municipality at a
        special or general election if at least the number of the registered
        voters of the municipality set forth in section 5(h) of this chapter
        sign and present a petition to the legislative body opposing the
        sale or disposition, in accordance with section 5(g) through 5(k)
        of this chapter.


        However, notwithstanding this subsection, in reviewing a
        proposed sale or disposition under subsection (e)(2), the
        commission may not condition its approval of the proposed sale
        or disposition on whether the factors set forth in IC 8-1-30.3-5(c)
        are satisfied or on any other factors except those provided for in
        subsection (e)(2) and (e)(3).



Court of Appeals of Indiana | Opinion 18A-EX-844 | December 31, 2018        Page 13 of 27
[20]   Indiana Code section 8-1.5-2-6.1 is not the sole statute that governs this

       transaction. Charlestown and Indiana-American also petitioned the IURC to

       approve the transaction under Indiana Code section 8-1-30.3-5 (2016), which

       governs the treatment of cost differentials involved in the sale or disposition of
                                                                       2
       “distressed” water or wastewater utilities. That statute provides, in relevant

       part:


                  (a) This section applies if:


                  (1) a utility company acquires property from another utility
                  company at a cost differential in a transaction involving a willing
                  buyer and a willing seller; and


                  (2) at least one (1) utility company described in subdivision (1) is
                  subject to the jurisdiction of the commission under this article.


                  (b) There is a rebuttable presumption that a cost differential is
                  reasonable.




       2
           “Cost differential” is defined as the difference between:

                  (1) the cost to a utility company that acquires utility property from a distressed utility,
                  including the purchase price, incidental expenses, and other costs of acquisition; minus

                  (2) the difference between:

                  (A) the cost of the utility property when originally put into service by the distressed
                  utility; minus

                  (B) contributions or advances in aid of construction plus applicable accrued depreciation.

       Ind. Code § 8-1-30.3-1 (2015).

       Court of Appeals of Indiana | Opinion 18A-EX-844 | December 31, 2018                                     Page 14 of 27
        (c) The utility company that acquires the utility property may
        petition the commission to include the cost differentials as part of
        its rate base. The commission shall approve the petition if the
        commission finds the following:


        (1) The utility property is used and useful in providing water
        service, wastewater service, or both water and wastewater
        service.


        (2) The distressed utility failed to furnish or maintain adequate,
        efficient, safe, and reasonable service and facilities.


        (3) The utility company will make reasonable and prudent
        improvements to ensure that customers of the distressed utility
        will receive adequate, efficient, safe, and reasonable service.


        (4) The acquisition of the utility property is the result of a mutual
        agreement made at arms length.


        (5) The actual purchase price of the utility property is reasonable.


        (6) The utility company and the distressed utility are not affiliated
        and share no ownership interests.


        (7) The rates charged by the utility company before acquiring the
        utility property of the distressed utility will not increase
        unreasonably as a result of acquiring the utility property.


        (8) The cost differential will be added to the utility company’s
        rate base to be amortized as an addition to expense over a
        reasonable time with corresponding reductions in the rate base.




Court of Appeals of Indiana | Opinion 18A-EX-844 | December 31, 2018         Page 15 of 27
        (d) A utility company may petition the commission in an
        independent proceeding to approve a petition under subsection
        (c) before the financial close of the transaction if the utility
        company provides:


        (1) Notice of the proposed acquisition and any changes in rates
        or charges to customers of the distressed utility;


        (2) Notice to customers of the utility company if the proposed
        acquisition will increase the utility company’s rates by an amount
        that is greater than one percent (1%) of the utility company’s base
        annual revenue;


        (3) Notice to the office of the utility consumer counselor; and


        (4) A plan for reasonable and prudent improvements to provide
        adequate, efficient, safe, and reasonable service to customers of
        the distressed utility.


        (e) In a proceeding under subsection (d), the commission shall
        issue its final order not later than two hundred ten (210) days
        after the filing of the petitioner’s case in chief. If the commission
        grants the petition, the commission’s order shall authorize the
        acquiring utility company to make accounting entries recording
        the acquisition and that reflect:


        (1) the full purchase price;


        (2) incidental expenses; and


        (3) other costs of acquisition;




Court of Appeals of Indiana | Opinion 18A-EX-844 | December 31, 2018        Page 16 of 27
                as the original cost of the utility plant in service assets being
                acquired, allocated in a reasonable manner among appropriate
                utility plant in service accounts.


       Ind. Code § 8-1-30.3-5.


[21]   The key issue is whether the purchase price for Charlestown’s water utility was

       reasonable for purposes of Indiana Code sections 8-1.5-2-6.1(d) and 8-1-30.3-
                 3
       5(c)(5). The IURC determined that the purchase price for Charlestown’s utility

       was “equal to the appraisal performed by the statutorily appointed appraisers,”

       and thus met the reasonableness requirement of Indiana Code section 8-1.5-2-

       6.1(d). NOW does not disagree that the purchase price was equal to the
                              4
       appraised value.


[22]   As for Indiana Code section 8-1-30.3-5(c)(5)’s requirement that the “actual

       purchase price” must be reasonable, the IURC concluded that the requirement

       had been met because the purchase price, which did not exceed the appraised

       value, was reasonable under Indiana Code section 8-1.5-2-6.1(d). NOW

       disagrees with this conclusion, arguing the two statutes “use different

       standards” to determine reasonableness and must be read separately.

       Appellant’s Br. p. 21. NOW further claims that the IURC’s decision results in




       3
        On appeal, NOW does not challenge the transaction under any other subsection of Indiana Code section 8-
       1-30.3-5(c).
       4
         As discussed above, the purchase price included the value of the utility’s real property and other assets, but
       it excluded the value of the wells and well pumps that the city would continue to own and would lease to
       Indiana-American.

       Court of Appeals of Indiana | Opinion 18A-EX-844 | December 31, 2018                               Page 17 of 27
       Indiana Code section 8-1-30.3-5(c)(5)’s reasonableness requirement being

       relegated to “mere surplusage.” Reply Br. p. 10.


[23]   Addressing this issue requires us to review principles of statutory application

       and construction. When a statute is unambiguous, it is unnecessary to engage

       in statutory construction in an effort to determine and give effect to legislative

       intent. McCabe v. Comm’r, Ind. Dep’t of Ins., 949 N.E.2d 816, 819 (Ind. 2011).

       Rather, we give an unambiguous statute its clear and plain meaning. Id.


[24]   If statutory language is open to more than one reasonable interpretation, then

       the statute is ambiguous and must be considered according to the rules of

       statutory interpretation. Matter of Supervised Estate of Kent, 99 N.E.3d 634, 638

       (Ind. 2018). We give undefined terms their plain and ordinary meaning. Id.

       “[P]aramount consideration must be given to the basic principle that two

       statutes that apply to the same subject matter must be construed harmoniously

       if possible.” McCabe, 949 N.E.2d at 820. This rule takes precedence over other

       rules of statutory construction. Id.


[25]   Indiana Code section 8-1-30.3-5(c)(5) requires the IURC to determine whether

       “[t]he actual purchase price of the utility property is reasonable.” That statute

       does not define “actual” or “reasonable,” and the sentence could be open to

       multiple interpretations. We thus apply rules of statutory construction.


[26]   Indiana Code section 8-1.5-2-6.1 et seq. governs the transfer, acquisition, and

       improvement of municipal utilities, including the transfer of “nonsurplus”

       utility property. Indiana Code section 8-1-30.3-1 et seq. governs the treatment

       Court of Appeals of Indiana | Opinion 18A-EX-844 | December 31, 2018      Page 18 of 27
       of cost differentials for a subset of nonsurplus utility acquisitions, specifically

       the sale of “distressed” utilities. Indiana Code section 8-1.5-2-6.1 refers to

       Indiana Code section 8-1-30.3-5. Indeed, section 8-1-30.3-5 is necessarily

       dependent upon section 8-1.5-2-6.1, because there would be no purpose in

       seeking permission under section 8-1-30.3-5 for a cost differential to be included

       in a rate base unless the petitioner was engaged in the purchase of utility

       property under section 8-1.5-2-6.1. We conclude the two statutes apply to the

       same subject matter and must be construed harmoniously. See Hancock Cty.

       Rural Elec. Membership Corp. v. City of Greenfield, 768 N.E.2d 909, 912 (Ind. Ct.

       App. 2002) (construing together several statutes governing annexation

       ordinances).


[27]   Reading the two statutes together, we note that when the IURC reviews the sale

       of nonsurplus utility property, Indiana Code section 8-1.5-2-6.1(h) requires the

       IURC to consider the factors set forth in Indiana Code section 8-1-30.3-5(c),

       even if the purchaser of the property does not file a petition under Indiana Code

       section 8-1-30.3-5(c)(5). The IURC is thus obligated to consider the

       reasonableness of the sale price under Indiana Code section 8-1.5-2-6.1(d) under

       all circumstances. The reasonableness requirement of Indiana Code section 8-

       1-30.3-5(c)(5) must be subordinate and complementary to the reasonableness

       requirement of Indiana Code section 8-1.5-2-6.1(d).


[28]   We conclude the sale process set forth in Indiana Code section 8-1.5-2-6.1

       governs sales of nonsurplus property by both distressed and nondistressed

       utilities. In the case of sales involving nondistressed utilities, any price that

       Court of Appeals of Indiana | Opinion 18A-EX-844 | December 31, 2018        Page 19 of 27
       does not exceed the appraised value is deemed reasonable per subsection (d) of

       that statute. In the case of a sale by a distressed utility, a sale price that does not

       exceed the appraised value is similarly deemed reasonable under Indiana Code

       section 8-1.5-2-6.1(d), but Indiana Code section 8-1-30.3-5(c)(5) further allows

       the IURC to approve a sale price in excess of the appraised value if the IURC

       finds the “actual price” to be reasonable under the circumstances based on

       sufficient evidence. In other words, in general the appraised value of

       nonsurplus utility property is the reasonable price limit under Indiana Code

       section 8-1.5-2-6.1, except in cases where a distressed utility is for sale, where a

       higher price may be reasonable. This reading harmonizes the two statutes and

       gives meaning to section 8-1-30.3-5(c)(5).


[29]   Our reading of these statutes is supported by a related statute, Indiana Code

       section 8-1.5-2-6 (2016). Subsection (b) of that statute provides: “[e]xcept as

       provided in subsection (e), [nonsurplus utility] property may not be sold for less

       than its full appraised value, as set forth in the appraisal, less the amount of any

       bonds, liens, or other indebtedness due upon the property . . . .” In turn,

       Indiana Code section 8-1.5-2-6(e) states:


               (e) The municipally owned utility property that is [sold as
               nonsurplus property] may be sold for less than its full appraised
               value, as set forth in the appraisal, if the municipal legislative
               body determines that it would be in the municipality’s best
               interests to sell the property for less than its full appraised value
               so as to result in lower utility rates to be charged by the
               prospective purchaser to customers of the municipality's
               municipally owned utility.


       Court of Appeals of Indiana | Opinion 18A-EX-844 | December 31, 2018            Page 20 of 27
[30]   Indiana Code section 8-1.5-2-6 thus grants municipalities the authority to sell

       utility property for less than the appraised value under certain circumstances,

       which strengthens our conclusion that when the sale price is greater than the

       appraised value, the IURC must consider the reasonableness of the “actual

       price” under Indiana Code section 8-1-30.3-5(c)(5).


[31]   For these reasons, we agree with the IURC that the sale price of Charlestown’s

       utility, which was equal to the appraised value, was reasonable for purposes of

       Indiana Code sections 8-1.5-2-6.1(d) and 8-1-30.3-5(c)(5). As a result,

       Charlestown and Indiana American’s transaction fulfilled the requirements of

       Indiana Code section 8-1-30.3-5(c), and the transaction did not need to be
                                                                                                      5
       submitted to a public vote under Indiana Code section 8-1.5-2-6.1(h).


                     III. Providing Appraisal Information to Public
[32]   NOW next claims the City failed to comply with statutory requirements
                                                                            6
       governing disclosures during the appraisal process. The parties’ dispute

       focuses on Indiana Code section 8-1.5-2-4 (2016), which provides:




       5
         On a related note, NOW argues in detail that the appraisal was flawed, pointing to testimony by OUCC
       witnesses identifying perceived errors in the appraisal calculations. The IURC concluded there was no basis
       to challenge the appraisals because: (1) the appraisers met statutory requirements for qualifications; and (2)
       the appraisals were deemed reasonable by law, pursuant to Indiana Code sections 8-1.5-2-6.1(d) and 8-1-30.3-
       5(c)(5). Appellant’s App. Vol. 2, p. 32. We agree with the IURC’s reading of those statutes and decline to
       address NOW’s evidentiary challenges to the appraisal’s calculations.
       6
         Charlestown argues NOW waived this claim for appellate review because NOW first presented it to the
       IURC in NOW’s motion for summary judgment after the expiration of the deadline for written evidentiary
       submissions. “Appellate review presupposes that a litigant’s arguments have been raised and considered” in
       the prior proceeding. Plank v. Cmty. Hosps. of Ind., Inc., 981 N.E.2d 49, 53 (Ind. 2013). In this case, NOW

       Court of Appeals of Indiana | Opinion 18A-EX-844 | December 31, 2018                               Page 21 of 27
               Whenever the municipal legislative body or the municipal
               executive determines to sell or otherwise dispose of nonsurplus
               municipally owned utility property, it shall provide for the
               following in a written document that shall be made available for
               inspection and copying at the offices of the municipality’s
               municipally owned utility in accordance with IC 5-14-3.


               (1) The appointment, as follows, of three (3) residents of Indiana
               to serve as appraisers:


               (A) One (1) disinterested person who is an engineer licensed
               under IC 25-31-1.


               (B) One (1) disinterested appraiser licensed under IC 25-34.1.


               (C) One disinterested person who is either:


               (i) an engineer licensed under IC 25-31-1; or


               (ii) an appraiser licensed under IC 25-34.1.


               (2) The appraisal of the property.


               (3) The time that the appraisal is due.


[33]   The IURC determined that Charlestown did not fully meet the requirements of

       the statute because the city failed to put the required information in a single




       presented its claim to the IURC, and the IURC addressed the claim in its final order. We reject
       Charlestown’s claim of waiver.

       Court of Appeals of Indiana | Opinion 18A-EX-844 | December 31, 2018                              Page 22 of 27
       document. Notwithstanding, the IURC declined to reject the utility sale,

       concluding Charlestown substantially complied with the statute by having the

       information available in multiple documents.


[34]   The Indiana Supreme Court has recognized that “immaterial variances from

       prescribed procedures [may] have no legal fallout.” D & M Healthcare, Inc. v.

       Kernan, 800 N.E.2d 898, 903 (Ind. 2003). Substantial compliance with a

       statutory mandate is sufficient if the act of compliance accomplishes the

       essential purpose of the statute. Lewis v. Bd. of Sch. Trs. of Charles A. Beard Mem’l

       Sch. Corp., 657 N.E.2d 180, 183 (Ind. Ct. App. 1995), trans. denied.


[35]   The plain language of Indiana Code section 8-1.5-2-4 provides that the required

       information shall be set forth in “a written document.” There is no dispute that

       the City did not compile such a document, thus failing to comply with the

       statute in its entirety. Instead, the City possessed multiple documents related to

       appointing appraisers, as well as the appraisal itself, which collectively stated

       the identity of the appraisers and specified the property to be appraised.

       According to the City’s discovery responses, those documents were available

       upon request at the “municipal utility office.” Appellant’s App. Vol. 6, p. 61.


[36]   NOW further argues that none of the documents identified by the city stated the

       “time the appraisal is due,” in violation of Indiana Code section 8-1.5-2-4.

       Based on our review of the documents, we agree. None of the appraisers’

       contracts, or the appraisals themselves, explained when the appraisals were due

       to be submitted to the city. Nevertheless, despite Charlestown’s failure to


       Court of Appeals of Indiana | Opinion 18A-EX-844 | December 31, 2018       Page 23 of 27
       compile one document and to state when the appraisal was due, we agree with

       the IURC that the City substantially complied with statutory requirements. It

       appears the essential purpose of Indiana Code section 8-1.5-2-4 is to allow

       citizens to learn who is appraising municipal utility property and have access to

       the appraisal itself. Charlestown, by making available the documents

       containing this information, accomplished that essential purpose. We decline

       to reverse the IURC’s decision on this basis. See Gee v. Green Tree Servicing,

       LLC, 934 N.E.2d 1260, 1262 (Ind. Ct. App. 2010) (sheriff substantially

       complied with statute requiring posting of tax sale notice at door of county

       courthouse).


[37]   NOW presents a related argument, claiming that Charlestown failed to make

       the documents available to the public. In support of its claim, NOW cites

       evidence from a citizen who submitted public records requests for documents

       related to the appraisal process, only to have the requests denied by

       Charlestown’s attorney. This case is not the forum to determine whether the

       city complied with the public records request statutes, which have separate

       remedies for noncompliance. Further, Charlestown presented testimony that

       the documents were available for public review. As a result, NOW’s argument

       amounts to a request to reweigh the evidence, which does not comply with our

       standard of review.


                                IV. Timeliness of Public Hearing
[38]   For its final allegation of error, NOW claims the IURC should have rejected the

       utility transaction because Charlestown failed to comply with the statutory
       Court of Appeals of Indiana | Opinion 18A-EX-844 | December 31, 2018     Page 24 of 27
                                                                                        7
deadlines for holding a public hearing to discuss the proposed sale. Indiana

Code section 8-1.5-2-5 (2016) sets forth the timeline for a public hearing, in

relevant part:


        (d) If, after the return of the appraisal by the appraisers, the
        legislative body and the municipal executive decide to proceed
        with the sale or disposition of the nonsurplus municipally owned
        utility property, the legislative body shall, not earlier than the
        thirty (30) day period described in subsection (e) and not later
        than ninety (90) days after the return of the appraisal, hold a
        public hearing to do the following:


        (1) Review and explain the appraisal.


        (2) Receive public comment on the proposed sale or disposition
        of the nonsurplus municipally owned utility property.


        Not less than thirty (30) days or more than sixty (60) days after
        the date of a hearing under this section, the legislative body may
        adopt an ordinance providing for the sale or disposition of the
        nonsurplus municipally owned utility property, subject to
        subsections (f) and (g) and, in the case of an ordinance adopted
        under this subsection after March 28, 2016, subject to section 6.1
        of this chapter. The legislative body is not required to adopt an
        ordinance providing for the sale or disposition of the nonsurplus
        municipally owned utility property if, after the hearing, the
        legislative body determines it is not in the interest of the
        municipality to proceed with the sale or disposition. Notice of a




7
 Charlestown argues that NOW waived this claim for failure to timely present it to the IURC. We decline to
apply the doctrine of waiver here for the same reasons stated in footnote 6 above.

Court of Appeals of Indiana | Opinion 18A-EX-844 | December 31, 2018                         Page 25 of 27
               hearing under this section shall be published in the manner
               prescribed by IC 5-3-1.


               (e) The hearing on the proposed sale or disposition of the
               nonsurplus municipally owned utility property may not be held
               less than thirty (30) days after notice of the hearing is given as
               required by subsection (d).


[39]   In this case, the parties do not dispute that the appraisal was delivered to

       Charlestown in November 2016, and that Charlestown failed to hold a public

       hearing within ninety days of delivery. In addition, there appears to be no

       dispute that the appraisers delivered a “recertified” appraisal to the city on April

       1, 2017, and that Charlestown held a public hearing not earlier than thirty days

       and no later than ninety days after delivery of the “recertified” appraisal. The

       question is whether the recertification was barred by Indiana Code section 8-

       1.5-2-5.


[40]   The IURC determined recertification of the appraisal was not expressly

       forbidden by the statute, and Charlestown complied with the statute because the

       recertification process did not harm “the public’s opportunity to comment and

       be heard by the City Council.” Appellant’s App. Vol. 2, p. 42. We agree. The

       plain language of Indiana Code section 8-1.5-2-5 does not bar recertification or

       redelivery of an appraisal. Nothing may be read into a statute which is not

       within the manifest intention of the legislature as gathered from the statute

       itself. Ind. Dep’t of State Revenue v. Horizon Bancorp, 644 N.E.2d 870, 872 (Ind.

       1994). The statute sets forth a timetable for a public hearing once an appraisal


       Court of Appeals of Indiana | Opinion 18A-EX-844 | December 31, 2018         Page 26 of 27
       is delivered, and Charlestown complied with that timetable as to the recertified

       appraisal.


[41]   NOW argues Charlestown’s citizens were harmed by the recertification because

       the appraisal was “stale” by six months when Charlestown held its public

       hearing. Reply Br. p. 22. We have already determined the IURC properly

       ruled that the calculations in the appraisal are not to be second-guessed, because

       the purchase price was reasonable by statute. Thus, alleged staleness does not

       change the result. We find no reversible error.


                                                 Conclusion
[42]   For the reasons stated above, we affirm the judgment of the Indiana Utility

       Regulatory Commission.


[43]   Affirmed.


       Bradford, J., and Altice, J., concur.




       Court of Appeals of Indiana | Opinion 18A-EX-844 | December 31, 2018   Page 27 of 27
