Judges split on district’s need to pay for new water main

The Indiana Court of Appeals split today on whether a school district was required to pay for the installation of a new water main as opposed to privately putting in its own water service line to connect to a new school.

The majority agreed with the Indiana Utility Regulatory Commission’s determination that the Indianapolis Department of Waterworks rules don’t prevent the Southern Hancock School Systems from connecting a service pipe to its new school from an existing main instead of paying to install a new water main.

In Department of Waterworks for the Consolidated City of Indianapolis v. Community School Corp. of Southern Hancock County, No. 93A02-1002-EX-218, the school system is building a new school and wanted to run a service pipe to a water main that runs along County Road 600 West, which services two other schools. The water company argued that the school needed to pay for a new water main along County Road 200 South in order to have adequate water for the school. The cost would be around $330,000. The school could install a service pipe and connect to the existing water main for around $170,000.

The informal disposition of the Consumer Affairs Division of the IURC concluded the water company provided sufficient reasoning to request the installation of a water main. The IURC reversed and held the school should be allowed to connect to the existing main.

The judges split not only on whether the school is required to install a new water main, but also on the standard of review that should be applied. Chief Judge John Baker and Judge Paul Mathias decided the standard of review should be a “multiple tiered review” focused on the facts with a “high level of deference,” as outlined in NIPSCO v. U.S. Steel Corp., 907 N.E.2d 1012, 1018 (Ind. 2009). Judge Patricia Riley in her dissent instead would rely on a passage from Citizens Action Coalition of Indiana v. NIPSCO, 485 N.E.2d 610, 612-13 (Ind. 1985), which says agency action reviews are limited to whether the commission stayed within its jurisdiction and conformed to the statutory standards and legal principles involved in its ruling.

At issue is the water company’s Rule 7(J), which states “A service pipe which is irregularly located shall, at [the Water Company’s] expense, be relocated and connected to a new main abutting the premises when subsequently installed for other purposes. [The Water Company] shall not be under any obligation to permit connection or to supply service to any customer whose premises does not abut a main.”

The majority found the water company’s proposition that each “new premise” has to be served by a main extension directly contradicts with the definition of premises that explicitly contemplates multiple premises or buildings on a single parcel or contiguous parcels of real estate being connected to the same main and each served by a separate service pipe, wrote Chief Judge Baker.

“In essence, none of the rules allows the Water Company to deny a connection to an existing main abutting a customer’s property and force a main extension because it can get a new main closer to the premises,” he wrote.

Judge Riley believed the IURC misinterpreted Rule 7(J) and exceeded its jurisdiction. The new school will be built on its own parcel of land within the school corporation’s campus.

“As far as I can discern, this new construction is not attached to any existing building but is an independent structure at the far end of the campus. Mindful of the rule and its accompanying definitions, the new school should be considered a ‘premise,’ pursuant to Rule 7(J), and thus it would be appropriate to require the School to pay for a new main extension,” she wrote.