Appellate panel affirms IURC jurisdiction over Muncie sewer dispute

The Indiana Utility Regulatory Commission did not overstep its bounds when it granted a municipal sewer company exclusive license to do business in unincorporated areas near Muncie, the Indiana Court of Appeals has ruled, finding Indiana Code gave the IURC jurisdiction in the Delaware County dispute.

Judge Robert Altice wrote for the unanimous appellate panel in Delaware County Regional Wastewater District v. Muncie Sanitary District, et al., 19A-EX-2964, which presented the court with an issue of first impression.

The dispute began in July 2015, when the Muncie City Council passed an ordinance giving the Muncie Sanitary District “exclusive license” over unincorporated areas within four miles of city boundaries, with some exceptions. If any of this territory came into dispute, the ordinance looked to Indiana Code § 8-1.5-6, which provides an administrative remedy through IURC review.

MSD sought approval of the ordinance from the commission in February 2018. In its petition, the municipal sanitation district noted the Delaware County Regional Wastewater District included territory that overlapped with the territory given to MSD through the ordinance. MSD was created pursuant to an ordinance, while DCRWD was created by the predecessor organization to the Indiana Department of Environmental Management and operated under Indiana Code Article 13-26, known as the IDEM Statutes.

The Delaware County utility moved to intervene. At the time of an evidentiary hearing, the county utility worked with three providers – Chesterfield, Yorktown and MSD – to treat collected wastewater and was working with the Liberty Regional Waste District to build a new treatment facility.

Thus, “During the hearing, MSD agreed to amend the Regulated Territory in several respects: First, it agreed to exclude the territory were LRWD was providing service. Second, MSD entered into a stipulation with Yorktown specifying that MSD would not seek to serve areas within Yorktown’s boundaries. Third, MSD agreed to expressly exclude from its Regulated Area the area where DCRWD was currently providing wastewater service,” Altice wrote.

The IURC approved the Muncie ordinance, with MSD’s three amendments, in November 2019. The COA affirmed that decision on Wednesday, calling back to I.C. 8-1.5-6, known as the Regulated Territory Statutes.

“The IDEM Statutes that DCRWD relies on concern establishment and regulation of waste districts, and while they address objections at the time a district is established, those statutes do not address resolution of competing territorial claims between an existing waste district and another wastewater utility,” Altice wrote. “The Regulated Territories Statutes do.”

DCRWD relied on City of North Vernon v. Jennings Northwest Regional Utilities, 829 N.E.2d 1 (Ind. 2005), to argue against the IURC’s jurisdiction, but the appellate panel determined Jennings did not control.

“Jennings was decided nine years before the enactment of the Regulated Territory Statutes, and the Court conducted its analysis in the absence of any dispute-resolution mechanism created by the legislature,” Altice wrote. “… By enacting I.C. § 8-1.5-6-6, the legislature specifically put the provision of service by a utility in a regulated territory or the approval of a regulatory ordinance under the jurisdiction of the Commission.

“… In sum, the Regulated Territories Statutes task the Commission, when presented with a petition to approve a regulatory ordinance, with resolving territorial disputes by considering any utilities that are actually or potentially affected by a regulatory ordinance (including regional districts), evaluating their ability to provide service and their history of service, and making a decision that is in the best interest of the public,” the panel concluded. “Accordingly, we find that in this case the Commission had the jurisdiction and authority to approve the Ordinance and its order was, therefore, not contrary to law.”