Town of Chandler v. Indiana-American Water

• Decision Date: 08 September 2008
• Docket Number: No. 93A02-0801-EX-00005.,93A02-0801-EX-00005.
• Citation: 892 N.E.2d 1264
• Parties: TOWN OF CHANDLER, Indiana, Appellant-Respondent, v. INDIANA-AMERICAN WATER CO., Appellee-Complainant, and Town of Newburgh, Indiana, Appellees/Complainant/Statutory Party/Intervenor.
• Court: Indiana Appellate Court

892 N.E.2d 1264

TOWN OF CHANDLER, Indiana, Appellant-Respondent, v. INDIANA-AMERICAN WATER CO., Appellee-Complainant, and Town of Newburgh, Indiana, Appellees/Complainant/Statutory Party/Intervenor.

No. 93A02-0801-EX-00005.

Court of Appeals of Indiana.

September 8, 2008.

Phillip J. Fowler, David T. McGimpsey, Christopher M. York, Bingham McHale LLP, Indianapolis, IN, Attorneys for Appellant.

Daniel W. McGill, Nicholas K. Kile, P. Jason Stephenson, Barnes & Thornburg LLP, Indianapolis, IN, Attorneys for Appellee Indiana-American Water Company, Inc.

Mark W. Cooper, Indianapolis, IN, Attorney for Appellee Town of Newburgh, Indiana.

OPINION

MATHIAS, Judge.

The Town of Chandler ("Chandler") appeals from the order of the Indiana Utility Regulatory Commission ("the Commission") granting the relief requested by the petition of Indiana-American Water Co. ("Indiana-American") and denying Chandler's motion to dismiss. Upon appeal, Chandler claims: (1) that the Commission has been statutorily deprived of the authority to hear the dispute at issue, and (2) that the Commission's ruling violates Article 1, Section 23 of the Indiana Constitution.

We affirm.

Facts and Procedural History

Chandler is a town in Warrick County, Indiana, with a population of less than 7,500. Chandler owns and operates a water utility for the delivery of water to the public within and around the corporate limits of the town. Chandler's water utility is a "municipally owned utility." See Ind.Code § 8-1-2-1(h) (2001). Indiana-American owns a water utility for the delivery of water to the public throughout numerous communities in Indiana, including Warrick County. Indiana-American is a "public utility." See I.C. § 8-1-2-1(a).

Chandler and Indiana-American both provide water service to areas of Warrick County which lie within four miles of the corporate boundaries of both Chandler and Newburgh, another town in Warrick County. Chandler and Indiana-American serve neighboring properties, and, in some places, their water lines cross or are located on two sides of the same street.

This system of competing water utilities made it difficult for Chandler to plan improvements and extensions of its water utility system. Therefore on August 21, 2006, Chandler adopted Ordinance 2006-13, which provided that Chandler's water utility would be the exclusive service provider within the four mile area surrounding the town. Chandler adopted this ordinance pursuant to Indiana Code sections 36-9-2-14 and 36-9-2-18 (2006). Section 14 provides that a municipality "may regulate the furnishing of water to the public" and may "establish, maintain, and operate waterworks." Section 18 provides that a municipality may exercise the powers granted by Section 14 "in areas within four (4) miles outside its corporate boundaries."

In response to this ordinance, Indiana-American filed a complaint with the Commission on October 3, 2006, requesting that the Commission determine that unincorporated areas in the four mile area surrounding Chandler were open to competition for water customers. Chandler then adopted Ordinance 2006-17, which excluded from its scope areas within the corporate limits of other municipalities, but otherwise restated the essential provisions of Ordinance 2006-13. In response to this, Indiana-American filed an amended complaint with the Commission.

On October 25, 2006, Chandler filed an action for declaratory judgment in Warrick Superior Court, asking that the court declare the Chandler ordinance valid and that Chandler was the exclusive provider of water utility service to the area in question. On December 22, 2006, Indiana-American filed a motion to dismiss this action. After briefing, the trial court stayed the action before it pending the outcome of the Commission's decision.

On November 22, 2006, Chandler filed a motion to dismiss the action before the Commission, claiming that the Commission lacked subject-matter jurisdiction to hear the case. The Presiding Officers of the Commission denied this motion to dismiss, and on March 28, 2007, this decision was affirmed upon appeal to the full Commission. On March 30, 2007, Chandler filed a notice of appeal from the Commission's decision and a motion to stay the action before the Commission pending the appeal.

On May 7, 2007, Chandler filed with the Commission a notice of the enactment of H.E.A. 1722, a second motion to dismiss, and a request to withdraw the motion to stay. In this second motion to dismiss, Chandler argued that H.E.A. 1722 amended Indiana Code section 8-1-2-86.5 to clearly remove Chandler from the jurisdiction of the Commission.

On June 18, 2007, Chandler requested that the Commission vacate the scheduled hearing on Indiana-American's complaint because the Commission had not yet ruled on Chandler's pending second motion to dismiss. Chandler argued in the alternative that, even if the Commission did not grant its motion to dismiss, then Newburgh should be added to the action as an indispensable party. Apparently, Newburgh had passed its own ordinance regulating the provision of sewer and water services within the four mile area surrounding its boundaries, and the four mile area surrounding Newburgh overlapped with the four mile area surrounding Chandler. The Commission then continued the hearing on Indiana-American's complaint to August 3, 2007.

On June 25, 2007, this court remanded Chandler's appeal of the denial of its first motion to dismiss in order to allow the Commission to rule on Chandler's second motion to dismiss. Our order allowed Chandler to raise any issue involving the denial of its first motion to dismiss in any subsequent appeals from the Commission in this case.

On July 13, 2007, Newburgh filed a petition with the Commission to intervene, which the Commission granted. Chandler then filed a cross-claim against Newburgh, arguing that, if the Commission did have jurisdiction to hear the matter, then Newburgh's ordinance was void. Newburgh filed a motion to dismiss the cross-claim, which the Commission granted on October 23, 2007, as not being ripe for review.

Ultimately, the Commission held a hearing on the Indiana-American complaint on September 24, 2007. On December 5, 2007, the Commission issued an order denying Chandler's second motion to dismiss, granting Indiana-American's requested relief, and providing that Indiana-American could provide water service to a prospective customer that reasonably demanded service within the four mile area around Chandler, regardless of the Chandler ordinances to the contrary. Chandler now appeals.

Standard of Review

In its appellant's brief, Chandler insists that the issue before us is simply one of statutory interpretation. As such, Chandler claims that our standard of review is de novo. See Cotton v. Ellsworth, 788 N.E.2d 867, 869 (Ind.Ct.App.2003) (noting that review of trial court's interpretation of statutes is a question of law which we review de novo). Indiana-American claims that we are reviewing the construction of a statute by an administrative agency, and notes that a reviewing court should generally accept an agency's reasonable interpretation of the statutes and regulations it is charged to enforce. Ind. State Bd. of Educ. v. Brownsburg Cmty. Sch. Corp., 865 N.E.2d 660, 665 (Ind.Ct.App.2007).

In its reply brief, Chandler acknowledges that reviewing courts should generally defer to administrative agencies when reviewing the agency's interpretation of a statute it is charged to enforce, but still claims that the appropriate standard of review in this case should be de novo. Chandler cites cases which state that when the statute at issue defines the jurisdiction of the administrative agency, there is an exception to this general rule of deference to an administrative agency's interpretation of a statute. Specifically, Chandler cites Nextel West Corp. v. Indiana Utility Regulatory Commission, 831 N.E.2d 134 (Ind.Ct.App.2005), trans. denied, wherein the appellees urged the court to review the Commission's jurisdictional determination under the deferential standard set forth above. The court, however, agreed with the appellants that the jurisdictional issue presented was "a legal question that we review de novo." Id. at 140-41. In support of its position, the Nextel West court cited Indiana Bell Telephone Co., Inc. v. Indiana Utility Regulatory Commission, 715 N.E.2d 351 (Ind.1999). In that case, our supreme court held that the question of the Commission's jurisdiction under Indiana Code section 8-1-2-83(a) was a legal question subject to de novo review upon appeal. Id. at 354 (citing Pub. Serv. Comm'n of Ind. v. City of Indianapolis, 235 Ind. 70, 82-83, 131 N.E.2d 308, 312-13 (1956)).

Indiana-American has filed a motion in this court to strike what it terms as "new arguments" in Chandler's reply brief or, in the alternative, to file a surreply to Chandler's new arguments. In this motion, Indiana-American cites Indiana Appellate Rule 46(C) in support of its claim that Chandler has impermissibly presented a new argument regarding the standard of review in its reply brief. Indiana Appellate Rule 46(C) provides in relevant part, "The appellant may file a reply brief responding to the appellee's argument. No new issues shall be raised in the reply brief." (emphasis added). See also Felsher v. University of Evansville, 755 N.E.2d 589, 593 n. 6 (Ind.2001) (holding that issue raised for the first time in reply brief was waived).

Here, the issue of the standard of review was presented to this court in Chandler's appellant's brief. Indeed, the issue of the standard of review is always before us as an appellate court in every case. The parties need not present the standard of review as an issue before we may address it. To apply Appellate Rule 46(C) in the manner which Indiana-American urges would mean that this court could not apply the appropriate standard of review if a party misstated the standard of review in its...