Indiana Municipal Law and Indiana Utility Law – Indiana Court of Appeals Affirms Ruling that Town Ordinance Regulating the Sale or Lease of Natural Resources was invalid.

On November 12, 2010, the Indiana Court of Appeals issued an opinion in a case affecting Indiana municipal law and Indiana utility law, Town of Avon v. W. Cent. Conservancy Dis., addressing whether an ordinance authorizing a town to regulate the sale or lease of natural resources was valid. The Court also addressed whether an aquifer was a “watercourse,” subject to the town’s regulatory authority under the Watercourse Statutes; whether the town’s ordinance was consistent with state regulation of groundwater; and whether the town interfered with the township and district’s common law right to use the groundwater in its aquifers as it saw fit.

In 1992, Washington Township (“Township”) established the West Central Conservancy District (“WCCD”) pursuant to Indiana Code §14-33-1-1 to provide for the collection, treatment, and disposal of sewage and other liquid wastes. The WCCD owns approximately 100 acres of land within the Town of Avon’s (“Avon”) limits, including Community Park (“Park”) in Avon. After discovering that water aquifers were beneath the Park, the WCCD began efforts to sell or lease the water to a third party. In 2005, the Avon Town Council enacted an ordinance to exercise its power to provide water service. Avon filed an opposition to the WCCD’s petition in the Hendricks Circuit Court. The trial court granted summary judgment for Avon, but was subsequently reversed by the Indiana Court of Appeals in an unpublished decision.

On April 24, 2008, Avon, using the authority given to them under Indiana Code §36-9-2-8 to establish, vacate, maintain, and control watercourses and under Indiana Code §36-9-2-10 to regulate the taking of water, enacted Ordinance No. 2005-39 (“Ordinance”), which gave Avon the exclusive right to “establish, maintain, control and regulate the taking of water within ten…miles of the Town’s municipal limits.” The Ordinance gives Avon the power to control watercourses, which the Ordinance states includes groundwater and aquifers. The Ordinance states that Avon has the authority to control watercourses under Indiana Code §36-9-2-10, which defines watercourses but does not mention groundwater or aquifers.

On October 23, 2008, the Township sought to have the Ordinance invalidated and filed a complaint for a permanent injunction and declaratory judgment. The Township alleged that the Ordinance granted Avon powers that exceeded the scope of Avon’s authority under the Home Rule Act. On December 3, 2008, the WCCD also filed a complaint challenging the validity of the Ordinance. All parties filed motions for summary judgment.

The trial court issued its order on motions for summary judgment on January 8, 2008. The order denied Avon’s motion for summary judgment, and granted summary judgment in favor of the Township and the WCCD and declared the Avon Ordinance invalid. The case was appealed to the Indiana Court of Appeals by Avon.

Part 1 of 2. Part 2 will be posted on 4/22/11.

Jeremy L. Fetty is a partner at Parr Richey whose practice focuses on corporate law, utility law, municipal law, and labor and employment law. The statements contained herein are for information purposes only and are not to be considered legal advice and should not be construed to form an attorney-client relationship. If you have questions regarding this article, please contact an attorney.