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. (Part 2)

Avon attempted to argue that Indiana Code §36-1-2-23 permits it to regulate the water in the Park because groundwater is a watercourse or body of water within the meaning of the statute. Indiana Code §36-9-1-10 states that a watercourse “includes, lakes, rivers, streams, and any other body of water.” Further, Avon argued that the Township and WCCD’s plan to sell the groundwater constituted a “business use” under Indiana Code §36-8-2-7, which authorizes “a unit [to]…regulate any business use of a water course.”

After the Court reviewed multiple Indiana statutes and common law, the court determined that the underground water at issue did not constitute a watercourse because it did not have well-defined banks, a bottom, a channel, or a flow along a definite course. Further the Court found that the Park’s aquifers and groundwater did not fit the definition of watercourse under Indiana Code §36-9-1-10, which specifically defines watercourse as including only bodies of water like lakes, rivers, and streams. Therefore, the Court held that because an aquifer is not a watercourse, Avon did not have the authority to restrict what the Township and the WCCDD choose to do with the Park’s groundwater.

Avon also claims that the Ordinance is a valid exercise of the police power embodied in the Home Rule Act and therefore it has the authority to limit the withdrawal of the groundwater for the protection of its residents. Avon relies on the Indiana Supreme Court’s language in City of Crown Point v. Lake County, 510 N.E.2d 684 (Ind. 1987), which states, the “Home Rule Act does not bar unites from enforcing against other political subdivisions those regulations of general applicability which are specifically authorized by statute.” Avon argues that its right to regulate the water supply arises from its statutory authority to regulate watercourses.

The Court agreed with Avon’s contention that towns are allowed to exercise powers that are explicitly granted by statute. However, in this case, the Court found that there was no statute that grants a town the authority to regulate groundwater in aquifers. Therefore, the Court held that the Ordinance was invalid with regard to groundwater.

Avon next argued that it has the right to grant or deny the Tonship’s exercise of its power, under Indiana Code §36-1-3-7. The Court rejects this argument and finds that the Park Resources Statute, Indiana Code §36-10-7.5-7, specifically states that the Township can decide what to do with the Park’s water. The Court held that Avon does not have any right to “review or regulate the exercise of powers.”

The next issue on appeal was whether the trial court erred in concluding that the Ordinance violated Indiana Code §36-1-3-8(a)(7), which states “a unit does not have the following…(7) The power to regulate conduct that is regulated by a state agency, except as expressly granted by statute.” The Indiana Court of Appeals found that the Department of Natural Resources (DNR), as stated in Indiana Code §14-25-7-14(D) has the authority to regulate groundwater and if a property owner, including a governmental agency, desires to withdraw more than a certain amount of groundwater, they must obtain a permit from the DNR. The Court held that because the power to regulate is granted exclusively to the DNR, the Ordinance violates Indiana Code §36-1-3-8(a)(7).

Lastly, the Court held that Avon does not have the right to interfere with the Township and WCCD’s common law right to use the groundwater in its aquifers as it sees fit where there has been no regulation by the State.

Town of Avon v. W. Cent. Conservancy Dist., 937 N.E.2d 366 (Ind. Ct. App. 2010)

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.