Articles Posted in Municipal Law

The First Circuit Court of Appeals recently issued an opinion finding that the Public Utility Regulatory Policies Act (“PURPA”) does not authorize lawsuits between cogeneration facilities and electric utilities because there is no express or implied private right of action in the statutory language. Allco Renewable Energy, Ltd. V. Mass. Elec. Co., 875 F.3d 64 (1st Cir. 2017). PURPA was enacted to encourage the development of energy-efficient cogeneration and small power production facilities, requiring electric utilities to purchase energy from “qualifying facilities” at a regulation-specified cost rate. Under FERC regulations, the cost rate is the rate equal to the utility’s full avoided cost. A qualifying facility under PURPA is a “nontraditional” facility which produces energy from sources such as biomass, waste, renewable resources, or geothermal resources.

In Allco, the plaintiff was a qualifying facility that wanted to negotiate a purchase agreement with defendant National Grid, an electric utility. Instead of negotiating a purchase agreement, National Grid offered to purchase Allco’s energy under its standard power purchase contract. Allco petitioned the Massachusetts Department of Public Utilities (“MDPU”) to investigate the reasonableness of National Grid’s offer, which the MDPU denied. FERC subsequently denied Allco’s petition asking FERC to bring an enforcement action against MDPU, and Allco sued National Grid and other state defendants.

The court analyzed section 210 of PURPA to determine whether it created an express or implied private right of action allowing a qualifying facility to sue an electric utility. PURPA expressly authorizes FERC to bring enforcement actions against a state in federal court and allows a qualifying facility to sue the state utility regulatory agency in state court for PURPA violations—it does not authorize suits between  qualifying facilities and electric utilities. The court also held that Congress did not implicitly authorize this kind of lawsuit because of the aforementioned express enforcement provisions. Additionally, the court invalidated MDPU regulations relating to calculating a utility’s avoided costs, but left the proper calculation to the MDPU since state utility regulatory agencies are responsible for implementing FERC’s regulations for rate determinations.

The Indiana Supreme Court ruled evidence of more than financing alone must be presented to demonstrate that the City has engaged in a policy-oriented decision making process  in order for discretionary function immunity to apply.  Cathy Beloat sued the City of Beech Grove after breaking her leg by stepping in hole in Main Street in the City. The City of Beech Grove claimed discretionary function immunity and presented an affidavit from its Mayor and minutes of the City Council and the Board of Works and Safety. The Mayor’s affidavit was not enough to demonstrate that an official policy decision was made. The minutes of City Council and the Board of Works and Safety, while establishing that the financing was discussed and approved, did not demonstrate the cost-benefit analysis, weighing of other options, and prioritization discussions that are required to decide that the City has engaged in a policy-oriented decision making process. The Court found that while the inference could be drawn that the City Council and/or the Board of Works and Safety did engage in the policy discussion necessary, the standard of review forbids that kind of inference.

Based on the Court’s decision, evidence of financing alone is not enough to show that the City completed all that was necessary to be shielded by discretionary function immunity. Had minutes been produced that demonstrated the cost-benefit analysis, weighing of options, why specific repairs were to be made and why total reconstruction rather than piecemeal, the Court might likely have found the City was immune.

James A. L. Buddenbaum has practiced law for more than 25 years with Parr Richey representing municipalities and businesses in utility, healthcare and general business sectors in both regulatory and transactional matters. Jim also has extensive experience in representing businesses in making large property damage and similar insurance claims.

On February 15, 2017, the Indiana Court of Appeals issued a published opinion affirming a municipality’s ability to charge a Stormwater Fee to all property owners within the boundaries of the city. Mint Management, LLC v. City of Richmond (No. 89a01-1603-PL-496, decided February 15, 2017). The Court of Appeals found the definition of “user” under the statute included all property owners within the boundaries of the city, regardless of whether a particular property owner contributed to the city’s storm water runoff.

The City of Richmond adopted an ordinance in 2007 which created a Stormwater Management District in Richmond, which was financed by imposing a Stormwater Fee on all property within the city that directly or indirectly contributed to Richmond’s stormwater system. Four property owners whose stormwater runoff did not directly or indirectly drain into the city’s stormwater system sued, requesting a declaratory judgment that they were not required to pay the fee and a reimbursement of the fees already paid. The trial court granted summary judgment to the city, finding that the definition of “user” under the ordinance included the property owners.

The Court of Appeals agreed, finding that there would be “an irrational and disharmonizing interpretation” of the ordinance if the definition of “user” and statutory language was not taken into account. Specifically, the Stormwater Act under the Indiana Code (section 8-1.5-5-7) allows a stormwater management district to collect user fees “from all of the property of the storm water district” without exceptions. The Court found the ordinance also used language which encompassed all property owners within the city’s boundaries. Further, the court noted that the stormwater system benefitted everyone who uses any sewer infrastructure, so the property owners did directly or indirectly contribute to the stormwater system.

The Indiana Court of Appeals recently issued a decision in a dispute between a public utility and a local municipality that may be of interest to electric utilities.  Duke Energy Indiana filed a lawsuit against the City of Franklin after the city announced plans to improve the intersection of two streets near State Road 44.   Duke alleged that the expanded intersection would adversely impact its established transmission easement and overhead line and roadside utility pole.

After an evidentiary hearing, the trial judge denied Duke’s request for an injunction stopping the project.  The judge found that the project would not unreasonably interfere with Duke’s easement rights and that Duke was unlikely to prevail on any of its claims at trial.

In considering Duke’s appeal, a panel of the Court of Appeals unanimously upheld the trial judge’s decision.   Duke Energy Indiana, LLC v. City of Franklin, 41A01-1607-CT-1549 (December 16, 2016).   The appeals court held that “the reasonable necessity of an intersection expansion outweighed whatever injurious effect that expansion would have on an electric utility’s enjoyment of its easement.”  It considered Duke’s claim that the increased volume and speed of traffic near the utility pole would pose greater risks to its maintenance crews, but noted that the road could be closed or traffic re-routed as needed for utility work.   The court concluded that the public benefits from beautification of the corridor, improved traffic flow, and enhanced development of the area overrode any occasional inconvenience to Duke.

The Indiana Court of Appeals reversed and remanded a trial courts grant of summary judgment for the Parks and Recreation Board Members who alleged that the Town of Cedar Lake had improperly removed their positions by dissolving the Parks and Recreation Department.

In Town of Cedar Lake v. Alessia, 985 N.E.2d 55 (Ind. Ct. App. 2013), the Town of Cedar Lake (the “Town”) dissolved the Parks and Recreation Department (the “Parks Department”) and eliminated the Board Members positions by voting in new members under Ordinance 1129 (the “Ordinance”). Under Indiana’s Home Rule Act, an Ordinance is valid unless it is prohibited by the Indiana Code or the Indiana Constitution. Generally, a unit has broad powers of local government, unless it is explicitly denied that power, or it has been exclusively granted to another entity.
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The Indiana Supreme Court recently handed down a decision regarding an ordinance requiring property owners to obtain city issued permits prior to the removal and sale of underground water from aquifers (an underground bed or layer of permeable rock, sediment, or soil that yields water) by third-parties. In Town of Avon, both Washington Township (Township) and the West Central Conservancy District (WCCD) owned real property within the Town of Avon (Avon). Town of Avon v. W. Cent. Conservancy Dist., 957 N.E.2d 598, 601 (Ind. 2011). Both properties overlay an underground water supply, White Lick Creek Aquifer (Aquifer), to which Township and WCCD began investigating the possibility of withdrawal and sale of the water to third parties. While Township and WCCD were contemplating the withdrawal, Avon passed an Ordinance which prohibited the taking of water from a watercourse for retail, wholesale, or other mass distribution unless done by or on behalf of Avon. As a result, the Ordinance required Township and WCCD to obtain permits prior to water withdrawal.
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The Indiana Court of Appeals recently handed down two decisions regarding the liability of a city or municipality for damage caused to real and personal property as the result of a sewer defect. The cases examine when a city or municipality may be held liable for sewer malfunctions that cause property damage.
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The Indiana Court of Appeals clarified the requirements necessary for a lawsuit to be considered a public lawsuit in Buse v. Trustees of the Luce Township Regional Sewer District, 953 N.E.2d 519 (Ind. Ct. App. 2011). In this case, a group of property owners filed suit against the Spencer County Sewer District to block it from laying a sewer line adjacent to the plaintiffs’ properties, which already had functioning septic tanks. The Sewer District argued that this lawsuit should be considered a public lawsuit under Indiana Code § 34-6-2-124. This statute was designed to end costly serial litigation against municipalities that could threaten to block nearly every proposed action of a municipality. The trial court found the plaintiffs’ lawsuit to be a public lawsuit since the allegations in the complaint directly or indirectly questioned the validity and construction of public improvements. This finding would have required the plaintiffs to post a surety bond in the amount of $9,000,000 (the amount of a grant the county received to defray construction costs) within ten days or the trial court’s order or the case would be dismissed.
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The specificity requirements of Indiana zoning decisions were discussed in The Kroger Co. v. Plan Commission of Plainfield, 953 N.E.2d 536 (Ind. Ct. App. 2011). In that case, Kroger wanted to construct a gas station next to its retail store. Kroger submitted a zoning petition seeking approval to begin construction, but the Plan Commission denied Kroger’s petition. Kroger sought judicial review. Both parties filed motions for summary judgment, with the trial court granting the Plan Commission’s motion for summary judgment. Kroger appealed, arguing that the denial did not satisfy the specificity requirement of the Zoning Enabling Act and also arguing that the Commission’s findings were not sufficient to support the denial of Kroger’s petition to construct a gas station.
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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.
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