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Newburgh ordinance allows it to block town from providing sewer service

December 23, 2013

The Indiana Court of Appeals Monday decided that the town of Newburgh was statutorily authorized to pass an ordinance prohibiting others from providing new sewer services to customers within four miles of its corporate boundaries.

The town of Chandler sued Newburgh in Warrick Superior Court in April 2012, trying to get the judge to say Newburgh’s ordinance couldn’t prohibit Chandler from providing new sewer services in an overlapping area. For years the two towns have been providing sewer services within the four-mile rings outside their boundaries, which somewhat overlap. In 2007, Newburgh, pursuant to I.C. 36-9-2-16, -17 and -18, passed the ordinance that gave it an exclusive license to furnish sewer service in the regulated territory.

A developer wanted to build in the regulated territory and got estimates from Newburgh and Chandler on sewer services for the subdivision. The developer chose Chandler because Newburgh’s estimate was much higher. Newburgh then sued the developer for violating its ordinance.

Chandler passed a similar ordinance six weeks after Newburgh. The trial court denied summary judgment for either town.

In Town of Newburgh v. Town of Chandler, 87A01-1305-CT-203, the appellate judges ruled in favor of Newburgh, pointing out that it was the first to pass the ordinance. Courts have long used a first-in-time rule, in the absence of other legislative direction, to resolve disputes when two municipalities possess concurrent and complete jurisdiction of a subject matter.

The statutes in question give municipalities several powers, including the ability to prohibit the furnishing of sewer services within four miles of their boundaries. In order to do so, the municipality must pass an ordinance, which Newburgh did in April 2007.

Chandler put forth several arguments as to why it should prevail, but the appellate court relied on the first-in-time rule.

Senior Judge Randall Shepard noted that Chandler and two amici curiae, the Warrick County Commissioners and the City of Boonville, may have a valid argument that Newburgh’s ordinance will chill economic development. The parties claim Newburgh only enforces the ordinance when significant sewer fees are expected, making developers hesitant to invest in projects in Newburgh’s extraterritorial areas because they worry they will be sued if they choose a cheaper sewer provider.

“Resolution of disputes like the one before us by a commission in the executive branch could likely produce more effective and efficient results. The creation of such mechanisms, however, is in the domain of the legislature and not the courts,” he wrote.

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