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Town takes unusual step to gain control of utility

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The town of Mooresville’s legal fight to reclaim control of its water utility is so rare in Indiana that observers say just one other community has taken such drastic action.

But lawyers representing the Morgan County community in its lawsuit against Indiana American Water think history is on their side. And that history could prove powerful.

The Indiana Supreme Court and the Legislature in the past five years weighed in on a similar issue following a years-long battle involving the city of Fort Wayne and its water utility operator.

“I am sure, given the length of time that litigation took, it could be a very expensive procedure,” said Bette Dodd, a utility lawyer at Lewis & Kappes who is not involved in the Mooresville suit. “But some of the gray areas have been resolved.”

Indiana American Water is a unit of Voorhees, N.J.-based American Water Works Co. Inc. with nearly 300,000 customers in 51 communities throughout the state. It has served Mooresville since 2000, when it bought Hoosier Water Co. Inc.

Officials of Mooresville sued Indiana American Water in Morgan Superior Court in late December.

Prompted by a fear of rising water rates, the officials want to acquire the town’s water utility through eminent domain. The legal action follows the town’s attempt to purchase the utility for $6.5 million, an offer too low for the liking of Indiana American Water.

Indiana American Water fired the first salvo in the dispute by suing the town in October, charging that officials violated due process by approving an ordinance to pursue their purchase of the utility.

Sorting out the legal morass could take time, judging from the 10 years Fort Wayne has spent to gain control of its water utility. Even so, the legal waters Mooresville will maneuver might not be as murky now that a precedent has been set.

“I think the path is pretty clear,” said Chris Janak, a lawyer at Bose McKinney & Evans LLP who represents the town. “Mooresville is allowed by law to do this.”

Indiana American Water’s attorney, however, is not so sure.

“There are first-impression things that will still have to be dealt with,” said Cristy Wheeler, the company’s corporate counsel. “It’s very unusual in Indiana, and it’s never happened to us.”

For guidance, Mooresville can turn to Fort Wayne’s tiff with Aqua Indiana, a division of Bryn Mawr, Pa.-based Aqua America Inc. that began in 2002. Dissatisfied with service, the city attempted to use eminent domain to force a sale of part of Aqua’s service area.

The Indiana Supreme Court sided with Fort Wayne in 2007 and the city took control of a portion of the service area the following year. The city now is attempting to gain control of the entire area by purchasing the rest of Aqua’s service area.

Between the Supreme Court decision and Fort Wayne’s follow-up battle with Aqua America, in 2009, the General Assembly passed a law supporting the court’s decision backing use of eminent domain to purchase a private utility.

Mooresville’s acquisition of Indiana American Water might seem like a lock, then, but legislation introduced this session by state Sen. Jim Merritt, R-Indianapolis, is much more friendly to water utilities.

Senate Bill 548 would allow communities to buy their water utilities only after the utilities fail to remedy repeated violations. And even then, a city would need public approval through referendum.

The Indiana Chamber of Commerce supports parts of the legislation but thinks a referendum may be unnecessary, said Vince Griffin, vice president of energy and environmental affairs.

“It seems to have some very rigorous things in there,” he said, “but we like it to not be easy for a municipality to divorce you and take over.”

While lawmakers debate the bill, Mooresville and Indiana American Water continue hurling barbs.

Janak, Mooresville’s lawyer, says the utility has raised rates and plans to raise them even more without investing in the town’s water infrastructure.

“As clear as the law is, it is incredibly contentious,” he said. “More than it should be.”

Indiana American Water says the average customer in Mooresville pays about $35 per month, which would rise to $39 with its plans to improve infrastructure.

“We’ve been scratching our heads all along about what’s been going on here,” Indiana American Water President Alan DeBoy said. “They think they can operate it at lower rates and more efficiently, but it’s not logical because they have no scale.”•

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  1. I grew up on a farm and live in the county and it's interesting that the big industrial farmers like Jeff Shoaf don't live next to their industrial operations...

  2. So that none are misinformed by my posting wihtout a non de plume here, please allow me to state that I am NOT an Indiana licensed attorney, although I am an Indiana resident approved to practice law and represent clients in Indiana's fed court of Nth Dist and before the 7th circuit. I remain licensed in KS, since 1996, no discipline. This must be clarified since the IN court records will reveal that I did sit for and pass the Indiana bar last February. Yet be not confused by the fact that I was so allowed to be tested .... I am not, to be clear in the service of my duty to be absolutely candid about this, I AM NOT a member of the Indiana bar, and might never be so licensed given my unrepented from errors of thought documented in this opinion, at fn2, which likely supports Mr Smith's initial post in this thread: http://caselaw.findlaw.com/us-7th-circuit/1592921.html

  3. When I served the State of Kansas as Deputy AG over Consumer Protection & Antitrust for four years, supervising 20 special agents and assistant attorneys general (back before the IBLE denied me the right to practice law in Indiana for not having the right stuff and pretty much crushed my legal career) we had a saying around the office: Resist the lure of the ring!!! It was a take off on Tolkiem, the idea that absolute power (I signed investigative subpoenas as a judge would in many other contexts, no need to show probable cause)could corrupt absolutely. We feared that we would overreach constitutional limits if not reminded, over and over, to be mindful to not do so. Our approach in so challenging one another was Madisonian, as the following quotes from the Father of our Constitution reveal: The essence of Government is power; and power, lodged as it must be in human hands, will ever be liable to abuse. We are right to take alarm at the first experiment upon our liberties. I believe there are more instances of the abridgement of freedom of the people by gradual and silent encroachments by those in power than by violent and sudden usurpations. Liberty may be endangered by the abuse of liberty, but also by the abuse of power. All men having power ought to be mistrusted. -- James Madison, Federalist Papers and other sources: http://www.constitution.org/jm/jm_quotes.htm RESIST THE LURE OF THE RING ALL YE WITH POLITICAL OR JUDICIAL POWER!

  4. My dear Mr Smith, I respect your opinions and much enjoy your posts here. We do differ on our view of the benefits and viability of the American Experiment in Ordered Liberty. While I do agree that it could be better, and that your points in criticism are well taken, Utopia does indeed mean nowhere. I think Madison, Jefferson, Adams and company got it about as good as it gets in a fallen post-Enlightenment social order. That said, a constitution only protects the citizens if it is followed. We currently have a bevy of public officials and judicial agents who believe that their subjectivism, their personal ideology, their elitist fears and concerns and cause celebs trump the constitutions of our forefathers. This is most troubling. More to follow in the next post on that subject.

  5. Yep I am not Bryan Brown. Bryan you appear to be a bigger believer in the Constitution than I am. Were I still a big believer then I might be using my real name like you. Personally, I am no longer a fan of secularism. I favor the confessional state. In religious mattes, it seems to me that social diversity is chaos and conflict, while uniformity is order and peace.... secularism has been imposed by America on other nations now by force and that has not exactly worked out very well.... I think the American historical experiment with disestablishmentarianism is withering on the vine before our eyes..... Since I do not know if that is OK for an officially licensed lawyer to say, I keep the nom de plume.

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