ILNews

Town takes unusual step to gain control of utility

Back to TopCommentsE-mailPrintBookmark and Share

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.”•

ADVERTISEMENT

Post a comment to this story

COMMENTS POLICY
We reserve the right to remove any post that we feel is obscene, profane, vulgar, racist, sexually explicit, abusive, or hateful.
 
You are legally responsible for what you post and your anonymity is not guaranteed.
 
Posts that insult, defame, threaten, harass or abuse other readers or people mentioned in Indiana Lawyer editorial content are also subject to removal. Please respect the privacy of individuals and refrain from posting personal information.
 
No solicitations, spamming or advertisements are allowed. Readers may post links to other informational websites that are relevant to the topic at hand, but please do not link to objectionable material.
 
We may remove messages that are unrelated to the topic, encourage illegal activity, use all capital letters or are unreadable.
 

Messages that are flagged by readers as objectionable will be reviewed and may or may not be removed. Please do not flag a post simply because you disagree with it.

Sponsored by
ADVERTISEMENT
Subscribe to Indiana Lawyer
  1. File under the Sociology of Hoosier Discipline ... “We will be answering the complaint in due course and defending against the commission’s allegations,” said Indianapolis attorney Don Lundberg, who’s representing Hudson in her disciplinary case. FOR THOSE WHO DO NOT KNOW ... Lundberg ran the statist attorney disciplinary machinery in Indy for decades, and is now the "go to guy" for those who can afford him .... the ultimate insider for the well-to-do and/or connected who find themselves in the crosshairs. It would appear that this former prosecutor knows how the game is played in Circle City ... and is sacrificing accordingly. See more on that here ... http://www.theindianalawyer.com/supreme-court-reprimands-attorney-for-falsifying-hours-worked/PARAMS/article/43757 Legal sociologists could have a field day here ... I wonder why such things are never studied? Is a sacrifice to the well connected former regulators a de facto bribe? Such questions, if probed, could bring about a more just world, a more equal playing field, less Stalinist governance. All of the things that our preambles tell us to value could be advanced if only sunshine reached into such dark worlds. As a great jurist once wrote: "Publicity is justly commended as a remedy for social and industrial diseases. Sunlight is said to be the best of disinfectants; electric light the most efficient policeman." Other People's Money—and How Bankers Use It (1914). Ah, but I am certifiable, according to the Indiana authorities, according to the ISC it can be read, for believing such trite things and for advancing such unwanted thoughts. As a great albeit fictional and broken resistance leaders once wrote: "I am the dead." Winston Smith Let us all be dead to the idea of maintaining a patently unjust legal order.

  2. The Department of Education still has over $100 million of ITT Education Services money in the form of $100+ million Letters of Credit. That money was supposed to be used by The DOE to help students. The DOE did nothing to help students. The DOE essentially stole the money from ITT Tech and still has the money. The trustee should be going after the DOE to get the money back for people who are owed that money, including shareholders.

  3. Do you know who the sponsor of the last-minute amendment was?

  4. Law firms of over 50 don't deliver good value, thats what this survey really tells you. Anybody that has seen what they bill for compared to what they deliver knows that already, however.

  5. As one of the many consumers affected by this breach, I found my bank data had been lifted and used to buy over $200 of various merchandise in New York. I did a pretty good job of tracing the purchases to stores around a college campus just from the info on my bank statement. Hm. Mr. Hill, I would like my $200 back! It doesn't belong to the state, in my opinion. Give it back to the consumers affected. I had to freeze my credit and take out data protection, order a new debit card and wait until it arrived. I deserve something for my trouble!

ADVERTISEMENT