The appeal from the Indiana Regulatory Commission, Application of South Haven Sewer Works, Inc., City of Portage v. South Haven Sewer Works, Inc., No. 93A02-0703-EX-204, came before the court because the City of Portage believed the Indiana Utility Regulatory Commission's grant of a certificate of territorial authority to South Haven was an error as a matter of law.
South Haven owns and operates a wastewater collection and treatment system in Porter County. It wanted to expand into a territory that ran west from Bay Road, which is the boundary of its existing CTA, a mile-and-a-half to Willowcreek Road, and in the north from County Road 700 North, south to State Road 130. The company filed a verified petition with the Indiana Utility Regulatory Commission, in which the commission issued a final order concluding South Haven met all statutory and regulatory requirements.
The city appealed, arguing an agreement between South Haven and the EPA required South Haven to have EPA approval before expanding its sewer territory. South Haven and EPA entered into a consent decree to settle a lawsuit filed by the EPA, in which the agency sought injunctive relief and civil penalties as a result of the company's violations of various environmental regulations.
Section V(8)(a) of the decree stated, "... South Haven shall not expand its sewer connections or service area unless, for each proposed expansion, it demonstrates to the EPA that ...." It also defined service area as "all areas in which South Haven is authorized to collect and convey sewage."
Portage argues these sections are unambiguous and mandates South Haven has EPA approval prior to expanding its service territory.
The commission found the provisions in the consent decree to be ambiguous and granted South Haven the power to expand. However, the Court of Appeals found the consent decree's language to be unambiguous, wrote Judge Patricia Riley.
"By defining service area as the area South Haven was providing sewer service to at the time of executing the consent decree, any future 'proposed expansion' of the service area requires EPA's approval pursuant to Section V(8)(a)," she wrote. "Accordingly, as South Haven proposed to expand its original CTA by filing a petition with the Commission, it should have requested EPA's prior approval."
South Haven and the commission argued requiring prior EPA approval for South Haven expansion means the EPA will have power over state matters. However, South Haven voluntarily entered into the consent decree with the EPA. Even after receiving EPA approval, it is still up to the commission to determine whether to grant South Haven's request for expansion, wrote Judge Riley. Therefore, the commission erred as a matter of law when it determined South Haven had lawful authority to expand its geographic service territory.