Lawrenceburg distillery loses sewer rate ordinance appeal

A Lawrenceburg distillery couldn’t persuade the Indiana Court of Appeals on Thursday to reverse a ruling upholding a regional sewer district’s adoption of an ordinance that excluded it from being considered a direct customer.

In MGPI of Indiana, LLC v. South Dearborn Regional Sewer District,19A-PL-00393, Lawrenceburg distillery MGPI of Indiana challenged a rate-setting ordinance adopted by the South Dearborn Regional Sewer District that no longer recognized MGPI as a direct customer.

A 1972 order issued by the Dearborn Circuit Court that found a proposed regional sewer district was necessary, and that it and the plan of operation were conducive to the “public health, safety, convenience and welfare, and that the plan for the operation of the District is economical, feasible, fair and reasonable.”

It also found “the only users of the sewage system of said District having an intermittent flow of at least one million (1,000,000) gallons per day are the Joseph E. Seagram & Sons, Inc. plant and the Schenley Distillers, Inc.”

The district was to be governed by a board of trustees made up of the mayors of Aurora, Greendale, and Lawrenceburg, and a representative from both Seagram and Schenley. In 2011, the distillery was bought by MGPI of Indiana, LLC, which eventually gave up all ownership interest in the distillery.

By 2017, the district informed MGPI that it would no longer have any “customers” other than Lawrenceburg, Greendale, and Aurora. Following a cost of services study, the district enacted an ordinance that set new sewage rates for those towns only and did not recognize MGPI as a direct customer.

MGPI appealed the ordinance to the District Authority of Dearborn County, which ultimately upheld the district’s adoption of the rate-setting ordinance. The trial court likewise denied MGPI’s appeal and upheld the ordinance.

In affirming the trial court, the Indiana Court of Appeals declined to intervene in what it called a “local, legislative matter.”

The appellate panel concluded that the district was not required to obtain permission from Indiana Department of Environmental Management to enact the ordinance, that it considered MGPI’s interests in enacting the ordinance, and the ordinance was not arbitrary and capricious.

First, MGPI argued that because the ordinance eliminated MGPI as a direct user of the district, the ordinance changed the purpose of the plan because it no longer guaranteed direct service to a user with an intermittent daily flow of at least 1 million gallons, as written in the 1972 order.

The appellate court agreed with the district, finding the ordinance did not change the district’s plan because it still provided sewage and wastewater treatment services. Likewise, it concluded the ordinance does not repudiate any of the terms of the 1972 order regarding delivery of sewage and wastewater treatment.

The appellate court also rejected MGPI’s assertion that its interests were not considered when the ordinance was enacted, noting that MGPI was present at many meetings where the proposed ordinance was discussed, that “due consideration was given to the things [the customers] were saying” and that the discussion included how MGPI could be billed on a “going-forward basis.”

“Finally, the vested interest did not run with the land to MGPI and even if MGPI once held the vested interest through the series of sales of the distillery that eventually resulted in MGPI’s purchase of the distillery, MGPI eventually disclaimed that vested interest,” Judge James S. Kirsch wrote for the panel.

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