ATTORNEY FOR APPELLANT ATTORNEY FOR APPELLEES
Corinne R. Finnerty Mary Ann Gay
McConnell & Finnerty Versailles, Indiana
North Vernon, Indiana
Adam Arceneaux
ATTORNEYS FOR AMICI CURIAE Brian Bailey
Bette J. Dodd Ice Miller
Lewis & Kappes, P.C. Indianapolis, Indiana
Indianapolis, Indiana
Jo Angela Woods
Indiana Association of Cities & Towns
Indianapolis, Indiana
______________________________________________________________________________
In the
Indiana Supreme Court
_________________________________
No. 40S01-0404-CV-184
CITY OF NORTH VERNON, INDIANA,
Appellant (Defendant below),
v.
JENNINGS NORTHWEST REGIONAL UTILITIES;
VANCE D. FUNKHOUSER, MAX A. WILEY,
NORMA TEEPLE, DONALD MCCAULEY,
LYNN H. CLARK, JOLENE MCQUEEN AND
PAUL MICHAEL IRWIN, IN THEIR CAPACITY AS
TRUSTEES OF THE JENNINGS NORTHWEST
REGIONAL UTILITIES,
Appellees (Plaintiffs below).
_________________________________
Appeal from the Jennings Superior Court, No. 40D01-9910-CP-296
The Honorable Carl H. Taul, Special Judge
_________________________________
On Petition To Transfer from the Indiana Court of Appeals, No. 40A01-0304-CV-145
_________________________________
June 14, 2005
Rucker, Justice.
This case requires us to determine what happens when there is an overlap between the
sewage service area of a regional sewer district and the sewage service area of a municipality.
Under the facts presented we conclude the municipality prevails.
Facts and Procedural History
Located in Jennings County, the City of North Vernon (“the City”) operates a wastewater
treatment and collection facility. The City has the statutory authority to provide wastewater
services inside its corporate boundaries as well as within a ten-mile radius outside its corporate
boundaries. In 1996, the Jennings County Commissioners filed a petition with the Indiana
Department of Environmental Management (“IDEM”) requesting IDEM to form a regional water
and sewer district for the northwest portion of Jennings County. IDEM granted the petition and
entered an order establishing Jennings Northwest Regional Utilities (“JNRU”). Among other
things the order authorized JNRU to provide sewer services to Geneva Township, Center
Township, Spencer Township, and portions of Sand Creek Township.
The order excluded the City’s corporate boundaries from JNRU’s service area. But at the
time the order was entered, the City was already providing sewer services to areas of the county
that IDEM identified as JNRU’s service district. Those areas are within ten miles outside of the
City’s corporate boundaries. Sand Creek Elementary School (“the School”), which was then in
the planning stages for construction, is located within that ten-mile radius.
Both JNRU and the City approached the School about connecting to their respective
sewer lines and providing sewer services. Over JNRU’s objection, School officials entered into
a thirty-year service agreement with the City. The City is currently servicing the School and has
done so since the School opened in the year 2000. Although JNRU eventually plans to do so, it
had not constructed sewer facilities for the School as late as May 2004.
JNRU filed a complaint against the City seeking a declaratory judgment that JNRU had
the exclusive right to serve the School and that the City did not. The City moved to dismiss
JNRU’s complaint and attached various exhibits in support. As a result, the trial court treated the
2
City’s motion as a motion for summary judgment. See Ind. Trial Rule 12(B)(8). JNRU
responded with its own motion for summary judgment. After conducting a hearing, the trial
court entered summary judgment in JNRU’s favor. Among other things the trial court
concluded: (i) the City’s right to provide sewer services to Sand Creek Elementary School is
contingent upon JNRU’s consent and agreement, (ii) JNRU has never agreed or consented to the
City’s exercise of power to provide sewer services to the School, and (iii) without JNRU’s
consent or agreement, the City has no right to provide sewer services to the School. On review
the Court of Appeals affirmed the judgment of the trial court. See North Vernon v. Jennings
Northwest Regional Utilities, 799 N.E.2d 1068 (Ind. Ct. App. 2003). Having previously granted
transfer, we now reverse the trial court’s judgment.
When reviewing a grant or denial of summary judgment our well-settled standard of
review is the same as it is for the trial court: we examine whether there is a genuine issue of
material fact, and whether the moving party is entitled to judgment as a matter of law. Indiana
Univ. Med. Ctr., Riley Hosp. for Children v. Logan, 728 N.E.2d 855, 858 (Ind. 2000). Summary
judgment should be granted only if the evidence sanctioned by Indiana Trial Rule 56(C) shows
that there is no genuine issue of material fact and the moving party deserves judgment as a
matter of law. Gunkel v. Renovations, Inc., 822 N.E.2d 150, 152 (Ind. 2005). All evidence must
be construed in favor of the opposing party, and all doubts as to the existence of a material issue
must be resolved against the moving party. Tibbs v. Huber, Hunt & Nichols, Inc., 668 N.E.2d
248, 249 (Ind. 1996).
Discussion
JNRU was created under the auspices of Indiana Code section 13-26-1-1 et seq., which
governs the establishment of regional water and sewer districts. The statute provides in relevant
part, “Any area may be established as a regional water, sewage, or solid waste district under this
article for one (1) or more of the following purposes: . . . (2) To provide for the collection,
treatment, and disposal of sewage inside and outside the district.” Ind. Code § 13-26-1-1. Once
established, a regional district is an “independent municipal corporation” that has only such
power and authority as expressly conferred by statute. Ind. Code §§ 13-26-2-10; 13-26-5-1 to -2.
3
The City is a municipality as defined by Indiana Code section 36-1-2-11. A municipality
has the authority to “acquire, construct, improve, operate, and maintain sewage works under this
chapter.” Ind. Code § 36-9-23-2(1). With exceptions not applicable here, this authority includes
providing sewer services “in areas within ten (10) miles outside its corporate boundaries.” Ind.
Code § 36-9-23-36. Also applicable in this case is Indiana’s Home Rule Act—Indiana Code
sections 36-1-3-1 to -9. The Act abrogated the traditional rule that local governments possessed
only those powers expressly authorized by statute. Instead the Act expressly broadened a
governmental unit’s authority to include not only all powers granted to it by statute, but also “all
other powers necessary or desirable in the conduct of its affairs, even though not granted by
statute.” Ind. Code § 36-1-3-4(b)(2). See also City of Gary v. Indiana Bell Tel. Co., Inc., 732
N.E.2d 149, 153 (Ind. 2000); City of Crown Point v. Lake County, 510 N.E.2d 684, 685-86 (Ind.
1987).
Relying on the express statutory authority to provide sewer services within ten miles
outside of its corporate boundaries, as well as on the broad provisions of the Home Rule Act, the
City contends that it has the exclusive authority to provide sewer services to the School. JNRU
acknowledges that the School is located within ten miles outside of the City’s corporate borders.
However, JNRU counters that the Home Rule Act itself limits the City’s authority. In relevant
part the Act provides, “a unit 1 may exercise any power it has to the extent that the power: (1) is
not expressly denied by the Indiana Constitution or by statute; and (2) is not expressly granted to
another entity.” Ind. Code § 36-1-3-5(1)-(2) (emphasis added). JNRU argues that because
IDEM has expressly granted it the authority to provide sewer services to an area within ten miles
outside of the City’s corporate boundaries, the City must first obtain JNRU’s permission before
the City can exercise its authority to provide such services within the area. Thus, according to
JNRU the trial court correctly entered summary judgment in its favor on this point.
The first step in interpreting a statute is to determine whether the Legislature has spoken
clearly and unambiguously on the point in question. Rheem Mfg. Co. v. Phelps Heating & Air
Conditioning, Inc., 746 N.E.2d 941, 947 (Ind. 2001). When a statute is clear and unambiguous,
we need not apply any rules of construction other than to require that words and phrases be taken
1
“‘Unit’ means county, municipality, or township.” Ind. Code § 36-1-2-23.
4
in their plain, ordinary, and usual sense. Poehlman v. Feferman, 717 N.E.2d 578, 581 (Ind.
1999). Clear and unambiguous statutes leave no room for judicial construction. Id. However
when a statute is susceptible to more than one interpretation it is deemed ambiguous and thus
open to judicial construction. Amoco Production Co. v. Laird, 622 N.E.2d 912, 915 (Ind. 1993).
And when faced with an ambiguous statute, other well-established rules of statutory construction
are applicable. One such rule is that our primary goal of statutory construction is to determine,
give effect to, and implement the intent of the Legislature. Indiana Civil Rights Comm’n v.
Alder, 714 N.E.2d 632, 637 (Ind. 1999). To effectuate legislative intent, we read the sections of
an act together in order that no part is rendered meaningless if it can be harmonized with the
remainder of the statute. AlliedSignal, Inc. v. Ott, 785 N.E.2d 1068, 1078 (Ind. 2003). We also
examine the statute as a whole. Matter of Lawrance, 579 N.E.2d 32, 38 (Ind. 1991). And we do
not presume that the Legislature intended language used in a statute to be applied illogically or to
bring about an unjust or absurd result. State ex rel. Hatcher v. Lake Super. Ct., Rm. Three, 500
N.E.2d 737, 739 (Ind. 1986).
At first blush the Home Rule Act appears to be clear and unambiguous. A municipality
“may exercise any power it has to the extent that the power . . . is not expressly granted to
another entity.” Ind. Code § 36-1-3-5(a). But a strict interpretation of this provision, in the
context of the facts before us, would produce an absurd result. More specifically, such an
interpretation is at odds with the express grant of statutory authority given municipalities to
operate sewer facilities within and without its corporate boundaries, and at odds with other
provisions of the Act as well. For example the Act also provides, “[T]he policy of the state is to
grant units all the powers that they need for the effective operation of government as to local
affairs.” Ind. Code. § 36-1-3-2. By unequivocal language the Legislature specifically abrogated
the rule of law declaring that a unit has only the “(1) powers expressly granted by statute; (2)
powers necessarily or fairly implied in or incident to powers expressly granted; and (3) powers
indispensable to the declared purposes of the unit.” Ind. Code § 36-1-3-4(1)-(3). The
Legislature also specifically abrogated the rule of law that declared, “any doubt as to the
existence of a power of a unit shall be resolved against its existence . . . .” Ind. Code § 36-1-3-3.
Rather, the Legislature has said, “Any doubt as to the existence of a power of a unit shall be
5
resolved in favor of its existence,” and this is so “even though a statute granting the power has
been repealed.” Ind. Code § 36-1-3-3(a), (b).
We believe this statutory scheme demonstrates a legislative intent to provide counties,
municipalities, and townships with expansive and broad-ranging authority to conduct their
affairs. Of course this authority is not without limitations. However we do not think the Act
anticipated the rather unique facts of this case, namely, an express grant of authority allowing a
regional sewer district to provide sewer services to an area where a municipality is already
providing those services to the area. Indeed, most such territorial disputes are resolved during
the IDEM permitting process. 2 Here, apparently there was a breakdown in communications.
And by the time the City discovered this overlapping boundary problem, it was too late for the
City to take curative action. 3
JNRU suggests that the facts of this case are not at all unique, but rather are strikingly
similar to those in Town of Merrillville v. Merrillville Conservancy Dist., 649 N.E.2d 645 (Ind.
Ct. App. 1995), trans. denied. In that case, prior to 1992 the town of Merrillville did not have its
own sanitation system. Instead the Merrillville Conservancy District and certain other public and
semi-private utilities provided the sewer needs of the town. On December 29, 1992, the town
adopted an ordinance creating its own sanitary district and sanitation department. The sanitary
district included all territory within the corporate boundaries of Merrillville in addition to certain
2
See, e.g., Indiana Code section 13-26-2-10(b)(3), which provides in relevant part, “[i]f an eligible
entity” has territory within the proposed district, the order establishing a regional district must “contain
provisions protecting the investments of the entities and protecting the rights of the holders of bonds or
other obligations issued to provide money for the system.” The City is an “eligible entity” within the
meaning of the statute. Ind. Code § 13-11-2-62. Nothing in the order establishing JNRU contained any
such provision. See Appellant’s App. at 44-51. See also Cumberland v. Dep’t of Environmental Mgmt.,
691 N.E.2d 206, 208 (Ind. Ct. App. 1998) (Petition to establish a regional water and sewer district
requested that “‘those areas served as [of] the date of formation of the proposed district by existing
private, semi-public or public sanitary sewer utilities’ . . . be excluded from the District.”). No such
request appears in the petition to establish JNRU. See Appellant’s App. at 26-29.
3
The City filed a declaratory judgment action in this case challenging the order issued by IDEM. The
trial court dismissed the City’s claim. On review, the Court of Appeals affirmed on the ground that the
City’s failure to first seek judicial review of the validity of IDEM’s order pursuant to AOPA deprived the
trial court of subject matter jurisdiction. City of North Vernon v. Funkhouser, 725 N.E.2d 898 (Ind. Ct.
App. 2000).
6
territory outside the town. The Conservancy District filed a complaint for declaratory judgment
requesting that the town ordinance be found void. According to the District, the ordinance
violated the Home Rule Act because the power to provide sewer services had already been
granted to it under a statute providing for the creation of a conservancy district. 4 Therefore, the
District argued, the town of Merrillville was precluded from exercising those same powers. The
court agreed and held that because the District had been granted specific powers under the statute
to provide for sewage disposal, the town was precluded from exercising conflicting powers under
the Home Rule Act. Id. at 652. Specifically the court held, “We conclude that Merrillville is
precluded from exercising any powers which have been granted to [the District] under I.C. § 13-
3-3, as such would be a violation of I.C. § 36-1-3-5 [providing that a unit “may exercise any
power it has to the extent that the power: . . . (2) is not expressly granted to another entity”].” Id.
Acknowledging that Town of Merrillville involved a sewer conservancy district rather
than a regional sewer district, JNRU argues the same rationale still applies. And according to
that rationale, just as with the District, here JNRU also has been granted specific statutory
authority to provide sewer services and thus the City is precluded from exercising conflicting
powers under the Act.
We agree that for the purpose of our analysis the distinction between a conservancy
district and sewer district is of no moment. Still, the facts here are distinguishable. The
conservancy district in Town of Merrillville was already exercising its statutory powers to
provide sewer services when the town attempted to provide those identical services under the
authority of the Home Rule Act. JNRU is not similarly situated. If anything, JNRU is in a
position similar to that of the town by attempting to provide sewer services to an area that was
already being provided with such services. In fact the City was providing sewer services under
an express grant of statutory authority before IDEM ever created JNRU and established its
service district. To interpret the Act as JNRU suggests would in effect allow a regional district
to trump a municipality’s decision to provide extraterritorial sewer services. We do not believe
the Legislature could have intended this result. Indeed we doubt the Legislature even
4
Indiana Code section 13-3-3-2(a)(5) (repealed by P.L.1-1995, Sec. 91, and recodified as I.C. § 14-33-1-1
(a)(5)) granted conservancy districts the specific power to provide for the “collection, treatment, and
disposal of sewage and other liquid wastes.”
7
contemplated the facts presented here. Our determination in this regard finds support in Indiana
Code sections 36-1-7-1 et seq. (providing for interlocal cooperation agreements) and Indiana
Code section 36-1-3-9(d) (detailing the use of such agreements). With these statutes, the
Legislature set forth a procedure for the resolution of territorial disputes between two
municipalities. There is no such statutory dispute resolution mechanism for territorial boundary
disputes between municipalities and regional districts. And because regional districts are not
subject to the same statutes applicable to municipalities, the statutes governing interlocal
cooperation agreements are not applicable here. 5 Again, disputes of this kind ordinarily are
resolved during administrative proceedings.
Our Legislature has encouraged municipalities to plan for the future development of their
communities and to protect the health, safety, convenience and welfare of their citizens. See Ind.
Code. § 36-7-4-201. In meeting these goals, municipalities prepare and adopt comprehensive
plans to serve as a guide for long-term growth and development. See Ind. Code. § 36-7-4-502.
Comprehensive plans include the provision of utility services in the municipalities’ growth areas.
Municipalities rely on their ability to extend their utility services to these anticipated areas. 6
We must therefore reconcile the broad-ranging authority granted municipalities under the
Home Rule Act and Indiana Code section 36-9-23-36 (granting municipalities the authority to
provide sewer services “in areas within ten (10) miles outside its corporate boundaries”) with the
powers granted regional districts under Indiana Code sections 13-26-1 to -14. In doing so we
conclude that where there is an overlap between the service area of a regional district and the
service area of a municipality, and absent a resolution during the IDEM permitting process,
under the “expressly granted” provision of the Home Rule Act, the district prevails unless the
municipality was already providing services to the area at the time the district’s service area was
5
We thus agree with the Court of Appeals’ reasoning and analysis on this point. See Jennings, 799
N.E.2d at 1075-76.
6
As Amici for Indiana Association of Cities and Towns and the Indiana Municipal Lawyer’s Association
point out, “Allowing Districts to have veto power over the expansion of a municipality’s sewer and water
services to areas outside the municipality’s corporate boundaries interferes with these plans and the
legislature’s intent that municipalities have control over their growth and development.” Br. of Amici at
10. Their point is well taken.
8
created. Because the reverse of the latter is true in this case, the City prevails. Consequently the
City has the exclusive right to provide sewer services to the School.
Conclusion
We reverse the judgment of the trial court. This cause is remanded for further
proceedings consistent with this opinion.
Shepard, C.J., and Dickson, Sullivan and Boehm, JJ., concur.
9