[R75] What happens when sewer systems overlap? (1/31/2014)

Friday, January 31, 2014

Start Date: 1/31/2014 Start Time: 12:00 AM
End Date: 1/31/2014
What happens when sewer systems overlap? In the case of the towns of Chandler and Newburgh, for many years nothing happened. However, when a new development project came to Warrick County and posed the potential for added businesses, this previously coexisting relationship began to deteriorate.  

Under current law, a municipality has the power to operate a municipal sewage works in an area within four miles outside of its corporate boundaries. The towns of Newburgh and Chandler have overlapping sewer districts within that four mile area. From 1974- 2007, the two towns both provided sewer treatment in this overlapping area that existed outside of each of the towns’ corporate limits. 

In 2007, the town of Newburgh passed an ordinance stating that they have the exclusive right to furnish sewer services within this area. Within a few weeks, Chandler followed suit. Five years later, developers who were building in the overlapping area went to both towns to determine the cost of sewage services. They found that Chandler’s services were much less expensive, so they chose their services over Newburgh’s. 

As a result, the town of Newburgh sued for violation of the ordinance that was passed in 2007. The case was eventually brought to the Court of Appeals where Justice Shepard ruled in Newburgh’s favor, citing the “first-in-time” rule. After all, Newburgh had been the first to pass an ordinance.  However, Justice Shepard also explained that until state code is changed, there is nothing to prevent this from happening again somewhere else. Current Indiana code does not offer any guidance on how to proceed when more than one community has the ability to provide sewage services to the same area located outside of their corporate boundaries. 

As you can imagine, this legal battle has proven to be very costly and even halted development in the area. This session, I have authored House Bill (HB) 1187 to preemptively protect communities, customers and businesses across the state from being plagued by this same issue. A recent GPS study found that this same problem could occur in 300 communities statewide, meaning the potential for 150 more lawsuits.  

Most importantly however, I also want to protect the approximately 1,300 constituents that live in District 75 who are impacted by this. On Thursday, January 30, HB 1187 passed the House on third reading by a vote of 85-10. This bill aims to address this problem in two main ways. 

First, it provides that any ordinance expressing that a municipality has the exclusive right to provide sewage services in an area within four miles outside of their corporate boundaries cannot be enforced until May 1, 2017, if the ordinance was adopted before January 1 of this year. Second, if such an ordinance was adopted after December 31, 2013, then it will be void as a result of this legislation.

What this means is that no new ordinance could be passed claiming exclusive rights to an overlapping area. For the time being, this also means that we would be reverting back to before Newburgh’s 2007 ordinance was passed, and they would not be able to enforce their ordinance until 2017. Those who were in the overlapping area and on Chandler’s service would be able to keep their service. Essentially, this is a three year protection for Chandler and 300 other communities across the state. 

My hope is that during those three years, we can continue to further study this complex issue and come up with a plan moving forward. It is clear that something must be done, however we need to make certain that our solution will be applicable in any situation. 

Personally, I believe that the people in these overlapping areas should be able to choose which sewage treatment service they want to utilize and which service is the most cost-effective for them. This is by no means the final version of the bill though. It will now be sent to the Senate for further discussion. 

I look forward to working with the Senate as well as officials from Chandler, Newburgh and other towns across the state to ensure that we have the best final product when we send this legislation to be signed by the governor. An issue between Chandler and Newburgh may have prompted this, but it is truly intended for the benefit of all Hoosiers in every town in Indiana.