Court of Appeals of Indiana | Memorandum Decision 18A-EX-2179 | June 26, 2019 Page 1 of 18

MEMORANDUM DECISION

Pursuant to Ind. Appellate Rule 65(D), 

this Memorandum Decision shall not be 

regarded as precedent or cited before any 

court except for the purpose of establishing 

the defense of res judicata, collateral 

estoppel, or the law of the case.

ATTORNEYS FOR APPELLANT

INDIANA OFFICE OF UTILITY 

CONSUMER COUNSELOR

William I. Fine

Daniel M. LeVay

Scott C. Franson

Indiana Office of Utility Consumer 

Counselor

Indianapolis, Indiana

ATTORNEYS FOR APPELLANT

CITY OF CROWN POINT, INDIANA

Robert M. Glennon

Robert Glennon & Assoc., P.C.

Danville, Indiana

Jeffery A. Earl

Danville, Indiana

ATTORNEYS FOR APPELLANT

TOWN OF SCHERERVILLE, INDIANA

J. Christopher Janak

Kristina Kern Wheeler

Bose, McKinney & Evans LLP

Indianapolis, Indiana

ATTORNEYS FOR APPELLEE

INDIANA-AMERICAN WATER 

COMPANY

David L. Pippen

General Counsel

Indiana-American Water Company

Greenwood, Indiana

Peter J. Rusthoven

Nicholas K. Kile

Hillary J. Close

Barnes & Thornburg, LLP

Indianapolis, Indiana

ATTORNEYS FOR APPELLEE

CITY OF LAKE STATION

Michael L. Deppe

Benjamin D. Waite

Deppe Law Center

Hobart, Indiana

ATTORNEYS FOR APPELLEE

INDIANA UTILITY REGULATORY 

COMMISSION

Curtis T. Hill, Jr.

Attorney General of Indiana

Patricia C. McMath

Aaron T. Craft

Deputy Attorneys General

Indianapolis, Indiana
Court of Appeals of Indiana | Memorandum Decision 18A-EX-2179 | June 26, 2019 Page 2 of 18

Beth E. Heline

General Counsel

Jeremy Comeau

Steven Davies

Assistant General Counsel

Indiana Utility Regulatory 

Commission

Indianapolis, Indiana

I N T H E

COURT OF APPEALS OF INDIANA

Indiana Office of Utility 

Consumer Counselor, City of 

Crown Point, Indiana, and 

Town of Schererville, Indiana,

Appellants-Statutory Party and 

Intervenors,

v.

Indiana-American Water 

Company, Inc., City of Lake 

Station, Indiana, and Indiana 

Utility Regulatory Commission,

Appellees-Petitioners and 

Administrative Agency

June 26, 2019

Court of Appeals Case No.

18A-EX-2179

Appeal from the Indiana Utility 

Regulatory Commission

The Honorable James F. Huston, 

Chairman

The Honorable Sarah E. Freeman, 

Stefanie Krevda, David Ober, and 

David E. Ziegner, Commissioners 

The Honorable Carol Sparks Drake, 

Administrative Law Judge

IURC Cause No. 45041

Crone, Judge.
Court of Appeals of Indiana | Memorandum Decision 18A-EX-2179 | June 26, 2019 Page 3 of 18

Case Summary

[1] Indiana-American Water Company, Inc. (“Indiana American”),1 agreed to 

purchase the water utility of the City of Lake Station (“Lake Station”) for over 

$20,000,000. Indiana American and Lake Station filed a petition seeking

approval of the proposed sale from the Indiana Utility Regulatory Commission 

(“the Commission”). After an evidentiary hearing on the petition, the 

Commission issued an order approving the transaction over the objection of the 

Indiana Office of Utility Consumer Counselor (“the OUCC”) and Indiana 

American wholesale customers the Town of Schererville (“Schererville”) and 

the City of Crown Point (“Crown Point”) (collectively “Appellants”).

[2] On appeal, the controversy centers on Lake Station’s water treatment plant and 

five supply wells, which Lake Station currently uses. Although Indiana 

American does not plan to use them after the transaction closes, the 

Commission allowed their appraised value of over $7,000,000 to be included in 

Indiana American’s rate base. Appellants argue that the Commission erred in 

doing so. The Commission, Indiana American, and Lake Station (collectively 

“Appellees”) argue otherwise. We agree with Appellees and therefore affirm.

 

1 We follow the Indiana Utility Regulatory Commission’s lead in dropping the hyphen from the company’s

name.
Court of Appeals of Indiana | Memorandum Decision 18A-EX-2179 | June 26, 2019 Page 4 of 18

Facts and Procedural History2

[3] The relevant facts are undisputed. Lake Station’s water system has been 

interconnected with Indiana American’s Northwest Operations System since 

1965.3 In 1990, Lake Station and Indiana American entered into a water supply 

agreement, which allowed Lake Station to receive 750,000 gallons per day. At 

the recommendation of an engineering consultant, Lake Station constructed 

various improvements to its water system, including five new supply wells and 

a water treatment plant, which began operating in 2015. That same year, the 

water supply agreement between Lake Station and Indiana American expired 

and was not renewed, resulting in the closure of the valves linking the two 

systems.

[4] Lake Station was unable to adequately maintain its water system, so in March 

2016 it started taking steps to sell the system pursuant to Indiana Code Chapters 

8-1.5-2 (“Transfer, Acquisition, and Improvement of Utilities by 

Municipalities”) and 8-1-30.3 (“Acquisition of Distressed Water or Wastewater 

Utilities”). Before a municipal legislative body or executive may sell its

“nonsurplus municipally owned utility property,” it must appoint three 

disinterested Indiana residents to appraise the property. Ind. Code § 8-1.5-2-4. 

 

2 We thank the parties for their well-written briefs, which facilitated our review.

3 According to the Commission’s order, Indiana American “is an Indiana corporation engaged in providing 

water utility service to the public in numerous communities throughout Indiana, including Lake County, for 

residential, commercial, industrial, public authority, sale for resale, and fire protection purposes[,]” and 

“serves approximately 300,000 water customers ....” Appealed Order at 2. Lake Station “owns and operates 

a water system serving approximately 3,443 metered customers.” Id.
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If the legislative body and the municipal executive decide to proceed with the 

sale after the appraisal is returned, the legislative body must hold a public 

hearing and then may adopt an ordinance providing for the sale of the property.

Ind. Code § 8-1.5-2-5(d).

[5] Lake Station appointed three appraisers, who returned an appraisal that valued 

its nonsurplus water utility property at $20,380,600. Lake Station held a public 

hearing and in June 2017 adopted an ordinance for the sale of the property. In 

September 2017, Lake Station and Indiana American signed an asset purchase 

agreement, pursuant to which Indiana American proposed to pay Lake Station 

$20,680,000 for the property.

[6] Before a municipality may sell its nonsurplus utility property, the municipality 

and the prospective purchaser must obtain the Commission’s approval pursuant 

to Indiana Code Section 8-1.5-2-6.1 (“Section 6.1”). Ind. Code § 8-1.5-2-6.1(b). 

The Commission shall approve the sale according to the parties’ proposed terms 

and conditions if the Commission finds that the sale according to those terms 

and conditions is in the public interest. Ind. Code § 8-1.5-2-6.1(d). The 

purchase price shall be considered reasonable if it does not exceed the appraised 

value set forth in the aforementioned appraisal. Id. If a municipally owned 

utility files a petition under Indiana Code Section 8-1-30.3-5(d) and the 

Commission approves the petition under Indiana Code Section 8-1-30.3-5(c), 

then the proposed sale “is considered to be in the public interest.” Ind. Code § 

8-1.5-2-6.1(e)(1).
Court of Appeals of Indiana | Memorandum Decision 18A-EX-2179 | June 26, 2019 Page 6 of 18

[7] In January 2018, Indiana Code Section 8-1-30.3-5 (“Section 30.3-5”) provided

in relevant part as follows:

(a) This section applies if:

(1) a utility company acquires property from another 

utility company at a cost differential[4]in a transaction 

involving a willing buyer and a willing seller; and

(2) at least one (1) utility company described in subdivision 

(1) is subject to the jurisdiction of the commission under 

this article.

(b) There is a rebuttable presumption that a cost differential is 

reasonable.

(c) The utility company that acquires the utility property may 

petition the commission to include the cost differentials as part of 

its rate base. The commission shall approve the petition if the 

commission finds the following:

(1) The utility property is used and useful in providing water 

service, wastewater service, or both water and wastewater service.

(2) The distressed utility failed to furnish or maintain 

adequate, efficient, safe, and reasonable service and 

 

4

See Ind. Code § 8-1-30.3-1 (“As used in this chapter, ‘cost differential’ means the difference between: (1) the 

cost to a utility company that acquires utility property from a distressed utility, including the purchase price, 

incidental expenses, and other costs of acquisition; minus (2) the difference between: (A) the cost of the utility 

property when originally put into service by the distressed utility; minus (B) contributions or advances in aid 

of construction plus applicable accrued depreciation.”). According to the Commission, “[t]he cost 

differential is in essence the ‘premium’ paid over and above the original cost less depreciation, which would 

have otherwise been allowed in rate base.” Commission’s Br. at 25.
Court of Appeals of Indiana | Memorandum Decision 18A-EX-2179 | June 26, 2019 Page 7 of 18

facilities.[5]

(3) The utility company will make reasonable and prudent 

improvements to ensure that customers of the distressed 

utility will receive adequate, efficient, safe, and reasonable 

service.

(4) The acquisition of the utility property is the result of a 

mutual agreement made at arms length.

(5) The actual purchase price of the utility property is 

reasonable.

(6) The utility company and the distressed utility are not 

affiliated and share no ownership interests.

(7) The rates charged by the utility company before 

acquiring the utility property of the distressed utility will 

not increase unreasonably as a result of acquiring the 

utility property.

(8) The cost differential will be added to the utility 

company’s rate base to be amortized as an addition to 

 

5

See Ind. Code § 8-1-30.3-2 (“As used in this chapter, ‘distressed utility’ refers to a utility company whose 

property is the subject of an acquisition described in section 5(a) of this chapter.”). Indiana Code Section 8-1-

30.3-6 provides in pertinent part that for purposes of Section 30.3-5(c)(2),

a distressed utility is not furnishing or maintaining adequate, efficient, safe, and reasonable 

service and facilities if the commission finds one (1) or more of the following:

...

(5) The distressed utility:

(A) is municipally owned utility property of a municipally owned utility that 

serves fewer than five thousand (5,000) customers; and

(B) is being sold under IC 8-1.5-2-6.1.
Court of Appeals of Indiana | Memorandum Decision 18A-EX-2179 | June 26, 2019 Page 8 of 18

expense over a reasonable time with corresponding 

reductions in the rate base.

(d) A utility company may petition the commission in an 

independent proceeding to approve a petition under subsection 

(c) before the utility company acquires the utility property if the 

utility company provides:

(1) notice of the proposed acquisition and any changes in 

rates or charges to customers of the distressed utility;

(2) notice to customers of the utility company if the 

proposed acquisition will increase the company’s rates by 

an amount that is greater than one percent (1%) of the 

utility company’s base annual revenue;

(3) notice to the office of the utility consumer counselor; 

and

(4) a plan for reasonable and prudent improvements to 

provide adequate, efficient, safe, and reasonable service to 

customers of the distressed utility.

(Emphasis added.)

[8] In January 2018, Indiana American filed a petition with the Commission

pursuant to Section 30.3-5 seeking approval to include cost differentials as part 

of its rate base. Lake Station joined the petition, seeking approval to sell its 

assets pursuant to Section 6.1. Indiana American wholesale customers 

Schererville and Crown Point were granted permission to intervene. The 

Commission held an evidentiary hearing at which the foregoing entities and the 
Court of Appeals of Indiana | Memorandum Decision 18A-EX-2179 | June 26, 2019 Page 9 of 18

OUCC appeared.6 In August 2018, a majority of the five-member Commission

issued an order finding that Lake Station’s water utility is a distressed utility 

under Indiana Code Section 8-1-30.3-6(5), that the sale is in the public interest 

pursuant to Section 6.1, and that Indiana American had satisfied the 

requirements of Section 30.3-5(c) and -(d). With respect to Section 30.3-5(c)(1), 

which is the focus of this appeal, the majority’s findings state in pertinent part:

(1) The utility property is used and useful in providing water 

service, wastewater service, or both water and wastewater 

service. This element was contested as it relates to the used and 

useful status of Lake Station’s treatment plant [(“WTP”)], wells, 

and associated equipment[, which had been valued at 

approximately $7,366,043]. The crux of this dispute is whether 

this requirement is satisfied if the utility property is used and 

useful to the seller or if it must also be used and useful to the 

acquiring utility. [OUCC Utility Analyst James Parks] testified 

that the Lake Station WTP will not be used and useful after Lake 

Station’s Water System is acquired by Indiana American. 

[Indiana American Director of Community and Government 

Affairs Matthew Prine] testified that the Lake Station plant “is” 

used and useful as it is currently supplying water to Lake Station 

customers today. ....

....

In approaching this element, it is important to recognize that it is 

likely this transaction would not be before the Commission if the 

Lake Station source of supply and treatment plant were excluded 

from the acquisition. [Lake Station Mayor Christopher 

 

6

Indiana Code Section 8-1-1.1-4.1(a) provides that the OUCC “may appear on behalf of ratepayers, 

consumers, and the public” in hearings before and appeals from the orders of the Commission.
Court of Appeals of Indiana | Memorandum Decision 18A-EX-2179 | June 26, 2019 Page 10 of 18

Anderson] testified that Lake Station still owes money to the

State of Indiana related to the construction of the treatment 

plant. He also testified that Lake Station could not sell its system 

without also selling the WTP because revenues from water sales 

would be needed to pay back the loan.

Indiana American argues that the verb tense (present and not 

future) used in Section 30.3-5(c)(l) requires us to find that the 

utility property it is seeking to acquire “is” used and useful by

Lake Station in the provision of water service as opposed to 

finding that it “will be” used and useful to Indiana American

after the acquisition. We agree and find that it is sufficient for

the purposes of this statute that the utility property is used and 

useful to the selling utility.

In addition to the plain language of the statute, the use of the 

present tense makes sense in the overall statutory scheme. If a 

purchaser was required to show that all of the assets being

acquired would continue to remain reasonably in service after the 

closing, there may be anomalous results that could discourage 

the purchase of distressed utilities and its promotion of 

efficiencies through regionalization. The clear policy decision of 

the legislature to encourage regionalization through acquisitions 

further supports finding that the utility property is used and 

useful to the selling utility.[7]

For example, as further discussed below, Section 6.1 requires the 

Commission to find the purchase price for a municipality’s 

nonsurplus property to be reasonable if it does not exceed its

appraised value. Consequently, if Lake Station had received two 

offers for the purchase of its utility at the appraised value, one 

from a utility that had an existing interconnection and need only

 

7 A detailed description of recent legislative activity in this area appears on pages 20 and 21 of the 

Commission’s order.
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open a valve to deliver quality water from an existing regional 

treatment plant and the other from a utility that would need to 

operate Lake Station’s existing WTP and wells, it seems 

unreasonable to allow the cost differential in the rate base of the 

utility needing to continue operation of the existing WTP and 

wells, but not for the utility that simply needs to open the 

interconnection and may be able to provide more efficient service 

with its existing facilities. Changing the verb tense to future tense 

would require that every single asset owned by the seller remain 

in service, despite the efficiencies, economies, and improvements 

to service that might be gained by the combination. It may also 

cause sellers not to choose the purchaser in the best position to 

regionalize and gain service efficiencies in order to sell to another 

purchaser for a higher price.
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Our dissenting colleagues argue that under Ind. Code § 8-1-2-6,[8]

to be part of a public utility’s rate base, an asset must be used and 

useful to that utility and therefore, Indiana American is 

prohibited from including in rate base the cost of Lake Station’s 

WTP and wells. However, we must respectfully disagree. As 

specific exceptions to Ind. Code § 8-1-2-6, Sections 6.1 and 30.3-5

were clearly intended by the legislature to change the standards 

of Ind. Code § 8-1-2-6 in certain circumstances, in order to 

promote the regionalization and greater efficiencies through the

acquisition of distressed utilities and small municipal utilities. In 

addition, the legal case history regarding “used and useful”

involved instances in which cost recovery was being sought for

cancelled electric generation plants. See Citizens Action Coalition, 

Inc. v. N. Ind. Pub. Serv. Co., 485 N.E.2d 610, 614-615 (Ind. 1985). 

 

8

Indiana Code Section 8-1-2-6 reads in pertinent part as follows:

(a) The commission shall value all property of every public utility actually used and useful for 

the convenience of the public at its fair value, giving such consideration as it deems appropriate 

in each case to all bases of valuation which may be presented or which the commission is 

authorized to consider by the following provisions of this section. As one of the elements in 

such valuation the commission shall give weight to the reasonable cost of bringing the property 

to its then state of efficiency. In making such valuation, the commission may avail itself of any 

information in possession of the department of local government finance or of any local 

authorities. The commission may accept any valuation of the physical property made by the 

interstate commerce commission of any public utility subject to the provisions of this act.

(b) The lands of such public utility shall not be valued at a greater amount than the assessed 

value of said lands exclusive of improvements as valued for taxation. In making such valuation 

no account shall be taken of presumptive value resting on natural resources independent of any 

structures in relation thereto, the natural resource itself shall be viewed as the public’s property. 

No account shall be taken of good will for presumptive values growing out of the operation of 

any utility as a going concern, all such values to rest with the municipality by reason of the 

special and exclusive grants given such utility enterprises. Except in a proceeding under IC 8-1-

30, and except as provided in IC 8-1-30.3-5 and IC 8-1.5-2-6.1, no account shall be taken of 

construction costs unless such costs were actually incurred and paid as part of the cost entering 

into the construction of the utility. Except in a proceeding under IC 8-1-30, and except as provided 

in IC 8-1-30.3-5 and IC 8-1.5-2-6.1, all public utility valuations shall be based upon tangible 

property, that is, such property as has value by reason of construction costs, either in materials 

purchased or in assembling of materials into structures by the labor or (of) workers and the 

services of superintendents, including engineers, legal and court costs, accounting systems and 

transportation costs, and also including insurance and interest charges on capital accounts 

during the construction period. As an element in determining value the commission may also 

take into account reproduction costs at current prices, less depreciation, based on the items set 

forth in the last sentence hereof and shall not include good will, going value, or natural 

resources.

(Emphases added.)
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In contrast, Indiana American provided testimony that it would 

be using Lake Station’s existing WTP and wells to some extent, 

such as in cases of emergency and to backup Indiana American’s

existing system, particularly to assist with threats to its water 

supplies. We also recognize that Indiana American is not 

purchasing or building a treatment plant and wells; it is 

proposing to regionalize and purchase an entire system, which

includes a treatment plant and wells, and all of which is included 

in the appraisal price. Moreover, Ind. Code § 8-1-2-6 is a statute 

of general applicability for use when reviewing utility rates and

charges; whereas Sections 6.1 and 30.3-5 are more specific 

statutes addressing what may be included in the rate base of a 

utility that is acquiring a distressed utility. Indiana courts have 

held “where provisions of a statute conflict, the specific provision 

takes priority over the general provision.” Robinson v. Wroblewski, 

704 N.E.2d 467, 475 (Ind. 1998). Therefore, because Section

30.3-5(c)(l) does not require a utility to demonstrate that the 

acquired assets will be used and useful, Ind. Code § 8-1-2-6 does 

not prohibit Indiana American from including in rate base that

which is authorized under Sections 6.1 and 30.3-5.

We also respectfully disagree with the OUCC and our dissenting 

colleagues that Section 30.3-5(c) applies to an acquisition that has 

already occurred. They base their interpretation on the fact that 

this provision states that the utility company that “acquires” the 

utility property may petition the Commission to include the cost 

differentials as part of its rate base. However, if you read 

Sections 6.1 and 30.3-5 as a whole, the review that occurs under 

Section 30.3-5(c) must occur prior to the close of the acquisition. 

See, Ind. Code 8-1-30.3-5(d) providing that a “utility company

may petition the commission in an independent proceeding to 

approve a petition under [Section 30.3-5(c)] before the utility 

company acquires the utility property...” (emphasis added); Ind. 

Code § 8-1.5-2-6.l(b) requires the municipality and the 

prospective purchaser to obtain Commission approval “[b]efore a 

municipality may proceed to sell” its property (emphasis added); 

and Ind. Code § 8-1.5-2-6.1(e) requiring the Commission to 
Court of Appeals of Indiana | Memorandum Decision 18A-EX-2179 | June 26, 2019 Page 14 of 18

approve the proposed sale as within the public interest if the 

municipality’s municipally owned utility petitions the 

Commission under Section 30.3-5(d) and the Commission

approves that petition under Section 30.3-5(c).

The statute requires that the utility property before the 

acquisition “is used and useful” and does not address what its use 

will be after the closing. There is no dispute that the Lake 

Station WTP and wells, as they exist today, are currently used 

and useful, and we so find.

Id. at 25-28 (footnotes omitted) (underlined emphasis replaced with bold type).

9

 

Accordingly, the majority approved “the acquisition of the Lake Station Water 

System by Indiana American on the terms described in the Asset Purchase 

Agreement” and allowed Indiana American to “record for ratemaking purposes 

as net original cost rate base of the assets being acquired an amount equal to 

 

9

In a subsequent portion of the order, the majority stated,

The most disputed issue raised in this case was whether particular Lake Station Water System 

assets, i.e., the WTP and wells, should be considered reasonably necessary to the provision of 

utility service by Indiana American and therefore "used and useful" following the closing of the 

sale. We have determined and found that the WTP and wells are used and useful now to Lake 

Station and for acquisition purposes. This is why we approve the purchase. However, 

testimony has been presented that these assets might not be used and useful following the 

acquisition. If it does in fact turn out that the WTP and wells are not used and useful to Indiana 

American following the acquisition, we encourage Indiana American to voluntarily explore 

ratemaking options that might mitigate the impact of the purchase price in future proceedings. 

For example, the purchase price associated with the WTP and wells could be treated in a way 

that provides for a return of the investment, but does so at a reduced return on the investment. 

Another option may be to undertake an analysis to determine the ongoing value of the WTP 

and wells in providing water service to the consolidated customers and to compare that value 

against that of continuing to operate and maintain those assets. We encourage Indiana 

American and other utilities serving the public in Indiana to voluntarily use their resources and 

explore reasonable financial concessions that can serve to enhance regionalization efforts in a 

manner that also fosters positive public sentiments regarding those efforts for the benefit of all 

Hoosiers.

Appealed Order at 32.
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$20,199,470, plus actual incidental expenses, and other costs of acquisition 

reasonably incurred ....” Id. at 33.10 The remaining Commission members 

issued a dissenting opinion. This appeal ensued.

Discussion and Decision

[9] The legislature created the Commission primarily as a factfinding body with the 

technical expertise to administer the regulatory scheme that the legislature 

devised. N. Ind. Pub. Serv. Co. v. U.S. Steel Corp., 907 N.E.2d 1012, 1015 (Ind. 

2009). “When exercising this authority, the Commission balances the public’s 

need for adequate, efficient, and reasonable service with the public utility’s need 

for sufficient revenue to meet the cost of furnishing service and to earn a 

reasonable profit.” NIPSCO Indus. Grp. v. N. Ind. Pub. Serv. Co., 100 N.E.3d 234, 

238 (Ind. 2018). The Indiana Code authorizes judicial review of Commission

orders, which “must contain specific findings on all the factual determinations 

material to its ultimate conclusions[,]” and those findings “must be supported 

by substantial evidence in the record.” Ind. Gas Co. v. Ind. Fin. Auth., 999 

N.E.2d 63, 66 (Ind. 2013).

[10] Appellants do not challenge the correctness of the Commission’s factual 

findings, but they do disagree with the Commission’s interpretation of Section 

30.3-5(c)(1). We ordinarily review an agency’s legal conclusions de novo. 

 

10 Sections 6.1(f) and 30.3-5(e) both authorize the purchasing entity to record “(1) the full purchase price; (2) 

incidental expenses; and (3) other costs of acquisition” as the net original cost rate base.
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Moriarity v. Ind. Dep’t of Nat. Res., 113 N.E.3d 614, 619 (Ind. 2019). Our 

supreme court recently explained that although we are not bound by such 

conclusions, an interpretation of a statute by an agency charged with the duty of 

enforcing it “is entitled to great weight, unless this interpretation would be 

inconsistent with the statute itself.” Id. (quoting Chrysler Grp., LLC v. Review Bd. 

of Ind. Dep’t of Workforce Dev., 960 N.E.2d 118, 123 (Ind. 2012)).11 “In fact, ‘if 

the agency’s interpretation is reasonable, we stop our analysis and need not 

move forward with any other proposed interpretation.’” Id. (quoting Jay 

Classroom Teachers Ass’n v. Jay Sch. Corp., 55 N.E.3d 813, 816 (Ind. 2016)). 

Simply stated, the question before us is whether the Commission’s

interpretation of Section 30.3-5(c)(1) is reasonable. We hold that it is.

[11] Appellants’ primary complaint is that under longstanding Commission and 

court precedent, the “used and useful” standard has “applied to the utility 

seeking to recover a return on and a return of the utility property in question.” 

Appellants’ Br. at 23. But Appellants do not specifically assert, let alone 

conclusively establish, that this administrative and judicial precedent somehow 

precludes the legislature from applying the standard to a distressed utility 

 

11 The court took a contrary position less than six months earlier in NIPSCO Industrial Group v. Northern 

Indiana Public Service Co., 100 N.E.3d 234, 241 (Ind. 2018) (“We review questions of law de novo ... and 

accord the administrative tribunal below no deference.”), but we are bound by its latest pronouncement on 

the subject. Correll v. State, 639 N.E.2d 677, 683 (Ind. Ct. App. 1994).
Court of Appeals of Indiana | Memorandum Decision 18A-EX-2179 | June 26, 2019 Page 17 of 18

seeking to sell its nonsurplus property.

12

 It was reasonable for the Commission

to conclude that, pursuant to Section 30.3-5(c)(1), the legislature intended for 

the standard to apply to the seller of a distressed utility for the multiple cogent 

reasons stated in its order, which we need not rehash here.

13

 Appellants (and 

Indiana American’s ratepayers) may disagree with the legislature’s policy 

preferences regarding regionalization and the acquisition of distressed utilities, 

but it is not our prerogative to second-guess those preferences or their 

 

12 Lake Station points out that determining whether “an asset ‘is used and useful’ to the seller ensures that the 

seller is only selling nonsurplus property as required by [Section 6.1(b)].” Lake Station’s Br. at 21. The 

Commission makes the same observation and further observes that “exactly none of Lake Station’s 

nonsurplus utility property is used and useful to Indiana American because it owns none of the property.” 

Commission’s Br. at 34. In a recent opinion, another panel of this Court concluded that Sections 6.1 and 

30.3-5 “apply to the same subject matter and must be construed harmoniously[,]” just as the Commission did 

in its order in this case. NOW!, Inc. v. Indiana-American Water Co., 117 N.E.3d 647, 657 (Ind. Ct. App. 2018), 

trans. denied (2019). Contrary to Appellants’ assertion in their reply brief, NOW!, Inc. is (and always has been) 

a published opinion, which was certified on May 14 following our supreme court’s denial of transfer.

13 The legislature’s recent amendment of Section 30.3-5(c)(1) (now codified as Section 30.3-5(d)(1)) clarifies

this intent. See Ind. Pub. Law 229-2019 § 5 (“Before closing on the acquisition, the utility company that 

acquires the utility property may petition the commission to include any cost differential as part of its rate 

base in future rate cases. The commission shall approve the petition if the commission finds the following: 

(1) The utility property is used and useful to the offered [i.e., distressed] utility in providing water service, 

wastewater service, or both water and wastewater service.”) (emphases added).
Court of Appeals of Indiana | Memorandum Decision 18A-EX-2179 | June 26, 2019 Page 18 of 18

outcomes.

14 Consequently, we stop our analysis without considering 

Appellants’ interpretation of Section 30.3-5(c)(1) and affirm the Commission’s

order.

[12] Affirmed.

Vaidik, C.J., and Mathias, J., concur.

 

14 Appellants quote Indiana Code Section 8-1-2-0.5, which provides,

The general assembly declares that it is the continuing policy of the state, in cooperation with 

local governments and other concerned public and private organizations, to use all practicable 

means and measures, including financial and technical assistance, in a manner calculated to 

create and maintain conditions under which utilities plan for and invest in infrastructure 

necessary for operation and maintenance while protecting the affordability of utility services for 

present and future generations of Indiana citizens.

Appellants then assert,

Requiring customers to pay for the return on and return of Indiana American’s investment in a 

water treatment plant that is not used and useful to Indiana American is not consistent with the 

legislative policy of being “necessary for operation” of Indiana American and is not “protecting 

the affordability of utility services for present and future generations of Indiana citizens.

Appellants’ Br. at 33. We note that Section 30.3-5 was enacted before Section 8-1-2-0.5, and we presume that 

the legislature was aware of the former when it drafted the latter. Any real or perceived dissonance between 

the two is not a matter of judicial concern. In their reply brief, Appellants raise what could be construed as a 

substantive due process challenge to the Commission’s interpretation of Section 30.3-5(c)(1), see Appellants’ 

Reply Br. at 10-11 (quoting Denver Union Stock Yard Co. v. United States, 304 U.S. 470, 475 (1938)), but an 

argument raised for the first time in a reply brief is waived. Showley v. Kelsey, 991 N.E.2d 1017, 1021 n.2 

(Ind. Ct. App. 2013), trans. denied.