Parr Richey Frandsen Patterson Kruse LLP

Case Summary: Dupont Water Co. v. City of Madison

2026-09-17T15:09:08Z

Seventh Circuit Holds Rural Water Association Cannot Claim USDA Monopoly Rights Over a Customer It Failed to Timely Serve (Dupont Water Co. v. City of Madison, No. 25-3131 (7th Cir. Aug. 5, 2026)) The Seventh Circuit affirmed summary judgment for the City of Madison and Jefferson County, Indiana, holding that Madison did not violate the federal monopoly protections of 7 U.S.C. § 1926(b) by supplying water to a new county jail, because the rural water association claiming those protections, Dupont Water Company, Inc. (“Dupont”), never actually “provided or made available” service to the jail within a reasonable time after being asked to do so. Section 1926(b) is part of the Consolidated Farmers Home Administration Act of 1961, which authorizes the U.S. Department of Agriculture (“USDA”) to loan money to rural water associations. In exchange for taking on USDA debt, § 1926(b) protects those associations from certain municipal competition: their service “shall not be curtailed or limited” by a municipality’s annexation of the association’s territory or by the grant of a competing franchise. The Seventh Circuit has long read this protection broadly. In Jennings Water, Inc. v. City of North Vernon, 895 F.2d 311 (7th Cir. 1989), the court held that § 1926(b) bars any municipal curtailment of a protected association’s service, not just the two forms of competition the statute’s text actually names. And in Washington County Water Co. v. City of Sparta, 77 F.4th 519 (7th Cir. 2023), the court adopted a two-part “physical capability” test for determining whether an association has “provided or made available” service to a disputed area: (1) the association must have “pipes in the ground”— water lines within or adjacent to the area sufficient to serve it “within a reasonable time after a request for service occurs”—and (2) the association must have the legal right under state law to serve that area. Only the first prong was contested in this case. Jefferson County built a new jail on undeveloped land just outside Madison in 2020. Two utilities could potentially serve the site: Madison, which had a 12-inch water main across the street, and Dupont, a USDA-indebted rural water association whose nearest main was only three or four inches—too small for the jail’s projected volume. Beginning in July 2020, the County’s construction manager, DLZ Corporation, repeatedly reached out to Dupont about the project’s water needs, and the record shows Dupont knew by October 2020 that it would need a larger main to serve the jail. Over the next two years, DLZ and the County followed up again and again, asking Dupont to confirm its connection plans, requesting a water rate quote, and eventually telling Dupont it would need to hire an engineer to figure out how to proceed. Dupont never provided an infrastructure plan, a cost estimate, a rate quote, or a proposed contract. It did, however, send Jefferson County two letters (in January and June 2021) asserting that the jail site fell within its protected service area under § 1926(b) and that Dupont was “the entity from whom Jefferson County needs to purchase water.” With Dupont still unable to say whether or on what terms it could serve the jail, the County eventually connected the jail to Madison’s main in December 2022. Dupont sued Madison in March 2023, claiming the sale of water to the jail violated § 1926(b), and sought declaratory relief and damages. Jefferson County intervened, seeking a declaration that its arrangement with Madison was lawful; Dupont counterclaimed against the County. Only once the case was in litigation did Dupont commission an engineering study, which concluded that Dupont could now build the necessary infrastructure to serve the jail in anywhere from about seven days (if allowed to tie into Madison’s main, at roughly $10,000) to 90–180 days (building its own main, at $482,000– $524,160). The district court (S.D. Ind., Judge Sarah Evans Barker) granted summary judgment to Madison and Jefferson County, finding no evidence that Dupont had “provided or made available” water service to the jail, and Dupont appealed. Dupont’s position on appeal was that Jefferson County had never made a proper “request” for service in the first place pointing to deposition testimony that Dupont customers normally request service by visiting Dupont’s office, filling out an application, and paying a membership fee, none of which the County did. On that theory, Dupont argued its years of inaction were irrelevant, and that the court should instead credit its litigation expert’s after-the-fact estimate that it could physically build the necessary infrastructure in as little as a week. Dupont also argued the County had been improperly “rate shopping” between Dupont and Madison rather than genuinely trying to secure service from Dupont. Madison and Jefferson County argued that two years of correspondence about the jail’s water needs and Dupont’s own letters invoking § 1926(b) and calling itself the exclusive water provider for the site plainly constituted a request for service, and that Dupont’s litigation-driven expert testimony could not retroactively establish a “physical capability” that did not exist when it actually mattered. Madison separately urged the court to overrule Jennings Water and limit § 1926(b) to the two forms of competition its text actually lists (annexation and competing franchises), which would have foreclosed Dupont’s theory entirely. The Seventh Circuit affirmed on the narrower ground, without reaching Madison’s request to overrule Jennings Water. Applying the “physical capability” test’s first prong, the court held that “we need not hypothesize” about whether Dupont could serve the jail in the abstract, because the historical record already answered the question: Dupont did not provide water to the jail “within a reasonable time after a request for service,” and instead “sat on its hands for years, doing nothing much other than asserting its monopoly rights.” The court rejected Dupont’s argument that no “request” had been made, calling it “Kafkaesque” and finding it “borders on absurd” to say a well-documented, two-year exchange about a large new customer’s water needs was not a request simply because no one filled out Dupont’s standard membership form. The court likewise rejected the rate-shopping argument, noting the County kept working with Dupont for months after learning Madison’s rates were substantially lower. And it gave no weight to Dupont’s litigation-commissioned expert testimony, explaining that such evidence might matter in a case where a water association was caught by surprise, but not where, as here, the association had every opportunity to develop a service plan in real time and simply failed to do so. Although the panel did not need to revisit Jennings Water to decide the case, it used the opinion to flag concerns with the court’s own precedent. The panel noted that Dupont was not using § 1926(b) defensively, to protect an existing customer base from municipal encroachment, but offensively, as a “sword” to claim a brand-new customer it had never actually served—a use the court worried could let a water association “expand its exclusive franchise area unilaterally and limitlessly” simply by extending pipe toward the edge of its territory (quoting the Fourth Circuit’s “kudzu vine” concern in Chesapeake Ranch Water Co. v. Board of Commissioners, 401 F.3d 274 (4th Cir. 2005)). The court closed by suggesting that “in an appropriate case, we should consider revisiting” its broad, judicially expanded reading of § 1926(b), signaling that the doctrine could narrow in future litigation. The Seventh Circuit affirmed the district court’s grant of summary judgment to the City of Madison and Jefferson County on all of Dupont’s claims. Madison’s provision of water to the jail did not violate § 1926(b), because Dupont never “provided or made available” service to the jail within a reasonable time after the County’s repeated requests.

Indiana Flooding: Understanding Water Damage and Insurance Coverage

2026-08-18T03:49:50Z

By Michael L. Schultz Indiana has just experienced one of its most serious flooding events in decades. Beginning August 11, severe storms dumped extraordinary amounts of rain across portions of the state—more than 11 inches in some locations. The White River reached record levels in several communities, widespread evacuations and water rescues were necessary, and homes and businesses throughout central Indiana sustained significant damage. Tragically, at least six deaths have been attributed to the storms and flooding. For property owners now confronting the damage, an important point is that “water damage” and “flood damage” are not necessarily the same thing for insurance purposes. Most standard homeowners and commercial property policies exclude damage caused by “flood,” which is generally understood to involve surface water inundating normally dry land. The Indiana Department of Insurance likewise cautions that ordinary homeowners insurance typically does not cover flooding. Separate flood insurance—often issued through the National Flood Insurance Program—is generally required for that risk. But that does not mean every loss involving water after these storms is necessarily excluded. The recent weather involved much more than rising rivers. It included torrential rain, high winds, falling trees, power outages, overwhelmed drainage systems, and other conditions that may implicate different provisions of a property policy. Depending upon the facts and the language of the particular policy, coverage questions may arise concerning wind-created openings, rain entering through storm damage, sewer or drain backup, sump-pump failure, collapse, fallen trees, or damage to equipment and other property. The Indiana Department of Insurance itself notes that some losses associated with severe weather may be covered even though traditional flood damage is not. For that reason, policyholders should be cautious about assuming they have no insurance claim simply because their property contains floodwater—or accepting an insurer's characterization of the entire loss as “flood” without examining how the damage actually occurred. If your property was damaged, document everything before cleanup and repairs alter the evidence. Take extensive photographs and video showing the property, water lines, damaged contents, exterior conditions, openings through which water may have entered, fallen trees, roof or siding damage, and affected mechanical systems. Keep damaged materials when reasonably possible, preserve receipts for emergency expenses, and maintain a written chronology of what happened. Most importantly, promptly report potentially covered losses. An insurance company should be given the opportunity to investigate the actual causes of the damage and apply the specific language of the policy. A loss involving several contributing causes can present substantially different coverage issues from a straightforward river-flooding claim. The scale of this disaster is also a reminder for the future. Indiana reports that fewer than 1% of the state's households currently have flood insurance, even though flooding can occur well outside areas traditionally regarded as high-risk flood zones. For Hoosiers dealing with the aftermath of these storms, the immediate priorities are safety and recovery. But when it comes to insurance, do not assume that “flooding” ends the coverage analysis. The cause of the particular damage, the sequence of events, and the precise language of the policy all matter.

Indiana Appeals Court Affirms Bad-Faith Claim Against Erie Insurance

2026-05-18T13:45:48Z

Appellate Court Affirms Bad-Faith Claim When Erie Insurance Opportunistically Avoided Paying the Uninsured Motorist claim and Court Declared UM/UIM Coverage Limits Do Not Apply to the Breach of Policy Damages Claims The Indiana Court of Appeals largely affirmed the jury’s finding that Erie Insurance acted in bad faith toward Christine and Roy Cosme after denying uninsured motorist coverage following a 2017 rear-end collision. The court detailed how Erie attempted to cancel the Cosmes’ automobile policy after mistakenly believing their son’s driver’s license had been suspended, even though the suspension resulted from an administrative error and the family had actively attempted to correct the issue before the purported cancellation became effective. After the accident, Erie denied coverage and maintained that the policy had been cancelled, despite conflicting internal documentation suggesting the policy remained active. The appellate court rejected Erie’s arguments that the bad-faith claim should have been dismissed on summary judgment. The court found there were genuine issues of material fact regarding whether Erie properly cancelled the policy and whether its denial of coverage constituted an “unfounded refusal to pay policy proceeds” or deceptive conduct under Indiana bad-faith law. The opinion emphasized that Erie’s own records conflicted on whether the policy was actually cancelled and that evidence supported the claim that Erie opportunistically relied on the confusion surrounding the son’s license suspension to avoid paying the uninsured motorist claim. The court also upheld the admission of expert testimony characterizing Erie’s conduct as “opportunistic fraud,” concluding that the testimony was not a surprise opinion because the insurer had long been aware the expert intended to testify that Erie failed to act forthrightly and attempted to justify improper claims-handling conduct after the fact. However, the appellate court determined the trial court improperly reduced portions of the jury’s damages award. Specifically, the court held that while uninsured motorist policy limits properly capped damages arising directly from the accident itself, those limits did not necessarily apply to damages caused by Erie’s separate breach of contract in failing to pay the claim. The matter was therefore remanded for further proceedings on damages. For the claimants, the opinion is highly favorable and provides substantial leverage going forward. The appellate court validated the core theory that Erie’s handling of the cancellation and denial process could constitute actionable bad faith, preserved the punitive damages award, and reopened the possibility of reinstating significant breach-of-contract damages beyond the policy limits. Claimants should continue pressing the distinction between contractual uninsured motorist benefits and consequential damages flowing from Erie’s wrongful conduct, while emphasizing the appellate court’s repeated recognition that factual disputes existed concerning the legitimacy of the cancellation and the insurer’s claims-handling practices. James A.L. Buddenbaum and Michael L. Schultz are partners in the Indiana law firm of Parr Richey Frandsen Patterson Kruse LLP and regularly litigate claims for insurance policy holders in state and federal courts. The statements contained herein are matters of opinion and general information only and are not to be considered legal advice and should not be construed to form an attorney-client relationship. If you have any questions regarding this article, please contact an attorney.

What If Evidence Is Destroyed In A Lawsuit?

2026-03-25T13:36:14Z

Recently, the Indiana Supreme Court dealt with the issue to handle potential evidence which is not preserved and the Court declared that the issue is within the discretion of the trial court. The case involved a person who was injured when she tripped on a lobby floormat while leaving Community Hospital and sued for negligence. Plaintiff’s counsel sent a letter shortly after the fall requesting the all video evidence be preserved. The hospital security only preserved a short clip of approximately 10–12 seconds from a camera that captured the fall which was produced to plaintiff’s counsel. The hospital admitted there were three cameras that covered the area, but only one captured the fall. The footage from the other cameras, and earlier footage from the camera that captured the fall were not preserved. The Plaintiff moved for sanctions arguing that by not preserving all of the cameras the hospital committed spoilation and requested a jury instruction allowing an adverse inference if a party fails to preserve evidence. The trial court denied sanctions and the adverse-inference instruction and the jury returned a verdict for the hospital. The Court of Appeals reversed, in part, finding potential spoliation and error in refusing the instruction. The Supreme Court granted transfer and vacated that opinion. The majority of the Indiana Supreme Court held that that the trial court did not abuse its discretion in finding no spoliation even though the Plaintiff argued that the preserved video was distant and pixelated so earlier footage which was not preserved would likely shown the small, foot-sized raised portion of the mat. Ultimately, the Supreme Court majority affirming the trial judgment for the hospital. However, Justice Goff wrote a dissenting opinion arguing the trial court abused its discretion by declining to give Plaintiff’s adverse-inference instruction. as Justice Goff stated. He emphasized the factual sensitivity of spoliation determinations and stated “[s]poliation is a ‘discovery abuse that involves the intentional or negligent destruction, mutilation, alteration, or concealment of physical evidence’ in pending or reasonably foreseeable litigation”. He argued that the question of whether evidence was spoliated and the inference to drawn is better decided by a jury after evidentiary presentation. Justice Goff argued this would be classic jury factual question given the Plaintiff’s preservation letter shortly after the fall, the preserved video’s poor angle and pixelation blocking the relevant portion of the mat, the unpreserved footage from two other cameras which might have shown the mat condition before the fall. While the plaintiff did not prevail, this case is a reminder of the need for a carefully crafted preservation letter in cases where evidence might be change or be deleted. Plaintiff Caryl Rosen v. Community Healthcare System d/b/a Community Hospital, Indiana, Supreme Court No. 25S-CT-217 (Decided March 11, 2026) James A.L. Buddenbaum is a partner in the law firm of [nap_names id="FIRM-NAME-1"] with offices in Indianapolis and Lebanon, Indiana and has more than 35 years’ experience litigating in state and federal courts for utilities, local government, healthcare providers and businesses on a variety of issues. The statements contained herein are matters of opinion and general information only and are not to be considered legal advice and should not be construed to form an attorney-client relationship. If you have any questions regarding this article, please contact an attorney.

The Number Of Remonstrators Controls Opposition To Establishemnt Of A Conservancy District

2026-03-16T01:35:23Z

Numerous freeholders petitioned the trial court to establish the Lake of the Woods of Marshall County Conservancy District which was met with remonstrators who sought dismissal. The trial court dismissed the petition after finding the remonstrators met statutory signature requirements. The Petitioners appealed, challenging whether the court clearly erred in dismissing the petition. Petitioners filed the district petition on August 11, 2023, describing the territory as all parcels with frontage on Lake of the Woods or associated channels, and stating that the purposes for the proposed conversancy district was for water quality, drainage, and flood control. The Marshall Auditor reported 152 petitioner signatures out of 270 freeholders, reflecting 56.3%, and the court found prima facie sufficiency and referred the matter to the Natural Resources Commission. The Commission recommended establishment upon amendment to add a purpose and to include a detailed boundary map proving contiguity of the district. The remonstrators filed an opposition petition with 197 noted signatures, followed by Auditor scrutiny of “questionable” signatures. In response, the Petitioners filed an amended petition with a map and challenged the sufficiency of opposition signatures, including purported revocations and sought an updated Auditor accounting. The Auditor updated the signatures after reviewing a third-party spreadsheet and stated petitioner support would not drop below 50% even removing some names. At hearing, the parties agreed the dispositive issue was whether the remonstrators had at least 51% of freeholder signatures. The trial court found that (A) petitioners failed to sufficiently establish district boundaries, and their spreadsheets and vague map were inadequate to show which properties had qualifying frontage; (B) credited remonstrators’ evidence and found they had 140 valid signatures, equaling 51.85% of freeholders, and therefore dismissed the petition. Upon review, the appellate court offered that findings and conclusions of the trial court will only be set aside only if clearly erroneous, with no reweighing of evidence. The court of appeals rejected petitioners’ framing of the opposition as a Trial Rule 12(B) motion and declined summary judgment review. The Court of Appeals determined that under Indiana Code § 14-33-2-15(b), if a petition against establishment contains at least 51% of freeholders’ signatures, the court must dismiss the establishment petition. The Court further determined that Indiana Code § 14-33-2-3 defines how freeholds and signatures are counted, including limits on joint titles and treatment of corporate and municipal signatories. Based on these statutes and principles, the Court of Appeals determined that the total freeholders numbered 270, requiring at least 138 opposition signatures to mandate dismissal. The Court reject Petitioners’ argument that starting from signatures favoring establishment and “switches” was irrelevant and held that the only question is whether opposition had at least 138 valid signatures. The Court also determined that the petitioners map was too vague for disputes over boundary expansions or restrictions leaving addresses and parcel inclusion unclear on appeal. Accordingly, the trial court, as factfinder, assessed boundaries and signatures, credited remonstrators’ evidence, and found 140 valid opposition signatures, exceeding the statutory minimum. The Court of Appeal ultimately affirmed that the trial court did not clearly err in finding the opposition petition contained at least 51% of freeholder signatures and in dismissing the establishment petition under Indiana Code § 14-33-2-15(b). James A.L. Buddenbaum is a partner in the law firm of Parr Richey Frandsen Patterson Kruse LLP with offices in Indianapolis and Lebanon, Indiana and has more than 35 years’ experience advising utilities, local government, healthcare providers and businesses on a variety of issues. The statements contained herein are matters of opinion and general information only and are not to be considered legal advice and should not be construed to form an attorney-client relationship. If you have any questions regarding this article, please contact an attorney.

Local Government Need Not Provide Health Insurance to Elected Official

2025-08-19T09:15:52Z

The Indiana Supreme Court has held that the local government was within its rights to classify a county council member as a part-time employee and exclude him from group health insurance coverage. The court found that Indiana law allows local governmental units to exclude part-time employees from group health insurance and that the county's classification of the county council member Huck as a part-time employee was permissible. Perry County et. al. v. Huck, Case No. 24S-PL-297 (Ind. 2025). Chief Justice Loretta Rush agreed in the result but filed a separate “concurring opinion” of note. Justice Rush wrote that conflicting provisions of the statute lead to the conclusion that elected officials are not an employee of Perry County [local government]. Justice Rush’s analysis that elected officials are not employees is one shared by many practitioners in the government law practice. Local government should review its policies and implementation of those policies in light of this case. James A.L. Buddenbaum is a partner in the law firm of Parr Richey Frandsen Patterson Kruse LLP with offices in Indianapolis and Lebanon, Indiana and has 25 years’ experience advising local government. He advises and litigates for local government, businesses, healthcare providers, utilities, individuals and insurance policy holder clients and in the areas of real estate, corporate, commercial transactions, health insurance law matters. The statements contained herein are matters of opinion and general information only and are not to be considered legal advice and should not be construed to form an attorney-client relationship. If you have any questions regarding this article, please contact an attorney.

FERC Legal – Blog Post: Duke Energy Corp. v. FERC, 2018 U.S. App. LEXIS 16108

2025-08-19T07:35:26Z

In January 2014, a so-called “Polar Vortex” caused a significant increase in the demand for electricity and a corresponding spike in the price of natural gas. To make matters worse, a Canadian natural gas pipeline burst on January 25, 2014. This was a major problem for electrical utilities because the combustion turbines through which they generate electricity run on natural gas. These difficult circumstances ultimately led to Duke Energy Corporation suffering a staggering $9.8 million loss in a single day after over-buying gas in order to comply with a directive from its regional transmission organization, PJM Interconnection. Each day, electrical utilities are notified by their regional transmission organizations which combustion turbines are scheduled to operate the following day based on the predicted demand for electricity. Because these estimates are never completely certain, even if a generator is scheduled to operate, the regional transmission organization may or may not call on it to provide energy. Duke Energy Company purchases its gas through an agreement with the Natural Gas Pipeline Company (NGPL), which normally allows Duke to purchase gas as needed throughout the day. However, in response to the gas shortage, NGPL imposed new rules during the Polar Vortex requiring utilities to reserve gas well in advance, making gas purchases riskier and less convenient. The problem in this case arose when Duke’s regional transmission organization, PJM Interconnection, notified Duke that all eight of its eighty-megawatt combustion turbines were to be ready for operation on January 27, 2014. Duke had serious concerns about purchasing so much over-priced gas when it was possible that PJM’s prediction that all eight generators would operate was overly conservative. However, after a series of contentious phone calls between the two companies, Duke purchased enough gas to power five of its eight generators and bid on gas to power the remaining three generators. The following day, PJM never dispatched any of Duke’s generators, leaving Duke with a $9.8 million loss. When Duke demanded reimbursement form PJM, citing its contract with PJM which provided that Duke was entitled to recover any damages “arising out of or resulting from . . . . Generation Owner’s [] acting in good faith to implement or comply with the directives of the Transmission Provider.” PJM refused, arguing that its guidance to Duke was never actually a “directive.” Duke then filed a complaint with the Federal Energy Regulatory Commission (“FERC”) alleging that PJM filed to fulfill its contractual obligations to Duke. Alternatively, Duke sought a one-time limited waiver of certain provisions of the contract, which would also have allowed Duke to recover its losses. FERC denied Duke’s complaint, as well as its request for a rehearing. Duke then challenged FERC’s decision in the D.C. Circuit Court of Appeals. Unfortunately for Duke, the D.C. Circuit agreed with FERC that Duke was not entitled to reimbursement because the gas purchases were incurred in meeting its capacity resource obligations to PJM. The court also found that Duke was never actually directed to purchase the gas because Duke was already contractually obligated to be available. In light of the court’s decision in Duke v. FERC, is important for electrical utilities to understand the dangers of relying on contractual provisions guaranteeing reimbursement when making expensive and risky purchases. This case shows that those reimbursement provisions are incredibly narrow, especially when there is disagreement over whether or not an electrical utility was “directed” to make the purchase. Absent an explicit directive, electrical utilities must rely on their own professional judgment in deciding how much gas to purchase. The dire circumstances in this case made it particularly difficult for Duke—or anyone, for that matter—to accurately predict the demand for energy. However, given Duke’s potential liability to PJM and its customers if it had failed to provide enough energy, Duke probably made the right decision to over- rather than under-purchase gas on January 27, 2014. Jeremy Fetty is a partner in the law firm of Parr Richey with offices in Indianapolis and Lebanon. Mr. Fetty is current Chair of the Firm Utility and Business Section and often advises businesses and utilities (for profit, non-profit and cooperative) on regulatory, compliance, and transactional matters. The statements contained herein are matters of opinion and general information only and are not to be considered legal advice and should not be construed to form an attorney-client relationship. If you have any questions regarding this article, please contact an attorney.

FERC Legal – Old Dominion Elec. Coop. v. FERC, 2018 U.S. App. LEXIS 16105

2025-08-19T07:32:35Z

I. Introduction and Case Summary In January 2014, a so-called “Polar Vortex” scourged the Eastern United States, causing a significant amount of property damage and several fatalities. While many industries were impacted by the Polar Vortex, electrical utilities were dealt an especially devastating financial blow. The increased demand for electricity to heat homes and businesses during the Polar Vortex caused a corresponding increase in operational costs for many electrical utilities. Due to a federal tariff that caps the amount an electrical utility may charge for its services, many providers and generators, including Old Dominion Electric Cooperative, were temporarily forced to sell electricity at a substantial loss. After the Polar Vortex subsided, Old Dominion requested that the Federal Energy Regulatory Commission (FERC) waive provisions of the governing tariff retroactively so that it could recover some of its losses. The FERC denied the request and Old Dominion appealed. On June 15, 2018, the U.S. Court of Appeals for the District of Columbia held that Old Dominion’s request was properly denied, as the rate cap imposed by the tariff could not be lifted even under extreme circumstances like the Polar Vortex. II. The Federal Power Act The Federal Power Act empowers the FERC to prospectively fix or change the rates charged by public electrical utilities to ensure that they are just and reasonable. If a utility wants to change its own rates, it must notify the FERC at least sixty days before the change is to take effect. The FERC may waive the sixty-day notice requirement for good cause, but, as the court in Old Dominion Electric Cooperative v. FERC found, it does not have the authority to allow retroactive changes in the rates already charged to consumers. These requirements are collectively known as the “filed rate doctrine.” The Federal Power Act also prohibits the FERC from adjusting current rates to make up for an electrical utility’s over- or under-collection in prior periods. These rules are intended maintain the predictability of rates and prevent discriminatory or extortionate pricing. III. Key Takeaways Old Dominion Electric Cooperative v. FERC confirmed that under the Federal Power Act, the FERC has lacks the authority to make discretionary exceptions for electrical utilities, even in cases where the electrical utility’s motivation is not to gouge consumers, but simply to recoup lost profits, or at least break even, after natural disaster forces the utility to provide services at a loss. In order to avoid ending up like Old Dominion, an electrical utility may be able to adjust its rates accordingly by notifying the FERC at least sixty days before a disaster is likely to occur. However, from a practical standpoint, it is unlikely that an electrical utility could predict an event like the Polar Vortex so far in advance. Jeremy Fetty is a partner in the law firm of Parr Richey with offices in Indianapolis and Lebanon. Mr. Fetty is current Chair of the Firm Utility and Business Section and often advises businesses and utilities (for profit, non-profit and cooperative) on regulatory, compliance, and transactional matters. The statements contained herein are matters of opinion and general information only and are not to be considered legal advice and should not be construed to form an attorney-client relationship. If you have any questions regarding this article, please contact an attorney.

Indiana Supreme Court Clarifies Compensation Owed in Takings Relating to Road Construction

2025-02-04T17:19:50Z

In October 2024, the Indiana Supreme Court held that property owners cannot recover damages for traffic flow reduction to their property caused by roadway projects if the project leaves the property’s access points unchanged because no taking of a property right would occur.[1]

As part of new I-69 construction, the state in 2019 sought to purchase a narrow strip of land from an undeveloped parcel belonging to Franciscan where another nearby property owner, SCP, owned a drainage easement for its CVS storefront.[2] The new interstate would also remove the nearest intersection, which would soon place plaintiffs’ properties at the dead-end of a road and abutting the new interstate.[3] Unsuccessful in negotiations, the state filed for eminent domain, and plaintiffs asserted damages including a reduction in their properties’ commercial value.[4] The state, in turn, argued that damages stemming from traffic reduction are barred as a matter of law.[5] The trial court disagreed, leading to a jury verdict over two million dollars.[6] The Court of Appeals reversed the jury determination of damages for error, and the Supreme Court granted transfer.[7]

When an Indiana government entity uses eminent domain to take property, it owes compensation to the property owner including “‘fair market value’” and “damages ‘to the residue of the property’ that the owner retains.”[8] But a compensable taking requires taking a property right.[9] While condemning the narrow strip of property at hand indisputably created a taking, the traffic issues arising from removing the nearby intersection required a separate analysis.[10]

Indiana common law on damages from loss of property access shows two salient legal principles. First, “a landowner cannot recover damages for changes in traffic flow past their property[.]”[11] Second, “a landowner can recover damages when ingress and egress to their property is actually or constructively eliminated.”[12] And as further refined in State v. Kimco of Evansville, Inc., loss-of-access damages do not include road improvements that prevent expansion of public access.[13]

The court distilled previous law into an analytical framework:

When a property’s ingress and egress points remain unchanged, the landowner cannot recover damages based only on increased circuity of travel between the property and a public roadway because those damages do not result from the taking of a property right. . . . But when a property actually or constructively loses ingress and egress points between the property and a public roadway, the landowner can recover damages because they result from the taking of a property right.[14]

Accordingly, the court abrogated any case before Kimco that fails to tie a property interest taking to eminent domain damages.[15]

Applying this framework, the court held that the Franciscan plaintiffs failed to show a property right taking.[16] While “[t]akings cases are fact-sensitive,” plaintiffs’ concerns solely involved traffic flow, and no ingress-egress points were affected by removing the nearby intersection.[17] Thus, the court remanded the remaining valuation decision to the trial court with restrictions to appropriated land value alone.[18]

Moving forward, property owners affected by roadway construction should take care to frame their property interests through access instead of traffic concerns. Even a constructive access issue, like the bridge weight limits in Tolliver,[19] creates a compensable taking. Otherwise, unfortunately, legislative change may be required to ensure compensation for traffic-related damage to business and commercial value.

__________________________________________

[1] State v. Franciscan All., Inc., No. 24S-PL-118, 2024 Ind. LEXIS 660, at *2–3 (Ind. Oct. 31, 2024).

[2] Id. at *3–5.

[3] Id.

[4] Id. at *5–6.

[5] Id. at *4–5.

[6] Id. at *6–7.

[7] Id. at *7–8.

[8] Id. at *8 (quoting Ind. Code § 32-24-1-9).

[9] Id. at *8–10 (citing State v. Ensley, 164 N.E.2d 342, 348 (Ind. 1960)).

[10] Id.

[11] Id. at *11–12 (citing Ensley, 164 N.E.2d at 348, 350).

[12] Id. at *11–13 (citing Ensley 164 N.E.2d at 348; State v. Tolliver, 205 N.E.2d 672, 677–78 (Ind. 1965) (holding that constructive taking existed where traffic change required access to industrial business over bridge without weight capacity for business’s trucks)).

[13] 902 N.E.2d 206, 208, 214 (Ind. 2009); Franciscan, 2024 Ind. LEXIS 660, at *13–14 (also discussing lack of consideration for whether damages are “special and peculiar” and inapplicability of a change to “a property’s ‘highest and best use’”).

[14] Id. at *14–15 (cleaned up).

[15] Id. at *15.

[16] Id. at *16–17.

[17] Id. at *17–18.

[18] Id. at *19. Trial court-appointed appraisers disagreed on Franciscan’s land valuation, but a previous settlement precluded SCP’s easement valuation. See id. at *7.

[19] See supra note 12.

Authors:

Erin Borissov and Andy Eddington

Erin Borissov is a partner in the law firm of Parr Richey Frandsen Patterson Kruse with offices in Indianapolis and Lebanon, Indiana. She advises utilities and business clients in the areas of utility regulatory law, electric cooperative law, easement and right-of-way law, commercial transactions, corporate governance, and corporate compliance.

The statements contained herein are matters of opinion and general information only and are not to be considered legal advice and should not be construed to form an attorney-client relationship. If you have any questions regarding this article, please contact an attorney.

Indiana Utility Regulatory Commission Investigation of Public Utility Status of DER Aggregators

2025-06-20T08:27:44Z

The Indiana Utility Regulatory Commission has initiated an investigation to determine whether distributed energy resource (“DER”) aggregators are “public utilities” under Indiana law.[1] FERC Order 2222 gave DERs the right to participate in wholesale energy markets through aggregators and required regional transmission organizations such as MISO and PJM to file tariff changes to facilitate participation by DER aggregators. Over the past 18 months, the Commission has conducted stakeholder workshops relating to the implementation of in Indiana.[2] The workshops have discussed interconnection of DERs to local distribution facilities, technical and operational concerns, cost allocation issues, and the extent to which DERs and Aggregators of DERs should be regulated or monitored. After numerous workshops the Commission initiated the investigation to review the public utility status of DER aggregators in order to “facilitate rule development”. __________________________________ [1] Investigation into the Public Utility Status of Distributed Energy Regulators, Cause No. 46043 (IURC 4/17/24) [2] https://www.in.gov/iurc/home/implementation-re-ferc-order-2222/ Erin Borissov is a partner in the law firm of Parr Richey Frandsen Patterson Kruse with offices in Indianapolis and Lebanon, Indiana. She advises utilities and business clients in the areas of utility regulatory law, electric cooperative law, easement and right-of-way law, commercial transactions, corporate governance, and corporate compliance. The statements contained herein are matters of opinion and general information only and are not to be considered legal advice and should not be construed to form an attorney-client relationship. If you have any questions regarding this article, please contact an attorney. __________________________________ Status update (June 19, 2025): On December 18, 2024, IURC issued a Final Order in Cause No. 46043. The Commission found they lacked sufficient evidence to determine the public utility status of any or all DER aggregators that conduct, or may conduct, business in Indiana. As such, the Commission expressed concern with making a conclusive determination on the public utility status in light of the differences between existing DER aggregation models and the host of potential models. Furthermore, the Order states it is unnecessary for the Commission to make a determination as to the public utility status of DER aggregators because IC § 8-1-40.1 places DER aggregator activities that are conducted under FERC Order 2222 within the Commission’s jurisdiction through direct rulemaking authority. Neither FERC Order 2222 nor IC § 8-1-40.1 require the Commission to make a finding of the public utility status of DER aggregators to manage their participation in the wholesale market. In conclusion, the Commission found that moving forward to a determination based on this record that any or all DER aggregators are public utilities is an unnecessary step to accomplish the purpose of the investigation. The investigation was closed without any finding as to the public utility status of DER aggregators as a class. Following the December 18, 2024 Order in Cause No. 46043, the Commission resumed its pre-rulemaking stakeholder process to seek input on various issues that might be addressed in rules to implement FERC Order 2222. The most recent stakeholder meeting was May 29, 2025. Erin C. Borissov | Partner