Negotiations have broken down between Brown County Water Utility and the Nashville Town Council on which of them has the rights to serve a high-volume water customer.
The parties will spend the rest of the year preparing for a summary judgment hearing in federal court, which they’ve asked to be scheduled in January.
“Despite much effort and work on both sides, the parties have recently hit an impasse in their negotiations and have not settled the case,” reads a status report filed March 2 in United States District Court, Indianapolis Division.
“The parties do not believe that any further negotiations would be fruitful at this time and therefore plan to resume litigation of this case.”
A summary judgment is a way to get a ruling without a full jury trial.
A “proposal for settlement of Brown County Water Utility lawsuit” was listed on the February agenda of the Nashville Town Council, but it was taken off at the start of the meeting without explanation. When asked at the May council meeting about the nature of that possible settlement, Town Attorney James T. Roberts said he’d prefer not to discuss the case at this time.
Since May 2017, the council has met 14 times in executive session to discuss pending or threatened litigation, including once at a dispute resolution firm in Indianapolis. By law, the council is allowed to close those meetings to the public.
Background
Brown County Water Utility is not part of county government; it is a privately-held, member-owned utility.
For the past year, the town and BCWU have actually been tied up in two disputes related to this same service issue, one at the federal level and the other at the state level.
On June 20, 2017, Brown County Water Utility sued the Town of Nashville and town council members, claiming they were violating BCWU’s rights to serve Big Woods Brewing Co. and its related companies at the new Hard Truth Hills development at Firecracker Hill.
On May 15, 2017, the town council had petitioned the state for a formal water service territory. In addition to current town water customers within 4 miles of town limits, the proposed territory included the 300-plus-acre Hard Truth Hills property, as well as a 154-acre area known as “the Berry Farm” across State Road 46 West from the old Little Nashville Opry site, and another 56 acres next to it. The Berry Farm area and Hard Truth Hills were marked as “future development.”
The Indiana Utility Regulatory Commission ruled on Feb. 8, 2018, that Nashville could have that area as its service territory. BCWU did not try to intervene in that case, according to the state’s ruling. However, the state regulatory commission did direct the town to keep it updated on the status of the federal case.
BCWU claims that because it is federally indebted, it has the exclusive right to serve Big Woods at Hard Truth Hills.
Even though Big Woods has been a Nashville Utilities water customer since 2009 at its downtown and northern Nashville locations, the Hard Truth Hills land hadn’t had water customers on it in the past.
“Because Brown County Water has historically served the area and has made water services available to Big Woods, federal law gives Brown County Water the exclusive right to serve Big Woods. This right preempts any state or local law,” BCWU claims in a March 13 court document.
Last summer, BCWU spent $95,480.86 to upgrade an existing 2-inch water line to a 6-inch line near the back edge of the Hard Truth Hills property, off Weddle Lane, according to a document filed Aug. 7.
Nashville Utilities already had a water line at the front edge of the Hard Truth Hills property, along Old State Road 46. Last summer, the town went ahead and hooked up Hard Truth Hills to its water line, after Big Woods’ owners had signed a water service contract with the town.
BCWU claims the town’s actions were illegal.
Nashville is making some of the same arguments in court, except in its favor. The town claims that it has historically been the water provider for the Hard Truth Hills area, not BCWU.
The town also is federally indebted by $1.2 million for a water service improvement project it started earlier this year. In the 1970s, it used federal money to build the water line along Old State Road 46 which serves Hard Truth Hills and many area homes, the court documents claim.
The town also claims that BCWU’s engineer gave the state a water service map in 2015 which showed the Hard Truth Hills property being in Nashville’s service area, not its own. When that piece of land became an issue, the town claims that BCWU changed the map shortly before filing the federal lawsuit to remove Nashville’s service area.
The town argues that its water line is better positioned to serve Hard Truth Hills than BCWU’s line is, because to reach the actual development, BCWU’s new line would have to run through the woods on the back edge of the property instead of from Old State Road 46, where the Hard Truth Hills entrance is. In addition, the town’s water line connects to a larger loop, which provides better fire protection than BCWU’s line could, court documents say.
BCWU’s attorney, Peter Campbell King, said at the company’s annual meeting April 16 that the reason behind BCWU bringing the the lawsuit against the town is to defend BCWU’s federal rights, “and the purpose of those federal rights is to make sure all taxpayers are protected, all of us, by those who seek to take or encroach upon the service area of a rural water association.”
Why does this matter?
Both parties claim in their court filings that if they lose, current rate payers will be impacted.
Big Woods is Nashville Utilities’ largest water customer, and the town’s current rate structure depends on receiving that revenue, court documents say.
The town’s water department took in $1,315,414.62 and spent $1,309,727.85 in 2017, keeping itself in the black by $5,686.77, according to financial documents on Indiana Gateway.
Nashville Utilities is also BCWU’s biggest customer. The town buys all or nearly all of the water it sells to its customers from BCWU.
Board President Ben Phillips said last summer that one of BCWU’s concerns is that if Nashville were to serve the new Big Woods development directly, one day they could decide to take their business elsewhere and cause great harm to BCWU. The utility doesn’t want to take that chance, he said.
BCWU had $177,000 in net income in 2017, according to an oral report given at the company’s annual meeting on April 16. Total revenue was $3.5 million and total operating expenses were $3.1 million, with the remaining $223,000 going to interest on various loans.
BCWU engineer Lori Young told the audience that more than $8 million in improvements have been made to BCWU’s rural water system within the last couple years, but more updates should be done “in the long-term future,” such as increasing the size of some water lines.
The town and BCWU also are asking for whichever side loses in court to pay the other’s attorney fees.
When asked at the BCWU annual meeting, King would not give an estimate on legal fees incurred so far or a projected figure on what the case would cost the company. He said it would depend on how it plays out.
The town’s 2018 water department budget includes $55,000 for legal expenses. At the end of 2017, the council approved paying $18,722.04 to Bose McKinney & Evans, which has been handling the state and federal cases.
