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Indiana General Assembly· SB 426Public Law 24

Water utilities., the official text

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First Regular Session of the 124th General Assembly (2025)

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between statutes enacted by the 2024 Regular Session of the General Assembly.

  SENATE ENROLLED ACT No. 426

   AN ACT to amend the Indiana Code concerning utilities.

   Be it enacted by the General Assembly of the State of Indiana:

   SECTION 1. IC 8-1-1.9-5, AS ADDED BY P.L.18-2022, SECTION
12, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE JULY 1,
2025]: Sec. 5. (a) This section applies to a water or wastewater utility
that:

      (1) is not subject to the jurisdiction of the commission for the
      approval of rates and charges; and
      (2) has been issued one (1) or more enforcement orders after:

         (A) June 30, 2022, in connection with the provision of
         wastewater service; or
         (B) June 30, 2025, in connection with the provision of
         water service.
   (b) As used in this section, "department enforcement action" means
an action of the department of environmental management commenced
under IC 13-30-3.
   (c) As used in this section, "enforcement order" means an order,
including an agreed order under IC 13-30-3-3:
      (1) resulting from a department enforcement action; and
      (2) relating to environmental or health and human safety issues.
   (d) Notwithstanding section 3 of this chapter, as used in this
section, "wastewater "water or wastewater utility" means any of the
following that provides water service, wastewater service, or both

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water service and wastewater service to the public in Indiana:
      (1) A public utility (as defined in IC 8-1-2-1(a)).
      (2) A municipally owned utility (as defined in IC 8-1-2-1(h)).
      (3) A not-for-profit utility (as defined in IC 8-1-2-125(a)).
      (4) A cooperatively owned corporation.
      (5) A conservancy district established under IC 14-33.
      (6) A regional water or sewer district established under IC 13-26.

   (e) The following apply to a water or wastewater utility that is
subject to this section:

      (1) Except as provided in clause (C) in the case of a water
      utility, upon the issuance of the first enforcement order with
      respect to the water or wastewater utility, the commission shall
      do the following:

         (A) Perform an informal review, using such procedures as the
         commission may choose, of the rates and charges of the water
         or wastewater utility to determine if the rates and charges are
         sufficient to:

            (i) operate and maintain the water or wastewater utility's
            distribution system or collection and treatment system, as
            applicable; and
            (ii) pay all obligations of the water or wastewater utility's
            distribution system or collection and treatment system, as
            applicable. and
         (B) Determine whether all elements of an adequate asset
         management program are in place with respect to the water or
         wastewater utility's distribution system or collection and
         treatment system, as applicable.
         (C) In the case of a water utility, the commission shall not:
            (i) initiate an informal review of the water utility's rates
            and charges under clause (A); or
            (ii) proceed to determine whether all elements of an
            adequate asset management program are in place with
            respect to the water utility's distribution system under
            clause (B);
         unless twelve (12) months have elapsed since the effective
         date of the first enforcement order and the water utility
         has not remedied within that time the violation for which
         the enforcement order was issued.
      In making a determination under clause (B), the commission may
      consult with the drinking water and wastewater infrastructure
      research and extension program authorized by IC 5-1.2-11.5-10.
      Notwithstanding IC 8-1-1-5(b), commission staff shall not be

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      subject to cross examination in any subsequent proceeding in
      connection with any documents prepared during an informal
      review under this subdivision.
      (2) If within two (2) years of the effective date of the first
      enforcement order a second enforcement order is issued with
      respect to the water or wastewater utility within two (2) years of
      the effective date of the first enforcement order, in connection
      with the same type of service for which the first enforcement
      order was issued, the water or wastewater utility:

         (A) shall undergo a base rate case before the commission; and
         (B) becomes subject to the jurisdiction of the commission for
         the approval of rates and charges upon the effective date of the
         second enforcement order;
      with respect to that service. After this first required rate case,
      the water or wastewater utility shall undergo one (1) subsequent
      rate case before the commission not earlier than three (3) years
      after the effective date of the commission's order in the first rate
      case under this subdivision. The water or wastewater utility shall
      remain subject to the jurisdiction of the commission for the
      approval of rates and charges for a minimum of five (5) years
      from the effective date of the commission's order in the first rate
      case under this subdivision and for at least one (1) year after the
      effective date of the commission's order in the second rate case
      under this subdivision. For purposes of determining rates and
      charges under this subdivision, if the a wastewater utility also
      provides storm water services or is considered a combined sewer
      system, the commission may consider any revenues collected by
      the wastewater utility for storm water services. However, the
      commission may not order storm water rates to be adjusted.
      (3) Notwithstanding IC 8-1-2.7, if the water or wastewater utility:
         (A) satisfies the requirements set forth in subdivision (2); and
         (B) is not issued any additional enforcement orders during the
         rate regulation period described in subdivision (2);
      the water or wastewater utility shall provide to the commission
      written notice to that effect. If the commission determines that the
      water or wastewater utility has satisfied the requirements set
      forth in subdivision (2) and has not been issued any additional
      enforcement orders during the rate regulation period described in
      subdivision (2), the water or wastewater utility shall be
      withdrawn from the commission's jurisdiction.
      (4) If, during the rate regulation period described in subdivision
      (2):

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         (A) one (1) or more additional enforcement orders are issued
         with respect to the water or wastewater utility in connection
         with the same service for which the first two (2)
         enforcement orders were issued; or
         (B) the commissioner of the department of environmental
         management otherwise determines that environmental or
         health and human safety considerations so warrant;
      the commission may, in consultation with the department of
      environmental management, initiate a receivership proceeding
      with respect to the water or wastewater utility.
      (5) Subdivision (1) applies with respect to any enforcement order
      that is issued with respect to the water or wastewater utility after
      the completion of the rate regulation period described in
      subdivision (2).
   (f) The commission may enter into an agreement with the
department to carry out the requirements set forth in subsection (e).
   (g) An action by the department of environmental management
under this section is subject to review under IC 4-21.5.
   (h) An action by the commission under this section is subject to
review under IC 8-1-3.
   SECTION 2. IC 8-1-2.7-2, AS AMENDED BY P.L.60-2024,
SECTION 1, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
JULY 1, 2025]: Sec. 2. (a) This chapter provides the exclusive statutory
manner for a utility described in section 1.3(a)(1) or 1.3(a)(2) of this
chapter to withdraw from the jurisdiction of the commission for the
approval of the following:
      (1) Rates and charges.
      (2) Stocks, bonds, notes, or other evidence of indebtedness.
      (3) Rules.
      (4) The annual report filing requirement.
   (b) Notwithstanding any other provision in this article, a sewer
disposal company described in section 1.3(a)(2) of this chapter shall
not initiate operations or provide service or seek commission authority
to do so within a territory for which the commission has granted
operating and territorial authority to any other entity, which has not
been revoked.
   (c) A sewage disposal company described in section 1.3(a)(2) of this
chapter that has withdrawn from commission jurisdiction under this
chapter shall offer service to all customers within the territory for
which the commission has granted the utility territorial authority.
   (d) A sewage disposal company utility described in section
1.3(a)(1) or 1.3(a)(2) of this chapter that is subject to the commission's

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jurisdiction under IC 8-1-1.9-5(e)(2) for having been issued more than
one (1) enforcement order (as defined in IC 8-1-1.9-5(c)) within the
time specified in IC 8-1-1.9-5(e)(2) may not seek to withdraw from the
commission's jurisdiction under this chapter during the rate regulation
period set forth in IC 8-1-1.9-5(e)(2).

   SECTION 3. IC 8-1-30.3-0.5 IS ADDED TO THE INDIANA
CODE AS A NEW SECTION TO READ AS FOLLOWS
[EFFECTIVE JULY 1, 2025]: Sec. 0.5. (a) To encourage the
consolidation of utility companies under this chapter, the
commission shall consider and authorize mechanisms:

      (1) outside of a general rate case; and
      (2) in addition to the inclusion of a cost differential in a utility
      company's rate base under section 5 of this chapter;
to allow utility companies to integrate into their systems, invest in,
and earn on acquired utility assets.
   (b) The commission shall authorize a mechanism under
subsection (a) if the commission finds that the proposed mechanism
is just and reasonable and in the public interest.
   (c) The commission may adopt rules under IC 4-22-2 to
implement this section.
   SECTION 4. IC 8-1-31-5.5, AS AMENDED BY P.L.61-2022,
SECTION 5, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
JULY 1, 2025]: Sec. 5.5. As used in this chapter, "infrastructure
improvement costs" means the following:
      (1) For a public utility:

         (A) depreciation expenses, including deferred depreciation
         expense beginning with the in service date of eligible
         infrastructure improvements;
         (B) property taxes to be paid by the public utility based upon
         the first assessment date following placement in service; and
         (C) pretax return; and
         (D) post in service carrying costs, compounded monthly
         and based on the overall weighted cost of capital most
         recently approved by the commission;
      associated with eligible infrastructure improvements.
      (2) The following for a municipally owned utility:
         (A) Depreciation expenses.
         (B) Adequate money for making extensions and replacements
         of eligible infrastructure improvements to the extent not
         provided for through depreciation, as provided in
         IC 8-1.5-3-8(c).
         (C) Debt service on funds borrowed to pay for eligible

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         infrastructure improvements.
         (D) To the extent applicable, property taxes to be paid by the
         municipally owned utility based upon the first assessment date
         following placement in service of eligible infrastructure
         improvements.
      (3) The following for a not-for-profit utility:
         (A) Debt service on funds borrowed to pay for eligible
         infrastructure improvements.
         (B) Adequate money for making extensions and replacements
         of eligible infrastructure improvements.
         (C) To the extent applicable, property taxes to be paid by the
         not-for-profit utility based upon the first assessment date
         following placement in service of eligible infrastructure
         improvements.
   SECTION 5. IC 13-18-16-13.5 IS ADDED TO THE INDIANA
CODE AS A NEW SECTION TO READ AS FOLLOWS
[EFFECTIVE JULY 1, 2025]: Sec. 13.5. (a) As used in this section,
"water utility" means:
      (1) a public utility (as defined in IC 8-1-2-1(a));
      (2) a municipally owned utility (as defined in IC 8-1-2-1(h));
      (3) a not-for-profit utility (as defined in IC 8-1-2-125(a));
      (4) a cooperatively owned corporation;
      (5) a conservancy district established under IC 14-33; or
      (6) a regional water district established under IC 13-26;
that provides water service to the public in Indiana for
compensation.
   (b) Notwithstanding any other law, a complaint:
      (1) seeking damages from a water utility; and
      (2) arising out of an alleged exposure to drinking water
      supplied by the water utility;
is barred if the water supplied by the water utility met applicable
regulatory standards under the Safe Drinking Water Act (42
U.S.C. 300f et seq.), Indiana law, or rules adopted by the board.
   SECTION 6. IC 14-26-2-16, AS AMENDED BY P.L.164-2024,
SECTION 11, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
UPON PASSAGE]: Sec. 16. (a) As used in this section, "water supply
reservoir" means a body of water formed by a dam wholly owned and
operated by a municipality or a public utility (as defined in IC 8-1-2-1)
for the purpose of providing water utility service to the public. The
term does not include the following:
      (1) Tributary streams that drain into the body of water.
      (2) Wetlands associated with those streams.

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   (b) Notwithstanding any other law, the department may not regulate
the following activities conducted within the one hundred (100) year
flood level of a water supply reservoir:

      (1) Sediment removal, dredging for the purpose of providing
      water supply storage, seawall construction, or the maintenance of
      water intake structures.
      (2) Restoration or stabilization of the shoreline.
   (c) A person may perform an activity under subsection (b) without
a permit issued by the department.
   (d) Subject to subsection (e) and notwithstanding any other law,
the department may not order the closure or removal, or the
partial closure or removal, of:
      (1) a dam described in subsection (a); or
      (2) a dam that forms or contains a body of water that is used
      to supply one (1) or more private water wells, including a dam
      described in IC 14-27-7.7;
if the closure or removal, or the partial closure or removal, of the
dam would impact either the provision of water utility service to
the public or the supply of water to one (1) or more private water
wells, as applicable.
   (d) (e) This section does not restrict the department's ability to
regulate the safety or maintenance of a dam or other control structure
under IC 14-27-7.5, including the department's authority to take
emergency measures under IC 14-27-7.5-12.
   SECTION 7. An emergency is declared for this act.

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President of the Senate

President Pro Tempore

Speaker of the House of Representatives

Governor of the State of Indiana

Date:                             Time:

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