Subject: Procedural Guidelines for the Interpretations of the Conservancy District Article (IC 14-33).

I. History

A. Background

(1) The development of conservancy districts is an active option for addressing a variety of land use issues at the local level. Freeholders within contiguous geographic areas may use a conservancy district to achieve a dependable drinking water supply, to provide for sewage collection and treatment, to improve flood control, to reduce soil erosion, or to achieve any of numerous other water resource community goals, either singly or in combination. IC 14-33-1-1.

(2) A circuit court determines whether to approve the establishment or dissolution of a conservancy district and has jurisdiction for oversight of an existing conservancy district. IC 14-33-2-26. Management of the district is under the control of a board of directors, selected initially by the county commissioners and subsequently by the freeholders of the district. IC 14-33-5-11.

(3) Important roles are also served by the natural resources commission (sometimes referred to as the "commission") at six crucial stages in the formation, management, and dissolution of conservancy districts. At two of the stages, hearings for public input are required. At the other four, hearings may be requested. These stages also provide the primary forums for the receipt and evaluation of scientific and technical data upon which the court adjudicates and the board manages. In the receipt and evaluation of technical data, the commission brings together reports and analyses of the department of natural resources (sometimes referred to as the "DNR"), acting primarily through the division of water, as well as other state and local agencies. Most common among these are the department of environmental management, state department of health, and utility regulatory commission.

B. Development of Information Bulletin

(1) In 1996, a comprehensive commission policy was established for procedural functions relating to the formation and development of conservancy districts. (Information Bulletin #12, 19 IR 2801, superseded). Four developments were identified by the commission in support of the policy:

(2) In response to these developments, Information Bulletin #12 provided guidelines for implementation of conservancy districts processes, where those processes were within the commission's jurisdiction. A flexible guidance was designed to help the commission fully and fairly review pertinent issues. Responsibilities were identified and delegated to the commission's division of hearings, and to the DNR, so as to foster better coordination among these and other agencies.

(3) The primary purposes of Information Bulletin #36 were the (1) refinement of the purposes previously addressed in Information Bulletin #12; (2) integration of the "contiguousness" analysis contained in Information Bulletin #6; (3) clarification of agency treatment of initiatives to add a purpose to an existing district; (4) inclusion of standards for determining whether a district qualifies for the purpose of flood prevention and control; and (5) consideration of conservancy district elections.

(4) The six crucial stages in which the commission serves are considered separately in the information bulletin. These stages are as follows:

The commission on September 16, 2003, approved amendments to this information bulletin, for additions to conservancy districts in Hendricks County. These amendments were published in the Indiana Register and became effective on November 1, 2003. In 2004, the Indiana general assembly amended IC 14-33-4-2 by deleting the extraordinary requirements for Hendricks County. The legislation became effective July 1, 2004, and the information bulletin was amended to remove the 2003 amendments.

II. Consideration of Technical Review Prior to Formation of a District

A. Petition Referral

(1) As provided in IC 14-33-2-17(b), after a court determines a petition to create a district is in proper form and has the needed signatures, the petition is referred to the commission for technical review. The issues for review are set forth in subsection (c) and include whether:

(2) At least one public hearing shall be held. An interested person has "the right to be heard. At the request of an interested person, the commission shall hold hearings at the county seat of a county containing land in the proposed district." IC 14-33-2-19(a). Notice of the hearing must be published in a "newspaper of general circulation in each county containing land in the proposed district." IC 14-33-2-19(b). The commission is also required to incorporate technical assistance from any state and local agency that might have jurisdiction over the subject matter of the proposed district.

(3) Information received at public hearing, in written statements, and from the agencies is incorporated by a hearing officer in a recommended factfinding report to the commission. The recommended report is placed on an agenda for consideration during a public meeting of the commission. During the public meeting, the commission may also receive additional information. If newly discovered information is offered that could not reasonably have been offered before preparation of the recommended report, and the newly discovered information significantly refutes any of the five findings in the technical review, the commission may remand the matter to the hearing officer for further proceedings.

(4) When the commission is satisfied as to the adequacy of the technical review, it adopts a factfinding report for submission to the circuit court. The commission's factfinding report is prima facie evidence of the facts in all subsequent proceedings. IC 14-33-2-23. After receipt of the report from the commission, the court sets another hearing at which an opportunity for additional evidence is provided. IC 14-33-2-25.

(5) Of the six stages considered in the information bulletin, the initial stage has most frequently evoked controversy. Persons participating in the process at this stage have occasionally urged the full application of the AOPA. Key elements of AOPA are that all testimony must be given under oath, there is an opportunity for the cross-examination of witnesses, and there is a prohibition on substantive ex parte communications between a party and the administrative law judge (or, if applied to conservancy districts, the hearing officer).

(6) AOPA does not have direct application to the commission's role prior to formation of a district. AOPA is typically concerned with the issuance or failure to timely issue an agency "order". The commission's factfinding report is not an order. The circuit court issues the order whether to create a conservancy district following a judicial hearing. In addition, the application of AOPA to hearings which may be attended by hundreds of participating citizens would be unwieldy. Finally, the hearing officer is often unaware of the identity of remonstrants before the hearing date.

(7) On the other hand, fairness requires the full participation by remonstrants and by citizens seeking additional information, as well as by the petitioners. The development of a complete factfinding report is also supported by full citizen participation, particularly the freeholders to a proposed district. The process should be conducted in a manner which both is and has the appearance of being impartial. To these ends, the following guidelines are established:

B. "Contiguousness" of District Boundaries

(1) As part of the factfinding report, the commission is required to determine and communicate to the court whether a proposed district would "cover and serve a proper area." IC 14-33-2-17(c)(5). Also, as provided in IC 14-33-2-22, the factfinding report must include "findings on the territorial limits of the proposed district."

(2) Factors for determining appropriate district boundaries are set forth in IC 14-33-3-1. Among these factors is that "each part of the district is contiguous to another part." The statutory requirement of contiguousness forms an important element to the geographic requirements of the conservancy district article. If lengthy but narrow boundaries are created to incorporate outlying areas into a district, problems could be posed to adjacent areas, particularly if residents of these areas are not allowed to enter the district. The establishment of a district with exclusive boundaries may hinder attempts by the residents to form a new district. These problems may be acute where a purpose of the district is to provide water supply or sewage disposal.

(3) To establish a consistent and viable framework for determining what is "contiguous" within IC 14-33-3-1, the commission shall seek to prevent the formation of a conservancy district which is comprised of unrelated, unconnected parcels of land. Property to be included in the district must properly be related to a purpose for which the district is being established in both general nature and proximity.

(4) Ordinarily, "contiguous" anticipates that each part of the district adjoins every other part. Contiguousness may be made contingent upon the grant of an easement or other written license, to connect improvements across a parcel which is not included in the proposed district, because the parcel is unlikely to benefit directly from the district's formation.

(5) A district boundary, which is excessively long and narrow, does not satisfy contiguousness. What is excessively long and narrow would be evaluated on an individual basis and is more likely a major concern for districts which would provide sewage disposal or water supply than for districts which would provide other services.

(6) Where the district would provide flood prevention and control, contiguousness should encourage a coordinated effort within a watershed.

(7) Where the district is to provide sewage treatment or water supply, freeholders must typically be provided an opportunity to connect to an adjacent line or to enter the district. An "adjacent line" is one that is either (1) used to carry sewage and located within 300 feet of the freeholder's building; or (2) used to carry water supply and located on an easement or license that adjoins the freeholder's property.

One purpose for which a conservancy district can be established is flood prevention and control. IC 14-33-1-1(a)(1). In order to receive a favorable determination by the commission under IC 14-33-2-17 for the purpose of flood prevention and control, a petition must ordinarily show the district would accomplish at least one of the following functions:

All works for the purpose of flood prevention and control must be coordinated in design, construction, and operation according to sound and accepted engineering practice so as to affect the best flood control obtainable that complies with IC 14-28-1-29.

III. Development of a District Plan

A. Statutory Structure under Conservancy District Article

(1) Following the creation of a conservancy district by the circuit court, the district is required to establish a "district plan." As provided in IC 14-33-6-2, a "district plan consists of an engineering report that sets forth the general, comprehensive plan for the accomplishment of each purpose for which the district was established." The district plan includes physical and technical descriptions, maps, preliminary drawings, cost estimates based upon preliminary engineering surveys and studies, copies of agreements with other governmental entities, and works of improvement.

(2) The board of directors is required to submit a district plan to the commission for its approval within 120 days after the appointment of the board members, unless a time extension is obtained from the commission. IC 14-13-6-3. "The commission may reject a plan or any part of a plan." IC 14-13-6-4(d). "After receiving the approval of the commission, the board shall file the district plan with the court." IC 14-13-6-5(a). Following the filing by the board of directors, the court sets the district plan for a hearing. IC 14-13-6-5(b).

B. Agency Processing and AOPA Review

(1) The Conservancy District Article does not address review of the "approval" process at the state agency level, but licenses are addressed by AOPA. Included within the definition of "license" is any "approval" required by law. IC 4-21.5-1-8. The term "license" is similarly defined at IC 14-11-3-1, a section which also specifies the DNR director or his designee issues most licenses for IC 14. The commission is the "ultimate authority" for these license determinations. IC 14-10-2-3. "Ultimate authority" is defined in AOPA as the entity "in whom the final authority for an agency is vested by law." IC 4-21.5-1-15.

(2) With this background, the following guidelines are established:

IV. Development of a Unit of Work

A. Statutory Structure under Conservancy District Article

(1) To implement a district plan, the board of directors of a conservancy district "shall order the preparation of the detailed construction drawings, specifications, and refined cost estimates.... The implementation may involve all or part of the works of improvement if the part constitutes a unit that:

"When the drawings, specifications, and cost estimates have been prepared to the satisfaction of the board, the board shall by resolution tentatively adopt and submit the drawings, specifications, and cost estimates to the commission for approval." IC 14-33-6-8(b).

(2) "Upon the receipt of the written approval," the board provides shall provide a "hearing on the drawings, specifications, and cost estimates at which any interested person must be heard." IC 14-33-6-9.

(3) The process of the development of a unit of work is similar to that for the preparation of a district plan. An important distinction is that no judicial hearing is required following agency approval.

B. Agency Processing and AOPA Review

With this background, the following guidelines are established:

V. Addition of Territory to an Existing District

A. Alternative Procedures

Unless otherwise specified by statute, territory may be added to an existing district according to either of two procedures. The procedures are here separately considered:

B. Additions Initiated with the Circuit Court

(1) Pursuant to IC 14-33-4-2(b)(1), territory may be added according to the same procedure as is provided for the establishment of a district. A petition to add territory shall be supported as follows.

(2) After a court determines a petition to add territory to a district is in proper form and bears the needed signatures, the petition is referred to the commission for a technical review. The issues for review include whether:

(3) The director of the division of hearings shall appoint a hearing officer to conduct at least one hearing in the county seat where land in the conservancy district is located. The hearing officer shall provide notice in a newspaper of general circulation in each county containing land in the district and in the proposed addition. Each interested person shall be provided an opportunity to be heard. An agency with jurisdiction over the subject matter of the district and the proposed addition shall be provided an opportunity to comment.

(4) A proposal for addition of territory may be relatively minor and involve only a small area with little or no measurable affect to the freeholders within the existing district. Following the public hearing and the receipt of agency comments, the hearing officer shall report to the director of the division of water as to whether the proposed addition is likely to have more than a de minimis effect upon the operations of the district.

(5) Upon receipt of the report from the hearing officer, the director of the division of water shall determine if the proposed addition of territory is de minimis and if further review by the commission is unlikely to be productive. If the division director makes such a determination, the hearing officer's report shall be forwarded directly to the court as the commission's factfinding report. This report shall be submitted within 30 days of receipt by the division of water of a completed petition to add territory to a district.

C. Additions Initiated with the Board of Directors

(1) As provided in IC 14-33-4-2(b)(2), an addition of territory to an existing district may also be initiated by a board resolution. The resolution follows a petition by the majority of freeholders or the municipality in the area proposed to be added. The resolution and petition are filed with the court, and the court sets the matter for hearing. Notice of the hearing shall be sent to the following:

(2) Upon receipt of the notice, the division of hearings shall notify the DNR's division of water and other state agencies which appear to have jurisdiction over the subject of the addition.

(3) A board wishing to apply IC 14-33-4-2(b)(2) shall inform the division of hearings as soon as practicable, and not later than 45 days before a hearing is set under IC 14-33-4-2(d), so as to facilitate expeditious discussions with state agencies. Adequate review is essential to a favorable comment by the commission to the court. The division director of the division of water is delegated authority by the commission to report favorably, to make recommendations to modify or condition the addition of territory, or to object to the addition of territory. See particularly IC 14-33-4-2(e).

A. Alternative Procedures

A purpose may be added to an existing district according to either of two procedures. The procedures are here separately considered.

B. Additions Initiated with the Circuit Court

Pursuant to IC 14-33-1-4(1), the same procedure may be used as is provided for the establishment of a district. If this procedure is used, reference should be made to the process for the addition of territory in part V.B. of this information bulletin.

C. Additions Initiated with Petition to Board

(1) In the alternative, IC 14-33-1-4(2) provides that the district board may add a purpose based upon a petition signed by at least 10% of the freeholders of the district. If the board approves a resolution supporting the petition, the resolution and petition are filed with the circuit court, and the court sets the matter for hearing. The court forwards a notice of hearing to the commission along with a copy of the resolution "at least 30 days before the date of hearing." IC 14-33-1-5.

(2) Upon receipt of a notice from the circuit court, the division of hearings shall notify the DNR's division of water and other state agencies that appear to have jurisdiction over the subject of the addition. A board wishing to apply IC 14-33-1-4(2) shall inform the division of hearings as soon as practicable, and not later than 45 days before setting a hearing under IC 14-33-1-5(b), so as to facilitate expeditious discussions with state agencies. Adequate review is essential to a favorable comment by the commission to the court. The director of the division of water is delegated authority by the commission to report favorably, to make recommendations to modify or to condition the addition of purpose, or to object to the addition of purpose. See particularly IC 14-33-1-5(e).

VII. Dissolution of a District

A. Alternative Grounds

A conservancy district may be dissolved under IC 14-33-15 because the district is "no longer of benefit" or under IC 14-33-16 because "construction of works of improvement has not begun within six (6) years after the district plan."

B. Improvements Not Begun within Six Years after the District Plan

Where a dissolution is sought on the grounds that works of improvement were not begun within six years after the district plan, the commission has no statutory role.

C. District is No Longer of Benefit

(1) A district dissolved due to loss of benefit applies "the same procedure used to establish a district. The petition must set forth the change of circumstances that causes the district to lose the district's benefit." IC 14-13-15-1.

(2) Because the process is essentially the same for the dissolution as for the establishment of a conservancy district, a similar analysis applies to the development of an appropriate process for dissolutions as was applied to the establishment of a district. With this background, the following guidelines are established:

VIII. Election of Board of Directors and Notice to Commission

Neither the commission nor the DNR have jurisdiction over board elections. The board of commissioners of the county appoints the board of directors for the new district within 20 days after a court order establishing a district. IC 14-33-5-1. A person adversely affected by an action committed or omitted by the board may petition the court to enjoin or mandate the board. IC. 14-33-5-24.

The board chair is required by IC 14-33-5-17 to promptly notify the commission when board members are elected or appointed. The department's division of water maintains a database of conservancy districts and board members. By this information bulletin, the commission identifies the following address for the notice required by IC 14-33-5-17:

Service at this address will also help assure the division of water's database is current.

For more information see:

IX. Application and Modification

This information bulletin shall be liberally construed to support efficient administration by the commission, acting in cooperation with other agencies, of its conservancy district responsibilities. Modifications to the document may be needed based upon experience or legislative changes. Suggestions for modification of the document are welcomed and may be forwarded to the division of hearings at the address set forth previously or by email to slucas@nrc.in.us.