BLOOMINGTON – Tuesday the City of Bloomington filed a lawsuit in Monroe County challenging the validity of a 2019 law that retroactively voided eighty percent of Bloomington’s sewer extension contracts. The 2019 law purports to nullify hundreds of contracts that allow non-municipal residents to connect to the City’s sewer system in exchange for those residents waiving their right to contest a future annexation.
During its 2019 session, the General Assembly included two succinct provisions within a vast 229-page bill, annulling sewer contracts more than 15 years old.
The 2019 law had a major impact on Bloomington’s pending annexation: Based on numbers published by Monroe County Auditor Cathy Smith in February, if the 2019 law is struck down, Bloomington’s annexations will move forward in five of the seven areas proposed for annexation, rather than failing in five of the seven areas.
The City’s suit argues that the 2019 law is unconstitutional for three reasons. First, the General Assembly’s actions violate the “contracts clause” of Article I, Section 24 of the Indiana Constitution. Like nearly every state in the country, Indiana’s constitution contains a contracts clause that prohibits its legislature from enacting laws that retroactively alter independently negotiated contracts. Second, the General Assembly’s interference in sewer contracts violates Article I, Section 10 of the federal constitution, which also prohibits the legislative branch from interfering with pre-existing contracts.
Third, whether or not the 2019 law is constitutional, it cannot be applied to Bloomington’s annexations. Bloomington initiated its annexation early in 2017 and would have completed the process during 2017. However, in the middle of the 2017 process, the General Assembly unlawfully suspended the annexation and also prohibited Bloomington from performing any new annexation for more than five years. Ultimately, the state courts hearing the case, including the state supreme court, declared the legislature’s actions during 2017 unconstitutional, but Bloomington spent three and a half years fighting the General Assembly’s actions. While Bloomington was in the middle of winning this first fight, the legislature took advantage of the time it bought and interceded again with the 2019 statute, voiding most of Bloomington’s sewer contracts. The legislature was only able to use the 2019 law to nullify sewer extension contracts and further hamper Bloomington’s annexation because it unconstitutionally delayed Bloomington’s annexation in 2017.
“The General Assembly’s actions violate our state and federal constitutions,” said Mayor John Hamilton. “This is the second time legislators at the Statehouse have inappropriately intervened in our otherwise orderly and extensive local annexation process. We are prepared to go back to court against the General Assembly’s continued, persistent interference with our local process. Annexation is essential to our thriving city. The proposed annexation helps to “right-size” Bloomington, providing an urban level of services for urbanized areas, and allowing our community of households and businesses to share and chart a common future.”
The lawsuit, https://bton.in/XbMNP, names Auditor Smith as the defendant, in her official capacity. Because the lawsuit alleges that the law is unconstitutional, the City has also notified the Indiana Attorney General’s Office.
The City’s Corporation Counsel, Beth Cate, commented, “The General Assembly’s actions again left the City with only one realistic option–to file suit. We are focused on protecting our right to securely enter into contracts, and for individuals to confidently enter into contracts with Bloomington, without having to worry about after-the-fact legislative interference. Really, this suit impacts all units of local government, statewide.”
