There is a lot of change these days in the local wind and solar zoning world. It seems that every week, a new county changes its setbacks, imposes a moratorium to stop a wind or solar project, or clarifies its requirements to entice new solar investment. But it may be time to think about whether at least some of these ordinances are, in fact, even valid under state law. Two Indiana Supreme Court decisions issued on May 30, 2024 shed light on this idea.

First, the Court issued a unanimous decision in Duke Energy v. Noblesville and held that the Indiana Utility Regulatory Commission (IURC) is the only entity with authority to decide whether a zoning ordinance implicating a public-utility function is unreasonable. There, Duke decided to build new facilities in Noblesville, including a garage, office, substation, and related improvements. As a courtesy, Duke notified Noblesville it would be demolishing the abandoned house and garage on the property. Noblesville insisted that Duke comply with the Unified Development Ordinance, meaning Duke would need demolition and building permits. Duke refused to obtain the permits because, it said, Noblesville had no right to regulate a public utility’s service-related project through zoning and permitting requirements. Noblesville issued a stop-work order and filed a lawsuit to force Duke to comply with the zoning ordinance. Noblesville argued its ordinances were generally applicable to everyone. Duke countered that the IURC had sole and exclusive authority to enforce ordinances against public utilities, and countersued claiming Noblesville’s ordinance was unreasonable. The trial court and court of appeals ruled for Noblesville and awarded penalties and attorneys’ fees against Duke. The Indiana Supreme Court accepted transfer and reversed, holding in favor of Duke. The Court concluded that while the trial court had jurisdiction over Noblesville’s enforcement action against Duke, only the IURC can decide whether Noblesville’s ordinance is unreasonable. Municipal ordinances presumptively apply to regulated power utilities, and both the IURC and trial courts can hear ordinance enforcement actions generally, but only the IURC can decide whether a local ordinance affecting or relating to public-utility service goes too far. Only the IURC can decide whether the zoning ordinance interferes unreasonably with Duke’s public utility functions (this includes demolition and garage and office projects which are necessary for maintaining transmission lines so clearly “affect or relate to” Duke’s public-utility service). The Supreme Court concluded that the trial court could either dismiss the case and refer the whole thing to the IURC, or could hear the enforcement action, but still needed to refer the issue of ordinance reasonableness to the IURC. This was a win for public utilities.

Second, in a companion decision called City of Carmel v. Duke Energy, the Supreme Court upheld the IURC’s ruling that the City of Carmel’s zoning ordinances restricting utility facility construction were unreasonable and void. The Court explained that the IURC was the exclusive decider of the enforceability of local ordinances affecting utility service because it had the factual expertise and non-local focus needed to balance the competing interests of public utilities and municipalities. Our General Assembly granted local governments the power to enact reasonable ordinances affecting a utility’s use of that municipality’s public property. When an ordinance is adopted, it is presumed reasonable unless and until the IURC determines otherwise. Carmel’s challenged ordinances required utility lines, poles, and related structures to be located underground unless Carmel approved otherwise and detailed procedures for when a utility facility needed to be relocated due to other infrastructure projects. The ordinances also imposed all costs on the utility unless Carmel agreed otherwise. After challenging the ordinances before the IURC, Duke presented evidence that it serves Hoosiers in 69 counties, many of which are rural. Duke explained that if forced to pay for underground relocation in Carmel, the utility would seek recovery of those costs. Further, if Carmel’s ordinances were allowed to stand, Duke expected other communities to enact similar rules. The IURC determined the ordinances were unreasonable and void because they threatened to impose unreasonable expenses on Duke, which would in turn unfairly impact all Duke customers throughout Indiana. The Supreme Court ruled that the IURC’s conclusions were supported by evidence and therefore affirmed the IURC’s order. Justice Goff added a concurrence which highlights the primary role of the IURC: ensuring uniformity of utility regulation throughout the state by limiting the authority exercised by municipal entities. Count this as another public utility win and a limit on local zoning.

These cases are both based in part on a 1913 law called the Shively-Spencer Act. The Act reshaped our state’s utility landscape by creating a uniform system for regulating utilities in place of the many separate local regulators that existed before. The IURC enforces a comprehensive statewide utility system in place of the earlier checkered system of allowing each locality to regulate utilities in its own way. The 1913 Act flipped the balance of power over utility regulation, shifting that authority away from local government and moving it to the state. Then, in 1980, Indiana enacted its Home Rule statute (giving local government “all the powers they need for effective operation of government as to local affairs” and “all other powers necessary…”). I.C. 36-1-3. The Home Rule statute didn’t necessarily overrule the 1913 Act, but it did reverse the presumption about what powers municipalities have. Now, local governments can generally regulate their own affairs unless that power was expressly granted in statute to a state entity (like the IURC).

So…what does it all mean? Great question. I think we can expect to see solar companies challenge county solar zoning ordinances as unreasonably limiting the ability to site solar facilities. Again, the IURC is supposed to apply its factual expertise and ability to balance state-wide versus local considerations when it comes to energy production and transmission. One case to keep an eye on is Lone Oak Solar v. IURC, currently pending before the Court of Appeals. There, the solar company is challenging the IURC’s refusal to accept jurisdiction over the solar company’s challenge of certain Madison County, Indiana solar ordinances. The case is still being briefed by the parties, but I think we will see the Court of Appeals shed light on how the two Duke cases apply to solar ordinances. Stay tuned!