By Casey Smith
Indiana Capital Chronicle
BLOOMINGTON — A Bloomington manufacturer argued before the Indiana Supreme Court Wednesday that it was unfairly forced to modify building plans for a new warehouse, claiming Duke Energy Indiana took part of its land without compensation.
Counsel for the utility pushed back, however, maintaining before the justices that Duke has easement rights to ensure the safe transmission of electricity.
The underlying case — Duke Energy Indiana, LLC v. Bellwether Props. LLC — stems from a disagreement between the parties over whether Bellwether’s claim was an issue of a physical taking or a regulatory taking. In a physical taking, the government acquires private property for a public purpose, as opposed to a regulatory taking, in which the government’s regulation of the property is so intrusive that it effectively takes over the property.
The dispute began nearly a decade ago when Bellwether’s plans to build the warehouse were stymied by Duke Energy’s overhead power lines in a 10-foot-wide easement over the property. Although the proposed structure only abutted the easement, the National Electrical Safety Code (NESC) requires a 25-foot-wide “strike zone” between the lines and nearby buildings. That strike zone required Bellwether to reduce the size of the warehouse.
“They’re informing us what we can and cannot do on our property,” said William Riley, Bellwether’s attorney. “It’s fundamental. It’s our land. We don’t have to change anything.”
Skepticism From Justices?
During Wednesday’s hearing, the high court justices lobbed Bellwether’s counsel with critical questions about the manufacturer’s complaint.
Justice Geoffrey Slaughter pressed Riley, Bellwether’s attorney, about whether the case presents a physical invasion on the property.
“If their lines are within their easement, how is that invading your property,” Slaughter asked. “Duke simply followed the regulation from the IURC that it’s subject to — why isn’t the IURC the one who did the taking?”
Riley held that neither the IURC nor Indiana’s electrical code “have any authority over Bellwether’s land.”
“There is nothing in any of these laws that dictates that Bellwether is obligated to listen to Duke,” Riley said. “We are not a regulated entity. There is no police power that applies to Bellwether. There’s no law that allows them to do this.”
Chief Justice Loretta Rush added that she’s “really struggling with shoehorning this case” into a matter of regulatory taking: “It’s a restriction on your client’s use of the way he wants to put his property to use, but they’re not doing any physical invasion themselves.”
Maggie Smith, an attorney for Duke Energy, argued that while the warehouse situation did qualify as a regulatory taking, Bellwether is wrongly “trying to shoehorn it into a physical taking.”
“Bellwether had an obligation to maintain the easement in a way that Duke could provide energy safely,” she said.
Smith maintained, too, that Duke “was never given the opportunity” to come up with a compromise. For example, Bellwether could have requested a variance, which Duke would have sought to get from the IURC on the manufacturer’s behalf, Smith said.
But that wasn’t part of the discussion when Bellwether’s builder met with Duke 10 years ago.
“Bellwether never came back and said, ‘Can you work with us?’ Bellwether could have just changed the slope. It didn’t have to cut its property. It could have moved it a little bit. There were many things that could happen here. Duke works with its customers. We work with the customers. We try to do everything we can,” Smith said. “Bellwether just ran off, did what it wanted, took an action that it didn’t have to take, and then turned around and said, ‘Duke, you’re responsible.’ But … that’s just not accurate.”
Smith warned that if justices were to remove the requirement of “an actual physical presence or physical encroachment” to occur, that would open up the definition of physical takings “to virtually every single law that is passed.”
“If there is a constitutional taking here, it is the result of the IURC, and that’s who should have been sued. We do not enact this regulation. We do not enforce it. We didn’t have anything to do with it. We are bound by it,” Smith said, adding that if a change in Indiana constitutional law is necessary, then it should be done in a case “where the largest stakeholders” — like state agencies or local municipal bodies — are parties and are given the opportunity to intervene.
“When you do not step foot on the property, you do not come into contact with it at all,” Smith continued. “They’re trying to put a square peg into a round hole. There’s not a single case that is anywhere close to this, because it just isn’t a physical taking.”
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