CITY OF NEW ALBANY v. Indiana Department of Natural Resources, Appellee-Intervenor (2025)

MEMORANDUM DECISION

Case Summary

[1] In February of 2021, Ecosystems Connections Institute, LLC (“ECI”), requested permission from the Indiana Department of Natural Resources (“DNR”) to remove the Providence Mill Dam (the “Dam”), a low-head dam, which had been built in Silver Creek more than 100 years ago. The City of New Albany, Indiana (the “City”), opposed ECI's request. DNR granted ECI permission to remove the Dam. Its decision was affirmed by the Natural Resources Commission (the “Commission”). The City requested, and was denied, judicial review by the trial court. While the administrative proceedings were pending, the City sought a declaratory judgment against River Heritage Conservancy (“RHI”) and ECI in the trial court. The City appeals from the dismissal of the declaratory-judgment action. We affirm.

Facts and Procedural History

[2] The Dam is a “low-head dam” located on Silver Creek. Appellees’ App. Vol. II p. 31.¹ A low-head dam is “a manmade in-channel structure in a watercourse that is capable of generating hazardous recirculating currents that pose a risk to public health and safety and causes the watercourse to have a vertical drop of twenty-five (25) feet or less.” Ind. Code § 14-27-7.3-2. “Silver Creek is a tributary to the Ohio River in south-central Indiana and flows in a southerly direction between [the City] and Clarksville.” Appellees’ App. Vol. II p. 32. In 1984, the U.S. Army Corps of Engineers determined that Silver Creek is a navigable waterway.

I. Permit Application

[3] On February 2, 2021, ECI filed a permit application with the DNR pursuant to Indiana Code section 14-28-1-22(c), requesting permission to remove the Dam. A public hearing to discuss the removal of the Dam was held on March 31, 2021. After completing numerous levels of review and holding a public hearing on the matter, on June 9, 2021, DNR issued a Certificate of Approval permitting the removal of the Dam (the “Permit”).

II. Agency Proceedings

[4] On June 25, 2021, the City petitioned for administrative review with the Commission, alleging that DNR's approval of the Permit did not comply with the Flood Control Act (“FCA”). The Commission “is the ultimate authority of” cases involving DNR actions. Appellees’ App. Vol. III p. 191. The Commission appointed an Administrative Law Judge (“ALJ”) to preside over the matter.

[5] On October 13, 2022, the City moved to stay all activity relating to removal of the Dam. The ALJ denied the City's requested relief in an order dated December 12, 2022. With regard to ownership of the Dam, the ALJ stated that “[i]t is reasonably concluded from the evidence presented at the stay hearing that either the State owns the Dam or the ownership of the Dam is not known.”² Appellant's App. Vol. II p. 215.

[6] On March 14, 2023, ECI moved for summary judgment and DNR filed a response in concurrence with ECI's motion. The City opposed ECI's motion for summary judgment. On November 15, 2023, the ALJ issued an order granting ECI's motion for summary judgment. In this order, the ALJ found that, substantively, the “matter is governed by ․ the [FCA].” Appellees’ App. Vol. III p. 191. The ALJ also found the following, uncontested facts:

43. The Department received a permit application on February 2, 2021[,] prepared by ECI. The project for which the permit was sought is described as removal of [the Dam]. ECI Motion for Summary Judgment, Exhibit 1.

44. Silver Creek is listed as a Navigable Waterway in Floyd County “navigable from its junction with the Ohio River for 3.0 miles” in Information Bulletin 3, Navigable Waterways Roster, Fifth Amendment, (IB 3) DIN 20211020-IR-312210433NRA. According to research held by the Commission, Silver Creek was included in IB 3 based on a determination of navigability by the Army Corps of Engineers. Affidavit of Jane Dall Wilson, Petitioner's Exhibit 2.

****

49. The permit was approved by the Department on June 9, 2021. Id.

****

69. The ownership of the Dam was contested at the Motion for Stay hearing held on November 22, 2022. Petitioner's Exhibit 4. There is no evidence [that] ownership of the Dam has been judicially determined.

Appellees’ App. Vol. III pp. 195–99 (emphasis in original).

[7] Applying the factual findings to the applicable law, the ALJ concluded, with regard to ownership and navigability, as follows:

Does the Question of Ownership of the Dam Impact the Validity of the Permit?

96. The City argues that the permit should not have been granted because ECI has no ownership interest in the Dam and no authority to enter the property surrounding the Dam as needed to remove it. According to the City's argument, it has ownership interests in the Dam and, because the City objects to the project, the permit should be denied.

97. Under Ind. Code § 14-28-1-22, the Department shall issue a permit if the conditions stated therein are met. This statute does not require the owner of the property on which the project will occur to apply for the permit. As previously discussed, the permit application meets the requirements of this statute.

98. Further, for the purposes of applications issued by the Department under the [FCA], the word “owner” is defined as the person:

(1) listed on the tax assessment rolls as being responsible for the payment of real property taxes imposed on the property; and

(2) in whose name title to real property is shown.

I.C. § 14-11-4-1.

99. The City has not presented evidence that it is listed on the tax assessment rolls or that title to the Dam is listed in the City's name. Therefore, it is not an owner as defined by statute.

100. Undertaking a construction project on someone else's property may subject ․ the permittee to damages assessed in a civil lawsuit. However, when [the Permit] was approved, there was no requirement in I.C. § 14-28-1-22 that the applicant establish ownership of the property on which the project would be undertaken.

101. The Commission has no authority to impose a requirement to I.C. § 14-28 that did not exist when the permit was approved.

102. Further, the Commission's authority is limited to that provided by the legislature. The Commission has no authority to determine ownership of property. That issue is left to the circuit and superior courts of the county. There is no evidence that ownership of the Dam has been determined by a county circuit or superior court or any other court of relevant jurisdiction.

Navigability of Silver Creek:

103. The City also argues Silver Creek is not a navigable waterway because the determination Silver Creek is navigable is not based on a judicial determination.

104. The question of whether Silver Creek is a navigable waterway was raised in the hearing on the City's Motion to Stay without objection. The City's argument in this regard will therefore be addressed.

105. “Navigable” is defined in 312 IAC 1-1-24 as a waterway that has been declared to be navigable or a public highway by one (1) or more of the following:

(1) A court.

(2) The Indiana General Assembly[.]

(3) The United States Army Corp of Engineers.

(4) The Federal Energy Regulatory Commission.

(5) A board of county commissioners under IC 14-29-1-2.

(6) The commission following a completed proceeding under IC 4-21.5.

106. The City argues that the determination of navigability of Silver Creek was determined by the Army Corp of Engineers. See Wilson Affidavit. Therefore, by definition, Silver Creek is a navigable waterway.

Appellees’ App. Vol. III pp. 203–04 (emphases in original, footnote omitted).

[8] On December 1, 2023, the City petitioned for judicial review of the Commission's determination. Following a hearing, the trial court issued an order denying the City's petition for judicial review. See City of New Albany v. Ecosystems Connections, LLC, et al, ––– WL ––––, 24A-PL-2969 *19 (Ind. Ct. App. August 28, 2025). The City appealed and, in an opinion handed down simultaneously with the instant memorandum decision, we affirmed. See id. at *2.

III. Complaint Seeking Declaratory and Injunctive Relief

[9] On November 14, 2023, the City filed a verified complaint for declaratory and injunctive relief. The City named RHC and ECI as defendants and claimed that it was “filing this action to prevent [RHC and ECI] from removing the” Dam. Appellant's App. Vol. II p. 28. The City asserted an ownership interest in the Dam and stated that

[RHC and ECI] should therefore be enjoined from excavating the Dam (1) until they have obtained the City's consent and all necessary municipal permits and (2) until any and all persons with an ownership interest in the Dam have been identified and consented to the efforts undertaken by ECI to remove the Dam.

Appellant's App. Vol. II p. 28. The City requested that the trial court

issue a Declaratory Judgment, setting forth the rights and obligations of the parties with respect to the existing controversy over the Dam as follows:

a. Declaring whether Silver Creek is a navigable waterway at the site of the Dam.

b. Declaring the complete ownership of the Dam.

c. Declaring whether [RHC and ECI] may enter upon the right-of-way sought in order to demolish the Dam without the City's consent.

d. Declaring that [RHC and ECI] do not have the right to demolish the Dam without seeking and being granted various municipal authorizations, including

i. A floodplain development permit under City Code §§ 157.008 and 157.009.

ii. A demolition permit under City Code § 150.060.

iii. A commercial contractor license under City Code § 150.045.

e. Declaring that any unauthorized activities in the creek bed to remove the Dam will be an unlawful trespass.

Appellant's App. Vol. II pp. 38–39. The City also requested that the trial court permanently enjoin RHC and ECI from removing the Dam.

[10] On December 12, 2023, RHC and ECI moved to dismiss the City's complaint, stating that “[f]or the last two-and-a-half years, [the City, ECI, and DNR] have been involved in administrative litigation regarding DNR's issuance of a permit to ECI approving the removal of [the Dam] under the [FCA.]” Appellant's App. Vol. II p. 86. In seeking dismissal, RHC and ECI argued that the City had failed to exhaust administrative remedies and had failed to name indispensable parties, arguing that the City “seeks to overturn agency determinations by the [U.S. Army Engineer] Corps and DNR, take property away from the State, and expand the Floyd County line at the expense of Clark County without naming any of these parties.” Appellant's App. Vol. II p. 115. The trial court issued an order dismissing the action on July 1, 2024.

Discussion and Decision

[11] The underlying action leading to the City's lawsuit was DNR's issuance of the Permit to ECI to remove the Dam. It is undisputed that DNR is a state agency, and its decisions are subject to administrative review. The City initially initiated administrative review of DNR's decision, and the administrative proceedings were pending at the time the City filed its lawsuit.

[12] Administrative proceedings are subject to the provisions of AOPA. Johnson v. Celebration Fireworks, Inc., 829 N.E.2d 979, 982 (Ind. 2005). AOPA “establishes the exclusive means for judicial review of an agency action.” Ind. Code § 4-21.5-5-1. “In accordance with the AOPA ‘[w]e have repeatedly emphasized the value of completing administrative proceedings before resorting to judicial review.’ ” Johnson, 829 N.E.2d at 982 (quoting Ind. Dept. of Envtl. Mgmt. v. Twin Eagle LLC, 798 N.E.2d 839, 844 (Ind. 2003)) (brackets in original).

[13] “It has long been Indiana law that a claimant with an available administrative remedy must pursue that remedy before being allowed access to the courts.” Turner v. City of Evansville, 740 N.E.2d 860, 861 (Ind. 2001). “If a party fails to exhaust administrative remedies, the trial court lacks subject matter jurisdiction.” Id. at 861–62 (Ind. 2001). “The reasons for requiring a party to seek administrative remedies are well established. Premature litigation may be avoided, an adequate record for judicial review may be compiled, and agencies retain the opportunity and autonomy to correct their own errors.” State Bd. of Tax Comm'rs v. Montgomery, 730 N.E.2d 680, 684 (Ind. 2000). Even if the ground of complaint may be beyond the agency's power to resolve, “exhaustion may still be required because administrative action may resolve the case on other grounds without confronting broader legal issues.” Id. (internal quotation omitted). Moreover, when a question of whether the issue at hand falls under the administrative agency's purview arises, “courts are generally reluctant to grant declaratory relief if the result is to bypass available administrative procedures.” Scales v. State, 563 N.E.2d 664, 666–67 (Ind. Ct. App. 1990).

[14] Once again, at the time the City initiated this action and at the time of the trial court's ruling, the City's administrative remedies had not yet been exhausted. In dismissing the City's action, the trial court determined that “[t]he City has failed to exhaust administrative remedies because it seeks to overturn [a] final agency action through a declaratory judgment action.” Appellant's App. Vol. II p. 24. The City acknowledged that “there are certain overlapping arguments and contentions” in its lawsuit seeking declaratory judgment and the administrative proceedings. Appellant's App. Vol. III p. 136. The so-called injury that establishes the basis for the City's lawsuit is DNR's issuance of the Permit to remove the Dam. At its core, the City is seeking declaratory judgments as to ownership (and the related question of whether the owner's consent is required for the issuance of a permit) and the navigability of Silver Creek. Both of those issues were squarely before the Commission in the administrative proceedings, and both were decided against the City.³ The City cannot circumvent the available administrative procedures by reframing its arguments to include claims that may potentially fall outside the Commission's purview. See Montgomery, 730 N.E.2d at 684. For these reasons, we cannot say that the trial court erred in dismissing the City's action for declaratory relief.

[15] The judgment of the trial court is affirmed.

FOOTNOTES

1.   References to “Appellees’ Appendix” refer to the appendix filed by RHC and ECI. Appellee DNR did not filed an appellate appendix.

2.   The ALJ's conclusion is supported by authority of the Indiana Supreme Court, which suggests that because Silver Creek is a navigable waterway, the State owns the Dam. See Gunderson v. State, Ind. Dep't of Nat. Res., 90 N.E.3d 1171, 1173 (Ind. 2018) (“A century ago, our Court of Appeals recognized that, among those rights acquired upon admission to the Union, the State owns and holds ‘in trust’ the lands under navigable waters within its borders, ‘including the shores or space between ordinary high and low water marks, for the benefit of the people of the state.’ Lake Sand Co. v. State, 68 Ind. App. 439, 445, 120 N.E. 714, 716 (1918)”) (emphasis omitted).

3.   While the Commission did not make a judicial determination as to who ultimately owns the Dam, it concluded in two separate orders that, at the very least, the City does not own the Dam.

Bradford, Judge.

Pyle, J., and Kenworthy, J., concur.