Sec. 125. (a) As used in this section, “not-for-profit utility” means a public water or sewer utility that:

(1) does not have shareholders;

(2) does not engage in any activities for the profit of its trustees, directors, incorporators, or members; and

(3) is organized and conducts its affairs for purposes other than the pecuniary gain of its trustees, directors, incorporators, or members.

The term does not include a regional district established under IC 13-26, a conservancy district established under IC 14-33, or, for purposes of subsections (f), (g), (h), (i), (j), and (k), a utility company owned, operated, or held in trust by a consolidated city.

     (b) As used in this section, “sewage disposal system” means a privy, cesspool, septic tank, or other similar structure. The term includes a septic tank soil absorption system (as defined in IC 13-11-2-199.5). The term does not include a sewer system operated by a not-for-profit public sewer utility.

     (c) A not-for-profit utility shall be required to furnish reasonably adequate services and facilities. The charge made by any not-for-profit utility for any service rendered or to be rendered, either directly or in connection with the service, must be nondiscriminatory, reasonable, and just. Each discriminatory, unjust, or unreasonable charge for the service is prohibited and unlawful.

     (d) A reasonable and just charge for water or sewer service within the meaning of this section is a charge that will produce sufficient revenue to pay all legal and other necessary expense incident to the operation of the not-for-profit utility’s system, including the following:

(1) Maintenance and repair costs.

(2) Operating charges.

(3) Interest charges on bonds or other obligations.

(4) Provision for a sinking fund for the liquidation of bonds or other evidences of indebtedness.

(5) Provision for a debt service reserve for bonds or other obligations in an amount not to exceed the maximum annual debt service on the bonds or obligations.

(6) Provision of adequate funds to be used as working capital.

(7) Provision for making extensions and replacements.

(8) The payment of any taxes that may be assessed against the not-for-profit utility or its property.

The charges must produce an income sufficient to maintain the not-for-profit utility’s property in sound physical and financial condition to render adequate and efficient service. A rate too low to meet these requirements is unlawful.

     (e) Except as provided in subsections (f) and (h), a not-for-profit public sewer utility may require connection to its sewer system of property producing sewage or similar waste and require the discontinuance of use of a sewage disposal system if:

(1) there is an available sanitary sewer within three hundred (300) feet of:

(A) the property line, if the property is:

(i) located in a consolidated city;

(ii) adjacent to a body of water, including a lake, river, or reservoir; or

(iii) any part of a subdivision, or land that is divided or proposed to be divided into lots, whether contiguous or subject to zoning requirements, for the purpose of sale or lease as part of a larger common plan of development or sale; or

(B) for all other properties, the improvement or other structure from which the sewage or similar waste is discharged; and

(2) the utility has given written notice by certified mail to the property owner at the address of the property at least ninety (90) days before the date for connection stated in the notice.

The notice given under subdivision (2) must also inform the property owner, other than an owner of property located in a consolidated city, that the property owner may qualify for an exemption as set forth in subsection (f).

     (f) Subject to subsection (h), a property owner is exempt from the requirement to connect to a not-for-profit public sewer utility’s sewer system and to discontinue use of a sewage disposal system if the following conditions are met:

(1) The property owner’s sewage disposal system is a septic tank soil absorption system that was new at the time of installation and approved in writing by the local health department.

(2) The property owner, at the property owner’s expense, obtains a written determination from the local health department or the department’s designee that the septic tank soil absorption system is not failing. The local health department or the department’s designee shall provide the owner with a written determination not later than sixty (60) days after receipt of the owner’s request. If the local health department or the department’s designee fails to provide a written determination within the time established in this subdivision, the owner, at the owner’s expense, may obtain a written determination from a qualified inspector. If the local health department or the department’s designee determines that a septic tank soil absorption system is failing, the property owner may appeal the determination to the board of the local health department. The decision of the board is final and binding.

(3) The property owner provides the not-for-profit public sewer utility with:

(A) the written notification of potential qualification for the exemption described in subsection (i); and

(B) the written determination described in subdivision (2);

within the time limits set forth in subsection (i).

     (g) If a property owner, within the time allowed under subsection (i), notifies a not-for-profit public sewer utility in writing that the property owner qualifies for the exemption under this section, the not-for-profit public sewer utility shall, until the property owner’s eligibility for an exemption under this section is determined, suspend the requirement that the property owner discontinue use of a sewage disposal system and connect to the not-for-profit public sewer utility’s sewer system.

     (h) A property owner who qualifies for the exemption provided under this section may not be required to connect to the not-for-profit public sewer utility’s sewer system for a period of ten (10) years beginning on the date the new sewage disposal system was installed. A property owner may apply for two (2) five (5) year extensions of the exemption provided under this section by following the procedures set forth in subsections (f) and (g). If ownership of an exempt property is transferred during a valid exemption period, including during an extension of an initial exemption:

(1) the exemption applies to the subsequent owner of the property for the remainder of the exemption period during which the transfer occurred; and

(2) the subsequent owner may apply for any remaining extensions.

However, the total period during which a property may be exempt from the requirement to connect to a district’s sewer system under this section may not exceed twenty (20) years, regardless of ownership of the property.

     (i) To qualify for an exemption under this section, a property owner must:

(1) within sixty (60) days after the date of the written notice given to the property owner under subsection (e), notify the not-for-profit public sewer utility in writing that the property owner qualifies for the exemption under this section; and

(2) within one hundred twenty (120) days after the not-for-profit public sewer utility receives the written notice provided under subdivision (1), provide the not-for-profit public sewer utility with the written determination required under subsection (f)(2).

     (j) When a property owner who qualifies for an exemption under this section subsequently discontinues use of the property owner’s sewage disposal system and connects to the not-for-profit public sewer utility’s sewer system, the property owner may be required to pay only the following to connect to the sewer system:

(1) The connection fee the property owner would have paid if the property owner connected to the sewer system on the first date the property owner could have connected to the sewer system.

(2) Any additional costs:

(A) considered necessary by; and

(B) supported by documentary evidence provided by;

the not-for-profit public sewer utility.

     (k) A not-for-profit public sewer utility may not require a property owner to connect to the not-for-profit public sewer utility’s sewer system if:

(1) the property is located on at least ten (10) acres;

(2) the owner can demonstrate the availability of at least two (2) areas on the property for the collection and treatment of sewage that will protect human health and the environment;

(3) the waste stream from the property is limited to domestic sewage from a residence or business;

(4) the system used to collect and treat the domestic sewage has a maximum design flow of seven hundred fifty (750) gallons per day; and

(5) the owner, at the owner’s expense, obtains and provides to the district a certification from the local health department or the department’s designee that the system is not failing.

     (l) A property owner who connects to a not-for-profit public sewer utility’s sewer system may provide, at the owner’s expense, labor, equipment, materials, or any combination of labor, equipment, and materials from any source to accomplish the connection to the sewer system, subject to inspection and approval by the not-for-profit public sewer utility.

     (m) This section does not affect the authority of the Indiana department of health, a local health department, or a county health officer with respect to a sewage disposal system.

     (n) For purposes of this section, a sewage disposal system is “failing” if one (1) or more of the following apply:

(1) The system refuses to accept sewage at the rate of design application and interferes with the normal use of plumbing fixtures.

(2) Effluent discharge exceeds the absorptive capacity of the soil into which the system discharges, resulting in ponding, seepage, or other discharge of the effluent to the ground surface or to surface waters.

(3) Effluent discharged from the system contaminates a potable water supply, ground water, or surface waters.

     (o) As used in this section, “qualified inspector” means any of the following:

(1) An employee of a local health department who is designated by the local health department as having sufficient knowledge of onsite sewage systems to determine if an onsite sewage system is failing.

(2) An individual who is certified by the Indiana Onsite Wastewater Professionals Association as an onsite sewage system installer or inspector.

(3) An individual listed by the Indiana department of health or the local health department with jurisdiction over the service area of the property inspected as having sufficient knowledge of onsite sewage systems to determine if an onsite sewage system is failing.

As added by P.L.82-1986, SEC.1. Amended by P.L.35-1990, SEC.25; P.L.78-1996, SEC.1; P.L.97-2012, SEC.1; P.L.178-2013, SEC.1; P.L.292-2013, SEC.1; P.L.56-2023, SEC.50.