I highly doubt there is any state statute banning rain barrels. I'd e=mail them back and ask them to site in the Indiana code where it says that. If they don't reply or say they don't know that means they were likely making it up. Most all states that ban the collection of water are western states that have drought conditions. (think Texas and California).
Here is the Indiana thread try asking here. https://www.backyardchickens.com/t/730582/indiana-bycers-here
Here is the Indiana thread try asking here. https://www.backyardchickens.com/t/730582/indiana-bycers-here