City of New Brunswick v. Borough of Milltown
| Decision Date | 22 July 1982 |
| Docket Number | 81-2907,No. 81-2906,81-2906 |
| Citation | 686 F.2d 120 |
| Parties | , 12 Envtl. L. Rep. 20,803, 11 Fed. R. Evid. Serv. 1139 CITY OF NEW BRUNSWICK, Appellee, v. BOROUGH OF MILLTOWN and the Middlesex County Utilities Authority (formerly Middlesex County Sewerage Authority), Appellants. and The MIDDLESEX COUNTY UTILITIES AUTHORITY (formerly the Middlesex County Sewerage Authority), Appellant, v. The UNITED STATES of America, By and Through its ENVIRONMENTAL PROTECTION AGENCY, Appellee. |
| Court | U.S. Court of Appeals — Third Circuit |
Milton B. Conford, Francis X. Journick, Woodbridge, N. J., of counsel; Wilentz, Goldman & Spitzer, P.C., Woodbridge, N. J., for appellant Middlesex County Utilities Authority.
Arnold K. Mytelka, Roger S. Clapp, Clapp & Eisenberg, P.C., Newark, N. J., Robert S. Seguin, Booream & Seguin, Milltown, N. J., for appellant Borough of Milltown.
Carol E. Dinkins, Asst. Atty. Gen., Donald W. Stever, Jr., Edward J. Shawaker, Rosanne Mayer, Dept. of Justice, Washington, D. C., Robert M. Perry, Gen. Counsel, Lee DeHihns, E. P. A., Washington, D. C., for appellee E. P. A.
James M. Cahill, Asst. City Atty., New Brunswick, N. J., for appellee City of New Brunswick.
Before GARTH and BECKER, Circuit Judges, and FULLAM *, District Judge.
In this appeal we are presented with two questions. The first is whether the Environmental Protection Agency ("EPA") acted within its authority in withholding federal grant funds from the Middlesex County Utilities Authority ("MCUA") on the ground that the Borough of Milltown, whose sewage is treated by the MCUA's plant at Sayreville, New Jersey, has not adopted a system of user charges as required by the Federal Water Pollution Control Act Amendments of 1972, as amended, 33 U.S.C. §§ 1251 et seq. ("the Clean Water Act"), and its implementing regulations, 40 C.F.R. §§ 35.900 et seq. The second issue is whether-assuming that the EPA's decision to withhold funds does fall within its authority-the Clean Water Act unconstitutionally impairs a contract which Milltown has with the neighboring City of New Brunswick, a participating member of the MCUA, under which New Brunswick is responsible for disposing of Milltown's sewage free of charge to Milltown. Because we agree with the district court's determination that the EPA is authorized to withhold funds from the MCUA in the circumstances of the present case, and that the provisions of the Clean Water Act authorizing such withholding are not inconsistent with the constitutional provisions regarding impairment of contracts, we will affirm the district court's judgment.
The present dispute stems from a decision by the MCUA to apply to the EPA for federal funds to assist it in the expansion and improvement of a sewage treatment facility that the MCUA operates. This plant, located in Sayreville, New Jersey, receives sewage from approximately twenty-five municipalities in three New Jersey counties, as well as from a number of industrial concerns. Currently, the MCUA is engaged in a construction project to install new lines and make other improvements which will allow the Sayreville plant to operate with less of an adverse impact on water quality.
To help defray the cost of these improvements, the MCUA applied to the EPA for federal grant funds pursuant to the Clean Water Act. 1 Title II of that Act, 33 U.S.C. §§ 1281-1297, establishes a federal grant program under which the federal government will bear up to 75 percent of the construction cost of publicly-owned waste treatment plants, so long as certain conditions are met by the grantee. See generally Bosco v. Beck, 475 F.Supp. 1029, 1031 (D.N.J.1979), aff'd without opinion, 614 F.2d 769 (3d Cir.), cert. denied, 449 U.S. 822, 101 S.Ct. 81, 66 L.Ed.2d 24 (1980). On August 30, 1976, the EPA approved the MCUA's application, on the condition, among others, that the MCUA comply with the "user charge" provisions of the Clean Water Act.
Under the user charge provisions of the Act, the EPA administrator is not to approve a grant
unless he shall first have determined that the applicant (A) has adopted or will adopt a system of charges to assure that each recipient of waste treatment services within the applicant's jurisdiction, as determined by the Administrator, will pay its proportionate share (except as otherwise provided in this paragraph) of the costs of operation and maintenance (including replacement) of any waste treatment services provided by the applicant * * *.
33 U.S.C. § 1284(b)(1) (Supp.1982) (). The EPA regulations specify what requirements a user charge system must meet in order to satisfy section 204(b)(1). In general, the user charge system proposed by a grantee such as the MCUA must, in order to meet approval, ensure that "each user ... pays its proportionate share of operation and maintenance (including replacement) costs of treatment works within the grantee's service area, based on the user's proportionate contribution to the total waste water loading from all users ...." 40 C.F.R. § 35.929-1(a). 2 Moreover, in the case of a "regional treatment system accepting wastewaters from other municipalities," such as the MCUA, "the subscribers receiving waste treatment services from the grantee shall adopt user charge systems in accordance with section 204(b)(1)(A) of the Act (quoted above) and §§ 35.929 through 35.929-3" of the regulations. Id. § 35.929-2(e).
After making some payments to the MCUA pursuant to the grant agreement of August 30, 1976, the EPA determined that the MCUA was not complying fully with section 204(b)(1) of the Clean Water Act, or with the implementing regulations, as required by the terms of the grant agreement. The basis for this determination was the fact that the Borough of Milltown, whose sewage is treated by the MCUA at the Sayreville plant, has not adopted a user charge system. 3 The explanation for Milltown's failure to adopt such a system is a contract that Milltown signed in 1914 with the City of New Brunswick, which, unlike Milltown, is a participating member of the MCUA and so pays the MCUA for sewage treatment. As the district court noted, it is undisputed that
in 1914 the City of New Brunswick entered into a contract with the Borough of Milltown under which New Brunswick agreed to receive and dispose of Milltown's sewage without charge in exchange for Milltown's promise to discontinue its practice of discharging sewage into the Lawrence Brook, a source of drinking water for New Brunswick. On two separate occasions, New Jersey courts have upheld the validity of this contract. City of New Brunswick v. Borough of Milltown, 3 N.J.Super. 113, 65 A.2d 621 (App.Div.1949); City of New Brunswick v. Borough of Milltown, 135 N.J.Eq. 310, 38 A.2d 288 (Ch. 1944).
As a result of this contract, the sewage from Milltown flows free of charge from Milltown to New Brunswick, and the combined flows from the two municipalities are treated at the MCUA plant. New Brunswick pays MCUA for its own and for Milltown's sewage at a rate set by the MCUA. Milltown pays nothing to New Brunswick or to MCUA and has not to date, adopted a system of sewer user charges to pay for its proportionate share of waste treatment.
City of New Brunswick v. Borough of Milltown, 519 F.Supp. 878, 881 (D.N.J.1981).
As a consequence of its determination that the MCUA was not in full compliance with the user charge requirement because Milltown, "a recipient of waste treatment services within the (MCUA's) jurisdiction," had not adopted a user charge system, the EPA began to withhold funds for the Sayreville project. 4 It is that determination which is attacked by Milltown and the MCUA in the present case.
The legal challenge to the EPA's decision to withhold funds for the Sayreville project was brought into federal district court by a rather involved sequence of procedures and actions:
(I)n August, 1980 ... the City of New Brunswick instituted suit in the Superior Court of New Jersey, Chancery Division, Middlesex County, against Milltown and the MCUA, seeking an injunction and declaration that a 1914 contract between itself and Milltown, which obligates New Brunswick to receive and dispose of Milltown's sewage without cost, was void on several grounds, including allegations based on EPA regulations:
Federal Rules and Regulations governing the Middlesex County Sewerage Authority must be made applicable to all users of the system, including the Defendant, Borough of Milltown, regardless of whether or not the user has a direct contract with the Sewerage Authority.
Complaint, P 4, Third Count.
New Brunswick further alleged:
(U)nder such Rules and Regulations such users of the Sewerage Authority's facilities must pay their fair share of the cost of operating and maintaining the Sewerage Authority's treatment works.
Complaint, P 5, Third Count.
In November, 1980, MCUA brought the Environmental Protection Agency into the state court litigation by naming it as a third-party defendant. In its cross-complaint, MCUA alleged that neither the Clean Water Act nor its implementing regulations requires that Milltown adopt a system of user charges and that, even if they did, such a requirement would constitute an unconstitutional abrogation of the 1914 contract. EPA removed this action to the Federal District Court under 28 U.S.C. § 1442(a)(1) in December, 1980, and ... answered and counterclaimed against all other parties, seeking a declaration that section 204 authorizes EPA to withhold grant funds from MCUA pending adoption of the user charges by Milltown and an injunction requiring Milltown to adopt such user charges or alternatively, to cease sending its sewage through MCUA's facility for treatment.
City of New Brunswick v. Borough of Milltown, 519 F.Supp. at 880-81 (footnote omitted).
All parties then moved for partial summary judgment on the federal...
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