Hotel Employers Ass'n of San Francisco v. Gorsuch, 80-4413
| Decision Date | 24 February 1982 |
| Docket Number | No. 80-4413,80-4413 |
| Citation | 669 F.2d 1305 |
| Parties | , 12 Envtl. L. Rep. 20,591 HOTEL EMPLOYERS ASSOCIATION OF SAN FRANCISCO, Plaintiff/Appellant, v. Anne M. GORSUCH, * as Administrator of Environmental Protection Agency, et al., Defendants/Appellees. |
| Court | U.S. Court of Appeals — Ninth Circuit |
J. C. Ladd, San Francisco, Cal., argued, for plaintiff/appellant; Jeffrey R. Williams, Steinhart, Falconer & Morgenstein, San Francisco, Cal., on brief.
William A. Barrett, Deputy City Atty., San Francisco, Cal., Thomas H. Pacheco, Washington, D.C., argued, for defendants/appellees; George Deukmejian, Atty. Gen., Francis B. Boone, Asst. U.S. Atty., San Francisco, Cal., on brief.
Appeal from the United States District Court for the Northern District of California.
Before TRASK, SNEED and TANG, Circuit Judges.
Hotel Employers Association of San Francisco appeals a summary judgment award entered against it in an action brought to invalidate the Environmental Protection Agency's approval of a system of sewer service charges adopted by the City and County of San Francisco. Two principal issues are raised: (1) did the district court err in holding that the EPA Administrator and the EPA's agents were not "arbitrary and capricious" in approving the City sewer charge system? and (2) did the district court err in holding that the City charge system did not violate equal protection or due process guarantees under the federal and California constitutions? We find no error and therefore affirm. 1
The City and County of San Francisco ("the City") operates a combined sewer system, meaning that both sanitary sewage and surface runoff flow into the same water collection and treatment network. The treatment system's capacity is sometimes overwhelmed when it rains, resulting in discharges of raw sewage and surface runoff into the bay and ocean between 80 and 100 times per year.
Under an order from the California State Water Resources Control Board ("the State Board") to abate the discharges, the City is constructing a $1.5 billion water treatment project to reduce the number of direct discharges into the bay and ocean. Seventy-five percent of the project's construction cost is financed through a federal matching grant approved by the Environmental Protection Agency ("EPA"); the balance of the cost is funded by State grants and City sewer revenue bonds. The City pays for bond debt service and operation and maintenance expenses from revenue generated by sewer service charges.
As a condition of the federal construction grant, the City obtained the EPA's and the State Board's approval of its sewer charge scheme. See 33 U.S.C. § 1284(b)(1) (1977 Supp. I). The City's sewer service charge is levied according to the amount of incoming tap water delivered to each user. The charge is calculated on the assumption that ninety percent of all incoming tap water is returned to the sewer system; the fee is adjusted according to the strength of the discharge normally associated with different categories of users. The charge system does not allocate operation and maintenance expenses between wet weather flow and dry weather flow, nor does it make a separate assessment of costs based on surface run-off.
In December, 1978, the Hotel Employers Association of San Francisco ("HEA"), an association of 41 member hotels, brought this action in federal district court challenging the EPA's approval (through its delegated agent, the State Board) of the City's system of sewer service charges. HEA argued first that the sewer charge system failed to allocate treatment costs of surface runoff according to the acreage occupied by each user and therefore violated the proportionality requirement of section 204(b) of the Federal Water Pollution Control Act ("FWPCA"), 33 U.S.C. § 1284(b). HEA also challenged the adoption and approval of the charge system on federal and state due process and equal protection grounds.
On cross-motions for summary judgment, the district court granted summary judgment
for EPA and the other defendants. The court ruled that the approval by EPA and its designated agent, the State Board, was not "arbitrary or capricious" and that a "rational basis" existed for their conclusion that City sewer charge system satisfied the proportionality requirements of section 204(b). The trial court also rejected HEA's constitutional claims, reasoning that if the EPA approval of the sewer charge system was not "arbitrary or capricious", the system also passed muster under the less exacting "rational relationship" standard associated with the constitutional claims. HEA appeals.
Under section 204(b)(1)(A) of the FWPCA, the EPA may approve a federal construction grant only upon a showing that "the applicant ... has adopted or will adopt a system of charges to assure that each recipient of waste treatment services ... will pay its proportionate share 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)(A) (1977 Supp. I) (emphasis added). Section 204(b)(2)(B) requires the EPA to issue guidelines for such user charges, including "criteria against which to determine the adequacy of charges imposed on classes and categories of users reflecting all factors that influence the cost of water treatment including strength, volume, and delivery flow rate characteristics of waste ...." 33 U.S.C. § 1284(b)(2)(B) (1977 Supp. I) (emphasis added). 2
HEA interprets these two subsections to require grant applicants to apportion operation and maintenance costs in proportion to the burden each user places on the treatment system. While HEA concedes that the City charge system meets this requirement with respect to sanitary sewage, it contends that the charge system fails to apportion the cost of treating surface run-off on a proportionate basis. HEA estimates, and for summary judgment purposes the district court agreed, that surface run-off treatment costs account for thirty-five percent of the total operating and maintenance costs of the City's treatment system. The charge system allocates surface run-off treatment costs on a pro-rata user basis; each user's percentage share of total run-off treatment cost is the same as the percentage share each user contributes to the total cost of treating only sanitary sewage. According to HEA, however, this is erroneous; the amount of surface run-off attributable to a user's property depends upon the property's land area and not upon how much sewage the user loads into the treatment system. To meet the proportionality requirement of section 204(b), HEA contends that the charge system must apportion the costs of treating surface run-off according to the acreage occupied by each user.
As section 204(b) approval does not require a hearing or formal findings on a record, EPA's decision to approve the City's charge system is reviewed under the "arbitrary or capricious" standard of 5 U.S.C. § 706(2)(A) (1976). See Camp v. Pitts, 411 U.S. 138, 142, 93 S.Ct. 1241, 1244, 36 L.Ed.2d 106 (1973) (per curiam). Under this narrow standard, a reviewing court must determine whether the agency decision was based on a consideration of the relevant factors and whether there has been a clear error of judgment. Bowman Transportation, Inc. v. Arkansas-Best Freight System, Inc., 419 U.S. 281, 285, 95 S.Ct. 438, 441, 42 L.Ed.2d 447 (1974); Washington State Farm Bureau v. Marshall, 625 F.2d 296, 302 (9th Cir. 1980). We must affirm the agency action if a reasonable basis existed for its decision. Id. at 302.
The district court sustained the EPA's approval under this standard because the EPA could rationally conclude that: (1) the City's charge system satisfied the proportionality requirement of section 204(b), and (2) the City's charge system was consistent with regulations promulgated by EPA to implement section 204(b).
Section 204(b)'s reference to "proportionate share" is nowhere defined in the FWPCA. The district court, however, found that the section's legislative history suggests that Congress did not intend to impose an "absolute proportionality" requirement and meant to require "only proportionality which is generally equitable". The court argued that proportionality, while a general requirement, was not a primary motivation for the enactment of the user fee requirement. According to the court, Congress instead was primarily concerned with ensuring that treatment systems would be self-financing and was tolerant of local variations in user charge schemes so long as this basic requirement was met. Thus, while the City charge system apportioned costs on a proportionate basis only with respect to sanitary sewage, the court concluded that the system was sufficiently sensitive to each user's burden on the total treatment system to satisfy the proportionality requirement.
HEA concedes that Congress desired to give localities flexibility in devising financing schemes, but argues that this broad concern should not obscure the command of the statute's text requiring proportionality. To bolster its point, HEA emphasizes that in 1974 Congress failed to adopt an EPA-proposed bill that would have specifically authorized localities to apportion surface run-off treatment costs on a pro-rata basis. 3 HEA reasons that had Congress intended to permit pro-rata allocation of these costs, it would have adopted this amendment.
We believe HEA is reading too much into this instance of Congressional inaction. The proposed bill's main focus was to permit localities to finance treatment costs through ad valorem taxes. This portion of the bill was ultimately enacted three years later without the language cited by HEA. 4 Although Congress may have refused to act on this part of the 1974 bill because it opposed the bill's...
To continue reading
Request your trial
-
RIGGS NAT. BANK v. DISTRICT OF COLUMBIA
...inaction "might also have been due to the belief that the point was already covered by existing law." Hotel Employers Ass'n v. Gorsuch, 669 F.2d 1305, 1308 (9th Cir. 1982). 37. The purpose of pre-judgment interest being to make the creditor whole, and no more, the District is obviously not ......
-
SACRAMENTO REG. CTY. SANITATION DIST. v. Thomas
...when the purchase of mitigation wetlands are a prerequisite to the building of a treatment works.12 See Hotel Employers Ass'n v. Gorsuch, 669 F.2d 1305, 1308 (9th Cir.1982) (when Congress decides not to act on a proposed bill, inaction may be "due to the belief that the point was already co......
-
City of New Brunswick v. Borough of Milltown, 81-2906
...withhold funds from the MCUA's plant at Sayreville only if that decision is arbitrary and capricious. See Hotel Employers Association v. Gorsuch, 669 F.2d 1305, 1307 (9th Cir. 1982). In the present case, the EPA has taken the position that while there is flexibility in designing the user ch......
-
Independent Accept v. State
...for its decision." California Hosp. Ass'n v. Schweiker, 559 F. Supp. 110, 116 (C.D. Cal. 1982) (citing Hotel Emp. Ass'n of S.F. v. Gorsuch, 669 F.2d 1305, 1307 (9th Cir. 1982)), aff'd, 705 F.2d 466 (9th Cir. 1983). Moreover, we must give the Secretary's interpretation of her own regulations......