Oakland County v. City of Berkley, 83-1173
| Decision Date | 24 August 1984 |
| Docket Number | No. 83-1173,83-1173 |
| Citation | 742 F.2d 289 |
| Parties | COUNTY OF OAKLAND, Plaintiff-Appellee, v. CITY OF BERKLEY, et al., Defendants, City of Madison Heights, Defendant-Appellant. |
| Court | U.S. Court of Appeals — Sixth Circuit |
Bernard Friedman, Southfield, Mich., for defendant-appellant.
William P. Hampton (argued), Davidson, Gotshall, Kohl, Secrest, John M. Donohue, Farmington Hills, Mich., for plaintiff-appellee.
Before LIVELY, Chief Judge, WELLFORD, Circuit Judge, and GIBSON, District Judge. *
This appeal presents questions of subject matter jurisdiction and the propriety of summary judgment. Both questions are affected by the nature of existing litigation with which this case was consolidated by the district court.
In 1977 the United States, at the request of the Environmental Protection Agency, initiated a compliance action in the district court against the City of Detroit, the Detroit Water and Sewerage Department and the State of Michigan. This action, No. 7-71100 on the docket of the district court, charged the defendants with violation of the Federal Water Pollution Control Act, as amended, 33 U.S.C. Sec. 1251 et seq. (1976), by the discharge of effluents and pollutants from wastewater and sewage facilities into navigable waters. See generally United States v. City of Detroit, 720 F.2d 443, 445 (6th Cir.1983). The plaintiff in the present case, Oakland County, Michigan, was permitted to intervene in No. 7-71100 and thereafter the district court entered an order pursuant to Rule 19(a), Fed.R.Civ.P., adding all municipalities and agencies under contract with the City of Detroit for sewage services as parties to that action. The defendant in the present case, City of Madison Heights, was added as a party pursuant to this order. In September 1977 the district court entered a consent judgment in No. 7-71100, binding on all parties thereto and their successors. The consent judgment established a compliance schedule for achieving secondary treatment of pollution sources in the shortest reasonable time.
The connection between Oakland County, the City of Madison Heights and Detroit's pollution problems arose from long-standing agreements under which Detroit has received and disposed of sanitary and storm sewage originating in nearby communities. In 1942 several municipalities joined together to create the Southeastern Oakland County Sewage Disposal System (Southeastern System) pursuant to a Michigan enabling act. The Oakland County Drain Commissioner was made agent for the contracting parties. In 1962, in contemplation of the construction of extensive facilities and in anticipation of a contract with the City of Detroit for disposition of sewage from the Southeastern System, the participating communities, including Madison Heights, entered into a written agreement with Oakland County. The contract, dated October 1, 1962, apportioned the cost of the improvements among the municipalities within the Southeastern System, allocating slightly more than ten percent of the project cost to Madison Heights. To pay for the construction Oakland County agreed to issue bonds and each municipality agreed to raise funds sufficient to pay the principal and interest representing its allocated share of the costs, and each pledged its full faith and credit for the prompt payment of their charges.
The 1962 contract also contained an agreement for defraying the costs of operating the project. Paragraph 13 provided in part:
The municipalities agree to pay the county for the disposal of storm and/or sanitary sewage at such rates as shall be fixed from time to time in accordance with the provisions of this agreement and Act No. 342, Michigan Public Acts of 1939, as amended. Such charges shall be sufficient to provide:
(a) for all costs of operating and maintaining said county sewage disposal system including charges by Detroit for sewage disposal;
(b) for the maintenance of the $125,000 Reserve in the Operation and Maintenance Fund and the $25,000 Replacement Fund, at the said amounts, after their original establishment as provided in paragraph 15 hereof;
(c) for any other necessary and proper costs and expenses relating to the system.
Paragraph 14 provided that "[s]ervice charges by the county for the disposal of sanitary sewage shall be made to each municipality upon the basis of the amount of water consumed therein," subject to exceptions not here applicable where metering was not available, and that "[i]n those cases where a municipality, in whole or in part, is served by combined storm and sanitary sewers, an extra charge shall be made against such municipality to cover the cost of the disposal of storm water." (Emphasis added). In November 1962 Oakland County entered into a contract with the City of Detroit by which Detroit agreed to receive and dispose of sanitary and storm sewage from the Southeastern System and the County agreed to a schedule of payments for this service. Oakland County served as an intermediary only, depending completely on payments from the municipalities to meet its obligation to Detroit.
In 1970 Oakland County and the municipalities determined that it was necessary to "extend, improve and enlarge" the sewage system operated by the Southeastern System to abate pollution in the Red Run Drain and Clinton River. This decision necessitated the acquisition and construction of a "pollution control facility." The project involved the construction of an enclosed retention chamber in the Red Run Drain right-of-way which previously had been an open drain. A written contract was executed by Oakland County and the municipalities including Madison Heights, dated April 1, 1970. In this contract the parties approved the project and the purchase of additional flowage rights from the City of Detroit. The municipalities agreed to pay the net cost of the project, with the share of each allocated according to a schedule included in the agreement. Madison Heights was required to pay approximately seven percent of the cost of the project rather than the ten plus percent allocated to it under the 1962 contract. The 1970 contract contained no new agreement with respect to service charges, but adopted and specifically incorporated portions of the 1962 contract, including paragraphs 13 and 14.
The action by the United States against the City of Detroit (No. 7-71100) was a wide-ranging suit which charged Detroit with all manner of pollution. Some 18 months after entry of the consent judgment in that case the district court found that Detroit was far from being in compliance with the requirements of the judgment. The court determined that the appointment of an "administrator of operations" for the City of Detroit Wastewater Treatment Plant was necessary. The court appointed the mayor of Detroit as administrator "empowered to exercise extraordinary remedies in the control, management and operation" of the plant. United States v. City of Detroit, 476 F.Supp. 512, 515 (E.D.Mich.1979). The appointment was based on the "broad range of equitable powers available to this court to enforce and effectuate its orders and judgments." Id. at 520 (citations omitted). The administrator was granted "such powers as are traditionally exercised by receivers to manage and conduct such operations under the supervision of the court." Id. at 521. There is no issue in this case with respect to the validity of the appointment or the powers of the court-appointed administrator or receiver.
An additional order was entered in No. 7-71100 in October 1979 which provided in part:
All customers, users or rate payers of the City of Detroit Wastewater Treatment System shall refrain from any and all litigation before any other court based upon the subject rate structure.
This order has not been challenged in these proceedings. Oakland County was a customer, user and rate payer of the Detroit System and both Oakland County and Madison Heights were parties to No. 7-71100.
In December 1980 the Oakland County Drain Commissioner adopted a new formula for calculating the quantity of storm water runoff which should be charged to each municipality within the Southeastern System. This action was taken because the previous practice of estimating runoff on the basis of water consumption was inaccurate. The new method, sometimes called the "rational formula," was based on a standard engineering equation, Q = CIA (Q equals storm water flow; C equals runoff coefficient; I equals ten-year average rainfall and A equals area). The adoption of the new formula resulted in an increase in the monthly services charges for storm water disposal allocated to Madison Heights. The total increase did not appear on the billings to Madison Heights until June 1981 because the drain commissioner failed to include a 960-acre tract in Madison Heights in the area calculations for the first six months.
Prior to the construction of the 1970 pollution control facility surface water from the 960-acre tract had flowed directly into the open Red Run Drain and was not included in the sewage transmitted to Detroit for disposal. With the construction of the enclosed retention chamber in the Red Run Drain the storm water from the 960-acre tract was fed into the new chamber and became part of the total sewage which wound up in the Detroit system. Madison Heights took the position that it never had paid service charges for the storm water from the 960 acres and that it was not required to pay merely because the Southeastern System had adopted a new formula.
When Madison Heights persisted in its refusal to pay the service charges Oakland County filed the present action seeking a declaratory judgment that Madison Heights is required to pay the "storm water disposal charges allocated to the 960 acres in Madison Heights which formerly discharged storm water through a system of separated storm...
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