U.S. v. City of Detroit, 82-1818

Citation720 F.2d 443
Decision Date26 October 1983
Docket NumberNo. 82-1818,82-1818
Parties, 14 Envtl. L. Rep. 20,164 UNITED STATES of America, Plaintiff-Appellee, v. CITY OF DETROIT, et al., Defendant-Appellees, v. COUNTY OF MUSKEGON, Intervenor-Appellant.
CourtUnited States Courts of Appeals. United States Court of Appeals (6th Circuit)

Harry J. Knudsen argued, Knudsen, Wasiura & Associates, Muskegon, Mich., for County of Muskegon.

Leonard R. Gilman, U.S. Atty., argued, Mark R. Werder, Asst. U.S. Atty., Detroit, Mich., for the U.S.

Frank J. Kelley, Atty. Gen. of Mich., Louis J. Caruso, Sol. Gen., Thomas J. Emery, Lansing, Mich., for State of Mich.

William L. Cahalan, Joseph B. Klein, Detroit, Mich., for Wayne County Dept. of Health-Air Pollution Control.

James A. Smith, Kathleen A. Lieder, Detroit, Mich., for Macomb County.

Richard J. McClear, Robert J. Franzinger argued, Terrence E. Haggerty, Dykema, Gossett, Spencer, Goodnow & Trigg, Detroit, Mich., William P. Hampton, Davidson, Gotshall, Kohl, Secrest, Wardle, Lynch & Clark, Farmington Hills, Mich., for City of Detroit and Detroit Water and Sewerage Dept.

Before MERRITT and KRUPANSKY, Circuit Judges, and BROWN, Senior Circuit Judge.

KRUPANSKY, Circuit Judge.

This case originated as a compliance action initiated in 1977 by the United States, at the request of the Environmental Protection Agency (EPA), against the City of Detroit (Detroit), the Detroit Water and Sewerage Department (DWSD), and the State of Michigan (Michigan), predicated upon defendants' alleged discharge of effluents and pollutants from wastewater and sewage facilities into navigable waters in violation of the Federal Water Pollution Prevention and Control Act, 33 U.S.C. Sec. 1251 et seq. (FWPCA). On September 14, 1977 a Consent Judgment was entered mandating compliance by defendants in such matters as financing, use charges, industrial cost recovery, local capital cost funding systems, industrial waste control, staff training, operation and maintenance, facilities planning, sludge disposal, secondary treatment, phosphorous removal, effluent limitations, reporting and other miscellaneous matters. Specific dates for compliance in each area were incorporated into the judgment.

By October 1978, defendants had failed to comply with various provisions of the Consent Judgment and the district court appointed a monitor to study the operation of the Detroit sewer facilities and recommend to the court viable remedies. After receiving the monitor's report and subsequent to extensive hearings in February and March of 1979, the district court determined that Detroit had failed to comply with the Consent Judgment. The Mayor of the City of Detroit was appointed Administrator for the Detroit wastewater treatment facilities and empowered to control, manage and operate the plant so as to achieve compliance with the Consent Judgment at the earliest possible date. United States v. City of Detroit, et al., 476 F.Supp. 512 (E.D.Mich.1979).

In April 1980, the consent judgment was amended after a separate action was initiated against the City of Detroit by the United States which prayed for relief from Detroit's alleged violations of the Clean Air Act, 42 U.S.C. Sec. 7401 et seq. In the detailed Amended Consent Judgment defendants committed themselves to achieve compliance with the provisions of the Clean Air Act and the FWPCA, principally through construction of treatment facilities. At a hearing conducted on July 6, 1981, the district court was informed that funds in the amount of approximately $100 million would be required to construct major capital improvements at the wastewater treatment facility and thereby achieve compliance with the Amended Consent Judgment. The Court was further advised that defendants did not have sufficient state or local monies to fund the projects.

In August, 1981, the City of Detroit filed a "Petition to Reallocate Unobligated (Unrescinded) Grant Funds and/or for Instruction Re Consent Judgment Mandated Projects", effectively requesting the district court to either reserve federal funds for Detroit or else grant relief from the Amended Consent Judgment. An understanding of this motion necessitates familiarization with various federal and state statutory frameworks which are discussed seriatim.

Title III of the FWPCA, 33 U.S.C. Secs. 1311-28, establishes pollutant limitations and provides for EPA enforcement thereof. Title II of FWPCA, 33 U.S.C. Secs. 1281-97, authorizes the issuance of federal grants for the construction of treatment works. It is fundamental that Title III compliance may be sought by the EPA without a corresponding conditioning of Title II grant funds. State Water Control Board v. Train, 559 F.2d 921 (4th Cir.1977).

Reduced to its essentials, Title II, Grants for Construction of Treatment Works, authorizes the Administrator of the EPA to issue grants for construction of treatment works. 33 U.S.C. Sec. 1281(g)(1). Annually each state is "allotted" a certain percentage of that fiscal year's appropriations. 33 U.S.C. Sec. 1285(a). 1 The allotment percentage of the total federal fiscal appropriation reserves to each state a sum certain for various environmental projects. A state is precluded from utilizing allotted funds, however, until such funds have been "obligated" by the Administrator. Congress has defined the procedure by which obligation may be effected. An applicant for a federal grant must initially submit to the Administrator for approval various plans, specifications, and estimates for each proposed treatment works project. 33 U.S.C. Sec. 1283. Before approving a grant for any proposed project, the Administrator "shall determine", inter alia, (1) that such works have been certified by the appropriate State water pollution control agency as entitled to priority over other State projects, (2) that the applicant has agreed to pay the non-federal costs of the project (generally 25%) and has made adequate provision for assuring proper and efficient operation of the facility in accordance with a plan of operation approved by the State water pollution control agency, (3) that the size and capacity of such works relates directly to the needs to be served by such works, including sufficient reserve capacity and (4) that no specification for bids in connection with such works has been drafted in a manner as to contain proprietary, exclusionary, or discriminatory requirements. 33 U.S.C. Sec. 1284(a). The Administrator may not approve a grant unless it is first determined that the applicant (A) 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, and (B) has legal, institutional, managerial and financial capability to insure adequate construction, operation and maintenance of treatment works. 33 U.S.C. Sec. 1284(b)(1)(A) and (B). Also, the grant must provide that the engineer or engineering firm supervising construction or providing architect engineering services during construction shall continue its relationship to the grant applicant for a period of one year after the completion of construction. 33 U.S.C. Sec. 1284(d)(1). One year after the completion of construction the owner and operator of such treatment works must certify to the Administrator that the completed treatment works conforms to the design specifications and effluent limitations incorporated into the grant agreement and permit. 33 U.S.C. Sec. 1284(d)(2). In sum, allotted monies become obligated only when an application is made to the EPA, the state certifies the project as one of priority, and the EPA approves the application after ascertaining that criteria mandated by the Congressional enactment have been satisfied.

Allotted Title II funds are available for obligation for a period of one year. The Administrator is under a statutory duty to reallot unobligated funds to the other states at the expiration of the fiscal year:

Any sum allotted to a State under subsection (a) of this section shall be available for obligation under section 1283 of this title on and after the date of such allotment. Such sums shall continue available for obligation in such State for a period of one year after the close of the fiscal year for which such sums are authorized. Any amounts so allotted which are not obligated by the end of such one-year period shall be immediately reallotted by the Administrator, in accordance with regulations promulgated by him, generally on the basis of the ratio used in making the last allotment of sums under this section. * * *

33 U.S.C. Sec. 1285(b)(1) (emphasis added). Regulations also require the Administrator to "immediately reallot" the funds to the other states to the total exclusion of the state from which the unobligated funds originated. 40 C.F.R. Sec. 35.2010(b). 2

Michigan has promulgated legislation to provide procedures for establishing the priority of eligible projects and for certifying projects for an allocation of grants for treatment works construction. The Michigan Water Resources Commission (Commission) is statutorily required to promulgate rules to establish the priority of proposed treatment works projects based upon a system which will satisfy the requirements of FWPCA. M.C.L.A. 323.122(2). 3 In accordance with these rules, the Commission assigns a priority rating to each grant applicant. M.C.L.A. 323.126(3). A "priority list" or "project list" is then submitted by the Commission to the Michigan legislature for approval. M.C.L.A. 323.126(4). Upon approval, the projects appearing on the priority list are certified by the Commission to the administering federal agency (EPA) for potential federal obligation of Title II grants. Id. The projects on the certified priority list collectively request an amount equal to or less than the federal monies allotted to Michigan for the fiscal year and are therefore deemed "fundable". In the event that a fundable project is...

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