Opinion ID: 1668628
Heading Depth: 1
Heading Rank: 3

Heading: sewer surcharge

Text: On October 30, 1973, the Board adopted a resolution revising the rates for sewer services. That resolution provided that a surcharge of $.035 per pound would be imposed on wastes having concentrations of suspended solids (SS) and biological oxygen demand (BOD) greater than 300 parts per million (ppm). The effective date for the sewer surcharges on SS and BOD was May 1, 1974. No surcharge was placed on the discharge of oil and grease (O & G) until September 24, 1974, when the original resolution was amended to include a $.035 per pound surcharge on O & G above 100 ppm. The Board began collecting surcharges for BOD and SS at the rate of $.035 per pound in May of 1974, as provided in the October 1973 resolution. In addition, the Board began to impose a $.035 per pound surcharge on O & G in May 1974, although the resolution providing for that surcharge was not enacted until September 1974. Durbin contends the surcharges on O & G of $4,020.75 that were paid from May 1974 through September 1974 were unauthorized and illegal. On January 20, 1976, the Board enacted a Resolution Adopting Rules and Regulations for the use of the Sanitary Sewer System. That resolution provided that for BOD and SS concentrations greater that 250 milligrams per liter (mg/1), the party discharging the wastes shall pay the reasonable additional cost incurred by the Board in treating the waste. Likewise, a surcharge for the reasonable additional cost incurred in treating O & G above 100 mg/1 was imposed. The effective date of the resolution was February 1, 1976. The Board continued to bill Durbin at the rate of $.035 per pound for all wastes after the January 20, 1976, resolution was passed which provided for a surcharge based upon the reasonable additional costs incurred for treatment, rather than a set fee. Durbin contends that no attempt has ever been made to determine the Board's cost for treating O & G. Nonetheless the Board has charged Durbin approximately $134,000.00 in O & G surcharges. The Board had commissioned a study in January 1973 of the average cost of treatment for BOD and SS. The study apparently was the basis for the rates set in October 1973 of $.035 per pound. In a letter dated October 29, 1973, Felix Harris, who performed the study, stated that the cost involved in treating BOD above normal strength was $.031 per pound and recommended a surcharge of $.035 per pound. The letter also stated: We are unable at this time, to calculate the exact cost of treating waste with suspended solids greater than 300 p.p.m. but in other municipalities have found that the cost is similar to that for treating excess B.O.D. We therefore recommend that the charge for excess suspended solids also be set at 3½ cents per pound. The Board contends that the January 20, 1976, resolution of the Board did not repeal the rates set in the October 1973 resolution. There is no provision in the 1976 resolution that specifically repeals the earlier act. The Board also states: Durbin's contention [that] there has been no effort made by the Board to determine the reasonable additional cost attributable to its processing of above normal strength waste, is not completely accurate.  (Emphasis added.) The Board refers to a 1979 study which made no specific reference to surcharge costs and to the yearly audits of the Board from 1976 through 1980. The Board also relies upon a letter from Lucas and Carr Engineers, Inc., which states that the surcharges recommended were determined from an analysis of ordinances of similar size cities. After reviewing the evidence presented, we are of the opinion that the Board acted unreasonably in relation to the sewer surcharges in a number of ways. First, there was no ordinance allowing the collection of a surcharge on O & G from May 1974 through September 1974. We are of the opinion that the Board could not impose a surcharge on Durbin without enacting some enabling legislation setting the surcharge. See, Johnson v. Mayor and City Commissioner of City of Natchitoches, 14 La.App. 40, 129 So. 433 (1930). Second, we find that the Board acted unreasonably in the manner in which it set its rates for O & G and SS following the passage of the resolution in 1976. From October 1974 through January 20, 1976, the Board had in effect a surcharge which we find to be reasonable and enforceable. However, we find that the resolution passed by the Board in January 1976 changed the basis upon which the Board could make surcharges. That resolution called for surcharges based upon the reasonable additional costs incurred in providing treatment services. While the 1973 study provided some information on costs for BOD, which could have been the basis for the $.035 surcharge for BOD, there was no information on either O & G or SS and thus we find that it was improper for the Board to impose a surcharge on O & G and SS from 1976 until the present. We find that the Board's contention that the 1973 rates remained in effect, despite the 1976 resolution, untenable. The 1976 resolution appears to be a comprehensive plan for sewer service charges. Even without a specific repealer provision, it clearly changed the basis upon which the rates were to be calculated. This is not to say that the rate structures themselves were unreasonable; rather, the manner in which the rate structure was administered was unreasonable. Durbin also contends that the Board failed to follow its own regulation as to the sampling of sewer discharge for a determination of the surcharges to be imposed. The 1976 resolution provided that a determination of character and strength of said wastes shall be made quarterly, or more often as may be deemed necessary. Durbin states that its wastes were measured every six months and, at times, at longer intervals. The record of the samplings introduced at trial, for example, indicate that one sampling was done in February 1976, and that the next sample was not taken until February 1977. The Board's only response to this contention is that [t]he taking of some samples was delayed during periods of rain, and that Durbin never requested a sample that was not promptly taken. Again, we are of the opinion that the Board set forth a reasonable rate structure and administrative procedure in the 1976 resolution, but that the Board failed to follow the sampling procedures set forth therein. We hold that in administering the lawfully enacted rate structure a municipal board must follow its own rules and regulations. Vitarelli v. Seaton, 359 U.S. 535, 79 S.Ct. 968, 3 L.Ed.2d 1012 (1959). Thus, for those quarters when no sampling took place, we are of the opinion that it was unreasonable and arbitrary for the Board to continue to impose the surcharge, absent some compelling reason for failure to sample the sewer discharge. Durbin also contends that the manner in which samples were analyzed for O & G and SS were unreasonable. Durbin states: The unrefuted testimony of Dr. Thompson shows that the Board's analyses of Durbin's wastes are double counting O & G and therefore billing Durbin twice for O & G. Because the method used in analyzing SS picks up the insoluble O & G in the wastes as a part of the SS, that billing based on the SS analysis is, in part, billed based on O & G as well. Then the board bills separately for O & G based on analysis of all O & G, both soluble and insoluble. Fifty percent of the O & G has already been filtered out and measured as a part of the suspended solids. Therefore, the board is in effect billing Durbin twice [for] some of the O & G in its wastes. The Board makes no response to this contention. The trial court made no specific finding as to the reasonableness of this procedure, but by granting the motion for summary judgment on the counterclaim by the Board, the trial court implicitly held that this procedure was not unreasonable. We disagree. The testimony for Durbin concerning the double measurement of O & G was undisputed and, therefore, it was improper for the trial court to grant the board's motion for summary judgment for the full past due amounts. Durbin also argues that the surcharge rates were applied in a discriminatory fashion in that Durbin was the only customer being billed for a surcharge up until 1977. Beginning in 1977, Southern Animal Foods, a company using the same sewer line as Durbin, was charged the surcharges. The testimony at trial indicated that there were a number of other users in the system such as hospitals, restaurants, and car washes that discharged BOD, SS, or O & G at concentration levels that would have justified a surcharge. While we agree with the proposition that discriminatory application of utility rates is unconstitutional, Water Works Board of Town of Parrish v. White, 281 Ala. 357, 202 So.2d 721 (1967), we disagree with Durbin's analysis on the facts of this case. There was evidence presented that the Board's practice could have been based upon Environmental Protection Agency regulations which required cost recovery for above normal strength wastes from users whose water flow exceeded a certain level. Durbin is apparently the only user whose flow requires cost recovery (via the surcharges), and therefore we find that the application of the surcharge only against Durbin is not unreasonable. Finally, Durbin contends that the surcharges are unconstitutional in that they deny due process because no notice and hearing were provided to Durbin. We need not address this issue, because we find that Durbin had notice of all Board meetings in that these were public meetings scheduled on a regular basis. There is no statutory requirement that the Board give individual notice and provide a hearing before enacting new rates, and this Court will not impose such a requirement. See, Sellers v. Iowa Power and Light Co., 372 F.Supp. 1169 (S.D.Iowa 1974). In summary, we hold that the rate structure itself was not unreasonable; however, the following actions of the Board under that structure were unreasonable: 1. The imposition of a surcharge for O & G prior to September 1974; 2. The imposition of a surcharge for SS and O & G from January 1976 until the present without establishing the cost of this service; 3. The failure to take quarterly samples as provided in the January 1976 resolution. We are also of the opinion that it was error for the trial court to grant summary judgment on the counterclaim in light of the undisputed evidence concerning the double measurement of SS and O & G.