Petition — Middlesex County Utilities Authority v. City of New Brunswick

Supreme Court of the United

Ocronan Term, 1982

ALEXANDER L STEVAS,

CLERK

BOROUGH OF MILLTOWN,

Petitioner,

and by separate petition

MIDDLESEX COUNTY UTILITIZES AUTHORITY,

Petitioner,

CITY OF NEW BRUNSWICK, and THE UNITED

STATES OF AMERICA, by and through its ENVIRON-

MENTAL PROTECTION AGENCY,

Respondents.

Anwort K. Myra,

Counsel of Record for Petitioner,

Bor of Milltown,

a Nes J 07102.

ew Jersey

(201) 642-3900

Adams Press Corp., 50 Park Place, Newark, New Jersey 07102—(201) 623-8611

i

Questions Presented for Review

1. Whether Congress intended the grant-conditioning

power delegated to the United States Environmental

Protection Agency (EPA) pursuant to 33 U.S.C. 51284

(b)(1)(A) to authorize regulation of a municipality that

is neither a grantee nor a party contracting with a

grantee—whether this is a case of regulatory overreach?

2. Whether Congress intended 33 U.S.C. §1284(b)(1)

(A), which is part of the Federal Water Pollution Con-

trol Act of 1972, to abrogate an existing intermunicipal

contract entered into in 1914, notwithstanding legisla-

tive history requiring EPA to “take into account the

diversity of legal and financial factors that exist from

jurisdiction to jurisdiction” and to permit “reasonable

flexibility . . . that meets the unique requirements” of

each jurisdiction l

3. Whether Congress intended a rigid reading of 33

U.S.C. §1284(b)(1)(A) requiring absolute proportionality

and disallowing flexibility—the impact of the Third Cir-

cuit’s opinion below, or whether Congress intended gen-

erally equitable” treathent with an “emphasis upon local

flexibility”, as held by the Ninth Circuit this year?**

4. Whether a court should accord full deference to

an administrative agency where the questions presented

are matters of statutory construction, not technical ex-

*2 A Legislative History of the Water Pollution Control Act

Amendments of 1972, 1352-1353 (U.S. Government Printing Of-

fice, 1973).

Hotel Emp. Ass'n of San Francisco v. Gorsuch, 669 F.2d

1305, 1308-09 (9th Cir. 1982).

ii

pertise, and where the issue is the statutory jurisdiction

of the agency itself?

5. Whether as a matter of constitutional law aad pol-

iey, 33 U.S.C. §1284(b)(1)(A) should have been con-

strued to avoid the contract impairment/due process is-

sue resulting from a decision that derogates from sub-

stantial contractual rights under a long-standing written

agreement?

TABLE OF CONTENTS

Questions PResENTED ror Review

Tams or AUTHORITIES

Orrsions BeLow

JURISDICTION

Consrrruriox AND STATUTE

STaTEMENT OF THE CaSE

ARGUMENT:

Point I— Because the grant-conditioning power

in Sec. 1284(b)(1)(A) is contractual in nature

and attaches only to a party which “volun-

tarily and knowingly accepts the terms of the

‘contract’”, Congress never intended that

statute to reach Milltown which neither ap-

plied for a grant nor contracted with a

grantee. Certiorari should be granted and the

contrary decision of the Court of Appeals

should be reversed

A. Statutory context

B. Applicable legal principle

C. Statutory language

Point II— The Congressional purpose in enact-

ing 33 U.S.C. Sec. 1284(b)(1)(A) was to get

waste treatment plants built; and Congress

intended the EPA in achieving that purpose to

“take into account the diversity of legal and

financial factors... from jurisdiction to juris-

— ·

de do we .

* *

Iv TABLE OF OONTENTS

PAGE

diction” and to permit “flexibility in the design

of a system of user charges that meets the

unique requirements of” each jurisdiction. The

Court of Appeals’ decision contravenes this

purpose and intent and should be reversed .. 10

A. Overriding purpose 10

B. Congressional intent 11

1. Flexibility 12

2. Self-sufficiency 14

3. Another purpose? 14

Point III— The Ninth Cireuit's decision in Hotel

Emp. Ass’n of San Francisco v. Gorsuch, 669

F.2d 1305 (9th Cir. 1982), correctly construed

the Congressional intent underlying 33 U.S.C.

Sec. 1284(b)(1) as requiring tolerance of local

variations in user charge systems. The con-

flicting decision of the Third Circuit in this

case should be reversed 17

Point 1V—The Courts below erred in according

full deference to the EPA where its statutory

jurisdiction was at issue and technical ex-

pertise was not involved 19

Point V—The Third Circuit’s construction of 33

U.S.C. Sec. 1284(b)(1)(A) derogates from Mill-

town’s substantial contractual rights and thus

creates a contract impairment/due process is-

sue. The Third Cireuit's decision should be

reversed to avoid that result

Point VI—Certiorari should be granted

Conciusion

8 8

APPENDIX:

A—Opinion of the United States Court of Ap-

peals for the Third Circuit

B—Judgment of the United States Court of Ap-

peals for the Third Circuit

C—Opinion of the United States District Court

for the District of New Jersey

D—Order of Dismissal, Remand, ete. of the

United States District Court for the District

of New Jersey

la

2

vi TABLE OF AUTHORITIES

Table of Authorities

Cases Cited

American Iron and Steel Institute v. E.P.A., 526 F.2d

1027 (3d Cir. 1975), modified on other grounds, 560

F.2d 589 (3d Cir. 1977), cert. den., 435 U.S. 914

(1978)

Carroll Vocational Institute v. United States, 211

F. 2d 539 (5th Cir.), cert. den., 348 U.S. 833 (1954)

Chapman v. Houston Welfare Rights Org., 441 U.S.

600 (1979)

Federal Maritime Commission v. Seatrain Lines, 411

U.S. 726 (1973)

Gartner v. Soloner, 384 F.2d 348 (3d Cir. 1967),

cert. den., 390 U.S. 1940 (1968)

Gonzales v. United States, 286 F.2d 118 (10 Cir.

1960), cert. den., 365 U.S. 878 (1961)

Home Building & Loan Association v. Blaisdell, 290

U.S. 398 (1934)

Hotel Emp. Ass’n of San Francisco v. Gorsuch, 669

10

10

F. 2d 1305 (9th Cir. 1982) i, 17, 18

Lynch v. United States, 292 U.S. 571 (1934) .............

Midwest Video Corp. v. F.C.C., 571 F.2d 1025 (8th

Cir. 1978), aff’d, 440 U.S. 689 (1979)

New Brunswick v. Milltown, 135 N.J. Eq. 310, 38 A.2d

288 (Ch. 1944)

New Brunswick v. Milltown, 3 N.J. Super. 113, 65

A.2d 621 (App. Div. 1949) 2, 3, 7, 16

TABLE OF AUTHORITIES

Ogden v. United States, 303 F.2d 724 (9th Cir. 1962),

cert. den., 376 U.S. 973 (1964)

Pennhurst State School v. Halderman, 451 U.S. 1

(1981) 4, 6, 7, 9, 12, 21

Pittston Stevedoring Corp. v. Dellaventura, 544 F.

2d 35 (2d Cir. 1976), aff'd sub. nom., Northeast

vii

PAGR

9

Marine Co. v. Caputo, 432 U.S. 249 (19777 8

Rogers v. Frito-Lay, Inc., 611 F.2d 1074 (5th Cir.),

cert. den., 449 U.S. 889 (1980) 16

SEC v. Sloan, 436 U.S. 103 (1978) 20

Social Security Board v. Nierotko, 327 U.S. 358

(1946)

Southeastern Community College v. Davis, 442 U.S.

397 (1979) 10

State of New Jersey, Dept. of Ed. v. Hufstedler,

662 F.2d 208 (3d Cir. 1981) 6

Stop H-3 Ass’n v. Coleman, 533 F.2d 434 (9th Cir.),

cert. den., 429 U.S. 999 (1976) 9

Train v. City of New York, 420 U.S. 35 (197557 5

United States v. Cartwright, 632 F.2d 1290 (5th Cir.

1980) 9

United States v. Clark, 445 U.S. 23 (1980) 15, 20

United States v. Johnson, 462 F. 2d 423 (3d Cir. 1972),

cert. den., 410 U.S. 937 (1973) 8

United States v. Palmeri, 630 F.2d 192 (3d Cir. 1980),

cert. den., 450 U.S. 967 (1981) 8

Western Union Tel. Co. v. F.C. C., 541 F.2d 346 (3d

Cir. 1976), cert. den., 429 U.S. 1092 (1977) 19

viii TABLE OF AUTHORITIES

PaGE

United States Constitution Cited

Article I, Paragraph 8, Clause 1 ) 2, 6, 21

Statutes Cited

28 U.S.C.:

Sec. 1284 2

See. 1291 2

Sec. 1442(a)(1) 2,3

33 U.S.C. (Federal Water Pollution Control Act of

1972 (“Clean Water Act”) 15

Sec. 1251(b) 12,14

See. 1251(a) (4) 11

Sec. 1281 (g) (1) 4,11

Sec. 1283(a) 5, 6

Sec. 1284(b)(1) 2, 5, 17

Sec. 1284 (b) (1) (A) i, ii, 2, 4, 7, 9, 11,

12, 14, 17, 20, 21

Regula tions Cited

40 C. F. R.:

Sec. 35.929-1 5

TABLE OF AUTHORITIES

B |

Other Authorities Cited

1 A Legislative History of the Water Pollution

Control Act Amendments of 1972 (U.S. Govern-

ment Printing Office, 1973) :

295 —

368 14

371 14

2 A Legislative Hisiory of the Water Pollution

Control Act Amendments of 1972 (U.S. Govern-

ment Printing Office, 1973) :

1352-1353 i, 10, 11, 13, 14

1446 13, 14

S. Rep. No. 93-370, 95th Cong., Ist Sess. (1977) — 15

1977 U.S. Code Cong. Ad. & News 4326, 4352 15

Webster’s Third New International Dictionary, defi-

nition, “jurisdiction” 1227 (1963) 8

Supreme Court of the United States

Oczonen Term, 1982

—

BOROUGH OF MILLTOWN,

Petitioner,

and by separate petition

MIDDLESEX COUNTY UTILITIES AUTHORITY,

Petitioner,

v.

CITY OF NEW BRUNSWICK, and THE UNITED

STATES OF AMERICA, by and through its ENVIRON-

MENTAL PROTECTION AGENCY,

Respondents.

PETITION OF THE BOROUGH OF MILLTOWN FOR A

WRIT OF CERTIORARI TO THE UNITED STATES

COURT OF APPEALS FOR THE THIRD CIRCUIT

Opinions Below

The Court of Appeals, Third Circuit, filed its opinion

July 22, 1982. It is not reported ( ppendix la- a).

The opinion of the District Court, New Jersey, is reported

at 519 F. Supp. 878 (1981) (Appendix 33a-52a). The

judgments are set forth below (Appendix 30a-32a, 53a-

56a).

Jurisdiction

Jurisdiction of this Court is conferred by 28 U.S.C.

$1284; that of the Court of Appeals by 28 U.S.C. 51291;

and that of the District Court by 28 U.S.C. §1442(a)(1).

Constitution and Statute

United States Constitution, Article I, Paragraph 8,

clause 1 is quoted below at page 6 and 33 U.S.C. 51284

(b)(1)(A) is quoted below at page 5.

Statement of the Case

In 1914, two New Jersey municipalities entered into

a written contract to settle a dispute. For substantial

consideration, the City of New Brunswick (New Bruns-

wick) agreed to dispose of sewage delivered by the Bor-

ough of Milltown (Milltown). Both parties have per-

formed the contract to date.

This sewage disposal contract has been twice sustained

against challenges advanced by New Brunswick. See

New Brunswick v. Milltown, 135 N.J. Eq. 310, 38 A.2d

288 (Ch. 1944); New Brunswick v. Milltown, 3 N. J. Super.

113, 65 A.2d 621 (App. Div. 1949).

In a new challenge, commenced in the Superior Court

of New Jersey, New Brunswick again sought abrogation

of its contract with Milltown. New Brunswick’s com-

plaint included a federal ground, namely, that 33 U.S.C.

§1284(b)(1) required New Brunswick to charge Milltown

for sewage disposal, its contractual obligation to the con-

trary notwithstanding.

The Complaint also named the Middlesex County Util-

ities Authority (MCUA), a regional sewage authority, as

a party defendant. New Brunswick had contracted with

MCUA for disposal of New Brunswick’s sewage (inelud-

ing Milltown’s). Milltown did not contract with MCUA.

Milltown was not consulted and did not consent to New

Brunswick’s contract with MCUA.

The Complaint against MCUA sought an order requir-

ing MCUA to directly charge Milltown for the cost of dis-

posing of Milltown’s sewage. MCUA denied it had the

power to so act, alternatively crossclaimed against Mill-

town, and additionally brought a third party complaint

against EPA.

EPA had previously withheld part of a grant it had

made to MCUA for construction of treatment facilities.

MCUA’s third party complaint against EPA alleged the

withholding was improper and sought payment. EPA re-

moved to the District Court, 28 U.S.C. $1442(a)(1), and

filed reponsive pleadings.

Cross-motions for summary judgment resulted in an

order sustaining EPA’s power to withhold the grant on

the ground that Milltown, under its contract with New

Brunswick, was not itself paying for sewage disposal. The

balance of the case was remanded for adjudication of state

issues,

Milltown and MCUA appealed. The Third Circuit af-

firmed, MCUA has petitioned for certiorari to this Court.

Because of the obvious detriment to Milltown—the federal

determination will likely be regarded as settled law and

the New Jersey courts may well consider this novel prece-

dent as a “material change” compelling abrogation of the

Milltown/New Brunswick contract, see New Brunswick v.

Milltown, supra (3 N.J. Super. at 121, 65 A.2d at 624)—

Milltown seeks relief here.

4

ARGUMENT

An analysis of the issues is presented at Points I through

V. A summary of the reasons why certiorari should

be granted is set forth at Point VI.*

POINT I

Because the grant-conditioning power in §1284(b)

(1)(A) is contractual in nature and attaches only to

a party which “voluntarily and knowingly accepts the

terms of the ‘contract’ ”,** Congress never intended that

statute to reach Milltown which neither applied for a

grant nor contracted with a grantee. Certiorari should

be granted and the contrary decision of the Court of

Appeals should be reversed.

A. Statutory context.

The statute in question is part of a grant program: 33

U.S. C. $1281(z)(1) authorizes “grants to any State, muni-

sipality, or intermunicipal or interstate agency for the con-

struction of publicly owned treatment works.” Pursuant

thereto, MCUA applied for a grant and EPA awarded the

grant.

* Milltown’s perspective is different than that of MCUA. In-

deed, these parties are adversaries in pending State court pro-

ceedings involving related issues. Nevertheless, Milltown finds

itself in substantial agreement with the analysis set forth in

MCUA's petition for certiorari, at pages 8 to 22, and respectfully

relies upon the points advanced therein.

** Pennhurst State School v. Halderman, 451 U.S. 1, 17 (1981).

The grant program is contractual in nature. The appli-

cant submits a proposal and the EPA Administrator's

“approval of any such plans, specifications, and estimates

shall be deemed a contractual obligation of the United

States for the payment of its proportional contribution to

such project.” 33 U.S.C. §1283(a); emphasis added. As

such, the legislation is unusual because Congress has agreed

in advance of appropriations to fund what has been con-

tractually obligated within certain authorization limits. See

Train v. City of New York, 420 U.S. 35, 39 at n. 2 (1975).

The statutory section at issue here is a component of

the contractual grant program. It provides that:

. .. the Administrator shall not approve any grant

for any treatment works under Section 1281(g)

(1) [quoted above] . . . 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 ap-

plicant’s jurisdiction, as determined by the Admin-

istrator, will pay its proportionate share . . of the

costs of operation and maintenance (including re-

placement) of any waste treatment services provided

by the applicant... .” 33 U.S.C. $1284(b)(1).

Acting under this section, EPA promulgated regulations,

40 C. F. R. §35.929-1 and 2, and withheld grant funds from

MCUA for alleged non-compliance.

B. Applicable legal principle.

Unlike an administrative agency’s plenary regulatory

authority, regulations that are based on grant conditions

depend upon consent.

Because the power to make and condition grants derives

from the Constitution’s Spending Power Clause,“ grant

statutes are “voluntary and the States [or, as here, instru-

mentailties of the States] are given ine choice of comply-

ing with the conditions set forth in the Act or foregoing

the benefits of federal funding.” Pennhurst State School v.

Halderman, supra, 451 U.S. at 11.

As such, grants and conditions thereto a.e:

. . . in the nature of a contract: in return for fed-

eral funds, the States agree to comply with federally

imposed conditions. The legitimacy of Congress’

power ? legislate under the Spending Power thus

rests on whether the State voluntarily and know-

ingly accepts the terms of the ‘contract.’ [Author-

ities omitted. Id. at 17 (emphasis added); accord,

State of New Jersey, Dept. of Ed. v. Hufstedler,

362 F. 2d 208, 214 (3d Cir. 1981).

As indicated above, the statute in question here provides

for “a contractual obligation of the United States,” 33

U.S.C. §1283(a), and is therefore consistent with the

Supreme Court’s analysis in Pennhurst.

Acceptance of the grant by MCUA supplies its consent.

New Brunewick’s agreement to dispose of its sewage

through MCUA’s facility may supply New Brunswick’s

consent.

But nothing supplies Milltown’s consent. It has neither

applied for a grant, nor contracted with a grantee. Cer-

tainly, New Brunswick’s unilateral decision to dispose of

Milltown’s sewage—which New Brunswick is bound by

* The Congress shall have Power To .. provide for the

general welfare of the United States. US. Const., art. I, §8,

cl. 1.

7

agreement to receive—through MCUA’s facility cannot be

construed ac Milltown’s consent to EPA grant conditions.

Thus, Milltown cannot be said to have “voluntarily and

knowingly” accepted the terms of “the contract.” Penn-

hurst State School v. Halderman, supra, 451 U.S. at 17.

In this context, taken together with the unique overlay

of the Milltown/New Brunswick agreement, it is clear that

Congress did not intend t! at 33 U.S.C. §1284(b)(1)(A)

should reach a municipality that was neither a grantee

nor a party contracting with a grantee.

C. Statutory language.

The statutory language is consistent with the above

analysis, Section 1284(b)(1)(A) reaches “each recipient

of waste treatment services within the applicant’s jurisdic-

tion, as determined by the Administrator. .” The Dis-

trict Court cited the dictionary definition of “recipient”

as “one that receives” and concluded that “Milltown is in-

arguably a ‘recipient’ of MCUA’s treatment services” be-

cause Milltown’s sewage “receives its only treatment from

the MCUA system” (519 F. Supp. at 882; Appendix 402).

The Court of Appeals agreed with the District Court, al-

though it admitted that Milltown was only .an indirect

recipient (Appendix 13a).

The analysis is erroneous because Milltown receives

nothing from MCUA. By contract with New Brunswick,

Milltown has the right to transmit sewage through a 12

inch pipe to New Brunswick, nothing more. New Bruns-

wick v. Milltown, supra (3 N.J. Super. at 121, 65 A.2d

at 624).

Once the sewage crosses into New Brunswick, the sew-

age belongs to New Brunswick to dispose of it as it sees

fit. Milltown has no right to require or even request that

8

b F< = cally Mali Boos 4

particular agency. The sewage belongs to New Bruns-

wick, not Milltown, and New Brunswick alone is the “re-

cipient” of any treatment services from MCUA which New

Brunswick elects to enjoy. For federal statutory pur-

poses, the sewage should be dealt with no differently than

sewage piped from a New Brunswick city facility.

Of even greater significance is the fact that the word

“recipient” is limited by the phrase “within the applicant’s

jurisdietion.““

Plainly, Congress contemplated recipients that are both

within and not “within the applicant’s jurisdiction.” Other-

wise, the quoted phrase would be surplusage. See United

States v. Palmeri, 630 F.2d 192, 199 (3d Cir. 1980), cert.

den., 450 U.S. 967 (1981) (We should not construe a

statute to make it redundant of itself.); United States

v. Johnson, 462 F. 2d 423, 428 (3d Cir. 1972), cert. den., 410

U.S. 937 (1973) (“words in statutes should not be con-

strued as excess verbiage”). The question, then, is which

recipients are “within the applicant’s jurisdiction” and,

more particularly, what did Congress mean by “juris-

liction.”

It is appropriate to start with the dictionary definition

of “jurisdiction.” After defining jurisdiction in judicial

terms, Webster’s gives a second definition, “authority of

a sovereign power to govern or legislate: power or right

to exercise authority,” and, for a synonym, “see POWER.”

Webster's Third New International Dictionary 1227

(1963) ; emphasis added.

Judicial definitions are to the same effect. Dealing with

the crime of making a false statement in a matter within

The final words—“ as determined by the Administrator

obviously call for a test of reasonableness.

the jurisdiction of a federal department or agency, the

Ninth Circuit held “jurisdiction” to be synonymous with

“power to act,” and the Fifth Cireuit concurred. Ogden v.

United States, 303 F.2d 724, 743 (9th Cir. 1962), cert. den.,

376 U.S. 973 (1964) ; United States v. Cartwright, 632 F.2d

1290, 1292 (5th Cir. 1980) ; emphasis added.

In the context of a statutory grant of subpoena auth-

ority to the Veterans’ Administration for matters within

its jurisdiction, the Fifth Cireuit defined “jurisdiction”

as “the right to say and the power to act; and, as be-

tween agencies of the government, jurisdiction is the power

of that particular agency to administer and enforce the

law.” Carroll Vocational Institute v. United States, 211

F.2d 539, 540 (5th Cir.), cert. den., 348 U.S. 833 (1954)

(emphasis added); accord, Stop H-3 Ass’n v. Coleman,

533 F.2d 434, 441 at n. 13 (th Cir), cert. den., 429 U.S.

999 (1976); Gonzales v. United States, 286 F.2d 118, 123

(10th Cir. 1960), cert. den., 365 U.S. 878 (1961).

In summary, the plain meaning of the Congressional

language in 33 U.S.C. $1284(b)(1)(A) is that the sec-

tion was designed to reach only recipients within MCUA’s

(“the applicant’s”) power to act (“jurisdiction”). It is

undisputed that MCUA has no power to act with respect

to Milltown because Milltown is not a subscriber to serv-

ices provided by the MCUA.

Alternatively, it is even more obvious that the statu-

tory language is not free from ambiguity, as is necessary

before a user charge requirement can be imposed on Mill-

town. “If Congress intends to impose a condition on the

grant of federal moneys, it must do so unambiguously.”

Pennhurst State School v. Halderman, supra, 451 U.S. at

17.

10

POINT II

The Congressional purpose in enacting 33 U.S.C.

§1284 (b)(1)(A) was to get waste treatment plants

built; and Congress intended the EPA in achieving that

purpose to “take into account the diversity of legal and

financial factors . . . from jurisdiction to jurisdiction”

and to permit “flexibility in the design of a system

of user charges that meets the unique requirements of”

each jurisdiction.* The Court of Appeals’ decision con-

travenes this purpose and intent and should be reversed.

A. Overriding purpose.

Although [the starting point in every case involv-

ing construction of a statute is the language itself,” South-

eastern Community College v. Davis, 442 U.S. 397, 405

(1979), the judicial task is “to interpret the words of

. . . Statutes in light of the purposes Congress sought

to serve.” Chapman v. Houston Welfare Rights Org.,

441 U.S. 600, 608 (1979). Thus, in construing a statute,

“the court must consider the purpose of its enactment,

the evi! to be eradicated, the object to be obtained and

recognize the construction that would best effectuate those

standards.” Gartner v. Soloner, 384 F. 2d 348, 355 (3d Cir.

1967), cert. den., 390 U.S. 1040 (1968).

The overriding policy applicable to waste treatment

grants is to provide financial assistance “to construct pub-

lically owned waste treatment works” so as “to restore

and maintain the chemical, physical, and biological in-

*2 A Legislative History of the Water Pollution Control Act

Amendments of 1972, 1352-1353 (U.S. Government Printing Of-

fice, 1973).

be

1¹

tegrity of the Nation’s waters.” 33 U.S.C. §1251(a)(4);

see 33 U.S.C. $1281(g)(1). While a proportional system

of charges, 33 U.S.C. §1284(b)(1)(A), may be of some

help in the overall decontamination process, the baby

EPA and that is the 3 result of the Court of

Appeals’ decision in this case.

In most cases, the applicant and those who subscribe

to its services will voluntarily comply with grant von-

ditions, including the system of charges required by 33

U.S.C. 51284 (b) (1) (A), to obtain available federal fund-

ing. Here, however, a unique situation obtains. Mill-

town has pre-existing contractual rights and the appli-

cant—MCU A—has no power to compel Milltown to waive

those rights.

Surely, Congress did not intend to withhold financial

aid to MCUA in these circumstances and thereby to de-

feat the overriding objective of the act, namely, to get

waste treatment facilities built. The statutory construc-

tion that “would best effectuate” the Congressional pur-

pose is to read the words “within the applicant’s jurisdic-

tion” as excluding municipalities like Milltown that are

not within that jurisdiction.

B. Congressional intent.

Neither legislative history, see A Legislative History of

the Water Pollution Control Act Amendments of 1972

(U.S. Government Printing Office, 1973) (hereinafter “Leg-

islative History“), nor any other guides to Cmgressional

intent, confront and solve the precise problem before this

Court. Nevertheless, it is valuable to examine what evi-

33 U.S.C. §1284(b)(1)(A). In addition, there are these

1. Flexibility.

At the outset of the act, Congress articulated its policy

of shared federal-state responsibility :

“It is the policy of the Congress to recognize, pre-

serve, and protect the primary responsibilities and

rights of States to prevent, reduce, and eliminate

pollution, to plan the development and use . of

land and water resources, and to consult with the

Administrator in the exercise of his authority un-

der this chapter. It is the policy of Congress that

the States manage the construction grant program

under this chapter... .” 33 U.S.C. 51251 (b); em-

phasis added.

As with the legislation considered in Pennhurst, Congress

here contemplated “federal-state cooperative programs.”

Pennhurst State School v. Halderman, supra, 451 U.S.

at 11.

It is tor this reason that flexibility in implementation

of §1284(b)(1)(A) was emphasized in the legislative pro-

cess. For example (to quote a committee report), while

volume and character of each discharge were to be the

basis of rate determination [a]s a general rule,”

“[t]hese [EPA] guidelines [regulations] should take

into account the diversity of legal and financial

factors that exist from jurisdiction to jurisdiction,

and each applicant should be permitted reasonable

flexibility in the design of a system of user charges

that meets the unique requirements of his own jur-

isdiction.” 2 Legislative History, supra, 1352-1353;

emphasis added.

In quoting this committee report, which gave the “gen-

eral rule” and the flexibility exception, Senator Muskie

commented on the Senate floor :

“But the flexibility point is emphasized, and I think

should be, because we are trying to encourage ex-

periments and flexibility.” Jd. at 1353; emphasis

added.

And Senator Nelson replied:

“Mr. President, I thank the Senator. I had as-

sumed, from looking at the act, that that was the

intent, but I appreciate the clarification, so that the

legislative intent will be clear from our discussion

on the Senate floor.” Id. at 1353; emphasis added.

To the same effect, see 1 Legislative History 295; 2 Leg-

islative History 1446.

In the case at bar, the Court will discern absolutely no

regard by EPA, or by the Courts below, for the legislative

intent concerning flexibility that was to be “clear from

our discussion on the Senate floor.”* No consideration is

* The District Court’s discussion is superficial and unenlightening

(S19 F. Supp. at 883; Appendix 42a-43a), and the Court of

14

given to “the diversity of legal and financial factors” and

“the unique requirements” of the situation presented here.

Certainly, this legislative history does not bespeak Con-

gressional intent to ignore or violate the Milltown/New

Brunswick contract—an obviously “legal and finarcial”

factor, 2 Legislative History 1352-1353—or to overrule

state instrumentalities in their exercise of their “primary

responsibilities and rights.” 33 U.S.C. 51251 (b).

2. Self-sufficiency.

The charge system set forth in 33 U.S.C. §1284(b)(1)

(A) has one central objective. As stated on the floor of

the House of Reprsentatives, “[a]gain, I would like to

stress the aim in making user charges is to enable each

local system to achieve self-sufficiency.” 1 Legislative His-

tory 368. To the same effect, see 1 Legislature History 371;

2 Legislative History 1446.

Here, there is no evidence whatsoever that this objec-

tive will be compromised by honoring the Milltown/New

Brunswick contract. New Brunswick has fully paid MCUA

for every gallon of sewerage transmitted and there is no in-

dication that it cannot or will not continue to do so. The

lower Courts’ speculation that New Brunswick might “break

its contract with Milltown and cease paying for the costs

of treating Milltown’s wastes” (519 F. Supp. at 883; Ap-

pendix 42a and 24a n. 18) is patently lacking in reeord

support. Speculation is not a sound basis for judgment.

The aim of self-sufficiency is being achieved.

3. Another purpose?

Both lower Courts mistakenly assumed that one of the

original Congressional purposes in enacting the subject

15

legislation was to promote water conservation. 519 F.

Supp. at 883; Appendix 42a and 24a-25a. Based on that

assumption, the lower Courts believed that Milltown’s en-

actment of a user change would further the purpose of

the statute. But the assumption is not valid because the

legislative history is silent on the subject of conserva-

tion until five years later when (in 1977) Congress amend-

ed the Clean Water Act. S. Rep. No. 93-370, 95th Cong.,

Ist Sess. (1977), reprinted in 1977 U.S. Code Cong. Ad.

@ News 4326, 4352. The 1977 Senate Report states that

user charges were “originally proposed” to assure “that

each federally assisted facility would have adequate op-

eration and maintenance funds.” Id. at 4352. The Re-

port then indicates that: “Further examination of the

user charge concept revealed additional benefits.” Jd. The

conservation purpose is then mentioned as one of the

“additional benefits” discovered after enactment of the sta-

tute.

The 1977 commentary relied upon by the lower Courts

is not the legislative history of the 1972 statute in issue

here. “(T]he views of some Congressmen as to the con-

struction of a statute adopted years before by another

Congress have ‘very little, if any, significance.’ [Citations

omitted.])” United States v. Clark, 445 U.S. 23, 33 at

n. 9 (1980). As the Fifth Cireuit put it:

“The retroactive wisdom provided by the subse-

quent speech of a member of Congress stating that

yesterday we meant something that we did not say

is an ephemeral guide to history. What hap-

pened after a statute was enacted may be history

and it may come from members of the Congress,

but it is not part of the legislative history of the

original enactment.

16

“Had this statement been made in the report of

the Committee that recommended the legislation, it

would indeed be part of the statutory history. When

uttered five years later it is mere commentary.”

Rogers v. Frito-Lay, Inc., 611 F.2d 1074, 1080, 1082

(5th Cir.), cert. den., 449 U.S. 889 (1980).

Moreover, the 1977 amendments permit user charges to

be based on ad valorem taxes or flat fees which, unlike

metering, are not directly related to the use of water.

Thus, despite lip service to water conservation in the

legislative history of the 1977 amendments, the amend-

ments themselves are contrary to that assumed objective.

Finally, there is no evidence in the record regarding

any water conservation issue in this case. The Courts

below speculate, but no proofs support their speculation.

The lower Courts’ “conservation” rationale is more make-

weight than meritorious.“

In summary, to the extent that Congressional intent

ean be gleaned from legislative history, the clearest in-

dication is that flexibility was the goal and unique legal

and financial factors, such as those presented by the Mill-

town/New Brunswick contract, were to receive respect.

To require Milltown to enact a user charge does not

further the expressed Congressional objective that the

EPA should cause waste treatment plants to be built,

and such a requirement is also contrary to the expressed

Congressional prescription that the EPA, in carrying out

the Congressional mandate, should be flexible in design-

ing user charge systems and accommodate the unique legal

and financial characteristics of each jurisdiction.

17

POINT III

The Ninth Circuit’s decision in Hotel Emp. Ass’n of

San Francisco v. Gorsuch, 669 F.2d 1305 (9th Cir.

1982), correctly construed the Congressional intent

underlying 33 U.S.C. 51284 (b) (1) as requiring toler-

ance of local variations in user charge systems. The

conflicting decision of the Third Circuit in this case

should be reversed.

In Hotel Emp. Ass’n of San Francisco v. Gorsuch,

supra, the Ninth Cireuit Court of Appeals construed 33

U.S.C. §1284(b)(1)(A) and the legislative history of that

statuie and reached a conclusion as to the Congressional

intent which is the opposite of that reached by the Third

Cireuit in this case. It is Milltown’s position that the

Ninth Cireuit is correct, and the conflicting decision of

the Third Circuit below should be reversed.

In the Ninth Cireuit case the plaintiff challenged the

EPA’s approval of a user charge system. The system

charged costs in accordance with sewage flow (based on

water consumption) and sewage strength (based on cate-

gories of users). While the system was rational, it did

not adjust for the fact that sanitary and storm sewage

were treated together. Thirty five percent of operating

and maintenance costs reflected surface runoff, yet runoff

depends upon acreage, not water consumption or sewage

strength. Thus, the user charge system nowhere neared

true proportionaiity.

The Ninth Circuit affirmed the District Court’s ruling

that

“the section’s legislative history suggests that Con-

gress did not intend to impose an ‘absolute propor-

tionality’ requirement and meant to require ‘only

5

18

proportionality which is generally equitable’. . .

[P]roportionality, while a general requirement, was

not a primary motivation for the enactment of the

user fee requirement. . 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.” 669 F.2d at

1308.

In conclusion, the Ninth Circuit again stressed “the im-

portance Congress placed upon giving localities flexibility

in designing user fee systems” and held:

“The legislative history’s emphasis upon local flex-

ibility, however, persuades us against narrowly in-

terpreting Section 204(b)(1) [§1284(b)(1)] to re-

quire localities to apportion treatment costs with

exacting mathematical precision.” 669 F.2d at 1309.

By way of support, the Ninth Cireuit quoted (Id. at n. 6)

the same legislative history language quoted in this peti-

tion’s discussion of flexibility. (Above p. 13).

The Third Cireuit decision below takes the opposite

approach to the subject statute. Instead of honoring the

Congressional objective of flexibility, the Third Cireuit

reads the statute narrowly and rigidly as requiring par-

ticipation by each municipal user. The Third Cireuit

ignores the unique contractual arrangement between Mill-

town and New Brunswick.

The Ninth Cireuit's construction of the statute carries

out the will of Congress and should be followed. The

conflicting approach of the Third Circuit should be re-

jected.

19

POINT IV

The Courts below erred in according full deference

to the EPA where its statutory jurisdiction was at issue

and technical expertise was not involved.

Milltown’s position is that both Courts below erred in

according full deference to the EPA’s interpretation of

the statute in question. When, as here, the issue involves

the statutory jurisdiction of an agency, deference to the

agency’s own interpretation of the statute should not

play a major part in the analysis.

In such circumstances, the Third Circuit had previously

detined its scope of review as necessarily entailing “a first-

hand judicial comparison of the claimed excessive action

with the pertinent statutory authority.” Western Union

Tel. Co. v. F.C. C., 541 F.2d 346, 354 (3d Cir. 1976), cert.

den., 429 U.S. 1092 (1977). The Court should itself ex-

amine “the entire statutory scheme and the legislative

history” and accord deference to the agency’s interpre-

tation of the Act only if that interpretation is “more

reasonable”. American Iron and Steel Institute v. E.P.A.,

526 F.2d 1027, 1037, 1042 (3d Cir. 1975), modified on other

grounds, 560 F.2d 589 (3d Cir. 1977), cert. den., 435 U.S.

914 (1978). Thus, to quote this Court:

“An agency may not finally decide the limits of

its statutory power. That is a judicial function.”

Social Security Board v. Nierotko, 327 U.S. 358, 369

(1946).

Although no evidence of long-standing administrative

construction was adduced in this case—the regulations do

not expressly deal with the present situation—it is ap-

propriate to note that even in that event “an agency may

5

not bootstrap itself into an area in which it has no juris-

dietion by repeatedly violating its statutory mandate.“

Federal Maritime Commission v. Seatrain Lines, 411 U.S.

726, 745 (1973); accord, SEC v. Sioan, 436 U.S. 103, 118-

119 (1978).

In short, “[a]n agency can neither create nor lawfully

expand its jurisdicti. by merely deciding what it thinks

the future should be like. . . and “the public interest is

not served by agency actions beyond their jurisdiction.”

Midwest Video Corp. v. F. C. C., 571 F.2d 1025, 1045 (8th

Cir. 1978), aff’d, 440 U.S. 689 (1979).

POINT V

The Third Circuit’s construction of 33 U.S.C. §1284

(b) (1) (A) derogates from Milltown’s substantial con-

tractual rights and thus creates a contract impairment/

due process issue. The Third Cireuit's decision should

be reversed to avoid that result.

This is a statutory construction argument that Milltown

wishes to preserve, but concedes is not a proper basis

for certiorari in its own right.

The point is that the impact of the administrative and

judicial decisions below derogates from Milltown’s „sub-

stantial contractual rights,” Home Building & Loan As-

sociation v. Blaisdell, 290 U.S. 398, 431 (1934); see

Lynch v. United States, 292 U.S. 571 (1934); and that this

impact could have been avoided—and should have been—

by construing 33 U.S.C. §1284(b)(1)(A) as Milltown sug-

gests. See United States v. Clark, 445 U.S. 23, 27 (1980).

The point can be developed if certiorari is granted.

21

POINT VI

Certiorari should be granted.

There is substantial error below. In addition, there

are these reasons why certiorari should be granted:

1. This Court has not construed the federal statutory

section in question here, nor any similar legislation. A

decision on the merits will have nationwide impact on

how the EPA deals with unique local requirements in

this major grant program.

2. A significant federal effort to fund sewage treat-

ment systems and ameliorate water pollution in urban/

industrial areas like New Jersey may well be thwarted by

the rigidly unrealistic and legally erroneous construction

of 33 U.S.C. §1284(b)(1)(A) adopted by the Courts

below. Congressional intent in a critical area will be

frustrated absent intervention by this Court.

3. The authority of federal administrative agencies to

reguate via grant conditions derives from Congressional

exercise of constitutionally delegated spending powers.

U.S. Const., Art. I, §8, cl. 1. This Court commenced defini-

tion of the reach of grant-conditioning regulatory powers

in an important decision last year. Pennhurst State School

v. Halderman, 451 U.S. 1 (1981). The conduct of EPA,

the judicial acquiescence in that conduct, the circumstances

of this case, and the pervasiveness of federal grant pro-

grams, strongly demonstrate the need for further deline-

ation here.

4. The Third and Ninth Circuits are in conflict in their

interpretation of Congressional intent regarding the stat-

ute at issue here. The Third Circuit’s attempt to recon-

eile divergent judicial philosophies by a footnote (Appen-

dix 22a-23a, n. 17) is superficial in the extreme. The foot-

22

note accurately states that both decisions approve EPA

action, but the substance of what was approved and the

principles advanced are clearly in conflict.

5. It is time for this Court to sharply draw the line

between areas of administrative expertise and those in

which the courts are competent. There are parallel and con-

flicting lines of precedents “with the result that a court

of appeals must choose the one it deems more appropriate

for the case at hand.” Pittston Stevedoring Corp. v. Della-

ventura, 544 F.2d 35, 49 (2d Cir. 1976) (Friendly, J.), af d

sub nom., Northeast Marine Terminal Co. v. Caputo, 432

U.S. 249 (1977). This Court should curtail rubberstamp

deference where, as here, the questions presented are mat-

ters of statutory construction, not technical expertise, and

where the issue is the statutory jurisdiction of the agency

itself.

CONCLUSION

For the reasons stated in Poi t VI, and because of

the errors below (Points I through V), Milltown urges

that certiorari be granted.

Respectfully submitted,

Arnotp K. Myrerxa,

Counsel of Record for Vetitioner,

Borough of Milltown.

Crarp & Eisenserc,

A Professional Corporation,

Attorneys for Petitioner,

Borough of Milltown.

Rocer S. Crapp,

Rosert S. Seurx,

Of Counsel.