The opinion of the court was delivered by: NEWCOMER
The powers of the Commission, which are in issue here, extend generally throughout a 12,765 square mile area from the headwaters of the Delaware River in New York's Catskill mountains to the Delaware Bay. The Commission has the power to set the amount of water which each community may take from the River, subject only to the shares already enjoyed by some communities under the Supreme Court decrees predating the Compact, and has engaged in projects to improve the quantity and quality of the common water supply. Among these projects have been the construction of two reservoirs -- the Blue Marsh Reservoir and the Beltzville Reservoir -- to increase the Basin's stored water supply. The Commission did not actually construct these reservoirs but contracted
with the U.S. Army Corps of Engineers to repay the federal government for the costs of including water storage among the capabilities of the two reservoirs. To meet these contractual obligations the Commission adopted the water use charges which are in dispute here.
By a resolution dated May 22, 1974 (hereinafter "Resolution 74-6"), the Commission for the first time imposed charges for the use of the surface waters of the Delaware. The financial obligations incurred by the Commission had previously been met from the general revenues of the member states. Resolution 74-6, which established the relatively nominal rate of $.04 per thousand gallons for consumptive use and $.04 per thousand gallons for non-consumptive use, represented the culmination of ten years of Commission staff studies and public hearings on the issue of how the costs of storing water in the reservoirs should best be met. The compromise embodied in Resolution 74-6 was that part of these costs should be financed from the signatory states' tax revenues and part from charges levied on the individual users of the river's waters. The theory behind the user charges was that the River Basin should be seen as one pool of water which each user benefiting from the enlargement of the pool's water supply regardless of whether the water stored in the reservoirs directly benefit the user. In explaining the "pooled water" concept, the Commission stated:
"All users benefit from a regulated pool of water. In this case, the pool is defined as the Delaware River Basin System. As water seeks its level over its entire surface, benefits tend to diffuse to users of water resources throughout the entire pool service area. So long as a reservoir, regardless of its location, contributes to the entire pool, at a justified cost, and so long as users are dependent upon the pool for their supply, benefits accrue to users at least to the extent of their alternative cost of providing the service they enjoy from the pool." Notice to Interested Parties, Water Supply Pricing Hearing Issues, Part II, pp. 4-7.
According to this concept, the upriver user pays towards a downriver reservoir in lieu of replacing the water which it takes from the River.
Plaintiffs herein are seven Pennsylvania municipalities who use the water from the Delaware River and who will have to pay charges for this water under Resolution 74-6. Plaintiffs claim that by imposing the water charges the Commission exceeded its authority under the Compact, violated several sections of the Compact, and violated the Water Supply Act of 1958. The basic premise underlying these challenges is that the Commission is required by the Compact and the 1958 Act to relate any costs charged to a user for a project to the benefits that user derives from it, and that plaintiffs, all of whom lie upriver from the Reservoirs, derive no benefit from the increased storage capacity. Plaintiffs also contend that by adopting the charges without first issuing an environmental impact statement the Commission violated the National Environmental Policy Act of 1969 (hereinafter "NEPA").
I. Commission's Authority to Impose Charges.
The Commission argues that the power to impose charges for water can be derived from any of the following sections of the Compact:
i. Section 3.3, empowering the Commission to allocate waters among the signatory states and their political subdivisions "in accordance with the doctrine of equitable apportionment." This section expressly authorizes the Commission to "impose conditions, obligations and release requirements related [to water allocation]", subject to the rights of the signatory parties under the Supreme Court's decree in New York v. New Jersey, 347 U.S. 995, 98 L. Ed. 1127, 74 S. Ct. 842 (1954). (Emphasis added);
ii. Section 3.7, permitting the Commission to fix "rates, rentals, charges, and tolls and classifications thereof, for the use of facilities which it may own or operate and for products and services rendered thereby . . .";
iii. Section 4.1, conferring upon the Commission the power to "develop, implement and effectuate plans and projects for the use of the water of the basin. . . .";
iv. Section 3.6(h), which allows the Commission to "exercise such other and different powers . . . necessary or convenient to carry out its express powers or which may be reasonably implied therefrom."
Before discussing these manifold and apparently overlapping sections, it should be noted that the Compact expressly authorizes the Commission to "acquire, operate, and control projects and facilities for the storage and release of waters . . ." Compact, Section 4.2(a). The Commission is not expressly invested with the power to fix charges by the section dealing with water storage, but rather arguably derives this power from the Compact sections cited in the paragraphs above.
Plaintiffs' attack on the validity of Resolution 74-6 under the Compact centers on its exemption of certain users from the obligation to pay the rates, at least until that user consumes more than a minimum level set by the Commission.