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DELAWARE RIVER BASIN COMMN. v. BUCKS CTY. WATER &

July 27, 1979

Delaware River Basin Commission
v.
Bucks County Water and Sewer Authority and City of Philadelphia.



The opinion of the court was delivered by: POLLAK

Plaintiff Delaware River Basin Commission (hereinafter, "Commission") is suing Bucks County Water and Sewer Authority (hereinafter, "BWSA") and the City of Philadelphia to impose its charges for water drawn from the Delaware River by Philadelphia and sold to BWSA. Philadelphia has cross-claimed against BWSA for indemnification if it is held liable to the Commission. The Commission has moved for summary judgment against Philadelphia and BWSA, which in turn have cross-moved for summary judgment against the Commission. *fn1"

I.

 The Commission is an interstate body established under the Delaware River Basin Compact, an interstate compact entered into by New York, New Jersey, Pennsylvania, Delaware, and the United States, and ratified by Congress (75 Stat. 688) pursuant to the Compact Clause of the Constitution, Article I, § 10. The Compact, codified in Pennsylvania at 32 P.S. § 815.101, became effective in 1961. The purpose of the Compact is the management and conservation of water from the Delaware River Basin (the Delaware River and its tributaries).

 The Compact authorizes the Commission to impose charges for the use of facilities it owns and operates. Compact § 3.7; 32 P.S. § 815.101(3.7). The Commission may not charge, however, for any water withdrawn from the Basin if the withdrawal "could lawfully have been made without charge on the effective date of the Compact . . . ." Compact § 15.1(b). *fn2" In 1971, the Commission passed Resolution 71-4, authorizing charges for the use of water from the Delaware River Basin. In 1974, the Commission passed Resolution 74-6, Section 5.1-2 of which provides that a charge for water shall be levied against "(a)ny person, firm, corporation or other entity, including a public corporation, body or agency, who shall use, withdraw or divert surface waters of the (Delaware River) basin." *fn3" Exempted from these charges are those who use, withdraw or divert water "in quantities not exceeding the legal entitlement of the user, determined as of (the effective date of the Compact)." Resolution 74-6, § 5-1.3(a). Section 5-1.3(b)(1) defines "legal entitlement" in the following manner:

 
1. "Legal entitlement" means the quantity or volume of water expressed in million gallons per month determined by the lesser of the following conditions:
 
(i) a valid and subsisting permit, issued under the authority of one of the signatory parties, if such permit was required as of October 27, 1961, or thereafter;
 
(ii) physical capability as required for such taking; or
 
(iii) the total allocable flow without augmentation by the Commission, using a seven-day, ten-year, low-flow criterion measured at the point of withdrawal or diversion. *fn4"
 
In 1966, BWSA and the City of Philadelphia signed an agreement under which Philadelphia was to provide BWSA with 35,000,000 gallons of water per day. *fn6" This agreement, made before the Commission began charging for water drawn from the Basin, was submitted to the Commission for approval under Section 3.8 of the Compact, 32 P.S. § 815.101(3.8), requiring Commission approval of water projects having "a substantial effect on the water resources of the basin." The Commission's executive director, James F. Wright, responded by letter that no approval was needed under Section 3.8 of the Compact. Philadelphia began delivering water to BWSA in 1970, and has done so continuously since that date, while receiving a stipulated payment.
 
In late 1976 and early 1977, the Commission wrote to Philadelphia and to BWSA, (a) stating that BWSA had no legal entitlement to any water from the Basin free of the Commission charge, and (b) requesting that Philadelphia or BWSA remit money owed to the Commission under Resolution 74-6 for the water withdrawn by Philadelphia for BWSA's use. Philadelphia responded that the Commission should pursue BWSA, which was actually receiving the water, and that Philadelphia did not wish to act as a "collection agency" for the Commission. BWSA responded that it owed no money to the Commission, because it was buying water from Philadelphia that Philadelphia had been legally entitled to draw from the Basin free of charge on the effective date of the Compact. The Commission then brought this law suit. The Commission moves for summary judgment, arguing that both defendants are liable to the Commission for the water taken by Philadelphia and sold to BWSA, in that (a) within the meaning of Section 5-1.2 of Resolution 74-6, both defendants "use, withdraw or divert" Delaware River water, and (b) within the meaning of Section 5-1.3 of the Resolution, defendants fell without "the legal entitlement of the user . . ." and hence do not qualify for the exemption from the Commission's water charges mandated by the Compact.
 
II.
 
A.
 
The first question to be considered is whether the City of Philadelphia and BWSA "use, withdraw or divert" waters from the Delaware River Basin within the meaning of Section 5.1-2 of Resolution 74-6, supra, and Section 5.4-1(b), Supra note 3. Neither defendant, however, seriously contends that it falls without these provisions. In appropriating water from the Delaware River under its contract with BWSA, Philadelphia "withdraws" and "diverts" those waters within the ordinary meaning of those words. *fn7" ...

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