On Appeal From The United States District Court for the District of New Jersey.
Gibbons and Hunter, Circuit Judges, and Pollak,*fn* District Judge.
The Middlesex County Utilities Authority ("MCUA") is a public body established, pursuant to New Jersey law, by the Board of Freeholders of Middlesex County.*fn1 In 1954, MCUA entered into an Agreement with twenty-four municipalities and several industrial enterprises in Middlesex, Somerset and Union Counties, pursuant to which MCUA undertook to build and operate a trunk sewer system together with a sewage disposal plant to be located at Sayreville. With the adoption in 1972 of the Federal Water Pollution Control Act, more commonly known as the "Clean Water Act," MCUA, like other public sewage treatment systems, became subject to comprehensive federal legislative prohibitions on discharging pollutants into waterways -- prohibitions which, together with those applicable to private pollution sources, are intended to "restore and maintain the chemical, physical, and biological integrity of the Nation's waters." 33 U.S.C. § 1251(a).
By 1975, it was apparent to MCUA that it would have to expand and modernize its trunk system and the Sayreville facility. To accomplish this, MCUA decided to apply to the Environmental Protection Agency (EPA) for a construction grant pursuant to Title II of the Clean Water Act, which, with a view to helping public sewage treatment systems achieve compliance with federal anti-pollution standards, authorizes the EPA Administrator to fund up to 75% of the cost of building or improving sewage systems. As a predicate for applying for a grant, MCUA and its customer municipalities and industries entered into a Supplemental Agreement amending the 1954 Agreement in the respects necessary "to obtain grants for the construction of wastewater facilities." Supplemental Agreement, p.2. Among the amendments were a provision that "the Authority and each Municipality represents and agrees that it will adopt a system of user charges . . . . which, at a minimum, complies with the rules and regulations of the EPA," and a companion provision obligating each municipality to "secure passage of a sewer use ordinance or resolution." Supplemental Agreement, pp. 4 and 5. These undertakings were intended to meet the directive of Section 204(b) (1) of the Clean Water Act that:
In 1976, the Administrator approved MCUA's grant application, thereby committing EPA to pay 75% of the multi-million dollar sewage treatment improvement project. But four years later, after having advanced 80% of the promised federal funds, EPA suspended further payments. The reason for the suspension was that Milltown and Sayreville had not adopted ordinances providing for user charges. The suspension triggered two law suits, of which this is the second.
The first law suit involved Milltown. Milltown is a municipality whose sewage is handled by MCUA but which is not a signatory to the 1954 Agreement or the 1975 Supplemental Agreement. The explanation for this apparent paradox traces to the fact that Milltown has, since 1914, had a contract with its larger neighbor, New Brunswick, under which the latter has seen to the collection and disposal of Milltown's sewage. Since the 'fifties, New Brunswick, a signatory of both MCUA agreements, has paid for MCUA's treatment and disposal of both New Brunswick's and Milltown's sewage. Because Milltown is not a signatory of the MCUA Agreements, it did not regard itself as bound by the provisions of the Supplemental Agreement calling for adoption and implementation of a user charge ordinance. But EPA took the position that Milltown is a "recipient of waste treatment services" within the meaning of Section 204(b) (1) of the Clean Water Act and hence obliged to put a user charge system into effect. MCUA and Milltown not only challenged EPA's reading of the statute but argued that the statute so read would work an unconstitutional impairment of Milltown's 1914 contract with New Brunswick. Judge Debevoise rejected these contentions. City of New Brunswick v. Borough of Milltown, 519 F. Supp. 878 (D.N.J. 1981). And this court, speaking through Judge Garth, affirmed. City of New Brunswick v. Borough of Milltown, 686 F.2d 120 (3rd Cir. 1982).
The second law suit -- this one -- involves Sayreville. Sayreville is a signatory to the 1954 and 1975 Agreements. In February of 1981, MCUA brought an action against Sayreville and the members of the Sayreville Borough Council in the New Jersey Superior Court, seeking to mandamus the defendants to adopt a sewer use ordinance in fulfillment of Sayreville's 1975 commitment to do so. Sayreville impleaded Attorney General Smith, EPA Administrator Douglas M. Costle, and various subordinate officers of EPA and the Department of Justice, alleging, evidently in reliance on the Tenth Amendment, that EPA in promulgating rules enforcing the user charge system requirement "usurped the powers and perogatives [sic] not only of the United States Congress but also of the individual sovereign states and the political subdivisions thereof . . . .," and seeking damages or, in the alternative, "a declaration of the invalidity of the [EPA] rules . . . ." The federal defendants thereupon removed the litigation to the district court and moved for summary judgment dismissing the third-party complaint and declaring the validity of Section 204(b) (1) and its attendant regulations. MCUA moved for summary judgment against Sayreville. On December 1, 1981, Judge Debevoise entered an order which gave effect to a bench opinion delivered on November 16, 1981.*fn3 The order dismissed Sayreville's third-party complaint; declared that Section 204(b) (1) and the challenged regulations "are lawful and valid and authorize EPA to condition its award to MCUA of grant funds under Title II of the Clean Water Act . . . . upon the requirement that MCUA assure that Sayreville adopt a system of sewer user charges . . . .;" and, without ruling on MCUA's motion for summary judgment, remanded the balance of the case to the Superior Court.
On this appeal, Sayreville continues to press its claim that Congress by statute*fn4 and EPA by regulation*fn5 have breached the Tenth Amendment by conditioning the MCUA construction grant on MCUA's implementation of an undertaking to put into force a user charge system -- i.e., a system of charges which, in the words of Section 204(b) (1), is designed "to assure that each recipient of waste treatment services within the applicant's jurisdiction . . . . will pay its proportionate share . . . . of the costs of operation and maintenance (including replacement) of any waste treatment services provided by the applicant . . . ." In Sayreville's view, a grant so conditioned is calculated to coerce Sayreville to introduce a superfluous tax rather than pay its share of MCUA's services out of its happily sufficient general revenues. To force Sayreville to adopt an uncongenial tax is, Sayreville submits, in contravention of Sayreville's slice of New Jersey's sovereignty.
We note in passing that MCUA -- the public body to whom the federal grant was made, on whom the condition was imposed, and from whom federal funds are now being withheld -- has not raised a Tenth Amendment claim on its own or even acquiesced in the claim advanced by Sayreville.*fn6 Whether or not MCUA would have had standing to raise this Tenth Amendment claim, we are satisfied that Sayreville -- the municipality whose revenue system EPA seeks to modify through enforcement of the condition -- does have the requisite standing. Accordingly, we turn to the merits of the claim. This necessitates a consideration of what Congress intended the challenged condition to accomplish, and -- in the light of Congress' purposes -- the degree to which the congressional constraint would curtail fulfillment of those central values of statehood vindicated in National League of Cities v. Usery, 426 U.S. 833, 49 L. Ed. 2d 245, 96 S. Ct. 2465 (1976).
The purposes subserved by the challenged condition are not obscure. Judge Debevoise in City of New Brunswick v. Borough of Milltown, supra, 519 F. Supp. at 883, found that his "interpretation of the [Clean Water] Act's user charge requirements and its implementing regulations [was] consistent with the underlying purposes and policies of the Act" for the following reasons:
Legislative history reveals that Congress' purpose in providing for a user charge system was twofold: first, it was enacted "as a means of assuring that each federally assisted facility would have adequate operation and maintenance funds", and, second, the system was intended to be "a positive force in encouraging more efficient management of wastes discharged through a municipal system as well as an economic inducement to reduce excessive ...