City of Highland Park, Mich. v. EPA

Court of Appeals for the Sixth Circuit·Decided May 18, 2020·No. 19-1979·Unpublished

Opinion

NOT RECOMMENDED FOR PUBLICATION File Name: 20a0279n.06

Nos. 19-1979/1981

UNITED STATES COURT OF APPEALS FOR THE SIXTH CIRCUIT

CITY OF HIGHLAND PARK, MICHIGAN, ) FILED ) May 18, 2020 Plaintiff-Appellant, ) DEBORAH S. HUNT, Clerk ) v. ) ENVIRONMENTAL PROTECTION AGENCY, ) ) Defendant, ON APPEAL FROM THE ) UNITED STATES DISTRICT ) GREAT LAKES WATER AUTHORITY and COURT FOR THE EASTERN ) SUSAN MCCORMICK (19-1979); CITY OF DISTRICT OF MICHIGAN ) DETROIT, MICHIGAN, DETROIT WATER AND ) SEWERAGE DEPARTMENT, and GREAT ) LAKES WATER AUTHORITY (19-1981), ) Defendants - Appellees. )

Before: BOGGS, GRIFFIN, and LARSEN, Circuit Judges.

LARSEN, Circuit Judge. Like many small municipalities, the City of Highland Park relies

on others to treat its wastewater. For many years Highland Park contracted with the City of Detroit

and Detroit Water and Sewerage Department (DWSD) for wastewater treatment; now it relies on

the Great Lakes Water Authority (GLWA). These relationships have produced extensive

litigation; the present suits are the latest rounds. In both lawsuits, Highland Park complains that it

was charged too much for water and wastewater treatment. In the first case (Docket No. 19-1979),

Highland Park sued GLWA, GLWA’s CEO Sue McCormick, the EPA, and other entities and

individuals, raising twelve claims in total. The district court dismissed them all. Highland Park

now hopes to resurrect only one—a claim against GLWA and McCormick for violation of a Nos. 19-1979/1981, City of Highland Park v. EPA, et al.

National Pollutant Discharge Elimination System (NPDES) permit. In the second case (Docket

No. 19-1981), Highland Park sued Detroit, DWSD, and GLWA, raising claims for breach of

contract and declaratory relief. The district court dismissed those claims too. Highland Park

appeals only the dismissal of the breach-of-contract claim. We conclude that the district court

correctly dismissed Highland Park’s claim based on the NPDES permit in Docket No. 19-1979

and the breach-of-contract claim in Docket No. 19-1981. Accordingly, we AFFIRM.

I.

Although Highland Park owns and operates a system to collect sanitary sewage and

stormwater (wastewater) within its city limits, it does not operate a treatment facility. In the past,

Detroit and DWSD provided treatment services to Highland Park, pursuant to a contract formed

in 1983 (1983 Contract). In 2015, however, Detroit leased its treatment system to GLWA and, in

the process, assigned any contracts with Highland Park to GLWA. Highland Park’s sewage and

stormwater system is connected to GLWA’s treatment system, and all wastewater generated in

Highland Park now goes through GLWA’s treatment facility.

Not surprisingly, the operation of a treatment facility is highly regulated. To provide

stormwater treatment services, DWSD was required to obtain an NPDES permit from the State of

Michigan Department of Environment Quality.1 It did so, and its Permit took effect on May 1,

2013. GLWA became a co-permittee when it leased Detroit’s treatment facility. The Permit

governs GLWA’s operation of its treatment facilities and sets forth numerous requirements, many

1 Although “[t]he United States Environmental Protection Agency (EPA) is principally responsible for administering the NPDES permit system, . . . it may lawfully delegate permit issuing authority to state government.” Nat’l Wildlife Fed’n v. Consumers Power Co., 862 F.2d 580, 582 (6th Cir. 1988). The EPA delegated its authority to the State of Michigan in 1974. See Approval of State Programs, 39 Fed. Reg. 26,061 (July 16, 1974).

-2- Nos. 19-1979/1981, City of Highland Park v. EPA, et al.

related to combined sewer overflows (CSOs).2 The EPA also regulates treatment facilities through

various other policies and guidance documents. Three are relevant here: the CSO Control Policy,

Guidance for Financial Capability Assessment and Schedule Development (Financial Capability

Guidance), and Guidance for Funding Options (Funding Options Guidance).

Beyond the various regulations, policies, and guidance documents, a host of contracts and

judgments govern the parties’ relationship. Long before Detroit leased its system to GLWA,

Detroit twice sued Highland Park over Highland Park’s failure to pay Detroit for sewer services;

Highland Park’s failure to adequately charge its residents for sewer services contributed to its

shortfall on its payments to Detroit. Detroit received money judgments against Highland Park in

both cases, but the parties settled the cases while Highland Park’s appeals were pending. The

resulting settlement agreement (the 1996 Settlement Agreement) set terms to ensure Highland Park

would charge and collect from its customers, so that, in turn, Highland Park would pay for Detroit’s

services. At the same time, the parties entered into an Amended Consent Judgment, which

encapsulated many of the terms from the 1996 Settlement Agreement and explained how Highland

Park would pay the arrearages it owed Detroit.

In 2013, Detroit again sued Highland Park in federal district court, once again alleging that

Highland Park had failed to fully and timely pay for Detroit’s treatment services. After the district

court dismissed various claims, only a claim that Highland Park had breached the Amended

Consent Judgment remained. The district court later dismissed that claim too, concluding that it

lacked subject-matter jurisdiction. The court acknowledged that the parties had entered into

various oral and written agreements since the Amended Consent Judgment. And the Amended

2 The defendants explain, “A CSO occurs when a combination of stormwater and wastewater is discharged directly into a body of navigable water without treatment.” Docket No. 19-1978, Appellees Br. at 7. -3- Nos. 19-1979/1981, City of Highland Park v. EPA, et al.

Consent Judgment did not provide “for federal court jurisdiction over any future billing disputes

that may arise between the parties.” According to the court, construing the Amended Consent

Judgment in that manner “would be to provide, in perpetuity, a federal-court forum for garden-

variety, state-law breach of contract claims.”

Detroit then took its grievance to Michigan circuit court and obtained a judgment against

Highland Park for nearly $20 million in unpaid wastewater-treatment charges and water-supply

services. The circuit court concluded that Highland Park had breached various agreements.

Highland Park’s appeals from the judgment failed in both the Michigan Court of Appeals and the

Michigan Supreme Court. Nonetheless, on return to the state circuit court, the court allowed

Highland Park to proceed on a counterclaim as a potential setoff to the judgment. The

counterclaim, which remains pending, alleged that the 1996 Settlement Agreement and Amended

Consent Judgment remain in effect and prescribe the rates Detroit may charge for its services. The

counterclaim also sought a declaration that Detroit had overcharged for its services.3

Docket No. 19-1979 – Clean Water Act Claim

Litigation in state court was not enough. Highland Park also sued GLWA, McCormick,4

and other individuals and entities, including the EPA, in federal court for violations of the Clean

Water Act (Docket No. 19-1979). Highland Park raised twelve claims, all of which the district

court dismissed.

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