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Court of Appeals for the Sixth Circuit·Decided May 18, 2020·No. 19-1979·Unpublished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NOT RECOMMENDED FOR PUBLICATION File Name: 20a0279n.06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

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).

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.

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. Only one matters for this appeal, however, as Highland Park challenges only the district court’s decision to dismiss Count Nine of its First Amended Complaint, in which Highland Park brought a citizen suit under the Clean Water Act against GLWA for allegedly violating the

3 According to the defendants, “[t]he counterclaim has since been amended, but these basic claims remain, although now primarily against GLWA rather than [Detroit].” Docket No. 19-1981, Appellees Br. at 15 n.8. 4 The parties treat GLWA and McCormick as one for the purposes of this appeal. We do the same, using “GLWA” to refer to both GLWA and McCormick when discussing Docket No. 19-1979.

Permit. See 33 U.S.C. § 1365(a). Highland Park alleged that a variety of GLWA actions had violated the Permit by failing to comply with the CSO Control Policy, the Financial Capability Guidance, or the Funding Options Guidance.

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