Transcript Religion and Regulation

The Duty To Serve
The Obligation of the
Community & State to Serve Its
Residents
Overview
If a city creates a utility district, does it actually
have an obligation to serve all residents in the
district?
Can a utility district force its services on the
residents?
Robinson V Boulder, 1976
Appellees (landowners) sought to subdivide
approximately 79 acres of land in the Gunbarrel Hill area
northeast of Boulder and outside of its city limits. The
landowners proposed a residential development in
conformity with its county rural residential (RR) zoning.
CITY OF
BOULDER
Gunbarrel Hill
Subdivision
Actions
Boulder County, before it would grant
final approval to Gunbarrel Hill, requires
the developer to seek sewer and water
services from the City of Boulder
Boulder operates a water and sewer
utility system. In the mid 1960's it
defined an area beyond its corporate
limits, including the subject property, for
which it intended to be the only water
and sewer servicing agency.
Boulder contracted with and provided
water and sewer service to the Boulder
Valley Water and Sanitation District
which is located within the service area.
Gunbarrel Hill is immediately adjacent to
the district boundaries, but is still within
the district
The District & The Plan Area
Gunbarrel Hill
Subdivision
CITY OF
BOULDER
Boulder Valley
Water and
Sanitation
District
Gunbarrel Hill is Shot Down
The landowners apply to the district for inclusion, and
the application was approved by the District however,
Boulder disapproved the action on the grounds that the
landowners' proposal was inconsistent with the Boulder
Valley Comprehensive Plan and various aspects of the
city's interim growth policy.
The owners of Gunbarrell Hill file suit with the district
court on the basis that Boulder, who controlled the sewer
and water district, had a duty to serve all seekers if they
met the utility standards
The Trial Court
In terms of supplying water and sewer services, it must
treat all members of the public within its franchise area
alike -- including these landowners. The court held that
Boulder had unjustly discriminated against Gunbarrel Hill
by denying them service, while having previously
approved service extensions to neighboring residential
and industrial developments
The court concluded that Boulder can only refuse to
extend its service to landowners for utility-related
reasons. Growth control and land use planning
considerations do not suffice.
Boulder Appeals
On appeal Boulder argues that its service program is not a
public utility
Boulder contends that it has never held itself out as being ready
to serve all members of the public to the extent of its capacity
Boulder argues that its decision to deny the extension of
services to the landowners in this case was based on the
proposed development's noncompliance with growth projections
outlined in the comprehensive plan. In the event of an alleged
conflict between Boulder's public utility and land use planning
duties the master plan should rule and be controlling
The Appeals Court Finds That:
Boulder's total control and dominance as the exclusive
water and sewer servicing agency in the Gunbarrel area
is demonstrated by the fact that Boulder County
planning authorities, routinely and in compliance with
the city's agreement, refer area landowners in need of
such services to Boulder
The course of conduct followed by Boulder in providing
water and sewer services to this area indicates that it
has held itself out to be the one and only such servicing
agency in the Gunbarrel area.
Conclusion
The Court holds that Boulder is the sole and exclusive
provider of water and sewer services in the area
surrounding the subject property, it is a public utility. As
such, it holds itself out as ready and able to serve those
in the territory who require the service.
There is no utility related reason, such as insufficient
water, preventing it from extending these services to the
landowners. Unless such reasons exist, Boulder cannot
refuse to serve the people in the subject area.
Dateline Builders v City of Santa
Rosa, 1983
Dateline Builders held an option on a parcel of
real property located beyond the limits of the
city boundary, on Todd Road in an undeveloped
rural area known as the Santa Rosa Plain.
Todd Road
City of
Santa Rosa
Dateline Property
The Santa Rosa Plain
Agreements
The City and the Board of County Commissions of Santa
Rosa County entered into a cooperative agreement to
prevent scatter development that is not served by city
facilities and utilities
New subdivisions would have to be consistent with the
city’s standards and regulations
The city would allow new developments to connect to
their facilities if they furthered the goals of compact
development and contributed to orderly and efficient
utility service
Dateline Applies for Subdivision
Builders wanted to subdivide and develop its Todd Road
property as a single family moderate and low income
home tract. It was zoned for agricultural use
The Todd Road property was not contiguous with the
City but was contiguous to one of the City's trunk sewer
lines. Builders had obtained FHA approval for the project
under a loan program for homes in communities of less
than 10,000 population.
The sewer hookup was not a condition for the availability
of the federal funds. Builders planned to build 66 single
family homes and submitted a tentative subdivision map
to the County
The County Gives Conditional
Approval
The County approved the tentative map but attached 24
conditions, including sewer hookup approval from the
City and rezoning of the property to R-1 residential use
by the County.
For a project of the size contemplated by Builders, the
County required a sewer system rather than septic
tanks. After that date, Builders never performed any of
these conditions nor took any steps to do so.
The City Shoots It Down
Datelines’ application for a certificate was reviewed by
the City for consistency with its plan, and development
policies and standards
The City determined that Builders' proposed
development in an agricultural area well beyond the City
boundaries represented "leap-frog“ development
inconsistent with the City's plans, policies and standards
The City denied the request; builders never submitted a
subsequent or renewed application for a certificate.
Dateline Appeals
Dateline appealed to the City again
Nope, says the City – “the proposal is not
consistent with the requirements of our plan”
We have the capacity – but you can’t have it
You are not in our district and we do not have to
extend it to you
Dateline Fights Back
The Trial Court Hears the Case
The City was not a public utility charged with providing
sewer connections to Builders' proposed development
The City's urban development strategy in the
implementation of its general plan, development policies
and standards involved fundamental policy decisions in an
exercise of the police power
As a result of Builders' failure to perform any of the
conditions, Builders was never in a position to receive any
benefit from an approval of its application to the City for a
certificate
The City acted reasonably in determining that Builder’s
proposed development was inconsistent with its adopted
land use plan, policies and then denying the certificate
The Appeals Court
Dateline argues that the City was acting in its proprietary
capacity as a public utility and was the only provider of
utility services for the Santa Rosa Plain, the City's refusal
to grant the certificate was arbitrary and constituted
unjust and unlawful discrimination as a matter of law
And the City had no power to act beyond its boundaries
And even more – that Dateline was a third party to a
contract to receive sewer and water and that the City’s
refusal constitute breach of contract
The Appeals Court’s Analysis
Dateline is not a third party!
The Court says that: “We do not think either the City
nor the County intended to compensate a developer who
does not own the property he wishes to subdivide for
damages that are at best speculative because he was
not granted a permit to hook up to the sewer system.
The “Plains Agreement”: was made for the public as a
whole.
The Next Finding
Dateline is not in Santa Rosa’s district – however, the
City has extended services to developments that met its
planning criteria in the past
Therefore, under the Plains Agreement, the City must
extend services if the development meets all the
approvals of the County and City
Dateline did not cut it. They neither complied with the
conditions of the county – and they were classified as
“leap frog” development
Conclusion
The City did not violate its cooperative utility
agreement
It acted reasonably to deny an extension of
services to an uncooperative and undeserving
developer
Dateline Provides
Its Own Water
Service
First Peoples Bank of New Jersey v
Medford Township, 1991
Background
In the mid-1970s Medford experienced rapid land
use development that overburdened the
municipal sewer system. Consequently, the New
Jersey Department of Environmental Protection
imposed a sewer connection ban.
Medford's initial response was to adopt a "Flow
Equalization Plan," which involved the use of
holding tanks to store effluent during peak
periods.
By 1983, the sewer plant was again at its limit.
The City was under an order to increase the
capacity of its pumping station
Land use development came to a halt
Medford Twsp. Pop. 1940 - 2000
25000
20000
15000
10000
5000
0
1940 1950 1960 1970 1980 1990 2000
New Ordinances
Medford Townships passes ordinances to place a
moratorium on development
It also passes another ordinance that allows the
Township to allocate new sewer capacity before
the plant expansion is finished
A land owner may apply and pay for advance
sewer permits – the number of permits would
equal the number of lots that could be
developed under the present zoning
The fees from these advance sewer permits
would help pay for the new expansion
About The Ordinances
If you buy the permits now, you get a deal! If you wait, the cost
goes up annually
The township reserves the right to “not honor the permits” if it is in
the best interest of the public
In that case, the township has to repay the permit holder
Well guess what?
The township sent out warnings to all developers who had not
purchased permits telling them to get with it because they were
again reaching processing capacity based on the number of permits
issued
Then What Happens
A large land owner buys all the remaining unsold permits
for a total of $3.3 million – and wants more
The Township says we have issued all the advance
permits that we can and imposes another permit
moratorium
About 2 days later the Peoples Bank applies for several
permits
The bank goes to district court to attack the validity of
the ordinance
The Judicial Review
The trial court found for the Township saying that they
had acted reasonably within their authority
The Bank says – no they didn’t and appeals
The Bank argues that:
– The township should have saved some permits and sold so
many to the “big developer
– The Bank contends that the ordinance does not contain
adequate standards to guide the municipality in determining
whether to exercise its option to repurchase.
Standards
The court found that the challenged ordinance, although
not exquisitely drafted, contains sufficient standards to
withstand the Bank's challenge
These standards require the Township to give six
months' written notice to a permit owner of the
Township's intent to repurchase
When deciding whether to repurchase a permit, the
Township acted by resolutions adopted after discussions
at public meetings.
Conclusion
This is not a case in which a municipality has rigidly
refused to construct needed sewer capacity.
The record does not support an inference that Medford's
refusal "is the result of a determination not to discharge
a plain duty”
Because of a municipality's greater familiarity with local
conditions and expertise in constructing sewer capacity,
a court should supplant the exercise of municipal
discretion only in a compelling case.
Differential Rates
Can a city control growth
and timing by charging
differential rates for water
and sewer service to
those located outside it
service district?
Must rates be uniform?
WE ARE
BACK IN
KANSAS
AGAIN
Mitchell v City of Wichita, 2000
This is a class action suit brought by plaintiffs David
Mitchell and Nolan O. Luke challenging the authority of
the City of Wichita, Kansas to charge users of its water
and sewer utility who live outside the city limits a fee for
water and sewer service which is 55% higher than the
fee charged the users within the city limits.
The plaintiffs' challenge is to both the authority of the
City to impose such a surcharge and to the
reasonableness of the City's 55% surcharge.
Background
Basic History
– In 1957, the City acquired the Wichita Water Company, a
privately owned company that had previously provided water
services to the city as well as nonresidents surrounding the
city.
– Prior to 1957, the Wichita Water Company charged its
residential water customers who lived outside the city limits of
Wichita a 100% surcharge.
– After the City's acquisition of the Wichita Water Company in
1957, the City reduced the surcharge for nonresidents to 40%.
Sometime between 1974 to 1989, this surcharge was increased
from 40% to 55%. The surcharge has remained at 55% since
that time.
Mitchell and Nolan Luke
The Lukes’ Own A Transportation Company
Statutory Authority In Kansas
Both the trial court and the Supreme Court reviewed the
statutes authorizing municipalities to set rates and charge
for water services
Since this is a straight forward examination, the courts
conclude that since there was nothing included in the
statues to prohibit differential rates – then the legislative
silence indicated that this decision was up to the local rate
making authority
"No person, firm, corporation, or association, nor any city
department, shall be allowed free use of water, nor shall
there be discrimination among water users of like classes as
to rates, and rebates in rates shall never be allowed to any
person, firm or corporation or city department except as an
inducement to prompt payment of water rates."
SO, What About Discrimination
and the Duty To Serve?
The fact that the rates charged within the city are
different than those charged outside the city does not of
itself characterize the rates as discriminatory
Although a municipality may charge higher rates for
customers living outside the city limits, rates must still be
reasonable, and persons and corporations dependent on
the utilities are entitled to judicial protection against
rates when they become unreasonable.
What Is Reasonable?
What is a fair and reasonable rate comprehends more
than just enough revenue to get by. Sound fiscal practice
would seem to dictate that provision be made for future
contingencies and that reasonable reserves be set up to
provide for the repair, improvement and replacement of
the physical plant and facilities comprising a water
distribution system. The rule generally followed is that in the absence of
statutory restrictions, a municipal corporation which operates a water system has
authority to charge such rates as will yield a fair profit, so long as the rate is not
disproportionate to the service rendered."
Conclusion
The Supreme Court concluded that the only measure they
could use was whether or not the differential rate was
excessive or confiscatory
The Court notes that water rates 100% higher than for
district residents are common – certainly 55% is not out of
bounds
This is especially true when district residents are charged
with maintenance and upgrade to the water plant while out
of district residents cannot be taxed for these
improvements
The burden was on the Lukes to show that the rates were
excessive and unreasonable – too bad – so sad!
Solid Waste & Interstate
Commerce
Oregon Waste Systems, Inc v
Environmental Quality Control, 1994
Does an ordinance by the State of Oregon
imposing a $2.25 per ton surcharge on the instate disposal of solid waste generated in other
States and an $0.85 per ton fee on the disposal
of waste generated within Oregon violate the
neutrality provision of the Commerce Clause?
Key Words
– Interstate commerce
– Commerce Clause
– Duty to Serve
The Background
Like other States, Oregon comprehensively regulates the
disposal of solid wastes within its borders. The Oregon
Department of Environmental Quality oversees the
State's regulatory scheme by developing and executing
plans for the management, reduction, and recycling of
solid wastes
To fund these and related activities, Oregon levies a
wide range of fees on landfill operators. In 1989, the
Oregon Legislature imposed an additional fee, called a
"surcharge," on "every person who disposes of solid
waste generated out-of-state in a disposal site or
regional disposal site
The Fee
The amount of that surcharge was left to the Environmental
Quality Commission to determine through rulemaking, but
the legislature did require that the resulting surcharge "be
based on the costs to the State of Oregon and its political
subdivisions of disposing of solid waste generated out-ofstate which are not otherwise paid for" under specified
statutes.
The Commission set the surcharge on out-of-state waste at
$2.25 per ton. In conjunction with the out-of-state
surcharge, the legislature imposed a fee on the in-state
disposal of waste generated within Oregon. The in-state
fee, capped by statute at $0.85 per ton , is considerably
lower than the fee imposed on waste from other States.
The Challenge
Oregon Waste Systems (OWS) is a
private contractor who owns and
operates a solid waste landfill in
Gilliam County, Oregon
OWS accepts in and out of state
waste
OWS also has a 20 year contract
with Clark County, Washington to
transport (by barge) waste to their
facility
OWS challenges the administrative
rules establishing the higher outof-state surcharge as contrary to
the Commerce Clause of the U.S.
Constitution
What Is The Commerce
Clause?
“Congress shall have the Power to regulate
commerce among the several States”
The Clause has always been interpreted as a
negative regulatory power that denies the States
the power to unjustifiably discriminate against or
burden the interstate flow of commerce
Justice Cardozo explained:
– under a truly compensatory tax scheme, "the stranger
from afar is subject to no greater burdens as a
consequence of ownership than the dweller within the
gates. The one pays upon one activity or incident, and
the other upon another, but the sum is the same when
the reckoning is closed.
Analysis
The Oregon Court of Appeals and the Supreme Court of
Oregon upheld the differential fee – they
– Approved the scheme as a “compensatory tax” necessary to make outof-state shippers pay their fair share of cost of waste disposal in their
state
The U.S. Supreme Court notes that " "It was not the
purpose of the commerce clause to relieve those
engaged in interstate commerce from their just share of
state tax burden[s]." Nevertheless, one of the central
purposes of the Clause was to prevent States from
"exacting more than a just share" from interstate
commerce
So What Is Justified?
To justify a charge on interstate commerce as a
compensatory tax – a state must:
– "identify the intrastate tax burden for which the State is
attempting to compensate." Once that burden has been
identified, the tax on interstate commerce must be
– Shown roughly to approximate - but not exceed - the amount
of the tax on intrastate commerce. Finally,
– The events on which the interstate and intrastate taxes are
imposed must be "substantially equivalent"; that is, they must
be sufficiently similar in substance to serve as mutually
exclusive "prox[ies]" for each other
The Fatal Flaw
The Supreme Court notes that the scheme allows out of
state shippers to bear the full and real cost of waste
disposal, but permits Oregon shippers to bear less than
the full cost of disposal
Oregon argues that this is not economic protectionism –
rather it is “resource protectionism”
The Court says that: “Even assuming that landfill space
is a "natural resource," "a State may not accord its own
inhabitants a preferred right of access over consumers in
other States to natural resources located within its
borders”
Conclusion
Because respondents have offered no legitimate reason
to subject waste generated in other States to a
discriminatory surcharge approximately three times as
high as that imposed on waste generated in Oregon, the
surcharge is facially invalid under the Commerce Clause.
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