ELR Citation: ELR 20863
No(s). s. 90-1901, -1902 (6th Cir. Jan 27, 1992)

The court upholds a district court order requiring the U.S. Environmental Protection Agency (EPA) and the Michigan Department of Natural Resources (MDNR) to fund 80 percent of a sewer system evaluation survey (SSES) to be undertaken by a Michigan city under the Federal Water Pollution Control Act (FWPCA). In 1969, the MDNR ordered communities polluting the Ecorse Creek near Detroit, Michigan, to stop discharging waste into the creek. In 1974, the county drainage commissioner obtained a Step 1 planning grant from EPA to study existing sewer systems and alternative treatment works, to prepare an environmental assessment, and to determine a waste treatment management system to abate the pollution of the creek. After completing the study, the commissioner recommended construction of new sewer systems to separate sanitary sewage from storm runoff. The county drainage board approved the commissioner's recommended proposal, and the commissioner obtained a Step 2 grant from EPA and the MDNR to prepare plans for the proposed facilities. EPA and the MDNR approved the recommended proposal and tendered Step 3 construction grants under the FWPCA to cover 80 percent of the construction costs of the sewer separation project, with the local communities assuming the remaining 20 percent of the construction costs. In 1985, the county drainage commissioner applied for an amendment to the Step 1 planning grant to cover the costs of an SSES to be performed by one of the cities participating in the construction. The MDNR declined to take action on the request, and EPA determined that the SSES was not part of the existing Step 1 project and that FWPCA §201(l)(1), which Congress passed in 1981, precluded funding new Step 1 and Step 2 projects. The city filed a motion in district court under the All Writs Act for enforcement of judgment to compel funding of the SSES.

The court first holds that the record supports the district court's view that the entire Ecorse Creek pollution control effort was a "project," and that it was always contemplated that as an integral part of the program, there would be state and federal funding for the SSESs. The court finds that the recommended proposal for addressing the pollution of the creek required an SSES, and that the city would never be in compliance until the survey was made. Further, the plan adopted by the drainage authorities and approved by EPA and the MDNR required all of the cities involved to complete SSESs to satisfy their obligations. The court notes that the term "project" was used throughout this case to refer to the entire undertaking to alleviate the pollution of the creek, and that even FWPCA §201(l)(1) uses the term "project" in the broad sense. The court holds that the request for SSES funding was not a "project change" that substantially altered the objective or scope, or changed the amount, of assistance provided by a grant agreement. Under the district court's permissible view of the evidence, the city merely sought payment of funds necessarily included in the earlier Step 1 grant, but for which disbursement had been delayed by agreement of the parties.

The court next holds that FWPCA §201(l)(1) does not bar the district court's order. EPA made its commitment for Step 1 funding in 1977, and nothing in the language of the statute or the legislative history indicates an intent to give §201(l)(1) retroactive effect. The court also holds that EPA's 1985 policy implementing §201(l)(1) does not require EPA to deny funding for the city's SSES. That policy prohibited funding for completed Step 1 work. By agreement of all parties, the Step 1 work for the Ecorse Creek project had not been completed. The court holds that the district court had jurisdiction to issue its order under the All Writs Act, because its jurisdiction was also based on FWPCA §505(a)'s citizen suit provision and federal question jurisdiction. The court notes that its decision is not based on judicial estoppel, because it finds no intentional affirmative misconduct by any government officer or agent. Finally, the court holds that the district court should not have denied the city's motion for failure to exhaust administrative remedies, because this is not a case where a party to administrative proceedings resorted to a court to obtain review of an unfavorable decision.

[Previous decisions in the this litigation are published at 11 ELR 21203, 21057, and 14 ELR 20237.]

Counsel for Plaintiffs-Appellants
Carl Strass, Martin W. Matzen, M. Alice Thurston
Environment and Natural Resources Division
U.S. Department of Justice, Washington DC 20530
(202) 514-2000

Counsel for Defendants-Appellees
Michael H. Feiler
Feiler, Joelson, Lakind & Rosenberg
32255 Northwestern Highway, Ste. 145, Farmington Hills MI 48334
(313) 855-1205

Before JONES and MILBURN, Circuit Judges, and LIVELY, Senior Circuit Judge.