ELR Citation: ELR 20747
No(s). 84-1752 (4th Cir. Jul 1, 1985)

The court rules that a provision in a sewage treatment contract providing for industrial cost recovery (ICR) charges pursuant to a requirement of the Federal Water Pollution Control Act became unenforceable upon repeal of the requirement. The court first rejects the defendant's argument that the repeal of the ICR requirement, which enabled municipalities to recoup the capital costs of constructing sewage treatment plants, only affected the 50 percent of the ICR charges that the defendant, as grantee, was required to pass on to the federal treasury. The entire ICR scheme was repealed and Congress directed the Environmental Protection Agency to remove the ICR requirement from any outstanding grant agreements. The legislative history of the ICR repeal shows that Congress intended to free industry of all ICR obligations. The court distinguishes a case rejecting a demand for a refund of part ICR payments on the grounds that while the repeal did not explicitly mandate refunds, it clearly eliminated the federal requirement of further ICR payments. The court then holds that state contract law does not allow the grantee to collect 50 percent of the payments, because the contractual obligation was required by the ICR provisions and therefore was not freely negotiated. Finally, the court holds that the general federal savings statute is inapplicable because the obligation to make ICR payments was contingent upon completion of the project and had not accrued at the time the requirement was repealed.

Counsel for Plaintiffs
Robert O. King
Ogletree, Deakins, Nach, Smoak & Stewart
100 E. North St., P.O. Box 2757, Greenville SC 29602
(803) 242-1410

Julian B. Salley Jr.
Henderson, Salley, Lynn, Farmer & Brown
111 Park Ave. SW, P.O. Box 517, Aiken SC 29801
(803) 648-4213

Counsel for Defendant
Henry Summerall Jr.
Summerall & Bailey
100 Park Ave. SW, P.O. Box 2376, Aiken SC 29801
(803) 648-9529

Before Russell and Chapman, JJ.