Court backs city for 3rd time on Essex suit

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June 3, 2012

Court backs city for 3rd time on Essex suit

By Steven Fletcher Staff Writer The Gloucester Daily Times Sun Jun 03, 2012, 11:30 PM EDT

A Massachusetts Appeals Court has dealt Essex a third strike in its challenge to recoup sewer fees from Gloucester, but it's not clear whether town officials will fight on.

An Appeals Court Panel last week dismissed the third legal action the town filed against the city.

Essex' appeals have alleged that fees from Gloucester's multi-million-dollar Combined Sewer Overflow project were an illegal tax, a breach of contract and offered no direct benefit to town ratepayers. Essex connected to Gloucester's sewer in 2000, and has its wastewater treated at the city's water treatment plant.

The town's latest appeal said that two Superior Court Judges misinterpreted the agreement between the municipalities. The court panel, however, disagreed.

"Essex contends on appeal that, in separate rulings, two judges of the Superior Court misinterpreted the contract to conclude that a capital improvement project undertaken by Gloucester 'affects' Essex's use and that Essex's increased fees do not constitute an illegal tax," the panel's decision states, "Substantially, for the reasons expressed in their thoughtful memoranda of decision, we affirm (previous court rulings)."

Gloucester officials hailed the ruling as a sign the city has charged and handled the situation properly under the 2000 agreement.

"I think the court's ruling supports Gloucester's position all along that CSO project was a direct benefit to all sewer users," Egan said.

Brendhan Zubricki, Essex Town Administrator, declined comment on this story, saying the town doesn't discuss "ongoing litigation."

If the town does not further appeal, the litigation would no longer be "ongoing." But the town's counsel, Greg Corbo of the Boston-based law firm of Kopelman and Paige, did not return a call for comment on this story. Selectmen Jeff Jones and Susan Coviello also declined to return calls seeking comment.

Essex first filed suit in 2008, stating that Gloucester, by including CSO cost figures, overcharged the city on sewer bills, with the town claiming its users shouldn't be charged for capital improvement projects that only benefit Gloucester.

Two Superior Court judges and the Appeals Court panel, however, found that the improvements did. The CSO project, the panel's decision states, avoided violation of the Clean Water Acts and because of that, all users benefit from having sewer service continue.

Egan said that Essex came at the issue through three legal arguments — an initial injunction, the illegal tax argument, and then the breach of contract claim. The last two, she said, Essex filed in 2010 and 2011; both were also denied.

When the town connected to Gloucester's sewer system, the city was just over a decade into a federal Environmental Protection Agency and Clean Water Act lawsuit demanding that it stop letting sewage overflow into the harbor. The city started tackling the issue when, as mandated, it kicked off the CSO project in 2008.

When the town of Essex signed a contract, the panel's decision states, it signed onto a clause that said the total cost of any improvements on a portion of Gloucester's sewer affected by Essex wastewater will be covered by both parties.

"The gravamen of Essex' claims is that because the improvements to Gloucester's sewage system are physically remote from and because it receives no particularized benefit from system improvements, Essex has no obligation to pay for them," the decision states.

But, the decision states, because Essex wastewater affects the entire collection system, and the sewer can only process a finite amount of wastewater, Essex benefits from improvements to the system.

"Because the CSO project was on a portion of the city system affected by the Essex effluent," it reads, "Gloucester could recover the costs of the CSO project by increasing the residential sewer rate to all customers,"

Steven Fletcher may be contacted at 1-978-283-7000 x3455, or sfletcher@gloucestertimes.com. Follow him on Twitter at @stevengdt.