Knowledgebase-Sewer Charge Based on Water Consumption

Information Product

Title:Sewer Charge Based on Water Consumption
Summary:MTAS was asked whether the city could charge for sewer service solely on the basis of water consumption.
Original Author:Hemsley, Sid
Product Create Date:09/23/2008
Last Reviewed on::10/07/2008
Subject:Wastewater--Rates and charges--Tennessee; Sewers--Rates and charges
Type:Legal Opinion
Legal Opinion: Sewer Charge Based on Water Consumption public.doc

Reference Documents:

Text of Document: MEMORANDUM

FROM: Sid Hemsley, Senior Law Consultant

DATE: September 23, 2008

RE: Sewer Charge Based Solely on Water Consumption

Your question is, can a city charge a sewer rate based totally on water consumption?

The heavy weight of the law is yes, although some cases hold otherwise. In fact, there is a Tennessee case on your question that sides with the weight of the cases: Patterson v. City of Chattanooga, 241 S.W.2d 291 (1951). There the Tennessee Supreme Court addressed the question of whether a city could cut-off the water service of a customer who failed to pay the sewer bill. In declaring that the answer was yes, the court looked at the water and sewer charge arrangement at issue:

Here the user of water is assessed a certain amount for the use of the sewer which under ordinary circumstances is a necessary incident for the user of water to have to dispose of the sewerage and water after it is used and polluted. It is upon these users alone that charge is made and not upon the property as a whole but as the various property owners and properties become users of water they are charged for this service measured by the quantity of metered water supplied to them. Under such circumstances we can see no reasonable basis upon which the user can object to paying this service for reasons hereinafter set forth. [At 293-94]

Some of the reasons hereinafter set forth include the Court's declaration that "Insofar as we can find every State in the Union where the question has arisen, has held in accordance with the quotation last above quoted [that the water supply could be cut off for failure to pay the sewer bill]." [At 295] The Court reasoned that "As far as we can see there can be no material difference because the sewer is a necessary incident to the use of water." [At 295]

The Court continued with another reason:

An analogous and almost identical situation arose in the case of Gatton v. City of Mansfield, 67 Ohio App. 210, 36 N.E.2d 306, 308, wherein that Court said: ' So that from the record of this case, we are of the opinion that the sewer rental is based upon the amount of water used, the operation of the sewerage system is dependent upon the water supply, and the water and sewer service may be rightfully considered one transaction. ' [At 295] [Emphasis is mine]

The Court also pointed to Chapter 222 of the Public Acts of 1947, which gave utilities authority " combine charges for sewer and water services in one statement and to bill the beneficiary of such services therefor in such manner as to require the payment of both charges as a unit, and to enforce the payment of such charges by discontinuing either the water service or the sewer service or both..."

Finally, said the Court,

It seems to us that a sewerage system is an essential element of a water system. Purchasers of water must have sewers in order to dispose of the water purchased. Likewise a sewerage system is dependent upon the water supplied- the two services being interlocked in such a way that one is necessary to the other. [At 296]

Patterson v. Chattanooga did not actually involve the question of whether the sewer bill could be calculated on the basis of 100% of the water bill, although, as the Court noted, that was the water/sewer billing scheme in effect. In the Court's own words:

The issue involved, in a nutshell, is: Can a City construct a sewer, where it is necessary to do so for the purpose of disposing of sewerage and making the City more sanitary, under an Act authorizing it to do so then charge the users of water in the City for the construction of this sewer? The incidental question is also involved of whether or not the City may contract with an independent corporation to collect this sewerage rental and if it is not paid cut off the water of the consumer and the rent payer. [At 293]

But the Court clearly upheld the city's "resolution" under which it cut-off the plaintiff's water for refusing to pay the sewer bill, which was based on 100% of water usage, as a "reasonable regulation." [At 295]

But there is language in that case that suggests that in some cases a sewer bill based solely on water usage might not always be permissible. The Court said that, "Here the user of water is assessed a certain amount for the use of the sewer which under ordinary circumstances is a necessary incident for the user of water to have to dispose of the sewerage and water after it is used and polluted." There may be situations in which some of the water consumed by a water customer does not return to the sewer system in any reasonable proportion, and for that reason a sewer bill based on 100% of water consumption may not be a "reasonable regulation." We will see below that some courts take that position.

It is said in 61 A.L.R. 1236, Validity and construction of regulations by municipal corporations fixing sewer-use rates, section 4(g), that:

Sewer use rates may be fixed by taking into consideration the amount of water used on the premises. In fact it is reasonable and fair to base the sewer charge entirely upon the amount of water used on the premises as shown by water meters regardless of whether all of such water reaches the sewers; and particular rate schedules basing a sewer charge solely on consumption of water, and varying with different classes of users have been held or recognized not to unlawfully discriminate....

In support of the justness of sewer-sue rates based on water consumption, it is said that generally the amount of water which flows into a building is apt to be roughly proportional to what flows out as sewerage or the amount of water so used bears a high correlation with the amount of sewerage-bearing water discharged. While there are without doubt exceptions, and while it might be more equitable to consider some further factors having to do with types of use, normally a measure of sewer use based upon water use is not inequitable. Thus, an argument that to base a charge for sewer service upon the quantity of water used upon the premises is unreasonable has been rejected as wholly without merit, especially in regard to a municipality in which the water and sewerage system are combined and where a reasonable provision was made for customers using large quantities of water which may never reach the sewer. A court has declared that no more proper, fairer, or more equitable method of arriving at the amount to be charged for use of a sewer had never been brought to its attention.

On the other hand, courts have rejected the contention that sewer rental must be based on water costs or on water consumption. The amount of water consumed on the premises is not in exact correlation with the amount of sewerage-bearing water discharged, for not all water used exits via the sewer system; and sewer charges are not unreasonable or discriminatory merely because they do not correspond to the amount of water used on the premises. A sewer-rate plan is not invalid because it does not correspond to the amount of water used and results in a higher sewer-use charge to some customers using less water than other customers using a smaller amount for sewer use. Amount of water consumption is only one criteria which may be employed in fixing sewer-use rates.

In a few instances particular sewer charges based upon water consumption have been held unreasonable or discriminatory, specifically when the charge ignores a large industrial use of water which does not enter the municipal sewers. In regard to an industrial user of a sewer, it has been held that a municipality may not refuse to accept the industrial waste which contained most of the water used, and still charge for the sewer on the basis of 100 percent of the water intake. Also, a municipality ' s estimate of the amount of water consumed on a premises for the purposes of determining sewer rental may be unreasonable and invalidate the charge.

That is where the law stands on your question. The City has a solid argument that, at least as to residential users, its sewer use charge based solely on water consumption is legal. But let me point to an extremely interesting case in which a sewer district's sewer use ordinance provided for sewer charges based upon water consumption, but allowed a lawn-watering credit. In Greater Peoria Sanitary Sewerage Disposal Dist. v. Kellstedt, 474 N.E.2d 1267 (Ill. App. 1985), a sewer user challenged the ordinance, alleging that it violated his constitutional right to Equal Protection. The Court discussed the ordinance and its outside water usage credit as follows:

This court has previously upheld the constitutionality of Ordinance 301 [the Ordinance at issue], adopted pursuant to Section 7 of the Sanitary District Revenue Bond Act [Citations omitted by me.] However, we did not consider the issues raised here in the Board of Education case [in which the Court had upheld the constitutionality of the Ordinance.] Kellstedt's basic argument is that Ordinance 301 is unconstitutional as applied to him. [Emphasis is mine.] The Ordinance sets rates based upon water consumption and provides for a credit for water used but not discharged into the Sanitary District's sewers in Section 206 of the Ordinance. Section 206 provides for separate metering to measure discharge...and for an allowance for lawn sprinkling at single and two family residences (Section 206.2). Section 206-2 reads in pertinent part:

"206.2.1 By reducing the metered water consumption by an amount equal to 10% ."

The Court appears to have said that had the ordinance charged sewer usage based solely on water consumption, it would have upheld the ordinance. In fact, it had earlier upheld the same ordinance at issue in this case, but a reading of that earlier case indicates that the plaintiff did not made the argument that the ordinance was unconstitutional as to him. That said, as we will see below, the Court went outside the constitutional issue in Kellstedt to declare that the ordinance's water consumption credit violated the common law prohibition against rate discrimination.

Kellstedt successfully argued that the 10% credit discriminated against him because he refused to buy a meter at his own expense [apparently that measured sewer discharge], and because 75% of the water he used during the summer went into his swimming pool and on his lawns, gardens and golf greens. The Court appears to have agreed that the ordinance did not involve a "suspect classification" and for that reason did not violate Equal Protection, but it said that a utility rate scheme could violate the common law right against exorbitant utility rates and unjust discrimination. "Therefore," continued the Court:

The common law right unlike the constitutional right which protects against discriminatory governmental action does not require that the consumer be a member of a suspect class. In this case the difference in the rates charged to consumers using
substantially in excess of 10% of the water consumed out of doors is substantial and is not reflected in the increased cost of service to the user charged the greater amount. [At 1269]

What proof did Kellstedt offer that he used 75% of his water consumption in his swimming pool and on his lawn, gardens and golf greens?:

Ample evidence exists in the record to determine that Kellstedt used as much as 75% more water during the summer months in the two year period when the unpaid charges were incurred. One need only to look to the billing record introduced into evidence by the Sanitary District to support Kellstedt ' s contention. The ordinance must provide a method to allow substantial outdoor water
consumers to further reduce their sewer charges upon proof that a substantial amount of their water consumption is not discharged into the Sanitary District Sewers. [At 1269]

That burden of proof rests on the proposition that "I use more water in the summer, ergo, less of it went down the sewer."

There are a few cases similar to Kellstedt. In theory, the same thing could happen in Tennessee, where there is also a common law right against discriminatory rates. In fact, I assume that common law right is probably generally applicable to most states. I suspect that the larger the outdoor use of water in a given case, the more likely it is that the courts would hold that an ordinance that bases the sewer rate solely on water consumption reflects a discriminatory sewer rate. But Patterson v. Chattanooga, and the weight of authority, indicate that generally a sewer bill based solely on water consumption will be upheld.

I will note here something you undoubtedly already know: Many cities ' sewer use ordinances provide a discount or credit on the sewer bill where the water-sewer user can show that his or her water consumption from certain uses does not go down the sewer. Such ordinances make sense, particularly where there is a large gap between the water consumed and what actually goes down the sewer.

Please remember that these legal opinions were written based on the facts of a given city at a certain time. The laws referenced in any opinion may have changed or may not be applicable to your city or circumstances.

Always consult with your city attorney or an MTAS consultant before taking any action based on information contained in this database.