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Town of Pembroke v. Town of Allenstown

Supreme Court of New Hampshire, Merrimack

June 22, 2018

TOWN OF PEMBROKE
v.
TOWN OF ALLENSTOWN

          Argued: February 7, 2018

          Preti Flaherty Beliveau & Pachios LLP, of Concord (Mark H. Puffer and Gregory L. Silverman on the brief, and Mr. Silverman orally), for the plaintiff.

          Drescher & Dokmo, P.A., of Milford (William R. Drescher on the brief and orally), for the defendant.

          Donahue, Tucker & Ciandella, PLLC, of Exeter (Sharon Cuddy Somers on the memorandum of law), for the Town of Allenstown Board of Selectmen.

          HICKS, J.

         This case presents two questions arising out of the operation of the Suncook Wastewater Treatment Facility (the "Facility") in Allenstown. First, under an intermunicipal agreement, must the defendant, Town of Allenstown, share any of the profits generated from septage haulers who discharge their waste at the Facility with the plaintiff, Town of Pembroke? And second, after Allenstown used a portion of those profits to increase the Facility's wastewater treatment capacity, must Allenstown allocate any of that increased capacity to Pembroke? Because we, as did the Superior Court (Nicolosi, J.), answer both questions "no," we affirm.

         I

         The following facts are drawn from the trial court's order in this case, or are otherwise found in the record. Prompted by the passage of the Federal Water Pollution Control Act Amendments of 1972, see Pub. L. No. 92-500, 86 Stat. 816 (1972), commonly known today as the Clean Water Act (CWA), Allenstown and Pembroke entered into an intermunicipal agreement to jointly finance, construct, and maintain a wastewater treatment facility - the Facility - on August 6, 1974. Due to landscape and location considerations, as well as federal regulations dictating that a single town must be identified as a facility's "owner," Allenstown was chosen as the Facility's home and delineated owner-operator. Through a combination of federal, state, and local funding, with the local portion accounting for approximately 5% - split 65/35 between Pembroke and Allenstown, respectively, based upon population projections - of the total construction cost, the Facility became operational in 1977. Governed by the 1974 agreement, the towns thereafter contributed to the Facility's operation and maintenance costs over the ensuing years based upon their proportionate use thereof.

         In April 2002, the New Hampshire Department of Environmental Services notified Allenstown that the Facility had exceeded 80% of its "flow capacity" and was "within 100, 000 gallons per day of [its] total capacity." When the Facility ultimately reached its capacity a little over three years later in August 2005, a moratorium was placed on permits for new sewer connections.

         As a result, the towns began conferring and negotiating over ways to increase the Facility's capacity and how to fund such efforts. With regard to the latter consideration, Allenstown explored whether the Facility could accept septage from commercial haulers notwithstanding the moratorium. In time, Allenstown discovered that it could accept septage by only "dewatering" it, which impacted neither the Facility's capacity nor efficiency negatively, and trucking the resulting "solid sludge" off-site along with solid waste from the towns' collection systems. By allocating the associated expenses against revenues generated thereby, Allenstown ensured that neither town bore the costs of septage processing. More importantly, by charging septage haulers a "market rate that exceed[ed] the pure cost of processing the septage," Allenstown began generating what Pembroke alleges are "significant profits."

         In support of a proposed $15 million upgrade of the Facility to double its capacity, the towns entered into a successor to the 1974 intermunicipal agreement on November 20, 2006. Section 3.06 of the 2006 agreement, which concerns, in relevant part, allocation of septage processing revenues, provides:

Revenue received from septage permits and fees by Allenstown shall be used to help offset the costs of septage processing and any excess revenues may be used to offset the costs of operation and maintenance of [the Facility] and/or the upgrade/expansion of [the Facility].

         As to the anticipated upgrade of the Facility, Section 4.03 of the 2006 agreement reads, in pertinent part, as follows:

At the same time the Town of Allenstown approves and appropriates the bonding of the costs for construction of expansions or modifications to the wastewater facilities, that were designed for, or which will be utilized by the Town of Pembroke, Pembroke shall also raise and appropriate it's [sic] proportionate share of the estimated Capital Costs of the facilities, less any previous payments made during the design phase. Payment of Pembroke's proportionate share of the bond repayment shall be ...

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