SJC allows sewer hook-up fee

A Supreme Judicial Court ruling that a sewer-connection charge applied to new development is a fee, not a tax, is likely to have implications for other communities seeking to comply with sewer and stormwater regulations.

The town of Saugus had implemented the sewer “inflow and infiltration fee” to help it comply with a 2005 consent order from the Department of Environmental Protection, which imposed a moratorium on new development until the town remedied inadequacies in its aging sewer system. Saugus worked with the DEP to create the fee on new hook-ups to help fund necessary improvements.

The DEP also helped the town develop a “sewer bank,” which grants the town credits for the amount of stormwater and groundwater that is prevented from entering the sewer system and then allows the town to withdraw those credits for new connections related to development.

After four local developers challenged the inflow and infiltration fee, a Superior Court judge in 2009 directed the town to refund more than $670,000 in fees plus accrued interest. The state Appeals Court upheld the decision in January 2011.

The SJC decision, issued on June 29, focused on the town’s argument that the fee imposed on new development was justified because developers “were paying a reasonable amount for a particularized benefit: accelerated access to the town’s sewer system.”

In a 10-page opinion, SJC Chief Justice Roderick Ireland wrote, “Because we conclude that the charge in this case has the requisite characteristics of a fee rather than an impermissible tax, we reverse the judgment and enter judgment for the town.”

Ireland also accepted the concept of the sewer bank as valid.

“The purpose of the moratorium on new connections, as well as the sewer bank, was to prevent overwhelming an already impaired sewer system with new flow,” Ireland wrote. “The developers could have chosen to wait until those repairs were completed before connecting to the sewer system.”

Attorney Ira Zaleznik, who represented Saugus, told the Lynn Daily Item that the decision should serve as a precedent.

“This was a case that had wide application among many cities and towns in Massachusetts that had similar problems and were entering in agreements with the DEP using the sewer bank,” he said. “This was a fairly widespread technique. Not only was it important to Saugus – and a lot of money was at stake here – it also had influence on other cities and towns.

“Every time there was a serious rain event, the system got overwhelmed and there ended up being overflow into the Saugus River and other waterways,” he continued. “It’s not really a good thing to have untreated sewage going into waterways.”