A State Supreme Court judge has ruled that Riverhead Town illegally overcharged Suffolk County for the treatment of wastewater generated by the county jail, court complex and county center from 2018 to 2021.
The court in a Jan. 22 ruling barred the town from charging the facilities, outside of the boundaries of the Riverhead Sewer District, out-of-district rent charges established by 2018 and 2021 resolutions of the Town Board. The county sued the town in 2021.
The town is appealing the ruling which, if upheld, would deal a fatal blow to Riverhead’s claim that the county owes the Riverhead Sewer District $2,856,899 for sewer services provided in the fiscal years 2018 through 2021.
At stake also are millions of dollars for the years since 2021 the town claims the county owes the sewer district. The town has set the same out-of-district rates ruled illegal by the court in 2022, 2023 and 2024. Unless the ruling is overturned, a separate lawsuit by the county about the same issue for the year 2022, which was not decided, would likely end the same way, as would any challenges to the rates set for 2023 and 2024.
State Supreme Court Justice Maureen Liccione ruled that the resolutions establishing the out-of-district rates were “arbitrary and capricious” and “had no rational basis in the record.”
Riverhead’s outside counsel, Frank Isler of Smith, Finkelstein, Lundberg, Yakaboski and Isler, filed a notice to appeal the ruling on Jan. 28. Riverhead Supervisor Tim Hubbard and Riverhead Town Attorney Erik Howard did not respond to requests for comment yesterday.
The town-owned sewage treatment plant has served the county complex in Riverside since September 1969. The complex includes the county center, criminal court, the surrogate’s court and jail. The county facilities are located in the Town of Southampton and outside the Riverhead Sewer District. The town and the county had written agreements covering the handling of wastewater by the town’s sewage treatment plant, with the most recent agreement, signed in 1997, expiring Dec. 31, 2017.
Beginning in November 2015, Riverhead Town demanded an increase in the $146,688 annual subsidy it had been receiving from county sales tax revenue since 1992. Riverhead officials argued that the Riverhead Sewer District was entitled to payments of $537,140 for 2016 and almost $1.5 million for 2017. In December 2016, the Town Board authorized filing a $2 million notice of claim against the county.
In June 2017, Riverhead sued the county seeking to collect on its claims for an increase in the subsidy. In May 2020, State Supreme Court Justice John Leo dismissed Riverhead’s case. The town appealed. The Appellate Division has not yet issued a decision on the appeal.
It’s unclear whether the Jan. 22 decision in the sewer district rate case will have implications for Riverhead Town in a lawsuit it brought against the Town of Southampton challenging the boundaries of the Riverside Sewer District, established by Southampton last May.
Riverhead in that suit, among other things, argues that the Riverside Sewer District should be redrawn to include the county facilities in Riverside. Riverhead Town argues that it must set aside enough treatment capacity at its sewage treatment plant to handle the “design flow” of wastewater from the county facilities, and that it needs that capacity to serve users within the Riverhead Sewer District.
But the court last month ruled that the town could only charge the county based on how much wastewater the sewage treatment system receives, not the “design flow.”
State law allows the town to establish charges for the use of its sewer system — designated as ‘sewer rents’ which may be based on the “metered consumption of water on premises connected with the sewer system” or “upon any other equitable basis” as determined by the Town Board. That requires a rational basis in the record, according to case law cited by the court.
The charges imposed on the county by a Riverhead Town Board resolution adopted in May 2021 failed that test, the court ruled.
The sewer rents were based on the county facilities’ “design flow usage” rather than actual usage, plus a “multiplier of 1.75 over the base rent.”
The “design flow” of the facilities is 166,399 gallons per day, and an annual flow of 61,830,635 gallons. Actual annual usage, the court found, was an average of 38,364,127 per year during the four-year period in question — only 62% of the “design flow” usage.
This resulted in a “substantial surcharge” to the county, the court found. The town’s formula required the county to pay for almost 100 million gallons of sewer service not actually utilized over the four-year period covered by the resolution: $622,831 unrelated to the reasonable costs of providing sewer services for the same period.
Riverhead Town contends that the sewer district is “mandated” by both the Suffolk County Department of Health Services and the New York State Department of Environmental Conservation to “reserve” a portion of its sewer plant’s permitted flow capacity to the sewage flow attributed to the County Center Facility under the County’s Department of Health Services
standards, regardless of the actual flow received from that facility. The town points to that as justification for basing the rates imposed on the county, rather than actual usage.
“However,” the court wrote, “Riverhead points to no regulation, statute, standard, or requirement from the County’s Department of Health Services and/or the DEC containing this alleged mandate to reserve.”
The court said Riverhead also failed to explain why, if it were required to use such an “earmarking” method, it did not follow that method in the agreement it had with the county regarding sewage treatment for the Riverside facilities for years. The last agreement expired Dec. 31, 2017.
“In fact, the sewer rent portion was calculated in the Agreement based on the actual ‘water usage’ of the County Facilities, not on the maximum design flow methodology,” the court wrote. “There is nothing in the record indicating that any other Sewer District user is charged sewer rent based on a maximum design flow calculation.”
Riverhead argued it had no means of verifying the flow numbers provided by the county, because the Riverside facilities are not served by the Riverhead Water District.
“The Court finds this alleged justification unconvincing, in light of the quantity of effluent discharged to the Sewer District being measured at the Riverhead County Center pump station maintained by the County. which is calibrated on an annual basis, and Riverhead’s ability to perform its own calibration tests and/or install a meter at the point of interconnection to measure the flow,” the judge wrote.
The court did not decide three other causes of action that were part of the county’s lawsuit, which were based on alleged violations of the U.S. and N.Y. State constitutions and seek damages; the judge said those were severed for determination at a later date.
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