by Victoria Heldt and Gary Taylor

Roger Newell and Arelene Newell v. Village of Otter Lake, County of Lapeer
(Michigan Court of Appeals, November 15, 2011)

The Newells own property in the Village of Otter Lake on which sits a structure with a working septic system.  In 2004, the Village created a special assessment for its public sanitary sewage system.  The Newells were assessed $10,475; however, they were of the opinion that the assessment should not be applied to them so they filed a complaint with the Michigan Tax Tribunal.  During the time between when the Newells filed their complaint and the time of their hearing, the Village enacted an ordinance that changed the definition of an “available public sanitary sewer system.”  Under the new definition any public sewer system that “crosses, adjoins, or abuts a parcel upon which a structure is located” is considered an “available public sewer system” regardless of how many feet the system was from the structure it services or could potentially service.  This ordinance differed from the previously governing state statute (MCL 333.12751 (c)), which “available public sanitary sewer system as  “a public sanitary sewer system located in a right of way, easement, highway, street, or public way which crosses, adjoins, or abuts upon the property and passing not more than 200 feet at the nearest point from a structure in which sanitary sewage originates.”

At the Tax Tribunal trial, the Newells argued that the assessment was unjust because they received no benefit from the sewer system (they did not connect to it, nor did they need to connect to it).  The tribunal upheld the assessment and the Newells paid it.   Since they did not connect to the system, however, they refused to pay the operation and maintenance fees that were due each quarter thereafter.  When they were notified of their delinquency on the operation and maintenance fees, the Newells filed a claim in circuit court arguing that the ordinance was preempted by the previously governing state statute, that the fee violated the Headlee Amendment, and that the assessment violated the right to equal protection under the Michigan Constitution.  The court ruled in favor of the Village, finding that the preemption claim could have been resolved in the tax tribunal hearing so the court was prohibited from ruling on it.  Additionally it found that, although a municipality is not allowed to enact ordinances that conflict with state statutes, it is free to make ordinances that expand on them.

On appeal, the Newells again made a preemption claim arguing that the state statute preempted the Village’s ordinance.  They were of the opinion that they were not required to connect to the public sewer system (per the state statute MCL 333.12751 (c)) because their structure was located more than 200 feet from it.  The Court disagreed, finding that the Village’s ordinance was not in conflict with the state statute but merely expanded on it, which is allowable.  Thus, the Village’s ordinance was not preempted by the state statue.  The Court further noted that, in matters of public health such as a sewer system, municipalities act as an agent of the state in the regulation of such systems.

Citing People v. Llewellyn, the Newells additionally argued that this area of regulation was one in which state law has exclusive jurisdiction.  This argument rested on the fact that MCL 333.12751 was not included in the list of sections that the statute specified as being expandable by municipalities.  The Court rejected this argument, finding that the statute clearly anticipated changes by local governments.  It further found that the fact that the section was not listed did not equal a declaration that the state’s statutes were the exclusive governing power in that area.

The Newells also argued that the fee violated the Headlee Act, which prohibits municipalities from enacting a tax that was not authorized by state law, and from increasing an already authorized tax without a majority vote.  The Court found that since the fee is “serving a regulatory and not a revenue-raising purpose,” it is not considered a tax.  Consequently, the Headlee Act does not apply to it.  The Court affirmed the lower court’s decision in favor of the Village.