Fourth Circuit decides SC Contracts Clause Case

In CATAWBA INDIAN TRIBE v. CITY OF ROCK HILL, the Tribe and the City entered into an Agreement whereby the City would provide the Tribe with water and sewer services. Under the Agreement, each water meter costed $55.00 and would be installed upon the Tribe's request. Later in 2003, the City adopted an Ordinance imposing water and waste water impact fees "for all water and/or waste water service requests," including requests for "new service, water and/or waste water extension requests and agreements, additional meters, or upgrades of existing services that will create any new or additional demand on the City’s water and/or waste water systems." The Tribe did not request service and installation of the meters until August 2003, and thus the City asserted that the Tribe must pay the impact fee. The Tribe brought suit under the Contracts Clause of the Constitution.

The Fourth Circuit disagreed with the Tribe. The Tribe conceded that it expected to pay the regular fee that the City charged services; and thus the Fourth Circuit held that the natural extension of this argument is that nothing restricts a public utility from raising or otherwise varying its fees. The original agreement simply did not touch on this later issue--all the original agreement contemplated was for the City to provide services, which it was willing to do. Hence, there was no impairment of contracts.