Last week, the Federal Circuit heard oral argument in District of Columbia Water and Sewer Authority v. United States, a case we have been following because it attracted an amicus brief. In this case, the United States appeals a decision of the Court of Federal Claims, which awarded the District of Columbia Water and Sewer Authority $633,150.90 for unpaid sewer charges. Judges Stoll, Cunningham, and Stark heard the oral argument. This is our argument recap.
Vincent Phillips Jr. argued on behalf of the United States. Phillips began by saying the question before the court is whether a statute “exempts” the Armed Forces Retirement Home, formerly known as the United States Soldiers’ Home, from paying sewer and water charges based on an agreement that was executed in 1938, “whereby the Home provided an easement to the District of Columbia to build a reservoir in exchange for” a promise by the utility not to charge the Home for water and sewer services. Phillips said the “statute preserve[s] that agreement” because “the plain text, by its ‘extension’ language, . . . incorporates the exchange through the 1938 easement.” Phillips explained “the plain meaning of the word ‘extension’ . . . means to expand or increase.” According to Phillips, there was a need to expand “the capacity” of the system, and the reservoir “extended the system insofar as it created greater capacity so that the system was able to continue to work.”
Judge Stoll asked, in the United States’ view, “what [the trial court] relied on in their interpretation that caused them to go down the wrong path?” Phillips argued the trial court employed “an overly limited understanding or reading of ‘extension,’” under which “‘extension’ is almost subsumed into ‘operation’ or ‘maintenance.’” Phillips contended the trial court’s interpretation “doesn’t fit within the purpose of the statute because that reading of ‘extension’ has now potentially put D.C. Water on the hook for an additional liability . . . that they have to come up with consideration in another form.” Phillips argued that result would “conflict with the purpose of the [statute], which was, at the bottom, a revenue-generating statute.”
Judge Stark noted “the statute is completely silent on the 1938 agreement or any reference to the Home” even though it does “call out free water for churches and other charitable organizations.” He asked whether the court should “read some meaning into that silence.” Phillips responded by arguing that, “while [the 1938 agreement] wasn’t mentioned specifically, it is certainly covered within the ‘extension’ language.” Moreover, according to Phillips, the 1938 agreement “was executed pursuant to another federal law . . . so there wouldn’t have been an additional reason for Congress to specifically mention” the 1938 agreement.
Emil Hirsch argued on behalf of the District of Columbia Water and Sewer Authority. He began by presenting the “two overarching themes” of the D.C. Water and Sewer Authority’s argument. First, he said, “one of the rationales” given by the court below permits the Federal Circuit to “affirm without going into a circuitous loop where [the Federal Circuit is] forced to interpret the word ‘extension.’” Second, Hirsch maintained, “there is a fundamental disagreement that D.C. Water has . . . over what plain and ordinary meaning is.” He argued “the noscitur principle has been given vitality by the Supreme Court” in “relatively recent” cases to prevent statutes from being read “too broadly.”
Judge Stark suggested that, “if [the reservoir] weren’t there, there’s some number of buildings in D.C. that would not have water.” Based on this point, he asked whether it is “obvious that the reservoir is an extension.” Hirsch responded by arguing “only if you accept . . . the dictionary definition.” According to Hirsch, the analysis “starts with the dictionary definition,” but then continues to an examination of the “surrounding words” and “that’s the noscitur principle.”
Judge Cunningham asked Hirsch to return to his “first point,” that there may be a “less circuitous” path of analysis. Hirsch argued the Federal Circuit “does not have to reach the interpretation of an ‘extension’ . . . because the preliminary or threshold question is correctly identified by [the court below].” Hirsch continued by saying “the statutory exemption” is not “a codification or incorporation of the 1938 agreement” because “Congress cannot . . . abrogate the bargain but then hide the elephant in the mouse hole of the so-called ‘water exception.’” According to Hirsch, such an interpretation is “counterintuitive” and “produces an absurd result.”
In rebuttal, Phillips maintained the “addition of the reservoir to increase the [system’s] capacity and size would fit within [the] dictionary definition” of “extension.” He said extension means “any act of extending or enlargement in dimension, area, or scope of something.” Phillips then argued the 1938 agreement was not “nullified or abrogated” by the statute. He suggested that, “if Congress was deemed to have nullified” the 1938 agreement, the Federal Circuit is confronted with “the same problem . . . Judge Stark mentioned before, that Congress hasn’t mentioned [the 1938 agreement] at all within” the statute. Phillips rejected the argument of a partial nullification, moreover, saying “Congress really has not put anything within [the statute] that would delineate or show that they were passing a property right.”
We will continue monitoring this case and report on developments.