The city of Chattanooga and the Walker County Water and Sewerage Authority are engaged in an ongoing legal dispute in which the city claims the authority owes more than $25 million in unpaid bills and fines.
Though the authority owns and operates its own wastewater collection system and treatment facility, it has relied on Chattanooga's Moccasin Bend facility to meet the needs of an increasing population and is billed for those services.
In a letter sent to the Walker County Water sewage authority on Sept. 16, Phil Noblett, deputy city attorney for Chattanooga, wrote the authority had "short-paid" 22 invoices for wastewater sewer treatment services Chattanooga provided from October 2017 through July 2019. The total outstanding balance for those invoices was nearly $1.9 million. He further stated the authority owed the city more than $23 million in penalties resulting from a breach of the 2016 agreement that serves as a wastewater contract between them.
"Walker County's refusal to timely pay the full amounts owed is a material breach of the parties' agreement," Noblett wrote, demanding payment within 60 days. "That amount continues to accrue at the rate of $1,000 per violation per day," he wrote, plus interest.
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The 60-day window closed on Nov. 15, and the sewer authority had not paid at that time.
On Nov. 19, the sewer authority's attorneys filed a legal response challenging a number of actions and charges by Chattanooga over the years and saying the sewer authority is, in fact, owed $279,500.
On Dec. 13, Chattanooga responded by filing a motion to dismiss the counterclaims.
In a deposition taken in September, a representative for the sewer authority said it has enough treatment capacity to treat all of the wastewater that it sends to Chattanooga. Later in that same deposition, however, he also testified that upgrades are needed for the authority to handle all of its customers' water and sewer needs.
Earlier this year, the Walker County Board of Commissioners voted to put $5 million in federal COVID-19 relief funds toward a water and sewer improvement plan with the goal of redirecting sewage from the north end of the county to the sewer treatment plant in Chickamauga, Georgia, rather than Chattanooga. When asked during the September deposition if this would be enough to allow the Walker County Water and Sewerage Authority to fullly disconnect from Chattanooga's system and recapture and treat all of its own wastewater, the representative for the authority said doing so would likely require another "redirection project" as well as facility treatment upgrades.
In court documents, attorneys for Chattanooga said the city was entitled to terminate service under the 2016 agreement and requested that the court allow it to "elect its contractual remedies."
"Nothing is stopping Walker County from raising its wastewater rates to construct a treatment facility with sufficient capacity to treat all of its own wastewater," the city argued. "Walker County can also find someone else to contract with to treat its sewage. But what it cannot do is stubbornly refuse to pay its bills, tell Chattanooga how it must finance capital projects necessary to treat its wastewater, and then play the victim when Chattanooga sues to enforce its contractual rights. This is not some litigation game. This is fundamental to how Chattanooga operates."
Chattanooga's attorneys argue that Walker County unilaterally withheld rate revenues for years when Chattanooga needed the money to comply with federal agreements to clean up its wastewater treatment system.
In the same document, attorneys for Chattanooga said the city understood termination may not be immediately possible because there are practical issues related to the removal of the inter-connections that must be addressed first to ensure Walker County's wastewater is "properly handled, treated and disposed of after disconnection."
Instead, they asked the court to require the sewer agency to immediately begin taking the necessary steps to facilitate the termination process.
The Walker County Water and Sewerage Authority is an independent entity that is not part of Walker County government. However, Shannon Whitfield, who serves as chairman for the county's board of commissioners, also leads the sewage authority.
Whitfield told the Times Free Press he could not answer questions about the legal dispute because the matter is ongoing.
In an email, Chattanooga City Attorney Emily O'Donnell said the city also has a policy against discussing ongoing litigation.
Contact Kelcey Caulder at kcaulder@timesfree press.com or 423-757-6327. Follow her on Twitter @kelceycaulder.