Riverhead appeals ruling that it overcharged Suffolk County for sewer fees

Riverhead Town is appealing a state Supreme Court ruling that found the town overcharged Suffolk County for sewage treatment at county facilities in Riverside from 2018 to 2021.

Suffolk County sued Riverhead in 2021, alleging the town sought to “penalize” the county by charging more for sewer services at the county complex that includes the jail, county center and courts. In a ruling last month, state Supreme Court Justice Maureen Liccione sided with the county, writing Riverhead’s sewer rates were “arbitrary and capricious” and had “no rational basis” according to the law.

The ruling, which prohibits the town from collecting the fees for the four-year period for now, could put nearly $2 million at stake for Riverhead. In court documents, Riverhead claims the county owes $2.8 million in sewer fees while the county has argued the actual cost of providing the services was $1.1 million.

Court records show Frank Isler of Smith, Finkelstein, Lundberg, Isler and Yakaboski LLP filed an appeal for Riverhead Town on Jan. 28. Isler did not respond to a request for comment. Riverhead Town Attorney Erik Howard said in an email the town was “disappointed” in the decision.

“The trial court’s decision did not focus on the unreasonable, unfair and substantial impact imposed upon our sewer district and ratepayers ... to reserve a certain amount of flow for the comparatively massive County Center and Jail property,” Howard wrote.

A county spokesman, Peter Guaraldi, declined to comment Thursday, citing ongoing litigation.

Agreements between Riverhead Town and Suffolk County for wastewater treatment at the county center complex date back to 1969, and the last long term contract expired at the end of 2017. The county had been paying Riverhead an average of $345,966 per year for the services from 2006 to 2017, according to court documents.

But when officials failed to iron out a new agreement, and that contract lapsed, Riverhead began setting the annual fees by town board resolution, according to court papers. The town effectively doubled the annual fee, which ranged from $684,171 to $756,343 between 2018 and 2021. 

“Surely such a dramatic increase would need to be justified,” Liccione wrote in her decision.

Riverhead has continued setting sewer rates for the “out of district” county center in 2022, 2023 and 2024, though the court ruling did not address those years.

Though the complex has a Riverhead address, it straddles town lines and is technically located within Southampton Town.

Separately, Riverhead is suing to force Southampton to include the complex in its newly formed Riverside Sewer District. Riverhead officials argue that servicing the county buildings has put a strain on the town's sewer district capacity.

Howard in an email said the recent decision “only amplifies the importance” of Southampton connecting the county center to the proposed sewage treatment plant in Riverside. “Once constructed, there is no legitimate reason that Riverhead should continue servicing an out of district property situated in another town with its sewage plant available,” he said.

Liccione’s ruling also found the town based sewer rents on “design flow” rather than actual metered use, and added a multiplier of 1.75, which resulted in a “substantial surcharge” to the county equating to nearly 100 million gallons of sewer service that the county never used.

Both municipalities have been locked in a dispute over sewer funding for more than five years. In 2017, Riverhead sued Suffolk County in an attempt to draw more sewer tax stabilization money from the county’s drinking water protection program fund. A judge dismissed that case in 2020, and an appeal is pending.

Howard said the town has had “productive conversations” with county officials and hopes to strike a deal to resolve the legal dispute. He did not elaborate on what those terms could include.