Shanty Town Associates Ltd. Partnership v. Environmental Protection Agency

Shanty Town Associates Ltd. Partnership (Shanty Town) (plaintiff), a private land developer, owned property in an unincorporated area on the coast within the floodplain near the municipality of West Ocean City (municipality). The area was environmentally sensitive, consisting of wetlands and floodplains as well as agricultural land. The Environmental Protection Agency (EPA) (defendant) gave a grant to the municipality for the construction of a sewage system. The grant stipulated that all services from federally funded facilities were to be limited to properties already developed at the time of the grant or platted for buildings as of June 1977. The grant also specified that service from the sewage system was not to be made available within the wetlands or for new buildings on the floodplain. Property owners were permitted to use alternative systems such as septic tanks on lots where sewage service was restricted. Shanty Town sued the EPA in federal district court, arguing that the EPA lacked authority to impose conditions on the grant to the municipality. Shanty Town argued that the grant’s conditions, which were intended to limit water pollution from nonpoint sources, conflicted with the delegation of authority of the Federal Water Pollution Control Act (FWPCA) over nonpoint-source pollution to the states. Shanty Town also argued that the grant conditions upset the allocation of authority to the states under the Coastal Zone Management Act (CZMA) and the National Flood Insurance Act. The district court rejected Shanty Town’s arguments.