The so called "rain tax" is about to hit property owners in Maryland.
In April 2012, the Maryland General Assembly enacted a law — known as HB 987 — that requires each of the 10 most populous jurisdictions in Maryland to establish an annual stormwater remediation fee and local watershed protection restoration fund. The deadline for implementation by local municipalities is July 1, 2013. These jurisdictions are currently busy drafting ordinances to implement the law.
As news of the impending deadline spreads, Maryland businesses, nonprofits and residents have begun to wake up to the reality that, in some cases, assessed fees may exceed hundreds of dollars annually, and some who object have dubbed HB 987's requirements a "rain tax."3 Local counties' compliance with HB 987's requirements has been far from uniform to date, and some Maryland state legislators have vowed to delay or repeal the "rain tax."4 To the further chagrin of local businesses and residents, HB 987 exempts state, county and municipal properties from the stormwater fee program.5
A dedicated stormwater remediation fee in Maryland is needed to meet the federal mandate to improve the water quality of the Chesapeake Bay.6 However, many questions about HB 987's requirements, exclusions and interaction with federal law remain unanswered. Accordingly, those who are affected by a stormwater fee program, including covered jurisdictions and Maryland-based entities, should remain aware of this developing issue.
The stormwater fee program is an outgrowth of the aggressive federal program to help restore the water quality of the Bay, which has been in decline for many years. With the Environmental Protection Agency's (EPA) December 2010 promulgation of the Chesapeake Bay Maximum Daily Load (TMDL) rule, the six Bay states and the District of Columbia were mandated to meet specific pollution reduction targets for the first time.7 The TMDL sets the maximum amount of pollution the Bay can receive and still attain water quality standards. It also identifies specific pollution reduction requirements for nitrogen, phosphorus and sediment that must be met by 2025 — with at least 60 percent of the actions completed by 2017.8
Indeed, the cost of treating stormwater in Maryland to meet the TMDL is estimated to be $7.7 billion.9 Much of the costs will fall on the shoulders of local jurisdictions.10 This prospective burden led to the Maryland General Assembly's enactment of HB 987, which requires Anne Arundel, Baltimore, Charles, Carroll, Frederick, Harford, Howard, Montgomery and Prince George’s Counties, as well as Baltimore City, to establish an annual stormwater remediation fee and local watershed protection and restoration fund.11
The requirements of HB 987 are intended to reduce stormwater impacts in Maryland’s most populous jurisdictions, thereby helping Maryland comply with EPA's Chesapeake TMDL.12 The bill directs that local laws and ordinances implementing it must be enacted by July 1, 2013.13 Jurisdictions will be developing stormwater plans to restore 20 percent of impervious surfaces to help capture and attenuate the damage from uncontrolled stormwater runoff into streams and creeks.14 Fees collected will likely be used to implement projects with green technologies, such as rain gardens, bioswales, permeable pavements, stream restoration and landscape infiltration.
However, as noted above, HB 987 exempts state, county, and municipal properties from the stormwater fee program.15 Given Maryland's substantial property ownership, the cost to residential, commercial and nonprofit rate payers will necessarily increase to cover the cost of stormwater treatment from public properties.16 Not only does this exclusion raise fundamental issues of fairness, it also raises the difficult question of whether the federal agencies will object to municipal fees assessed on runoff from federal facilities.17
Differing Fee Structures
As the deadline for HB 987's implementation approaches, the covered jurisdictions are far from uniform regarding the fee structures. For example:
Anne Arundel County is considering an annual $85 fee per 2,800 square feet of impervious area for any business, commercial or industrial-zoned property, including apartment buildings, to raise estimated revenue of $26 million.18
Charles County is considering a flat annual fee of $11, $16, $32 or $64 for a single-family residential zoned property, based on the amount of impervious surfaces they collect. An annual fee of $32 per 3,087 square feet of impervious area would be charged for other property within the county, with estimated revenue of $2,313, 645.19
Howard County, which enacted the fee ordinance on March 26, 2013, assesses a variable annual fee for a single-family residential zoned property that ranges from approximately $39 to over $500. An annual fee of $15 per 500 square feet of impervious area would be charged for other property within the county.20
Montgomery County Bill 34-12 passed the County Council on April 17, 2013. The fee program adopted on April 20 includes a variable annual fee for a single-family residential zoned property that ranges from approximately $26 to $29. An annual fee of $88 per 2,406 square feet of impervious area would be charged for other property within the county.
The bill being considered in Baltimore City assesses a flat annual fee of $48, $72 or $144 for a single-family residential zoned property based on the amount of impervious surfaces they contain; an annual fee of $72 per 1,050 square feet of impervious area would be charged for other property in the city.21
In contrast, the Frederick County Commissioners, who have largely objected to the storm water fee assessment mandate, voted on May 30, 2013 to implement a one-cent stormwater fee per parcel of land.22
There has been significant public outcry over HB 987's implementation. In April 2013, some Maryland lawmakers vowed to make a last-minute push to delay implementation of the entire stormwater fee program for two years, but those efforts were unsuccessful.23
The backlash was recently played out in public in Anne Arundel County, when County Executive Laura Neuman vetoed the implementing ordinance and the County Commission overrode her veto.24 According to State Sen. David Brinkley, who represents northern Frederick County, some companies are already planning to move out of state to avoid paying the stormwater fee.25 The Baltimore Sun has reported on several industrial and commercial businesses that face enormous stormwater fees on impervious surfaces that in some instances even surpass their property tax bills.26 Even nonprofits have objected.27 Nevertheless, Baltimore sees the fee program as a significant means of paying for the huge costs of remediating its old and decaying stormwater system. 28
Interaction with the CWA, Applicability to Federal Property Owners
Further complicating effective implementation of HB 987 is the question of whether or not the federal government, as a property owner in Maryland, must also pay local stormwater fees. On January 4, 2011, Congress enacted Public Law 111-378, commonly known as the Cardin amendment, to the Clean Water Act.29 The amendment clarifies the duty of federal agencies to pay "reasonable service charges" for treating stormwater runoff from federal property, provided that the fee is "nondiscriminatory," based on "some fair approximation of the proportionate contribution of the property or facility to stormwater pollution," and the fee is "used to pay or reimburse the cost associated with any stormwater management program."30 The Cardin amendment was especially significant in that the federal government has historically refused to pay service charges unless Congress expressly waived the sovereign immunity of the United States.
The Cardin Amendment would presumably enable local jurisdictions to collect substantial fees from federal facilities in Maryland, since the federal government owns or controls a huge amount of land in the state with considerable impervious surface stormwater discharges into various municipal systems. However, federal agencies are already showing resistance to fees to be assessed under these proposed programs. In a March 1, 2013 letter, the Department of the Navy wrote to the Anne Arundel County Council asserting that the County’s proposed ordinance implementing HB 987 was "discriminatory," and concluding that the Department of Defense was not required to pay the fee under the Cardin Amendment.31 It seems likely that federal resistance to HB 987's implementing ordinances is likely to continue, due to the broad exclusion for state-owned property and other factors.
An Uncertain Future
The fee programs developed under HB 987 could be an important vehicle for financing the huge costs of meeting the Chesapeake Bay TMDL. Although the law is well intentioned, however, these stormwater fee programs might come to be seen as another burden on the economy. The exclusions for state and local properties and likely resistance from federal agencies raise serious fairness and equity concerns. Further, unlike fees to collect trash and provide water and sewer services, the public may have a hard time visualizing the direct benefits of cleaning up the Bay, making public acceptance a challenge. As a result, whether the "rain tax" program will succeed remains very much up in the air.
1 See Md. Code Ann. Envir. §4– 201.1.
2 See The Maryland Stormwater Management Watershed Protection & Restoration Act of 2012, Md. H.B. 987, §2.
3 See, e.g., "Rain tax rebellion?" The Frederick News-Post, May 5, 2013, http://www.fredericknewspost.com/news/environment/policies/article_336b6f73-8b40-53a8-a8bf-90a9ea5c0af8.html.
4 Luke Broadwater & Timothy B. Wheeler, "Businesses, nonprofits object to stormwater fees," The Baltimore Sun, Apr. 7, 2013, http://articles.baltimoresun.com/2013-04-07/news/bs-md-ci-storm-water-20130407_1_stormwater-fee-maryland-lawmakers.
5 See Md. Code Ann. Envir. §4– 202.1(e)(2).
6 See EPA, "Chesapeake TMDL," December 2010, http://www.epa.gov/reg3wapd/tmdl/ChesapeakeBay/tmdlexec.html.
7 See id.
8 See id.
9 Fiscal note on HB 987 at p. 8.
11 See Md. Code Ann. Envir. §4– 201.1.
12 Fiscal note on HB 987 at p. 8.
13 See The Maryland Stormwater Management Watershed Protection & Restoration Act of 2012, Md. H.B. 987, §2.
14 For example, the MDE's Draft Municipal Separate Storm Sewer (MS4) permit for Prince Georges county "requires an additional twenty percent of the County's impervious area to be restored" beyond the ten percent restoration in the existing permit.
15 See Md. Code Ann. Envir. §4– 202.1(e)(2).
16 Fiscal note on HB 987 at p. 8.
17 See id. at 3–4.
18 http://www.wtplaw.com/sites/default/files/document_pdf/WTP%20Local%20Stormwater%20Fee%20Summary%2004-25-13.pdf; see also Betsi Fores, "Maryland county executive resists 'rain tax,'" The Daily Caller, Apr. 27, 2013, http://dailycaller.com/2013/04/27/maryland-county-executive-resists-rain-tax/; County Council of Anne Arundel County, Maryland, Bill No. 2-13, available at http://www.aacounty.org/CountyCouncil/Resources/2013/2-13.pdf (noting the veto and veto override actions).
19 Bill No. 2013-09 was introduced on April 16, 2013 and a public hearing was held on May 1, 2013.
20 Bill CB8-2013 (Program) and Resolution CR21-2013 (Fees) both passed the County Council on March 28, 2013.
21 Baltimore City Council Website, Tuesday, June 4, 2013, http://www.baltimorecitycouncil.com/ (listing on the legislative agenda "Work Session: Judiciary and Legislative Investigations Committee . . . 12-0155 Stormwater Remediation Fees Work Session continued from May 14, 2013").
22 Bethany Rogers, “Commissioners vote to create 1-cent 'rain tax,'" The Frederick News-Post, May 30, 2013, http://www.fredericknewspost.com/locations/local/frederick_county/article_739ffc28-c951-11e2-be97-0019bb30f31a.html.
23 See Broadwater & Wheeler, supra note 4 ("In Annapolis, some lawmakers concerned about the complaints say they'll make a last-minute push Monday to put the entire stormwater fee program on hold for two years, state Sen. Joan Carter Conway, a Baltimore Democrat, confirmed Sunday.").
24 See Forbes, supra note 15.
25 See "Rain tax rebellion?," supra note 3 ("According to Sen. David Brinkley, who represents northern Frederick County, some companies are already planning moves out of state.").
26 The Baltimore Sun reported that a South Baltimore-based industrial contracting company and scrap yard says his property tax bill is $3,000 annually, but that he would face $4,000 in stormwater fees under the proposal. See Broadwater & Wheeler supra note 4.
27 According to the Sun article, "nonprofits, community associations and businesses across Baltimore have lined up to object to the city's implementation of a stormwater treatment fee, which they say will hit their organizations disproportionately hard." Supra note 4.
28 The Sun reports that "the money from the stormwater fee is also a key part of Mayor Stephanie Rawlings-Blake's 10-year financial plan aimed at reducing a $750 million projected shortfall. Money from the fee would free up revenue to help reduce property taxes, officials point out." Supra note 4.
29 "An Act to amend the Federal Water Pollution Control Act to clarify Federal responsibility for stormwater pollution," Pub. L. No. 111-378, 124 State. 4128 (Jan. 4, 2011).
30 See id.; 33 U.S.C. §1323(c)(1).
31 Letter from Christine H. Porter, Director of Regional Environmental Coordination, Dept. of Navy, to Anne Arundel County Council, “Subject: Anne Arundel County Bill number 2-13,” Mar. 1, 2013.