Stormwater Regulation and Fees in Pennsylvania

by McNees Wallace & Nurick LLC
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Municipalities throughout Pennsylvania are in the process of implementing local stormwater ordinances and fees that will likely impact residents, business owners, and land development.  Recent changes to federal and state laws have forced municipalities to seek new funding sources, regulate businesses that have large areas of solid pavement and roofing (“impervious” areas), and limit stormwater impacts that occur from land development.  Some municipalities are joining forces with their neighbors, others are creating authorities, and some are spinning their wheels.  If your municipal clients have not yet developed and implemented stormwater regulations, you may soon be asked to assist in implementing a stormwater plan.

We note that this article focuses specifically on Pennsylvania, but these stormwater program and fee issues impact municipalities across the country.

A municipal separate storm sewer system, a system that has separate pipes to convey stormwater, is known as an “MS4.” Municipalities regulated as MS4s have independent legal obligations related to stormwater management.  These obligations are implemented through their MS4 permits with the Pennsylvania Department of Environmental Protection (“DEP”).   One potential component of an MS4’s compliance is regulation of businesses and land development through ordinances.  For example, DEP requires minimum standards for stormwater controls in local ordinances and, to that end, has issued a model stormwater ordinance that MS4s are expected to implement, in some form, by September 30, 2022.  The model ordinance is available here.

The permitting requirements are even more severe if the MS4 is within the Chesapeake Bay watershed or within an identified “impaired” watershed.  In the Bay watershed, for example, MS4 permitting now requires municipalities to demonstrate sediment and nutrient reductions (contributions of these soil particles and nutrients in runoff, like nitrogen and phosphorus, are considered pollutant “loadings” to surface waters that affect the Bay’s water quality).  The requirements originate from federal requirements imposed on the Commonwealth.  DEP is continuing to release guidance to assist municipalities in meeting their obligations, including a toolbox for local planning and tracking pollutant reductions.

A list of the hundreds of regulated MS4s, by county, and their regulatory status is available on DEP’s municipal stormwater website.  If you represent one of these listed municipalities, you are likely in the midst of grappling with stormwater regulation.  If you represent another municipality, or have not yet addressed these issues, now is the time to start the stormwater discussion.  Below are some key points to consider.

Stormwater Authorities and Fees
Due to recent changes to the Municipal Authorities Act of 1945, Act of May 2, 1945, P.L. 382, as amended and supplemented, municipalities may now create stormwater authorities, which are separate local entities that have defined responsibilities such as stormwater planning, management, and implementation.  By law, stormwater authorities may generally impose “reasonable and uniform” rates.  A key point of contention at the local level will undoubtedly be whether rates imposed are “reasonable and uniform” based on the characteristics of the properties that are subject to the fees. Whether an authority is the right approach for your municipal client will depend on a number of vairables.

Fee structures vary widely from municipality to municipality.  The most administratively simple is the flat per-parcel fee structure. A more complicated, but also more precise approach is the equivalent hydraulic area (EHA) fee structure, which features separate per-square footage rates for impervious area surfaces (parking lots and other paved surfaces) and pervious area surfaces (lawns, gardens, green rooftops).  Additionally, many municipalities may apply separate fee structures for non-residential and residential parcels, with residential properties typically charged a flat-fee, while non-residential properties pay more targeted fees designed to reflect each parcel’s total impervious area, such as a per-EHA rate.  Typically, non-residential properties are subject to a broader range of fees based on higher variance in impervious surface areas among commercial and industrial parcels.

No matter how the municipality or authority structures its fees, the revenue generated from the fees may be used by MS4s to implement “best management practices” (“BMPs”) that control and reduce the discharge of stormwater, including sediment and nutrient loadings.  BMPs can range from something as simple as more frequent street cleaning, to something as burdensome and costly as construction of retention basins and infiltration techniques.

Potential for Conflict
While Pennsylvania municipalities and authorities are facing increasing pressure to implement stormwater programs and impose stormwater fees, residents and businesses have mounted challenges to recent municipal actions.  For example, an attorney and property owner in the City of New Castle filed a complaint with the Lawrence County Court of Common Pleas requesting that the court void stormwater management fees to be collected by the New Castle Sanitation Authority.

Although new to Pennsylvania, other jurisdictions across the country have addressed challenges to stormwater fee programs with considerably varying outcomes.  In the heartland, the Supreme Court of Missouri issued a 2013 decision striking down stormwater management fees and requiring municipalities to fund stormwater management programs through tax revenues.  However, in the northeast, the Supreme Court of Maine conversely issued a 2012 decision affirming a stormwater management fee program as a fee for services rendered.

The outcomes of these challenges remain uncertain, but litigation results could further impact the landscape of acceptable stormwater management programs and fees in Pennsylvania.

Transparent Development Process
When municipalities propose ordinances, fees, BMPs, and other measures to regulate stormwater, the municipalities should undertake a transparent process.  Public education and input will be critical, and key stakeholders should be encouraged to participate.  The focus should be on developing a fee structure that ensures assessments are fair, reasonable, and uniform.  In addition, a municipality or authority may consider including a credit program for implementing desired controls.  This approach will help reduce the risk of litigation later (which has been common for stormwater fees throughout the country).

In addition, MS4 municipalities may look to private landowners and businesses to help them implement BMPs on private property.  This can involve questions related to funding, design and construction, and long-term operation and maintenance (“O&M”) agreements to ensure ongoing effectiveness of BMPs.  It may also involve restrictions on property, such as through deed covenants or use restrictions.  The opportunity to work collaboratively on such projects can be beneficial for both the municipality and the stakeholders, resulting in a win-win if done properly.  These opportunities may also expand beyond the borders of a municipality and involve cooperation with regional and county-wide initiatives.

Conclusion
Stormwater management is an expensive proposition, and local regulation of stormwater is here.  Developing a plan and a fee structure can be a daunting task, and ultimately may result in litigation.  However, a transparent process that allows for stakeholder input, collaboration, and creativity will allow your municipal clients to meet their regulatory requirements and reduce the risk of possible litigation.  The McNees Stormwater Team can assist with review, analysis, and if necessary, litigation of stormwater management plans and fees.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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