Stormwater Utility Ordinance: U.S. District Court Addresses Whether Assessment Violates Railroad Revitalization and Regulatory Reform Act

by Mitchell, Williams, Selig, Gates & Woodyard, P.L.L.C.
Contact

Mitchell, Williams, Selig, Gates & Woodyard, P.L.L.C.

Download PDF

A United States District Court (Western District Virginia)in a December 26th Memorandum Opinion (“Opinion”) addressed a challenge to a stormwater utility ordinance assessment. See Norfolk Southern Railway Company v. City of Roanoke, et al., 2017 WL 6599008.

The challenge was based on an argument that the assessment imposed by the ordinance discriminated against a rail carrier in violation of the Railroad Revitalization and Regulatory Reform Act of 1976 (“Act”).

The City of Roanoke, Virginia (“City”) enacted a stormwater utility ordinance (“Ordinance”) in 2013. The Ordinance established a utility to support the City’s stormwater management activities and a system of charges (i.e., assessments) to fund those activities. The utility manages the City’s MS4 (Municipal Separate Storm Sewer Systems) and administered the corresponding permit.

Virginia Code § 15.1-292.4 authorizes local governments to adopt stormwater control programs and impose charges on property owners to finance the cost of the programs. Charges imposed pursuant to the statute must be based on an analysis that demonstrates the rational relationship between the amount charged and the services provided.

Such localities are also required to provide for full or partial waivers of charges to any property owner who installs, operates, or maintains a stormwater management facility that reduces stormwater flow or pollutant levels and retains and treats stormwater on site in accordance with an approved stormwater management plan. Income derived from stormwater management charges is declared by the statute to be dedicated revenue and cannot exceed actual costs incurred by a locality operating under the provisions of the statute. Further, it can only be used to pay or recover costs for certain listed charges or costs.

The adoption of the Ordinance was based upon a finding that “an adequate, sustainable source of revenue for stormwater management activities is necessary to protect the general health, safety and welfare of the residents of the City.” A finding by the City Council declared that it would be in the “best interest of the public to base the assessment on a parcel’s impervious surface cover.”

Norfolk Southern Railway Company (“Norfolk Southern”) owns approximately 758 acres of property in the City. The railroad filed a lawsuit in the United States District Court (Western District Virginia) challenging the Ordinance’s assessment.

Norfolk Southern argued that the Ordinance is:

. . . another tax that discriminate[s] against a rail carrier, in violation of the Railroad Revitalization and Regulatory Reform Act of 1976 . . .

The Chesapeake Bay Foundation (“Chesapeake”) intervened as a Defendant.

Norfolk Southern, the City and Chesapeake all moved for summary judgment on the threshold issue of whether the assessment is a tax for purposes of the Act.

The Court concluded that the assessment is a fee rather than a tax. As a result, the Ordinance’s assessment was deemed not actionable under the Act. Both the City and Chesapeake were therefore deemed entitled to summary judgment.

The Court’s opinion provides a detailed discussion of the Act including its purpose and components. In particular, the Court notes that the Act was enacted in order to “restore the financial stability of the railway system in the United States.”

In order to achieve this goal, Congress is stated to have targeted states and local taxation schemes that discriminate against railroads. The Court considered whether the assessment was “another tax” within the meaning of Subsection (b)(4) of the Act. A key question was therefore whether the assessment was a tax or a fee.

The Court determined that the assessment was outside the scope of the Act. It noted:

. . . while the assessment bears some indicia of a tax, the court is convinced that those features do not render the Ordinance a tax provision. Instead, the court concludes, for the following reasons, that the Ordinance imposes a regulatory fee, rather than a tax, for purposes of the Act.

The reasons for the Court’s conclusion include:

  • The record establishes that the Ordinance and the assessment were part of a comprehensive statutory and regulatory scheme designed to manage stormwater and its negative effects
  • It was undisputed that all of the revenue generated by the assessment was used to fund the utility stormwater management facility operation and activities
  • The structure of the assessment more closely resembles that of a fee as opposed to that of a tax
  • The regulatory purposes served by the assessment structure “counsel in favor of characterizing the charge as a fee”
  • The Ordinance encourages owners of improved parcels to implement stormwater management practices that further reduces runoff and pollutants
  • There is sufficient correlation between the assessment and the stormwater management services provided by the utility

A copy of the opinion can be downloaded here.

Written by:

Mitchell, Williams, Selig, Gates & Woodyard, P.L.L.C.
Contact
more
less

Mitchell, Williams, Selig, Gates & Woodyard, P.L.L.C. on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
Privacy Policy (Updated: October 8, 2015):
hide

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.

Security

JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at info@jdsupra.com. In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at: info@jdsupra.com.

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.