Court Holds Federal Agencies Responsible for Payment of Past-Due Stormwater Service Charges
Municipal stormwater management agencies achieved a major victory on May 25, 2012, when a federal judge in Washington state ruled for the cities of Renton and Vancouver, Wash., holding the federal government must pay those cities for the costs of cleaning up stormwater from federal facilities for assessments made prior to the passage of clarifying legislation that took effect in January 2011.1 This ruling supports local governments nationally in their efforts to collect past-due stormwater service charges from federal facilities discharging into municipal storm sewer systems that have previously refused to meet these obligations.
Sovereign Immunity and the District Court’s Decision
The case of United States v. City of Renton, et al.2 revolves around the issue of whether federal facilities owned by the Bonneville Power Agency (BPA) were legally obligated to pay fees imposed by the cities of Renton and Vancouver in order to fund the stormwater mitigation efforts required under state law and the Clean Water Act (CWA). The legal principle of sovereign immunity at issue in the case states that the federal government cannot be held liable for fees assessed by state and local governments, absent a clear congressional waiver. While Congress broadly waived the federal government’s sovereign immunity in 1977 under section 313(a) of the CWA for the payment of “reasonable service charges,” federal agencies in recent years refused to pay the assessments for expensive stormwater cleanup throughout the United States, claiming that Congress did not expressly include such fees in enacting the 1977 waiver and that such assessments were a tax - rather than a service charge - and are therefore outside of the waiver of sovereign immunity.
In this particular case, both cities had received prompt and uncontested payment of these fees from the BPA until late 2010 and early 2011, when the agency abruptly determined that it was not legally obligated to do so and ceased payment. In response to a raft of similar decisions throughout the country, municipal advocacy groups, including the National Association of Clean Water Agencies (NACWA), successfully pushed for the passage of the S. 3481 in early 2011. This legislation, sponsored by Sen. Ben Cardin (D-Md.), included clarifying language at §313(c) stating that the federal government’s waiver of sovereign immunity for “reasonable service charges” included stormwater fees.3
Despite widespread expectations that this clarification would result in federal agencies paying past and future stormwater fees without objection, in Renton and Vancouver the BPA claimed that S. 3481 was not retroactive.4 The United States then sued the cities arguing that the federal government was under no obligation to pay the cities stormwater fees until S. 3481 was signed into law on January 4, 2011, and sought the return of all amounts paid in the years prior to that date.5 In rejecting these claims, Judge James Robart of the Western District of Washington ruled that the federal government’s 1977 waiver of sovereign immunity “unambiguously includes any fee, charge or assessment, even if denominated as a tax.”6 In citing extensively from the legislative history of S. 3481, Judge Robart held that Congress waived sovereign immunity for reasonable service charges under the CWA since at least 1977, that S. 3481 was a clarification of Congress’ original intent for the term “reasonable service charge” - rather than a change in substantive law. As a result, the government was retroactively obligated for any fees assessed prior to January 2011, so long as they fell within the Act’s criteria requiring that the assessment is “nondiscriminatory,” is based on “some fair approximation of the proportionate contribution of the property of the facility to stormwater pollution” and the fee is “used to pay or reimburse the costs associated with any stormwater management program.”7
Notably, Judge Robart did not resolve the issue of whether the BPA was responsible for the specific unpaid charges imposed by the cities, concluding that they had not unequivocally demonstrated that those fees were reasonable charges within the framework established by S. 3481.8 However, in doing so, he provided clarifying guidance on whether the cities’ fee programs complied with S. 3481, noting that the reasonableness of a charge should be considered in comparison to those assessed on non-governmental entities, that the use of differing methods of approximating a facility’s burden did not mean that the fee program was “discriminatory,” and that the revenue from these fees may be used for the “full range of costs associated with the program.”9
Implication of the Decision
The Renton decision has wide-ranging implications for stormwater management agencies across the country because it establishes a clear avenue for municipal agencies to collect fees for federal facilities’ contributions to the expensive costs of stormwater being imposed on municipalities under the Clean Water Act. The importance of this avenue becomes clear when the plight of cites such as Richmond, Va., and Seattle, Wash., are considered as each is owed hundreds of thousands of dollars in stormwater fees by numerous federal agencies.10 This issue has only become more pressing over the last year as state and local governments are making tough fiscal decisions in light of a sluggish recovery from the recent recession.11 It also is particularly important for municipalities in the Chesapeake Bay region that have extensive federal properties and are facing huge costs in meeting the Chesapeake Bay cleanup targets.12
Although securing stormwater fee revenue from federal facilities will not solve local governments’ funding woes, it will limit potential inequities by ensuring that local governments are not forced to pass on the burden of these costs to residents and other private facility owners. In addition, securing stormwater revenue from federal facilities under the Renton precedent may also have significant benefit for communities that have struggled to fund long-term stormwater mitigation efforts that were predicated on revenue from those facilities.
Although still subject to appeal to the Ninth Circuit, the court’s decision in Renton has the potential to significantly alter the balance of judicial precedent in favor of municipal and county governments seeking to secure past-due stormwater service fees from recalcitrant federal agencies. The ruling supports the efforts of many local governments around the county in their efforts to be compensated for the tremendous costs of cleaning up stormwater pollution caused by runoff from federal facilities into municipal storm sewer systems.
1 P.L. 111-378, signed into law on January 4, 2011.
2 See U.S. v. City of Renton et al., No. C11-1156JLR (W.D.Wash. May 25, 2012) (order granting in part and denying in part motion for partial summary judgment).
3 See Brief for the National Association of Clean Water Agencies et al. as Amici Curiae in Support of Defendant’s Motion for Partial Summary Judgment at 6, U.S. v. City of Renton et al., No. C11-1156JLR (W.D.Wash. Feb. 9, 2012).
4 See Id.
5 See City of Renton at 1.
6 See Id. at 20.
7 See Id. at 11-24.
8 See Id. at 24.
9 See Id. at 24-26.
10 See Brief for the National Association of Clean Water Agencies et al. at 13.
11 See Elizabeth McNichol, Phil Oliff and Nicholas Johnson, States Continue to Feel Recession’s Impact, March 2012, Center for Budget and Policy Priorities, (noting that 46 states have reduced services while at least 30 have been forced to raise taxes to maintain revenue).
12 Reducing stormwater impacts will help meet the Chesapeake Bay Total Maximum Daily Load ( TMDL) limits established by EPA in December 2010. The Bay TMDL (1) sets the maximum amount of pollution the Bay can receive and still attain water quality standards and (2) identifies specific pollution reductions requirements for nitrogen, phosphorus and sediment that must be met by 2025 with at least 60 percent reduction met by 2017. The costs will be very high. For example, Maryland estimates that costs of meeting the 2025 goals will be $14. 7 billion of which $7.7 billion will be devoted to stormwater remediation.