Montgomery County Should Appeal Stormwater Case

Last Wednesday, a Montgomery County Circuit Court judge held that the Montgomery County Water Quality Protection Charge is invalid and that the plaintiff should not have been required to pay any stormwater fee to the county. The case could have significant ramifications across the state for jurisdictions that have, like Montgomery County, established a stormwater fee similar to the one invalidated in the case.

First, some background.  In 2012, the Maryland General Assembly passed HB 987, which required any jurisdiction subject to a certain federal stormwater permit (including, for example, Baltimore City and Prince George’s County) to implement an annual stormwater remediation fee and a local watershed protection and restoration fund to hold those new funds. The law did not require the local governments to set the fee at any specific level or otherwise require them to collect a specified amount in revenues; each jurisdiction had discretion in setting the local stormwater remediation fee. 

Interestingly, Montgomery County had established its Water Quality Protection Charge long before the Maryland General Assembly acted in 2012 and was well on its way to using the newly collected funds to support the development of green infrastructure throughout the county.  Subsequently, Montgomery decided to update its local laws to comply with the provisions of the new law, although it could have decided not to, as the local charge was authorized under a much older section of law that authorized but did not require such local fees. 

And that’s where the first big question about the impact of this case comes in.  This past session, the Maryland General Assembly passed a new law, signed by Governor Hogan, that repealed the requirement for the 10 largest municipal governments to charge a stormwater fee, but which maintained the requirement for these jurisdictions to fully fund their stormwater obligations.  In this new law, the General Assembly also repealed the applicability of the law to Montgomery County, and decided to treat the county separately, under the different and older section of the state code.  Thus, Montgomery County is no longer required to comply with the state law at issue in this case.  However, the trouble is that Montgomery County is required under the new law to comply with many of the same provisions analyzed in the case. 

There are two separate provisions at issue, which together, essentially require a local stormwater fee to be set based on the stormwater services being provided to the property owner by the county.    The first of these provisions guides how a fee must be set, and the second requires jurisdictions to establish credits for properties that have their own stormwater facilities or activities.  The plaintiff sued because he has stormwater drainage ponds on his property and argued that, not only should he receive a credit for that, but he should not be charged at all.  The judge agreed, emphasizing that a fee must be reasonably connected to the county’s actual stormwater management. 

If the county appeals, it will likely focus on the significant ambiguity in these provisions, as well as the total lack of deference that the court provided to the agency in this case.  The judge reasoned that the law is new, that Montgomery County has very little experience interpreting it, and, therefore, its interpretation should be entitled to very little deference.  As noted, Montgomery County had established its stormwater fee long before the state required it, and the county fee was in some ways a template for the state fee.  Further, the county needed to change its law very little to conform to the state law in 2013.  Additionally, many other jurisdictions in Maryland have established their fees under the same interpretation of these provisions.  Finally, if appealed, the Court of Special Appeals will likely take a hard look at whether the case was as cut and dried, as the circuit court judge seemed to think.  The provisions cited refer generally to the principle that a fee should be based on the stormwater management services provided and that credits should be provided for those who undertake stormwater management activities on their own; of this, there is little question (otherwise it’s more like a tax, less like a fee).

But most jurisdictions impose a cap on the amount of a credit (or even establish two fees – one of which cannot be offset by credits) in recognition that there are overhead costs associated with running a stormwater utility or division that should not be totally eliminated.Montgomery County should also appeal the case because of the substantial amount of revenues at stake (principally, from commercial or industrial properties) and the importance of those revenues to achieving the county’s clean water goals and compliance with the total maximum daily load or “pollution diet” for the Chesapeake Bay.  Stormwater is the most intractable problem facing Bay restoration efforts, both in Maryland and throughout the watershed as a whole.  And stormwater fees are the cornerstone of new efforts to turn that problem around.