A July 22, 2015, Montgomery County Circuit Court decision has called into question Montgomery County’s stormwater remediation fee, also known as the Water Quality Protection Charge (WQPC).  The case is Paul N. Chod v. Board of Appeals for Montgomery County, 398704V. The challenge was brought by developer Paul Chod in response to an $11,000 WQPC bill assessed against his Shady Grove Development Park in Gaithersburg.  Judge Nelson Rupp, Jr. rendered the decision.

The case centers around § 4-202.1 of the Environment Article, the controversial law that originally required all 10 local jurisdictions subject to a National Pollution Discharge Elimination System Phase 1 Municipal Separate Storm Sewer System (MS4) permit to adopt a stormwater remediation fee, also know as the “rain tax” by the fee’s opponents.  (Note: The mandate to charge the fee was repealed during the 2015 Session, although counties must justify how they are meeting their MS4 stormwater remediation costs.)  The 10 affected jurisdictions include: Baltimore City and Anne Arundel, Baltimore, Carroll, Charles, Frederick, Harford, Howard, Montgomery, and Prince George’s Counties.

Rupp addressed two key issues in the case: (1) whether the WQPC is per se invalid; and (2) whether the WQPC is invalid as applied in the specific instance to the petitioner, Chod.

WQPC is Per Se Invalid

Rupp considered whether the WQPC complied with the requirements of § 4.202.1(e)(3) of the Environment Article, which reads:

(i) If a county or municipality establishes a stormwater remediation fee under this section, a county or municipality shall set a stormwater remediation fee for property in an amount that is based on the share of stormwater management services related to the property and provided by the county or municipality.

(ii)   A county or municipality may set a stormwater remediation fee under this paragraph based on:

1.   A flat rate;

2.   An amount that is graduated, based on the amount of impervious surface on each property; or

3.   Another method of calculation selected by the county or municipality.

The Court found that the WQPC is invalid per se because it did not “reasonably relate to the stormwater management services provided by the County” and went against the language of § 4202.1(e)(3).  In reaching its decision, the Court rejected the County’s interpretation that the statute allows flexibility in how and what the County can collect.  From Rupp’s holding:

The County has taken the position that § 4-202.1(e)(3)(i) need not be the basis for the Charge. Instead, the County contends that in imposing the Charge, subsection (e)(3)(i) should be read as requiring the County to “adopt a stormwater remediation charge that, at a bare minimum, allows [the County] to recover the cost of providing services to individual property owners by collection a regulatory fee-for-serve.”…From the County’s perspective, the broad flexibility of the statute allows for the Charge to be imposed as a tax unrelated to the services provided. The County argues that because the Charge was assessed based on the imperviousness of the property that it complies with the statute because that is a permissible method under subsection (e)(3)(ii). In that respect, the County’s interpretation of the enabling legislation ignores the express language of § 4-202.1.

The WQPC is Invalid as Applied in This Instance

Rupp also found that the WQPC was invalid as applied in the specific instance because the County essentially provided no stormwater management services to the property. From Rupp’s holding:

Therefore, this Court finds that the WQPC is invalid as applied because it is being imposed on the Petitioner without consideration for the services provided by the County, as expressly required by § 4-202.1 of the Environment Article.  [Petitioner Chod’s] stormwater retention ponds service an area three times the size of the Shady Grove Development Park and receive essentially no services from the County in return.  Therefore, as applied, the Charge does not take into account the services provided by the property owner compared with the services provided by the County. Property owners like the Petitioner are thus being burdened with the same charge as other property owners despite bearing the cost of managing the property themselves. Such an application of the statute clearly violates the intentions behind the law, thus creating an arbitrary and onerous burden on the Petitioner.

Implications

UPDATE 2015-07-27: According to Montgomery County, the Court’s decision was not a declaratory judgment action and no injunction was issued. Currently, the ruling is limited to Chod. It is unclear whether this holding could be expanded or used by other individuals subject to the WPQC.

It is also unclear whether this holding will have broader implications beyond Montgomery County. The County is unique among the Phase 1 jurisdictions in that it established its stormwater fee prior to the passage of § 4-202.1 and the law “grandfathered” the County’s fee but also required it to be “consistent” with the provisions of § 4-202.1.   This consistency requirement also applies to other non-Phase 1 MS4 jurisdictions under § 4-204(d)(4).   If the Court’s holding derives solely from this “consistency” requirement, then the holding could possibly be expanded to affect only Montgomery and those non-Phase 1 jurisdictions that have adopted a stormwater charge under § 4-204.  To the extent the holding is based on broader concerns than consistency, then other Phase 1 MS4 jurisdictions could also be effected.

Affected jurisdictions would likely have to redraft their fees and collect a fee that is uniquely calculated for each property.  Additionally, such jurisdictions could not use the fee to generate funds for stormwater projects for common areas open to all county citizens, such as roads or parks.

County Appeal

Coverage from a July 22, 2015, Daily Record article reported that Montgomery County is considering an appeal:

Absent a successful appeal, Judge Nelson W. Rupp Jr.’s decision will likely compel the county to redraft its Water Quality Protection Charge to mirror its costs for providing the environmental service. …

Montgomery County spokesman Patrick Lacefield stated in an email that the county is “reviewing the decision, including the option of appeal.”

Background on Montgomery County Water Quality Protection Charge