Stormwater pollution is bad. Avoiding stormwater pollution – in particular, by implementing green infrastructure projects – is good. In fact, stormwater mitigation provides broad economic and environmental benefits. Policymakers often recognize these truths, but before they can act they must answer a key question: How do we pay for mitigation efforts so we can all reap the benefits?
A common answer is stormwater management districts, or SMDs. SMDs are bodies created by state or local governments to address stormwater pollution. They may be congruent with municipal or county borders, or they may span multiple local governments. Most importantly, SMDs have the authority to maintain storm-sewer systems, undertake stormwater mitigation projects, and charge fees to pay for these activities. But these fees are sometimes challenged by opponents claiming that they are really disguised illegal taxes.
Courts faced with these stormwater-fee cases generally follow a simple three-part rule: when (1) there’s an enabling act for an SMD, (2) the SMD’s fees conform to the terms of that enabling act, and (3) those fees provide a benefit to the people who pay them, a court will uphold the fee and affirm that it is not an illegal tax.
Rhode Island presently has no SMDs. But it does have a strong enabling act on the books – the “Stormwater Management and Utility District Act of 2002.” Last year, CLF released a report analyzing this act and assessing the likelihood that stormwater fees established by Rhode Island SMDs could survive legal challenge. The answer? Very likely. We have a strong enabling act, so any fee that conforms to the terms of that act and provides a benefit to fee payers should be upheld. And SMDs can easily ensure that their fees follow the act and provide benefits to fee payers, so long as they charge fees to properties that actually discharge stormwater.
A few weeks ago, the Rhode Island Supreme Court issued an opinion that supports CLF’s conclusion that stormwater fees here should survive legal challenge. In Commerce Park Associates 1, LLC v. Houle, opponents challenged the Town of Coventry’s sewer assessment fee as a disguised tax. The Court applied part of the formula mentioned above to uphold the sewer assessment. The Court noted that (1) there is an enabling act, and (2) its language authorizes the sewer assessment at issue without indicating that the assessment is actually a tax. In fact, the language of the act is so straightforward in indicating that the sewer assessment is not a tax that the Court did not even reach the third question of fee-payers’ benefit. The Court simply relied on plain language in holding that the assessment is valid and is by definition not a tax.
Like the enabling act in Coventry, the state SMD enabling act does not in any way indicate that a stormwater fee is actually a tax. This means lesson for Rhode Island municipalities and SMDs is simple: follow the formula. (1) Pay attention to the enabling act, (2) craft a fee that follows the terms of the act, and (3) provide a benefit to fee payers, meaning fees should only be charged on properties whose stormwater discharges can be managed or mitigated. Do those three things, and you will finally be able to pay for green infrastructure, create jobs in your community, and stop stormwater pollution.