Funding Clean Water: A Tale of Two Counties

By: Diane Cameron, Former Director, ANS Conservation Programs

November 2015 was notable for stormwater funding in Maryland. In the space of two days, November 16 and 17, two counties took actions affecting their local clean water funds. Montgomery County provided certainty and stability to its large and growing clean water program aimed at protecting local streams and rivers and eliminating stormwater pollution. Baltimore County’s action, on November 16, was a unanimous council vote to phase out its stormwater fee. I’m glad that Montgomery continues to support robust clean water funding, and I hope that Baltimore County will reverse its course and provide needed funding for its own stream and watershed protection and restoration programs. Robust Clean Water Funding is needed to support stream and watershed restoration – mandated by the Clean Water Act. Montgomery’s stormwater fee (Water Quality Protection Charge or WQPC) funds the implementation of the County’s stormwater permit, issued in 2010 by the Maryland Department of the Environment. This permit is mandated under the Federal Clean Water Act. Starting a decade ago, ANS has advocated for this permit and supported its funding and implementation through the Stormwater Partners Network, a countywide coalition co-founded by ANS. This permit requires Montgomery to build retrofits like rain gardens and tree plantings, and to increase the pollution removal performance of existing stormwater ponds, sufficient to address the runoff from an additional 4000+ acres of pavement and rooftops.

Montgomery County Council

Montgomery County Council

Montgomery County Council acts to provide certainty to its stormwater fee system after developer’s Litigation cast doubt on the status of the stormwater fee. In Montgomery on November 17, the nine-member Council voted unanimously to define its existing stormwater fee as an “excise tax.” Doing this was recommended by the County Attorney, in order to provide certainty and long-term funding stability for Montgomery’s $360 million clean water program. The Montgomery County Council’s action was recommended by the County Attorney in the face of ongoing litigation against the County’s stormwater fee, brought by a developer named Paul N. Chod. Mr. Chod, a developer in Gaithersburg, alleged that the County’s stormwater fee system was unfair to him, because the County didn’t adequately reduce (or eliminate) his fee based on the fact that he has stormwater ponds on his property. Although the County’s Department of Environmental Protection – the agency administering the stormwater fee – did reduce Mr. Chod’s stormwater fee by 25%, that wasn’t deemed adequate by Mr. Chod, who thought he should pay zero. Unfortunately, Judge Rupp agreed with the plaintiff, and found against Montgomery County. In his decision in July, 2015, Judge Rupp stated that “This Court finds that the WQPC is invalid per se because this charge need not reasonably relate to the stormwater management services provided by the County.” This opinion espouses a theory that is at odds with the fundamentals of public utility financing. In public utility financing and user billings – for electrical, gas, and water services – users pay a fee that combines direct usage/ direct benefit to each user, with systemwide support funding such as for distribution, maintenance, and capital investments that benefit all users across the entire system.

Like all Utilities, the Stormwater Fee and Fund Benefits Users Directly and Indirectly Like all well-run utilities, Montgomery’s clean water fund is based on this combination of private use and benefit, with system wide support: user fees relate to each property’s quantity of impervious surface (pavement and roof area), along with the need to fund countywide programs that prevent, reduce, and mitigate runoff and restore local streams. The fee is reduced according to each property’s implementation of measures like rain gardens, green roofs, and stormwater ponds that reduce their stormwater discharges.

Residential Rain Garden

Residential Rain Garden

In the wake of Judge Rupp’s decision, the County Attorney subsequently recommended that the Council define the WQPC as an excise tax, since a tax isn’t considered a “fee for service” where charges levied by the County must exactly correspond to services rendered. Although not all experts reviewing the case agreed with this course of action, it was aimed at a goal that clean water activists do agree with: providing certainty to our local clean water fund, so that it can be leveraged to provide even more robust funding via municipal bonds. On November 17, 2015, I testified on behalf of ANS, plus six other organizations, in favor of the County Attorney’s proposal to define the WQPC as an “Excise Tax.” (see full testimony). Our coalition of seven organizations were the only community voices at the hearing testifying in favor of the clean water fund (WQPC) and the recommended change in definition; other speakers at the hearing, in addition to DEP Director Lisa Feldt who spoke in favor of the change, were there to oppose “the Rain Tax,” including Mr. Chod, and an individual who wore a camouflage rain poncho and carried an umbrella during his testimony. The Council voted unanimously in favor of the change; in so doing, we (the Council, County Executive Leggett, and group members of the Stormwater Partners Network) put the stormwater fee out of harm’s way of further litigation seeking to impose an ultra-specific “property owner benefit” standard to the exclusion of systemwide support.

Here is an excerpt from my November 17 testimony to the Montgomery County Council: “Montgomery’s stormwater infrastructure operates as a complete system. Each property owner pays into the system, based on their amount of impervious surface. But, in addition to providing local flooding prevention, this program covers system wide maintenance and capacity needs caused by stormwater pollution. Utility fees, from electricity to drinking water, include charges that fund systemwide maintenance and capacity-building; our stormwater program is no different.

Clif Grandy, Steward of the Fenwick Tributary to Rock Creek, points out where a gabion wall failed due to flood-stage erosion

Clif Grandy, Steward of the Fenwick Tributary to Rock Creek, points out where a gabion wall failed due to flood-stage erosion

Our Water Quality Protection Fund supports projects that do the following: • Restore local streams and protect public health; • Prevent erosion; • Reduce flooding and scour of roads and bridges; • Reduce raw sewage leaks, caused by stormwater scour; • Increase local property values by planting more trees. To insist upon direct benefit to each property owner as the sole basis for stormwater fees — as some have interpreted the Chod case to be claiming — flies in the face of established practice for public infrastructure programs including stormwater.”

Reforming the stormwater fee structure is preferable to eliminating or phasing it out To eliminate an existing dedicated clean water funding tool – as Baltimore County Council decided to do – also flies in the face of common sense and legal prudence. The Baltimore Sun reported that the Chesapeake Bay Foundation had warned the Council that its elimination of the stormwater fee, without having an alternative in place to pay for projects required by the County’s stormwater permit, could violate state law. As of 2009, the estimated stream restoration cost for Baltimore County, according to an analysis of MD-DNR data, was $897.5 Million. (Montgomery’s estimated stream restoration cost in the same analysis was $769.2 million.) Reportedly, the stormwater bill for the former Sparrows Point steel mill, which is located in Baltimore County and slated for redevelopment into new industries, was a driver of the council’s action. It seems that reforming the fee structure in order to ensure that the fee is affordable, fair and appropriate for all, including large industrial landowners, would be preferable to phasing out the fee altogether.

Please don’t call it a Rain Tax – it’s not about the rain – it’s about land management decisions To call our local Water Quality Protection Charge, or any stormwater fee “the Rain Tax,” is to misinform the public about the threat to our clean streams from land use and land management decisions. These decisions are not about the rain. They are about protecting our most precious common resource: clean water. 

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One Comment

  1. Thanks Diane for your update. I imagine we’ll see the benefits of Montgomery County’s decision in the coming decades … as the County avoids problems will have to be fixed sooner or later.

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