City of Roanoke Prevails; Railroad Must Pay Stormwater Management Fee

On February 15, 2019, the Fourth Circuit Court of Appeals held that the City of Roanoke’s Stormwater Management Utility charge was a regulatory fee and not a tax. The Court, therefore, affirmed the dismissal of Norfolk Southern’s Complaint asserting that the City’s Stormwater Management Utility charge was a tax that discriminated against railroads in violation of federal law. The decision forecloses federal court challenges to local government charges for stormwater management services as unlawful discrimination against railroads.

The Court’s decision included three separate opinions; each of the three judges on the panel wrote an opinion. The opinion joined by all three judges, written by Circuit Court Judge Diaz, concluded that the City’s stormwater management charge was a fee rather than a tax, because the charge forms part of a comprehensive regulatory scheme. The opinion states:

In sum, the charge is part of a regulatory scheme, rooted in the Clean Water Act, whose purpose is to remedy the environmental harms associated with stormwater runoff and to hold stormwater dischargers responsible for footing the bill.

The Fourth Circuit’s decision affirmed the decision of District Judge Glen Conrad of the Western District of Virginia granting summary judgment in the City’s favor.

Circuit Judge Wilkinson wrote an eloquent concurring opinion that is destined to be cited as a landmark call to arms in cases involving environmental regulations. Citing sources as varied as John Smith, the Algonquin Indian tribe, and William Byrd, II, Judge Wilkinson analyzed the complexity of addressing modern environmental problems.

Judge Wilkinson noted that, under its stormwater management permit, the City has the burden of reducing stormwater pollution but it can only do so with the cooperation of its residents. The Judge also observed the wide-ranging impact of the Court’s decision, including the effects on stormwater management efforts throughout the Chesapeake Bay Watershed.

Judge Wilkinson wrote:

Our rivers and estuaries are complex, interconnected ecosystems. It follows, therefore, that efforts to restore them are correspondingly complex and interconnected. Without the cooperation of all levels of government, as well as of private companies and citizens, our waters will continue to be compromised by pollution. The restoration effort imposes burdens on many people; happily, the benefits of clean waters, (economic; health; scenic; recreational) accrue to just as many if not more. Everyone, including the owners and employees of Norfolk Southern, are better off when our streams run clear and estuarine flora and fauna are flourishing. It is only fair to ask those who benefit to shoulder some of the burden.

Gentry Locke attorneys Greg Haley, Monica Monday, and Scott Stephenson, together with City Attorney Dan Callaghan, represented the City of Roanoke. The Chesapeake Bay Foundation intervened as a defendant in support of the City’s regulatory program.

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