» Advocacy Alerts Archive

NACWA forwarded a letter Sept. 10 to the U.S. Department of Justice (DOJ) Office of Legal Counsel arguing that impervious area charges and stormwater charges levied by municipal wastewater and stormwater agencies should be classified as fees for service and not as taxes, thus requiring that federal facilities pay the charges.  The letter, drafted in collaboration with NACWA Legal Affiliate Holland & Knight, was sent in response to the growing problem of federal government facilities refusing to pay local impervious area charges or stormwater fees by claiming that such charges represent an impermissible tax on the federal government.   This 18 page letter outlines the key legal arguments clean water and stormwater utilities should be aware of when arguing that charges billed to federal facilities represent a fee and not a tax and can serve as a valuable resource for NACWA members dealing with this issue.

Background

NACWA has long advocated that federal facilities are responsible for paying local utility fees related to the management of stormwater runoff, including participation in litigation over the issue from 2004 to 2007.  The issue of federal facilities refusing to pay local stormwater fees or other related wastewater or stormwater charges on the basis that such fees represent an illegal tax on the federal government is one that has impacted NACWA members all across the country in recent years. The most recent example of this problem arose in April 2010 when the federal General Services Administration (GSA) informed NACWA member agency the District of Columbia Water and Sewer Authority (DC Water) that federal government facilities in the District of Columbia would not be paying an impervious area charge instituted by DC Water to recover the capital costs of the utility’s federally mandated Long Term Control Plan (LTCP).  

NACWA responded to this decision with a letter in late April to U.S. Attorney General Eric Holder arguing that federal facilities have no legal basis to refuse payment and that since the federal government is the largest landowner in the city, its refusal to pay the fee not only places an unfair economic burden on other ratepayers but also significantly undercuts President Obama's own public commitment to reduce water quality impairments both within the Chesapeake Bay watershed and also nationwide.  In early June, NACWA met with officials from DOJ’s Environment and Natural Resources Division to further advocate the municipal position on this important issue.  Subsequent to this meeting, NACWA learned that DOJ’s Office of Legal Counsel (OLC) had been tasked with reviewing the “fee v. tax” question with regarding to stormwater charges and impervious area charges and issuing a legal opinion on the matter.

September 10 Letter to DOJ

NACWA’s Sept. 10 letter , sent to the current Acting Assistant Attorney General heading OLC, challenges previous determinations by GSA and the U.S. Government Accountability Office (GAO) that federal facilitates are immune from paying impervious area charges or similarly structured stormwater fees, and lays out in detail both the legal and policy arguments as to why such charges should be considered fees payable by the federal government.   Specifically, the letter highlights existing U.S. Supreme Court case law detailing the test for determining if a charge is a fee or a tax and provides an explanation of how existing programs that charge based on impervious area meet the legal qualifications to be considered a fee and not a tax.  Using the DC Water impervious area charge as an example, the letter presents detailed legal arguments as to why the utility’s program or other similar stormwater and wastewater fee programs qualify under existing case law as a fee for service payable by federal facilities under Clean Water Act Section 313 and do not represent an impermissible tax.

The correspondence also outlines a number of policy arguments as to why federal government facilities should be required to pay all local utility fees, including the fact that a refusal by the federal government to pay these fees unfairly puts a heavier financial burden on other local ratepayers.  This is especially problematic at a time of economic recession when the federal government is placing increased regulatory requirements and costs on local communities, especially related to stormwater control.  The letter further discusses the importance of this issue to stormwater and wastewater utilities all across the nation and requests that DOJ issue a legal opinion outlining how impervious area charges and other fee programs can be structured to ensure they are considered a fee for service and not a tax, thus requiring payment by federal facilities.  Additionally, the letter also requests a meeting with DOJ and OLC officials to further discuss the issue.

The legal and policy arguments presented in the letter represent some of the major factors that NACWA members dealing with non-payment of fees by federal facilitates will need to consider, and Association members are encouraged to use the letter as a resource if confronting the fee v. tax issue.  NACWA will report on any response to the letter and any subsequent developments.  Anyone with questions about the letter or NACWA’s response on this issue is encouraged to contact Nathan Gardner-Andrews, NACWA’s General Counsel, at 202/833-3692 or This e-mail address is being protected from spambots. You need JavaScript enabled to view it for additional information.