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Zweig v. MSD St. Louis

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Zweig v. MSD St. Louis

On November 12, 2013, the Missouri Supreme Court issued a decision icon-pdf upholding a lower court ruling that invalidated the stormwater fee program administered by NACWA member the Metropolitan St. Louis Sewer District (MSD).  The court determined through a detailed analysis that MSD’s contested stormwater user charge qualified as a tax and not a user fee under Missouri state law, and further determined that the charge was invalid because it had not been put to a voter referendum as required by Missouri law. The court stated that while it “sympathizes with MSD’s predicament… MSD levied the stormwater user charge without prior voter approval.” The court refused to grant the ratepayers’ request for a refund of approximately $90 million in stormwater user charges, but affirmed the trial court’s award of attorneys’ fees of over $4 million.

NACWA and a number of other municipal groups filed an amicus brief in December 2012 with the Missouri Supreme Court supporting MSD’s efforts to have the state supreme court overturn the lower court decision. NACWA’s brief provided a national perspective on impervious surface based stormwater user fees, which are becoming the industry norm because they fairly and equitably apportion the cost of stormwater services to the amount of runoff generated on improved property. The brief explained why impervious surface stormwater fees properly qualify as valid service charges and should not be considered taxes, and highlighted a number of state courts around the country that have already examined and upheld similar types of stormwater fee programs as valid service charges.

Background
The Missouri Supreme Court appeal is the result of a 2010 decision by a Missouri trial court finding that MSD’s stormwater utility fees were illegal taxes, thereby invalidating the utility’s entire stormwater fee program, and a March 2012 Missouri Court of Appeals decision that upheld the trial court ruling. 

The lower appellate court reached its decision after analyzing the MSD stormwater rate structure, which is based on impervious surface, against a number of elements of Missouri state law.  Among the more concerning aspects of this ruling was the appellate court’s decision to uphold the trial court’s factual finding that there is no direct relationship between impervious area and stormwater runoff.   Using a similar analysis under state case law, the Missouri Supreme Court reasoned that because the stormwater fee is based on each landowner’s contribution to the overall need for MSD’s stormwater services rather than that owner’s actual use of the services and MSD provides services to ensure the continuous and ongoing availability of its drainage system to the district as a whole, not to individual users, the charge cannot be a valid user fee because MSD does not render a service individually in exchange for a fee.

NACWA’s briefs filed in this litigation convey the Association’s strong disagreement with the courts’ analysis and findings.  The dissenting judge in the lower appellate court decision wrote a strong opinion citing to the NACWA brief in support of the MSD program and the use of impervious surface to charge for stormwater services.   The dissent noted that not only are stormwater fees based on impervious surface the industry norm, but that “the engineering literature has validated the equity of this methodology for stormwater management user fees.”

Although the direct legal impact of this decision is confined to Missouri, the issues involved in this litigation have potential national implications for other municipal stormwater utilities using a similar fee structure because the case raises the larger question about the legality of stormwater fee methodology.  NACWA participated in the case to push back against any negative legal precedent regarding the use of impervious surface as a basis for stormwater charges and will continue to aggressively defend municipal storwmater fee programs in the judicial arena.

 

 

 

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