Stormwater Utility Charge

On February 15, 2019, the United States Court of Appeals for the Fourth Circuit held that the Roanoke, Virginia stormwater management charge was not subject to the discriminatory tax prohibition in the Railroad Revitalization and Regulatory Reform Act of 1976 (“4-R Act”) because the charge was a fee. In 2013, Roanoke enacted a stormwater management charge to comply with state and federal stormwater regulations and based the charge on a parcel’s impervious surface cover that contributes to stormwater runoff. Invoking the 4-R Act, the railroad argued that Roanoke’s stormwater charge applied to its property differently than non-railroad property, and hence discriminated under the 4-R Act, even though both property types were equally pervious to stormwater. However, the court determined that the 4-R Act’s discriminatory tax prohibition did not apply because the charge was a regulatory fee, not a tax. The court explained that, among other things, the charge formed part of a comprehensive regulatory scheme to remedy the environmental harm associated with stormwater runoff. Norfolk S. Ry. Co. v. City of Roanoke, No. 18-1060 (4th Cir. Feb. 15, 2019).