Court Rules Roanoke Stormwater Fee is Not a Tax; Norfolk Southern Must Pay

(ROANOKE, VA)—U.S. District Court Judge Glen E. Conrad has ruled that the stormwater utility fee charged by the City of Roanoke is not a tax, and, therefore, Norfolk Southern Railway Co. is not exempt from the charge. The railway had sued the city, claiming the assessment was "another tax that discriminates against a rail carrier."

The Chesapeake Bay Foundation (CBF) intervened in the case in support of Roanoke.

"As Judge Conrad concluded in his opinion, the city's stormwater fee is dedicated solely to reducing local flooding and polluted runoff. The fund helps to clean up local streams and rivers, and to meet state and federal water pollution regulations," said Peggy Sanner, Virginia attorney for CBF. "Judge Conrad also rightly noted that all city residents and businesses, including Norfolk Southern, benefit from the fee."

Norfolk Southern owns about 758 acres in Roanoke, making it one of the city's largest property owners, according to the opinion. The railway's largest parcel is 726 acres, composed of industrial buildings, paved areas, and areas covered by railroad tracks, ballast, sub-ballast and roadbed. Most of the polluted runoff from the parcel flows into Lick Run, a tributary of the Roanoke River, according to the opinion.

Starting in the early 1990's, both state and federal regulation required Roanoke and other cities to limit the amount of polluted runoff discharged into local streams and rivers. When rain water falls on impervious surfaces common in suburban and urban areas, it picks up various contaminants as it flows off the land. The Virginia General Assembly in 1991 also authorized local governments such as Roanoke to impose charges on property owners to finance the costs of managing stormwater.

The Roanoke City Council enacted a stormwater utility fee in 2013, which went into effect in 2014. The fee is assessed according to the amount of impervious surface a property contains. Landowners can avoid up to half of the fee by taking steps to reduce polluted runoff from their properties. Owners also can challenge the calculated amount of the fee if they believe it is unfair.

Norfolk Southern sued the city on April 12, 2016, contending its property was no more impervious than a lawn, and therefore should not be subjected to the fee. The railway also claimed the stormwater utility fee was really a tax. Congress has forbidden discriminatory taxes against railways.

For the tax year 2017 Norfolk Southern was assessed a stormwater utility charge in the amount of $414, 748 for its large parcel of 726 acres, according to the opinion.

Judge Conrad ruled that unlike a tax, the stormwater utility fee is not paid into the general revenues of the city. The money is used strictly to reduce local flooding and polluted runoff to meet the requirements of state and federal regulations.

Currently, about 1,500 to 2,000 local governments across the country use stormwater utility fees to reduce polluted runoff and reduce flooding.


Note to editors: The opinion issued by the court incorrectly states on page 12 that the Chesapeake Bay Foundation "moved to intervene in the case and defend the assertion that Norfolk Sothern's ballasted railroad surfaces are as pervious as lawns." CBF supported the city's position.

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