Federal government refuses to pay D.C. stormwater fee

By Jonathan O'Connell
Monday, October 18, 2010

The federal government is refusing to pay a new D.C. storm water fee, saying it amounts to a tax the government is precluded from paying even though the proceeds go toward meeting U.S. clean water standards.

Last year the D.C. Department of the Environment began charging property owners for the amount of impervious surface on their properties, reasoning that the pavement contributes to the polluted runoff that pours into the Anacostia and Potomac rivers and Rock Creek.

The charge is one of two that are being levied against D.C. property owners to help cleanse runoff entering the city's waterways, both of which appear on bills from the city's water provider, the D.C. Water and Sewer Authority. A charge levied by the city is expected to raise $13 million this fiscal year to manage and treat storm water -- i.e., rain and melted snow that does not seep into the ground -- and meet pollution control mandates required by the Environmental Protection Agency under the Clean Water Act.

The other charge, levied by the D.C. Water and Sewer Authority, aims to collect $2.6 billion needed to build a series of underground tunnels that will prevent untreated wastewater from entering the city's waterways when heavy rains overwhelm an aging sewer system

After evaluating the two charges, Lynn H. Gibson, acting general counsel for the Government Accountability Office, deemed one a fee and the other a tax and said the federal government is required to pay only one of them. She wrote the utility and the city Sept. 29 agreeing to pay D.C. Water's charge but not the city's, citing the federal government's immunity from local taxes.

Because the purpose of the utility's charge is "to cover the costs of capital improvements," those costs are "properly recoverable through a rate for utility services," Gibson wrote.

She dubbed the charge being instituted by the environmental department, meanwhile, "a tax for which Congress has not waived its sovereign immunity," citing previous decisions and enclosing a 21-page legal brief.

Under the city's charge, residential properties, estimated to have an average of 1,000 square feet of impervious surface, are levied $30.84 per year. Commercial properties pay the same rate per 1,000 square feet and the federal government would pay about 20 percent of the annual total, around $2.5 million.

The agency's acting director, Christophe A.G. Tulou, called it "a classic 'polluter pays' fee, which is premised on the assumption that the persons who generate pollution have to pay their share to fix the problem, even the federal government."

The federal government's decision not only creates a budget problem for the city, it holds repercussions for cash-strapped jurisdictions around the country as they strive to meet clean water guidelines. George S. Hawkins, general manager of D.C. Water, said the government was "using Washington, D.C., as kind of the test case."

Ken Kirk, executive director of the National Association of Clean Water Agencies, said the decision forced other municipalities to consider whether an impervious surface charge was the best course.

"We're absolutely dumbfounded as to why and how they can agree to pay part of it, but not the other," Kirk said of the two fees in D.C. "It's the same program. Unless you really torture the legalities of the issue, it seems to me that it boils down to the notion that the federal government bear its fair share of the cost."

The city has not yet decided how to respond to the decision. Environmentalists are focusing on getting legislation passed in Congress that would clarify storm water charges as fees for which the government is responsible. Doug Siglin, federal affairs director for the Chesapeake Bay Foundation, called the GAO's argument " 'Alice in Wonderland' reasoning."

"What's really crazy about this is that the federal government requires localities to undertake these expensive activities to benefit the residents and the federal employees who live there," he said.

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