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Sewer District Permitted to Manage Stormwater and Charge Fee

A regional sewer district in the Cleveland area has authority to create a program to manage stormwater and can assess a fee to implement the plan, the Ohio Supreme Court ruled today.

State law and the sewer district’s charter gave the district the power to establish the regional stormwater-management program and the fee structure, Justice Paul E. Pfeifer wrote in the court’s opinion. Acknowledging the many amicus briefs filed in the case and the differing policy positions about this program, he noted that those views did not apply to the legal issues before the court.

The ruling reverses the judgment of the Eighth District Court of Appeals.

Sewer District Intended to Tackle Stormwater Problems
In January 2010, the Northeast Ohio Regional Sewer District developed a plan to manage regional stormwater in and near Cuyahoga County. The district, created in 1972, also set up fees to be charged on property with impervious surfaces. The district’s area is extensive, encompassing all or parts of more than 60 cities, villages, and townships.

Following the stormwater-management program’s adoption, the sewer district filed a lawsuit to confirm its authority to implement the program and fees. The common pleas court agreed the sewer district had these powers. However, on appeal, the Eighth District reversed. The appeals court concluded the sewer district is authorized only to collect, treat, and dispose of “waste water” and a plan to manage stormwater and assess fees is outside that mandate.

Stormwater Is Waste Water
In today’s decision overturning the appeals court, the Supreme Court explained that a regional water or sewer district’s purpose, as spelled out in statute, is either to “supply water” or to “provide for the collection, treatment, and disposal of waste water.”

Because this sewer district does not supply water, the core of the legal dispute is whether the district handles “waste water” – defined in R.C. 6119.011(K) as “any storm water and any water containing sewage or industrial waste or other pollutants or contaminants derived from the prior use of the water.”

Given that a regional stormwater-management program would collect, treat, and dispose of stormwater – a type of waste water – the program falls within the sewer district’s authority under state law, Justice Pfeifer concluded.

Given that a regional stormwater-management program would collect, treat, and dispose of stormwater – a type of waste water – the program falls within the sewer district’s authority under state law, Justice Pfeifer concluded.

Justice Pfeifer reasoned that “any storm water” is one type of waste water, and the other is “any water containing sewage or industrial waste or other pollutants or contaminants derived from the prior use of the water.” Given that a regional stormwater-management program would collect, treat, and dispose of stormwater – a type of waste water – the program falls within the sewer district’s authority under state law, Justice Pfeifer concluded.

The sewer district’s charter also permits a regional stormwater-management program, he added, because the charter states the district controls the area’s waste water collection and has authority to “plan, finance, construct, operate and control waste water treatment and disposal facilities [and] storm water handling facilities.”

Fees Can Be Charged
Another statute, R.C. 6119.09, allows a sewer district to charge fees “for the use or services of any water resource project or any benefit conferred thereby.” Justice Pfeifer concluded that the sewer district may impose fees for the stormwater-management system because the meaning of a “water resource project” includes a waste water facility or water management facility “to be acquired, constructed, or operated by” the sewer district. The charter’s language also permits these fees, he noted.

Votes of the Court
Joining the majority opinion were Chief Justice Maureen O’Connor and Justices Judith Ann Lanzinger and William M. O’Neill. Justice Judith L. French wrote separately to concur in part and dissent in part. Justice Sharon L. Kennedy dissented in an opinion joined by Justice Terrence O’Donnell.

Justice Deems Fees Improper at this Time
Justice French concurred with the majority on all points except for the conclusion that the sewer district fees are authorized by statute. In her view, the sewer district had no statutory authority to finance the regional stormwater-management program by currently assessing a fee.

She reasoned that the district may only charge a fee for the “use or services of” or “any benefit conferred” by a water resource project. The majority did not address whether a water resource project that will be acquired, constructed, or operated in the coming years offers uses, services, or benefits now, she concluded.

“Nothing in R.C. 6119.09 suggests that the Sewer District may presently impose a fee for uses or services it will be able to provide only in the future,” Justice French wrote. “Until the Sewer District acquires, constructs or begins to operate a water-resource project relating to regional stormwater management, it has no use, service or benefit to provide in exchange for the stormwater fees it seeks to extract from property owners.”

Until then, she pointed out, the sewer district may fund the program by collecting taxes and special assessments, issuing revenue bonds, seeking grants, or entering agreements with other political subdivisions.

While the dissent believes the fees are an illegal tax, Justice French noted the Supreme Court declined to consider that argument and the question is not properly before the court.

Dissent Sees No Authority for Program or Fees
Justice Kennedy would have ruled the sewer district had no authority to manage stormwater in the area or to charge related fees.

Agreeing with the Eighth District, she would have adopted the interpretation that waste water is water that contains sewage, industrial waste, or other pollutants or contaminants and therefore would have concluded the sewer district was not permitted to handle stormwater runoff.

“In large part, the [regional stormwater-management program] seeks to manage ‘pure’ stormwater, i.e. water resulting from precipitation that is not mixed with pollutants or contaminants and that never enters the sanitary sewer system,” she reasoned. “Management of this water is beyond the scope of the Sewer District’s authority, which is to collect, treat, and dispose of waste water, which is water that contains waste, i.e., pollutants or contaminants.”

In reaching the conclusion that the fees are an illegal tax, she agreed with the argument of the city of Beachwood. While the issue of whether the fee was an illegal tax was not a proposition of law accepted by the court, Justice Kennedy determined the city could legally raise a valid legal argument to refute the sewer district’s claims justifying the charges.

“To prevent Beachwood from making such an argument based on our initial declination to consider this issue would infringe upon Beachwood’s ability to make arguments of its own choosing and to fully respond to the Sewer District’s propositions of law that we accepted in this appeal,” she wrote.

In evaluating whether the sewer district’s fees are a tax, she explained that charges benefiting the general public are typically regarded as taxes, while fees give something specific to an individual. Because alleviating the stormwater problems would help the public overall rather than individual property owners, Justice Kennedy concluded the fees in this case are actually taxes that were not legally imposed.

2013-1770. Northeast Ohio Regional Sewer Dist. v. Bath Twp., Slip Opinion No. 2015-Ohio-3705.

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