Are Tennessee municipal stormwater fees required by federal law, and do they count as unfunded federal mandates?

Subject

Opinion No. 12-96, Authority for Storm Water Fees/Unfunded Federal Mandates, October 9, 2012

Plain-English summary

Senator Beavers asked whether (1) the stormwater fees Tennessee utility districts charge are required by the federal Clean Water Act, and (2) whether those fees constitute an unfunded federal mandate prohibited by federal law.

The AG's answer was nuanced. On the first question, the Clean Water Act (CWA) doesn't have a provision saying "municipalities shall charge stormwater fees." But the CWA does require municipalities with municipal separate storm sewer systems (MS4s) to get National Pollutant Discharge Elimination System (NPDES) permits regulating their stormwater discharges. Tennessee runs its own EPA-approved NPDES program through the Tennessee Department of Environment and Conservation under the Tennessee Water Quality Control Act. To help local governments fund the compliance work the permits require, Tennessee's General Assembly enacted Tenn. Code Ann. §§ 68-221-1101 to -1113, which expressly authorizes municipalities to (a) regulate stormwater discharges, (b) build and run drainage and flood-control facilities, (c) adopt fee ordinances, and (d) charge a graduated stormwater user fee based on actual or estimated use of the system. So the fees are not directly required by the CWA, but they exist as a necessary financing mechanism for CWA-required permit compliance.

On the second question, "unfunded federal mandate" is not a magic phrase that voids a federal requirement. Congress passed the Unfunded Mandates Reform Act of 1995 (UMRA) in response to state and local government concerns, but UMRA is a procedural framework: it requires the Congressional Budget Office to estimate the cost of mandates in proposed legislation and agencies to estimate the cost of mandates in proposed regulations. It does not prohibit unfunded mandates. The AG cited Valentine Properties for the rule that UMRA noncompliance "shall not be used as a basis for staying, enjoining, invalidating or otherwise affecting [an] agency rule." UMRA also expressly precludes private rights of action.

And even if UMRA applied to the CWA (it generally doesn't, since the CWA predates UMRA), and even if stormwater fees were classified as part of an unfunded mandate, the Sixth Circuit in Sch. Dist. v. Sec'y of the United States Dep't of Educ. ruled that insufficient federal funding is not a defense for failing to comply with federal regulation (in that case, No Child Left Behind).

The AG's final point: stormwater fees don't just fund CWA compliance. They also fund flood control, drainage installation/cleaning/maintenance, and public health protection. Because those purposes go beyond CWA compliance, charging stormwater fees isn't even a CWA mandate; it's a permissible state and local funding mechanism for multiple objectives.

Currency note

This opinion was issued in 2012. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.

Background and statutory framework

The CWA permitting architecture

The Clean Water Act (33 U.S.C. §§ 1251-1387) aims to "restore and maintain the chemical, physical, and biological integrity of the Nation's waters." Its operative tool is the NPDES permitting system at 33 U.S.C. § 1342. Section 1342(p) directs EPA to regulate stormwater discharges from MS4s through NPDES permits. The implementing regulations at 40 C.F.R. § 122.26 and § 122.32 spell out who needs a permit. Vandergriff v. City of Chattanooga confirms municipalities are required to get NPDES permits for storm sewer system discharges.

States can take over administration of the NPDES program if their program is at least as protective as the federal one (33 U.S.C. § 1342(b)-(c)). Tennessee took that step through the Tennessee Water Quality Control Act (Tenn. Code Ann. §§ 69-3-101 to -133), administered by TDEC.

Tennessee's stormwater funding statutes

Tenn. Code Ann. §§ 68-221-1101 to -1113 give covered municipalities the tools to fund their MS4 obligations. § 68-221-1101 authorizes regulation, drainage facility construction and operation, and fees. § 68-221-1101(8) defines stormwater. § 68-221-1105(a)(2) lets municipalities adopt ordinances setting "a system of fees for services and permits." § 68-221-1107(a) authorizes a "graduated storm water user's fee . . . based on actual or estimated use of the storm water and/or flood control facilities of the municipality." Two prior AG opinions (09-182 and 09-147) had already discussed this framework.

UMRA's actual reach

UMRA was enacted in 1995 to address mounting state and local complaints about federal mandates imposed without funding. But UMRA's mechanism is informational, not prohibitory. It creates:

• CBO duties to estimate direct mandate costs in pending federal legislation.
• Agency duties to estimate direct mandate costs in proposed regulations.
• A procedural mechanism letting Congress decline to consider intergovernmental mandates above certain cost thresholds.

What it does not do: prohibit unfunded mandates. Courts have held that compliance or noncompliance with UMRA is not judicially reviewable. Valentine Properties cites 2 U.S.C. § 1571(a)(3) (mandate noncompliance does not invalidate agency rules) and § 1571(b) (no private right of action created).

Why insufficient funding isn't a defense

Sch. Dist. v. Sec'y of Educ. (6th Cir. 2009) held that lack of federal funding is not a defense to compliance with No Child Left Behind. The principle generalizes: if federal law requires X, the absence of federal money to pay for X is not a basis for refusing to do X. The remedy is political: lobby Congress, sue under different theories, or comply at state and local expense.

The fees serve multiple purposes

The opinion makes the final point that stormwater fees are spent on more than CWA compliance: drainage system construction, cleaning, maintenance, flood control, and public health. So even if one labeled CWA compliance an "unfunded mandate," the stormwater fees themselves serve broader state and local objectives that municipalities would have to fund anyway.

Common questions

Are municipalities legally required to charge stormwater fees?
The AG says federal law doesn't directly require fees. Tennessee statutes authorize them. Whether a municipality must charge them depends on how it chooses to finance its NPDES compliance and its drainage and flood-control infrastructure.

Can a property owner refuse to pay a stormwater fee on "unfunded mandate" grounds?
Based on the opinion's reasoning, no. UMRA doesn't create a private right of action, and even if a fee were tied to an unfunded mandate, the mandate would still apply. Local stormwater fees are authorized by Tennessee statute and can be enforced like any other municipal charge.

Why does Tennessee have a separate stormwater statute if federal law already covers it?
The state statutes (Tenn. Code Ann. §§ 68-221-1101 to -1113) authorize municipalities to do specific things: regulate discharges, build drainage facilities, charge fees, and pursue funding. Federal law tells municipalities what they have to achieve (clean stormwater discharges under NPDES permits). State law tells them how they can pay for it.

Does this opinion apply to private property owners or just to utility districts?
The opinion focuses on the authority of water utility districts and municipalities to charge stormwater fees. Customers pay the fees the municipality establishes. The opinion does not directly address property-owner challenges or rate-setting standards.

Citations

Statutes and regulations:
- 33 U.S.C. §§ 1251-1387 (Clean Water Act)
- 33 U.S.C. § 1342 (NPDES permits, including § 1342(b)-(c) on state programs and § 1342(p) on stormwater)
- 40 C.F.R. § 122.26, § 122.32 (federal MS4 permit regulations)
- 2 U.S.C. §§ 1501-1571 (Unfunded Mandates Reform Act of 1995)
- 2 U.S.C. § 1555 (defining "federal mandate")
- 2 U.S.C. § 1571 (judicial review limits)
- Tenn. Code Ann. §§ 68-221-1101 to -1113 (Tennessee municipal stormwater statutes)
- Tenn. Code Ann. § 68-221-1101(8) (definition of "storm water")
- Tenn. Code Ann. § 68-221-1105(a)(2) (ordinance authority for fees)
- Tenn. Code Ann. § 68-221-1107(a) (graduated user fee)
- Tenn. Code Ann. §§ 69-3-101 to -133 (Tennessee Water Quality Control Act)

Cases and prior opinions:
- Vandergriff v. City of Chattanooga, 44 F.Supp.2d 927 (E.D. Tenn. 1998)
- Valentine Properties Assoc., L.P. v. U.S. Dept. of Housing and Urban Dev., 785 F.Supp.2d 357 (S.D.N.Y. 2011)
- Sch. Dist. v. Sec'y of the United States Dep't of Educ., 584 F.3d 253 (6th Cir. 2009)
- Tenn. Att'y Gen. Op. 09-182 (Nov. 30, 2009)
- Tenn. Att'y Gen. Op. 09-147 (Aug. 4, 2009)

Source

• Landing page: https://www.tn.gov/attorneygeneral/opinions.html
• Original PDF: https://www.tn.gov/content/dam/tn/attorneygeneral/documents/ops/2012/op12-096.pdf

Original opinion text

S T A T E O F T E N N E S S E E
OFFICE OF THE
ATTORNEY GENERAL
PO BOX 20207
NASHVILLE, TENNESSEE 37202

October 9, 2012

Opinion No. 12-96

Authority for Storm Water Fees/Unfunded Federal Mandates

QUESTIONS

1. Is the "storm water fee" charged to customers by some water utility districts required under the Clean Water Act of 1977?

2. Does the assessment of these storm water fees constitute an unfunded federal mandate prohibited by federal law?

OPINIONS

1. There is no express provision in the federal Clean Water Act regarding the setting and charging of storm water fees. However, the State of Tennessee is required to comply with the regulations found in the Clean Water Act, including regulations related to municipal storm water discharges. As a result, Tenn. Code Ann. §§ 68-221-1101 to -1113 expressly authorize Tennessee municipalities to regulate storm water discharges, operate storm water and flood control facilities and set a graduated storm water fee in order to at least partially fund compliance with these provisions. Therefore, the setting of storm water fees by some water utility districts is a necessary function in meeting the requirements of the Clean Water Act as required under state and federal law.

2. Unfunded mandates are not universally prohibited by federal law. Congress enacted the Unfunded Mandates Reform Act of 1995 (UMRA) to address state and local governmental concerns over a perceived increase in unfunded federal mandates in the 1980s and 1990s, but nothing in the legislation prohibits the creation or application of such mandates. Additionally, nothing in the UMRA or any other legislation makes unfunded federal mandates per se improper. Unfunded mandates are commonly used in regulatory schemes, including environmental protection legislation, and courts have recognized that insufficient funding is not a valid reason for failing to comply with a federal mandate. The ability of municipalities to develop and implement a storm water fee framework as authorized by the General Assembly provides funds to not only comply with the provisions of the Clean Water Act, but also maintain flood controls and generally protect the public. Although the adoption of storm water fees by some municipalities is, in part, a response to the requirements of the Clean Water Act, such fees are not mandated by the provisions of the Act. However, even if storm water fees were considered an unfunded federal mandate, such mandates are not prohibited by federal law.

[Footnote 1: "Storm water" is defined as "storm water runoff, snow melt runoff, surface runoff, street wash waters related to street cleaning or maintenance, infiltration (other than infiltration contaminated by seepage from sanitary sewers or by other discharges) and drainage." Tenn. Code Ann. § 68-221-1101(8).]

ANALYSIS

1. The Clean Water Act of 1977 (CWA), 33 U.S.C. §§ 1251-1387, was enacted with the objective of "restor[ing] and maintain[ing] the chemical, physical, and biological integrity of the Nation's waters." 33 U.S.C. § 1251(a). In furtherance of this goal, the CWA regulates point source discharges of pollutants, including storm water, through the National Pollutant Discharge Elimination System (NPDES) permitting scheme. 33 U.S.C. § 1342. Under section 1342(p) of the CWA, the United States Environmental Protection Agency (EPA) regulates discharges from municipal separate storm sewer systems (MS4s) that meet the criteria for regulation and requires such municipalities to obtain NPDES permits. 33 U.S.C. § 1342(p); 40 C.F.R. § 122.26; 40 C.F.R. § 122.32. See also Vandergriff v. City of Chattanooga, 44 F.Supp.2d 927, 929 (E.D. Tenn. 1998) (stating "municipalities are required to obtain NPDES permits for discharges from municipal storm sewer systems"). However, the CWA also provides for state implementation of the NPDES permitting system, provided that the state, at a minimum, meets the requirements of the CWA. 33 U.S.C. § 1342(b)-(c). Tennessee's EPA-approved NPDES permitting program is found in the Tennessee Water Quality Control Act (TWQCA) and is implemented through the Tennessee Department of Environment and Conservation (TDEC). Tenn. Code Ann. §§ 69-3-101 to -133. See also Vandergriff, 44 F.Supp.2d at 929 (concluding that "the CWA allows states to develop a program for issuing NPDES permits").

Although there are no express provisions dealing with storm water fees in the CWA, these fees are a necessary outgrowth of compliance with the regulations. As discussed in this Office's prior opinions, the General Assembly enacted Tenn. Code Ann. §§ 68-221-1101 to -1113 to assist municipalities covered under the MS4 regulations with both CWA and TWQCA compliance. See Tenn. Att'y Gen. Op. 09-182 (Nov. 30, 2009); Tenn. Att'y Gen. Op. 09-147 (Aug. 4, 2009). This legislation provides mechanisms for covered municipalities "to regulate [storm water] discharges, . . . construct and operate a system of drainage facilities for storm water management and flood control, . . . and fix and require payment of fees for the privilege of discharging storm water." Tenn. Code Ann. § 68-221-1101. Additionally, municipalities are permitted to adopt ordinances setting out "a system of fees for services and permits." Tenn. Code Ann. § 68-221-1105(a)(2). Finally, the statutes also specifically allow covered municipalities to adopt a "graduated storm water user's fee . . . based on actual or estimated use of the storm water and/or flood control facilities of the municipality." Tenn. Code Ann. § 68-221-1107(a). Thus, since Tennessee is required to comply with the mandates of the CWA and the General Assembly has enacted specific legislation addressing the permissibility of setting and collecting storm water fees, municipal storm water fees are a consequential requirement of compliance with the CWA, even if not specifically enumerated in the federal legislation.

2. An unfunded mandate is generally defined as "a requirement set forth by a government agency that does not provide any type of funding to facilitate the requirement." [Footnote 2: BusinessDictionary.com, located at http://www.businessdictionary.com/definition/unfunded-mandate.htm (last visited Aug. 10, 2012). See also 2 U.S.C. § 1555 (2011) (defining "federal mandate" as "any provision in statute or regulation or any Federal court ruling that imposes an enforceable duty upon State, local, or tribal governments including a condition of Federal assistance or a duty arising from participation in a voluntary Federal program").] To address the imposition of unfunded federal mandates on states, local governments, tribunal governments, and the private sector, Congress enacted the Unfunded Mandates Reform Act of 1995 (UMRA), 2 U.S.C. §§ 1501 to 1571. This legislation created a framework for the Congressional Budget Office (CBO) to estimate the direct costs of mandates in legislative proposals to state/local governments and the private sector and for issuing agencies to estimate the direct costs of mandates in proposed regulations to regulated entities. Aside from these informational requirements, the UMRA controls the imposition of mandates only through a procedural mechanism, allowing Congress to decline to consider unfunded intergovernmental mandates in proposed legislation if they are estimated to cost more than specified threshold amounts. However, the UMRA specifically provides that "the inadequacy or failure [of an agency to comply with the obligations of the UMRA] shall not be used as a basis for staying, enjoining, invalidating or otherwise affecting [an] agency rule." Valentine Properties Assoc., L.P. v. U.S. Dept. of Housing and Urban Dev., 785 F.Supp.2d 357, 369-70 (S.D.N.Y. 2011) (citing 2 U.S.C. § 1571(a)(3), which requires agencies to prepare a written statement accompanying regulatory actions likely to result in an expenditure by state or local governments of $100,000,000 or more). Courts have also noted that any issue as to compliance or noncompliance with the UMRA or the applicability of its provisions is not subject to judicial review and that the UMRA does not "create any right or benefit, substantive or procedural, enforceable by any person in an administrative or judicial action." Id. at 370 (citing 2 U.S.C. § 1571(b)).

Because the CWA was enacted prior to the UMRA, it would generally be excluded from examination under this legislation. However, even if the UMRA were applicable, it is unclear whether municipal storm water fees would necessarily be considered a "federal mandate" under the definitions in the UMRA. Finally, if the UMRA were applicable and municipal storm water fees were determined to be part of an unfunded federal mandate contained in the CWA, nothing in the UMRA or any other legislation would make such a mandate per se improper. Although legislation may contain such a mandate, the Sixth Circuit has recognized that insufficient federal funding is not a defense for failing to comply with federal regulation. See Sch. Dist. v. Sec'y of the United States Dep't of Educ., 584 F.3d 253, 268-78 (6th Cir. 2009) (determining that lack of federal funding was not grounds for failing to comply with the requirements of No Child Left Behind).

As discussed above, the CWA does not specifically provide for the creation, setting or collecting of storm water fees. Although these fees are used to comply with the provisions of the CWA, the funds are also utilized to address other issues, such as flood control through installation, cleaning, and maintenance of the drainage system, and public health issues. As storm water fees are not specifically addressed in the CWA and the collection of these fees support many municipal activities, the charging of a storm water fee by some water utility districts does not constitute an unfunded mandate of the CWA.

ROBERT E. COOPER, JR.
Attorney General and Reporter

WILLIAM E. YOUNG
Solicitor General

EMILY B. VANN
Assistant Attorney General

Requested by:
Honorable Mae Beavers
State Senator
Suite 7, Legislative Plaza
Nashville, Tennessee 37243