Railroad Stormwater Planning Consulting

How Local Municipalities May Be Passing Ordinances that Could Cost Your Railroad Money

Stormwater, Compliance, and Fees, Oh My!

March 27th, 2019

When most of us think of stormwater and fees, we immediately think of permit fees under Section 402 of the Clean Water Act (the Act). In a worst-case scenario, we may even think about penalties under the Act. But more ominous and less-well-known are the developing municipal stormwater fees becoming more and more prevalent across the country.

The Old, Familiar Clean Water Act

In the years since the amendments to the Act in 1972, everyone has become familiar with both the requirements entailed by the regulations as well as the penalties for violating it. Its objective was intended to restore and maintain the chemical, physical, and biological integrity of the nation's waters by preventing point and nonpoint pollution sources. Largely administered by the States on behalf of the U.S. Environmental Protection Agency (USEPA), state agencies were empowered to address pollution. In some cases, these authorities have even been granted to local municipalities to enforce the Act, although that situation is much rarer.

Hopefully, there are few of us who are familiar with the consequences of violating the Act on more than an academic level, because the costs can be severe. Section 309 of the Act empowers the USEPA and the states to which it delegates its authority to seek penalties of up to $25,000 per day of violation for a first offense and up to $50,000 per day for further violations. For knowing endangerment caused by a violation of the Act, penalties can range up to $250,000 for an individual or up to $1,000,000 for an organization. Even criminal injunctions may be sought, along with jail time.

But by now most of us know how to manage stormwater under the National Pollution Discharge Elimination System (NPDES). And while there may be occasional fits and starts where various facilities may incur minor penalties, it is not often that one hears of a violation of the Act that runs into the tens of thousands or even the hundreds of thousands of dollars under the Multi-Segment General Permit.

So when we hear about local ordinances that can cost railroads tens or even hundreds of thousands of dollars a year, that is a stormwater issue that can grab our collective attention!

The New Municipal Stormwater Fees

Across the country, up to 8,000 municipalities are considering passing stormwater fee ordinances that could cost the railroads hundreds of thousands of dollars every year. In Virginia, Texas, Washington, and California – just to name a few states – several municipalities already have ordinances in place and have been sending bills for years now. Since the railroads are often one of the largest landowners in a city or a county, they often end up with the largest bills.

Unfortunately, these ordinances are not being passed under the auspices of the Act. Very few of these agencies have been delegated any authority under Section 402. So while this is often couched as a clean water effort when the ordinances are being written and ballots are voted on, there are many who question these agencies’ motivations. Generally, the monies taken in are slated for projects that may lead to cleaner discharges of stormwater from a city’s municipal separate storm sewer system (MS4), projects such as separating old systems to avoid combined sewer overflows (CSOs) and even removing sediment trapped in old systems and disposing of it in landfills. But often, much of the money is being used to support the general operation and maintenance of the municipality’s MS4 system, general maintenance that formerly was paid by property taxes that are, of course, still being paid. As a result, many view these new fees as a duplicative tax on existing property. However, to date, the courts have upheld municipalities’ rights to set these fees and have not classified them as a new tax. As the process continues through the courts, this could always change in the future.

In the meantime, what can railroads do to minimize their exposure and financial risk?

What the Railroads Can Do

In areas where there is as yet no ordinance, but one may be in the process of development, it would be worth the railroad’s while to get involved on a local level with the writing of potential regulations. Key to these discussions is the consideration of what surfaces may be considered pervious and what may be considered impervious. Oftentimes, municipalities are defaulting to considering ballast and other gravel surfaces as impervious or semi-pervious, which results in a lot of stormwater fees’ being assessed for an area as large as a railroad. The more that can be done to define and limit the amount of surface area considered to be causing sheet flow to the local MS4 system, the more a railroad can limit its future utility bills.

For those areas where an ordinance is already in place, all hope is not yet lost! It can definitely pay for itself when the railroad invests some time in studying the wording of the ordinance in an effort to take advantage of how it is written. Depending on the definition of the various surfaces, arguments can be made as to how much of the railroad’s property can have fees levied on it. And better defining the extent of those surfaces will always be the low-hanging fruit. Getting deeper into the ordinances often reveals some credits and exemptions that the railroads can take advantage of especially for infiltration areas.

Railroads can also take this into consideration when planning their redevelopments of old yards or new developments. If an ordinance is already in place, or even if there is a strong possibility that an ordinance is likely to be considered in the future, low-impact development (LID) approaches can often pay for themselves. More and more municipalities, especially in water sensitive parts of the country like California, are requiring LID consideration when issuing development permits. By designing stormwater systems to incorporate infiltration basins, bioswales, and other LID features the railroad can limit both its stormwater runoff as well as its future liability.

The Yellow Brick Road Rolls On

While many municipalities are skipping down the yellow brick road toward more and more stormwater fees, there are some things railroads can do to protect themselves:

  • Get involved early on at the local level with ordinance consideration and development
  • Take advantage of the ordinance provisions and the physical features of your property to limit your liability
  • Plan ahead during development to limit future liability

Until the courts decide otherwise, all we can do is try to minimize these fees wherever possible. And of course, always try to avoid any violations of the Act as well!

Need support with stormwater planning? Contact us today.

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This article was originally published in the American Railway Development Association March 2019 newsletter.

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