Decision
Matter of: Forest
Service—Surface Water Management Fees
File: B-306666
Date: June 5, 2006
Appropriated funds are not
available to pay surface water management fees assessed by King
County, Washington, against
national forest lands and other Forest Service properties because those fees
constitute a tax. The federal government
is constitutionally immune from state and local taxation. Although section 313(a) of the Clean Water
Act, 33 U.S.C. sect. 1323(a), waives sovereign immunity from certain state and
local environmental regulations and fees, it does not waive immunity from
taxation. Such a waiver must clearly and
expressly confer the privilege of taxing the federal government.
The Chief Financial Officer of
the Forest Service, United States Department of Agriculture, has requested an
advance decision under 31 U.S.C. sect. 3529 on the propriety of paying surface
water management fees assessed by King County, Washington, against federal
lands located within its jurisdiction.
Letter from Jesse L. King, Associate Deputy Chief for Business
Operations/Chief Financial Officer, Forest Service, to David M. Walker,
Comptroller General, GAO, Oct. 11, 2005 (King Letter). The Forest Service believes that it is
constitutionally immune from paying the fee, which the agency considers a
tax. As we explain below, we agree that
the United States
is constitutionally immune from surface water management fees assessed by King
County and find that appropriated
funds are not available to pay such assessments. Furthermore, although section 313(a) of the
Clean Water Act, 33 U.S.C. sect. 1323(a), requires federal agencies to comply with
all state and local requirements respecting the control and abatement of water
pollution, including the payment of reasonable service charges, that provision
does not waive the federal government’s sovereign immunity from taxation by
state and local government. Such a
waiver must clearly and expressly confer the privilege of taxing the federal
government.
BACKGROUND
The National Pollutant Discharge Elimination System (NPDES)
program under the Clean Water Act (CWA) establishes the basic structure for
regulating discharges of pollutants into the waters of the United
States, including rivers, lakes, and streams. 33 U.S.C. sect. 1342.[1] Under the NPDES program, the U.S.
Environmental Protection Agency (EPA) and EPA-authorized states issue and
enforce permits to regulate pollution from specific entities, including, for
example, industrial dischargers and municipal wastewater treatment facilities,
known as “point sources.” Id. See,
e.g., GAO, Clean Water Act: Improved Resource Planning Would Help EPA
Better Respond to Changing Needs and Fiscal Constraints, GAO-05-721 (Washington,
D.C.: July 22, 2005), at 5--6.
Section 319 of the CWA also requires states to implement management
programs for controlling pollution from diffuse or “nonpoint” sources, such as
agricultural runoff. 33 U.S.C. sect. 1329. See,
e.g., State of Washington, Department of Ecology, Washington’s Water Quality Management Plan to Control Nonpoint Source
Pollution, Publ’n No. 99-26 (April 2000); Vol. 1, Water Quality Summaries for Watersheds in Washington State, Publ’n No.
04-10-063 (August 2004).[2]
Federal facilities are required under section 313(a) of the
CWA to comply with all federal, state, interstate and local regulations respecting
the control and abatement of water pollution, including the payment of
reasonable service charges. 33 U.S.C.
sect. 1323, quoted, in relevant part, infra
p. 10. Accordingly, the Forest Service
and the State of Washington have
entered into an agreement whereby the Service agrees, among other things, to
implement site specific “best management practices” on national forests in Washington
to meet or exceed applicable state surface water quality laws and
regulations. Memorandum of Agreement between the USDA Forest Service, Region 6 and the Washington State Department of Ecology for Meeting
Responsibilities under Federal and State Water Quality Laws, Nov. 21, 2000.[3]
To implement the CWA, King
County has also established a
surface water management (SWM) program to fulfill its requirements under its
NPDES municipal stormwater permit and to regulate nonpoint source pollution. See generally
King County, Wash., Code (hereafter K.C.C.) title 9 (2005); see also K.C.C. sect. 9.08.060(R) (findings of the county council regarding
the county’s implementation of the CWA).[4]
Counties in the state of Washington
are authorized to raise revenues through rates and charges assessed against
those served by, or receiving benefits from, any storm water control facility
or contributing to an increase of surface water runoff. Wash.
Rev. Code sect. 36.89.080(1)
(2005). Under this authority, King
County imposes an annual service
charge, or “surface water management fee” (hereinafter “SWM fee”), on all developed parcels in unincorporated
areas of the county, for surface and storm water management services provided
by the SWM program. K.C.C.
sections 9.08.050(A), 9.08.070(C) (2005). These
services include, but are not limited to:
“basin planning, facilities
maintenance, regulation, financial administration, public involvement, drainage
investigation and enforcement, aquatic resource restoration, surface and storm
water quality and environmental monitoring, natural surface water drainage system
planning, intergovernmental relations, and facility design and construction.”
K.C.C. sect. 9.08.010(Y).[5]
According to the county ordinance, SWM fees are necessary
for various reasons:
(1) to promote the public health, safety, and welfare by minimizing
uncontrolled surface and storm water, erosion, and water pollution; (2) to
preserve and utilize the many values of the county’s natural drainage system
including water quality, open space, fish and wildlife habitat, recreation,
education, urban separation and drainage facilities; and (3) to provide for the
comprehensive management and administration of surface and storm water. K.C.C. sect. 9.08.040.
SWM fees must be based on the relative contribution of
increased surface and storm water runoff from a given parcel to the surface and
storm water management system.[6] K.C.C. sect. 9.08.070(A). The SWM fee structure consists of seven
classes of developed parcels based on the parcel’s relative percentage of
impervious surfaces:[7] (1) residential, (2) very light, (3) light, (4)
moderate, (5) moderately heavy, (6) heavy, and (7) very heavy. K.C.C. sect. 9.08.070(C). Residential and very lightly developed
properties are assessed a flat annual fee of $102 per parcel, while light to
very heavily developed parcels are assessed various per acre rates ranging from
$255.01 per acre for lightly developed parcels to $1,598.06 per acre for very
heavily developed parcels. Id. See
also King County, Washington,
SWM Fee Protocols (January 2004), at
3.[8]
The Forest Service maintains approximately 363,543 acres of
federal land within the jurisdictional boundary of King
County, including the Mount
Baker-Snoqualmie National Forest (MBS), roads, campgrounds, trailheads, and
picnic areas. King Letter, Attachment. In 2001, the King County Treasury Division
began assessing SWM fees against several parcels of Forest Service land. Id. The MBS Supervisor’s Office questioned the
applicability of the fee because no services were provided to the Forest
Service and requested that the King County Treasury Division remove Forest
Service properties from its tax rolls. Letter
from Larry Donovan, Recreation Special Uses Coordinator, MBS National Forest
Supervisor’s Office, to King County Treasury, Mar. 28, 2001. The county
treasury division informed the MBS financial manager that the SWM fee is not a
tax assessment, but a fee, and that the U.S.
government was not exempt from paying fees.
King Letter, Attachment. Despite
informing the King County Treasury Division on several occasions that the
Forest Service believes it is exempt from the SWM fee, the MBS financial manager
continues to receive “official property value notices” and “delinquent real
estate tax statements” from King County. Letter from Mary E. Wells, Financial Manager,
MBS National Forest Supervisor’s Office, to King County Treasury Division, Oct. 15, 2001.
DISCUSSION
The issue before us is whether the Forest Service is
constitutionally immune from paying the King County surface water management
fee or whether the Forest Service may pay that fee as a “reasonable service
charge” under the Clean Water Act’s sovereign immunity waiver, 33 U.S.C. sect.
1323(a).
It is an unquestioned principle of constitutional law that
the United States
and its instrumentalities are immune from direct taxation by state and local
governments. See McCulloch v. Maryland, 17 U.S.
(4 Wheat.) 316 (1819). The Supreme Court
has described a tax as “an enforced contribution to provide for the support of
government.” United States v. La Franca, 282 U.S.
568, 572 (1931). A fee charged by a
state or political subdivision for a service rendered or convenience provided,
however, is not a tax. See Packet Co. v. Keokuk, 95 U.S.
80, 84 (1877) (wharf fee levied only on those using the wharf is not a tax); 73
Comp. Gen. 1 (1993) (federal agencies receive a tangible benefit from use of
city sewer and may pay sewer service charges so long as they reflect the fair
and reasonable value of service received by United States); 70 Comp. Gen. 687
(1991) (county landfill user fee is a reasonable, nondiscriminatory service
charge based on level of service provided).
See also 50 Comp. Gen. 343
(1970) (county per-ton incinerator service charge not a tax against United
States but a reasonable charge based on the quantum
of direct service furnished). Taxation
is a legislative function while a fee “is incident to a voluntary act, e.g., a request that a public agency
permit an applicant to practice law or medicine or construct a house or run a
broadcast station.” National Cable
Television Ass’n v. United States, 415 U.S.
336, 340 (1974).
Distinguishing a tax from a fee requires careful analysis
because the line between “tax” and “fee” can be a blurry one. Collins
Holding Corp. v. Jasper
County, South Carolina, 123 F.3d 797, 800 (4th Cir.
1997). In determining whether a charge
is a “tax” or “fee,” the nomenclature is not determinative, and the inquiry
must focus on explicit factual circumstances. Valero Terrestrial Corp. v. Caffrey, 205 F.3d 130, 134 (4th
Cir. 2000). See also United States v. Columbia, Missouri, 914 F.2d 151, 154
(8th Cir. 1990) (applying a “facts and circumstances” test rather
than “reduc[ing the] case to a question of pure semantics” in finding that city
utility rate was not a tax). One court has described a “classic” tax as one meeting a
three-part inquiry—an assessment that (1) is imposed by a legislature upon
many, or all, citizens, (2) raises money, and (3) is spent for the benefit of
the entire community. [9] San
Juan Cellular Tel. Co. v. Public Service Comm’n of Puerto Rico, 967 F.2d 683, 685 (1st Cir.
1992). On the other hand, a classic “regulatory
fee” is imposed by an agency upon those subject to its regulation, may serve
regulatory purposes, and may raise money to be placed in a special fund to help
defray the agency’s regulation‑related expenses. Id.
See also B-288161, Apr. 8, 2002,
n.1 at 4, and cases cited therein, aff’d on
reconsideration, B-302230, Dec.
30, 2003 (applying Valero
and San Juan Cellular in tax versus fee analysis).
When the three-part inquiry yields a result that places the
charge somewhere in the middle of the San
Juan Cellular descriptions, that is, when assessments have characteristics
of both “taxes” and “fees,” the most important factor becomes the purpose
behind the statute or regulation that imposes the charge. See Valero,
205 F.3d at 134 (citing South Carolina v. Block, 717 F.2d 874, 887 (4th
Cir. 1983)). In those circumstances, if
the ultimate use of the revenue benefits the general public, then the charge
will qualify as a “tax,” while if the benefits are more narrowly circumscribed,
then the charge will more likely qualify as a “fee.” Id.
(citing San Juan Cellular, 967
F.2d at 685).
In United States v.
Huntington, West Virginia, the Fourth Circuit considered whether a “municipal
service fee” was indeed a fee or a tax, and whether the federal government (in
this case, the General Services Administration and the U.S. Postal Service) was
immune from its assessment. United States v. Huntington, West Virginia, 999
F.2d 71 (4th Cir. 1993), cert.
denied, 510 U.S.
1109 (1994). A provision of the West
Virginia Code authorizes any city furnishing an essential or a special
municipal service to impose upon the users of such service reasonable rates,
fees, and charges. W. Va. Code sect. 8-13-13 (2005). The
city of Huntington, West
Virginia, imposed a “municipal service fee” for fire
and flood protection and street maintenance based on the square footage of
buildings owned in the city. Huntington, 999 F.2d 71. The court found that
liability for Huntington’s
municipal service fee arose not from any use of city services but from the
federal government’s status as property owner.
Id. at 74.
Further, rejecting the city’s argument that any assessment
tied to some state-provided benefit is a user fee, the court added: “Under the theory advanced by the City,
virtually all of what now are considered ‘taxes’ could be transmuted into ‘user
fees’ by the simple expedient of dividing what are generally accepted as taxes
into constituent parts, e.g., a ‘police fee.’”
Id. at 74.
The court concluded that an assessment for such core government services
is in fact a “thinly disguised tax” from which the General Services
Administration and the U.S. Postal Service were constitutionally immune. Id. See also
20 Op. Off. Legal Counsel 12 (1996) (applying Huntington to conclude that District of Columbia clean air fee is
not a user or service fee because revenue from the fee is used to provide an undifferentiated
benefit to the entire public).
King County’s Surface Water Management Fee
When subjected to the three-part inquiry of San Juan Cellular, King
County’s SWM fee has the classic
attributes of a tax. The SWM fee is (1)
imposed by the county council, under authority granted by the Washington
State legislature, on all owners of
developed parcels in unincorporated areas of the county (2) to raise money that
is (3) spent to benefit the entire community.
See Valero, 205 F.3d at 134; San Juan Cellular, 967 F.2d at 685.
Though denominated a “service charge” or “fee,” the facts and
circumstances surrounding King County’s
assessment of SWM fees, Columbia, Missouri, 914 F.2d at 154, disclose that the
county provides no direct, tangible service or convenience in exchange for
payment of the SWM fee.[10] See
Packet Co., 95 U.S.
at 87--88; 73 Comp. Gen. 1; 50 Comp. Gen. 343. Cf.
Teter v. Clark, 104 Wash. 2d
227, 233--34 (Wash. 1985) (fees
imposed under Wash. Rev. Code
sect. 36.89.080 are an exercise of general police power and valid
under state constitution even though no specific service received). Unlike a fee to use a city wharf or sewer or
a county incinerator or landfill, the benefits paid for by King
County’s SWM fee—basin planning,
facilities maintenance, regulation, drainage investigation, resource
restoration, environmental monitoring, etc.—are
not narrowly circumscribed but benefit the general population at large. See
Valero, 205 F.3d at 134. Such broad
benefits are more in the nature of core government services comparable to the
provision of fire and flood protection and street maintenance financed through Huntington’s “municipal service fee,”
999 F.2d at 73, than a fee for a direct, tangible service or convenience
provided.[11] 73 Comp. Gen. 1; 50 Comp. Gen. 343. Nor is assessment of the SWM fee incident to
a voluntary act such as a request for a permit, see National Cable Television, 415 U.S. at 340; the assessment, rather,
supports the provision of undifferentiated benefits to the entire public. See 20
Op. Off. Legal Counsel 12.
King County’s
SWM fee, however, also shares some characteristics of a classic “regulatory fee.” See
San Juan Cellular, 967 F.2d at 685. The assessment, for example, serves
regulatory purposes under the county’s implementation of its municipal NPDES
permit under the CWA. See K.C.C. sect. 9.08.060(R). Ascribing a regulatory purpose to a tax,
however, does not convert it into a “fee.”
20 Op. Off. Legal Counsel 12.
Taxes, like fees or service charges, may also serve regulatory
purposes. See Massachusetts v. United States, 435 U.S.
444, 455--56 (1978) (“[A] tax is a powerful regulatory device; a legislature
can discourage or eliminate a particular activity that is within its regulatory
jurisdiction simply by imposing a heavy tax on its exercise”). SWM fees must also be deposited in a special
fund to be used only for maintaining and operating storm water control
facilities; planning, designing, establishing, acquiring, developing,
constructing, and improving such facilities; or to pay or secure the payment of
general obligation or revenue bonds issued for such purpose. Wash.
Rev. Code sect. 36.89.080(4); K.C.C. sect. 9.08.110. That fact, however, “is not enough reason on
its own to warrant characterizing a charge as a ‘fee.’” Valero, 205 F.3d at 135 (internal citation omitted). “If the revenue of the special fund is used
to benefit the population at large then the segregation of the revenue to a
special fund is immaterial.” Id. at 135.
When tax assessments also have some attributes of “fees,” an important factor in determining whether
it is a tax or a fee is the purpose behind the assessments. See
Valero, 205 F.3d at 134. Broadly
stated in the county ordinance, SWM fees are assessed: (1) to promote the public health, safety, and
welfare; (2) to preserve and utilize the county’s natural drainage system; and
(3) to provide for the comprehensive management and administration of surface
and storm water. K.C.C. sect. 9.08.040. As we discuss above, such broad purposes are
more like core government services providing undifferentiated benefits to the
entire public than narrowly circumscribed benefits incident to a voluntary act
or a service or convenience provided. See discussion supra pp.7--8.
Like Huntington’s “municipal service fee,” we conclude that the SWM fee is a
“thinly disguised tax” for which liability arises from the United
States’ status as a property owner and not from
the United States’
use of any King County
service. See Huntington, 999 F.2d at 73--74.[12]
Clean Water Act and Federal Sovereign Immunity
The state of Washington
has explicitly exempted the federal government from taxation, except as
permitted by federal law. Wash. Rev. Code sections 84.36.010(a);
84.40.315. In some instances Congress has
waived sovereign immunity and permitted state and local taxation and/or
regulation of certain federal activities, particularly in the field of
environmental regulation. See, e.g., 42 U.S.C.
sect. 2021d(b)(1)(B) (federal low-level radioactive waste disposal at nonfederal
disposal facilities subject to “fees, taxes, and surcharges”). See
also 42 U.S.C. sect. 7418 (Clean Air Act provision waiving federal sovereign
immunity from state, interstate, and local air pollution regulation, including
requirements to pay fees or charges imposed to defray costs of air pollution
regulatory programs). Section 313(a) of
the Clean Water Act, commonly known as the “federal facilities provision,” subjects
federal agencies to state, local, and interstate regulation of water pollution,
including the payment of reasonable service charges. 33 U.S.C. sect. 1323(a). The question arises whether section 313(a) also
waives federal immunity from state and local taxation and permits the Forest
Service to use appropriated funds to pay the King County SWM fee.
Section 313(a) of the Clean Water Act provides, in pertinent
part, that:
“Each department, agency, or
instrumentality of the executive, legislative, and judicial branches of the
Federal Government (1) having jurisdiction over any property or facility, or
(2) engaged in any activity resulting, or which may result, in the discharge or
runoff of pollutants, and each officer, agent, or employee thereof in the
performance of his official duties, shall be subject to, and comply with, all
Federal, State, interstate, and local requirements, administrative authority,
and process and sanctions respecting the control and abatement of water
pollution in the same manner, and to the same extent as any nongovernmental
entity including the payment of
reasonable service charges. The
preceding sentence shall apply (A) to any requirement whether substantive or
procedural (including any recordkeeping or reporting requirement, any
requirement respecting permits and any other requirement, whatsoever), (B) to
the exercise of any Federal, State, or local administrative authority, and (C)
to any process and sanction, whether enforced in Federal, State, or local
courts or in any other manner. This
subsection shall apply notwithstanding any immunity of such agencies, officers,
agents, or employees under any law or rule of law.”
Id.
(Emphasis added). Laws such as the
section 313(a) federal facilities provision must be construed strictly in favor
of the sovereign and not enlarged beyond what the language requires. See Ruckelshaus
v. Sierra Club, 463 U.S. 680, 685 (1983) (holding that absent some degree
of success on the merits by a claimant, a federal court may not award attorneys
fees under section 307(f) of the Clean Air Act). A waiver of sovereign immunity cannot be
implied but must be unequivocally expressed.
United
States v. Mitchell, 445 U.S.
535, 538 (1980). While section 313
subjects federal agencies to state and local regulation of water pollution, state
and local taxation is not one of the governmental powers to which federal
agencies are subjected under section 313(a).
See United States Department of
Energy v. Ohio, 503 U.S.
607, 623 (1992). Nothing less than an
act of Congress clearly and explicitly conferring the privilege of taxing the
federal government will suffice. Domenech v. National City Bank of New York, 294 U.S.
199, 205 (1935). Section 313 does not expressly
provide that federal agencies must pay state and local environmental
taxes. See id. The provision “never even [mentions] the word
‘taxes’ when referring to the obligations of the United
States.”
New York State Department of Environmental
Conservation v. United States Department of Energy, 772 F. Supp.
at 98, comparing 42 U.S.C. sect.
2021d(b)(1)(B) (federal low-level radioactive waste disposal at nonfederal
disposal facilities subject to “fees, taxes, and surcharges”) with 33 U.S.C. sect. 1323(a).
Moreover, we cannot imply a waiver of federal sovereign
immunity from state and local taxation, despite legislative history suggesting
the CWA’s federal facilities provision intended, “unequivocally,” to subject
federal agencies to “all of the
provisions of State and local pollution laws,”
S. Rep. No. 95-370 at 67 (1977) (emphasis added). Mitchell,
445 U.S. at
538; Lane v. Peña, 518 U.S.
187, 192 (1996). The waiver of sovereign
immunity must be expressed in the statutory text; a statute’s legislative
history cannot supply a waiver that does not appear clearly in any statutory
text. Lane, 518 U.S.
at 192, citing United States v. Nordic Village,
503 U.S. 30, 37
(1992).
The Supreme Court has consistently viewed section 313, and
its predecessors, narrowly. In 1976 the
Supreme Court found that a prior, similar version of
section 313 was not sufficiently clear and unambiguous as to require federal
dischargers to obtain state NPDES permits.[13] EPA v. California, 426 U.S.
200, 211--12 (1976). Because of the
fundamental importance of the principles shielding federal installations and
activities from regulation by the states, an authorization of state regulation
is found only when and to the extent there is a clear congressional mandate,
that is, specific congressional action that makes this authorization of state
regulation clear and unambiguous. Id. at 211, citing Hancock v. Train, 426 U.S.
167, 178 (1976).[14] The Court held that section 313 did not expressly
provide that federal dischargers must obtain state NPDES permits. EPA v. California, 426 U.S. at 212.
Nor did the provision expressly state that obtaining a state NPDES
permit was a “requirement respecting control and abatement of pollution,” as the
language of then-section 313 provided. Id. at 212--13. In response to the Supreme Court’s holding in
EPA v. California, Congress amended
section 313 “to indicate unequivocally that all Federal facilities and
activities are subject to all of the provisions of State and local pollution
laws.” S. Rep. No. 95-370, at 67.
Despite such statements of congressional intent, the Supreme
Court again narrowly construed the CWA’s waiver provision, holding that
Congress had not waived the federal government’s sovereign immunity from
liability for civil fines imposed by the state of Ohio
for past CWA violations. United States Department of Energy v. Ohio, 503 U.S.
607 (1992). Rejecting a broad reading of
current section 313’s “all . . . requirements” language, the Court found that
the language “can reasonably be interpreted as including substantive standards
and the means for implementing those standards, but excluding punitive
measures.” Id. at 627--28,
quoting Mitzelfelt v. Department of the
Air Force, 903 F.2d 1293, 1295 (10th Cir. 1990). Section 313(a)’s waiver provision, rather,
only recognizes “three manifestations of governmental power to which the United
States is subjected: substantive and procedural requirements;
administrative authority; and ‘process and sanctions,’ whether ‘enforced’ in
courts or otherwise.” Id. at 623.
Other federal courts also have construed the CWA’s section
313(a) waiver provision narrowly. New York State Department of Environmental
Conservation v. United States Department of Energy, 772 F. Supp. at 98 (section
313 “not blanket [waiver] of the United States’
sovereign immunity from the imposition and assessment of taxes by a State”). See
also In re: Operation of the Missouri
River System Litigation,
418 F.3d 915 (8th Cir. 2005) (section 313 a limited waiver of
sovereign immunity); Sierra Club v.
Lujan, 972 F.2d 312 (10th Cir. 1992) (section 313 does not waive
federal sovereign immunity from liability for punitive civil penalties).
CONCLUSION
The Forest Service is constitutionally immune from surface
water management fees assessed by King
County, and appropriated funds are
not available to pay for such assessments.
Notwithstanding the fact that King
County labels these assessments
“service fees,” the assessments, actually, are taxes. Furthermore, though section 313(a) of the
Clean Water Act, 33 U.S.C. sect. 1323(a), requires federal agencies to comply with
all state and local requirements respecting the control and abatement of water
pollution, including the payment of reasonable service charges, that provision
does not waive the federal government’s sovereign immunity from taxation by
state and local government. Such a
waiver must clearly and expressly confer the privilege of taxing the federal
government.
Anthony H. Gamboa
General Counsel