The Pennsylvania Supreme Court has ruled that the money charged by a municipality to treat stormwater should be considered a “tax,” and not a “fee.” Thus far, the exact legal implications are not clear. While its possible the ruling could result in substantial shifts in who is responsible for the cost of cleaning up stormwater, the ruling also potentially offers relief to tax-exempt organizations.
Environmental Risks of Stormwater
Climate change has increased the risk that stormwater poses to coastal communities and those around other bodies of water. The water that arises during major flooding can often be contaminated with toxic chemicals, and also is often tainted by raw sewage. As a result, cleaning up after a major storm can be costly but necessary to prevent environmental damage and limit the spread of disease.
Court Rules Stormwater Costs Are Tax, Not Fee
The case in question concerned West Chester University, which had argued against a local municipal ordinance that required it (along with other residents) to pay increased fees to cover the costs of cleaning up after a storm. Under its argument, these costs constituted a tax, and as a tax-exempt institution, it was also exempted from paying these costs. The PA Supreme Court agreed, awarding them the victory but leading to serious legal questions in the process.
Implications for Tax-Exempt Organizations
The cost of stormwater management and cleanup must be paid for, which invariably means that the cost will be shifted elsewhere. But in the short term, this seems like it could be a boon for tax-exempt organizations, who may no longer need to worry about paying for stormwater cleanup costs. This includes colleges, churches, and charitable institutions of various sorts, as well as government agencies.
Many other municipalities, including Philadelphia, have similar stormwater costs imposed on residents and businesses. While this ruling, for now, only applies to the City of West Chester, it is likely that tax exempt organizations throughout Pennsylvania will raise similar challenges to municipal storm water costs.
Williams Cedar is a law firm dedicated to helping clients with personal injury, environmental law, and civil rights cases. We have extensive experience representing the interests of people injured in catastrophic accidents, including fires, explosions and leaks of toxic materials. If you believe we can be of service to you or a loved one, please give us a call at our New Jersey and Pennsylvania offices at (215) 557-0099, or visit our contact page.