Argued: November 1, 2018
from the United States District Court for the Western
District of Virginia, at Roanoke. Glen E. Conrad, District
A. Bryant, WILLCOX & SAVAGE, P.C., Norfolk, Virginia, for
Taylor Monday, GENTRY LOCKE, Roanoke, Virginia; Jon Alan
Mueller, CHESAPEAKE BAY FOUNDATION, Annapolis, Maryland, for
Gregory J. Haley, Scott A. Stephenson, GENTRY LOCKE, Roanoke,
Virginia; Daniel J. Callaghan, OFFICE OF THE CITY ATTORNEY
FOR THE CITY OF ROANOKE, Roanoke, Virginia, for Appellee City
Chuney, Brittany Wright, CHESAPEAKE BAY FOUNDATION, INC.,
Annapolis, Maryland, for Appellee Chesapeake Bay Foundation,
WILKINSON, WYNN, and DIAZ, Circuit Judges.
Norfolk Southern Railway appeals the district court's
order granting summary judgment for Defendant City of
Roanoke, Virginia and Defendant-Intervenor Chesapeake Bay
Foundation in this lawsuit alleging discriminatory taxation
in violation of the Railroad Revitalization and Regulatory
Reform Act of 1976. The district court concluded that the
City's stormwater management charge is a fee, rather than
a tax. This distinction matters because only taxes are
subject to challenge under the Act. For the reasons that
follow, we affirm.
City of Roanoke operates a stormwater management system that
includes gutters, storm drains, channels, retention basins,
and other infrastructure. The system collects stormwater and
diverts it into the Roanoke River or one of its thirteen
tributaries in the City.
operate its system, the City must hold a permit issued by
Virginia's Department of Environmental Quality pursuant
to the federal Clean Water Act and Environmental Protection
Agency regulations. Such permits "require controls to
reduce the discharge of pollutants to the maximum extent
practicable, including management practices, control
techniques and system, design and engineering methods, and
such other provisions as the [EPA] or the State determines
appropriate for the control of such pollutants." 33
U.S.C. § 1342(p)(3)(B)(iii). The City's permit
requires it to implement six "minimum control
measures" and meet Total Maximum Daily Load
("TMDL") limits, among other
facilitate compliance with applicable state and federal
stormwater regulations, Virginia law authorizes
municipalities to establish stormwater utilities and enact
stormwater management charges. Va. Code Ann. §
15.2.2114. These charges must be enacted "by
ordinance," and must "be based upon an analysis
that demonstrates the rational relationship between the
amount charged and the services provided." Id.
§ 15.2.2144(A), (B). Localities must also provide for
full or partial waivers of charges to property owners who
engage in certain stormwater management practices.
Id. § 15.2-2114(D). Income from the charges
"shall be dedicated special revenue . . . and may be
used only to pay or recover costs for" seven purposes
related to stormwater management. Id. §
2013, the Roanoke City Council enacted an ordinance
establishing a Stormwater Management Utility and a stormwater
utility charge. The City Council found that "an
adequate, sustainable source of revenue for stormwater
management activities is necessary to protect the general
health, safety, and welfare of the residents of the
city." Roanoke, Va., Code § 11.5-2. The Council
also found that "parcels . . . with higher amounts of
impervious surfaces contribute greater amounts of stormwater
and pollutants to the city's stormwater management system
and that the owners of such parcels should carry a
proportionate burden of the cost of such system."
Id. Therefore, the Council chose to base the charge
on "a parcel's impervious surface cover."
ordinance imposes the stormwater management charge on all
"improved parcels," id. § 11.5-3(a),
meaning all parcels with 250 square feet or more of
impervious surface, id. § 11.5-10(e). An
impervious surface is one that significantly impedes or
prevents "the natural infiltration of water into the
soil." Id. § 11.5-10(d). Approximately 86%
of the parcels in the City are considered improved parcels
subject to the charge. J.A. 57.
of improved parcels may apply for credits against the charge
imposed upon them. Roanoke, Va., Code § 11.5-7. Credits
are available for various stormwater management activities
that reduce, control, or treat stormwater runoff from
improved parcels, such as installing rain gardens or pervious
asphalt. Id.; see J.A. 135-36. The maximum
credit allowed for a given parcel is 50% of the total charge.
Id. § 11.5-7(b)(1).
revenue from the charge is deposited into a stormwater
utility enterprise fund, which is separate from the
City's general fund. The enterprise fund may only be used
for six stormwater management-related purposes listed in Va.
Code Ann. § 15.2-2114(A). Since it was established, the
Utility has used all revenue from the charge for stormwater
Southern is one of the City's largest property owners,
and it holds one of the City's largest improved parcels.
In 2017, it was assessed a stormwater charge of $416, 748.28
for that parcel. Much of Norfolk Southern's property is
covered by railroad track and ballast. Ballast is the crushed
stone surface beneath railroad tracks that stabilizes the
tracks and drains stormwater away from them.
Southern claims that its ballasted property should be exempt
from the charge. It contends that ballast is at least as
pervious to stormwater runoff as lawns, which are not