News | November 15, 2017

Stormwater Regulation And Fees Will Impact Auto Dealers

By Steve Matzura and Scott Gould

Municipalities throughout Pennsylvania are in the process of implementing local stormwater ordinances and fees that will likely impact many auto dealers. Recent changes to federal and state laws have forced municipalities to seek new funding sources, regulate businesses that have large areas of solid pavement and roofing (“impervious” areas), including auto dealerships, and limit stormwater impacts that occur from future land development. Auto dealers should remain on the lookout for changes to local laws that will regulate stormwater, limit traditional land development, create quasi-governmental stormwater agencies (known as authorities), and impose stormwater fees. Auto dealers should take advantage of opportunities to participate to limit any adverse impacts from these local government initiatives on their operations. This article focuses specifically on Pennsylvania, but similar changes may be happening in municipalities throughout the country that are grappling with stormwater issues.

Auto dealers within the borders of a regulated municipal separate storm sewer system (a system that has separate pipes to convey stormwater, known as an “MS4”) may be affected the most by local stormwater regulation, whether or not the dealership discharges into storm sewer pipes. Municipalities regulated as MS4s have independent legal obligations related to stormwater management. These obligations are implemented through their MS4 permits with the Pennsylvania Department of Environmental Protection (“DEP”). An MS4’s compliance depends on land uses and practices of businesses within its borders. One potential component of an MS4’s compliance is regulation of commercial businesses, including auto dealers. For example, DEP requires minimum standards for stormwater controls in local ordinances and, to that end, has issued a model stormwater ordinance that MS4s are expected to implement, in some form, by September 30, 2022. The permitting requirements are even more severe if the MS4 is within the Chesapeake Bay watershed or within an identified “impaired” watershed.

A list of the hundreds of regulated MS4s, by county, and their regulatory status is available on DEP’s website. Auto dealers within these listed municipalities, in particular, should be attentive to developments at the local level and take advantage of their opportunities to shape local laws to accommodate their current and future business operations. Below are some key points to consider.

Stormwater Authorities and Fees
Municipalities may now create stormwater authorities, which are separate local entities that have defined responsibilities such as stormwater planning, management, and implementation. By law, stormwater authorities may generally impose “reasonable and uniform” rates. A key point of contention at the local level will undoubtedly be whether rates imposed are “reasonable and uniform” based on the characteristics of the properties that are subject to the fees.

Fee structures vary widely from municipality to municipality. The most simple is flat per-parcel fee. Another simple approach is the “total impervious surface” tiering approach, based on the amount of land that is not conducive to water infiltration, such as parking lots and building footprints. However, rather than a flat fee or total impervious surface fee, many municipalities may impose separate fees for non-residential and residential parcels, with non-residential properties bearing the lion’s share of costs. Typically, non-residential properties are subject to higher fees based on larger impervious surface areas that contribute to increased stormwater runoff (e.g., parking lots, roofs, etc.).

The revenue generated from the fees may be used by MS4s to implement “best management practices” (“BMPs”) that control and reduce the discharge of stormwater, including sediment contributions (or “loadings”) to surface waters (sediment, or soil particles, is considered a pollutant). BMPs can range from something as simple as more-frequent street cleaning, to something as burdensome as construction of retention basins and infiltration techniques.

Fee structures can (and should) include credit programs that reduce or eliminate fees for property owners who manage stormwater, such as by implementing their own BMPs. Auto dealers should ensure that credit programs are considered and look for opportunities to implement BMPs that can result in credits and long-term cost savings.

Dealerships in the Chesapeake Bay Watershed
Auto dealers within the Chesapeake Bay watershed may be most affected by local regulation as MS4s attempt to meet more-stringent permit requirements in this region. The Chesapeake Bay is considered “impaired” for sediment, nitrogen, and phosphorous. Therefore, federal and state regulation have focused on these three pollutants and, in urban or developed areas, particularly sediment. DEP permitting now requires MS4s in the Chesapeake Bay watershed to reduce sediment loadings to surface waters over the next several years and demonstrate those reductions (this is a new requirement for MS4 programs in Pennsylvania). In turn, this means businesses and land development within the Chesapeake Bay watershed will be in the crosshairs for more local regulation through BMPs and fees. Under DEP’s program, the amount of stormwater (or “volume”) is equivalent to “sediment” because higher volume results in stream scouring and stream bank erosion. Businesses, including auto dealers, may be forced to implement BMPs to reduce volumes discharged from properties where stormwater management was approved years or even decades ago.

Dealerships in Other “Impaired” Watersheds
Even beyond the Chesapeake Bay watershed, auto dealers within other, smaller watersheds throughout Pennsylvania that are considered “impaired” may be subject to additional local scrutiny for stormwater management. MS4s are subject to additional permitting requirements similar to those for the Chesapeake Bay if they are located within certain smaller watersheds that are ���impaired” for specific pollutants, including not only sediment, nitrogen, and phosphorous, but also pathogens, metals or acidity from abandoned mine drainage, and certain priority pollutants like polychlorinated biphenyls (“PCBs”) and pesticides. In turn, this means the potential for more local regulation in MS4 municipalities that face these issues beyond the Chesapeake Bay watershed.

Opportunities to Participate and Cooperate
When municipalities propose ordinances, fees, BMPs, and other measures to regulate stormwater, auto dealers should take advantage of opportunities to be in the conversation. Early participation in the development of fee structures, in particular, can ensure that assessments are fair, reasonable, and uniform and include credit programs for implementing desired controls, preventing the need for litigation later (which has been common for stormwater fees throughout the country). This includes having you or your representative attend public meetings, file written comments, and organize businesses in similar situations to oppose any inequitable treatment.

In addition, MS4 municipalities may look to private landowners and businesses to help them implement BMPs on private property. This can involve questions related to funding, design and construction, and long-term operation and maintenance (“O&M”) agreements to ensure ongoing effectiveness of BMPs. It may also involve restrictions on property, such as through deed covenants or use restrictions. The opportunity to work collaboratively with a municipality on such projects can be beneficial for auto dealers and help frame the outcome, resulting in a win-win if it is done properly. These opportunities may also expand beyond the borders of a municipality and involve cooperation with regional and county-wide initiatives (e.g., in York County).

Conclusion
Auto dealers must remain vigilant in tracking proposed local regulation of stormwater. Early participation by auto dealers or their representatives can reduce the regulatory burdens, present a positive community image, and result in savings in the long run.

© 2017 McNees Wallace & Nurick LLC
Auto Notes is presented with the understanding that the publisher does not render specific legal, accounting or other professional service to the reader. Due to the rapidly changing nature of the law, information contained in this publication may become outdated. Anyone using this material must always research original sources of authority and update this information to ensure accuracy and applicability to specific legal matters. In no event will the authors, the reviewers or the publisher be liable for any damage, whether direct, indirect or consequential, claimed to result from the use of this material.

McNees is a full-service law firm based in central Pennsylvania with more than 130 attorneys representing corporations, associations, institutions and individuals. For more information, visit www.mcneeslaw.com.

SOURCE: McNees