                                    PUBLISHED

                     UNITED STATES COURT OF APPEALS
                         FOR THE FOURTH CIRCUIT


                                     No. 18-1060


NORFOLK SOUTHERN RAILWAY COMPANY,

                   Plaintiff − Appellant,

             v.

CITY OF ROANOKE, a Virginia Municipality,

                   Defendant – Appellee,

             and

CHESAPEAKE BAY FOUNDATION,

                   Intervenor/Defendant − Appellee.


Appeal from the United States District Court for the Western District of Virginia, at
Roanoke. Glen E. Conrad, District Judge. (7:16-cv-00176-GEC)


Argued: November 1, 2018                                 Decided: February 15, 2019


Before WILKINSON, WYNN, and DIAZ, Circuit Judges.


Affirmed by published opinion. Judge Diaz wrote the opinion, in which Judge Wilkinson
and Judge Wynn joined. Judge Wilkinson and Judge Wynn wrote separate concurring
opinions.


ARGUED: Gary A. Bryant, WILLCOX & SAVAGE, P.C., Norfolk, Virginia, for
Appellant. Monica Taylor Monday, GENTRY LOCKE, Roanoke, Virginia; Jon Alan
Mueller, CHESAPEAKE BAY FOUNDATION, Annapolis, Maryland, for Appellees.
ON BRIEF: 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 of Roanoke. Alayna Chuney,
Brittany Wright, CHESAPEAKE BAY FOUNDATION, INC., Annapolis, Maryland, for
Appellee Chesapeake Bay Foundation, Inc.




                                    2
DIAZ, Circuit Judge:

       Plaintiff 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.



                                             I.

                                            A.

       The 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.

       To 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


                                             3
six “minimum control measures” and meet Total Maximum Daily Load (“TMDL”)

limits, among other requirements. 1

      To 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. § 15.2-2114(A).

       In 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

      1
         Minimum control measures include various means of reducing pollutants to
comply with the Clean Water Act, from public outreach and participation to system
operation and maintenance. EPA, National Pollutant Discharge Elimination System—
Regulations for Revision of the Water Pollution Control Program Addressing Storm
Water Discharges, 64 Fed. Reg. 68,722, 68,752 (Dec. 8, 1999). TMDLs limit total
discharges of specified pollutants based on water quality criteria. 33 U.S.C. § 1313(d).


                                            4
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.” Id.

       The 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.

       Owners 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).

       All 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

management.

                                         B.

       Norfolk 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


                                              5
$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.

       Norfolk 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 considered impervious surfaces and are not subject to the charge.

                                            C.

       Following unsuccessful attempts to exempt the ballasted property from the charge,

Norfolk Southern sued the City, alleging that the stormwater management charge is a

discriminatory tax in violation of the Railroad Revitalization and Regulatory Reform Act

of 1976 (the “4-R Act”), 49 U.S.C. § 11501. Under the 4-R Act, states and localities may

not impose any “tax that discriminates against a rail carrier.” Id. § 11501(b)(4). Norfolk

Southern alleges that the City’s stormwater management charge does just that because it

treats ballasted property differently from lawns, even though the two are, in the railroad’s

view, equally pervious to stormwater.

       Following a period of discovery, the district court granted Defendants’ motion for

summary judgment, concluding that although it is “admittedly a close question,” the

charge is not subject to the 4-R Act’s requirements because it is a fee rather than a tax.

Norfolk S. Railway Co. v. City of Roanoke, No. 7:16 CV 00176, 2017 WL 6599008, at

*8–9 (W.D. Va. Dec. 26, 2017). We review the district court’s decision de novo. Valero

Terrestrial Corp. v. Caffrey, 205 F.3d 130, 133 (4th Cir. 2000).




                                             6
                                            II.

       Because the 4-R Act applies only to taxes, not fees, we must determine whether

the charge in this case is closer to (1) a paradigmatic tax, which “is imposed by a

legislature upon many, or all, citizens” and “raises money, contributed to a general fund,

and spent for the benefit of the entire community,” or (2) a paradigmatic regulatory fee,

which “is imposed by an agency upon those subject to its regulation,” and serves

regulatory purposes by disincentivizing conduct or raising money to defray regulatory

expenses. San Juan Cellular Tel. Co. v. Pub. Serv. Comm’n, 967 F.2d 683, 685 (1st Cir.

1992). In answering this question, we are aided by the three-part framework suggested in

San Juan Cellular and adopted by this court in Valero, 205 F.3d at 134. 2 This framework

focuses on “(1) what entity imposes the charge; (2) what population is subject to the

charge; and (3) what purposes are served by the use of the monies obtained by the

charge.” Id. If the charge falls “somewhere in the middle” between a classic tax and a

classic fee, the most important of these considerations is the charge’s purpose. Id.




       2
         Defendants urge us not to apply the San Juan Cellular framework to this 4-R Act
case because it was developed in cases that concerned different statutes. Nothing about
the framework, however, is statute-specific. As Judge Wynn aptly notes in his
concurring opinion, it merely provides flexible and versatile guidance in assessing where
a particular charge sits on the tax-fee continuum. Indeed, San Juan Cellular aimed to
synthesize the general approach that courts had taken to distinguish taxes from fees “in a
variety of statutory contexts.” 967 F.2d at 685.



                                             7
                                            A.

       We first consider who sets the charge. A charge is more likely to be a tax if it’s

imposed by the legislature, rather than an administrative agency. Valero, 205 F.3d at

134. Here, this factor suggests that the charge is a tax because it’s imposed by Roanoke’s

legislative body, the City Council. 3

                                            B.

       Under the second San Juan Cellular factor, a charge is more likely to be a tax if it

is imposed on a broad segment of the public. GenOn Mid-Atl., LLC v. Montgomery

County, 650 F.3d 1021, 1024 (4th Cir. 2011). And assessment of a tax is often based

“solely on ability to pay,” as measured by a payor’s property or income, rather than tied

to the receipt of a particular benefit or the imposition of a regulatory burden. Nat’l Cable

Television Ass’n, Inc v. United States, 415 U.S. 336, 341 (1974); see DIRECTV, Inc. v.

Tolson, 513 F.3d 119, 126 n.3 (4th Cir. 2008) (discussing the significance of whether an

assessment is tied to income). By contrast, the classic fee is imposed only upon persons

subject to regulation by a particular agency. Valero, 205 F.3d at 134.



       3
         As Defendants point out, the Virginia statute authorizing the charge requires that
it be passed through ordinance by the City Council. This makes the Council somewhat
less like an autonomous legislature and somewhat more like an administrative agency
implementing the state statute, which itself forms a part of the Clean Water Act’s
comprehensive regulatory scheme. But the authorizing statute still requires legislative
decision-making through passage of an ordinance. The Council’s decision acts as a
check on the regulatory program, in much the same way that legislatures’ appropriations
decisions can check agencies’ regulatory programs. Thus, we consider the Council to
have acted in a predominantly legislative capacity for purposes of the first factor.



                                             8
       This factor suggested that the charge was a tax in Valero, where it was imposed

upon persons disposing waste at landfills, who in turn passed the cost on to their

customers, thereby spreading it “to a significantly wider portion of the population.” Id.;

accord DIRECTV, 513 F.3d at 125–26. In GenOn, however, we concluded that a carbon

emission charge was a fee rather than a tax primarily because the charge applied to only

one entity. 650 F.3d at 1024. 4

       Here, the second factor is largely inconclusive. On the one hand, the stormwater

management charge applies to a broad class of property owners, suggesting that it is a

tax. But on the other hand, it isn’t assessed solely on the basis of property ownership.

Rather, the amount assessed is proportional to the amount of impervious surface on an

owner’s property. And property owners may receive credits against the assessment if

they engage in certain stormwater management practices. These features suggest that the

charge is a measure of the stormwater management obligations that each parcel imposes

upon the City, rather than a measure of ability to pay. And this makes the charge more

like a fee. These features also distinguish the stormwater management charge from the

charge in Valero, which applied to all waste disposers regardless of their contribution to




       4
         Courts have differed as to how the second factor applies to stormwater
management charges. Compare DeKalb County v. United States, 108 Fed. Cl. 681, 700–
01 (2013) (concluding that the second factor suggested a stormwater management charge
was a tax), and McLeod v. Columbia County, 254 F. Supp. 2d 1340, 1346 (S.D. Ga.
2003) (same), with Homewood Vill., LLC v. Unified Gov’t of Athens-Clarke County, 132
F. Supp. 3d 1376, 1381 (M.D. Ga. 2015) (reaching the opposite conclusion).



                                            9
the burden that the charge was designed to address—closing underfunded landfills. On

balance then, this second factor is effectively a wash as to the nature of the charge.

                                             C.

       Under the third San Juan Cellular factor—which is the most important one in

close cases—a charge is more likely to be a tax if its primary purpose is to raise revenue

for general government activity that benefits the entire community. 967 F.2d at 685–86.

This is true even if the revenue is placed into a special fund and segregated from general

revenue, as long as “the special fund is used to benefit the population at large.” Valero,

205 F.3d at 135. Conversely, a charge is more likely to be a fee if it’s used to provide

individualized benefits or to defray an agency’s costs of regulating. San Juan Cellular,

967 F.2d at 685–86. A charge will also be considered a fee if its primary purpose is to

regulate conduct by making it more expensive (even if the charge also raises revenue).

S.C. ex rel. Tindal v. Block, 717 F.2d 874, 887 (4th Cir. 1983).

       The third factor pointed to the charge being a tax in Valero, where the funds

collected were used to support the closure of underfunded landfills in an environmentally

sound manner that complied with EPA regulations. 205 F.3d at 134–35. The charge’s

purpose was to protect the state’s groundwater, which benefitted the general public. Id.

And in United States v. City of Huntington, the charge’s purpose suggested it was a tax

where the charge paid for “core government services” including fire and flood protection

and street maintenance. 999 F.2d 71, 73 (4th Cir. 1993).

       On the other hand, the charge’s purpose suggested it was a fee in San Juan

Cellular, where the funds were used to regulate cell phone providers. 967 F.2d at 686.


                                             10
The court noted that there need not be an exact match between the charge assessed and

the agency’s expenditures on a particular regulated firm. Id. at 686–87. In GenOn, we

found that a carbon emission charge was “plainly regulatory,” just like a classic fee,

because it “create[d] disincentives for GenOn to continue polluting and provide[d] funds

for others to reduce their carbon dioxide emissions.” 650 F.3d at 1025.

      Courts have reached different results in applying the third factor to stormwater

management charges.     In DeKalb County, the court concluded that the third factor

suggested the charge was a tax because the benefits of stormwater management—flood

prevention and abatement of water pollution—were shared broadly by the general public.

108 Fed. Cl. at 701. The court also noted that the assessment of a stormwater charge is

based “not on the benefits derived by the payor, but by the anticipated burden that its

property imposes on the stormwater system.” Id. at 703.      And the charge couldn’t be

considered a voluntary user fee because property owners couldn’t decline stormwater

services. Id. at 704–06. The McLeod court reached a similar result, noting that “[s]torm

water management was and is the type of service that is often funded through general tax

revenue.” 254 F. Supp. 2d at 1347–48. The Homewood Village court, however, reached

the opposite conclusion, noting that although all residents receive a benefit from

stormwater management, “those paying the charge receive a special benefit” because the

county treats polluted water on their properties, facilitating compliance with state and

federal requirements. 132 F. Supp. 3d at 1381 (citing Homewood Vill., LLC v. Unified

Gov’t of Athens-Clarke County, 739 S.E.2d 316, 318 (Ga. 2013)).




                                           11
       Norfolk Southern argues that Roanoke’s stormwater management charge serves

two purposes that both benefit the general public: reducing water pollution and improving

flood control.   It analogizes these purposes to maintaining the safety of the state’s

groundwater, which we held to be a public benefit in Valero. Defendants respond that

they are obligated by law to operate a stormwater management system and to use all

revenue generated from the charge for specific stormwater management activities. Thus,

although the charge may benefit the public, its primary purpose is to satisfy regulatory

requirements. 5 Norfolk Southern’s rejoinder is that the charge isn’t regulatory in the

sense recognized by San Juan Cellular because the City is a regulated entity, rather than

a regulator. The railroad notes that the stormwater Utility doesn’t directly regulate its

activity or issue any permit for its stormwater discharges.

       We think the charge’s purpose is more consistent with that of a fee than a tax,

because the charge forms part of a comprehensive regulatory scheme.             Although

municipalities may have traditionally provided stormwater management as a public

benefit at the discretion of their legislatures, the Clean Water Act’s regulatory scheme

now requires the City to take myriad concrete actions to reduce discharges and pollutant

concentrations—many of them relating directly to runoff from Norfolk Southern’s




       5
         Defendants also note that all revenue from the charge is placed into a segregated
enterprise fund, rather than the City’s general fund. But standing alone, the fact that
revenue from the charge is placed in a special fund is “immaterial.” Valero, 205 F.3d at
135.



                                            12
property and the waters that receive it. See, e.g., J.A. 140–44, 169–80, 262, 284–86,

554–58.

       What’s more, if the City elects to assess a charge to offset the costs of complying

with these regulatory obligations, it must do so consistent with the state authorizing

statute, Va. Code Ann. § 15.2-2114. This statute restricts the funds to specific uses

related to stormwater management, and it requires that the charge incentivize stormwater

management practices by crediting property owners who adopt them. Id. § 15.2-2114(D).

These requirements have removed much of the legislative discretion that was

traditionally associated with stormwater management. The City is now a participant in a

comprehensive scheme regulating stormwater management and the assessment of charges

to pay for it.

       Of course, the City doesn’t directly regulate Norfolk Southern or other stormwater

dischargers, nor does it issue permits for their discharges. Thus, rather than defraying the

City’s costs of regulating, the charge primarily defrays the City’s costs of complying with

regulations imposed upon it. At bottom, however, a classic regulatory fee is designed to

address harmful impacts of otherwise permissible activities, and to ensure that the actors

responsible for those impacts bear the costs of addressing them. That is exactly the

function served by Roanoke’s stormwater management charge, which ensures that

owners of impervious surfaces bear the cost of managing stormwater runoff.

       In sum, the charge is part of a regulatory scheme, rooted in the Clean Water Act,

whose purpose is to remedy the environmental harms associated with stormwater runoff

and to hold stormwater dischargers responsible for footing the bill. EPA’s regulations


                                            13
ensure that the harms of stormwater discharge are addressed, and the City levies a charge

(as directed by the state) upon those whose activity creates the need for regulation. The

charge also serves the regulatory function of incentivizing property owners to reduce the

amount of impervious surface on their land and engage in stormwater management

practices that qualify them for credits.

       As a result, the third San Juan Cellular factor suggests that the charge is a fee.

                                             D.

       Finally, we consider the three San Juan Cellular factors collectively, in light of all

the relevant circumstances, to decide whether the City’s stormwater management charge

is a tax subject to the 4-R Act’s requirements, or a fee beyond the reach of those

requirements. As the district court acknowledged, this is a “close question.” Norfolk S.,

2017 WL 6599008, at *8. The first factor suggests that the charge is a tax because it’s

imposed by the legislature. The second factor is largely inconclusive because the charge

is levied upon most properties but based on contributions to stormwater runoff rather than

ability to pay. The third factor suggests that the charge is a fee because it forms part of a

comprehensive regulatory scheme.

       Applying the principle we articulated in Valero, 205 F.3d at 134, we give the third

factor controlling weight here because the charge’s regulatory purpose provides a better

indication of its overall nature than the body that implemented it or the class of persons it

is levied upon. See also Club Ass’n of W. Va., Inc. v. Wise, 293 F.3d 723, 726 (4th Cir.

2002) (applying this principle). Accordingly, we conclude that the charge is a fee, rather




                                             14
than a tax subject to the 4-R Act’s requirements. The district court correctly granted

Defendants’ motion for summary judgment.

                                                                          AFFIRMED




                                         15
WILKINSON, Circuit Judge, concurring:

       I am happy to concur in Judge Diaz’s fine opinion. For the reasons given in that

opinion, I agree that the charge levied on Norfolk Southern by the City of Roanoke is a

fee and not a tax. I write separately to describe how this case fits into the larger story of

environmental restoration.

                                             I.

       Captain John Smith’s party could hardly convey to readers the “abundance of fish

lying so thicke” that exceeded any river in Europe: “Neither better fish, more plenty, or

variety, had any of us ever seene, in any place swimming in the water, then in the Bay of

Chesapeack ….” Walter Russell & Anas Todkill et al., The Accidents That Happened in

the Discoverie of the Bay, in 1 The Complete Works of Captain John Smith (1580-1631)

224, 228 (Philip L. Barbour ed., 1986). Before the arrival of Captain Smith, the

Algonquin Indians recognized the extraordinary productivity of the Bay, terming it

“Chesepioc,” meaning “great shellfish bay.” Christopher P. White, The Chesapeake Bay

Field Guide, 3 (1989). More than a century later, in 1728, William Byrd II wrote that

“one might believe, when he sees such terrible amounts of them, that there was as great a

supply of herring as there is water. In a word, it is unbelievable, indeed, indescribable,

and also incomprehensible, what quantity is found there. One must behold oneself.”

William Byrd, The Newly Discovered Eden 78 (Richmond C. Beatty & William J.

Mulloy eds., trans., 1940).

       Today, one no longer can. Instead of fish, we quantify phosphorus, nitrogen,

sediment, and other pollutants. Clouds of sediment and algal blooms blot out the sun,

                                             16
leaving the subaqueous flora starved for photosynthetic fuel. U.S. Environmental

Protection Agency, Chesapeake Bay: Introduction to an Ecosystem, 4 (Kathryn

Reshetiloff ed., 1995). As the underwater grasses die for lack of sun, the fauna that rely

on them begin to die as well. Id. Microscopic zooplankton and small invertebrates that

feed on the grasses are deprived of their food. Alice Jane Lippson and Robert L. Lippson,

Life in the Chesapeake Bay, 175, 192 (2006). In turn, species of fish and fowl that feed

on these creatures lose their food as well. Id. Blue crabs lose a safe place to hide after

they shed their hard shells during their seasonal molting.          Christopher P. White,

Chesapeake Bay: A Field Guide, 84 (1989). And fish like menhaden and croakers, which

use the grasses as protective nurseries, are deprived of a safe place to nurture their young.

Alice Jane Lippson and Robert L. Lippson, Life in the Chesapeake Bay, 190 (2006).

Those fish that remain suffer from contamination by metals like chromium and mercury

or organic contaminants like PCBs and pesticides. Karl Blankenship, “Report finds

evidence of toxic contaminants impacting fish,” Bay Journal (January 1, 2013).

       But all that has happened, and is happening, need not always happen. And therein

lies the future of Virginia’s waters and the Bay.

                                                  II.

       Restoring damaged waters like the Chesapeake Bay requires sustained effort,

entailing cooperation and coordination among the federal government, “[s]tate and local

governments, the enterprise of the private sector, and . . . all the people who make this

region their home.” Exec. Order No. 13508, 74 Fed. Reg. 23099, 23100 (May 12, 2009).

Chesapeake Bay restoration would be impossible without stitching together the efforts of

                                             17
a vast number of people from diverse walks of life: cattle farmers in West Virginia, lawn

care specialists in New York, and golf course operators in Pennsylvania, to name a few,

not to mention countless public servants—town managers, environmental experts,

Cooperative Extension agents. All share a common goal and corresponding common

burdens.

       The response to the problem of stormwater runoff demonstrates the necessity of

cooperation between all levels of government and private actors. Stormwater is of

particular concern to environmental restoration: when it falls on impervious surfaces like

streets or parking lots, it picks up pollutants like motor oil, animal waste, or just plain

dirt, and washes them into the local streams. These pollutants contain chemical

contaminants and the nutrients that feed algal blooms. They make their way through

streams and tributaries, causing harm along the way, until they collect in the estuary

where the rivers meet the ocean. William H. Funk, “Virginia Artificial Wetland a Game-

Changer for Stormwater Pollution,” Chesapeake Bay Magazine (June 13, 2017).

       The scheme that regulates stormwater runoff begins with the federal government

which, through the Clean Water Act, mandates that states set water quality standards that

any given river must meet. 33 U.S.C. § 1313. If the river does not meet the water quality

standards, the state government steps in and works with the EPA to put the river on a

“pollution diet” or Total Maximum Daily Load (TMDL). Id. The TMDL establishes the

total amount of each pollutant that is allowed to drain into the river, and slowly reduces

that amount to a level consistent with federally mandated water quality standards. Id. One

of the ways the state then implements the TMDL is by adjusting the permits it gives to

                                            18
entities within the river’s watershed so that the total amount of pollution these entities are

allowed to drain into the river is below the overall limit. Local governments must obtain

one of these permits to manage the flow of stormwater from their sewer system into local

waterways.

       The City of Roanoke’s stormwater clean-up scheme, which is governed by its

permit, is what’s at issue here. While not in the Bay’s watershed, the Roanoke River is

itself worthy of protection, and the City of Roanoke’s program is a prime example of the

type of stormwater remediation efforts that localities in the Bay’s watershed must enact.

A ruling for Norfolk Southern here would have deleterious implications for comparable

municipal stormwater programs that are within the Bay’s watershed like Richmond,

Charlottesville, and Lynchburg. Richmond, Va., Code art. V., § 14-336 (2017);

Lynchburg, Va., Code art. V., § 16.2-56 (2018); Charlottesville, Va. Code art. VI., § 10-

104 (2018). And so while this case does not deal directly with the Chesapeake’s waters,

its health is very much at stake here.

       Under its permit, the City of Roanoke has the burden of reducing stormwater

pollution, but it can only do this with the cooperation of its residents. In addition to

maintaining its sewer infrastructure, the City coordinates with local “watershed

associations,   environmental     advisory     committees,       and   other   environmental

organizations.” J.A. 156. The City also helps its residents install features like rain gardens

and detention ponds that soak up the stormwater rather than allowing it to drain

immediately into the river. And, importantly, the City relies on its residents to help fund

its stormwater clean-up efforts through the fee at issue here.

                                             19
                                                  III.

       In seeking to avoid paying a fee that the City uses to fund its stormwater clean-up

scheme, Norfolk Southern, one of the largest property owners in Roanoke, is seeking to

absolve itself of responsibility. Stormwater runs off the railroad’s property into the City’s

sewer system. The City must then treat and manage this water to comply with its permit.

This costs money. If the City could not charge a fee to Norfolk Southern, Roanoke

would bear the burden of managing the railroad’s runoff alone. Erroneously deeming this

fee a tax under the Railroad Revitalization and Regulatory Reform Act would, as the

railroad knows, run the decided risk of limiting its contribution to the broader project of

stormwater management. The City would thus lose important revenue needed to offset

the costs of building and maintaining municipal gutters and drains, monitoring pollution

levels, policing illegal discharges of polluted water, and educating the public on proper

environmental practices. Norfolk Southern would, in effect, be shifting its burden to the

City. What we have here is the irony of a railroad seeking a free ride.

       This is unacceptable. As Judge Diaz aptly notes, “the charge is part of a regulatory

scheme, rooted in the Clean Water Act, whose purpose is to remedy the environmental

harms associated with stormwater runoff and to hold stormwater dischargers responsible

for footing the bill.” Maj. Op. at 13. The arteries of the Chesapeake Bay wend through

six states, including three in the Fourth Circuit (Maryland, West Virginia, and Virginia).

Numerous localities in the Bay’s watershed have clean-up schemes with fees comparable

to Roanoke’s. Norfolk Southern’s position would put these projects at risk.



                                             20
       Our rivers and estuaries are complex, interconnected ecosystems. It follows,

therefore, that efforts to restore them are correspondingly complex and interconnected.

Without the cooperation of all levels of government, as well as of private companies and

citizens, our waters will continue to be compromised by pollution. The restoration effort

imposes burdens on many people; happily, the benefits of clean waters (economic;

health; scenic; recreational) accrue to just as many if not more. Everyone, including the

owners and employees of Norfolk Southern, are better off when our streams run clear and

estuarine flora and fauna are flourishing. It is only fair to ask those who benefit to

shoulder some of the burden.

      No one is so naïve as to believe that the Chesapeake Bay can be restored to the

pristine condition viewed by John Smith and William Byrd, or that the Roanoke River

and its tributaries such as Peters Creek and Tinker Creek can be restored to the condition

in which this country’s earliest inhabitants found them. We would be fortunate to

preserve a wholesome fraction of what once there was. This case is but a tiny chapter in

the story of our nation’s effort to reconcile the just demands of development with the

imperative of preserving an environment that can help make productive enterprise worth

having. A reversal here might seem just a small setback. But a series of such setbacks

accelerates rather than retards the degradation of the natural world. We happily accepted

the abundance that came down from our forebears. How then can we impoverish the

environment for those who come after?




                                           21
WYNN, Circuit Judge, concurring:

       I concur in the majority opinion’s determination that the City of Roanoke’s

stormwater assessment constitutes a “fee,” rather than a “tax,” and therefore is not subject

to the provision in the Railroad Revitalization and Reform Act (the “4-R Act”)

prohibiting state and municipal “tax[es]” that discriminate against rail carriers. 49 U.S.C.

§ 11501(b)(4). The assessment is connected to a federal regulatory program, is designed

to defray the costs of that program, and encourages property owners to take steps to

advance the program’s regulatory objectives, and therefore serves “primarily . . .

regulatory or punitive purposes, making it a ‘fee.’”        GenOn Mid-Atlantic, LLC v.

Montgomery Cty., Md., 650 F.3d 1021, 1023 (4th Cir. 2011) (internal quotation marks

omitted).

       The analytical framework used in this matter derives from the First Circuit’s

decision in San Juan Cellular Telephone Co. v. Public Svc. Comm’n, 967 F.2d 683, 685

(1st Cir. 1992) (Breyer, J.). The framework in that case has been used to distinguish

“taxes” from “fees” for purposes of the Tax Injunction Act, 28 U.S.C. § 1341. See

Valero Terrestrial Corp. v. Caffrey, 205 F.3d 130, 134 (4th Cir. 2000).

       Here, we apply that Tax Injunction Act precedent to interpret whether an

assessment is a “tax” or “fee” under the 4-R Act. In doing so, we recognize that this

Court has held that “we must examine the explicit factual circumstances that transcend

the literal meaning of the terminology and ask whether the charge is levied primarily for

revenue raising purposes, making it a ‘tax,’ or whether it is assessed primary for

regulatory or punitive purposes, making it a ‘fee.’” GenOn, 650 F.3d at 1023 (internal

                                            22
quotation marks omitted). “[B]roader-based taxes . . . sustain the essential flow of

revenue to the state (or local) government [whereas] fees . . . are connected to some

regulatory scheme.” Collins Holding Corp. v. Jasper Cty., S.C., 123 F.3d 797, 800 (4th

Cir. 1997). And this Court’s long-standing precedent makes clear that “[t]he proper

analysis to arrive at the real nature of the assessment is to examine all the facts and

circumstances and assess them on the basis of economic realities.” United States v. City

of Huntington, W. Va., 999 F.2d 71, 73 (4th Cir. 1993) (internal quotation marks and

alterations omitted).

       Thus, determining whether an assessment amounts to a tax or fee turns on “all the

facts and circumstances.”      Id.   Nonetheless, this Court, and other courts, have

characterized San Juan Cellular as identifying three “factors” that bear on the resolution

of that question: “(1) what entity imposes the charge; (2) what population is subject to the

charge; and (3) what purposes are served by the use of the monies obtained by the

charge.” Valero, 205 F.3d at 134. But San Juan Cellular did not enumerate a “three-

factor” test—which instead came from a Ninth Circuit opinion purporting to distill the

analysis in San Juan Cellular. See Bidart Bros. v. Cal. Apple Comm’n, 73 F.3d 925, 931

(9th Cir. 1996). Rather, San Juan Cellular highlighted three “facts of th[e] case”—which

“facts” the Ninth Circuit later denominated as “factors”—because those facts indicated

that the assessment at issue was “close to the ‘fee’ end of the spectrum,” “with a

paradigmatic tax at one end and a paradigmatic fee at the other.” 967 F.2d at 686. The

court had no reason to address other “circumstances” that might be relevant in

distinguishing a tax from a fee because they were not present in the case. Id.

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       Significantly, our Tax Injunction Act decisions distinguishing between taxes and

fees have not always rigorously adhered to the three-factor analytical framework. See,

e.g., GenOn, 650 F.3d at 1023–24 (placing little weight on first factor, and characterizing

three factor framework as an “aid” in resolving governing question of whether

assessment is for revenue raising purposes or regulatory purposes); Collins, 123 F.3d at

797 (citing San Juan Cellular, but only addressing two of the three factors, and

characterizing the third factor—the “purpose and ultimate use of the assessment”—as

“the heart of the inquiry”).

       I write separately to point out that reducing a “totality-of-the-circumstances”

inquiry into a “three-factor test” poses substantial risks. It elevates the significance of

enumerated factors, relative to non-enumerated factors. It suggests that the enumerated

factors warrant equal significance in the ultimate weighing, notwithstanding that some

facts may be more important than others. It also discourages courts from considering

factors that are not enumerated in the test, but may be highly relevant in a particular case.

And it serves as an invitation to lower courts to simply tick through the enumerated

factors and determine whether more factors favor treating an assessment as a tax or a fee.

But “a score of [2] to [1] decides a baseball game,” Remington Hybrid Seed Co., 495 F.3d

403, 407 (7th Cir. 2007), not a multi-factorial balancing test, let alone a totality-of-the-

facts-and-circumstances test, like that used to determine whether an assessment

constitutes a tax or fee, cf. Hexom v. Or. Dep’t of Transp., 177 F.3d 1134, 1137 (9th Cir.

1999) (explaining that cases applying the San Juan Cellular test “take a practical and



                                             24
sensible approach. They do not apply a set of rigid rules or elements and then reach a

mechanical conclusion”).

       In this case, we conclude that the first two factors have little or no bearing on our

ultimate determination that the assessment at issue constitutes a fee. Additionally, the

decisive third factor—which appears to be coextensive with the purpose of the entire

three-factor inquiry—encompasses numerous considerations that bear significant weight

in the ultimate determination—such as whether the funds are kept in a segregated fund

and whether the assessment incentivizes decisions that advance the program’s regulatory

objectives—but which are not elevated to separate “factors” in the three-factor

framework. Thus, though we characterize our analytical framework as a “three factor

test,” the analysis adheres moreso to the governing “totality-of-the-circumstances”

inquiry.

       In sum, the three “factors” from San Juan Cellular provide helpful guidance in

analyzing the fundamental question of whether an assessment serves revenue raising

purposes, and therefore is a tax, or serves a regulatory purpose, and therefore is a fee.

But the “heart of the inquiry” remains “the purpose and ultimate use of the assessment.”

Collins, 123 F.3d at 797. The majority opinion engages in a thorough and persuasive

analysis of numerous facts and circumstances bearing on that question and concludes the

assessment is a fee. Accordingly, I concur.




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