Zweig v. Metro. St. Louis Sewer Dist.

• Decision Date: 12 November 2013
• Docket Number: No. SC 92581.,SC 92581.
• Citation: 412 S.W.3d 223
• Parties: William Douglas ZWEIG, et al., Respondents/Cross–Appellants, v. The METROPOLITAN ST. LOUIS SEWER DISTRICT, Appellant/Cross–Respondent.
• Court: Missouri Supreme Court

412 S.W.3d 223

William Douglas ZWEIG, et al., Respondents/Cross–Appellants,

v.The METROPOLITAN ST. LOUIS SEWER DISTRICT, Appellant/Cross–Respondent.

No. SC 92581.

Supreme Court of Missouri, En Banc.

Nov. 12, 2013.

John L. Gianoulakis, Robert F. Murray and Kevin A. Sullivan of Kohn, Shands, Elbert, Gianoulakis & Giljum LLP in St. Louis, and Susan M. Myers, St. Louis, for Metropolitan St. Louis Sewer District.

Richard R. Hardcastle III, Erwin O. Switzer, Kirsten M. Ahmad and George A. Uhl of Greensfelder, Hemker & Gale PC, St. Louis, for the ratepayers.

PAUL C. WILSON, Judge.

William Zweig and the other named plaintiffs, on behalf of themselves and a class of similarly situated ratepayers (“Ratepayers”), sued the Metropolitan St. Louis Sewer District (“MSD”) seeking declaratory, injunctive, and monetary remedies on the ground that MSD violated article X, section 22(a) of the Missouri Constitution when it implemented its “stormwater user charge” without prior voter approval. The trial court declared MSD's action unconstitutional, enjoined future collection of the charge, and ordered MSD to pay the Ratepayers' attorneys' fees and other expenses. The trial court, however, refused to order MSD to pay damages or refund charges already collected.

MSD appeals the trial court's decision on Ratepayers' constitutional claim and the award of Ratepayers' attorneys' fees and expenses. Ratepayers cross-appeal, claiming that the trial court erred in refusing to enter a money judgment against MSD for the amounts already collected. This Court granted transfer pursuant to Rule 83.04, has jurisdiction under Missouri Constitution article V, section 10, and affirms the trial court's judgment in all respects.

Article X, section 22(a) of the Missouri Constitution prohibits political subdivisions “from levying any [new or increased] tax, license or fees” without prior voter approval. Despite the breadth of this language, section 22(a) does not prohibit a political subdivision from charging an individual user a fee in exchange for rendering a service to that user, so long as this charge is not simply a tax by another name. Keller v. Marion County Ambulance District, 820 S.W.2d 301, 305 (Mo. banc 1991).

Under Keller, therefore, charges imposed by a political subdivision are separated into two species: (1) “taxes,” which include “licenses and fees” and other levied charges; and (2) “user fees,” which are charged for an individual's use of the political subdivision's service. Section 22(a) requires the political subdivision to obtain prior voter approval for the former, but not the latter. Keller offers five criteria intended to be “helpful” in telling these two species apart. Id. at 304 n. 10. However, a tax by any other name remains a tax. It cannot be transformed into a user fee by adept packaging, any more than a zoologist can transform a horse into a zebra with a bucket of paint. Here, no matter how many stripes MSD paints on it, the stormwater user charge is not a user fee.

MSD concedes that the stormwater fee is not charged in exchange for an individual landowner's “use” of MSD's drainage system (i.e., discharging stormwater into that system during a rainstorm) or that landowner's “use” of MSD's oversight functions (i.e., receiving a particular stormwater inspection, permit, or educational program). MSD admits that it has no way to measure each landowner's discharge into its drainage system during a storm. Even if it could measure such usage, MSD contends that a fee based on such use would be both impracticable and unfair because some of the landowners who discharge stormwater into the drainage system play no part in creating the need for stormwater services while others who contribute to the need for such services do not use MSD's drainage system. Accordingly, MSD does not claim that the stormwater charge is a user fee paid for MSD's service of providing a stormwater drainage system during rainstorms or providing its stormwater oversight functions on request.

Instead, MSD claims that the stormwater charge is a user fee paid for MSD's service of ensuring the “continuous and ongoing” availability of its stormwater drainage system (and oversight functions), rain or shine. Despite this novel characterization, the basic flaw in MSD's argument remains that a user fee must be charged in exchange for, and based upon, an individual's use of the relevant service. Here, no matter how MSD characterizes its service, the stormwater fee is not charged in exchange for, nor is it based on, each individual Ratepayer's use of that service. No Ratepayer uses MSD's service (i.e., ensuring the “continuous and ongoing” availability of stormwater drainage and oversight functions) any more or less than any other Ratepayer, and Ratepayers do not use such a service any more or less than the rest of the landowners and non-landowners throughout the district. Instead, the only true user of such an “availability” service is the district as a whole, not individual landowners or subsets of landowners.

MSD responds that the stormwater charge should be classified as a user fee because it is based on each landowner's individual contribution to the overall need for MSD's stormwater services. MSD argues that only those landowners whose properties contain unnatural surfaces impervious to stormwater are responsible, collectively, for creating the need for stormwater services throughout the district. As a result, MSD insists that this subset of landowners, collectively, must bear all of the costs of MSD's ensuring such services are available whenever needed. Nothing in Keller or MSD's arguments, however, justifies equating an individual's contribution to the total need for a service with that individual's use of that service for purposes of determining whether a charge is a user fee.

MSD insists that a tax based on the assessed valuation of a property has no relation to stormwater services, but a stormwater user charge directed at the landowners who, collectively, create the need for stormwater services is much fairer and more easily understood. This may be so, but it also is irrelevant. A tax need not be tied to the payer's use of the political subdivision's service, but a user fee must be. A charge based on contributing to the need for (rather than the actual use of) a service might be fair and easily understood, but it cannot be a user fee. Accordingly, MSD's decision to implement the stormwater user charge without voter approval violated section 22(a).

FACTS

Voters in City of St. Louis and parts of St. Louis County created MSD in 1954 when they ratified MSD's charter (“Plan”) pursuant to article VI, section 30(a) of the Missouri Constitution. MSD's purpose is stated in the first section of the Plan: “In the interest of public health and for the purpose of providing adequate sewer and drainage facilities ... there is hereby established a metropolitan sewer district[.]” [Emphasis added.]

After the Plan was approved, MSD assumed ownership of and control over all publicly owned sewer and stormwater facilities throughout the district. When voters expanded the district in 1977, however, MSD decided that it would not acquire all stormwater facilities in the newly annexed area. Instead, MSD determined that (if asked) it would help plan and coordinate stormwater programs already in existence. MSD changed this policy in 1989 when it announced that it would regulate all stormwater facilities throughout the district and would assume ownership of and control over designated facilities as funds became available.

MSD's basic stormwater services are to operate and maintain a stormwater drainage system and to provide certain stormwater oversight functions such as planning, permitting, and public education. MSD's stormwater drainage system is not analogous to its sewer operations. To use MSD's sewer system, a landowner must have a physical connection to that system. But a landowner needs no physical connection to MSD's stormwater drainage system for stormwater falling on that owner's property to flow through MSD's system on its way to the Mississippi River and the Gulf of Mexico.

MSD's stormwater drainage system is a combination of natural and artificial waterways, open and closed. Stormwater enters this system through natural aggregation and numerous trapped and un-trapped inlets. Before entering MSD's drainage system, however, most stormwater passes through natural or artificial collection devices such as curbs, gutters, culverts, or trenches. MSD does not operate or maintain these parts of the stormwater drainage system, which usually are owned (and maintained, if at all) by the Missouri Department of Transportation, local municipalities, or individual landowners.

Not all of the rain that falls in the district flows through MSD's drainage system. Some of it is held on or absorbed by the land, and some drains directly into major rivers or is handled by local levee districts. Of the stormwater that drains through MSD's system, MSD cannot tell where the water originates or how much stormwater each property discharges into the system during a particular storm or over any period of time.¹

MSD's stormwater oversight functions are separate and distinct from its operation and maintenance of the stormwater drainage system. With the expansion of state and federal environmental laws, MSD has been given expanded responsibility for an increasing array of stormwater planning, permitting, and public education functions.

MSD's powers are limited to those set forth and approved by the voters in the Plan and such implied powers as may be necessary to achieve MSD's purposes. St. Louis Inv. Properties, Inc. v. Metropolitan St. Louis Sewer Dist., 873 S.W.2d 303, 307 (Mo.App.1994). MSD's ability to fund its activities also is limited. Article VI, section 30(b) of the Missouri Constitution provides: “The plan shall provide for the assessment and taxation of real estate ... giving...