Ben Porto & Son, Ltd. v. Montgomery Cty.

318 A.3d 588

262 Md.App. 323

BEN PORTO & SON, LTD., et al.

v.MONTGOMERY COUNTY, Maryland

No. 2183, Sept. Term, 2022

Appellate Court of Maryland.

July 9, 2024

Circuit Court for Montgomery County, Case No. 487234V, David A. Boynton, Judge

Argued by Maria L. Olsen (Jon D. Pels, The Pels Law Firm, LLC, Bethesda, MD), on brief, for Appellant.

Argued by Jim Ogorzalek, Associate Cnty. Atty. (John P. Markovs, Cnty. Atty., Edward B. Lattner, Deputy Cnty. Atty., Trevor Ashbarry, Chief Division of Finance and Procurement, Rockville, MD), on brief, for Appellee.

Argued before: Berger, Leahy, Joseph M. Getty (Senior Judge, Specially Assigned), JJ.^*

Getty, J.

This case is a continuation of an eight-year legal odyssey pursued by Ben Porto & Son, Ltd., and Tri-State Stone & Building Supply, Inc. (collectively, "Porto"). Ben Porto & Son owns three contiguous parcels (the "Porto: property") in Montgomery County, Maryland, on which Tri-State Stone & Building Supply operates a quarry and building supply business. Since 2016, Porto has opposed Montgomery County’s imposition of the Water Quality Protection Charge ("WQPC") on the impervious surfaces on Porto’s property.

The WQPC is Montgomery County’s stormwater remediation charge, imposed by the County to control the negative effects of increased stormwater runoff from developed and developing lands. Subject to certain exceptions, Montgomery County charges set rates against each property owner in the county based upon the amount of impervious surface on their property. A property owner who can demonstrate that they treat their stormwater on-site can apply for a credit against the WQPC.

For each year between 2016 and 2018, Porto filed applications and appeals for either an exemption from or credit against the WQPC for its quarry. Montgomery County (the "County") denied each application, concluding that Porto was neither legally exempt from nor entitled to a credit against the WQPC. Porto ultimately appealed the County’s denial to the Maryland Tax Court (the "Tax Court"), again arguing either exemption from the WQPC entirely or entitlement to a credit for its purported on-site treatment of stormwater. After a trial in which both Porto and the County presented witness testimony, the Tax Court denied Porto’s request for exemption from the WQPC but found that Porto had demonstrated that it treated all of its stormwater on-site while also providing treatment for off-site stormwater. Because of that finding, the Tax Court awarded a 100% credit to Porto against the WQPC.

The parties then sought judicial review in the Circuit Court for Montgomery County. Porto reiterated its exemption argument, and the County challenged the Tax Court’s grant of a 100% credit. The circuit court ultimately affirmed the Tax Court’s decision as it related to exemption and entitlement to credit but remanded to the Tax Court because neither the record nor the Tax Court’s order reflected how the 100% credit award was calculated. The parties cross-appealed to this Court on the same issues.

We have rephrased and reorganized the questions presented¹ as follows:

1. Is the WQPC an unconstitutional retroactive excise tax?

2. Did the County improperly impose the WQPC against Porto?

3. Did the Tax Court err in its award and calculation of Porto’s WQPC credit?

4. Did the circuit court and Tax Court err by refusing to award attorneys’ fees to Porto?

For the reasons set forth below, we conclude that the WQPC is a valid excise tax but do not reach the question of whether it is unconstitutionally retroactive, as that issue was not preserved for our review. Further, we hold that the WQPC can be imposed against Porto but that based upon the Tax Court’s factual findings, Porto is entitled to a credit against the WQPC. However, the Tax Court’s order did not demonstrate how it calculated the credit amount Porto was entitled to. Finally, attorneys’ fees are not available in this case. Accordingly, we affirm the decision of the Circuit Court for Montgomery County remanding the case to the Tax Court for further fact-finding on the record to show the calculations required by County law for determining the amount of credit Porto should be awarded.

BACKGROUND

A. Federal and State Water Quality Protection

1. Federal Clean Water Act

The United States Congress passed the Federal Water Pollution Control Act of 1972, 33 U.S.C. §§ 1251–1389 (2016), more commonly known as the Clean Water Act (the "CWA"), to address growing concerns surrounding water pollution in the nation’s waters. Shaarei Tfiloh Congregation v. Mayor & City Corneil of Balt., 237 Md. App. 102, 110, 183 A.3d 845 (2018). The CWA takes a "cooperative federalism" regulatory approach to stemming water pollution, such that federal, state, and local governments are involved in the regulatory process. Md. Dep’t of Env’t v. Cnty. Comm’rs of Carroll Cnty., 465 Md. 169, 182, 214 A.3d 61 (2019). Each state must establish water quality standards for covered waters within the state’s borders. Piney Run Pres, Ass’n v. Cnty, Comm’rs of Carroll Cnty,, 268 F.3d 255, 260 (4th Cir. 2001).

[1, 2] The basic premise of the CWA is that the discharge of pollutants into water bodies is illegal. Md, Dep’t of Env’t v. Anacostia Riverkeeper, 447 Md. 88, 96,134 A.3d 892 (2016). In order for an entity to discharge pollutants into waters covered by the CWA, the entity must obtain a permit from the federal Environmental Protection Agency or an authorized state agency. Piney Run, 268 F.3d at 260. Known as National Pollutant Discharge Elimination System ("NPDES") permits, these permits allow the permitholder to discharge within set limits on the type and quantity of pollutants covered by the permit (the "effluent limitations"). Anacostia Riverkeeper, 447 Md. at 96, 134 A.3d 892. Before issuing a NPDES permit, the reviewing agency must ensure that the prospective discharger will not violate the water quality standards set by the state where the discharge will occur. Piney Run, 268 F.3d at 260.

Federal law allows for two types of NPDES permits: individual and general permits. As its name suggests, an individual permit covers an individual discharger. Driscoll v. Adams, 181 F.3d 1285, 1288 (11th Cir. 1999). Each individual permit contains its own effluent limitations for the permitted entity. U.S.C. § 1342(a). Conversely, a general permit "authoriz[es] a category of discharges under the CWA within a geographical area." 40 C.F.R. § 122.2 (2022); see also Md. Code Regs. ("COMAR") 26.08.01.01(35) (" ‘General permit’ is a discharge permit issued to a class of dischargers."). "[A] general permit is established with set limits and requirements." Anacostia Riverkeeper, 447 Md. at 138 n.57,134 A.3d 892. To be covered by a general permit, the potential discharger "file[s] a notice of intent … through which the discharger agrees to discharge under the terms of the general permit." Id. The notice of intent "represents no more than a formal acceptance of terms elaborated elsewhere." Id. (quoting Env’t Def Ctr, v. EPA, 344 F.3d 832, 853 (9th Cir. 2003)).

2. Stormwater Management in Maryland

Title 9, Subtitle 3 of the Environment Article ("EN") of the Maryland Code (1996, 2014 Repl. Vol.) contains Maryland’s laws on water pollution control, and Sections 9-322 through 9-333 govern discharge permits. The Maryland Department of the Environment ("MDE") is the agency authorized to issue NPDES permits in the State. Piney Run, 268 F.3d at 260; COMAR 26.08.04.07. In accordance with the authorization in federal law, MDE issues general permits for certain classes of discharges including for stormwater discharges and discharges from specified industries. OOMAR 26.08.04.08B(2)(a), 26.08.04.09.

Title 4 of the Environment Article ("Water Management") contains additional provisions regarding activities that affect water. Md. Code (1996, 2013 Repl. Vol., 2023 Supp.), EN §§ 4-101-901. These provisions include, inter alia, sediment control, stormwater management, watershed 'sediment and waste control, and pollution control and abatement.

a. Maryland Stormwater Management Act

Subtitle 2 of Title 4 ("Stormwater Management") contains the Maryland Stormwater Management Act. EN §§ 4-201-215; Carroll Cnty., 465 Md. at 196, 214 A.3d 61. First enacted in 1982, Subtitle 2 was created "to reduce as nearly as possible the adverse effects of stormwater runoff." Anacostia Riverkeeper, 447 Md. at 111, 134 A.3d 892 (quoting EN § 4-201). Under the Subtitle, each county and municipality in the State was required to " ‘adopt ordinances necessary to implement a stormwater management program’ by July 1, 1984," and the Department of Natural Resources was to issue regulations establishing minimum control requirements and design criteria for those programs. Id. (quoting EN § 4-202).

In 1987, MDE replaced the Department of Natural Resources as the agency promulgating regulations on stormwater management programs, Id. at 111 n.30, 134 A.3d 892. By 2000, MDE had identified "programmatic shortcomings" of the existing regulations. Id. at 111, 134 A.3d 892 (quoting 27 Md. Reg. 1167, 1168 (June 16, 2000) (to be codified at COMAR 26.07.02)). To rectify the "sparse guidance" in the regulations, MDE promulgated new regulations, including incorporating by reference the 2000 Maryland Stormwater Design Manual (the "Design Manual"). Id. at 111–12,134 A.3d 892 (quoting 27 Md. Reg. 1167, 1168). Each county and municipality were in turn required to incorporate the Design Manual into their own policies. Id. at 112, 134 A.3d 892. In 2007, the General Assembly mandated the use of environmental site design ("ESD"). Id. "ESD is best understood as those practices, such as ‘small-scale stormwater management practices, nonstructural techniques, and better site planning,’ that ‘mimic natural hydrologic runoff characteristics and minimize the impact of land development on water resources.’ " Id. (quoting EN § 4-201.1(b)).

As initially passed in 1982, the Stormwater Protection Act authorized...