Pels Law earned a big win this week in the Maryland Court of Appeals for clients in Bethesda against Montgomery County’s refusal to grant our clients statutorily mandated credits against the County’s “rain tax.” Pels Law attorneys Jon Pels and Maria Leonard Olsen have been working on this matter for more than eight years in a legal odyssey that included the County changing the statute at issue, as well as the appeals procedure, during the pendency of the case.

Stormwater remediation fees are established independently by counties and cities in Maryland. Gov. Hogan made the fees optional and gave localities flexibility to assess the controversial rain tax. Montgomery County’s Water Quality Protection Charge (WQPC) is assessed as an excise tax on almost all property owners in the County, based on the amount of impervious surface on the owner’s property. Both residential and commercial properties may apply online for credits against this charge, which is listed on owners’ property tax bills, though few commercial entities apply for credits, even though the WQPC can be thousands of dollars per year. Residents can obtain credits by demonstrating the use such stormwater measures as rain barrels, stormwater ponds, permeable pavement and conservation landscaping.

Our clients, Ben Porto & Son, Ltd. and Tri-State Stone & Building Supply, Inc., issued the following statement via Pels Law about the Court’s decision:

“On behalf of Porto and Tri-State Stone & Building Supply, Inc., we are pleased that the Court of Appeals made three key findings:
1. The ‘County did not offer any testimony or other evidence to contradict’ our expert’s ‘calculations or conclusions’ and that there was ‘substantial evidence to support the Tax Court’s finding that Porto demonstrated on-site treatment of both on- and off-site stormwater’;
2. The County is incorrect — as we have repeatedly argued — in asserting that absolute compliance with the Maryland Design Manual is required for WQPC credit and that ‘MCC Section 19-35(e) itself does not provide any requirements that practices eligible for credit must conform to the Design Manual’;
3. Finally, we are pleased that the Appellate Court affirmed in a reported opinion, which will survive indefinitely, that the Porto mine ‘is one of only a few quarries remaining in the County [and that] It mines a rare stone that is ‘the area’s only indigenous quartzite stone’, [that in] 1977, the County designated the Porto quarry as an ‘Area of Critical State Concern’ because it was found to be ‘in the State’s interest to preserve [mineral deposits] that contain useful material so that future generations may be able to take advantage of readily accessible economic sources of building material.’
We are very happy to have the Court affirm the very unique and special place the Porto quarry holds in this region and hopefully will continue to hold for years to come. Hopefully this ruling will convince the County to work with the last remaining building stone quarry in Montgomery County instead of against it, by providing WQPC credits for treatment of both on-site and off-site stormwater as long as it continues to mine the indigenous natural resource.”

Here is a link to an article about the case by Tax Notes, which “provides comprehensive and impartial coverage of tax news” and “offers best-in-class tax commentary and analysis on the latest changes in tax law and policy, as well as on court opinions, legislative action and revenue findings.” https://www.taxnotes.com/tax-notes-today-state/excise-taxes/maryland-court-upholds-stormwater-charge-allows-credit/2024/07/12/7kgp1

Here is a link to the lengthy reported decision: https://acrobat.adobe.com/id/urn:aaid:sc:VA6C2:fddec9f4-6ca7-4ab1-8613-73200629b4a7

If you would like to learn more about the case, pursuing WQPC credits or appealing a County WQPC assessment, please contact the firm at (301) 986-5570 or jpels@pelslaw.com.