February 4, 2010
Re: Dec. 17, 2009 letter from U.S. Postal Service
Dear City Recorder,
Your MTAS Management Consultant provided a copy to me of the above-referenced
letter from the U.S. Postal Service asserting that the tank maintenance fee and garbage fee
assessed in the bill from the city Utilities amount to taxes which the postal service believes it is
immune from paying.
Interestingly, this same (or a very similar) letter was sent to some other cities across our
state by post office locations in their boundaries, although storm water fees are at issue in those
other locations. The case law cited in these letters is the same, and the cases which the letter
cites are selected based on their perceived advantage to the postal system. In reality, case law
which is more recent on these issues concludes in favor of local governments being able to assess
fees for services such as the construction and unavoidable use of storm water facilities.
A case relied upon by the post office to assert that the (water) tank maintenance fees and
garbage fees are taxes, rather than fees, was later reversed in another case between Cincinnati
and the United States. The case was not overturned on appeal, but a 2007 court opinion makes
clear that the 1997, unreported trial court case replied upon by the post office is no longer
applicable to these situations.
In the earlier case City of Cincinnati v. United States, 153 F.3d 1375 (Fed. Cir. 1998), the
Court of Appeals does affirm the trial court’s dismissal of the City’s claim for unpaid storm
water fees, but states:
There may be some instances in which a municipal assessment is involuntarily imposed
but would nonetheless be considered a permissible fee for services rather than an
impermissible tax. Our decision in this case does not answer that question and thus we
do not hold that Cincinnati’s storm drainage service charge is a tax that cannot
constitutionally be imposed on a federal entity. Id., at 1378.
The appeal was rather dismissed for failure to state a claim, and no conclusions about whether
the amounts assessed are taxes or fees were reached by the Court. What is clear from this
opinion is that the trial court’s assertion that storm water drainage fees are taxes which cannot be
assessed against a federal entity was not adopted by the Court of Appeals, so the lower court
opinion has no precedent.
In the more recent case City of Cincinnati v. United States, 2007 WL 956432 (S.D. Ohio
2007), the court found that the storm water fees charged are not taxes, but permissible fees
enacted under the Clean Water Act, and no immunity exists for federal entities under the law.
Your situation with the post office is different, as you do not seek payment of storm
water fees, but fees for garbage service and tank maintenance fees for water tanks maintained on
the property. The analysis is very similar, however, as the first question to be asked is whether
these amounts are taxes, as asserted by the post office, or fees.
The primary distinction between a tax and a fee is the purpose for which each is imposed.
A tax is imposed to raise revenue. A fee is imposed for the regulation of some activity under the
police power of the city. Memphis Retail Liquor Dealers’ Ass’n, Inc. v. City of Memphis, 547
S.W.2d 244 (Tenn. 1977).
The regulation of drinking water, and protection of the public water supply, is a police
power held by cities through which fees may be assessed to residents and businesses within the
jurisdiction. The tank maintenance fee assessed by your city is part of your city’s efforts to
regulate and protect the city water supply, pursuant to the Safe Drinking Water Act, T.C.A. § 68221-702, et seq. Local governments are required by both state and federal law to inspect sources
of “non-potable” water, cross connections and auxiliary input systems which may have an impact
on the public water supply. The Tennessee Department of Environment and Conservation
Bureau of Environment Division of Water Supply mandates that cities have inspection programs
in place and regularly review water tanks for compliance, under the Public Water Supply rules,
found in our state rules and regulations at 1200-05-01. The “tank maintenance fee” assessed by
your city falls within this authority and duty granted by our laws and regulations. It is a fee
imposed pursuant to the police power of the City to regulate the public water supply and is
therefore clearly a fee rather than a tax.
There are many cases in our state in which it is clearly established that garbage fees are
not taxes. City of Tullahoma v. Bedford County, 938 S.W.2d 408 (Tenn. 1997). The assessment
of garbage fees, commonly referred to as “tipping fees,” is authorized by our state law for solid
waste disposal. T.C.A. § 68-221-835. Whether or not the resident or business uses the city or
county garbage collection service, this solid waste disposal fee may still be assessed, due to the
costs that local governments incur operating or utilizing landfills and dumping stations. Horton
v. Carroll County, 968 S.W.2d 841 (Tenn. App. 1997). As with the tank maintenance fee, the
garbage fee is imposed under statutory authority and is assessed pursuant to your city police
power to regulate the disposal of solid waste. It is therefore a fee rather than a tax.
The fees assessed by your city challenged by the U.S. Postal Service are legal and valid
fees from which the postal service has no immunity. The assertion that such fees are taxes is not
supported by our laws or by legal precedent. In my opinion, there is no immunity held by the
U.S. Postal Service which would prevent the city from being able to assess and collect these fees.
I hope this information is helpful. Thank you for consulting with MTAS.
Sincerely,
Melissa A. Ashburn
Legal Consultant