On April 30, 2026, the Supreme Court of Pennsylvania issued its decision in Borough of West Chester v. Pennsylvania State System of Higher Education, addressing whether a municipal stormwater charge constitutes a tax or a fee. The Court concluded, based on the specific structure and operation of the Borough’s ordinance at issue, that the charge functioned as a tax under the circumstances presented.
This decision is an important development for municipalities, municipal authorities, and property owners across the Commonwealth, particularly those involved in the design, implementation, or administration of stormwater management programs.
Case Background
The Borough of West Chester adopted a stormwater charge applicable to developed properties, calculated in part based on impervious surface area. The stated purpose of the program was to support stormwater system management and regulatory compliance obligations.
The Pennsylvania State System of Higher Education (PASSHE) and West Chester University challenged the charge, asserting immunity from local taxation as Commonwealth entities. The Borough maintained that the assessment was a fee for services. The matter proceeded through the courts, culminating in the Supreme Court’s review.
The Supreme Court’s Decision
The Court determined that, under the particular facts presented, the Borough’s stormwater charge was more appropriately characterized as a tax rather than a fee. As applied in that case, the charge could not be imposed on PASSHE due to its immunity from local taxation. Importantly, the Court’s analysis was grounded in a fact-specific evaluation of the ordinance and the manner in which the charge operated.
Key Considerations from the Opinion
While the Court’s reasoning is detailed and context-driven, several general considerations can be drawn:
- Substance Over Form
The Court evaluated the practical operation of the charge rather than relying solely on its label, emphasizing that classification depends on how a charge functions in practice. - Relationship to Services
The Court examined the relationship between the charge and the services associated with stormwater management, including how costs were allocated and assessed. - Governmental Context
The Court considered the broader context in which the stormwater program operated, including its role in addressing regulatory and infrastructure obligations.
Practical Observations
For Municipalities and Authorities
The decision highlights the importance of careful structuring and documentation of stormwater programs. Municipalities and authorities may wish to review existing ordinances and administrative practices to ensure alignment with applicable legal standards. Because the Court’s analysis is fact-specific, municipalities with clearly structured programs that closely tie charges to services provided may be better positioned to distinguish their ordinances from the one at issue in this case.
For Property Owners and Institutions
The ruling may prompt property owners, educational institutions, and tax-exempt entities to review how stormwater charges are assessed and applied in particular circumstances, especially for entities with unique legal status.
Looking Ahead
The Court’s decision does not establish a categorical rule applicable to all stormwater charges. Rather, it reinforces that classification will depend on the specific facts, structure, and implementation of each program. As municipalities and authorities continue to address stormwater management obligations, this decision will likely inform ongoing evaluation and refinement of funding mechanisms.
Notably, in this case, the University declined to pay the charge on the basis that it constituted a tax, and the Court’s ruling was limited to that classification issue. The Court did not address whether an entity in similar circumstances could both challenge the validity of a stormwater charge as a tax and seek a refund of previously paid fees. This leaves open an additional consideration for property owners and institutions evaluating their options in response to such charges.
The decision in Borough of West Chester underscores the importance of precision in program design and implementation. Stakeholders should consider reviewing applicable ordinances and policies in light of this guidance, with an emphasis on how charges are structured, justified, and administered.
If you have questions about the impact of this decision on stormwater programs and charges, please reach out to Adam Boyer, Colleen Gallo, or any attorney in Barley Snyder’s Real Estate Practice Group.
