3

ENVIRONMENT

FEES – REAL PROPERTY – WHETHER UNPAID BAY RESTORATION

FEE CONSTITUTES A LIEN ON REAL PROPERTY

June 14, 2007

The Honorable Pamela R. Howard

Cecil County Treasurer

You have requested our opinion concerning the collection of

the Bay Restoration Fee. Specifically, you asked whether an unpaid

charge is a lien on real property that may be collected through the tax

sale process.

For the reasons explained below, we conclude as follows: 

1. An unpaid tax or fee does not constitute a lien on real

property unless the lien is expressly provided by law. The statute

establishing the Bay Restoration Fee does not itself create a statutory

lien. Rather, that statute authorizes local governments and other

“billing authorities” to use their existing procedures for collecting

water and sewer bills to collect the Bay Restoration Fee – procedures

that may be used to collect various types of charges in addition to

water and sewer fees. In some jurisdictions, current law may

provide for a lien that would encompass other charges that may

appear on a water or sewer bill, such as the Bay Restoration Fee.

However, a local law simply making unpaid water or sewerage

charges themselves a lien would be insufficient to create a lien for

other unpaid charges.

2. Absent a statutory lien, an unpaid charge may not be

collected through the tax sale process. 

We recommend that the General Assembly consider the merits

of creating a statutory lien for unpaid charges to provide a more

uniform enforcement mechanism for collection of the Bay

Restoration Fee. 
4 [92 Op. Att’y

 The latter provision is a county ordinance. Other provisions in 1

the Cecil County Code, namely, the Public Local Laws governing the

County’s Sanitary District, provide for creation of a lien securing front

foot benefit assessments, water and sewer system upkeep charges,

connection charges, and related charges authorized under the Sanitary

District provisions. See, e.g., §§67-17 and 67-21 of the Code of Cecil

County. 

I

Background

In 2004, the Bay Restoration Fund program was enacted to

restore the vitality of the Chesapeake Bay by combating nitrogen and

phosphorus pollution. That law created a special fund to provide

financial assistance for upgrading wastewater treatment plants and

other efforts to reduce nutrient flow into waters of the State, with

primary emphasis on the Bay. Much of the revenue for the fund is

derived from a charge known as the Bay Restoration Fee. The law

enlisted local governments and other entities to collect that charge.

You indicated in your letter that Cecil County includes the Bay

Restoration Fee on the water or sewer bill for those properties served

by County water or sewer services. The charge is included on the

property tax bill for other properties. Your letter accurately noted

that, pursuant to the Annotated Code of Maryland, Tax-Property

Article (“TP”), §14-804(a), “[a]ll unpaid taxes on real property shall

be, until paid, liens on the real property ...” and that, pursuant to

§265-39 of the Code of Cecil County, “[a]ll rates and/or charges

referred to in [Chapter 265 - Waters and Sewers] shall constitute a

lien on the real estate served ....” However, you also stated that 1

“Cecil County is unable to find any law that states unpaid [Bay

Restoration Fees] constitute a lien on the real property.” You

advised that, based on your counsel’s advice, the County could not

collect delinquent fees through the tax sale process.

II

Bay Restoration Fund Program 

The Bay Restoration Fund program was enacted as Chapter

428, Laws of Maryland 2004, the relevant provisions of which are

codified at Annotated Code of Maryland, Environment Article
Gen. 3] 5

 The law, in effect, created three classes of rate payers and 2

imposed varying implementation dates: (i) Residential dwellings that

receive individual sewer bills and users of septic systems or holding tanks

that receive water bills (January 1, 2005); (ii)/(iii) Users of septic systems

or holding tanks that do not receive water bills (October 1, 2005); and (iv)

Multi-unit housing units that receive a sewer bill (but not sewer bills for

individual units) and nonresidential users (January 1, 2005). As to the

final class, the fees are based on “equivalent dwelling units” and are

prorated; the total fee for a single site is subject to an annual cap. EN

§9-1605.2(b). 

EN §9-1605.2(c) exempts certain users of wastewater facilities

based on facility discharge factors. 

(“EN”), §9-1605.2. As initially proposed by Governor Ehrlich’s

Administration, the charge would have applied only to users of

wastewater facilities, as defined in EN §9-1601. However, the bill

was substantially amended by the General Assembly to assess the

charge not only on those served by public sewer systems, but also on

those relying on septic systems and holding tanks. As a result, the

law relies on a number of mechanisms to collect the charge. Before

considering the specific issues raised in your inquiry, it is worth

outlining the relevant provisions of the statute.

The statute establishes the Bay Restoration Fund (“Fund”) as

a special fund administered by the Maryland Water Quality

Financing Administration (“WQFA”). EN §9-1605.2(a), (f). The

Fund is to consist of revenue from the Bay Restoration Fee, the

proceeds of bonds issued by WQFA, interest and other income on

the Fund principal, and money from other public or private sources

devoted to the purposes of the Fund. EN §9-1605.2(g). The Bay

Restoration Fee is to be paid by “any user of a wastewater facility,

an onsite sewerage disposal system, or a holding tank that: (i) [i]s

located in the State; or (ii) [s]erves a Maryland user and is eligible

for funding under [EN §9-1601, et seq.]” EN §9-1605.2(a)(4). The

applicable charge varies for different classes of users. EN

§9-1605.2(b)(1).2

EN §9-1605.2(d)(2)(i) provides that, except for a wastewater

facility without a billing authority, the charge “shall be collected by

the local government or the billing authority for the water or
6 [92 Op. Att’y

 The Comptroller is authorized to collect the charge from the 3

owner of a wastewater facility “without a billing authority.” EN

§9-1605.2(d)(2)(ii). This exception would extend to entities such as

industrial users that operate their own wastewater treatment facilities. 

 The Comptroller is to segregate a portion of the fee revenues to 4

cover administrative expenses. EN §9-1605.2(e)(4).

 EN §9-1605.2(e)(2) provides that, “[e]xcept to the extent of any 5

inconsistency with this subsection, the provisions of Title 13 of the TaxGeneral Article that are applicable to the sales and use tax shall govern the

administration, collection, and enforcement of the restoration fee under

this section.” However, these provisions would extend only to the

Comptroller, not to local billing authorities primarily responsible for

collections.

wastewater facility, as appropriate, on behalf of the State.” As to 3

users who receive a sewer or water bill, the charge is to be listed as

a separate charge on the bill and to be labeled “Bay Restoration

Fee.” EN §9-1605.2(b)(2)(i). The actual billing authority could

obviously vary, i.e., it could be a county, a municipality, a sanitary

commission, a water and sewer authority, or other utility, depending

on the manner in which services are provided in a particular

community. For users of septic systems or holding tanks that do not

receive a water or sewer bill, the statute assigns the county

responsibility for the collection of the charge, although the county

may negotiate with a municipality to assume responsibility for

collection within the municipal limits. EN §9-1605.2(b)(2)(ii)1.

Revenues from the charge are to be remitted by the billing

authorities to the Comptroller who is authorized to adopt regulations

necessary to administer, collect, and enforce the charge. EN

§9-1605.2(e)(1), (3). The Comptroller and Central Collection Unit 4

are authorized to collect from billing agencies revenues that should

have been credited to the Fund. EN §9-1605.2(e)(2) and (5).5

The statute delegates enforcement of the fee to the various

billing authorities. Key to your inquiry, the statute provides that:

A local government, billing authority for

a water or wastewater facility, or any other

authorized collecting agency:
Gen. 3] 7

Money collected from users of septic systems and holding tanks 6

is used, in part, for grants or loans for qualifying septic system upgrades,

educational programs, and certain technical support, and, in part, for crop

cover activities through the Department of Agriculture. See EN

§9-1605.2(h). This section was amended by Chapter 462, Laws of

Maryland 2006, altering permissible uses of and funding priorities for

these revenues, but the 2006 legislation does not affect our analysis. 

Other revenues collected under the statute are dedicated to, among

other things, grants for qualifying upgrades to wastewater facilities,

payment of bonds issued by the WQFA if the proceedsfrom the bond sale

were credited to the Bay Restoration Fund, and administrative costs,

including costs incurred by local governments and other billing

authorities, not to exceed 5% of the total fees collected by the billing

authority. 

 Neither the Comptroller’s Office or the Department of 7

Environment has yet adopted regulations under the statute. However, both

agencies have posted information regarding the Bay Restoration Fee on

their respective websites, http://business.marylandtaxes.com/taxinfo

/bay_res_fund.asp and http://www.mde.state.md.us/Water/CBWRF/

brf_faqs.asp. 

(i) May use all of its existing procedures

and authority for collecting a water or sewer

bill, an onsite sewerage disposal system bill,

or a holding tank bill in order to enforce the

collection of the Bay Restoration Fee; ...

EN §9-1605.2(d)(3)(i).

Remaining provisions of the statute address, among other

things, the permissible uses of the Fund, funding priorities, 6

segregation of fees collected from users of septic systems or holding

tanks, establishment of a Bay Restoration Advisory Committee, and

adoption of regulations by the Department of Environment. EN 7

§9-1605.2(f) - (k).

III

Analysis

The Tax-Property Article prescribes a process by which county

and municipal tax collectors may sell property at a tax sale if taxes

on the property are in arrears. TP §14-808, et seq. Availability of
8 [92 Op. Att’y

 “Other taxing agency” is defined as “any municipal corporation 8

or other public or quasi-public corporation that may impose a tax of any

kind which is or may become a lien on real property.” TP §14-801(b).

 In Home Owners’ Loan Corp., a public local law of Baltimore 9

City provided that “payment of waterservice charges may be enforced ‘by

the same process that city or state taxes are collected...’” The City relied

on that language to argue that unpaid water charges constituted a lien on

the property served. The Court of Appeals rejected that argument, noting

the “general rule” that taxes and water charges are not a lien unless

expressly made so by statute or ordinance. 175 Md. at 682. The particular

case before the Court involved unpaid charges in service areas beyond

City limits and the Court also relied on the fact that the law, which

provided for enforcement in Baltimore City courts, could not have been

meant to create a lien with respect to properties outside the municipal

limits. Id. at 682-83. In any event, it is evident that language

incorporating by reference other enforcement mechanisms does not create

a statutory lien by itself. 

the tax sale process as a means of debt collection, however, is tied

to the definition of a “tax”:

(1) “Tax” means any tax, or charge of

any kind due to the State or any of its political

subdivisions, or to any other taxing agency,

that by law is a lien against the real property

on which it is imposed or assessed.

(2) “Tax” includes interest, penalties, and

service charges.

TP §14-801(c) (emphasis supplied). Thus, whether the Bay 8

Restoration Fee may be collected through the tax sale process

depends on whether an unpaid charge constitutes a statutory lien on

real property.

A provision creating a lien must be explicit. It is well

established that neither taxes nor service charges are a lien on real

property unless expressly made so by statute. Home Owners’ Loan

Corp. v. Mayor and City Council of Baltimore, 175 Md. 676, 681-

82, 3 A.2d 747 (1939). See also 12 McQuillin, The Law of 9

Municipal Corporations §35:69 (3 ed. rev. 2006) (water rates are rd

not a lien on the property served unless provided by statute or

otherwise in express, unambiguous terms); 14 McQuillin, supra,
Gen. 3] 9

 Even if the Bay Restoration Fee were viewed as a tax, it clearly

10

is not a property tax in that a property tax is a charge on ownership of

property, without regard to its use, and is based on the assessed valuation

of the property. Waters Landing Ltd. P’ship v. Montgomery County, 337

Md. 15, 26, 650 A.2d 712 (1994); see also 91 Opinions of the Attorney

General 152, 160-61 (2006). 

§38.161 (taxes are not a lien on property unless expressly made so

by statute). 

The Bay Restoration Fund statute does not expressly establish

a lien on the property of a person responsible for payment of an

unpaid charge. As outlined above, the statute delegates collection of

the charge to entities responsible for collecting water or sewer bills.

And it simply incorporates whatever authority and procedures

already exist under the various billing scenarios – i.e., a collection

agency may use “its existing procedures and authority for collecting

a water or sewer bill, an onsite sewerage disposal system bill, or a

holding tank bill to enforce the collection of the Bay Restoration Fee

...” EN §9-1605.2(d)(3)(i). 

In many cases, the charge appears as a separate charge on

water and sewer bills. In situations where those responsible for

paying the charge receive neither a water nor a sewer bill, the county

is responsible for its collection. In the latter situation, it is our

understanding that the charge is generally included as a separate item

on the property tax bill, as is the practice in Cecil County. Whether

a delinquent charge for the Bay Restoration Fee is a lien on real

property depends on the mechanisms available to the particular

billing authority under the law governing that jurisdiction or agency.

Some local laws, such as the Cecil County provisions cited

above, make unpaid property taxes or water or sewer charges a lien

against the property. But the Bay Restoration Fee is neither a

property tax nor a water or sewer charge. A statutory provision 10

making unpaid water or sewer charges a lien against the property

served is inadequate to create a lien in favor of the State for other

charges, such as the Bay Restoration Fee, that may also be

delinquent. On the other hand, a local law that explicitly establishes

a lien on real property for any additional charges collected by the

billing authority beyond water or sewer charges would create a lien
10 [92 Op. Att’y

 By way of illustration, §2-13-24 of the Public Local Laws of 11

Frederick County provides, in part, that “[f]ront foot benefit assessment,

drainage assessments, water and sewer system upkeep charges, connection

charges, and other charges which the board [of county commissioners] is

empowered to make shall be liens upon the property served or benefitted

... [T]he county director, if directed by the board, shall sell the property of

the delinquent property owner in the same manner as other properties are

sold at a tax sale. ....” The statutory reference to “other charges” could

extend to related charges the County collects on behalf of the State such

as the Bay Restoration Fee. The breadth of this statute, however, is not

typical; for example, §67-21 of the Public Local Laws of Cecil County is

limited to “other charges ... pursuant to [Chapter 67 of the Code].”

Assuming arguendo that a home rule county or municipal

corporation could create a lien by local law, no unit of local government

could create a lien in a manner than conflicted with lien priorities dictated

by State law. See, e.g., May Dep’t Stores v. Montgomery County, 118 Md.

App. 441, 702 A.2d 988 (1997), aff’d as modified, 352 Md. 183, 721 A.2d

249 (1998). In any event, Cecil County, lacking home rule, clearly could

not create such a lien absent statutory authority. See, e.g., 6 Stevenson,

Antieau on Local Government &84.13 (2d ed. 2006) (absent clear

statutory authority, a local government utility cannot collect charges as

delinquent taxes).

with respect to an unpaid Bay Restoration Fee. Existence of a lien

thus turns on the scope of statutory provisions.11

Thus, whether a delinquent Bay Restoration Fee is a lien

against real property will vary among jurisdictions. Because the tax

sale process is only available to collect unpaid charges if the charges

constitute a lien, the availability of that process to collect delinquent

Bay Restoration Fees will also vary among jurisdictions. The

Legislature may wish to consider whether a greater degree of

uniformity is desirable in collecting this State-wide charge. 

IV

Conclusion

For the reasons set forth above, our opinion is as follows:

1. An unpaid tax or charge does not constitute a lien on real

property unless the lien is expressly provided by law. The statute

establishing the Bay Restoration Fee does not itself create a statutory

lien. Rather, that statute authorizes local governments and other
Gen. 3] 11

billing authorities to use their existing procedures for collecting

water and sewer bills to collect the Bay Restoration Fee – procedures

that may be used to collect various types of charges in addition to

water and sewer fees. In some jurisdictions, current law may

provide for a lien that would encompass other charges that may

appear on a water or sewer bill, such as the Bay Restoration Fee.

However, a local law simply making unpaid water or sewerage

charges themselves a lien would be insufficient to create a lien for

other unpaid charges. 

2. Absent a statutory lien, an unpaid charge may not be

collected through the tax sale process. 

We recommend that the General Assembly consider the merits

of creating a statutory lien for unpaid charges to provide for a more

uniform enforcement mechanism for collection of the Bay

Restoration Fee. 

Douglas F. Gansler

Attorney General

William R. Varga

Assistant Attorney General

Robert N. McDonald

Chief Counsel,

 Opinions and Advice