Environmental ClientAlert

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1 December 14, 2009 Berwyn Boston Detroit Harrisburg New York Orange County Philadelphia Pittsburgh Princeton Washington, D.C. Wilmington Recent Developments Concerning the Chesapeake Bay Michelle M. Skjoldal In t r o d u c t i o n The Chesapeake Bay watershed, which covers 64,000 square miles of the East Coast, flows into the largest estuary in the United States. The watershed runs from upstate New York to southern Virginia, and from the West Virginia panhandle to the Delmarva Peninsula. The bay itself, a hub for various recreational and commercial opportunities, provides significant economic benefits to the mid-atlantic region. One of the most significant adverse environmental impacts in the bay proper is low dissolved oxygen in some areas of the bay, caused primarily by excess nutrients such as nitrogen, phosphorous and sediment load from various urban and rural sources, which has contributed to declines in certain species and degraded habitats in the bay. Citizen groups, state and local governments and the federal government have devoted significant efforts to prevent further bay pollution and to focus on restoration of the bay. For many years, the six bay watershed states (Delaware, Maryland, New York, Pennsylvania, Virginia, and West Virginia), the District of Columbia (D.C.) and local governments have taken action aimed at protecting and restoring the bay, including developing protection and restoration strategies grounded in existing state regulations, funding voluntary bay cleanup programs, and evaluating potential additional state regulation of nutrient and sediment sources. 1 The federal government also has had significant involvement with bay protection and restoration efforts for many years. 2 And, as evidenced by the recent developments summarized below, the federal government is now taking action to position itself as the leader and coordinator of efforts to protect and restore the Chesapeake Bay. For many years, citizen groups, the six bay watershed states, local governments and the federal government have devoted significant efforts to prevent further bay pollution and to focus on protecting and restoring the bay. Recent Federal Developments Development of Chesapeake Bay TMDLs One of the most significant federal developments concerning the Chesapeake Bay is the effort of the United States Environmental Protection Agency (EPA) to develop, in cooperation with bay state officials, a bay-wide Total Maximum Daily Load (TMDL) for nitrogen, phosphorus and sediment. The bay-wide TMDL will be a combination of 92 smaller TMDLs for Chesapeake Bay tidal jurisdictions within the watershed. The goal of the TMDL is to achieve state clean-water standards for dissolved oxygen, water clarity and algae. 3 To meet the TMDL limits, the states and D.C. will submit to EPA detailed Watershed Implementation Plans (WIPs) that identify target nutrient loads by source sector and establish schedules to accomplish reductions in nutrient and sediment loads. 4 EPA also expects WIPs to contain schedules for enhanc- This publication may contain attorney advertising. The material in this publication was created as of the date set forth above and is based on laws, court decisions, administrative rulings and congressional materials that existed at that time, and should not be construed as legal advice or legal opinions on specific facts. The information in this publication is not intended to create, and the transmission and receipt of it does not constitute, a lawyer-client relationship. Please send address corrections to phinfo@pepperlaw.com Pepper Hamilton LLP. All Rights Reserved.

2 ing state programs and implementing actions (no later than 2025) to achieve reductions. EPA will have the authority to impose consequences for missed targets, which may include assigning more stringent pollution reductions to regulated point sources, objecting to state-issued permits, limiting or prohibiting new or expanded discharges of nutrients and sediment, and withholding, reallocating or placing conditions on federal grant funds. 5 WIPs will be developed and implemented in concert with two-year milestones that will identify specific actions to be implemented by the states and D.C., with the ultimate goal that all practices necessary to restore bay water quality be in place by On October 23, 2009, The Chesapeake Bay Program Principals Staff Committee 7 (PSC) and EPA agreed to preliminary basinwide target loads of 200 million pounds per year of nitrogen and 15 million pounds per year of phosphorous, and agreed to distribute these loads to each basin jurisdiction within the bay watershed. EPA, in a November 3, 2009 letter, memorialized the agreement with the PSC and published, based on recommendations of the PSC, preliminary working target loads for nitrogen and phosphorous for each of the basin jurisdictions within the bay watershed. 8 EPA and the PSC also agreed that the states and D.C. can exchange target loads within a state from one basin to another or can exchange nitrogen and phosphorous loads within a basin to create revised target loads, as long as water quality standards are still achieved. While the basin jurisdiction working targets should allow the states and D.C. to begin developing their WIPs, EPA expects that the basin-wide target loads will be revised based on further technical analysis, additional discussions among the states, D.C. and EPA, and additional opportunities for public input. EPA expects to publish a set of sediment target loads for the individual basins next spring. The November 3 letter also sets forth the following schedule for development of the bay TMDL. 9 November-December 2009: EPA hosts public meetings throughout the bay watershed June 1, 2010: States and D.C. submit preliminary draft Watershed Implementation Plans with target loads by source sector and bay segment drainage to EPA July 15, 2010: PSC reviews initial draft bay TMDL package August 1, 2010: States and D.C. submit revised draft WIPs to EPA August 15-October 15, 2010: Public review of bay TMDL and public meetings November 1, 2010: States and D.C. submit final WIPs to EPA November 15, 2010: PSC provides comments on bay TMDL package December 21, 2010: EPA publishes final bay TMDL November 1, 2011: States and D.C. incorporate local target loads into their WIPs and submit to EPA. Development of the Chesapeake Bay TMDLs is being done in concert with the schedule and requirements established by the Draft Strategy for Protecting and Restoring the Chesapeake Bay, discussed more fully below. Executive Order The Obama Administration also has become significantly involved in the effort to protect and restore the bay. On May 12, 2009, President Obama issued Executive Order on Chesapeake Bay Protection and Restoration, 10 the first-ever presidential directive on the bay and the first environmental executive order by President Obama. As stated in the preamble of the order: [d]espite significant efforts by Federal, State, and local governmental and other interested parties, water pollution in the Chesapeake Bay prevents the attainment of existing State water quality standards and the fishable and swimmable goals for the Clean Water Act.... Restoration of the health of the Chesapeake Bay will require a renewed commitment to controlling pollution from all sources as well as protecting and restoring habitat and living resources, conserving lands, and improving management of natural resources... The Federal Government should lead this effort.... Progress in restoring the Chesapeake Bay also will depend on the support of State and local governments. 11 To meet these goals, Executive Order establishes the Federal Leadership Committee for the Chesapeake Bay (FLC), which is chaired by the administrator of EPA, and includes the secretaries of the departments of Agriculture, Commerce, Defense, Homeland Security, Interior and Transportation. The executive order directs the FLC, in close consultation with the bay states and D.C., to develop draft reports and to issue by May 2010 a final strategy for protecting and restoring the Chesapeake Bay

3 Draft Strategy for Protecting and Restoring the Chesapeake Bay Pursuant to the executive order, representatives of the FLC worked with the six bay watershed states (Delaware, Maryland, New York, Pennsylvania, Virginia, and West Virginia), D.C. and the Chesapeake Bay Commission to develop a draft strategy for restoring the bay. On November 9, 2009, the FLC released the official Draft Strategy for Protecting and Restoring the Chesapeake Bay. 13 The draft strategy contains various federal initiatives to restore clean water, conserve treasured places, protect fish and wildlife and adapt to the impacts of climate change. Under the draft strategy, federal agencies will establish two-year milestones for implementing measures to improve water quality. The goal is to establish the milestones by May 2011 and implement them no later than The federal efforts to meet these milestones will be done in concert with the state-driven milestones discussed above. 14 According to the draft strategy, the initiatives are to be achieved through three primary means: (1) empowering local efforts, (2) decision-making through science, and (3) a new era of federal leadership. The draft strategy includes the following: establishing a Healthy Water, Thriving Agriculture Initiative, a joint Department of Agriculture/EPA program focused on reducing agriculture pollution in priority watersheds and introducing new conservation tools establishing a Living Communities Program, a joint EPA/ Department of Transportation effort that would work with state and local officials to encourage both smart growth and the development of walkable, bikeable communities protecting wetlands and other high-priority areas by designating them national parks, wildlife sanctuaries and national scenic rivers establishing ChesapeakeStat, a Web-based system providing information to the public on restoration efforts and goals, funding levels, and links to scientific data. Public comments on the draft strategy, further state consultations and agency revisions will be considered before the final strategy is released in May The public comment period on the draft strategy ends January 8, Comments can be submitted through the following Web site: a Furthermore, a series of public forums on the draft strategy are being held in the six bay states. The public forums will feature officials from multiple federal agencies including EPA, the U.S. Department of Agriculture, the U.S. Department of the Interior and the National Oceanic and Atmospheric Administration. The forum in Pennsylvania is scheduled for Tuesday, December 15, from 7:00 to 8:30 p.m. at the Farm Show Complex & Event Center (Banquet Hall), 2301 North Cameron Street, Harrisburg, PA Members of the public can submit questions about the draft strategy by recording a video of no more than 30 seconds and uploading it to YouTube with a tag of chesapeakebayeo. A selection of these video questions will be used at the public forums and for an online question-and-answer session with federal officials in January. Persons can also join conversations about the draft strategy on Facebook by visiting the Chesapeake Bay Executive Order page and clicking on discussions. Additionally, updates on executive order news are available through Twitter by 16 Re c e n t Developments in Pe n n s y l v a n i a s Nutrient Credit Trading Program The Pennsylvania Department of Environmental Protection (Pennsylvania DEP) issued a final policy on voluntary nutrient credit trading in the commonwealth in December The primary purpose of the policy is to provide more cost-effective solutions for National Pollutant Discharge Elimination System (NPDES) permittees to meet their effluent limits for nutrients and sediment. Nutrient credit trading allows a source to meet its nutrient reduction requirements by purchasing reduction credits from another source within the same watershed. Nutrient credits are generated when a source reduces nutrient loadings to a greater extent than is required by law. For example, a point source can install technology that results in reductions beyond those required under law, and a non-point source can use Best Management Practices (BMPs) that exceed the threshold BMP requirements. 18 Under Pennsylvania DEP s policy, before a credit can be used by an NPDES permittee, Pennsylvania DEP must approve in writing the use of proposed or implemented activities to generate credits. Following certification, credits must be verified, which involves annual submittal of documentation showing that the nutrient reduction activities have occurred. Following certification and verification, a trading contract for the credits must be submitted to Pennsylvania DEP; the credits are then registered 3

4 on an annual basis for use during the year in which the qualifying nutrient reduction activities took place. 19 Pennsylvania DEP will soon be releasing for public comment proposed rulemaking for Pennsylvania Code Title 25, Chapter 96, that would implement its nutrient trading policy. 20 The proposed rulemaking, among other things, codifies the methodology Pennsylvania DEP uses concerning the availability of viable credits and the eligibility of credits to meet NPDES requirements related to the Chesapeake Bay. The rulemaking further provides a method by which technologies can be reviewed to ensure they result in actual water quality improvements. With respect to future plans, Pennsylvania DEP is considering forming a technology review board with which it can work collectively with PennVEST and individuals from the point-source and environmental arenas, to review technologies to ensure proper nutrient credit generation. 21 It is expected that the proposed rulemaking soon will be published in the Pennsylvania Bulletin for a 30-day public comment period. En d n o t e s 1 In 1983, the governors of Maryland, Virginia and Pennsylvania, the mayor of the District of Columbia (D.C.), and the administrator of the United States Environmental Protection Agency (EPA) signed The Chesapeake Bay Agreement of 1983, forming the Chesapeake Bay Program. These signatories then entered into the 1987 Chesapeake Bay Agreement, establishing the Chesapeake Bay Program s goal to reduce the amount of nutrients primarily nitrogen and phosphorous that enter the Chesapeake Bay by 40 percent by In 1992, these Chesapeake Bay Program partners agreed to continue the 40 percent reduction goal beyond In June 2000, the Chesapeake Bay Program adopted Chesapeake 2000, an agreement intended to guide restoration activities throughout the Chesapeake Bay watershed through The governors of Delaware and New York committed to the goals of Chesapeake 2000 by signing a Memorandum of Understanding (MOU) in 2000, and the governor of West Virginia added his signature to the MOU in In May 2009, all six bay states and D.C. adopted the first of a series of two-year milestones for implementing bay restoration measures by The full text of these agreements can be found at: historyofcbp.aspx?menuitem= Information on individual state and D.C. programs and initiatives concerning the Chesapeake Bay can be found at: deq.state.va.us/, and dc.gov/ddoe/site/default.asp. 2 Detailed information on the Chesapeake Bay Program Office managed by the EPA is available at: gov/region3/chesapeake/. 3 Further information on development of the Chesapeake Bay TMDLs is available at: 4 EPA s expectations for Watershed Implementation Plans are fully described in a November 4, 2009 letter from EPA to Secretary L. Preston Bryant, Jr., available at: epa.gov/reg3wapd/tmdl/chesapeakebay/resourcelibrary. html#keydocs. 4

5 5 See November 4, 2009 EPA letter to Secretary Bryant. Recently proposed federal legislation, the Chesapeake Clean Water and Ecosystem Restoration Act of 2009 (S. 1816), would require the governors of the six bay states and the mayor of the District of Columbia to biennially propose watershed improvement plans specifying protective strategies and tactics to be implemented within the next two years with a restoration goal deadline of The bill, introduced October 19, 2009 by Senator Ben Cardin (D- Md.), also would give EPA the authority to penalize states that fail to propose measures to reduce pollution in the watershed. The biennial milestones in the bill would dovetail with state obligations under EPA s TMDL program. The full text of Bill 1816 is available at: congress/bill.xpd?bill=s In May 2009, the six bay states and D.C. adopted the first set of two-year milestones and committed that necessary bay restoration measures would be in place by See Chesapeake Executive Council (2009), 2011 Milestones for Reducing Nitrogen and Phosphorous, available at: chesapeakebay.net/news_ec2009.aspx?menuitem= The Principals Staff Committee is comprised of representatives from each of the bay states that serve as policy advisors to the Chesapeake Executive Council of the Chesapeake Bay Program. See for a complete list of committee members. 14 See Draft Strategy for Protecting and Restoring the Chesapeake Bay (November 9, 2009). 15 For more information, visit: 16 See 17 See Final Trading of Nutrient and Sediment Reduction Credits Policy and Guidelines (Policy) (DEP ID No ) (36 Pa.B (December 30, 2006)); see also See htm. 19 See htm. 20 See November 17, 2009 Pennsylvania Environmental Quality Board meeting minutes at: asp?a=3&q=544036# See November 17, 2009 Pennsylvania Environmental Quality Board meeting minutes. 8 See November 3, 2009 letter from EPA to Secretary L. Preston Bryant, Jr., available at: gov/reg3wapd/tmdl/chesapeakebay/resourcelibrary. html#keydocs. 9 See November 3, 2009 EPA letter. 10 The full text of Executive Order is available at: Order-Chesapeake-Bay-Protection-and-Restoration. 11 Executive Order 13508, Part I - Preamble (May 12, 2009). 12 See Executive Order 13508, Part 2 Part 10 (May 12, 2009). 13 The full text of the Draft Strategy for Protecting and Restoring the Chesapeake Bay is available at: chesapeakebay.net/category/reports-documents.aspx. 5