Yesterday, the Chesapeake Bay Commission released a study showing that implementation of a nutrient trading system would dramatically reduce the cost to achieve nutrient reductions in Chesapeake Bay. Pardon me if I seem to be posting a lot of dog bites man stories recently.

Although it should not come as a surprise that a trading system would permit nutrient reductions to be attained most cost-effectively, the scope of the benefit is worth noting. If trading were allowed basin-wide, and among both point and agricultural non-point sources, costs are projected to decrease by about 50% of the non-trading compliance costs.

Since I have faced this issue in Massachusetts, I found it even more noteworthy that, if trading were expanded to include regulated urban stormwater sources, compliance costs are expected to be reduced by about 80% over the non-trading scenario. The report’s explanation is both simple and cogent:

Implementing urban stormwater BMPs tends to be a much less cost-effective way of reducing nutrient loads than agricultural BMPs.

To which I say, you could have knocked me over with a feather. I just hope that EPA does not limit its review of this report to the Chesapeake Bay itself, but considers its implications more broadly in the context of stormwater regulation in other areas.

In recent years, the states and EPA have placed greater emphasis on regulating storm water discharges from various industrial and municipal sources under the Clean Water Act.  These discharges are typically regulated by a general NPDES Permit issued by EPA or an authorized state.  The standard approach required in these general permits is for a facility to develop a storm water pollution prevention plan (SWPPP) incorporating best management practices (BMPs) that will be followed to reduce pollutant impacts to storm water discharged from the facility.  Typically some type of periodic monitoring is required during storm events.  The monitoring can be just visual monitoring and less frequently chemical analysis of certain pollutants associated with the particular industry.  In lieu of numerical effluent limits, typically the general permit will establish “benchmark levels” for industry specific pollutants that are not to be exceeded.  If a benchmark level is exceeded, the facility is required to undertake and document corrective measures to address the problem.  Typically corrective measures involve modifications to BMPs.  Unlike a numerical effluent limit in non-storm water NPDES permits, benchmark levels are not enforceable effluent limits under the Clean Water Act.  Therefore exceeding a benchmark level by itself does not subject a facility to an enforcement action by EPA, an authorized state or a third party citizen suit.

Over the past five years there has been a significant increase in Clean Water Act storm water enforcement actions.  The emphasis has been on actions against the home construction industry as well as confined animal feeding operations (CAFOs).  The typical enforcement action has been focused on facilities that failed to obtain a required general permit or failed to comply with SWPPS and related paperwork requirements.  Also in the West we have witnessed a significant increase in third party citizen suits for violation of general storm water permits.

Over the past 15-20 years, the BMP approach in general permits has provided relative certainty of the requirements and ease of implementation for permittees.  EPA has taken the position, however, that the BMP approach to storm water permits is just a first phase in the program while the agency gathers data to support future actual numerical limits.  The future is now here.  An EPA Guidance document entitled “Guidance on Establishing TMDL Waste Load Allocations for Storm Water Discharges in NPDES Permits (EPA November 2010),” although not finalized, is already being implemented by EPA to establish numerical criteria. 

For those not familiar with “TMDLs” and “waste load allocations,” some brief background may be helpful.  The total maximum daily load (TMDL) program is dictated by Section 303(d) of the Clean Water Act.  The program requires states to identify impaired waters not meeting water quality standards and to then develop TMDLs to bring the waters back into compliance.  TMDLS are basically pollution reduction plans that identify the loading capacity (with a margin of safety) of a water body which is the level of particular pollutant causing the impaired condition that will bring the water body back into compliance with water quality standards.  The TMDL thus requires reductions of pollutant loading from both point sources (known as “waste load allocations” or “WLAs”) and nonpoint sources (known as “load allocations”).  Typical of Clean Water Act programs, the regulatory onus of complying with TMDLs falls on point sources through the NPDES permit program.  Nonpoint sources are not regulated by EPA and state nonpoint source programs are generally based on a non-regulatory approach.  Also typical of Clean Water Act programs involving water quality standards, a states’ identification of impaired waters and development of TMDLs are subject to EPA review, approval or disapproval.  In many instances EPA will actually develop a TMDL in the face of state inaction.

In the past storm water NPDES permits were often overlooked by the states and EPA in establishing TMDLs.  EPA’s recent Guidance makes clear that storm water permits will be considered when EPA reviews state TMDLs.  In fact the Guidance makes clear that it is EPA’s intent in approving TMDLS to ensure that numerical WLAs are included in general storm water NPDES Permits.  Although the Guidance suggests some flexibility in such an approach by stipulating that WLAs will only be included in storm water permits when “practical,” we all know that “practicality” is in the eye of the beholder.

Inserting WLAs into storm water permits raises a host of technical and compliance issues.  First, because of the variability of storm events it is often difficult to quantify the actual loading of pollutants from a particular facility.  Often times the data on such loading is lacking and is therefore based on modeling which may or may not predict actual conditions.  Thus if EPA implements this Guidance in storm water permits the cost and frequency of monitoring storm water discharges is likely to increase substantially.  Secondly, it is often very difficult to control the concentration or loading of a particular pollutant during storm events absent the installation of expensive wastewater treatment controls.  Thus the cost of compliance may increase substantially once this Guidance is implemented.  Finally, once WLAs or numeric effluent limits do find their way into general storm water NPDES permits, exceedence of these limits will subject facilities to EPA, state or third party citizen suits enforcement actions.

Despite these concerns, numerical limits or WLAs in storm water discharge permits appear to be the next wave of regulation.  Practitioners in this area should make sure that clients with regulated storm water discharges to impaired waters become involved in the TMDL development at the state level to ensure that they receive a reasonable WLA that can be consistently complied with and which will not be too costly to achieve.

Sometimes, the practice of environmental law just takes my breath away. A decision issued earlier last month in United States v. Washington DOT was about as stunning as it gets. Ruling on cross-motions for summary judgment, Judge Robert Bryan held that the Washington State Department of Transportation had “arranged” for the disposal of hazardous substances within the meaning of CERCLA by designing state highways with stormwater collection and drainage structures, where those drainage structures ultimately deposited stormwater containing hazardous substances into Commencement Bay -- now, a Superfund site -- in Tacoma, Washington.  

I’m sorry, but if that doesn’t make you sit up and take notice, then you’re just too jaded. Under this logic, isn’t everyone who constructs a parking lot potentially liable for the hazardous substances that run off in stormwater sheet flow? 

For those who aren’t aware, phosphorus, the stormwater contaminant du jour, is a listed hazardous substance under Superfund. Maybe EPA doesn’t need to bother with new stormwater regulatory programs. Instead, it can just issue notices of responsibility to everyone whose discharge of phosphorus has contributed to contamination of a river or lake.

The Court denied both parties’ motions for summary judgment regarding whether the discharges of contaminated stormwater were federally permitted releases. Since the Washington DOT had an NPDES permit, it argued that it was not liable under § 107(j) of CERCLA. However, as the Court noted, even if the DOT might otherwise have a defense, if any of the releases occurred before the permit issued – almost certain, except in the case of newer roads – or if any discharges violated the permit, then the Washington DOT would still be liable and would have the burden of establishing a divisibility defense. 

If one were a conspiracy theorist, one might wonder if EPA were using this case to gently encourage the regulated community to support its recent efforts to expand its stormwater regulatory program. Certainly, few members of the regulated community would rather defend Superfund litigation than comply with a stormwater permit.

You can’t make this stuff up.

Construction and development companies praying for an economic recovery next year have something else to worry about: pending new EPA regulations regarding stormwater discharges from construction activities – and claims from environmental groups that EPA’s proposal isn’t stringent enough.

EPA issued a proposal on November 28, 2008. That proposal is complex, but the aspect of it that has received the most attention is the requirement that certain construction sites greater than 30 acres meet numerical turbidity limits (specifically, 13 nephelometric turbidity units (NTUs), which I had to include in this post just because it sounds so cool). Developers have opposed the numeric limits; the National Association of Home Builders estimates that the cost to comply would be $15,000 to $45,000 per acre.

On the other hand, the NRDC and Waterkeeper Alliance have threatened to sue EPA if EPA does not revise the propose rule to include post-construction controls as part of the rule. EPA has stated that it is not planning to do so. It’s not obvious that NRDC and Waterkeeper Alliance have the better of this specific debate, but the argument regarding post-construction controls is similar to the ongoing discussion in Massachusetts and elsewhere regarding the need for ongoing stormwater controls at properties other than industrial facilities that are already regulated.

The issue is not going to go away.  EPA is under a deadline to issue the rule by December 1, 2009.

Among the priorities under the $787.5 billion American Recovery and Reinvestment Act of 2009 is repairing, rebuilding, and constructing the nation’s water infrastructure. Approximately $6 billion will augment the EPA’s clean water and drinking water state revolving funds, of which approximately $221 million will be disbursed to the Commonwealth of Pennsylvania’s Infrastructure Investment Authority (PennVest). The governing board of PennVest is appointed by Governor Rendell, and I have been serving as its chair for the past six years.

PennVest administers the approximately $300 million annual allotment of Clean Water and Drinking Water funds previously supplied by EPA on a matching basis with Pennsylvania. These funds will now be augmented by the $212 million in stimulus funds. The Clean Water Fund addresses waste water infrastructure. The fund also addresses brownfields (with its protection of water quality) and storm water, whereas the Drinking Water Fund is strictly for water supply and distribution. At least 50 percent of the funding must be in the form of grants.

With the current emphasis on sustainability, alternative energy, greenhouse gas emission reduction and the need for more stringent control over stormwater run-off, the allocation of stimulus funds by PennVest will focus on innovative green technology, including particularly, controlling stormwater and remediating brownfields (at least 20 percent of the stimulus funding must be used for “green infrastructure”.)

Although the final disbursement of the economic stimulus funding will be affected by various regulations, the awarding of grants and loans will likely be on the same timetable as in the past with an emphasis on “shovel ready” projects. Funding agreements must be entered into and contracts for the full amount signed within a year.  The ultimate goal is to immediately increase the amount of jobs needed to construct the infrastructural repair, rebuilding and construction. 

Among the priorities under the $787.5 billion American Recovery and Reinvestment Act of 2009 is repairing, rebuilding, and constructing the nation’s water infrastructure. Approximately $6 billion will augment the EPA’s clean water and drinking water state revolving funds, of which approximately $221 million will be disbursed to the Commonwealth of Pennsylvania’s Infrastructure Investment Authority (PennVest). The governing board of PennVest is appointed by Governor Rendell, and I have been serving as its chair for the past six years.

PennVest administers the approximately $300 million annual allotment of Clean Water and Drinking Water funds previously supplied by EPA on a matching basis with Pennsylvania. These funds will now be augmented by the $212 million in stimulus funds. The Clean Water Fund addresses waste water infrastructure. The fund also addresses brownfields (with its protection of water quality) and storm water, whereas the Drinking Water Fund is strictly for water supply and distribution. At least 50 percent of the funding must be in the form of grants.

With the current emphasis on sustainability, alternative energy, greenhouse gas emission reduction and the need for more stringent control over stormwater run-off, the allocation of stimulus funds by PennVest will focus on innovative green technology, including particularly, controlling stormwater and remediating brownfields (at least 20 percent of the stimulus funding must be used for “green infrastructure”.)

Although the final disbursement of the economic stimulus funding will be affected by various regulations, the awarding of grants and loans will likely be on the same timetable as in the past with an emphasis on “shovel ready” projects. Funding agreements must be entered into and contracts for the full amount signed within a year.  The ultimate goal is to immediately increase the amount of jobs needed to construct the infrastructural repair, rebuilding and construction.