Summary

Last week, the U.S. Environmental Protection Agency ("EPA") outlined what it terms a "rigorous accountability framework" for addressing pollution levels in the Chesapeake Bay and its tributaries. This is the latest in a series of federal efforts to address levels of nitrogen, phosphorus and sediment in the Chesapeake Bay watershed that are harmful to both animal and plant life. Most significant about these measures is that they include, for the first time in the 26-year history of the cleanup effort of the Chesapeake Bay, a number of punitive measures intended to force compliance with pollution controls by the six Chesapeake Bay states—Delaware, Maryland, New York, Pennsylvania, Virginia and West Virginia—and the District of Columbia.

This update outlines the punitive measures being imposed by the EPA, including the legal issues raised. It also describes the regulatory regime in place to address pollution levels. This regulatory approach was overhauled by the Obama administration in Executive Order 13508: Chesapeake Bay Protection and Restoration, dated May 12, 2009. This Executive Order, and the Draft Strategy proposed by the EPA that followed it, outlined a new strategy for cleaning up the Bay, including the punitive efforts announced this week. Finally, this update discusses what measures are expected in 2010.

The Problem and an Overview of Corrective Efforts

The EPA outlined the problems facing the Chesapeake Bay ecosystem in its "Draft Strategy for Protecting and Restoring the Chesapeake Bay," issued November 9, 2009.

The water continues to be polluted, populations of oysters are at an all-time low, and habitats such as underwater grass beds and wetlands are degraded. The problems facing the Chesapeake Bay stem from human activity that has transformed the natural landscape, the impacts of which have accelerated because of rapid growth and development. The population in the watershed has doubled since 1950, and the resulting development has destroyed forests and wetlands that previously filtered pollution and provided wildlife habitat. Farms have been converted to subdivisions, and suburban sprawl has led to a proliferation of roads, parking lots, and rooftops, as well as increased numbers of vehicles on the roads. Historic overharvest of fish and shellfish has contributed to the decline of key species in the Bay. Water is polluted primarily by nitrogen and phosphorus from agricultural land, cities and towns, wastewater plants, and airborne contaminants. (Page Three of Executive Summary)

In addition to extensive and diffuse sources of pollution, the large number of organizations involved in the cleanup process has added to the complexity of the effort. The Chesapeake Bay cleanup includes more than 20 federal agencies; six states, the District of Columbia, and thousands of local governments; watershed associations; riverkeeper and other civic groups; regional councils; tens of thousands of farmers; a large number of developers, agribusiness and other companies; and more than 5 million homeowners.

• Federal Efforts: In 1983, the Chesapeake Bay Program ("Program") was established to address the problems facing the Chesapeake. It includes the federal government (represented by the EPA), along with the states of Maryland, Pennsylvania, and Virginia; the District of Columbia; and a number of citizen groups. The Program was established to set voluntary directives to reduce pollution and restore the Bay. The most recent directive was the Chesapeake 2000 agreement, establishing water quality goals for the next 25 years. The governors of the states of New York, Delaware and West Virginia all signed a Memorandum of Understanding that committed to these goals.

• Grant Funding: In addition, the federal government provides federal assistance to protect the Chesapeake Bay Watershed, including the following grant programs:

  • The Small Watershed Grants Program, which provides grants of $20,000 to $200,000 to "organizations working on community-based projects that improve the condition of their local watershed while building stewardship among citizens."

  • The Chesapeake Bay Targeted Watershed Grants Program, which provide grants "of up to $1 million on a competitive basis to projects that target and reflect the diverse conditions (e.g., urban, rural, suburban) and sources of nutrients (e.g., agricultural, stormwater, other non-point sources) that exist throughout the Chesapeake watershed."

  • Bay Watershed Education and Training (B-WET) grants to foster stewardship of the Bay. (www.chesapeakebay.net)

The EPA, through the Program, also awards grants annually to state water pollution control agencies, interstate agencies, other public or nonprofit agencies, institutions, organizations, and individuals to promote the goals of the Program.

The Obama Executive Order and EPA Draft Strategy

Despite the directives and grant funding available to help protect the Chesapeake Watershed, there has been frustration that not enough progress has been made. As a result, the Executive Order and the EPA Draft Strategy overhauled this approach by requiring the development of:

• Total Maximum Daily Loads (TMDL) for the Chesapeake that establish the maximum amount of pollutants the ecosystem can receive and still meet water-quality standards.
  A federal permitting system whereby the EPA issues National Pollutant Discharge Elimination System (NPDES) permits consistent with these TMDL levels.
• The creation of Watershed Implementation Plans by the seven Chesapeake jurisdictions, detailing how they would reduce pollution levels, including the pollution from "non-point" sources, such as stormwater runoff.
• The establishment of an action plan to ensure that all jurisdictions reach their TMDL limits by no later than 2025.

Punitive Measures and the Potential Legal Issues they raise

The EPA outlines in its letter to the seven Chesapeake jurisdictions (a copy of this can be provided by the authors), the eight options at its disposal for those not meeting their commitments to the Chesapeake Bay's water-quality standards. They are:

• Expanding the National Pollutant Discharge Elimination System (NPDES) coverage to currently unregulated sources. The EPA notes that under its authority by the Clean Water Act, it can extend NPDES permitting requirements to "additional stormwater discharges" as needed (citing 33 U.S.C. section 1342(p)).
• Objecting to NPDES permits and increasing program oversight. The EPA also notes its authority to object to NPDES permits it considers inadequate and requiring additional oversight as needed.
• Requiring net improvement offsets for any new or increased discharges into the Chesapeake Bay watershed.
• Establishing finer scale wasteload allocation of pollutants in the Bay TMDL. The EPA notes that it can re-configure individual wastewater discharge levels, within the TMDLs that are being established, and could use this as a way to help meet water-quality standards.
• Requiring additional reductions of loadings from point sources.
• Increasing and targeting federal enforcement and compliance assurance in the watershed.
• Conditioning or redirecting EPA grants.
• Promulgating local nutrient water-quality standards. The EPA notes that it has authority under the Clean Water Act to "determine that a jurisdictions' local water quality criteria do not protect local or downstream designated users" (citing 33 U.S.C. section 303 (c)), and could use this authority to help lower pollutant levels, on a local basis.

The Obama administration, and the EPA, have signaled that sufficient legal steps will be initiated, both at the federal regulatory and funding levels, and through administering states and the District of Columbia ("District"), to implement this new version of a Chesapeake Bay cleanup program. The absence of new independent legislation providing such authorities, or of formal rulemaking under the Administrative Procedure Act ("APA"), raise other possible legal issues. The anticipated "Watershed Implementation Plans," two-year milestones," and the "negotiation of grant workplans" with states and the District, all promise to involve important authority foundation issues.

Additionally, even assuming that EPA has the necessary underlying legal authorities, the drafting stages of each policy and milestone provides junctures where important policies are adopted, or amended. Even currently authorized and appropriated funds, such as Clean Water Act "supplemental" section 117 funds, will be the subject of new guidance. "EPA Region III expects to issue Regional Grants Guidance to the States and the District Programs for 2010 clarifying its expectations for how "supplemental" CWA 117 funds, derived from the Congressional authorized budget, would be used to support the new accountability framework and Watershed Implementation Plans." Grantees are advised to pay particular attention to such guidance, and to seek clarifications and amendments where EPA terms and conditions raise legal, policy, and practical issues. Failure to do so could have serious adverse affects during later agency audits (or could lead to earlier grant termination activity).

What's Next: The best, or worst, is yet to come – the EPA is expected to complete Chesapeake Bay Total Maximum Daily Loads (TMDLs) for nitrogen, phosphorus and sediment by December 31, 2010.

The final part of the new Chesapeake Bay strategy will be the Chesapeake Bay TMDLs for nitrogen, phosphorus and sediment, which are expected by December 31, 2010. However, we would note that the EPA, working with the states represented on the Chesapeake Bay Program, has already identified target TMDLs for nitrogen and phosphorus for each of the basins that make up the Chesapeake Bay (Eastern Shore of Maryland, etc.). The EPA outlined these target TMDLs in a November 4, 2009 letter to the seven Chesapeake jurisdictions, and also notes that, for the entire Cheseapeake Bay ecoystem, the total load of nitrogen in the ecosystem would be 200 million pounds per year, and the total load of phosphorus would be 15 million pounds per year. The basin-by-basin figures within these totals will likely change before December 31; however, the preliminary numbers provide a useful map as to the EPA's thinking on where changes need to be made. A copy of this letter can be provided by the authors of this Alert.

Client Alert 2010-002