Municipalities throughout Pennsylvania are in the process of implementing local stormwater ordinances and fees that will likely impact land development.  Recent changes to federal and state laws have forced municipalities to seek new funding sources, regulate businesses that have large areas of solid pavement and roofing (“impervious” areas), and limit stormwater impacts that occur from land development.  Businesses and developers should remain on the lookout for changes to local laws that will regulate stormwater, limit traditional land development, create quasi-governmental stormwater agencies (known as authorities), and impose stormwater fees.  Stakeholders should take advantage of opportunities to participate to limit any adverse impacts from these local government initiatives on their operations.  This article focuses specifically on Pennsylvania, but similar changes may be happening in municipalities throughout the country that are grappling with stormwater issues.

Businesses and land development within the borders of a regulated municipal separate storm sewer system (a system that has separate pipes to convey stormwater, known as an “MS4”) may be affected the most by local stormwater regulation, whether or not operations involve discharges into storm sewer pipes.  Municipalities regulated as MS4s have independent legal obligations related to stormwater management.  These obligations are implemented through their MS4 permits with the Pennsylvania Department of Environmental Protection (“DEP”).   An MS4’s compliance depends on land uses and practices of businesses within its borders.  One potential component of an MS4’s compliance is regulation of businesses and land development through ordinances.  For example, DEP requires minimum standards for stormwater controls in local ordinances and, to that end, has issued a model stormwater ordinance that MS4s are expected to implement, in some form, by September 30, 2022.  The permitting requirements are even more severe if the MS4 is within the Chesapeake Bay watershed or within an identified “impaired” watershed.

A list of the hundreds of regulated MS4s, by county, and their regulatory status is available on DEP’s website.  Businesses and developers within these listed municipalities, in particular, should be attentive to changes at the local level and take advantage of their opportunities to shape local laws to accommodate their current and future operations.  Below are some key points to consider.

Stormwater Authorities and Fees
Municipalities may now create stormwater authorities, which are separate local entities that have defined responsibilities such as stormwater planning, management, and implementation.  By law, stormwater authorities may generally impose “reasonable and uniform” rates.  A key point of contention at the local level will undoubtedly be whether rates imposed are “reasonable and uniform” based on the characteristics of the properties that are subject to the fees.

Fee structures vary widely from municipality to municipality.  The most simple is flat per-parcel fee. Another simple approach is the equivalent hydraulic area (EHA) approach, which features separate per-square footage rates for impervious area surfaces (parking lots and other paved surfaces) and pervious area surfaces (lawns, gardens, green rooftops).  Additionally, many municipalities may impose separate fees for non-residential and residential parcels, with residential properties typically charged a flat-fee, while non-residential properties pay more targeted fees designed to reflect each parcel’s total impervious area, such as a per-EHA rate. Typically, non-residential properties are subject to a broader range of fees based on higher variance in impervious surface areas among commercial and industrial parcels.  For example, a used car lot would likely pay more in stormwater fees than a hotel because used car lots cover a large swath of impervious pavement, while hotels would generally have a relatively smaller footprint of impervious area.

No matter how the municipality or authority structures its fees, the revenue generated from the fees may be used by MS4s to implement “best management practices” (“BMPs”) that control and reduce the discharge of stormwater, including sediment contributions (or “loadings”) to surface waters (sediment, or soil particles, is considered a pollutant).  BMPs can range from something as simple as more-frequent street cleaning, to something as burdensome as construction of retention basins and infiltration techniques.

Fee structures can (and should) include credit programs that reduce or eliminate fees for property owners who manage stormwater, such as by implementing their own BMPs.  A properly structured credit program will allow property owners to reduce the billed stormwater fees commensurate with reductions in stormwater runoff from the property due to implementation of BMPs.  Businesses should ensure that credit programs are considered and look for opportunities to implement BMPs that can result in credits and long-term cost savings.  Legal representation may be helpful to assist with proactive review of proposed stormwater programs in order to encourage development of fair and flexible stormwater fee structures.

Businesses and Development in the Chesapeake Bay Watershed
Businesses within the Chesapeake Bay watershed may be most affected by local regulation as MS4s attempt to meet more-stringent permit requirements in this region.  The Chesapeake Bay is considered “impaired” for sediment, nitrogen, and phosphorous.  Therefore, federal and state regulation have focused on these three pollutants and, in urban or developed areas, particularly sediment.  DEP permitting now requires MS4s in the Chesapeake Bay watershed to reduce sediment loadings to surface waters over the next several years and demonstrate those reductions (this is a new requirement for MS4 programs in Pennsylvania).  In turn, this means businesses and land development within the Chesapeake Bay watershed will be in the crosshairs for more local regulation through BMPs and fees.  Under DEP’s program, the amount of stormwater (or “volume”) is equivalent to “sediment” because higher volume results in stream scouring and stream bank erosion.  Businesses and developers may be forced to implement BMPs to reduce volumes discharged from properties where stormwater management was approved years or even decades ago.

Businesses and Development in Other “Impaired” Watersheds
Even beyond the Chesapeake Bay watershed, businesses and development within other, smaller watersheds throughout Pennsylvania that are considered “impaired” may be subject to additional local scrutiny for stormwater management.  MS4s are subject to additional permitting requirements similar to those for the Chesapeake Bay if they are located within certain smaller watersheds that are “impaired” for specific pollutants, including not only sediment, nitrogen, and phosphorous, but also pathogens, metals or acidity from abandoned mine drainage, and certain priority pollutants like polychlorinated biphenyls (“PCBs”) and pesticides.  In turn, this means the potential for more local regulation in MS4 municipalities that face these issues beyond the Chesapeake Bay watershed.

Opportunities to Participate and Cooperate
When municipalities propose ordinances, fees, BMPs, and other measures to regulate stormwater, stakeholders should take advantage of opportunities to be in the conversation.  Early participation in the development of fee structures, in particular, can ensure that assessments are fair, reasonable, and uniform and include credit programs for implementing desired controls, preventing the need for litigation later (which has been common for stormwater fees throughout the country).  This includes having you, legal counsel, or other representatives attend public meetings, file written comments, and organize businesses in similar situations to oppose any inequitable treatment.

In addition, MS4 municipalities may look to private landowners and businesses to help them implement BMPs on private property.  This can involve questions related to funding, design and construction, and long-term operation and maintenance (“O&M”) agreements to ensure ongoing effectiveness of BMPs.  It may also involve restrictions on property, such as through deed covenants or use restrictions.  The opportunity to work collaboratively with a municipality on such projects can be beneficial for stakeholders and help frame the outcome, resulting in a win-win if done properly.  These opportunities may also expand beyond the borders of a municipality and involve cooperation with regional and county-wide initiatives (e.g., in York County).

Conclusion
Businesses and developers must remain vigilant in tracking proposed local regulation of stormwater. Early participation by stakeholders or their representatives can reduce the regulatory burdens, present a positive community image, and result in savings in the long run.

Please look for this article in the upcoming January/February 2018 issue of Metropolitan Corporate Counsel!

The Susquehanna River Basin Commission (“SRBC”) approved a final rulemaking at its business meeting on June 16, 2017, that will regulate “grandfathered” water withdrawals and consumptive uses as we explained in our analysis of the proposal last Fall.  This new regulation will be effective January 2018.  While the SRBC revised the proposed rule in response to public comments, the thrust of the rule will remain the same:  grandfathered withdrawals and uses will be required to register with the SRBC and to be metered.  The registration requirements for grandfathered withdrawals and uses will result in closer agency scrutiny.  They could cause loss of grandfathered status, triggering full SRBC review and approval for failure to timely register or increases in quantities withdrawn or used.

Entities with grandfathered sources and uses should carefully analyze this final rulemaking and contact McNees for additional information.

The new regulation is important for currently regulated and future projects.  There are changes to general application provisions and procedures that will be effective sooner than the grandfathering provisions (upon the rulemaking’s publication in the Federal Register) and could more broadly impact projects.

Other aspects of the proposed rulemaking last Fall, which would have imposed mitigation requirements for consumptive uses beyond the typical payment of a consumptive use mitigation fee, were abandoned in the final rule.  The SRBC removed proposed provisions relating to mitigation plans from the final regulation, including provisions on “water critical areas.”  The SRBC also put its draft Consumptive Use Mitigation Policy on hold, indicating that it will further consider the public comments on these issues and go back to the drawing board in the future.

We will know more about the final rulemaking when the SRBC posts the text and a comment/response document on its website in the coming weeks.  Until the grandfathering rule becomes effective in January 2018, the SRBC will be working on the forms and additional guidance for registration.  Once the grandfathering rule is effective, registrations can be made for six months without any application fee.

McNees contacts who can provide assistance include:

 

On May 17, 2017, the Pennsylvania Environmental Quality Board (“EQB”) greenlighted a proposal that would substantially increase fees for public water suppliers regulated by the Department of Environmental Protection (“PADEP”).  In addition to seeking the fee hike, the proposal would amend other regulations under the Pennsylvania Safe Drinking Water Act (“SDWA”), with some changes being even more stringent than federal standards.  The proposal now will be published in the Pennsylvania Bulletin followed by a public comment period of at least 30 days.

Stakeholders should carefully review the proposal and consider submitting comments, including all community water systems, noncommunity water systems, and bottled, vended, retail, and bulk water suppliers.  Those affected may include municipalities with water supply systems and businesses that supply water to the public or their own employees.

Fee Increase

The SDWA allows the EQB to establish fees for permit applications and certain services, as long as those fees bear a reasonable relationship to the actual cost of providing a service.  The proposal would amend the SDWA regulations by removing the current fee provisions and adding a new subchapter relating specifically to fees for each public water system.  PADEP has explained that the purpose of the fees is to increase the agency workforce tasked with inspecting public water systems, which would occur over the next few years.  When coupled with other costs of maintaining a reliable supply of water through permitting and technical requirements, such as those imposed by the Susquehanna River Basin Commission (“SRBC”), the financial impact on suppliers may be significant.

The proposed annual fees are generally broken down by type of water system and population served.  For community water systems, the proposed fees range from $250 to $40,000 depending on the population served.  The high end for noncommunity systems and vended, retail, and bulk water suppliers is $1,000, while the fee for bottled water systems is $2,500.  Public water suppliers will also be subject to additional fees for permit and technical reviews.  For example, application fees for construction or modifications would increase from the general $750 charge currently, to upwards of $10,000 under the proposal, again depending on system type and population served.

Other Amendments

Several other amendments have been proposed to keep pace with federal standards and, in some instances, go beyond federal standards.  Some of the regulatory proposals that are more stringent than federal requirements include:

  • Amended turbidity and filtration requirements to prevent turbidity spikes and pathogens.
  • System resiliency requirements for back-up power to ensure a continuous supply of water is delivered.
  • Clarifications to monitoring requirements for back-up sources and comprehensive monitoring plan requirements to ensure that all permitted sources are subject to routine compliance monitoring.
  • Requirements for responding to significant deficiencies through a protocol for notification and corrective action.

Public water suppliers should determine whether these and other provisions may apply to their systems and, if so, consider the potential impact.  McNees contacts that can provide assistance include:

On September 21, 2016, the Susquehanna River Basin Commission (“SRBC”) published a proposed rule that would expand the scope of its current authority over projects that withdraw and use water in Pennsylvania, Maryland, and New York.  The proposal would amend application requirements and SRBC’s review standards for projects, as well as add an entire subpart to its regulations for registration and reporting of “grandfathered” projects (which previously were not regulated).   Water users should expect additional regulation and scrutiny of all projects that involve withdrawals of surface water or groundwater and/or consumptive uses exceeding SRBC thresholds, whether they are new, existing, or (now) grandfathered projects.

Grandfathered Projects.  The most significant proposal is regulation of “grandfathered” projects, which involve water withdrawals or consumptive uses that began before specified dates in the regulations and did not previously require SRBC approval.  SRBC has estimated that there are some-760 grandfathered projects, many of which are not tracked by SRBC or member states, that account for the same amount of water use as all existing regulated consumptive uses in the Basin.  Therefore, SRBC has proposed a mandatory registration-and-reporting program for grandfathered withdrawals and uses, which includes a one-time registration and periodic reporting of withdrawals and uses, along with associated fees.  As support for this rule, SRBC cited to its responsibility to wisely manage water resources in the Basin and the corresponding need to close this “knowledge gap” by comprehensively tracking water usage.

In attempting to close this gap, SRBC has claimed that the registration requirements will not open the door to review-and-approval requirements for grandfathered projects.  In some respects, the registration requirements may be similar to those imposed by the states.  However, this may be only the first step for additional regulation of grandfathered projects, particularly once SRBC gathers and analyzes the registration data.  Indeed, the proposal potentially opens a floodgate of additional regulation. Failure to register within two years of the effective date would render a grandfathered project subject to SRBC’s review-and-approval authority.  Some key informational requirements for this critical registration include:

  • Identification of metering and monitoring for withdrawals and consumptive uses;
  • Reporting five years of quantity data, or other information that may be used to determine quantities withdrawn or consumptively used;
  • Identification of groundwater levels and elevation monitoring methods for groundwater sources;
  • A description of the processes that involve consumptive uses;
  • A request for specific grandfathered quantities; and
  • Any other information SRBC determines necessary.

Accordingly, it is clear that SRBC intends to scrutinize whether and to what extent currently unregulated withdrawals and uses actually qualify for “grandfathering.”  Under the proposal, the SRBC Executive Director must determine the appropriate grandfathered quantity and, in doing so, can examine the accuracy of metering and monitoring.  Increases of any amount over the determined grandfathered quantity would trigger SRBC’s review-and-approval authority.  Although SRBC’s approach is not yet in final form, those potentially affected should already ensure they are accurately metering and documenting withdrawals and usage.  It will also be important for potentially affected water users to understand their processes and monitor consumptive uses from those processes.  For example, as part of the registration, one provision requires SRBC to evaluate current metering and monitoring and authorizes SRBC to require a metering and monitoring plan.  The proposal would also trigger consumptive-use mitigation, such as fees, for certain grandfathered projects.

Other Projects.  New projects may also be affected by the registration requirements described above because SRBC will use the data on grandfathered projects to analyze the impact on waters of the Basin when deciding to approve or deny a new project.  The proposal also would impose several additional requirements to alter SRBC procedures.  It would amend the required contents of applications for new projects and renewals, requiring specific information depending on the type of project, such as an “alternatives analysis.”  The proposal would amend standards for SRBC’s review and approval and authorize SRBC to require monitoring for impacts to water quality and aquatic biological communities.  SRBC has also proposed to revise the provisions for public hearings and enforcement actions.  For example, the proposal expands the Executive Director’s enforcement authority, allowing the Director to issue compliance orders and determine civil penalty amounts, and acknowledges the SRBC’s use of consent orders and agreements and settlements to resolve enforcement actions.  These are just a few of the various amendments proposed by SRBC that may impact water users.

Next Steps. SRBC intends to hold informational webinars on October 11 and October 17 and then conduct four public hearings throughout November and December, with the first meeting scheduled for November 3 in Harrisburg.  Interested stakeholders should understand how the rules may affect them and weigh in through the public-comment process, which is open until January 30, 2017.  Stakeholders seeking more information or advice should contact attorneys and technical specialists who are experienced in these matters.  McNees contacts include: