The Chesapeake Bay watershed – covering 64,000 square miles and with tributaries within the District of Columbia and six states – has been designated among the nation’s “impaired waters” due to nutrient pollution, leading to extensive and long-term efforts to improve the health of the bay. In 2010, the EPA issued a federal Total Maximum Daily Load (TMDL) to reduce the discharge of nitrogen, phosphorus and sediment into the Chesapeake Bay.
The EPA stepped in after President Barack Obama signed an executive order designating the bay a historic treasure in need of a “pollution diet.” The Obama administration asserted it had authority under the Clean Water Act to reduce pollution after the District of Columbia and six states failed to voluntarily reduce such discharges into the Chesapeake Bay.
The federal TMDL requires the District and states within the bay’s watershed to adopt and have in place water implementation plans (WIPS) to reduce designated pollution discharges into the bay by 2025. While the EPA would like state and local governments to take the lead in designing their own WIPs, the federal TMDL has built-in enforcement measures or “backstops” to force the District and states to reduce pollution amounts to a federally mandated level.
According to the EPA Fact Sheet, the TMDL for the Chesapeake Bay requires pollution discharge reductions of 25 percent for nitrogen, 24 percent for phosphorous and 20 percent for sediment by 2025. These pollution reductions are divided among the District and states based on EPA modeling and are to be achieved through state and local WIPs.
The federal EPA recently issued an evaluation of the practices and protocols under Phase III of the WIPs that are to be in place by the end of 2017 in order to achieve 60 percent reduction on the pollution discharges of nitrogen, phosphorus and sediment compared to 2009 levels. These practices and protocols will set the foundation for meeting the required pollution reductions in 2025. While phosphorus and sediment are on track for meeting the 60 percent reduction, nitrogen discharge is anticipated to fall short by achieving a 47 percent reduction in relation to 2009 levels.
According to the EPA’s evaluation, the District and most states are now taking the necessary steps, with a few exceptions, to put in place the practices and treatment systems that will reduce discharges as required under the TMDL for agriculture, wastewater, urban/suburban and trading/offsets. These few exceptions include EPA’s concerns with Pennsylvania’s efforts to achieve reduction goals in agriculture and urban/suburban areas. EPA indicates these two sectors have a current rating of “backstop actions level.”
If Pennsylvania fails to have in place the necessary strategies for these two sectors, the federal government may impose mandated regulations, no matter how much they cost, that could significantly impact local land use decisions and hinder economic development within the Chesapeake Bay watershed area of the commonwealth.
NAIOP and the commercial real estate industry will closely watch the development and implementation of state credit-trading programs. The Baltimore Sun recently highlighted Maryland’s efforts to establish a credit trading program that allows commercial property owners, along with local government and the private sector, to earn credits for exceeding pollution reduction requirements. Such credits could then be sold to underperforming regulated entities.
The Maryland Department of Environment has taken the lead in developing the rules and regulations for the credit-trading program. The Baltimore Sun notes the Chesapeake Bay Foundation’s reaction is that the state’s initial proposal seems to be a constructive step toward meeting pollution reductions. However, the foundation is concerned about the size of regulated trading regions and the potential for allowing the interstate trading of credits. NAIOP and its members, along with other interested parties, will be able to weigh in on the state’s proposed trading program during the public comment period following a review by the legislature.
With eight years remaining, the District of Columbia and the six states within the Chesapeake Bay watershed are moving forward to have WIPS in place that comply with pollution discharge reductions under the federal TMDL. NAIOP members need to understand EPA’s approach and oversight of state and local efforts to clean up the Chesapeake Bay, and continue to monitor the implementation of WIPs for their impact on commercial real estate. If the federal TMDL-state WIP approach proves successful, it may be a national model for other parts of the nation.