PEC Opposes SB 799 as Currently Written

PEC has sent the following letter to the bill’s sponsor, expressing concerns with the legislation. The Senator indicated his intention in introducing the bill was to solicit comments for additional consideration.

June 27, 2017

To: The Honorable Richard Alloway, Pennsylvania Senate
From: John Walliser, Pennsylvania Environmental Council (PEC)
Subject: Comments and Concerns re Senate Bill 799 (P.N. 1010)

 Dear Senator Alloway –

We greatly appreciate the opportunity to provide comments on Senate Bill 799, the proposed Pennsylvania Clean Water Procurement Program Act.

PEC believes it is vital that Pennsylvania provides new and significant financial resources to address the Commonwealth’s 19,000 miles of rivers and streams that do not meet water quality standards due to abandoned mine drainage, runoff from agricultural operations, and pollution caused by stormwater.

We were encouraged when you and the other repressentatives of Pennsylvania on the Chesapeake Bay Commission wrote to all members of the House and Senate on January 24, 2017, putting the spotlight on the need for a Clean Water Fund for Pennsylvania potentially funded, as one option, by a new fee on water use. You, of course, introduced a water use fee bill late last year in Senate Bill 1401.

We were also pleased to see that you introduced Senate Bill 792 to begin to address the issue preventing the over-application of lawn and turf fertilizers.

However, we have several concerns about Senate Bill 799. We are concerned that it contains several flaws that will require municipalities to pay more to meet nutrient reduction limits when many have already done so; stands in the way of cost-effective implementation of local MS4 stormwater management plans already underway; prevents farmers from receiving much-needed financial help to install farm conservation practices; and potentially diverts scarce financial resources into high-cost solutions that do not address all of Pennsylvania’s water pollution issues.

Here are our concerns in more detail:

  1. Taxes Municipalities/Ratepayers Twice to Meet Nutrient Reduction Requirements. As drafted, the legislation requires municipalities to pay $500 million over 10 years to pay for the installation of practices to reduce nitrogen and phosphorus discharges. In most cases, municipalities and wastewater treatment system ratepayers have already increased their rates and made the investments necessary to meet these requirements in the Chesapeake Bay Watershed. This proposal to double tax municipalities and ratepayers appears imbalanced and, we believe, is untenable.In addition, MS4 communities are very far along in making significant investments in meeting their stormwater management obligations. Plans are due to the Department of Environmental Protection (DEP) in September of this year, in which the communities lay out the steps they plan to take to meet these requirements.Taxing them again for the same obligation we believe is also unfair, especially given the fact that many counties, authorities, and other groups of municipalities have developed innovative ways to meet these requirements and install the needed green infrastructure. These kinds of initiatives should be supported and not thrown out to start over.
  1. Municipalities/Ratepayers, MS4 Communities Across the State Will Be Taxed, But Will Not See Any benefit. As drafted, the legislation would raise $500 million over 10 years to pay for the installation of nitrogen and phosphorus discharge reductions in only the Chesapeake Bay Watershed in Pennsylvania. While the Bay drainage area represents about half the state, this also means the other half receives no benefit from the funds they pay in. PEC believes it is vital that any mechanism developed to address water quality impairments should help fund projects across the entire state, because the 19,000 miles of polluted streams occur in each and every county.
  1. Does Not Address the Most Significant Chesapeake Bay Pollution Obligation; Does Not Cover All 3 Of Pennsylvania’s 3 Major Sources of Water Quality Impairment. As drafted, the legislation addresses only a portion of one of the three major sources of water quality impairment in Pennsylvania – nitrogen and phosphorus – and leaves unaddressed other major water quality problems.The top three sources of water pollution in the state are: runoff and discharges from abandoned coal mines, agricultural lands runoff (nitrogen, phosphorus, and sediment), and pollution from stormwater runoff (nitrogen, phosphorus, and sediment). Interestingly, few watersheds across the state are impaired due to point source discharges from wastewater treatment plants and, specifically, those plants are already or nearly will meet their obligation to meet Chesapeake Bay Watershed requirements.The bill leaves unaddressed Pennsylvania’s obligation to reduce sediment pollution by hundreds of millions of pounds of sediment (328 million pounds alone in the Bay Watershed just to meet the 2017 milestone), as well as Pennsylvania’s number one water pollution issue: abandoned mine drainage.
    Again, PEC believes it is vital that any mechanism developed to address water quality impairments should help fund projects across the entire state.
  1. No Guarantee Practices Funded Will Count Toward Chesapeake Bay Obligations: As drafted, the legislation contains no guarantee practices funded under the program will, in fact, count toward Pennsylvania’s obligations toward the Chesapeake Bay milestones. For example, no specific manure treatment technology has ever been approved as counting toward meeting the Chesapeake Bay milestones, even though the Bay Program adopted a process recently for evaluating manure technology reductions last year.Any practice included in the program outlined in the bill should have to demonstrate upfront they have been approved by the Chesapeake Bay Program, and, for manure treatment technologies, gone through the approved evaluation process before their “credits” could accepted in the program.
  1. Lacks Taxpayer Safeguards: The legislation contains no safeguard for taxpayers that prevents companies, or their owners, principals or operators, that are in default of paying back previous state loans or financing or who are in violation of a Pennsylvania environmental law or regulation, from participating in the program outlined in the bill. These kinds of financial and compliance history checks are part of every major state environmental program from air quality to waste management to mining, and should be part of this legislation as well.
  1. Process Freezes Out Family Farmers from Funding Opportunities: As drafted, the bidding process established in the legislation freezes out family farmers who want to install cost-effective on-farm conservation practices like stream buffers and other measures. They simply could not be part of the program because of the high threshold for participating. Yet, family farmers have the largest demonstrated need for financial assistance in Pennsylvania.The process in the legislation favors companies which could theoretically deliver tons of reductions for just two pollutants (nitrogen and phosphorus) at one time, and having the wherewithal to participate in the bid process outlined in the bill. The bill also “absolves” municipalities and stormwater authorities of any obligations to meet nitrogen and phosphorus reduction requirements forever, but does not provide any similar protection for family farmers who are obligated to reduce nitrogen, phosphorus, and sediment.While Senate Bill 799 contains a set aside for 20 percent of the winning bidders’ credits for “small sources,” it is not at all clear what “small sources” are or who could participate. It would also be up to the company (winning bidder) to decide which “small sources” can sell the credits. There is also no guarantee the “small sources” would be installing practices that count toward Pennsylvania’s Chesapeake Bay obligations.

    In addition to all these provisions, the bill requires all bidders to be approved as vendors under the Commonwealth Procurement Act, which represents another bureaucratic and paperwork hurdle for family farmers.

  1. Process Favors High-Cost Solutions Over Cost-Effective Ones: As drafted, the legislation favors high-cost solutions to just nitrogen and phosphorus reductions, as noted in point 6, and even though practices go through a bidding process, the threshold for participation is much too high financially.Pennsylvania has had a competitive bidding auction for nutrient credits since 2010. It is operated by the Pennsylvania Infrastructure Investment Authority, which generally has auctions four times a year. The most recent auction was on June 7, where a pound of nitrogen credits sold for $2.25, and phosphorus for $7.90.  A second round of phosphorus credits the same day were sold for $4 per pound.Some companies, like those promoting manure treatment technology, are likely to provide bids under the process established in the bill that will require $8 to $12 per pound of reduction (or higher) to be profitable. The competitive process now in place is resulting in much lower-cost solutions that count toward Pennsylvania’s Chesapeake Bay reduction.
  1. No Funding Provided to Implement the Program. As everyone knows, state funding to environmental programs has been cut significantly over the last decade, leaving some on the verge of not being able to fulfill their state or federal obligations. This legislation imposes significant costs on both the State Conservation Commission and the Pennsylvania Infrastructure Investment Authority, which already have had their staff reduced to accomplish their existing responsibilities. Without significant new funding to administer this very complex program, this program could not even start.

PEC believes Pennsylvania does not have to start from scratch in supporting initiatives that address all three of primary sources of water quality impairment in Pennsylvania. There are already programs like Growing Greener that provide the necessary channels through which to deliver funding for these purposes. In addition, we believe state government should support local initiatives like those in Lycoming and York counties and those being implemented by the Wyoming Valley Sanitary Authority and other multi-municipal groups to address Pennsylvania’s MS4 stormwater pollution reduction requirements.

House Bills 913, 914, 915 and 916, introduced by Representative Everett and passed by the House earlier this month, would allow local governments of all types to adopt local stormwater fees to support MS4 Plan implementation and help address the funding issue.

What these programs need, above all, is a viable source of significant additional state funding to ensure their success and as your letter of January 24, 2017 supported.

We greatly appreciate your leadership on water quality issues in the Commonwealth; your attention and voice are critical to addressing these challenges. We offer these comments with the hope that they are useful to you as you evaluate options and opportunities. Please let us know if we can be of any assistance toward these important goals.