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Growth rules may lead to credit-and-trading

The state is considering plans to allow developers to pay for enhanced pollution controls on other land as a way to permit them to build in areas that might be off limits under new sustainable growth rules, environment officials have told lawmakers.

Environment Secretary Bob Summers was briefing House and Senate committees Wednesday on the current state of the proposed sustainable growth regulations requiring developers to offset additional nitrogen, phosphorus and sediment loads from their new projects.

Senate Bill 236 calls for the Department of the Environment to propose regulations for nutrient offset requirements to account residential growth in just Tier III areas (large lot developments) by the end of the month. Summers said a proposal for statewide regulations would not be finalized until next September.

The proposal establishes a market so that developers building in large lot development areas can offset nutrient loads through a credit and trading system and pay for offsets in rural and farming areas. Developers could earn credits by paying for capacity in a wastewater treatment plant, for instance, Summers said.

“One of the more controversial areas, growth in urban areas, could potentially be offset by paying for extra pollution control on our farms,” Summers said. “Once a farmer has achieved what is needed for his or her share of the [total maximum daily load], anything over and above that can be sold to a developer on a trading market to offset that load.”

Tier III large lot developers would calculate the post-development load of their project and secure credits to offset 100 percent of their nutrient load. Summers said that the market would be guided by state policy and regulations and would also comply with federal permits.

“We wanted to allow trading to offset the post-development load,” Summers said. “We are expected add an estimated 478,000 households by 2035 which is more than 2 million pounds per year in additional pollution to the [Chesapeake] Bay. If we don’t address this, our restoration efforts will not succeed.”

The benefit to trading is that it can drive innovation and lower costs, Summers said.

Summers said there will be some exemptions. Redevelopment projects would not have to offset pollution elsewhere because they would be replacing a load. No offset would be needed for discharge from a wastewater treatment plant that is operating below capacity.

There are additional elements that Summers said are needed if the state is going to be successful in attaining its bay restoration goals. These include smart growth development, using the best available technology (BAT) on septic systems, and using enhanced nutrient removal at wastewater treatment plants. A requirement to use best available technology for new and replacement septic systems has raised strong objections in rural counties.

Sen. Paul Pinsky, D-Prince George’s, stressed the importance of the cooperation from the counties. The environmental group 1000 Friends of Maryland complained this week that 23 counties have “skirted” the current sustainable growth legislation by taking advantage localities ability to designate tier designations, Tim Wheeler of the The Baltimore Sun reported.

“A lot of the initial maps that we have seen from staff level throughout the state have, often times, matched the local planning, zoning and preservation goals, said Jason Dubow of the Maryland Department of Planning. “In some counties, some kept it as is. Other counties [seem] uncomfortable with a strict interpretation of the law, and in some cases have gone to the complete opposite end that the law was seeking. “

Del. Dana Stein, D-Baltimore County, asked why there could be a payment arrangement when the original proposal did not include that type of provision. Summers said that the original thought was that the state didn’t have the mechanisms to handle that type of funding.

“But upon further thought and the comments that we have in, that is one area where we do have room to make some compromise and have some kind of reasonable fee-in-lieu system,” Summers said.

Fee levels are still being developed

Del. Marvin Holmes, D-Prince George’s, asked how Maryland’s pricing formula compared with those in two competing states, Virginia and Pennsylvania.

Summers said that, like Maryland, those states are also starting to figure out accurate pricing formulas for fees, and that pricing will depend heavily on the economic situations in the states.

Although the proposal still has issues left unanswered, a work group from stakeholder agencies such as the departments of Planning, Environment, Natural Resources and Agriculture is being established that will make recommendations.

House Minority Leader Tony O’Donnell said that representatives from the Department of Business and Economic Development should also participate in the work group.