The Real Deal - January 2014

Date: January 14, 2014

The State Acts: The Environmental Impact on Business, 2013 and 2014
By: M. Trent Zivkovich

The close of 2013 saw several developments in environmental regulatory matters that Maryland businesses and individuals should consider as they make plans for the coming year and beyond. A common theme in many of these state programs and initiatives is the role and cost of stormwater management and how many of them are connected to and dependent on one another. Because of these issues, businesses are encouraged to take a larger and long-term view of what is being required, what is likely to be required and what may be done in response. As the 2014 General Assembly session begins on January 8th, businesses should carefully evaluate how these recent developments may affect their operations and budgets.

What’s Ahead in the 2014 General Assembly Session

As always, multiple bills are expected to be heard this year in Annapolis that could have real impacts on business operations as they relate to the environment. Given the upcoming general elections, it’s expected that we’ll see a large number of what might be termed “populist” bills regarding current hot-topics such as local stormwater fees (known by some as the “Rain Tax”) and state direction on local land use matters.

Stormwater Fees: Expect multiple bills to be proposed to repeal outright or amend Chapter 151 of 2012, the law that required Maryland’s 10 major jurisdictions to implement a local stormwater fee. The general expectation is that no bill that repeals or significantly weakens the law will pass the House Environmental Matters Committee, but the current law could be amended to change certain requirements and potentially establish greater consistency in its implementation across the state’s various jurisdictions. However, with all the attention paid to it there is a chance that proponents may also elect to simply play a defensive role and not seek any changes to current law.

Local Land Use Planning: It’s also expected that legislation will be introduced to try and roll back legislation passed in recent years by which the State government has a role in reviewing (but no absolute approval responsibility) for local land use plans and similar decisions. Likewise, it is generally not expected that efforts to materially weaken these laws will gain majority support.

Accounting for Growth: A wild card is whether or not legislation will be introduced that would impact Maryland’s long-debated “Accounting for Growth” program and associated regulations. This program, primarily impacting the development community by requiring developers to purchase nutrient “credits” or otherwise meet its requirements, is currently being debated among the Maryland Departments of the Environment, Agriculture, and Planning and various stakeholder groups. Efforts to reach consensus among these groups and interests are currently ongoing, but it may be possible that legislation looking to trump these discussions appears on the scene. If this occurs expect a significant debate and potentially litigation.

The Impact of the 2013 Changes

General Permit for Stormwater Discharges Associated with Industrial Activity: The Maryland Department of the Environment has issued a new General Permit for Stormwater Discharges Associated with Industrial Activity that is held by many industrial and heavy commercial businesses in the state. The new permit, effective January 1, 2014, replaces the prior version of the permit. It should be noted that a petition to challenge the legality of the new permit’s requirements has been filed by an impacted business, but it is currently uncertain if that petition will be pursued and result in any changes to the permit and those who may hold it.

In general, the new permit includes more stringent certification and compliance requirements that will require careful attention and, in certain cases, actual stormwater quality monitoring. One of those most significant changes to this permit, known as 12-SW, is that it imposes a requirement on most permittees whose facility covers five acres or more and is located within certain developed jurisdictions to undertake what may be for many substantial capital investments. Specifically, the permit requires those businesses to “select, design, install and implement restoration of 20% of the untreated impervious surface area at [the] facility or equivalent control measures for the reduction of nutrients” and to do within the five-year permit term or within four years for new permittees. Those facilities that have qualified for a “No Exposure Certification” in the past will now need to have a new certification prepared and signed by a Professional Engineer or other stormwater management professional.

Any facility that is currently permitted under the prior version of the permit, 02-SW, must apply for the new permit before June 1, 2014. Because of the restoration requirement, recent stormwater fees, and other technical requirements, business owners are advised to evaluate long-term plans, capital budgets and what engineering practices may be necessary to meet the permit’s compliance requirements.

General Permit for Stormwater Discharges Associated with Construction Activity: Like the General Permit for Industrial Activity, Maryland has a General Permit for Stormwater Discharges Associated with Construction Activity that applies to construction sites disturbing more than one acre of land. The current General Permit, 09-GP, was due to expire on December 31, 2013, but has been administratively extended by the MDE until at least the spring of 2014. This extension is due to several factors including the continued debate regarding Maryland’s “Accounting for Growth” program which would be partially implemented through provisions in this new General Permit. Until the new General Permit is issued, parties may continue to apply for coverage under the current 09-GP permit using the existing forms and processes.

Maryland’s Hazardous Substance Reporting Rule: The MDE announced in early December that it was again planning on issuing long-delayed regulations associated with a law passed in 2007 that required “responsible persons” to report evidence they may possess of hazardous substances on properties in Maryland. The law required the MDE to issue regulations prescribing certain reporting concentration thresholds. Once this information is reported to the MDE, it will be maintained in a public database of “Brownfields” properties and may also subject the property owner to further investigation and/or addressing any impacts.

After initially proposing these regulations in 2008 the state withdrew them in the face of concerns regarding the impact they would have on businesses and the MDE itself. Since then MDE has offered draft regulations and met with stakeholders to discuss their implications, but never actually proposed the regulations for formal adoption. This recent announcement was accompanied by a release of new draft regulations and a request for feedback. The MDE also announced that at the very earliest, regulations would not be formally proposed until late spring 2014 and thus would not take effect until late summer or early fall 2014 at the earliest.

Businesses should be aware of this long-standing but often-delayed law when buying, selling and refinancing property, and should consider any potential ramifications with counsel.

New Phase I Environmental Site Assessment Standard: Individuals and businesses looking to purchase property should be aware that a new standard for the Phase I Environmental Site Assessments (ESA) has been officially adopted by the EPA as had been anticipated. On December 30, 2013, the EPA published a Final Rule adopting the new ASTM E 1527-13 as an acceptable standard for Phase I Environmental Site Assessments under the “All Appropriate Inquiries” regulations in 40 CFR Part 312. The Final Rule was effective upon publication.

Completion of a Phase I ESA in accordance with the standard is one of the requirements necessary for a party purchasing a property to obtain certain federal statutory protections and under many states’ voluntary cleanup programs (including Maryland’s).

Compared to the prior version of the ASTM standard, E 1527-05, this update makes only modest changes. These include revisions to several definitions, strengthened requirements for conducting regulatory agency file reviews and additional guidance regarding vapor migration issues. While the prior ASTM version is still referenced by and thus acceptable under the federal regulations, the EPA announced its intent to remove that reference by separate rulemaking in 2014.

From a practical perspective, this should have minimal effect on the scope of a Phase I ESA investigation and report or the length of time required to complete a Phase I ESA, and no likely increase as to the cost charged for completing a Phase I ESA. What is important is that most businesses will want to ensure that any proposal they request and any work completed is in accordance with the new ASTM E 1527-13 standard.

Please feel free to contact Trent Zivkovich at or 410-347-8778 with additional questions regarding these recent developments and how they may impact your business.