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Costly New Growth Regulations

In addition to the new stormwater management (SWM) regulations and the upcoming new erosion and sediment control (E&S) regulations, The Maryland Department of the Environment (MDE) is launching another program that will increase costs before a developer is allowed to build new or expand an existing development. In addition to the reductions to existing loads necessary to achieve TMDL, MDE is proposing these new regulations to ensure that nutrient pollution is quantified and mitigated through an offset/trading policy known as Accounting for Growth (AfG). AfG, expected to begin on January 1, 2014, will require developers to offset 100% of the post-development load from each land development project. What does this program potentially mean for new growth? How does AfG impact planned projects? LSA is tracking this constantly changing regulatory issue and is here to inform you of our understanding of the current draft. The proposed AfG policy is in constant flux; the latest update was November 1, 2012.

First, let’s discuss the proposed program specifics. The intent of the proposed AfG policy is to establish a strategy requiring complete and full offset of all nutrient pollutant loads from new developments as well as from existing developments looking to alter a structure or add to the use of the land. MDE defines how these pollutant loads will be calculated and how many offset credits the developer must purchase to fully offset these loads. An important note is that a developer must find a willing seller within the same County or watershed to purchase offset credits for nitrogen and phosphorus respectively. Also of serious concern is that no grandfathering provisions exist within the latest policy draft.

What is the cost of a credit? MDE asserts that the price per credit will be driven by the market and not mandated by the State. MDE is debating timeframes for which the seller’s nitrogen and phosphorus reduction controls remain in place, and a minimum of a 30-year guarantee is suggested. The credit price needs to account for this lengthy timeframe, required annual third party inspections, and potential maintenance/corrective costs. Considering the financial obligations over this length of time, the local farmer (seller) may desire to establish a much higher price per credit or possibly elect not to participate in the trading program at all. Although a fee-in-lieu program is being discussed, concerns of supply versus demand are real. Plus, MDE’s proposed fee-in-lieu program is focused first on nitrogen expecting the costs of offsetting phosphorus to be significantly higher. The State has not yet established an estimated fee for phosphorus removal. Please see Table 1 below for more details.

The pending AfG regulations will affect how new development moves forward within Maryland. Presently, it appears as if this policy will apply to any new or altered development – even those disturbing less than one acre – and seeking coverage under an NPDES General Permit or Individual Permits. Clearly, a developer’s costs and permitting delays could be significant. LSA continues to promote workable solutions to the State of Maryland including grandfathering, expanded trading geographies, and recognition of fiscal impacts. LSA values the importance of protecting the quality of our watersheds. We believe that the current regulations clearly protect water quality and that the proposed AfG policy should be further evaluated prior to implementing additional future restrictions.

We will keep you informed as the policy changes progress. Please contact Ed Carroll, P.E., Vice President of Environmental Engineering, or any LSA team member at 301.870.2166 or 301.948.2750 with any questions or requests for more detailed information.