Accounting for Growth Workgroup Releases Final Report

The Workgroup on Accounting for Growth (AFG) in Maryland submitted its final report to the Maryland Department of the Environment (MDE) on August 23.  The report makes recommendations regarding Maryland’s forthcoming AFG Policy, that will create water pollution offset requirements on new growth in Maryland.  The AFG Policy will supplement the Chesapeake Bay Total Maximum Daily Load (TMDL) water pollution targets that mainly account for existing water pollution sources and existing development.   The AFG Policy will require new growth to offset its nitrogen and potentially phosphorus and sediment pollution in order to remain compliant with the Bay TMDL pollution targets.  Offsets can be accomplished through direct onsite or offsite mitigation, buying credits through a nutrient credit trading process, or by paying a fee-in-lieu.

The Workgroup met from January to July and included representatives from various State agencies, counties, municipalities, homebuilders, commercial builders, environmental groups, Smart Growth advocates, agriculture, and the private sector.  MACo representatives included:  Frederick County Sustainability and Environmental Resources Manager Shannon Moore, Talbot County Planner Sandy Coyman, and Harford County Council Member Mary Ann Lisanti.  MACo Legal and Policy Counsel Les Knapp was a substitute member when one of the three regular members were unable to attend.  Additionally, Mr. Knapp and representatives from Washington and Baltimore Counties served as part of the Workgroup’s technical support subcommittee.   The Workgroup was facilitated by the consulting firm Council Fire and staffed by various State agencies.

MACo also has its own Watershed Implementation Plan (WIP) technical workgroup that has been working on the issue.  Its membership includes interested counties spanning from Western Maryland to the Eastern Shore.  Many of the county AFG Workgroup members also participate in the MACo WIP Technical Workgroup.

Although the Workgroup’s recommendations are advisory only, MACo and many other stakeholders have urged MDE to follow the Workgroup’s recommendations where there is stakeholder consensus or a majority consensus of the Workgroup.  The recommendations are broken down into a set of 11 subject areas, with a 12th catch-all area entitled “General Recommendations.”

The AFG Policy is extremely complex and MACo has many concerns with the Policy’s impact on county governments and future growth potential.  Three of MACo’s key concerns include:

1. Counties Required to Guarantee and Maintain Offsets in Perpetuity

MDE has advocated that local governments have to take on perpetual obligations for “definably permanent” pollution offsets after a 30 year life of a credit in the trading market.  The stated reason for the proposal was to allow for the use of more temporary offset practices (thus creating a broader trading market)  while still complying with a United States Environmental Protection Agency (EPA) policy for permanent offsets.  This would cause counties to have to take on potentially very significant long-term financial responsibilities for total replacement costs and operations and maintenance of practices after 30 years.  MACo has strongly resisted this proposal, arguing that local governments should have an option to act as a guarantor, but should not be mandated to do so.

2. Stormwater Runoff Pollution Must Be Reduced to the Level Produced By a Forest With No Accounting for the Level of Pre-Development Pollution Generated By a Piece of Land

Some workgroup stakeholders have strongly advocated that EPA will require growth to offset its entire load to a forested condition regardless of pre-development load. However, EPA’s Senior Policy Advisor on the Chesapeake Bay has noted that EPA did not have a hard and fast position on what starting credits would comprise the baseline for a site, versus what would constitute a new load.  In many instances using a forest baseline would result in nutrient reductions beyond those generated by the new growth and substantially increase the cost for new growth.  MACo has argued that since the policy is about offsetting water pollution from new growth, developers should have to account for any new pollution added to a land post-development, with some modifications for the development of active farmland and redevelopment.

3. Availability and Cost of Credits

No trades have occurred to date in the state’s agricultural nutrient trading market and establishing a strong trading market will be critical to having a workable AFG Policy.  This assumes an available supply of credits to trade, reasonable credit prices, and a flexible trading geography.  MACo is concerned that a lack of tradable credits could hamper the development of a robust trading market while a prohibitively high fee-in-lieu could stifle any new growth in the absence of a strong market.

MDE plans to brief the environmental committees of the Maryland Legislature in mid-September and unveil the draft regulations by the end of September or early October.  The General Assembly’s Joint Committee on Administrative, Executive, and Legislative Review (AELR) will have a chance to review and comment on the proposed regulations, as will the general public.  MDE expects to finalize the AFG regulations by December of 2013.  Counties will likely need to have their final AFG ordinances and regulations adopted by December of 2014.

MACo Accounting for Growth Primer

If you have questions regarding the Workgroup’s report, please contact Les Knapp ( / 410.269.0043).