Mar 03, 2015

Acting Out

Minimizing the financial burden of reaching environmental compliance

Municipalities around the country continue to struggle with maintaining Clean Water Act compliance. W&WD Associate Editor Amy McIntosh asked Fred Andes, the leader of Barnes & Thornburg LLP’s water team, how they can cope with U.S. Environmental Protection Agency (EPA) enforcement of these clean water policies.

Amy McIntosh: What are the main Clean Water Act compliance issues municipalities face?

Fred Andes: There are two main types of Clean Water Act compliance issues. One is the violation of the permits for sewage treatment plants. These permits are generally issued by the state and set limits on the amount of particular pollutants that can be discharged, such as bacteria, solids and metals. Plants can have violations of these discharge limits when their plants are not working properly, or when there are unusual operating conditions (such as very intense storms). 

The other main type of compliance issue is overflows. When there is wet weather and the amount of water in the city’s collection system exceeds the capacity of the system, some of the storm water (sometimes mixed with sewage) can be discharged through an overflow point. Communities are required to develop plans to eliminate or reduce those overflows, often at substantial expense.

McIntosh: How can municipalities finance EPA-mandated upgrades without impacting residents?

Andes: It is very difficult to finance those upgrades without affecting residents to some extent. While the federal government used to provide grants for these upgrades, that is no longer the case. There are sometimes loans available through a federal revolving loan program that is run by the states, but generally cities have to float bonds to pay for these upgrades and the cost of the bonds is then folded into sewer rates. Cities try to minimize the impact on residents—[for example], by spreading the costs over time—but EPA does not always allow that to happen.

There are several ways in which the financial impact to residents can be reduced through more flexible application of EPA mandates. For example, if the city is given more time to install the expensive control projects, it allows the city to spread the financial burden over more years, and that can make the impact on residents’ sewer rates much less severe. 

McIntosh: What environmental benefits can be achieved by paying penalties and reaching compliance?

Andes: The penalties don’t provide any direct environmental benefit; they are paid to the U.S. Treasury and go into general funds, not the EPA budget. Reaching compliance generally involves spending funds to reduce discharges from the treatment plant and/or from overflows, and that can provide environmental benefit. The challenge is that often the agencies want additional money spent to reduce loadings further, and those additional projects (with large costs) may not make much environmental difference as compared with the city’s original plan. 

Under EPA policy, a municipality can obtain a reduction in civil penalties paid for claimed violations if it agrees to do a voluntary Supplemental Environmental Project. That way, the city can spend resources on a project that will help clean up the environment in some way, rather than the funds going into the general federal treasury for use on, most likely, non-environmental federal budget items.

McIntosh: What are steps municipalities can take to avoid environmental violations? 

Andes: It is important for communities to develop long-term compliance plans and to factor in all of the costs that are involved with keeping their collection and treatment systems up and running for years to come. That will reduce the number of violations and help avoid crisis situations in which the city has to spend large amounts on control costs, as well as technical and legal assistance, to address EPA or state enforcement actions. 

About the author

Fredric P. Andes is a partner in the Chicago and Washington, D.C., offices of Barnes & Thornburg LLP, and the leader of the firm’s water team. Andes is involved in counseling and litigation on issues arising under various federal and state environmental laws, with a special emphasis on Clean Water Act matters. Andes can be reached at [email protected].

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