Ruling Paves the Way for Counties to Seek Innovative Private Sector Solutions

HIGHLIGHTS:

  • Maryland's highest court has broadly upheld the Maryland Department of the Environment's flexible approach to permitting discharges from county municipal separate sewer systems.
  • The Court of Appeals ruling overturned an earlier decision that would have required Montgomery County to do a better job explaining how it will achieve its water restoration goals.
  • This ruling establishes a solid foundation for these permits and will allow counties across Maryland to consider innovative solutions, including greater private sector participation, to deliver and finance stormwater projects.

The Maryland Court of Appeals has issued an important decision broadly upholding county stormwater permits issued by the Maryland Department of the Environment (MDE). The court's unanimous decision, authored by Judge Sally Adkins, addressed challenges to four MDE-issued stormwater permits for county Municipal Separate Sewer Systems (MS4s) in Montgomery, Baltimore, Anne Arundel and Prince George's Counties, as well as the permit for the City of Baltimore. As a result, the decision is dispositive of all of the current major challenges to county MS4 permits in Maryland and should ensure that these permits stand on solid legal footing moving forward.1

Flexibility and Dedicated Funding Key to Stormwater Management

Judge Adkins' decision focused substantially on the inherent flexibility of the underlying federal National Pollution Discharge Elimination System (NPDES) as a basis for allowing MDE to issue the permits as drafted, and deferred to its methodology to achieve its goals. The court agreed with MDE that restoration efforts for 20 percent of the counties' impervious surface area is a key strategy in restoring the Chesapeake Bay.

The court did not directly address the issue of implementing stormwater remediation fees, which was addressed in Montgomery County on July 22, 2015, inPaul N. Chod v. Board of Appeals for Montgomery County, 398704V. Nor did the court touch on specific contractual or organizational methods that counties may use to meet MS4 obligations, such as the innovative Public Private Partnership (P3) with Prince George's County. However, Judge Adkins addressed remediation fees broadly, finding that MDE has "ensured that the Counties cannot use lack of adequate funding as a defense for failure to comply with Permit terms" while noting that the General Assembly enacted §4-202.1 of the Environment Article to ensure that counties adopt (or now are authorized to adopt) "local laws or ordinances necessary to establish an annual stormwater remediation fee and a local watershed protection and restoration fund to provide financial assistance for the implementation of local stormwater management plans." (See Holland & Knight's alert, "Stormwater Alert: Maryland Fee Program No Longer Mandatory," April 30, 2015.)

Overall, there appears to be a clear signal that the counties must continue to fund and undertake the necessary remediation work and, in particular, the restoration of 20 percent of impervious surfaces.

The Cases

In addition to Anacostia Riverkeeper, which related to the MS4 permit for Montgomery County,2 the Court of Appeals' decision addressed circuit court decisions affecting permits in Anne Arundel County, Baltimore County and Prince George's County3, as well as the City of Baltimore. These cases were brought by a collection of environmental groups, which the Court of Appeals collectively referred to as the "Water Groups."

With regard to the Anacostia Riverkeeper case, the Court of Appeals overturned an underlying decision by the Maryland Court of Special Appeals, which had held that the MS4 permit issued to Montgomery County in 2010 was not specific enough to allow for adequate public comment and did not provide meaningful deadlines to measure compliance with water quality goals. (See Holland & Knight's alert, "Montgomery County, Md., Must Meet MS4 Permit Obligations Despite Rulings," Oct. 14, 2015.) In contrast, the Court of Appeals decision upheld contrary circuit court decisions in the other counties and the City of Baltimore that had upheld the MS4 permits issued by MDE to those jurisdictions.

Questions at Issue

The Court of Appeals decision addressed four questions, including: 1) whether the permit requirement for restoration of 20 percent of pre-2002 developed impervious surfaces was sufficiently specific, measurable and enforceable; 2) whether MDE's decision to issue the permits with a 20 percent restoration requirement was based on substantial evidence; 3) whether MS4 permits provided for sufficient public participation in the development of county restoration plans; and 4) whether the permits satisfied federal monitoring requirements.

The Court of Appeals answered all of these questions in MDE's favor, but focused its time at oral arguments, and subsequently the majority of its decision, on whether the 20 percent restoration threshold was supportable, and whether there was sufficient public participation during the adoption of the permits and related restoration plans.

The court found that annual reports required by the permits satisfied federal monitoring requirements. It also found that MDE was reasonably justified in establishing 2002 as the baseline for measuring impervious surface area to be restored. The court noted that Maryland regulations and local ordinances began requiring implementation of Best Management Practice (BMPs) in roughly that period, so it was reasonable for MDE to assume that, since that date, water quality treatment had been provided to the Maximum Extent Practicable (MEP). See Slip. Op. at 41-42.

The 20 Percent Restoration Requirement

The Water Groups argued that the 20 percent restoration requirement is too opaque to comply with federal law, alleging that it fails "to provide a specific performance standard for restoration activities," such as a numeric pollution reduction standard. However, the court disagreed, finding that the federal Clean Water Act (CWA) allows for various performance standards, and finding that MDE had, in fact, established a performance standard based on Water Quality Volume, as defined in the 2000 Maryland Stormwater Design Manual (the Manual), which defines as acceptable those practices ("Best Management Practices" or "BMPs) the counties may choose from to achieve this goal.

The court went to some length to explain that MDE established a viable performance standard by translating the various BMPs into credits based on the performance standards in the Manual. The court stressed that this system was justifiable because it encouraged the use of various modern practices where practicable, by providing for additional credits for high-volume BMPs, while allowing sufficient flexibility to incorporate less desirable BMPs when necessary, so long as an appropriate mixture will result in satisfaction of the 20 percent requirement.

Judge Adkins disagreed with the Water Groups' assertions that the permits did not provide for specific targets to achieve in desired pollution reductions. Instead, she found that they overlooked the fact that the 20 percent restoration requirement was a surrogate for actual reductions in pollution, and that MDE had "logically created an accountability system based on an assessment of compliance with the surrogate, not on assessment of pollution reduction in fact." The court found that this system was eminently measureable and that it is enforceable because it is required to be completed within the five-year framework of the permits, providing for potential penalties imposed by MDE, the U.S. Environmental Protection Agency (EPA) or citizen action if left unfinished. This appears to be a clear sign to the counties and advocacy groups alike of the need to continue making progress on the restoration requirements.

Public Participation

The Court of Appeals found that the permits were subject to appropriate public participation via notice and comment, and rejected the Water Groups' assertions that the adoption of restoration plans a year after adoption of the permit would constitute a major modification requiring additional public participation.

As drafted, the permits direct the counties to develop restoration plans using pre-approved BMPs that are found in the Manual and discussed again in MDE's Guidance4 for calculating impervious areas treated. These documents provide a "menu of options" from which the counties can select pre-approved BMPs. The court determined that this approach would not constitute a modification because MDE had previously analyzed and approved these BMPs and made them available for public comment by publishing them in the Manual and Guidance, which are incorporated in the permits. Further, the court noted that the permits explicitly provide for an additional 30-day public comment period, preceded by local and online publication, before each restoration plan is finalized, and as well as require the counties to address such comments in their annual reports submitted for MDE Review.

Unlike the Court of Special Appeals, which found this "menu" of BMPs "indecipherable," the Court of Appeals found that these options are an essential part of Maryland's "management approach, whereby additional or alternative practices are implemented if existing programs are not meeting target reductions."5

Ultimately, the court found that MDE provided sufficient public participation in development revision and enforcement of these permits by providing: 1) the opportunity to comment in writing and at a public hearing on the draft permits; 2) responses to the public's comments; and 3) the opportunity for the public to participate further in the counties' efforts to meet Waste Load Allocations (WLAs) by adopting and updating restoration plans.

Conclusion

The Court of Appeals decision in this case gives substantial deference to MDE's permitting decisions and stresses the flexibility of the MS4 permitting process. This decision should substantially curtail the potential for additional litigation on these permits, while strongly supporting each county's ability to modify its restoration plan by adopting the alternative BMPs necessary to achieve the 20 percent target reductions in impervious surfaces. At the same time, the Court of Appeals explicitly indicated that lack of resources will not provide a defense to future enforcement against county governments for failing to achieve these reductions. This decision should both free up necessary administrative resources and provide additional motivation for county decision-makers to consider the alterative compliance scenarios and innovative administrative options available to achieve these goals.