Owen Chilongo Texas Water Policy December 6 th, Municipal Setting Designations: Good or Bad Water Policy in Texas

Transcription

1 Chilongo 1 Owen Chilongo Texas Water Policy December 6 th, Municipal Setting Designations: Good or Bad Water Policy in Texas Introduction: One of the issues that the precautionary principal tries to address is the prevention of irretrievable damage that can be made to the environment. With regards to groundwater supply, the loss of any significant amount of water from its aquifers can have devastating effects at many levels, especially when that loss is caused by pollution and contamination. Some contaminated aquifers can be remediated, but the remediation process may take long depending on the nature of the contaminant. At worst, some aquifers have been found to be impossible to remediate due to cost and hence end up being written off as a way of dealing with them; and because of this, the focus of this paper is to examine if the intentional disregard of contaminated aquifers in Texas is good or bad for water policy planning and development. These banned contaminated groundwater sources are classified as Municipal Setting Designations (MSD) in the state of Texas. Legal Context to MSDs: Before delving into the impact MSDs have had on Texas water policy, it s important to first look at the legal foundation behind MSDs, both in the context of federal and state environmental regulatory regimes: 1. Resource Conservation and Recovery Act of 1976 (federal). In 1976, the United States Congress enacted the Resource Conservation and Recovery Act (RCRA), in an attempt to eliminate loopholes and weakness in U.S. environmental law regarding unregulated land disposal materials and hazardous waste. 1 While RCRA is an effective tool in the prevention of post Flahive, Kevin. "Municipal Setting Designations: Are They a Balanced, Common Sense Approach to Urban Groundwater Remediation or a Market- Driven Abandonment of Contaminated Municipal Aquifers?" Texas Tech Journal of Texas Administrative Law 6 (2005): 266.

2 Chilongo 2 hazardous waste disposal, it fails to address the threat of pre 1976 historical hazardous waste that is still impacting our current environment, public health, and safety Comprehensive Environmental Response, Compensation, and 2 Flahive, Flahive, Flahive, Flahive, Ibid. 7 Ibid. Liability Act of 1980 (federal). The Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (CERCLA), was enacted in response to RCRA s failure to address the growing need for remediating historical contamination that is still a threat to public and environmental health. 3 The primary goals of CERCLA are to facilitate the prompt cleanup of existing hazardous waste sites and to deter any future contamination by transferring the cost of remediation from the taxpayers to the identified polluter. 4 To accomplish these goals, CERCLA empowered the Environmental Protection Agency (EPA) to respond to hazardous waste releases by mandating cleanups from the responsible parties, and if these parties were not identified, the EPA would cleanup the site itself. 5 The legislature also created a Superfund, this is a trust fund the EPA can use to facilitate timely cleanups of hazardous waste sites that pose the greatest immediate threat to the public. 6 Note however that it is used in the event that the party ultimately responsible for the contamination is not immediately identified or not at all. Due to the urgency of the cleanup, the EPA immediately funds the cleanup costs while the perpetrator is being determined, and once this party has been identified, that party shoulders the burden of reimbursing the Superfund for the cleanup costs incurred by the EPA, and because of this, CERCLA imposes strict liability. 7 If the responsible for causing the pollution is not determined, the taxpayers carry the cost burden of cleaning up the site. The liability that CERCLA therefore imposes is designed not only to ensure reimbursement for EPA cleanup costs, but also to ensure deterrence from would-

3 Chilongo 3 be polluters; and because of this, CERCLA has been criticized by some quarters for its hard line liability, which is often seen as an obstacle to urban brownfield redevelopment projects Texas Waste Disposal Act (State). The EPA has delegated to Texas the implementation of federal hazardous waste management programs, hence reducing the EPA s role to a supervisory one on this matter; however, the Texas Legislature has also enacted supplemental environmental laws. The Texas Solid Waste Disposal Act (TSWDA), is a piece of legislation that authorizes the implementation of both federal and state hazardous waste management programs, it also creates statutory liabilities that run in tandem with the liabilities that are established in RCRA and CERCLA. 9 The waste management and disposal programs that TSWDA has created include the Texas Voluntary Cleanup Program (VCP) and The Texas Innocent Owner and Operator Program (IOP), which ultimately provided the framework for House Bill 3152, the law behind Municipal Setting Designations (MSD) and the focus of this paper. 4. House Bill Municipal Setting Designations (State). On June 20, 2003, Governor Rick Perry signed House Bill 3152 into law. House Bill 3152 intended to reduce or eliminate groundwater investigations and response actions for certain properties with contaminated groundwater by restricting its use as potable water either through a city ordinance or restrictive covenant. Essentially, this law allows the TCEQ, with the local government's consent, to certify an MSD for a contaminated urban property, thereby exempting the property from the strict remediation requirements [under RCRA and CERCLA]. 10 MSD Mechanics: An MSD is an official designation given to a property within a municipality or its extraterritorial jurisdiction that certifies that designated groundwater at the property 8 Flahive, Flahive, Ibid, 274.

4 Chilongo 4 is not [to be] used as potable water, and is [also] prohibited from future use as potable water because that groundwater is contaminated in excess of the applicable potable water protective concentration level. The prohibition must be in the form of a city ordinance, or a restrictive covenant that is enforceable by the city and filed in the property records. 11 The MSD law authorizes the Texas Commission on Environmental Quality (TCEQ) to receive, process and certify MSD applications, but TCEQ can only certify an application if the MSD has support from a local city. 12 What this means is that properties classified as MSDs are not required to restore or control the contaminated groundwater zone to federal potable water standards. The main consequence of MSDs is that they have managed to remove the feared punitive actions and requirements developers may face when building over aquifers that are deemed to be irretrievable as a groundwater sources; and because of TCEQ s difficulty in identifying polluters of these aquifers, MSDs have given TCEQ compelling reasons to permanently write off these contaminated aquifers. 13 MSDs therefore encourage development of properties over these aquifers without any consequences of meeting federal potable water quality standards. An MSD however can only be approved if it s in an area where an alternate water supply is available. 14 A City and public utility the proposed MSD affects must support and pass enforceable ordinances that prohibit the use of this designated ground water in the MSD. 15 A key prohibition of an MSD is that its groundwater is not to be used as potable water; and potable water is defined as water that is used for drinking, showering, bathing, cooking, or for irrigating crops intended for human consumption. 16 MSDs are therefore locally controlled programs, and through these local controlling institutions, the prohibition against the use of MSD groundwater must either be in the form of a city ordinance or as a restrictive covenant that is enforceable by the city and filed in the property records. For a fee of $1000 anyone can submit an application for a 11 TCEQ. "Municipal Setting Designation: A Guide for Cities." Texas Commission on Environmental Quality. (2013), html 12 Ibid. 13 TCEQ, Bost, Richard. "What Is MSD?" Houston Geological Society, Vol. 47, No. 1 (2004): Bost, TCEQ, 2.

5 Chilongo 5 MSD to the executive director of the TCEQ. Once all of the requirements have been met and the executive director determines that the proposed MSD will not negatively affect any regional water supply, now or in the future, the TCEQ may issue a MSD certificate. 17 MSD applications started at a slow pace in 2003 but eventually increased over the years; the TCEQ has consistently since 2007 certified MSDs every year. 18 TCEQ has for example issued over 180 MSD Certificates in or near the Dallas-Fort Worth and Houston metropolitan statistical areas alone. While obtaining a MSD certificate may reduce the amount of ground water remediation requirement for a certain area, the certificate does not prevent others from claiming personal injury or property damage caused by ground water contamination. 19 Note again that the question this paper is trying to investigate is whether MSDs are a reasonable water policy approach especially in drought prone states like Texas. As a consequence of this, the second issue this paper will explore is showing why property development over contaminated groundwater sources is found by the state of Texas to be more important than the reclamation of those contaminated aquifers that future generations could possibly use. Water Remediation and Land Development: Contaminated groundwater poses a problem for land development in cities because of the costs and legal requirements needed to meet remediation potable standards of groundwater; because of this, prospective developers avoid brownfield redevelopment. 20 MSDs therefore aim to reduce the cost and liability associated with the redevelopment of these properties that sit on contaminated groundwater so as to accelerate the process of property development. 21 By minimizing cost and liability, these properties become attractive to developers, thus enabling them to return brownfields 17 Bost, Webb, Bost, Webb, Jenilee. "Recovery of Contaminated Urban Land through Municipal Setting Designations in Texas." University of Texas at Austin Thesis Report (2011) UT Webb, 2.

6 Chilongo 6 into useful properties again but this time at a faster rate of development than the traditional route of first agreeing to the remediation of contaminated groundwater to potable standards before development can proceed. 22 One of the key opposing arguments made against the creation of MSDs has been that it rewards property development over water reclamation. Property Developers gain from the ban placed on the potable use of contaminated groundwater sources by not being required to remediate these water sources to potable standards. Federal laws however, under Resource Conservation and Recovery Act (RCRA) and Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA), hold that if a property owner, tenant, or lender are found to have contaminated groundwater on their property, they are responsible for its remediation to federal drinking standards regardless the previous quality levels of the water. 23 Both RCRA and CERCLA therefore play a key role in the rehabilitation of contaminated groundwater sources, and because of their strict liability requirements, this is usually seen as a major burden by developers. 24 Concern about the cost of groundwater cleanup on brownfield properties is therefore clearly linked to these federal laws that impose liability conditions on property owners, tenants, and lenders; these laws are critical to maintaining and protecting groundwater resources. 25 In Texas however, MSDs have been used as a tool to get around CERCLA and RCRA requirements in brownfield redevelopment. The creation of MSDs has thus opened a door for developers through which they can avoid incurring groundwater contamination costs and liabilities associated with brownfield redevelopment. The Texas Legislature therefore found a way through House Bill 3152 to allow property development in urban areas by removing the threat of RCRA and CERCLA that most developers have a fear of. 22 Webb, Webb, Ibid. 25 Morriss, James, and Matthew Knifton. "Municipal Setting Designations: A Sensible Alternative to the Costly Cleanup of Urban Groundwater." State Bar of Texas Environmental Law Review 34, no. 3 (2004): 158.

7 Chilongo 7 Arguments Supporting MSDs: Used in conjunction with other state and federal cleanup programs such as the Texas Voluntary Cleanup Program (VCP) and Innocent Owner Program (IOP), the MSD gives landowners and developers an alternative solution to investing large sums of money into property redevelopment instead of spending it on remediation costs for water that is banned from potable use; such remediation expenses are often a major impediment to the redevelopment of industrial and commercial properties and the completion of VCP projects. 26 Since cost and liability issues are key arguments used by proponents of MSDs, property development has thus won over the hearts and minds of policy makers against arguments made for water remediation. Below are several arguments made in support of MSDs: MSDs promote brownfield redevelopment and urban smart growth by reducing risks associated with remediating contaminated groundwater; The cost of groundwater cleanup is significant and not practical for developers to shoulder alone. These costs tend to outweigh the benefits of redeveloping a contaminated property and as a result prevent brownfields from being returned to productive use in their urban communities; By establishing MSDs, these properties get developed and in turn add to the municipality s tax revenue base; MSDs are viewed as the fastest way to secure real estate development of contaminated properties by removing the liability and costs associated with groundwater contamination. 27 MSDs help reduce the presence of abandoned buildings and properties in a city; these buildings not only take away from a municipality s tax revenue base, but also create a breeding ground for crime. 28 Abandoned buildings that attract crime also have the effect and consequence of depressing property values; real estate agents often discount the value of 26 Morriss, Webb, Ibid, 27.

8 Chilongo 8 properties based on the level of crime in that urban environment. 29 The avoidance of brownfield properties results in a trend known as environmental redlining or brownfield lining [through such marginalizing trends, certain areas are] effectively excluded from redevelopment. 30 MSDs therefore improve property values and tax revenues. The fundamental argument for the supporters of MSDs is therefore based on the benefits of property redevelopment in urban areas. They argue that the state should not require property owners to spend substantial amounts of money in remediating contaminated groundwater to potable standards that is deemed to be irretrievable to meeting these drinking level standards, and as such, the creation of MSDs results into a reasonable use of land. 31 Therefore promoters of MSDS argue that the expenditure on groundwater cleanup to potable standards is an ineffective and wasteful use of resources because of the persistence of the chemical compounds in the environment and that this can result in redevelopment projects being shelved or avoided (brownfield lining). 32 Arguments Against MSDs: Opponents to MSDs argue that, the legislature drafted House Bill 3152 with the intention of putting brownfield properties back into use by removing the hurdle to their marketability [caused by] groundwater remediation costs. 33 Those opposed to this bill had described it as being susceptible to exploitation and that it was pushed through the legislature by outsiders that did not tell the bill's sponsors the truth, which was in fact the writing-off and the abandonment of contaminated urban aquifers. 34 Regardless of the relatively quick redevelopment of properties and its associated short-term economic benefits that come with MSDs, arguments made against MSDs tend to have a long-term view. These opposing views include: 29 Ibid, Ibid, Webb, Morriss, Flahive, Kevin. "Municipal Setting Designations: Are They a Balanced, Common Sense Approach to Urban Groundwater Remediation or a Market- Driven Abandonment of Contaminated Municipal Aquifers?" Texas Tech Journal of Texas Administrative Law 6 (2005): Flahive, 264.

9 Chilongo 9 The MSD program is in conflict with federal regimes under CERLCA, RCRA, the Clean Water Act, and Safe Drinking Water Act; this argument is based on the fact that because environmental laws at the federal level are designed to make the polluter pay, the MSD legislation is in direct conflict with the federal liability scheme. 35 The true cost of an MSD is the loss of a groundwater supply, and even though this source is contaminated, there is a possibility that future technological advancements can remediate this water source if only more effort and investment was put into it. The challenge MSDs bring is that they do not look at this water resource as a potential future supply and hence justify leaving it contaminated forever. 36 Opponents to MSDs therefore hold that the cost of losing access to potential groundwater should never be seen as a cost in dollar terms, like the way remediation costs are assessed, but instead should be seen in terms of the permanent loss of a potential water resource. 37 The permanent loss of contaminated groundwater sources to MSDs is not only a loss to the present generation, but also to future generations. The loss of intergenerational equity due to MSDs is motivated by short-term economic benefits that MSDs bring through land redevelopment, over long-term water supply. Texas should not easily write off potential sources of future drinking water. MSDs hinder new methods of treatment technologies; these new technologies will only be developed if the polluter is given a financial incentive in remediating these water sources. 38 What MSDs have essentially managed to do is that they have lowered the liability standards and risks associated with environmental pollution and have discouraged environmental remediation and technology investment that would have gone into remediating these water sources for the future generations. 35 Webb, Webb, Ibid. 38 Webb, 39.

10 Chilongo 10 Why does this statute prioritize land development over the reclamation of contaminated aquifers? The selection of Greenfield properties by developers and industries is a trend that has increased urban sprawl and left many cities with large inventories of brownfield properties that drain the tax base while contaminants remain in the soil, groundwater, or both. In response to this phenomenon, the Texas Legislature and TCEQ began reforming state environmental regulations in an effort to encourage redevelopment of brownfield properties. Two such reforms are the Texas Voluntary Cleanup Program (VCP) and the Texas Innocent Owner and Operator Program (IOP). 39 VCPs are meant to provide immunity from liability to landowners who voluntarily conduct investigation and remediation activities on their properties this immunity also extends to any future owners/lenders of this property; Note however that the VCP only protects property owners from liabilities prescribed by the state and not from federal statute liabilities. 40 The IOP on the other hand is meant to shield innocent property owners or operators from liability for the contamination and its required remediation which they did not contribute to. 41 This is done in part because of the strict liability that comes with water contamination and its related transaction costs. For example, prospective purchasers and lenders often conduct extensive due diligence to determine whether the property they are considering purchasing or using as collateral for a loan has any environmental contamination in its soil or groundwater that requires remediation. If environmental contamination exists on the property, particularly groundwater contamination, the extensive cost of investigating and remediating the contamination can lead to the loss of a sale, loss of financing, or ultimately to the abandonment of the property by the owner. Even if the property is not abandoned, the value often drops because needed maintenance is deferred, and the opportunity for redevelopment moves on to other properties that don t have such high cost and liability Flahive, Flahive, Flahive, Morriss,159.

11 Chilongo 11 With the fear of dropping property values and brownfield marginalization, the Texas Legislature opted to protect property values from falling and also protect property owners from liability. In order to achieve this effectively, the legislature drafted House Bill 3152, the bill responsible for creating MSDs. For this reason, opponents to MSDs argue that the legislature drafted this bill solely with the intention of reducing the liability and costs associated with developing properties that sat on contaminated groundwater sources. The impact of this is that it has made MSDs marketable by removing the hurdles that developers feared and dwarfs any chances of reclaiming these contaminated groundwater sources. Are MSDs Good or Bad for Texas Water Policy? The issuance of an MSD certificate by TCEQ does not resolve the contamination issue at a property. For this reason it is the opinion of this paper that MSDs tend to have a negative impact of Texas water supply and hence MSDs are a bad policy in terms of water resource development. Secondly, because the existence of an MSD community is dependent on the supply of water from near by cities, MSDs increase the demand of potable water supply for those cities because it has banned the use of its own water source. Thirdly, because MSDs incentivize property redevelopment and liability protection, the consequence of this is that it creates a disincentive for environmental remediation hence passing on this water contamination problem to the next generation. The negative impact of MSDs on water development can be seen in cities like Dallas. Soon after House Bill 3152 was passed into law, the first municipality to pass MSD ordinances came from the City of Dallas; it passed MSD ordinances in 2004, and the following year the City of Fort Worth also followed suit. 43 For a city like Dallas that has one of highest water consumption in the state, it is baffling to see that the city would pursue brownfield redevelopment over groundwater remediation. As already earlier mentioned, TCEQ has consistently issued over MSD Certificates very year, predominantly for the Dallas-Fort Worth and Houston metropolitan statistical areas. These areas not only have large and growing populations, but the demand for municipal water will always rise and hence the need to explore all possible new water supplies 43 Flahive, 288.

12 Chilongo 12 sources. Writing off contaminated aquifers as possible water sources that the future generation can possibly remediate with advancing technology is an option worth seriously considering. Conclusion: MSDs represent a shift from the traditional and required approach of remediating groundwater to federal drinking standards, by writing off contaminated aquifers; instead of investing and developing technology that could recover these groundwater sources, the impression that the architects of MSDs portray seems to have been one of finding the least costly and most convenient solution to water remediation so as to pave way for property development. This is an unfortunate and tragic option in terms of water resource development. Analogous to The Tragedy of the Commons, we note how the abuse of a common resource by a few can negatively effect how others also use the same resource. 44 However, when it comes to pollution, the implication of this is that some polluters find it less costly to pollute a common resource by transferring this expense to the whole community. 45 An even greater tragedy here is that some polluters may come back through the loophole of MSDs and get exemptions from remediating a water resource they possibly helped pollute. It is therefore troubling when we see communities opt for the choice of writing off contaminated aquifers through MSDs as opposed to remediating them. This policy not only takes away from its current society a common resource, but banning this resource as a future potable source further robs future generations of a possible water supply that could be remediated if only time, money, and effort can be invested in it. So MSDs are a reflection of how a few individuals with power and influence, have the ability to deny a whole society and its future generations of a water resource for the sake of property development. One possible option of getting out of the dilemma MSDs have created, is through developing new ideas and policies that seek to integrate land use and water quality 44 Hardin, Hardin, 1245.

13 Chilongo 13 controls without losing our common resource. 46 It is imperative that we consider all water-related impacts regarding growth and land use, and start incorporating these concerns into our decisions and policies. The creators of MSDs have instead chosen to ignore or minimize the importance of properly managing the relationship that exists between land use and environmental regulation. It is therefore the opinion of this paper that future policies regarding the challenge MSDs bring to water development should be viewed through the nexus lens that exists between environmental regulation and land use. Through this lens, concepts such as wet growth have arisen over the years that look at the integration of water and land development issues through the integration of land use planning and water resource development regulations. 47 In cases where the water is already contaminated, land use controls have to be stricter than what we have witnessed so far with MSDs. To date MSDs seem to have done more harm that good to water resource development by weakening potable water requirements and regulations in favor of land development. References: Arnold, Craig Anthony. Is Wet Growth Smarter than Smart Growth? The Fragmentation and Integration of Land Use and Water. Environmental Law Reporter, Vol. 35, No. 3 (2005): Bost, Richard. "What Is MSD?" Houston Geological Society, Vol. 47, No. 1 (2004): Flahive, Kevin. "Municipal Setting Designations: Are They a Balanced, Common Sense Approach to Urban Groundwater Remediation or a Market-Driven Abandonment of Contaminated Municipal Aquifers?" Texas Tech Journal of Texas Administrative Law 6 (2005): ction=journals 46 Arnold, Craig Anthony. Is Wet Growth Smarter than Smart Growth? The Fragmentation and Integration of Land Use and Water. Environmental Law Reporter, Vol. 35, No. 3 (2005): Arnold,10154.

14 Chilongo 14 Hardin, Garrett. "The Tragedy of the Commons." Science Magazine 162, no (1968): Morriss, James, and Matthew Knifton. "Municipal Setting Designations: A Sensible Alternative to the Costly Cleanup of Urban Groundwater." State Bar of Texas Environmental Law Review 34, no. 3 (2004): Ortolano, Leonard. Environmental Regulation and Impact Assessment, New York: John Wiley and Sons, 1997.Print. TCEQ. "Municipal Setting Designation." Texas Commission on Environmental Quality. October 17, TCEQ. "Municipal Setting Designation: A Guide for Cities." Texas Commission on Environmental Quality. February 1, Webb, Jenilee. "Recovery of Contaminated Urban Land through Municipal Setting Designations in Texas." University of Texas at Austin Thesis Report (2011)