CABS Comments on PA DEP Draft Phase 3 WIP

June 5, 2019

The Coalition for Affordable Bay Solutions (CABS) is a non-profit advocacy group formed to support the creation of a competitively-bid procurement program for nutrient (nitrogen and phosphorus) reductions in Pennsylvania. It has focused on enabling low cost solutions to address both local drinking water and Chesapeake Bay water quality. CABS believes the overriding principle to solving the local and Bay water quality issues is a competitive bidding program open to all sources both public and private that will direct funding to the lowest cost solutions with local water quality improvements being valued as part of the award process. Senate Bill 575 is under consideration to effect such a program.

PADEP DRAFT Phase 3 Watershed Implementation Plan (WIP) – CABS Comments

The WIP continues to ignore the lowest cost alternatives available to taxpayers to meet local water quality and Chesapeake Bay targets. It continues to recommend solutions focused on runoff to capture solids when the far greater nutrient issue and cost driver for Pennsylvania taxpayers is volatile nitrogen in both dissolved and gas forms. As much as 70% of the nitrogen from livestock manure is subject to natural transformation to reactive water soluble ammonium or volatile gaseous ammonia both of which are extremely mobile once released into the environment and therefore extremely expensive to capture and treat.

Taxpayers and manure treatment technology (MTT) providers have not been adequately represented in the WIP stakeholders group. MTT systems are the low cost best management practice (BMP), yet they are absent from the WIP recommendations for achieving nitrogen load reductions. The WIP proposes to increase Pennsylvania taxpayer funding from $229M to $486M or by $257M annually for 6 years. This is a huge increase in taxpayer spending but it does not meet the basic test for spending taxpayer funds: Does it meet the end goal, are the recommended solutions cost effective, and have more cost effective alternatives been considered?

The WIP continues to diverge from its primary mission – to meet the nutrient reduction targets at the lowest possible cost to taxpayers. A major focus of the WIP is to improve soil health. That is a worthwhile undertaking but it is not subject to the same schedule and funding considerations as the federal mandate to reduce nitrogen loading to the Chesapeake Bay. The potential for litigation by the EPA, Maryland and other stakeholders will be based upon the fact that Pennsylvania failed to meet its nitrogen reduction targets as per their agreement; not that it failed to improve soil health.

A study by the Pennsylvania legislature concluded that MTT solutions are up to 90% less expensive than landscape BMP’s relied upon by the WIP. Consistent with this conclusion, proposed legislation enables private sector MTT project development while requiring the private sector to finance the cost of installing these systems and that their compensation be solely for the quantity of Pennsylvania Department of Environmental Protection (DEP) certified verified nitrogen reductions that their installations generate. In essence, the private sector will finance the solutions and assume all nutrient reduction performance risk. In contrast, the WIP proposed BMP’s are taxpayer funded and continue to place the performance risk on the taxpayers.

The WIP states that the excess nitrogen in Lancaster and Franklin counties are 17.2 million lbs and 5.9 million lbs respectively or a total 23.1 million lbs. The WIP projects that the total nitrogen reduction potential for manure transport and MTT combined are 1.2 million pounds annually absent any documentation to support this projection. The sponsors of existing MTT projects with DEP-certified nitrogen reduction processes have publicly projected that two projects will reduce in excess of 10 million lbs of nitrogen onsite. In fact, these two projects alone represent a larger volume of nitrogen reductions onsite than any individual BMP proposed in the WIP.

Why are Manure Treatment Technology projects so much more efficient than BMP’s?

•   MTT’s are designed to capture and treat both organic nitrogen and volatile nitrogen compounds prior to their release into the environment while BMP’s attempt to capture nitrogen after it has been released into the environment.
•   Volatile nitrogen either in gaseous or soluble form is extremely expensive to capture and treat once it’s released into the environment.
•   MTT’s focus on large-scale livestock producers, capturing efficiencies of scale.
•   MTT projects are private sector financed and therefore represent a riskless transaction to the taxpayer. These projects will only be paid for the actual verified nutrient reductions that are certified by the Pennsylvania DEP.
•   MTT projects not only capture and treat nutrients but also generate renewable energy; reduce greenhouse gases; destroy pathogens; generate fertilizer co-products; generate water for reuse; reduce air impacts and virtually eliminate odor. These MTT environmental benefits positively impact not only the local environment but also quality of life and public health in the local community.

The WIP projects local agricultural nitrogen reductions at an overall projected cost of $67 per lb ($313M *6 years /28M lbs of N) and that does not include the forest riparian buffer per lb projected costs of $52 ($67M*6 years /7.7M lbs of N) while MTT projected cost is less than $4 per lb. The WIP projection is a best case scenario since the economic costs of any failure including climate change impacts to the modeled BMP reduction targets will be borne by the taxpayer. On the other hand, the MTT projection is a worst case scenario since costs to taxpayer are contractual and, through competition and the adoption of science-based policies to fully recognize nutrient reduction benefits, verified nutrient reductions can be increased, lowering the unit cost of reductions.

Transition Agriculture

Another CABS sponsored low cost alternative solution to livestock waste impacts is transition agriculture (TA) which holds enormous promise for agriculture, local fresh water resources, the Chesapeake Bay and Pennsylvania taxpayers. TA is a voluntary approach that will enable small livestock operators to generate verified nutrient reductions by voluntarily adopting lower impact agricultural activities. This could take many forms such as transitioning from traditional milk production to grass fed milk; transitioning from either dairy or hog production to raising beef cattle; or from livestock production to either row crops or organic row cropping. CABS proposes to incorporate TA as a BMP that could participate in the competitive bidding award. In essence, the competitive bidding program becomes an aggregator providing the taxpayer with a market based cost effective solution that also enables small livestock producers to capture the full economic value of their nutrient reductions.

CABS believes that the use of taxpayer funded programs to mitigate livestock environmental impacts should include enabling the producer to decide which approach is in the best interests of his/her family based upon the fact that the cost to taxpayers is equivalent. Presently, no such revenue source exists to sufficiently offset the transition costs to higher value lower environmental impact agricultural activities. TA revenue from selling verified nutrient credits would provide a long term revenue stream to fund these transition costs.

Lastly, CABS believes that the adoption of a competitive bidding program to enable MTT projects and TA will be viewed as “innovative” programs by federal EPA and USDA and be supported with federal cost share funding.
In conclusion, CABS believes that the solution to the Bay mandate and local drinking water issues lies in 21st century technology adoption and new policy based upon current science and evolving market conditions. CABS is confident that the combination of Manure Treatment Technology adoption and Transition Agriculture will significantly contribute to environmental sustainability that is economically sustainable.

We respectfully ask that our proposals be adopted in the WIP for the benefit of all stakeholders.