Green Watch

Green Watch June 2012 Chesapeake Bay Foundation: A billion-dollar clean-up business makes its own mess

The Chesapeake Bay is the nation’s largest estuary, encompassing fresh water that flows from six states – Pennsylvania, Delaware, Maryland, Virginia, New York and West Virginia – and mixes with salt water from the Atlantic Ocean. The bay is roughly 200 miles long and up to 30 miles wide. It is estimated that more than 100,000 creeks, streams or rivers flow through its watershed and that as many as 17 million people live within the watershed and along the bay shoreline, earning their livelihood and enjoying recreational opportunities that the bay makes possible. “More than 500 million pounds of seafood is harvested from the bay every year,” the Chesapeake Bay Foundation (CBF) reports.

Because the “health” of the bay is so important, activities that may affect it are monitored by federal and state government agencies, universities and nonprofit groups, and business and civic associations. They conduct research, publish reports, and prepare scorecards to assess evidence of environmental degradation to the bay. CBF looks at the growth of underwater grasses, estimates the number of blue crabs, measures nitrogen pollution caused by agricultural runoffs, and undertakes many other activities to determine the bay’s health. It scores these multiple factors in its annual “State of the Bay” report. According to the report, a “saved bay” should have a score of at least 70. CBF scores Chesapeake Bay at somewhere between the high 20s to low 30s.

Each year Chesapeake Bay area residents and businesses heavily tax and regulate themselves to offset risks to the bay’s health. But CBF often finds their efforts are inadequate, and it engages in costly and time-consuming battles to prevent or overturn decisions regarding developments in and around the bay. CBF wages legal, legislative and public relations battles. Its opponents are private landowners and businesses as well as public agencies and local and state elected officials.

When necessary,” says the CBF website, “we use legal means to force compliance with existing laws. … CBF’s lawyers, scientists and environmental advocates help shape state and federal bay policies that protect and restore natural resources throughout the six-state Chesapeake Bay watershed.”

That’s no understatement. CBF board members, staff and partners are zealous protectors of the bay – and they don’t hesitate to file lawsuits or advocate legislation to enforce their own notions of environmental well-being, even if this thwarts local elected officials, infringes on private property rights, and limits community opportunities for economic development.

From Advocacy to Litigation

The Chesapeake Bay Foundation is a 501(c)(3) public charity. It has a dues-paying membership of 200,000, an operating budget of $22 million, and a staff of 160 who work out of four offices in Washington, D.C., Pennsylvania, Virginia and Maryland.

Well-trained and committed, CBF staffers readily pursue environmental litigation, working in partnerships with other environmental groups and against property owners and county governments that seek to develop public and private land to spur economic growth.

Consider the following recent examples. In November 2011, CBF joined the Audubon Society of Central Maryland and three dozen individuals to sue the Frederick County Board of Commissioners over a rezoning action that could open the way to building 17,000 new homes.

“This action flies in the face of the entire state’s efforts to reduce pollution to local streams and the Chesapeake Bay,” CBF’s Jon Mueller, vice president for litigation, wrote on a Nov. 15 press release. “With massive new proposed development such as this comes increased contaminated runoff. We cannot stand idly by if the board wishes to defy the law and the public interest.”

Also in November, CBF partnered with the Smarter Growth Alliance for Charles County (Maryland), a coalition of environmental groups that includes the Audubon Naturalist Society, the Sierra Club and the Bass Federation Nation. The coalition petitioned against further development of the Cross-County Connector, a planned highway intended to link heavily trafficked roads outside Washington, DC. The county sought to complete a six-mile road extension that would cross over Mattawoman Creek, a Chesapeake Bay tributary. CBF strenuously argued that the highway would endanger the creek’s stock of migratory fish, and its position was upheld when the Maryland Department of the Environment denied the county’s request for a permit to complete the road extension.

“This is huge,” said Terry Cummings, advocacy manager for CBF. “Without the permit, the highway can’t be built, hopefully ever. We are thrilled. This is a historic day for the citizens of Charles County and Maryland.” Cummings summed up his expansive interpretation of CBF’s mission when he concluded, “If we are going to save the bay, we must save her rivers and streams.”

Even when CBF’s attorneys lose, they continue the fight. In December 2011, the Northumberland County Board of Supervisors approved an 898-acre waterfront project for 530 homes, a resort hotel, spa, shops and restaurants on Virginia’s historic Northern Neck. CBF’s senior attorney had this to say:

“The Chesapeake Bay Foundation is very disappointed. CBF is committed to participating in all future stages of the project, including permit reviews before the Virginia Marine Resources Commission, Department of Environmental Quality, and others, to ensure the environment is protected to the maximum extent. We are reviewing all other options and will take action as appropriate.”

The message is clear: CBF opposes development and uses every legal step available to it to stop government agencies from issuing building permits.

And why not? “That’s their role,” said Glynn Rountree, an environmental policy analyst at the National Association for Homebuilders (NAHB) who also holds a degree in oceanography. “When I knew them in the 80s, they were very cooperative. They were not quite so pushy. Now, they’re not hesitant to bring a lawsuit.”

Must It Always Be the “Environment” vs. “Big Business”?

Rountree was commenting on a court battle pitting the homebuilders association and the American Farm Bureau Federation against the U.S. Environmental Protection Agency. The fight concerns the federal government’s authority to order private sector groups and state and local governments to restrict activities said to be responsible for environmental pollution.

The issues being litigated recently expanded when CBF joined the lawsuit along with a slew of environmental groups — the Defenders of Wildlife, National Wildlife Federation, Jefferson County Public Service District, Midshore Riverkeeper Conservancy, and a Pennsylvania citizens’ conservation group called Penn Future. They aligned themselves with EPA.

“We are pleased we can be part of defending the bay restoration effort and are confident that the court will uphold the public’s right to clean water,” said Chesapeake Bay Foundation president William Baker in an Oct. 13 statement.

Not all are cheering. Don Parrish, senior director for governmental relations for the American Farm Bureau Federation, had this to offer: “For agriculture,” he said, “it’s devastation.”

For decades residents along the Chesapeake Bay have had to deal with nitrogen, phosphorous and silt pollution, and the adverse impact it has on oyster, crab and fish populations. In 2010 EPA required the six states in the Bay watershed and the District of Columbia to develop and abide by a Total Maximum Daily Load (TMDL) plan. The overall goal of the plan, according to CBF, is “to reduce bay pollution by approximately 25 percent.”

So in January 2011, the American Farm Bureau Federation filed suit against EPA, arguing that the agency exceeded its authority under the Clean Water Act by requiring specific actions be taken to clean up the Bay. That’s for the states to decide, said a Farm Bureau statement: “EPA’s plan imposes specific pollutant allocations on activities such as farming and homebuilding, sometimes down to the level of individual farms. The Clean Water Act … requires a process that allows states to decide how to improve water quality and take into account the economic and social impacts on businesses and communities in the states.”

The Farm Bureau added that EPA relied on “inaccurate assumptions” and a “flawed scientific model” to formulate its TMDL levels, and failed to give the proper public notice for its new rules.

“Most states are doing TMDLs for the impaired water segments,” the Farm Bureau’s Parrish said. “But EPA was looking solely at the Maryland standards and implementing those through all the states. They are forcing this pollution diet into waters that already meet their standards … [using] data that comes from the Chesapeake Bay model. Models aren’t sound science.”

A better solution, said Parrish, would be for states and localities to decide the level of clean-up needed and to implement rules as required by law. “EPA has gone much further,” he warned. “Once you start allocating clean-up responsibility, you’re implementing policy.”

The dueling lawsuits deal with complex matters but the stakes are very high. The kinds of controls favored by EPA and CBF would impose heavy costs on farmers and homeowners—and tightly control how many more people could live or build in the watershed. Parrish cited one example: An estimated 50,000 homes in Arundel County, Maryland, would have to upgrade their septic systems to comply with the new mandates, at a cost of $30,000-to-$50,000 per structure. And new home developments would have to undergo a lengthy and expensive permitting process to prove that water infiltration levels post-development remained equal to water infiltration levels pre-development.

The Baltimore Sun (December 16, 2011) reported on the Chesapeake Bay “pollution diet.”

“The Watershed Implementation Plan is going to affect everybody,” said a spokesman for the Chesapeake Bay Program, which is a partnership of EPA, the District of Columbia, and the five states touching upon the bay. “The plan does affect how we use our land. [People] need to look at these and really be informed.”

What role does CBF play in the legal wrangling? “They’re advocating cleaning up the bay at all costs,” Parrish said. “They have asked to join the suit. … They always clothe themselves as if everything they do is great for the environment. I’m not saying we can’t do more for the watershed, but this approach, they’re just beating a drum for the farmers and developers and saying they don’t want to do anything to clean up the bay. That’s just going to cause more animosity.”

Parrish would seem to have a point. In a May 25, 2011 press release, William Baker, president of the Chesapeake Bay Foundation, explained his group’s decision to join EPA’s lawsuit. When push comes to shove CBF abandoned its pose of civil discourse:

“Just as the bay is making progress in its long fight to survive, these big money industry lobbyists are trying to derail the process. Why? A simple profit motive. They want the rest of us to suffer dirty and dangerous water so they can maximize their corn, hog and poultry profit.”

Money, Money, Money

If the farmers and homebuilders have “big money industry lobbyists,” then CBF must represents “the rest of us?” So who is CBF? CBF’s chairman is Simon Sidamon-Eristoff, senior counsel with the American Farmland Trust and former attorney at the Trust for Public Land, two nonprofits that aim to move private land into conservation easement. Other board members include vice-chairman Alan R. Griffith, former president of the Bank of New York Mellon; former Washington, D.C., mayor Anthony A. Williams, who now heads the state and municipal finance division with the law firm Arent Fox LLP; Alexis G. Sant, managing director of the private equity firm Persimmon Tree Capital; Maryland horseman H. Turney McKnight; S. Decker Anstrom, CEO of Landmark Communications, which owns The Weather Channel; former Virginia Republican congressman Thomas M. Davis III; and Charles W. Moorman, IV, CEO of Norfolk Southern.

Names like that know that Chesapeake Bay cleanup is big business. Maryland officials anticipate that during the next five years the state will need $7.5 billion just to meet its responsibilities. Other estimates put the final figure at $15 billion.

“The big issue,” the Baltimore Sun reports, “is how to pay for it all. A task force appointed by Gov. Martin O’Malley recommended tripling the $30 annual ‘flush fee’ paid by every household to cover costly upgrades of sewage treatment plants and help pay for similarly pricey retrofits of storm-water controls in existing communities.”

Never heard of a ‘flush tax?’ It’s been in place in Maryland for years – all due to Chesapeake Bay cleanup efforts.

“In 2004, state lawmakers enacted the flush tax, essentially a monthly fee on Maryland residents’ water and sewer bills, for the purpose of creating a trust fund for the Chesapeake Bay and the Atlantic coastal bays,” notes The Dispatch (Jan 27, 2012). “Revenue collected through the flush tax was dedicated to the cleanup of the bays through wastewater plant upgrades, cover crop funds, septic system upgrades and other projects.”

In Pennsylvania Gov. Tom Corbett has announced a $28 million award from state and federal government agencies to “upgrade a sewage treatment plant in Clinton County that will allow the plant to eliminate the discharge of partially treated sewage into a local stream as well as come into compliance with its Chesapeake Bay nutrient discharge requirements.” (PR Newswire, Jan. 25, 2012)

In Virginia, Gov. Bob McDonnell has called for new funding for bay preservation. “An additional $10 charge per land transaction to the state’s recordation tax will go to the Virginia Water Quality Improvement Fund for installation of agricultural conservation best management practices,” McDonnell said in a written statement in 2010. “For the coming biennium, that translates to $9 million a year.”

That’s in addition to the $627 million allocated from state coffers for wastewater treatment plant upgrades related to bay cleanup, and other legislative appropriations. In December 2011, Virginia’s two-year budget proposal included $45 million for sewage plant upgrades; $23 million for conservation planning for farmers; $5 million for water quality and stormwater runoff programs; and $1 million for oyster replenishment.

Even so, Chesapeake Bay conservationists complain.

“It’s questionable whether this budget will allow the commonwealth to meet the commitments Gov. McDonnell pledged to Virginians, EPA and the region just a year ago in his Chesapeake Bay watershed implementation plan,” said Ann Jennings, executive director for CBF-Virginia. “His budget leaves much doubt whether Virginia will be a full partner with localities and farmers in implementing the cleanup plan.”

All 50 States Pay to Save the Bay

Chesapeake Bay supporters also want more federal tax dollars:

* H.R. 258, the Chesapeake Bay Accountability and Recovery Act of 2011 (introduced by eight members of Congress: six from Virginia and one each from Maryland and Pennsylvania), redundantly would require EPA to develop and implement a management plan for bay restoration. It sets aside $1 million in tax dollars every year from 2012 to 2016.

* H.R. 1649, the Chesapeake Bay Gateways and Watertrails Network Continuing Authorization Act, would amend a 1998 law and “make permanent the authorization of appropriations” for this office. The Network is a project of the National Park Service that works with 172 nonprofit “partner” organizations.

“Over 11 years, Congress has appropriated $15.4 million for CBGN, with $10 million in financial assistance awarded directly to CBGN partners through matching grants,” according to the group’s website, “Each $1 of federal money awarded has been matched by $1.55 in non-federal funds.”

* Chesapeake Bay grantseekers receive funding from other federal agencies. The EPA has provided $2.1 million in grant dollars “as part of its Science to Achieve Results, or STAR, program …” to promote “community-based stormwater management” in the Chesapeake Bay watershed. The application period for those grants just closed. Fortunately for grantseekers the U.S. Department of Agriculture has announced a new $10 million grant for bay restoration. Up to $5 million will go for water quality credit trading in the watershed.

And that’s just a drop in the bucket of funding that goes to the Chesapeake Bay Foundation. And to the Chesapeake Bay Commission. And the Chesapeake Bay Restoration Fund. And the Chesapeake Bay Trust. And the Chesapeake Bay Funders Network. And the Chesapeake Bay Program.

Chesapeake Bay Foundation Funding

On its IRS Form 990 CBF reports 2009 gifts, grants, contributions and membership fees in excess of $28 million. That’s up from 2008 ($18 million), 2007 ($17 million), 2006 ($26 million) and 2005 ($24 million). CBF had total 2010 assets of more than $82 million. In every year from 2006-2009, it has reported spending $1 million on lobbying.

Some grants to CBF come directly from taxpayer funded federal agencies that already appropriate for bay clean-up causes. In its 2011 annual report, CBF says it received contributions of $100,000 or more from the Pennsylvania Department of Environmental Protection, the Pennsylvania Infrastructure Investment Authority, the U.S. EPA Chesapeake Bay Program, the U.S. EPA Region III, and the USDA Natural Resources Conservation Services.

Those revenues are only part of CBF’s financial picture.

CBF holds more than $39 million in endowments for the current year, down from nearly $43 million last year. The group holds 45 conservation easements totaling 7,417 acres. CBF also makes grants to other organizations. It awarded $320,000 to the Environmental Defense Fund, and gave $3 million to Red Barn Inc. (Lancaster, PA) and $5.3 million to Team Ag Inc. (Ephrata, PA) to implement best management practices on agricultural lands. Grants of $38,750 went to the World Resources Institute to develop nutrient neutral standards and $326,914 to Dann Marine Towing LC in Chesapeake City, Md., to promote clean diesel marine engines.

Interestingly, individuals affiliated with CBF have close financial ties to the nonprofit.

According to its 2009 IRS filings, CBF invests $1.06 million with the Winslow Green Growth Fund. CBF’s chief executive officer William Baker – and other key CBF trustees – serve on the board of directors for a company called Brown Advisory.

“Brown Advisory serves as the parent company and investment adviser of the Winslow Management Company LLC, which serves as the investment manager of the Winslow Green Growth Fund,” according to IRS filings.

Here’s another example: CBF invests $247,487 in JMI Equity Fund IV LP. CBF’s Baker and other CBF trustees serve on the board of directors for Brown Advisory, “which serves as the investment manager for JMI Equity Fund IV LP. Similar arrangements exist for a company called Accel VIII LP, which receives $47,602 of CBF’s investment dollars. Once again, Baker and other CBF trustees serve on the board for Brown Advisory, which is the investment manager for Accel. These business partnerships illustrate how CBF dealings are kept “in the family.”

Complex Clean-up

One might suppose all this money has accomplished its mission of restoring the Chesapeake Bay. Not yet. The clean-up process is complex, observes Glynn Rountree of the Homebuilders Association. When asked whether no government action is necessary to clean up the Bay and nature should be allowed to take its course, Rountree said “I don’t think anybody’s pushing for that. I don’t think that’s rational.”

But he added that CBF and like-minded advocates can do a better job of weighing costs against benefits. “We’re talking about hundreds of millions of dollars,” he said. “We have billions of dollars we’re spending at a time when all the states are broke. This is the worst time for a lawsuit … and most people [living in the watershed] are not even players in this. They are not even aware of what’s going on.”

Cheryl Chumley is an investigative reporter based in Washington, DC and a frequent contributor to Green Watch.