Anfield Session Week Report April 13-17

Utility Projects (CS/CS/HB 617 & CS/SB 1102)

Background: This bill creates an alternative method for financing the costs of certain utility projects using utility cost containment bonds. These bonds are issued by an “authority” (such as the Florida Governmental Utility Authority) on behalf of a local agency that owns and operates a publicly owned utility that provides public utility services, including water, wastewater, electric, or storm-water. The bonds may receive a lower interest rate because payment is secured by a pledge of the utility project. The primary utility project property is the utility project charge, which is imposed on customers, based on estimates of water, wastewater, electric, or storm-water service usage, to ensure timely payment of all financing costs with respect to utility cost containment bonds.

Proposed Changes: This bill would create an alternative method for funding public utility projects (specifically water and wastewater) through the issuance of utility cost containment bonds, which unlike regular bonds that are financed through utility revenues would instead be financed directly from utility customer charges. Because these bonds would be financed directly through a pledge of the project’s property (i.e. the utility charges), they would be subject to lower interest rates.

In order to obtain utility cost containment bonds, a local agency that owns and operates a public utility would need to apply to an intergovernmental public utility authority (whose membership must consist of at least three counties) for authorization to finance a utility project with proceeds from the bonds. The authority would then issue the bonds on behalf of the agency after adopting a financing resolution that the agency must abide by, as well as a set utility project charge, which each of the utility’s customers who are specified in the financing resolution would be required to pay regardless of whether they are receiving water, wastewater, electric, or storm-water services from an entity other than the publicly owned utility. The authority may require in the financing resolution that, in the event of default by the local agency or its publicly owned utility, the authority must order the sequestration and payment to the beneficiaries of the revenues arising from the utility project property.

Before applying for bonds, the agency would first need to determine, based on the best information available to its governing body, that the new rates resulting from the financing of the utility project with cost containment bonds will not be higher than the rates that would be charged if the project were financed with bonds payable directly from the revenues of the publicly owned utility.

The local agency must also specify the utility project to be financed by the cost containment bonds, as well as the maximum principal amount, the maximum interest rate, and the maximum stated terms of the utility cost containment bonds. An authority may issue utility cost containment bonds to finance or refinance utility projects; refinance debt of a local agency incurred in financing or refinancing utility projects, provided the refinancing results in present value savings to the local agency, or, with the approval of the local agency, refinance previously issued utility cost containment bonds. Should a local agency that has outstanding utility cost containment bonds cease to operate a water, wastewater, electric, or stormwater utility, these outstanding costs would automatically transfer to the successor entity. The successor entity would then have to assume and perform all the obligations of its predecessor and assume the servicing agreement while the utility cost containment bonds remain outstanding. They may not file for bankruptcy or pledge tax money for repayment of the bonds, nor can the authority alter, rescind, or amend any financing resolution. All the public utility’s property tied to the project must be pledged as security for the bonds. If the authority is financing the project through a single-purpose limited liability company, the bonds are payable from, and secured by, a pledge of amounts paid by the company to the authority from the applicable utility project property.

Currently, the Florida Governmental Utility Authority is the only intergovernmental authority that currently meets the criteria to provide financing under the bill.

Update: On Monday, the (S) Finance & Tax Committee passed CS/SB 1102withoutamendment. An amendment was proposed, to expand the authority to utilize this financing mechanism to all utilities, and the amendment received substantial discussion, but it was withdrawn. CS/SB 1102 will next be taken up in (S) Appropriations, its last committee of reference. CS/CS/HB 617 is currently on the House Special Order Calendar.

Environmental Control (CS/SB 714 & CS/CS/HB 653)

Overview: This bill makes changes to three areas of environmental policy: water quality credit trading, variances, and the Solid Waste Management Trust Fund.

Water Quality Trading

Background: One strategy recommended by the DEP for the overall reduction of nutrient loads required in order to meet a basin management action plan’s Total Maximum Daily Load (TDML) is the distribution of water quality credits. Water quality credit trading (WQCT) is basically the practice of issuing credits to regulated facilities, growers, and other entities who implement certain best management practices (BMPs) that exceed the requirements stipulated in their permits, thus improving the overall water quality for the basin as a whole. These water quality credits can then be sold to other permit holders who may not have the means or funds to implement their own BMPs or install their own pollution control measures. Under current statute and Rule 62-306.400(3)(b), F.A.C., the following activities can be used to generate credits:

  • Installing or modifying water pollution control equipment.
  • Making operational changes, modifications of a process or process equipment that reduces the quantity of nutrient rich water discharged.
  • Implementing structural nonpoint source management controls.
  • Installing, operating, and maintaining drainage projects designed to control storm water as part of city or county drainage improvements.
  • Using similar pollution controls or management practices with a demonstrated ability to reduce the load of nutrients discharged.

Land set-asides and land use modifications are not currently listed. Furthermore, rule 62-306.400(3)(b), F.A.C., specifically states that land use changes may not be eligible to generate credits unless the change results in post development pollutant loading being equal to or less than loading under natural conditions for the property.

Proposed Changes: This bill would amend statute to allow land set-asides and land use modifications, including constructed wetlands or other water quality improvement projects, to be used as activities that are eligible to generate water quality trading credits. These land set-asides and land use modifications must reduce nutrient loads into nutrient impaired surface waters in order to generate water quality credits.

Only land set asides and land use modifications not already required by state law or permit requirements may be used to generate water quality credits.

This change may require amendment of Rule 62-306.400, F.A.C.

Variances

Background: Under current law,the DEP my grant variances to land users and facilities for conditions that they cannot mitigate against within the time frame required by the rules and regulations of the Florida Air and Water Pollution Act, either due to the cost or infeasibility of implementing such pollution control measures. Such variances can apply to criteria such as anti-degradation requirements, water quality criteria, and mixing zones.

No variance can be granted if it would result in regulations that are less stringent than those employed at the federal level. The one exception is research, development, and demonstration permits for solid or hazardous waste facilities.

Proposed Changes: This bill would amend the statute under which variances are granted to specify that there is nothing in that section that prevents the issuance of moderating provisions under state law. The sole exception would be moderating provisions that result in permitting conditions that are less stringent than those required by federal law. The bills also clarify that all other moderating provisions would still bound by federal law and subject to EPA approval and disapproval.

Solid Waste Management Trust Fund

Background: Throughout the state of Florida there are numerous landfills and permanent solid waste disposal facilities. In order to close a landfill, an owner must first obtain a closure permit from the DEP, the conditions of which require the owners to install stormwater systems and other measures to prevent seepage, as well as plan to maintain long-term care for the landfill for a period of 30 years. This includes monitoring ground water and gas, maintaining the final cover, and maintaining the storm-water system.

DEP has identified no less than 5 landfills in the state whose owners have been unable to close or who have abandoned the site, even though proof of insurance was provided for the facilities in question. These sites present an immediate hazard to the local environment and water supply, and the DEP does not have a legal mechanism in place to access the insurance money to pay third party contractors to perform closure and long-term care activities.

Proposed Changes: This bill would create a landfill closure account within the Solid Waste Management Trust Fund(SWMTF) in order to provide funding for the closing and long-term care of solid waste management facilities. DEP may use funds from the account to contract with a third party to pay for the closing and long-term care of a solid waste management facility if:

  • The facility has or had a DEP permit to operate the facility.
  • The permittee provided proof of financial assurance for closure in the form of an insurance certificate.
  • The facility is deemed to be abandoned or has been ordered to close by DEP.
  • Closure is accomplished in substantial accordance with a closure plan approved by DEP.
  • DEP has written documentation that the insurance company issuing the closure insurance policy will provide or reimburse the funds required to complete closing and long-term care of the facility.

Once all these conditions are met, DEP would then be able to appropriate funds from the SWMTF Landfill Closure Account in order to contract with a third-party to close and maintain the facility. DEP would then receive reimbursement funds from insurers, which in turn would go back into the landfill closure account for future projects. The House Ver. allocates $2,339,764 from the Solid Waste Management Trust Fund to the DEP for closing the sites.

CUPs (House Version Only)

Background: Consumptive Use Permits (CUPs) are the set amounts of water allocated to agricultural growers and other users by the WMDs. Best management practices adopted by water users can conserve water, but concerns have been raised that such conservation could result in permits being reopened and allocations being reduced.

Proposed Changes: This bill would prohibit the reduction of permitted allocations during the life of a permit where water use has been reduced as a result of documented water conservation measures including the adoption of BMPs.

Harris Chain of Lakes Restoration Council (Senate Version Only)

Background: The Harris Chain of Lakes Restoration Council was created in 2001, consists of nine voting members, and is charged with overseeing and reviewing the restoration of the Harris Chain of Lakes to state were sport fishing may become a viable and lucrative activity.

Proposed Changes: This bill would allow a person experienced in environmental science or regulation, not necessarily an engineer, to serve on the Harris Chain of Lakes Restoration Council. It also provides that if a member resigns or does not attend three consecutive meetings, theirseat is automatically vacant.

Update:On Tuesday, the (S) Appropriations Subcommittee on General Government passed CS/SB 714 after adopting one amendment. The amendment adds the CUP section already contained in C2/HB 653 (described above) as well as a $2,339,764 allocation from the Solid Waste Management Trust Fund for closing abandoned landfills.

That same day, a strike-all was adopted for CS2/HB 653. The strike-all makes the following changes:

  • Renames and designates certain special offices within the DEP
  • Provides that for agricultural CUP permits, a WMD may not reduce the allocated amount of water during the permit’s term due to a reduction of water use from weather events, crop diseases, nursery stock availability, market conditions, or changes in crop type.
  • Adds section concerning the Harris Chain of Lakes Restoration Council (Described above)
  • Require WMDs to promote expanded cost-share criteria for additional water conservation practices and technologies, as well as technologies that provide water use information to utility customers.
  • Provides that rate of reclamation requirements do not apply to constructed clay settling areas where its beneficial use has been extended.
  • Provides that a landfill gas-to-energy system or facility does not count as a resource recovery facility

CS2/SB 714 will next go before (S) Appropriations. CS3/HB 653 will be placed on the Special Order Calendar.

Petroleum Restoration Program (CS/CS/SB 314 & CS/HB 733)

Background:Since 1983, the DEP has been in charge of regulating aboveground and belowground storage tanks for petroleum products. Of particular concern are tanks that have been abandoned or are out of service; such tanks sometimes leak into the surrounding strata and pose a risk to groundwater. In 1986, the Legislature passed the State Underground Petroleum Environmental Response (SUPER) Act. One program created under SUPER was the Early Detection Incentive Program (EDI), which allowed owners of abandoned tank sites the option of either performing site cleanup themselves and then receiving reimbursement from the DEP’s Inland Protection Trust Fund (IPTF), or of having the state perform the cleanup themselves in priority order. The financial costs attached to this program quickly skyrocketed past what had been originally projected, and in response the Legislature has shifted emphasis towards funding pre-approved cleanups, with priority placed on those contaminated sites identified before 1995, and with spending limited to what is within the confines of the program’s funding.

The Preapproved Advanced Cleanup Program (ACP) was also created, allowing owners of critically contaminated sites who did not take advantage of the EDI program before 1995 to bypass the priority ranking list and receive funding in order to facilitate a timely rehabilitation. Participants in this program are required to share at least 25% of the cost of rehabilitation and prepare limited scope assessments at their own expense. Applications are submitted to the DEP twice a year (between May 1 and June 30 and between November 1 and December 31). The applications are ranked based on the percentage of cost- sharing commitment proposed by the applicant, with the highest ranking given to the applicant that proposes the highest percentage of its share of costs. Different projects at different sites may also be bundled for greater cost effectiveness.

Two other programs affected by this bill are the Abandoned Tanks Restoration Program (ATRP) and the Petroleum Clean-up Participation Program (PCPP).

The Abandoned Tanks Restoration Program (ATRP) was created 1990. In order to be eligible for the ATRP, applicants must certify that the petroleum system has not stored petroleum products for consumption, use, or sale since March 1, 1990. They must also have filed a claim before June, 1996.

The Petroleum Cleanup Participation Program (PCPP) was created in 1996 for sites that had missed the opportunity for state funding assistance but had reported contamination before 1995. Responsible parties in the PCPP cost share in the cleanup and prepare a limited scope assessment at their expense. Sites that qualify for this program are eligible for $400,000 in rehabilitation funding and the owner, operator, or responsible party is required to pay 25 percent of the costs.

Proposed Changes: CS/CS/SB 314 would enact the following changes in regards to the SUPER Act:

  • Expand eligibility for the Abandoned Tanks Restoration Program (ATRP).
  • Remove a current requirement that applications for the Abandoned Tanks Restoration Program (ATRP) must have been filed before June 30, 1996.
  • Provide that a government entity must have the consent of the property owner in order to perform risk-based corrective actions, or to perform rehabilitation that would require a conditional site closure or closure with institutional/engineering controls that would necessitate deed restrictions or work stoppages.
  • Increase the amount the DEP may approve for developing an assessment plan per site from $30,000 to $35,000.
  • Extend the period for assessment and low-level remediation from 6 to 9 months. The DEP may authorize an additional 6 months if additional groundwater monitoring and remediation is required.
  • Increase the annual allocation for Advanced Cleanup contracts from $15 million to $25 million.
  • Provide that the issuance of a site rehabilitation order does not automatically constitute a contamination that is a danger to public health, the environments, or water resources, unless the DEP rules otherwise, and that in the later case the presence of a harmful contamination does not alter a site’s eligibility for state funded rehabilitation.
  • Reduce the minimum number of sites that a facility owner or operator or other responsible party must bundle in order to be eligible for performance-based contracts under Advanced Cleanup from 20 to 10.
  • Provide that a property owner or responsible party may enter into a cost-sharing agreement if the owner commits to bundle multiple sites and agree to list future sites to be included in those future bundles.

CS/HB 733, more limited in scope, would only do the following: