Feds seek Champlain cleanup cuts; state pushes back: EPA chief, Vermonters at odds over who pays $2B price tag

Story by John Flowers, Gaen Murphree, Will DiGravio and John S. McCright
VERMONT — Strides have been made toward cleaning up Lake Champlain since the Vermont Legislature two years ago passed Act 64, the Vermont Clean Water Act, and the U.S. Environmental Protection Agency released its Lake Champlain phosphorus-reduction targets last summer.
Steps taken have ranged from issuing new agricultural best-practice rules to curtailing phosphorus runoff into rivers and the lake; to the repairing of roadsides, which similarly reduces erosion; to taking the first steps in reducing spillage of sewage and road salts into Vermont waters.
But some fear the effort to clean Lake Champlain of cyanobacteria (blue-green algae) and other toxins and preserve its waters for recreation, drinking, tourism and natural beauty could be hampered by a change in administration at the federal level.
The cost of this huge undertaking is estimated at $2.3 billion over the next 20 years. For the current fiscal year, the EPA allocated nearly $4.4 million toward the Lake Champlain cleanup. But in its proposed FY 2018 budget the EPA looks to reduce its overall spending by 30 percent and essentially zero out spending on Lake Champlain water quality improvements.
“The EPA will encourage New York and Vermont to continue to make progress in restoring Lake Champlain from within core water programs,” reads the proposed 2018 budget for the EPA, under the direction of Administrator Scott Pruitt. “This funding change eliminates the Lake Champlain program. This change returns the responsibility for funding local environmental efforts and programs to state and local entities.”
The budget, released in May, also reduces funding to other geographically specific cleanup projects in the Gulf of Mexico, Chesapeake Bay and Puget Sound.
Does this mean that the huge effort Vermonters have made to start restoration of Lake Champlain and to improve water quality generally will fall by the wayside? How will Vermont pay for this?
The answers vary. No doubt, programs are well underway toward the cleanup goal (see story on Page 1A). But the Lewis Creek Association, for one, is preparing for less federal money to help it achieve its mission.
The association, which is devoted to restoring this Lake Champlain tributary that flows through northern Addison County, has relied on federal funding to pay a significant amount of the costs of many projects. One of these is a rain garden at Shelburne Community School that filters stormwater from the school roof and parking lot before it enters the nearby McCabe’s Brook. Funding from government sources currently makes up about 75 percent of LCA’s budget in a given year, with federal funding contributing to a third of that.
“Needless to say, we are working toward a large shift in our income from government to private sources to make up for unknown government funding down the road,” said LCA Program Coordinator Krista Hoffsis.
When considering the massive cleanup of Lake Champlain it has long been hoped that the federal government would provide the largest share of funds — some in direct spending but more by targeting money through state agencies. Of the federal sources, the EPA is probably the largest, but some funds also come to Vermont through the National Oceanic and Atmospheric Administration’s National Sea Grant Program.
In order to become law, Scott Pruitt’s EPA budget proposal must first pass the Appropriations Committees in both the U.S. House of Representatives and the U.S. Senate. Each of these committees will review the budget proposal, make changes or “markup” the proposal and then adopt an appropriations bill.
Once the House and Senate each approve their own version of the bill, the two bodies will then enter into conference to write a final version. Once this final appropriations bill is drafted, both chambers must pass it, and the president must sign it, before it becomes law.
On July 18, the House Appropriations Committee passed an initial appropriations bill that eliminated funding for the Lake Champlain basin program. As of press time, the Senate Appropriations Committee has yet to adopt an appropriations bill of its own.
Though nothing is certain, Vermonters have reason to believe the Senate Appropriations Committee will adopt a bill that funds the Lake Champlain Project; that’s because the committee’s vice chairman is Sen. Patrick Leahy, D-Vt.
As vice chairman of the committee and the Senate’s most senior member, Leahy has and will continue to play a leading role in the negotiation of the EPA’s 2018 budget. He and his office are committed to ensuring that the project is funded.
“Presidents of both parties have supported funding for Lake Champlain ever since we passed legislation in 1991 to establish the Lake Champlain Special Designation Act. The Trump Administration’s call to eliminate these investments is a travesty,” Leahy told the Independent. “It should not stand, it must not stand, and I will do all I can on the Appropriations Committee to protect Vermont and Vermonters from the Trump administration’s attacks on the environment and from this war on science.”
The deep cuts the Trump administration has proposed to federal agencies, including the EPA, have been met with some bipartisan opposition.
“Sen. Leahy has been working on both sides of the aisle against these deep cuts in EPA and other science agencies, as well as other parts of the Trump budget. Much of what the president has proposed in slashing these science agencies will not stand in Congress,” Leahy Press Secretary David Carle told the Independent. “But, of course, we’re early in the process.”
Last November, after the presidential election, Leahy announced that he would vacate his position as the ranking member of the Senate Judiciary Committee, a committee he had chaired intermittently for a decade, for the vice chairmanship of Appropriations. It is clear that Leahy’s decision to do so was, in part, in anticipation of these proposed cuts.
“My ongoing efforts range from economic development in Vermont and rebuilding our country’s infrastructure, to protecting Lake Champlain, fighting efforts to roll back protections of our air, water and public lands, and pressing forward with action on climate change,” Leahy said at the time. “I am determined to give Vermonters a front-and-center seat as budget and policy priorities are decided. Right now, at this unusual time, with these results, the best way for me to amplify Vermonters’ voices is as the Ranking Member of the Appropriations Committee.”
The EPA set the “Total Daily Maximum Load” or TMDL, thresholds for Lake Champlain last year. The TMDL identifies the maximum amount of a pollutant that a body of water can receive while still meeting water quality standards. Authorities aim to clean the lake by ensuring that farms, roads, sewers and other sources of contaminants send less than the TMDL of phosphorus into Lake Champlain and its tributaries.
At present, the EPA’s day-to-day role in the Lake Champlain project is minimal compared to the state’s, since Vermont has assumed jurisdiction over the program. The EPA reviews annual progress reports submitted by the state and regularly checks on its progress. Emily Bender is a spokesperson from the EPA’s Region 1 office in Boston, which oversees all Vermont operations. She said the EPA issued its first interim report card on the state’s progress this past February, which said the state had made “very good progress overall.” A final report card on the first two years of the project will be issued in 2018.
“EPA has several Region 1 Office staff working on TMDL implementation and overseeing the state’s progress right now, and we cannot speculate what will happen with the future budget,” Bender wrote in an email to the Independent.
However, many in Washington and Vermont are worried that the agency will no longer be a partner in ensuring that the project is completed, even if funding for the cleanup is secured.
“Another major concern is the ability of the EPA to even function as an agency — and deliver resources and regulatory programs across the board in Vermont and everywhere else — because it is threatened by an administration that proposes to cut the budget across the board by more than 30 percent,” Tom Berry, Leahy’s agriculture and natural resources adviser, told the Independent.
The fear is not that the EPA will take action to impede the project, rather that proposed cuts to the agency’s staff and operating budget will hinder their ability to be a resource for the state.
“The concern is more with the capacity of the EPA to be a partner than it is with undermining the regulatory framework within which we all operate,” Berry said.
According to Berry, there are rumors currently circulating around Washington that the EPA is taking a serious look at closing regional offices. The rumors are focused most intensely on their offices in Chicago and Boston.
“That has not been confirmed in a really strong way, but it is part of what is a fairly up-front intent by the administration to very, very significantly reduce the capacity of the EPA to deliver their programs,” Berry said.
According to the EPA’s Bender, the goals have remained the same and the EPA remains committed to the project.
“EPA remains committed to cleaning up America’s waters, as laid out in the Clean Water Act. In the case of Lake Champlain, we plan to continue our partnership with Vermont to restore the lake,” she wrote.
In addition to the EPA, the Trump Administration has also proposed cuts to NOAA’s National Sea Grant Program. Established in 1966, the program funds research at universities to address specific environmental problems. Lake Champlain has been a part of the program since Sen. Leahy first secured the funding in 1998. Since then, funding has gone to institutions throughout the state, including the University of Vermont.
On July 27, the Senate Appropriations Committee adopted an appropriations bill that, if passed by Congress as a whole, would reinstate funding for the Sea Grant Program. The House Appropriations Committee also reinstated funding for the program.
“This bill makes meaningful investments in the lives of Vermonters and in communities across the country by rejecting the misguided and unbalanced priorities outlined in the Trump Budget,” Leahy said in a statement. “These are the investments we should be making in Vermont and in the American people and their communities. But we can — and should — be doing more, and I look forward to continuing to fight for Vermonters on the Senate Appropriations Committee.”
But it’s not just EPA and NOAA funding that helps pay for Lake Champlain cleanup. The Vermont Department of Environmental Conservation (DEC) and Agency of Transportation (VTrans) both provide money to municipalities for water quality projects.
VTrans funding for municipal water quality-related projects is a mix of state and federal funds, according to Michele Boomhower, VTrans director of the Policy, Planning and Intermodal Development Division. While about half is from the Federal Highway Administration, Boomhower said this money is not at risk.
“These funds have been authorized through the five-year Federal Transportation Bill and are appropriated on an annual basis by Congress,” she told the Independent.
“Our risk review does not reveal any concerns regarding the availability of these funds.”
But on the DEC side of things, the budget impact of changes in federal spending could be significant. Three of the DEC’s four programs are entirely Vermont funded, but the $87 million Clean Water State Revolving Loan Fund — DEC’s largest chunk of change by far — is mostly federal dollars.
“For every five dollars of federal money we draw down, we need to put in one dollar of state money,” said ANR Secretary Julie Moore, explaining the matching funds ratio.
For Moore, a far larger concern is DEC staff.
Close to a third of the DEC’s 308 employees are funded through federal money. And among the many assaults on the EPA in President Trump’s proposed budget are cuts that could result in 30 fewer employees working on water quality at Vermont’s DEC.
“Frankly, in terms of our clean water work, where the agency faces the greatest risk is in terms of our staff,” said Moore. “About a third of the agency’s budget is federal. And what that translates to is we receive a state-assistance grant from the EPA to implement our core environmental programs, including the Clean Water Act.
“In the President’s budget, he proposed to reduce the state assistance grant by as much as, I believe, 30 percent and that grant pays for approximately 100 FTEs (full-time-equivalent personnel) here at the agency.
“So it could have a significant effect if it were to come to pass … If there are cuts to those state assistance grants, the place they will be felt most is in our ability to staff all these programs.”
Moore remains optimistic, however, because thus far it seems unlikely that the President’s budget as submitted will come to pass.
“Our sense in everything we’ve heard from the congressional delegation is that (President Trump’s proposed) budget is not a starting place for the conversation,” she said.
Moore also noted that if, as some are suggesting, Congress passes another continuing resolution to fund the federal budget (as it did for this year) that would extend current funding levels for another year. The federal fiscal year begins Oct. 1.
Beyond DEC dollars and manpower, Moore noted that damage to the EPA will inflict collateral damage on states, in any number of ways. She is concerned for the EPA’s role as a critical partner in Vermont’s work to provide clean water, clean air and a clean environment to its citizens.
“There are innumerable places that our work intersects,” said Moore. “The EPA is an important partner in a lot of our work, both directly and indirectly.”
She also expressed concern for the EPA itself. ANR has heard that the EPA is looking to reduce its workforce by as many as 1,500 positions nationwide through attrition and retirements, Moore said. She said this would be ineffective because job cuts would not be strategic, and morale would suffer.
“Everything I’ve heard is that it’s an incredibly difficult time to be an EPA employee,” Moore said.
Vermont began preparing a TMDL for Lake Champlain during the late 1990s, when it was recognized that the body of water didn’t meet federal Clean Water Act water quality standards. The Environmental Protection Agency approved Vermont’s proposed Lake Champlain TMDL in 2002.
But the Conservation Law Foundation sued the EPA in 2008, claiming the agency’s 2002 approval of the TMDL was “arbitrary, capricious and not in accordance” with law under the Clean Water Act. Essentially, the foundation argued the TMDL was flawed and not strong enough to comply with Clean Water Act standards.
After considerable litigation and negotiations, the EPA withdrew its 2002 approval of Vermont’s TMDL and pressed for development of a new TMDL, relating particularly to phosphorous runoff into Lake Champlain.
State and federal officials negotiated a new TMDL for Lake Champlain in 2015 and the EPA set the TMDL phosphorus limits in June 2016. While Lake Champlain is by far the state’s largest body of water, it is not the only one being scrutinized under the state’s Clean Water Initiative, a massive cleanup effort expected to take around 20 years and cost around $2.6 billion, according to state officials. A combined total of 11 other TMDL plans are being developed for other waterways in the state.
That includes three spots in Addison County: Middlebury River and part of Otter Creek in Middlebury because of bacteria, and Otter Creek below Vergennes because of sewer overflows.
While state leaders in Vermont agree that clean water is of paramount importance, what Legislators and the administration of Gov. Phil Scott are likely to differ on is how Vermont will pay for its share of the water quality improvements — all of which will have an impact on farms, wastewater treatment plants, businesses and rank-and-file Vermonters.
State Treasurer Beth Pearce got the discussion going this past January when she submitted her “Clean Water Report” to the Legislature. That report assesses potential cleanup costs and pitches 65 possible revenue sources for the state’s share of the Clean Water Initiative, including an excise tax on pesticides, a gas tax, a $50 annual flat fee per parcel, and/or a sales tax on auto repairs.
A complete menu of the potential revenue sources can be found online by clicking here: tinyurl.com/y9r8dgd9.
Pearce was candid in her portrayal of the financial challenge facing the state. She said Vermont is on pace to receive a total of around $1.06 billion in federal revenues for its clean water mandates during the next two decades, with the total cost estimated at $2.3 billion. That leaves a 20-year gap of $1.25 billion the state will have to find to fulfill its cleanup obligations.
Put another way, Vermont will have to come up with $55 million per year for the next 20 years to comply with the Clean Water Initiative.
To dig deeper into the question of lake cleanup funding, the Legislature last session established the “Act 73 Working Group on Water Quality Funding,” tasked with drafting legislation “to establish equitable and effective long-term funding methods to support clean water efforts in Vermont.” The working group’s recommendations are due to the General Assembly by Nov. 15.
With Pearce’s $55 million-per-year price tag in mind, Sen. Chris Bray, D-New Haven will be looking for the task force to offer some concrete proposals. Bray is chairman of the Senate Natural Resources & Energy Committee.
“We didn’t tell the task force that we wanted a report,” Bray said. “We said, ‘Let’s get right to the work at hand. Come to the Legislature with draft legislation that establishes equitable and effective long-term funding methods to support clean water efforts in Vermont.’ It will be interesting to see what they come back with.”
Fortunately, Vermont is off to a decent start in covering the first two of the 20 years of cleanup.
Treasurer Pearce has recommended the state earmark $25 million in unused bonding capacity to help bridge the funding gap for cleanup for fiscal years 2018 and 2019. That will still leave the Legislature a combined $54.8 million to make up for those two years, Bray noted. Lawmakers will need to adjust the fiscal year 2018 budget and craft a fiscal year 2019 budget beginning next January.
“It’s only two years and only half the total number of dollars we identified we needed to spend,” Bray said.
He made these and other concerns known to the task force through a July 17 letter.
“Are we putting off that $54.8 million?” Bray said. “Are we going to try to find it another way? And then for years three and on, we don’t have that (bonded) money any more — or at least we don’t have that much. What’s the plan going forward?”
The Senate Finance Committee will take the lead in devising funding scenarios for the cleanup plan, according to Bray. That will happen after several other legislative committees — including agriculture, natural resources and energy, and transportation — have taken their turns shaping the legislation.
“My goal is to make sure we can say with confidence that we know we are asking Vermonters to spend money in a well-designed and effective program,” Bray said.
That program will, of course, have to pass muster with federal authorities. And Bray said Vermont is fortunate to have been able to have significant input in its quest to meet the TMDL standards.
“Vermont has taken a more comprehensive approach that has a lot more details that are very specific to Vermont’s terrain and how Vermonters live on the land,” Bray said, citing measures to specifically address pollution emanating from farms, roads, sewer plants, businesses and other sources.
“I think it’s good that we have a TMDL that’s tailored to Vermont and that the state maintains its responsibility for implementing the plan.”
Vermont would find far less palatable a one-size-fits-all approach from Washington.
“The federal government looks at water quality through a more narrow window,” Bray said.
Absent an approved TMDL on Vermont’s terms, Bray said the federal government could have taken action on Vermont through:
•  More rigorous permitting standards for the state’s wastewater treatment plants.
•  A requirement that farmers obtain water quality permits, technically referred to as “National Pollutant Discharge Elimination Permits.”
•  Municipal water quality projects for storm water runoff.
Under the current scenario, the feds share authorship of the TMDL and the consequences if it doesn’t work out.
“Because the EPA wrote (the TMDL) with Vermont, the EPA owns the Lake Champlain TMDL,” Bray said. “If there’s a failure to perform, complaints would be made to the EPA, and it would be up to the EPA to take steps to ensure we were meeting the terms of the TMDL.”
Bray and other state officials are wondering how far the EPA will be able to press enforcement of the cleanup plan given the Trump administration’s stated desire to gut the agency’s resources.
“Under the current (Trump) administration … they seem much less inclined to protect air quality and water quality than the EPA has been for decades — right back to the 1970s, when the Clean Water Act and Clean Air Act were passed,” Bray said. “I don’t know what the federal government’s predisposition to enforcement will be.”
And any cut to the EPA is likely be felt at the state level, according to Bray.
“Roughly one-third of the Vermont Agency of Natural Resources’ budget flows from federal dollars,” Bray said. “We will still have the legal obligation to execute the terms of … all the federal (environmental) laws that we have been delegated. If we don’t have federal funds, I think we will be looking at staffing cuts, to be direct about it. Programs and people. I don’t think Vermont will be able to raise enough money to keep all those programs and people going.”
In the meantime, people are looking to see how Scott, in his first year as governor, addresses the water quality issue.
Julie Moore, secretary of the Agency of Natural Resources, said Gov. Scott adopted Treasurer Pearce’s recommendations on funding Lake Champlain cleanup whole hog this year.
“I would just note that the governor’s budget this year, really the increase in funding for clean water is in some ways unprecedented,” Moore said. “The budget that was passed has a 70 percent increase over last year in the amount of state dollars committed to clean water funding.
“We’ve had just this incredible uptick in resources available to us for this year and next year, which is exciting.”
Gov. Phil Scott, a Republican, said he himself has not sensed a reduced commitment from the Trump administration on clean water priorities. But he believes the situation bears watching.
“Obviously, we’re all concerned about what’s happening there, and you never know,” Scott told the Addison Independent last week during an exclusive interview. “But at this point in time, we haven’t heard anything different. We’re fully committed to doing whatever we can to clean up the lake. It’s going to be a 20-year process. We didn’t get here overnight, and we’re not going to get ourselves out of it overnight. We want to make sure we spend our money wisely and that we show our constituents that everything we’re putting into place has a meaning, is effective and efficient.”
Scott believes the state is well positioned financially to tackle the first two years of the cleanup program, and he’s hoping the Act 73 Working Group on Water Quality Funding will put together a solid plan to raise adequate revenues for the ensuing 18 years.
He cited one potential revenue source as particularly promising: The New England Clean Power Link, a $1.2-billion electric power line designed to bring renewable energy from Canada to the northeast United States. A portion of the line is slated to be buried beneath Lake Champlain, including off the west coast of Addison County. Project developers have agreed to some financial concessions, including a promise to contribute $202 million (about $5 million annually over 40 years) to Vermont’s Clean Water Fund.
“From my standpoint, this would be beneficial,” Scott said. “There is a direct relationship here between this project and the lake cleanup. It’s found money, if (the project) comes to be.”
Ultimately, Scott hopes economic growth within the state can generate substantial revenues to apply to lake cleanup efforts.
“I believe that if we make the right investments … we can grow revenue organically,” Scott said. “We’ll have more money coming into the coffers if we grow our business sector and grow the businesses that are already here. I believe that’s viable.
“When you take a look at it in its entirely, we don’t have to have a knee-jerk reaction with a new tax or fee to support the cleanup,” he added.
State economists last month reported state revenues will come in at almost $29 million less than had been anticipated for this fiscal year. But Scott believes the state will be able to reverse that trend thanks to new investments in workforce housing, downtown development, workforce education and support of incubator space for nascent enterprises.
“There’s a sense of optimism in Vermont,” Scott said, citing feedback he’s received during his statewide travels.
Scott should anticipate Lake Champlain cleanup as being a major campaign issue should he run for re-election next year. That’s because environmentalist James Ehlers, a Winooski Democrat, confirmed last week he will run for governor.
Ehlers is executive director of Lake Champlain International, an organization that advocates for the health of the lake.
Scott welcomes the challenge.
“I’ve know James for a number of years,” Scott said. “I’m not surprised to have opposition. I’m sure there will be many others.”
Back at the Lewis Creek Association, Krista Hoffsis said she is confident Vermonters will come together and change their habits and find ways to support improved water quality.
“Now more than ever, it is crucial that people who live in the Lake Champlain watershed get involved and support this extremely valuable resource,” she said. “I remain optimistic about Lake Champlain cleanup because I believe that communities can come together to educate one-another, volunteer and donate to conserve the health of the lake for its drinking water, as a place to recreate, and as a treasured part of the landscape. It truly is up to all of us.”

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