HB 78
Department of Legislative Services
Maryland General Assembly
2020 Session
FISCAL AND POLICY NOTE
Third Reader - Revised
House Bill 78 (Delegate C. Watson)
Environment and Transportation Education, Health, and Environmental Affairs
Bay Restoration Fund - Authorized Uses
This bill expands the criteria used to determine how to allocate funding from the
Bay Restoration Fund (BRF) Wastewater Account by including climate resiliency and
flood control as issues for the Maryland Department of the Environment (MDE) to consider
when determining the priority of funding for specified projects. The bill also specifies that
the types of stormwater control measures that a local government can receive BRF funding
for under current law (if the local government has implemented a system of charges to fully
fund a stormwater management program) include stormwater measures relating to water
quality, climate resiliency, or flood control. The bill takes effect July 1, 2020.
Fiscal Summary
State Effect: Overall finances for the BRF Wastewater Account are not affected; the bill
merely changes the priority ranking for certain projects and expands the authorized uses of
the account. MDE can promulgate implementing regulations with existing budgeted
resources. Revenues are not affected.
Local Effect: Local grant revenues and expenditures are likely affected by the change in
priority ranking and could also be affected to the extent that BRF funding is provided for
stormwater measures relating to water quality, climate resiliency, or flood control instead
of other authorized uses. Any such impact cannot be reliably estimated at this time.
Small Business Effect: Minimal overall, but potential meaningful impact on some small
businesses depending on the projects that receive funding under the bill.
 Analysis
Bill Summary: The bill adds climate resiliency and flood control to the factors MDE must
base funding awards on when allocating funding for (1) combined sewer overflow
abatement, rehabilitation of existing sewers, and upgrading conveyance systems, including
pumping stations; (2) nitrogen reduction from on-site sewage disposal (septic) systems;
and (3) the most cost-effective and efficient stormwater control measures by local
governments who have implemented a system of charges to fully fund a stormwater
management program.
Current Law:
Bay Restoration Fund
Chapter 428 of 2004 established BRF, which is administered by the Water Quality
Financing Administration within MDE. The primary purpose of the fund is to support
upgrades to Maryland’s 67 major publicly owned Wastewater Treatment Plants (WWTPs)
with enhanced nutrient removal (ENR) technology; funds are also used for septic system
upgrade grants, among other things, and Maryland Department of Agriculture’s (MDA)
Cover Crop Program.
As a revenue source for the fund, Chapter 428 established a bay restoration fee on users of
wastewater facilities, septic systems, and sewage holding tanks and Chapter 150 of 2012
doubled the fee for most users. Of the fee revenue collected from users of septic systems
and sewage holding tanks, 60% must be deposited into a separate account, commonly
referred to as the Septics Account. The remaining funds collected from users of septic
systems and sewage holding tanks (40%) must be transferred to the Maryland Agricultural
Water Quality Cost Share Program within MDA to provide financial assistance to farmers
for planting cover crops.
Priority of Uses of MDE’s Wastewater Account
Fee revenue generated from users of wastewater facilities is deposited into MDE’s
Wastewater Account and used, among other specified uses, to provide grants for up to
100% of the eligible costs to upgrade WWTPs to ENR.
Pursuant to Chapters 124 and 153 of 2015, beginning in fiscal 2018, the priority for project
funding from the Wastewater Account is as follows:
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(1) ENR upgrades at major WWTPs (design capacity of at least 500,000 gallons per
day (gpd));
(2) the most cost-effective ENR upgrades at minor WWTPs (design capacity of less
than 500,000 gpd);
(3) as determined by MDE and based on water quality and public health benefits, for
the following:
a. beginning in fiscal 2016, combined sewer overflow abatement, rehabilitation
of existing sewers and upgrading conveyance systems, including pumping
stations;
b. nitrogen reduction from on-site sewage disposal (septic) systems; and
c. the most cost-effective and efficient stormwater control measures by local
governments who have implemented a system of charges to fully fund a
stormwater management program.
MDE is required to determine the eligibility and priority ranking of a project based on
criteria established in regulations. The project criteria includes (1) nutrient loads currently
discharged and the projected nutrient load reduction; (2) cost-effectiveness in providing
water quality or public health benefits; (3) relative effectiveness of water quality benefit to
the Chesapeake Bay or other impaired body of water; (4) the existence of an administrative
or civil compliance order or of a compliance schedule in a discharge permit;
(5) sustainability benefits, such as water reuse, asset management, full cost pricing, energy
conservation, and smart growth; and (6) readiness to proceed to construction.
Background: According to the Comptroller’s Office, through December 31, 2019, a total
of $1.2 billion in bay restoration fees collected from wastewater facility users had been
deposited in MDE’s Wastewater Account. In addition, of the fee revenues collected from
users of septic systems and sewage holding tanks, almost $181.0 million had been
deposited in MDE’s Septics Account and $129.2 million had been provided to MDA to
support the planting of cover crops.
As of October 2019, BRF had supported ENR upgrades to 63 major wastewater facilities,
with 3 other facilities under construction and 1 in the planning stage. As of July 2019, BRF
had supported the installation of 10,532 BAT septic systems, of which 6,582 upgrades were
completed within Maryland’s Critical Areas. In addition, 515 homes had been connected
to public sewerage using BRF, and BRF had supported the planting of more than
three million acres of cover crops.
HB 78/ Page 3
 Additional Information
Prior Introductions: None.
Designated Cross File: SB 172 (Senator Hester) - Education, Health, and Environmental
Affairs.
Information Source(s): Anne Arundel, Howard, Montgomery, St. Mary’s, and Somerset
counties; Maryland Association of Counties; City of Laurel; Maryland Municipal League;
Comptroller’s Office; Maryland Department of the Environment; Department of
Legislative Services
Fiscal Note History: First Reader - January 22, 2020
an/lgc Third Reader - March 11, 2020
Revised - Amendment(s) - March 11, 2020
Analysis by: Kathleen P. Kennedy Direct Inquiries to:
(410) 946-5510
(301) 970-5510
HB 78/ Page 4


Statutes affected:
Text - First - Bay Restoration Fund - Authorized Uses: 91-605.2 Environment
Text - Third - Bay Restoration Fund - Authorized Uses: 91-605.2 Environment