The owners of the Conowingo Dam and the state of Maryland have come to legal blows over whether the utility can be forced to pay potentially billions of dollars over the coming decades to help clean up the Chesapeake Bay.The reservoir behind the 90-year-old Conowingo Dam has filled, allowing nutrients and sediments that were once trapped to enter the Susquehanna River and flow downstream to the Bay. (Dave Harp)

The Maryland Department of the Environment in late April issued a decision that could require the Chicago-based utility to pay up to $172 million a year to help control nutrient and sediment pollution flowing past the Susquehanna River dam as a condition of it getting a new federal operating license.

In late May, Exelon fired back, saying those conditions imposed an “unfair burden” on the 94-foot-high hydroelectric facility that would cost $7 billion over the course of its requested 50-year operating license — a figure the company said was “orders of magnitude” more than the dam was worth.

It asked the MDE to reconsider its decision, and filed challenges in both state and federal courts. Exelon said it went to court at the same time it asked the MDE to reconsider its decision because of the “seriousness of the issues at hand.”

“The dam itself does not produce any pollution,” Exelon said in a statement issued May 25. “Rather, the science clearly shows that the pollutants that travel down the Susquehanna River, from New York and Pennsylvania, are the source of the nutrients and sediments that flow into the Bay.”

In response, the MDE said it would “vigorously defend our comprehensive Conowingo plan to restore the river and the Bay. The Hogan administration is committed to using science, law and partnerships for environmental progress throughout the entire Chesapeake Bay watershed and the Conowingo plan is at the heart of our multi-state strategy to deliver the results Marylanders expect and deserve.”

Exelon is not the only one challenging MDE’s decision. The Lower Susquehanna Riverkeeper Association and Waterkeepers Chesapeake also filed an appeal with the MDE, contending that the agency failed to do enough to address the dam’s impacts.

At issue is how to resolve one of the most confounding issues facing Bay restoration efforts — addressing the excess pollution now reaching the Bay because it is no longer being trapped in the 14-mile-long reservoir behind the dam.

The dam was completed in 1928 and for most of the last century has been trapping sediment and nutrients that would otherwise reach the Chesapeake. But scientists say the reservoir reached its storage capacity faster than they expected, and once-trapped pollutants now flow into the Bay just 10 miles downstream.

The state-federal Bay Program partnership has estimated that it will require an annual reduction of 6 million pounds of nitrogen and 260,000 pounds of phosphorus to offset the impact of the dam’s lost trapping capacity. That would be roughly an additional 5 percent reduction for a river where upstream nutrient control efforts in Pennsylvania are already far behind schedule.

Bay Program partners plan to write a new cleanup plan to offset that additional pollution, but they have not indicated how those reductions — which come on top of the obligations states already face to meet cleanup goals — would be paid for, or who is responsible for making them.

Exelon is seeking a new operating license from the Federal Energy Regulatory Commission to continue generating power from Conowingo, one of five hydroelectric facilities along the lower Susquehanna. But as part of the licensing process, Maryland has to issue a certification that the operation of the dam will not degrade water quality.

Maryland issued that certification April 27, but it imposed numerous conditions it said were needed to mitigate water-quality impacts from the dam. Along with the requirement that Exelon fund nutrient pollution control practices, it called for other efforts to curb debris that flows downstream and changes to dam operations that the state says affect downstream habitats for fish and wildlife.

On May 25, Exelon appealed the decision administratively with the MDE and in court where, among other things, it contends the proposed conditions are so costly they would put the dam out of business and therefore represent an illegal “taking” of Exelon’s property. The utility has asked FERC to put its relicensing decision on hold until the appeals are resolved.

In its filings, Exelon contends that the state certification “departs dramatically” from those issued to other operations around the country, which it contends are more narrowly focused on actions related specifically to the operation of a hydro facility. The company called it unprecedented for a hydroelectric operation to be held responsible for pollution originating upstream.

But some environmental groups say the issue is not so straightforward.

“This is complicated,” said Mark Bryer, Bay program director for The Nature Conservancy, which has been involved in the dam’s relicensing for years. “The Nature Conservancy works on hydropower around the world, and this is one is unique.”

While the Conowingo Dam did not create the pollution, he said, its presence on the river greatly influences when, and in what form, pollution reaches the Bay.

For instance, the dam can affect the types of sediment and nutrients that get washed downstream. Large sediment particles, which can be beneficial downstream, tend to get trapped, while fine sediment, which is more harmful to water clarity, is more likely to get flushed downstream.

Environmental groups contend the utility has done little to address that concern.

“The entire time Exelon has operated this, to their financial gain, it was known that this was going to happen someday and there were no preventative actions taken by Exelon,” said Alison Prost, the Chesapeake Bay Foundation’s acting vice president for environmental protection.

Prost said she was worried that by going to court, Exelon could delay any action for years. “Saying it has no responsibility isn’t appropriate,” she said. “Exelon needs to be at the table with those other states to decide what they can do while still being financially solvent.”

It’s unclear how much Exelon makes from its power generation at Conowingo. A report prepared for the conservancy and the CBF last year estimated that dam revenues ranged from $115 million to $121 million annually — a figure the utility said was too high.

How much Exelon could be willing to pay toward restoration efforts is also unclear. The utility stated in a letter to the MDE on Jan. 16 that “it is open to providing some level of support to improve Chesapeake Bay water quality as part of a settlement agreement.”

But in a letter to Exelon on April 20, Maryland Environment Secretary Ben Grumbles said the utility had failed to provide sufficient detail about the level of support it was willing to provide. Shortly after that, the MDE finalized the water quality certification which gave the utility three choices: install offsetting pollution control practices itself; pay a fee for others to install the practices, at the rate of $17 per pound of nitrogen and $270 for every pound of phosphorus that needs to be controlled; or dredge the reservoir.

Meanwhile, the Lower Susquehanna Riverkeeper, along with 18 other riverkeeper groups in the region, contend the certification does not go far enough because it does not address the potentially catastrophic impacts if floodwaters from a severe storm scour vast amounts of built-up sediment and stored nutrients out of the reservoir and flush them into the Bay, as happened with Tropical Storm Agnes in 1972.

A recent study led by the U.S. Army Corps of Engineers and the Maryland Department of Environment discounted that concern, saying the bigger threat to the Bay was the annual increase in nutrients that has taken place under more normal weather conditions since the reservoir filled.

But the riverkeepers said that study underestimated the impacts of very large events which they say are “very likely or reasonably likely” to occur many times during the course of a 50-year license.

They asked that Exelon be required to excavate at least 4 million cubic yards of sediment from behind the dam each year, which they say would offset the roughly 1.5-million–2-million cubic tons that flow over the dam each year while also slowly drawing down what has built up over the decades.

“This is one of the most important decisions in the effort to clean up the Chesapeake Bay,” said Betsy Nicholas, executive director of Waterkeepers Chesapeake. “We shouldn’t be approving a 50-year license without a solid, accountable plan for removing sediment from behind the dam.”

Exelon, in its filings, said that dredging was not a feasible option, citing the recent Corps/MDE study which estimated it would cost as much as $2.8 billion annually just to dredge enough to keep pace with what now flows into the reservoir.

Further, the utility said those costs would increase over time because the amount of material to be dredged each year — equivalent to 25 football fields covered with 67.5 feet of sediment — would quickly exhaust nearby disposal sites.

Maryland is planning to fund a pilot project, though, to determine whether lower cost options which reuse some of that material might be feasible.

Since its last operating license expired Sept. 14, 2014, Conowingo has operated on an annual license issued by FERC. The license renews automatically while the relicensing is pending.

Any delay in issuing a new license for Conowingo would also postpone millions of dollars’ worth of fish passage improvements at the dam, which were negotiated between Exelon and the U.S. Fish and Wildlife Service. Those improvements were primarily aimed at getting American shad and river herring upstream, but most of those actions are contingent on the new license.

There is no prescribed time frame for the MDE to make a decision regarding either Exelon’s or the waterkeeper’s administrative appeals. The state must respond by July 9 to Exelon’s state court challenge that was filed in the Baltimore City Circuit Court. The state’s response to Exelon’s federal lawsuit, filed in the U.S. District Court for the District of Columbia, is due by July 11.

Meanwhile, others will be watching to see whether the action sets a precedent.

“It’s a bit of an odd situation, given that it’s a 25,000- square-mile watershed, to hold the folks accountable who actually did a service to the Bay,” said Andy Davis, a spokesman for Brookfield Renewable, which owns two upstream dams in Pennsylvania — Holtwood and Safe Harbor — whose reservoirs are also largely filled, according to the Corps study.

“But right now, we are just watching from the sidelines like everyone else. We will continue to do so and see where this thing shakes out.”