Conowingo Dam with sign

Conowingo was built in 1928 to generate electricity, and it inadvertently acted as a trap for nutrient and sediment pollution flowing downstream to the Bay. Over the years, sediment buildup behind the dam has reduced its pollution-trapping capacity. 

Pollution keeps flowing past the Conowingo Dam toward the Chesapeake Bay but it’s unclear who is going to pay to offset it. A new strategy, though, outlines how it might be done.

The Conowingo financing strategy calls for creating an independent financing authority that would receive funds and invest them in ways that would both accelerate the cleanup and reduce the cost.

The lynchpin of the strategy, completed in December, would be a pledge from Bay watershed states to fund the cleanup effort, which is expected to cost in excess of $53 million a year. But that’s something states in the Bay watershed have not committed to doing.

“One key issue is that a public commitment to investment is paramount, [their emphasis]” the financing strategy said. “The entire Conowingo … financing process is predicated on the responsibility of the public sector in general and the Bay states in particular to fund restoration activities.”

The strategy, prepared by the University of Maryland Center for Global Sustainability, says the proposed financing authority could leverage private funding, issue bonds to accelerate the cleanup and invest in innovative pollution control techniques.

But no one will buy bonds or make other cleanup-related investments unless the states will pay them back, said Daniel Nees, a senior fellow at the center and the lead author of the financing strategy.

“The obvious issue here is the states guaranteeing that they’re going to engage,” Nees said. “Everything else is kind of background after that.”

It’s unclear whether states are willing to pay to resolve the problem created by the 94-foot-high dam.

Located in Maryland 10 miles upstream of the Bay on its largest tributary, the Susquehanna River, Conowingo is the largest dam in the Bay watershed. It was completed in 1929 and for decades trapped some of the water-fouling sediment and nutrients coming down the river.

Recent studies, though, concluded the dam’s 14-mile-long reservoir has filled and an additional 6 million pounds of nitrogen a year is reaching the Bay, according to computer models.

That was not known when the U.S. Environmental Protection Agency and the seven Bay watershed jurisdictions established cleanup goals in 2010.

With the states already struggling to meet their own goals, the state-federal Bay Program agreed in 2017 to jointly fund a separate cleanup strategy for Conowingo, outlining additional actions needed to offset the increasing surge of nutrients, as well as a way to pay for it.

The cleanup plan, drafted by three nonprofit organizations, was released in October with a cost estimate of $53 million a year to fund runoff control practices, primarily on farms upstream of the dam in Pennsylvania. More funding would be needed for increased technical staff to work with farmers.

But the plans have caused sticker shock among state officials, whose budgets are already facing shortfalls stemming from the COVID-19 pandemic.

“I’ve still got some fairly significant concerns about where we’re headed there,” Matthew Strickler, Virginia Secretary of Natural Resources, told other members of the Bay Program’s Principals Staff Committee at its December meeting.

“The document as written makes it clear that the jurisdictions are going to be on the hook for coming up with the funding for this,” said Strickler, who chairs the committee of senior state and federal officials.

He said he would like to find creative funding solutions that relied more on private funding. “We don’t have $50 million a year among us right now to do this work,” Strickler said.

The financing strategy suggests the proposed authority would be a catalyst to incentivize new technologies and market-based pollution control mechanisms that could accomplish the cleanup at less cost. For instance, it could promote pay-for-performance projects that would encourage the private sector to implement pollution control efforts, such as stream restoration, and then repay them for actual nutrient reductions — something that could produce more results at less cost than traditional grants or farm cost-share projects. The authority could also borrow money to speed implementation.

But the strategy emphasizes that investors need a financial commitment from the states to ensure they will be paid back.

The plan anticipates all states in the watershed would pay into the authority, though it would primarily fund projects in Pennsylvania, where they are the most cost-effective. States committed to jointly fund development of the plans but made no commitment to fund them.

When work on the plans began, the states expected that a settlement between Maryland and Exelon — the utility that owns the dam — would generate tens of millions of dollars a year for the work. The utility needs approval from the state before it can get a new federal license to continue operating the hydroelectric dam.

But last year, the state and Exelon struck a deal that committed just $19 million over the 50-year lifespan of the license for that purpose.

Beth McGee, director of science and agricultural policy at the Chesapeake Bay Foundation, said it was “highly unlikely” the states would commit to the funding, though she held out the possibility that the incoming Biden administration might make some federal support a possibility.

“We think Exelon is conspicuously absent” from the plan, she added. “They should be talked about in here. The [Bay states] should be encouraging Exelon to participate in the process.”

Betsy Nicholas, executive director of Waterkeepers Chesapeake, said Maryland should withdraw its deal with Exelon, which has not been finalized, and negotiate a new one. “Those costs will fall on the backs of state taxpayers in all of the Bay partnership states unless Maryland holds Exelon accountable for their fair share of these costs,” she said.

Exelon has maintained that it is not responsible for pollution originating upstream that was trapped behind the dam.

Nicholas also raised social and economic justice concerns about relying on tax money collected largely from urban areas to fund pollution control practices primarily on Pennsylvania farms.

“Rural agricultural areas do need assistance and funding,” she said, “but it needs be done in such a way that it doesn't shift the burden to other areas already struggling with their own pollution problems.”

Karl Blankenship is editor-at-large of the Bay Journal. You can reach him at kblankenship@bayjournal.com.

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