By CATHERINE KRIKSTAN
Capital News Service
Tuesday, December 8, 2009

ANNAPOLIS - A state program that aims to upgrade septic systems throughout Maryland, reducing the amount of nitrogen that failing systems can discharge into the Chesapeake Bay, has been met with overwhelming public demand -- and unexpected conflict.

Septic system vendors and installers throughout the state have threatened to abandon the Department of Environment's Onsite Sewer Disposal System program if the way their work is paid for isn't changed.

Under the current program, state grants help pay the upgrade expenses of homeowners, who can, and have, taken the money and run, leaving businesses to waste time chasing checks.

"All these installers and all these vendors agree that this is a great program," said J.O.K. Walsh, executive director of the Caroline County Economic Development Corporation at a joint committee hearing Tuesday.

"But they also say that they cannot go on with the system as it currently exists. They're not getting paid in a significant number of these cases," Walsh told the Joint Committee on the Chesapeake and Atlantic Coastal Bays Critical Area.

Walsh estimates that as many as 10 percent of homeowners have left projects unpaid for.

And the homeowners that tend to skip out on their payments are those with the worst septic systems in the watershed's most critical areas -- the state's top priority for grant allocations.

A jump in demand -- the number of systems installed from September 2008 to September 2009 rose from 375 to 1,778 -- has forced the state to prioritize grant applicants, beginning with failing septic systems in the state's critical area, located within 1,000 feet of the mean high water line of tidal waters or the landward edge of tidal wetlands.

About 2,800 applicants who don't fall under this distinction have been placed on a waiting list until July, said Robert Summers, deputy secretary of the Maryland Department of the Environment.

The more than 400,000 septic systems in the state account for about 7 percent of the nitrogen that Maryland loads into the bay.

But new technology can cut the amount of nitrogen that is discharged by these systems in half. It is this technology that is installed by companies like Towers Concrete.

More than 100 installations completed by the Denton-based business have not been reimbursed by the homeowner, Walsh said. And almost 75 percent of these payments are more than 60 days past due.

"It's a cat and mouse game," said John Short, who manages the company's bay restoration project. "For the past two months, all I've been doing is going door to door, not even generating sales at this point, just trying to collect checks."

"We've been chased off properties. We've been threatened to be locked up for trespassing. There's all kinds of scenarios out there," Short said.

Walsh would like to see companies like Towers Concrete paid directly for their work.

"We need to get the money directly to the people who do the work, who do the marketing, who do the investment," Walsh said. "We need to help them out by changing this policy ... and allowing the vendors to be paid directly."

Otherwise, said Short, these businesses might be forced to raise the cost of septic systems, which average about $12,000, or abandon the project all together.

But Summers hesitates to get the state involved in what he called a third-party situation.

"The homeowner is the one who is responsible for this system over the long haul. The homeowner needs to be in control of the funding situation," Summers said.

The grants include a five-year maintenance and operation component, creating a long-term arrangement between the vendor and the homeowner, said Summers.

"Because the homeowner and that vendor need to work together over that period of five years, we just don't want the department getting in the middle of any arrangements that they've made," Summers said. "We feel that it's the homeowner's contractual obligation to pay the vendor."