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Update on PA DEP Financial Requirements for Private Dams

In a recent Pennsylvania Department of Environmental Protection (PA DEP) informational meeting sponsored by Rep. Rosemary Brown (R-Monroe/Pike), DEP representatives discussed the annual permit fee imposed on dam owners to cover a portion of the DEP costs to administer the Dam Safety program and the fiscal responsibility regulations. The meeting was primarily for private dam owners, as the financial responsibility requirement is handled differently for publicly owned dams.

The legislation requires private owners of high hazard dams to post a financial guarantee adequate to breach the dam if the owner does not comply with DEP safety requirements by January 2016. Of the 3, 378 dams in Pennsylvania, 778 have been deemed high hazard. Those high hazard dams that are publicly owned do not have to prove fiscal responsibility and are not subject to annual fees.

The required fiscal guarantee poses a hardship for many private individuals and associations—such as hunting clubs, homeowners associations, and non-profit organizations—who are unable to obtain a surety bond. The alternative for private dam owners to meet this fiscal requirement is to provide a certificate of deposit (CD) that DEP can draw from if the dam must be breached. For some associations, the financial guarantee reaches into the $100,000’s, a sum that will be very difficult for many private owners to raise and have sit in a CD restricted for this purpose.

The level of funding needed to meet fiscal responsibility and dam permitting requirements, depends on the hazard classification of the dam. The dam hazard classification is based on the probable effects of a failure. Therefore, downstream developments beyond the control of the dam owner can cause the hazard classification of the dam to change. Dam owners may retain the services of an engineering firm to conduct annual inspections, evaluate the hazard level of the dam, and propose cost-effective improvements to maintain safe operation of the dam.

In late 2014, representatives from PA DEP and state legislators are discussing modifications to the existing legislation to establish an insurance program for private dam owners to cover the cost if a dam breach is required. Until further legislation is completed, however, the current dam permitting process, inspections, and fiscal responsibility will require potentially significant action from private dam owners throughout the state.

Additional Resources:

PA DEP dam safety information: http://www.portal.state.pa.us/portal/server.pt/community/dam_safety/10501

PA DEP “Dams and Dam Safety: The Invisible Infrastructure” presentation: http://www.education.state.pa.us/portal/server.pt/document/1203131/panel_on_dam_emergenies_-_pa_dep_presentation_pdf

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