Taxation of wastewater upgrade grants in Suffolk County, New York, is now a thing of the past.

The IRS recently reversed its 2020 policy of taxing grants made to citizens who upgraded onsite systems to reduce nitrogen pollution. The county, which occupies the eastern end of Long Island, has at least 360,000 cesspools and has had water quality problems along its Atlantic Ocean shore because of high nitrogen levels.

In its 2020 opinion, the IRS said the grant money counted as income because homeowners exercised some management of projects such as choosing a contractor, and because the grants were not given based only on need. Money for the new systems went directly to contractors, who were responsible for paying taxes on it, said news reports. As part of its program to clean up its coastline, the county makes grants of up to $30,000. By the end of 2022, 3,583 county residents had applied for upgrade grants.

Key to the IRS reversal was a statement from the U.S. Department of Agriculture. Last fall, the department posted a notice saying the Suffolk County grants are primarily for conserving soil and water resources or protecting and restoring the environment. Following that statement, news reports said, the IRS invoked one of its own rules: “Any program of a state or a political subdivision of a state under which payments are made to individuals primarily for the purpose of conserving soil, protecting or restoring the environment, improving forests, or providing a habitat for wildlife,” should not be included in a person’s gross income.

Homeowners who have already paid taxes on grants can file amended tax returns to have payments refunded.

The person who started the tax mess was Suffolk County Comptroller John Kennedy. In 2019, Kennedy was running for county executive against incumbent Steve Bellone who had made water quality a focus of his administration. Kennedy mailed IRS 1099 forms to homeowners although an opinion from the county’s tax lawyer said the grants should not be taxable. Kennedy told a news outlet he disagreed, was concerned about the use of public funds for private benefit, and planned to request an opinion from the IRS. He blamed Bellone for the confusion over taxes. Bellone won the election.

North Carolina

The North Carolina Coastal Resources Commission has delayed a decision on new rules for oceanfront onsite systems. Last fall, the commission accepted the recommendation of its staff to postpone changes. That will allow time for more public comments and for input from a group of state and federal officials who have been meeting to consider structures threatened by erosion and the relocation of onsite systems threatened by sea level rise. Proposed changes to the rules would affect where onsite systems could be relocated to and would treat them as separate structures.

Three houses fell into the ocean last year, all on the Cape Hatteras National Seashore. Park officials identified 33 exposed onsite systems and drainfields, and began working with 24 homeowners to move their houses.

Coastal advocate Alyson Flynn told one news outlet that the land in the national seashore is subject to rapid erosion, so homes built far from the ocean are now much closer. “Some have multiple septic tanks because, over the years, as their septic tanks have become compromised, these homes have been allowed to replace their tanks so they can continue to rent or live in these properties,” she said. “One of the issues that creates is a lot of different septic tanks on the oceanfront that are spewing out wastewater onto the public beach because these drainfields are now on the public oceanfront. It’s a tragedy to see families here on vacation and setting up building sandcastles in a drainfield of wastewater.”

South Carolina

Two South Carolina environmental groups have sued to force the use of a stricter standard when permitting septic tanks in a proposed development.

Charleston Waterkeeper and the Coastal Conservation League want the state Department of Health and Environmental Control to review septic tank use under standards in the coastal management law. At issue is a development of more than 200 homes in the northern end of Charleston County and near the Cape Romain National Wildlife Refuge. The land is marshy and low, and near the Atlantic Ocean. More than 400 acres is intended for the development, reported The State of Columbia, South Carolina.

The lawsuit asks a court to stop the department from issuing septic tank permits in coastal counties unless permits are reviewed under the coastal law, and another request is for public notice of septic tank permit requests.

Florida

Florida’s Sarasota County wants to replace onsite systems with municipal sewer service, but found it can’t pursue conversions just yet. The problem, reported The Arcadian, is that county wastewater treatment plants first need to be upgraded to advanced treatment to improve effluent quality. This won’t happen for several years.

Construction of one advanced treatment plant, at a cost of $280 million, is underway with completion scheduled for December 2025. Work at a second plant, at an estimated cost of $150 to $200 million, is being designed with completion scheduled for December 2026. Improvements at the county’s third plant, estimated at $250 million to $275 million, have not entered the design phase. The county has also committed more than $12 million to store reclaimed water and return it to the aquifer.

Colorado

The Colorado Water Quality Control Commission has given final approval to a direct potable reuse rule. This opens the way for water from sanitation districts to be reused as drinking water, reported The Sopris Sun of Carbondale, Colorado.

An opinion from Denver-based law firm Brownstein Hyatt Farber Schreck said reuse would reduce the expense and trouble of finding new water supplies, but it also noted that a significant investment will be required along with years of preparation.

The newspaper suggested use of this technology is likely to occur first in the urban corridor along the eastern edge of the Rocky Mountains. Carbondale has a population of 6,491 and is near the ski center of Aspen. Mark O’Meara, Carbondale utilities director, said there are no plans to make the significant infrastructure investment direct reuse would require. Nathan Nelson, treatment manager at the Aspen Consolidated Sanitation District, told the newspaper he could see Aspen adopting reuse because of the West’s long drought and shrinking snowpack.

New York

A new block of state money has been allocated to New York’s Warren County to fund onsite system upgrades in the Lake George watershed.

Property owners may be eligible for grants for up to 50% of the cost of replacing septic systems or cesspools or upgrading an existing system. The maximum grant is $10,000 per project. The county was awarded $635,000.

The lake, on the southeastern edge of Adirondack Park, has been known for the quality of its water, but in recent years residents have seen large algae blooms.

California

The state of California will receive a $9 million grant from the U.S. Environmental Protection Agency to fight nonpoint source pollution.

More than $4 million will be used in projects to reduce sediment loading and improve habitat on several rivers in northern California, reported The Silicon Valley Voice of Santa Clara, California. The state will also use some of the money to implement its Onsite Wastewater Treatment System Policy.