| HJR 640: Joint Subcommittee to Study Options to Provide a Long-Term 
        Funding Source to Clean Up Virginia's Polluted Waters, Including the Chesapeake 
        Bay and its TributariesMay 12, 2005
The Joint Subcommittee 
        to Study Options to Provide a Long-Term Funding Source to Clean up Virginia's 
        Polluted Waters, Including the Chesapeake Bay and its Tributaries, held 
        its first meeting on May 12, 2005.  The members of the 
        joint subcommittee are: Delegate Vincent F. Callahan, Jr., Senator John 
        H. Chichester, Delegate Harry J. Parrish, Delegate M. Kirkland Cox, Delegate 
        L. Scott Lingamfelter, and Senator Charles R. Hawkins. Secretary of Natural 
        Resources, W. Tayloe Murphy, Jr., and Secretary of Agriculture, Robert 
        S. Bloxom are ex-officio members of the joint subcommittee. The first 
        order of business was the nomination and election of Delegate Vincent 
        F. Callahan, Jr. as Chairman, and Senator John H. Chichester as Vice Chairman. 
         FUNDING FOR CLEANUP 
        OF VIRGINIA'S WATERS The meeting began 
        with an overview of the Water Quality Improvement Fund, the primary source 
        for moneys to clean up Virginia's waters created by the General Assembly 
        during the 1997 Session. Current law dedicates 10 percent of any year-end 
        revenue surplus and 10 percent of any year-end unreserved general fund 
        balance to the Fund. Moneys in the Fund are used to provide grants to 
        local governments, soil and water conservation districts, and state agencies, 
        as well as individuals for cleanup of point and nonpoint sources of pollution. Due to the economic 
        recession, no deposit was made into the Fund in Fiscal Years 2002 through 
        2004, because there were no year-end revenue surpluses or balances. For 
        Fiscal Year 2005, the General Assembly appropriated $15 million in addition 
        to the year-end revenue surplus, making the total fiscal year deposit to the Fund $22.7 million. 
        For Fiscal Year 2006, the General Assembly appropriated $65 million in 
        addition to the year-end revenue surplus, making the total fiscal year 
        deposit to the Fund $97.4 million. Of this additional $65 million, $50 
        million is dedicated for wastewater improvement.
 ADDRESS BY SECRETARY 
        MURPHY 
 Secretary Murphy spoke to the members regarding issues raised by House 
        Joint Resolution No. 640, the joint resolution that created the study. 
        Secretary Murphy stated that plans and strategies are in place to clean 
        up Virginia's waters, but the Commonwealth lacks the funding needed to 
        execute these plans. Funding for natural resources hovers at or below 
        1% of the state budget on an annual basis.
 Secretary Murphy 
        explained that in 1999 the Environmental Protection Agency (EPA) added 
        the Chesapeake Bay and its tributaries to the list of impaired waters 
        because of increased amounts of nitrogen and phosphorus. The EPA established 
        new water quality standards for the Bay and its tributaries. These standards 
        form the basis for nutrient and sediment reduction goals. Secretary Murphy 
        indicated that Virginia is required to reduce the nitrogen discharge into 
        the Bay and its tributaries from 77 million pounds to 51.4 million pounds 
        per year and the phosphorus discharge from 10 million pounds to 6 million 
        pounds per year. Agricultural activities are the largest source of nonpoint pollution in the Commonwealth. In Fiscal Year 
        2006, the Department of Conservation and Recreation will have $30 million 
        for grants to reduce nonpoint sources of pollution. Secretary Murphy emphasized 
        that Virginia's economic prosperity is directly linked to the health of 
        its natural resources.
 PRESENTATION BY 
        MR. RUSSELL W. BAXTER Russell W. Baxter, 
        Assistant Secretary of Natural Resources for Chesapeake Bay Coordination, 
        began his presentation by discussing 2004 State water quality assessment. 
        Water quality sampling revealed that 6,900 out of 13,200 stream miles; 
        89,900 out of 109,000 acres of lakes; and 1,810 out of 2,500 square miles 
        of estuaries were impaired by pollution. Mr. Baxter discussed provisions 
        of House Bill No. 2862/Senate Bill No. 1275, passed during the 2005 Session 
        of the General Assembly. The legislation requires the State Water Control 
        Board to issue to significant pollution dischargers a Watershed General 
        Permit authorizing point source discharge loads for total nitrogen and 
        total phosphorus. A significant discharger can meet the maximum load authorized 
        by acquiring nitrogen and phosphorus allocations and credits from other 
        significant dischargers. Mr. Baxter discussed 
        provisions of House Bill No. 2777/Senate Bill No. 1235/Senate Bill No. 
        810, also passed during the 2005 Session of the General Assembly, which 
        provided an additional $50 million deposit to the Water Quality Improvement 
        Fund. The additional funding will be used solely to finance the costs 
        of design and installation of biological nutrient removal facilities or 
        other nutrient removal technology at publicly owned treatment plants.
 Mr. Baxter next provided 
        the members with the latest estimated costs for cleaning up the Chesapeake 
        Bay and other impaired Virginia waters. The total cost to meet nutrient 
        reduction commitments for all wastewater treatment plants located in the 
        Commonwealth was estimated at $1.1 billion. Of the 120 treatment plants 
        statewide, 100 are publicly owned plants, and the total cost to meet nutrient 
        reduction commitments at these plants was estimated to be $1.014 billion. 
        Mr. Baxter concluded with an estimate of the total costs for cleaning 
        up impaired waters of $12.5 billion, a cost to be shared by the Commonwealth, 
        local governments, agricultural producers, developers, as well as other 
        entities and individuals. RECOMMENDATIONS 
        OF THE CHESAPEAKE BAY WATERSHED BLUE RIBBON FINANCE PANEL  Dr. Jack Greer of 
        the Environmental Finance Center at Maryland Sea Grant College presented 
        the recommendations of the Chesapeake Bay Watershed Blue Ribbon Finance 
        Panel (the Panel), which was formed pursuant to Chesapeake Executive Council 
        Directive No. 03-02. The Panel was charged with identifying funding for 
        cleanup of the Chesapeake Bay, as well as facilitating removal of the 
        Bay from the EPA's list of impaired waters by 2010.  The Panel recommended 
        the creation of a Chesapeake Bay Financing Authority which would be capitalized 
        through revenue appropriations from the Bay states and the federal government. 
        The Financing Authority, as an independent entity, could direct funds 
        to Bay watershed projects that would provide the greatest amount of return 
        in terms of nutrient and sediment reductions. The Panel recommended that 
        the federal government provide 80 percent of the Fund's capitalization, 
        with the Bay states contributing 20 percent. The Panel also recommended 
        that the Bay states establish revolving loan funds to provide ongoing 
        funding for Bay cleanup. Agricultural producers will need financial assistance 
        in the form of federal and state grants and other subsidies to institute 
        best management practices for nutrient reduction. The Panel noted that 
        imposition of sewer and septic fees by the State of Maryland for cleanup 
        of the Chesapeake Bay serves as a funding model for wastewater treatment 
        improvements and other cleanup efforts.  RECOMMENDATIONS 
        OF THE CHESAPEAKE BAY FOUNDATION Anne Jennings, Virginia 
        Executive Director of the Chesapeake Bay Foundation, was the final speaker. 
        Ms. Jennings stated that the Foundation and Virginia's citizens support 
        the $50 million commitment made by the General Assembly (House Bill 2777/Senate 
        Bill 1235/Senate Bill 810) for cleanup of Virginia's waters. The results 
        of a recent professionally administered poll revealed that Virginia citizens 
        consider pollution of the Chesapeake Bay to be a serious problem- more 
        of a problem than the economy, public safety, education, or taxes. The 
        Foundation supports the need for a stable, consistent funding source for 
        Bay cleanup, but any new tax or fee that may be imposed for that purpose 
        should provide an exemption for low-income households. Collection of a 
        tax or fee should be as administratively simple as possible. Ms. Jennings 
        concluded by saying that Virginians are willing to pay their share of 
        the bill to restore the health of the Chesapeake Bay.
 NEXT MEETING
 The next meeting 
        of the joint subcommittee is scheduled for July 20, 2005, at 10:00 a.m. 
        in the General Assembly Building in Richmond. Chairman:The Hon. Vincent 
        F. Callahan, Jr.
 Vice Chairman:The Hon John H. 
        Chichester
 For information, 
        contact:Marty Farber, David 
        Rosenberg, or Mark Vucci
 DLS Staff
 Website:http://dls.state.va.us/statewaters.htm
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