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2007 SESSION

076836712
HOUSE BILL NO. 1710
AMENDMENT IN THE NATURE OF A SUBSTITUTE
(Proposed by the Senate Committee on Finance
on February 15, 2007)
(Patron Prior to Substitute--Delegate Callahan)
A BILL to amend and reenact §§ 10.1-2128, 10.1-2129, and 10.1-2131 of the Code of Virginia, relating to water quality improvement grants for treatment works.

Be it enacted by the General Assembly of Virginia:

1.  That §§ 10.1-2128, 10.1-2129, and 10.1-2131 of the Code of Virginia are amended and reenacted as follows:

§ 10.1-2128. Virginia Water Quality Improvement Fund established; purposes.

A. There is hereby established in the state treasury a special permanent, nonreverting fund, to be known as the "Virginia Water Quality Improvement Fund." The Fund shall be established on the books of the Comptroller. The Fund shall consist of sums appropriated to it by the General Assembly which shall include, unless otherwise provided in the general appropriation act, 10 percent of the annual general fund revenue collections that are in excess of the official estimates in the general appropriation act and 10 percent of any unreserved general fund balance at the close of each fiscal year whose reappropriation is not required in the general appropriation act. The Fund shall also consist of such other sums as may be made available to it from any other source, public or private, and shall include any penalties or damages collected under this article, federal grants solicited and received for the specific purposes of the Fund, and all interest and income from investment of the Fund. Any sums remaining in the Fund, including interest thereon, at the end of each fiscal year shall not revert to the general fund but shall remain in the Fund. All moneys designated for the Fund shall be paid into the state treasury and credited to the Fund. Moneys in the Fund shall be used solely for Water Quality Improvement Grants. Expenditures and disbursements from the Fund shall be made by the State Treasurer on warrants issued by the Comptroller upon the written request of the Director of the Department of Environmental Quality or the Director of the Department of Conservation and Recreation as provided in this chapter.

B. The purpose of the Fund is to provide Water Quality Improvement Grants to local governments, soil and water conservation districts, institutions of higher education and individuals for point and nonpoint source pollution prevention, reduction and control programs and efforts undertaken in accordance with the provisions of this chapter. The Fund shall not be used for agency operating expenses or for purposes of replacing or otherwise reducing any general, nongeneral, or special funds allocated or appropriated to any state agency; however, nothing in this section shall be construed to prevent the award of a Water Quality Improvement Grant to a local government in connection with point or nonpoint pollution prevention, reduction and control programs or efforts undertaken on land owned by the Commonwealth and leased to the local government. In keeping with the purpose for which the Fund is created, it shall be the policy of the General Assembly to provide annually its share of financial support to qualifying applicants for grants in order to fulfill the Commonwealth's responsibilities under Article XI of the Constitution of Virginia.

C. For the fiscal year beginning July 1, 2005, $50 million shall be appropriated from the general fund and deposited into the Fund. This appropriation and any amounts appropriated to the Fund in subsequent years in addition to any amounts deposited to the Fund pursuant to the provisions of subsection A of § 10.1-2128 shall be used solely to finance the costs of design and installation of nutrient removal technology at publicly owned treatment works designated as significant dischargers or eligible nonsignificant dischargers for compliance with the effluent limitations for total nitrogen and total phosphorus as required by the tributary strategy plans or applicable regulatory requirements.

At such time as grant agreements specified in § 10.1-2130 have been signed by every significant discharger dischargers and eligible nonsignificant discharger dischargers and available funds are sufficient to implement the provisions of such grant agreements, the House Committee on Agriculture, Chesapeake and Natural Resources, the House Committee on Appropriations, the Senate Committee on Agriculture, Conservation and Natural Resources, and the Senate Committee on Finance shall review the financial assistance provided under this section and determine (i) whether such deposits should continue to be made, (ii) the size of the deposit to be made, (iii) the programs and activities that should be financed by such deposits in the future, and (iv) whether the provisions of this section should be extended.

§ 10.1-2129. Agency coordination; conditions of grants.

A. If, in any fiscal year beginning on or after July 1, 2005, there are appropriations to the Fund in addition to those made pursuant to subsection A of § 10.1-2128, the Secretary of Natural Resources shall distribute those moneys in the Fund provided from the 10 percent of the annual general fund revenue collections that are in excess of the official estimates in the general appropriation act, and the 10 percent of any unreserved general fund balance at the close of each fiscal year whose reappropriation is not required in the general appropriation act, as follows:

1. Seventy percent of the moneys shall be distributed to the Department of Conservation and Recreation and shall be administered by it for the sole purpose of implementing projects or best management practices that reduce nitrogen and phosphorus nonpoint source pollution, with a priority given to agricultural best management practices. In no single year shall more than 60 percent of the moneys be used for projects or practices exclusively within the Chesapeake Bay watershed; and

2. Thirty percent of the moneys shall be distributed to the Department of Environmental Quality, which shall use such moneys for making grants for the sole purpose of designing and installing nutrient removal technologies for publicly owned treatment works designated as significant dischargers or eligible nonsignificant dischargers. The moneys shall also be available for grants when the design and installation of nutrient removal technology utilizes the Public-Private Education Facilities and Infrastructure Act (§ 56-575.1 et seq.).

3. Except as otherwise provided in the Appropriation Act, in any fiscal year when moneys are not appropriated to the Fund in addition to those specified in subsection A of § 10.1-2128, or when moneys appropriated to the Fund in addition to those specified in subsection A of § 10.1-2128 are less than 40 percent of those specified in subsection A of § 10.1-2128, the Secretary of Natural Resources, in consultation with the Secretary of Agriculture and Forestry, the State Forester, the Commissioner of Agriculture and Consumer Services, and the Directors of the Departments of Environmental Quality and Conservation and Recreation, and with the advice and guidance of the Board of Conservation and Recreation, the Virginia Soil and Water Conservation Board, the State Water Control Board, and the Chesapeake Bay Local Assistance Board, and following a public comment period of at least 30 days and a public hearing, shall allocate those moneys deposited in the Fund between point and nonpoint sources, both of which shall receive moneys in each such year.

B. 1. Except as may otherwise be specified in the general appropriation act, the Secretary of Natural Resources, in consultation with the Secretary of Agriculture and Forestry, the State Forester, the Commissioner of Agriculture and Consumer Services, and the Directors of the Departments of Environmental Quality and Conservation and Recreation, and with the advice and guidance of the Board of Conservation and Recreation, the Virginia Soil and Water Conservation Board, the State Water Control Board, and the Chesapeake Bay Local Assistance Board, shall develop written guidelines that (i) specify eligibility requirements; (ii) govern the application for and the distribution and conditions of Water Quality Improvement Grants; and (iii) list criteria for prioritizing funding requests.

2. In developing the guidelines the Secretary shall evaluate and consider, in addition to such other factors as may be appropriate to most effectively restore, protect and improve the quality of state waters: (i) specific practices and programs proposed in any tributary strategy plan, and the associated effectiveness and cost per pound of nutrients removed; (ii) water quality impairment or degradation caused by different types of nutrients released in different locations from different sources; and (iii) environmental benchmarks and indicators for achieving improved water quality. The process for development of guidelines pursuant to this subsection shall, at a minimum, include (a) use of an advisory committee composed of interested parties; (b) a 60-day public comment period on draft guidelines; (c) written responses to all comments received; and (d) notice of the availability of draft guidelines and final guidelines to all who request such notice.

3. In addition to those the Secretary deems advisable to most effectively restore, protect and improve the quality of state waters, the criteria for prioritizing funding requests shall include: (i) the pounds of total nitrogen and the pounds of total phosphorus reduced by the project; (ii) whether the location of the water quality restoration, protection or improvement project or program is within a watershed or subwatershed with documented water nutrient loading problems or adopted nutrient reduction goals; (iii) documented water quality impairment; and (iv) the availability of other funding mechanisms. Notwithstanding the provisions of subsection E of § 10.1-2131, the Director of the Department of Environmental Quality may approve a local government point source grant application request for any single project that exceeds the authorized grant amount outlined in subsection E of § 10.1-2131. Whenever a local government applies for a grant that exceeds the authorized grant amount outlined in this chapter or when there is no stated limitation on the amount of the grant for which an application is made, the Directors and the Secretary shall consider the comparative revenue capacity, revenue efforts and fiscal stress as reported by the Commission on Local Government. The development or implementation of cooperative programs developed pursuant to subsection B of § 10.1-2127 shall be given a high priority in the distribution of Virginia Water Quality Improvement Grants from the moneys allocated to nonpoint source pollution.

C. The provision of Water Quality Improvement Grants for the design and installation of nutrient removal technology at those publicly owned treatment works designated as significant dischargers or eligible nonsignificant dischargers pursuant to this article shall be made upon written certification that 75% of the local share of the cost of nutrient removal technology for the project has been expended. To the extent that any publicly owned treatment works designated as a significant discharger or eligible nonsignificant discharger receives less than the grant awarded pursuant to § 10.1-2131, any (i) annual general fund revenue collections that are in excess of official estimates in the general appropriation act and (ii) unreserved general fund balance at the close of a fiscal year that is deposited into the Virginia Water Quality Improvement Fund pursuant to subsection A of § 10.1-2128 shall be used in a manner to augment the funding of such projects for which grants have been prorated. However, the total combined funding or reimbursement for projects for which grants have been prorated, including any supplemental funding or reimbursement as provided herein, shall not exceed the total reimbursement or funding as provided under the formula set forth in subsection E of § 10.1-2131.

The distribution of Water Quality Improvements Grants for the design and installation of nutrient removal technology at those publicly owned treatment works designated as significant dischargers or eligible nonsignificant dischargers pursuant to this article shall be effected by one of the following methods:

1. In one lump sum payment to be paid by the State Treasurer upon request of the Director of the Department of Environmental Quality out of funds appropriated to the Virginia Water Quality Improvement Fund;

2. Over a specified time through a contractual agreement entered into by the Treasury Board and approved by the Governor, on behalf of the Commonwealth, and the locality or public service authority undertaking the design and installation of nutrient removal technology, such payments to be paid by the State Treasurer out of funds appropriated to the Treasury Board; or

3. In one lump sum payment to be made by the Virginia Public Building Authority pursuant to §§ 2.2-2261, 2.2-2263, and 2.2-2264, including the Commonwealth's share of the interest costs expended by the locality or regional authority for financing such project during the period from 50 percent completion of construction to final completion of construction. Payments shall be made under this subdivision only if the General Assembly provides a specific authorization for the Virginia Public Building Authority to issue bonds to finance the design and installation of nutrient removal technology, with such authorization including a maximum limit on the aggregate principal amount of bonds that may be issued by the Authority for such purposes.

The General Assembly shall have the sole authority for purposes of determining whether the payment of grants shall be effected pursuant to subdivision 1, 2, or 3.    

§ 10.1-2131. Point source pollution funding; conditions for approval.

A. The Department of Environmental Quality shall be the lead state agency for determining the appropriateness of any grant related to point source pollution to be made from the Fund to restore, protect or improve state water quality.

B. The Director of the Department of Environmental Quality shall, subject to available funds and in coordination with the Director of the Department of Conservation and Recreation, direct the State Treasurer to make Water Quality Improvement Grants in accordance with the guidelines established pursuant to § 10.1-2129. The Director of the Department of Environmental Quality shall enter into grant agreements with all facilities designated as significant dischargers or eligible nonsignificant dischargers that apply for grants unless the Director determines that the use of nutrient credits in accordance with the Chesapeake Bay Watershed Nutrient Credit Exchange Program (§ 62.1-44.19:12 et seq.) would be significantly more cost-effective than the installation of nutrient controls for the facility in question; however, all such grant agreements shall contain provisions that payments thereunder are subject to the availability of funds. Further, the eligible scope of work for which grants may be awarded shall be the alternative that optimizes cost efficiencies based on a total life-cycle cost analysis, unless the prospective grantee provides sufficient justification, as determined by the Director of the Department of Environmental Quality, for another alternative.

C. Notwithstanding the priority provisions of § 10.1-2129, the Director of the Department of Environmental Quality shall not authorize the distribution of grants from the Fund for purposes other than financing the reasonable cost of design and installation of nutrient removal technology at publicly owned treatment works until such time as all tributary strategy plans are developed and implemented unless he finds that there exists in the Fund sufficient funds for substantial and continuing progress in implementation of the tributary strategy plans. In addition to the provisions of § 10.1-2130, all grant agreements related to nutrients shall include: (i) numerical technology-based effluent concentration limitations on nutrient discharges to state waters based upon the technology installed by the facility; (ii) enforceable provisions related to the maintenance of the numerical concentrations that will allow for exceedences of 0.8 mg/L for total nitrogen or no more than 10 percent, whichever is greater, for exceedences of 0.1 mg/L for total phosphorus or no more than 10%, and for exceedences caused by extraordinary conditions; and (iii) recognition of the authority of the Commonwealth to make the Virginia Water Facilities Revolving Fund (§ 62.1-224 et seq.) available to local governments to fund their share of the cost of designing and installing nutrient removal technology based on financial need and subject to availability of revolving loan funds, priority ranking and revolving loan distribution criteria. If, pursuant to § 10.1-1187.6, the State Water Control Board approves an alternative compliance method to technology-based concentration limitations in Virginia Pollutant Discharge Elimination System permits, the concentration limitations of the grant agreement shall be suspended subject to the terms of such approval. The cost of the design and installation of nutrient removal technology at publicly owned treatment works meeting the nutrient reduction goal in an applicable tributary strategy plan or an applicable regulatory requirement and incurred prior to the execution of a grant agreement is eligible for reimbursement from the Fund provided the grant is made pursuant to an executed agreement consistent with the provisions of this chapter.

Subsequent to the implementation of the tributary strategy plans, the Director may authorize disbursements from the Fund for any water quality restoration, protection and improvements related to point source pollution that are clearly demonstrated as likely to achieve measurable and specific water quality improvements, including, but not limited to, cost effective technologies to reduce nutrient loads. Notwithstanding the previous provisions of this subsection, the Director may, at any time, authorize grants, including grants to institutions of higher education, for technical assistance related to nutrient reduction.

D. The grant percentage provided for financing the costs of the design and installation of nutrient removal technology at publicly owned treatment works shall be based upon the financial need of the community as determined by comparing the annual sewer charges expended within the service area to the reasonable sewer cost established for the community.

E. GrantsSubject to the criteria set forth in this section, grants shall be awarded in the following manner:

1. In communities for which the ratio of annual sewer charges to reasonable sewer cost is less than 0.30, the Director of the Department of Environmental Quality shall authorize grants in the amount of 35 percent of the costs of the design and installation of nutrient removal technology;

2. In communities for which the ratio of annual sewer charges to reasonable sewer cost is equal to or greater than 0.30 and less than 0.50, the Director shall authorize grants in the amount of 45 percent of the costs of the design and installation of nutrient removal technology;

3. In communities for which the ratio of annual sewer charges to reasonable sewer cost is equal to or greater than 0.50 and less than 0.80, the Director shall authorize grants in the amount of 60 percent of the costs of design and installation of nutrient removal technology; and

4. In communities for which the ratio of annual sewer charges to reasonable sewer cost is equal to or greater than 0.80, the Director shall authorize grants in the amount of 75 percent of the costs of the design and installation of nutrient removal technology.

2.  § 1. Virginia Water Quality Improvement Grants under Article 4 (§ 10.1-2128 et seq.) of Chapter 21.1 of Title 10.1 of the Code of Virginia may be used to fund a portion of some or all of the acquisition, design, construction, installation, equipping, improvement, or renovation of nutrient removal technology for eligible nonsignificant dischargers as defined in § 10.1-2117 of the Code of Virginia and the following projects:

 
Shenandoah - Potomac River Basin
 
FACILITY NAME                    OWNER
Fishersville Regional STP        Augusta County Service Authority
Luray STP                        Town of Luray
Middle River Regional STP        Augusta County Service Authority
North River WWTF                 Harrisonburg-Rockingham Regional
                                 Sewer Authority
Stuarts Draft STP                Augusta County Service Authority
Waynesboro STP                   City of Waynesboro
Weyers Cave STP                  Augusta County Service Authority
Berryville STP                   Town of Berryville
Front Royal STP                  Town of Front Royal
Mount Jackson STP                Town of Mount Jackson
New Market STP                   Town of New Market
North Fork Regional WWTP         Shenandoah County
Stoney Creek Sanitary
District STP                     Stoney Creek Sanitary District
Strasburg STP                    Town of Strasburg
Woodstock STP                    Town of Woodstock
Opequon Water 
Reclamation Facility             Frederick-Winchester Service 
                                 Authority
Parkins Mill WWTF                Frederick-Winchester Service
                                 Authority
Basham Simms WWTF                Town of Purcellville
Broad Run WRF                    Loudoun County Sanitation Authority
Leesburg WPCF                    Town of Leesburg
Round Hill WWTP                  Town of Round Hill
PWCSA-H.L. Mooney WWTF           Prince William County Service
                                 Authority
Upper Occoquan Sewage
Authority WWTP                   Upper Occoquan Sewage Authority
Vint Hill Farms Station WWF      Fauquier County Water and Sewer
Sanitation                       Authority      
Alexandria Sanitation 
Authority WWTP                   Alexandria Sanitation Authority
Arlington Co. WPCF               Arlington County
Noman M. Cole, Jr. Pollution 
Control Facility                 Fairfax County
Aquia WWTP                       Stafford County
Colonial Beach STP               Town of Colonial Beach
Dahlgren Sanitary District WWTP  King George County Service 
                                 Authority
Fairview Beach STP               King George County Service 
                                 Authority
Purkins Corner WWTP              King George County Service 
                                 Authority
District of Columbia – Blue
Plains STP (Virginia portion)    Loudoun County Sanitation Authority
                                 and Fairfax County contract 
                                 for capacity
 
Rappahannock River Basin 
 
FACILITY NAME                    OWNER
Culpeper WWTP                    Town of Culpeper
Marshall WWTP                    Town of Marshall
Mountain Run WWTP                Culpeper County
Orange STP                       Town of Orange
Rapidan STP                      Greene County
Remington WWTP                   Fauquier County Water and
                                 Sanitation Authority
Warrenton STP                    Town of Warrenton
Wilderness WWTP                  Rapidan Service Authority
FMC WWTF                         Spotsylvania County
Fredericksburg WWTF              City of Fredericksburg
Little Falls Run WWTF            Stafford County
Massaponax WWTF                  Spotsylvania County
Montross-Westmoreland WWTP       Montross-Westmoreland Sewer Authority
Oakland Park STP                 King George County Service Authority
Tappahannock WWTP                Town of Tappahannock
HRSD-Urbanna WWTP                Hampton Roads Sanitation District
Warsaw STP                       Town of Warsaw
Reedville Sanitary 
District WWTP                    Northumberland County
Kilmarnock WWTP                  Town of Kilmarnock
 
York River Basin 
 
FACILITY NAME                    OWNER
Caroline Co. Regional STP        Caroline County
Gordonsville STP                 Rapidan Service Authority
Ashland WWTP                     Hanover County
Doswell WWTP                     Hanover County
HRSD-York River STP              Hampton Roads Sanitation District
Parham Landing WWTP              New Kent County
Totopotomoy WWTP                 Hanover County
HRSD-West Point STP              Hampton Roads Sanitation District
HRSD-Mathews Courthouse STP      Hampton Roads Sanitation District
 
James River Basin
 
FACILITY NAME                    OWNER
Buena Vista STP                  City of Buena Vista
Clifton Forge STP                Town of Clifton Forge
Covington STP                    City of Covington
Lexington-Rockbridge
Regional WQCF                    Maury Service Authority
Alleghany Co.-Low Moor STP       Alleghany County
Alleghany Co.-Lower Jackson 
River WWTP                       Alleghany County
Rutledge Creek WWTP              Town of Amherst
Lynchburg STP                    City of Lynchburg
Moores Creek Regional STP        Rivanna Water and Sewer Authority
Crewe WWTP                       Town of Crewe
Farmville WWTP                   Town of Farmville
Falling Creek WWTP               Chesterfield County
Henrico Co. WWTP                 Henrico County
Hopewell Regional WWTF           City of Hopewell
Chesterfield Co.-Proctors 
Creek WWTP                       Chesterfield County
Richmond WWTP                    City of Richmond
South Central Wastewater         South Central Wastewater
Authority WWTF                   Authority
Chickahominy WWTP                New Kent County
HRSD-Boat Harbor STP             Hampton Roads Sanitation District
HRSD-James River STP             Hampton Roads Sanitation District
HRSD-Williamsburg STP            Hampton Roads Sanitation District
HRSD-Nansemond STP               Hampton Roads Sanitation District
HRSD-Army Base STP               Hampton Roads Sanitation District
HRSD-Virginia Initiative
Plant STP                        Hampton Roads Sanitation District
HRSD-Chesapeake/Elizabeth STP    Hampton Roads Sanitation District
 
Eastern Shore Basin 
 
FACILITY NAME                    OWNER
Cape Charles WWTP                Town of Cape Charles
Onancock WWTP                    Town of Onancock
Tangier WWTP                     Town of Tangier
 

§ 2. Such grants for nutrient removal technology shall be used solely for the purpose of funding the acquisition, design, construction, installation, equipping, improvement, or renovation of nutrient removal technology for eligible nonsignificant dischargers as defined in § 10.1-2117 of the Code of Virginia and the publicly owned treatment works described above to implement the Commonwealth’s Chesapeake Bay Tributary Strategies and assist the owners in complying with nutrient discharge control regulations adopted by the State Water Control Board. The General Assembly hereby finds and determines that such projects benefit the Commonwealth and its regional and local governments and authorities by preserving, restoring and enhancing the health and vitality of the Chesapeake Bay. 

§ 3. Grants that are funded for eligible nonsignificant dischargers as defined in § 10.1-2117 of the Code of Virginia and the publicly owned treatment works described above shall not be used to calculate, offset, or reduce the share of federal, state, or local revenues or funds otherwise available to any regional or local government.

3.  That the Department of Environmental Quality shall identify and evaluate options to ensure the efficient use of Virginia Water Quality Improvement Grants for nutrient removal technology for eligible nonsignificant dischargers as defined in § 10.1-2117 of the Code of Virginia and other treatment works and shall develop and issue written policies and guidelines governing the use of any such grants. Such policies and guidelines shall provide rules, processes, and procedures for enforcement of appropriate cost control measures for the use of grants for nutrient removal technology. In developing and issuing such written policies and guidelines, the Department shall work with representatives from local governments and the conservation community to evaluate the optimal use of existing and potential cost control measures for eligible nonsignificant dischargers and other treatment works set forth under this act including, but not limited to, the (i) evaluation of eligible and appropriate costs for funding or reimbursement related to upgrades, additions, replacements, or renovations of such treatment works, (ii) applicability of the Virginia Public Procurement Act (§ 2.2-4300 et seq. of the Code of Virginia) to upgrades, additions, replacements, or renovations of such treatment works, consistent with the provisions of the Virginia Public Procurement Act, (iii) use of voluntary nutrient credit trading as an alternative to upgrades, additions, replacements, or renovations of such treatment works, (iv) establishment or use of defined usual and customary rates for funding of, or reimbursing claims related to, upgrades, additions, replacements, or renovations of such treatment works, (v) optimization of a publicly owned treatment work using total life-cycle cost evaluation, (vi) ability to limit or exclude funding of, or reimbursements related to, upgrades, additions, replacements, or renovations of a publicly owned treatment work based upon a comparison of (a) the costs to upgrade or build in regard to such treatment work and (b) the purchase of nutrient credits as an alternative, and (vii) criteria to be used by the Department in prioritizing grants for publicly owned treatment works, including criteria based upon river-basin optimization plans. The development and issuance of the policies and guidelines by the Department shall be exempt from the Administrative Process Act (§ 2.2-4000 et seq. of the Code of Virginia). The policies and guidelines shall be made publicly available no later than April 1, 2008.