WIP3 Impact on Virginia's Wastewater Utilities

1. VIRGINIA MUNICIPAL LEAGUEOCTOBER 7, 2019 Chesapeake Bay TMDL Phase III Watershed Implementation Plan: WASTEWATER UTILITY IMPLICATIONS Christopher D. Pomeroy, Esq. President

2. WIP3 Admits to Outstanding Local Govt Wastewater Results: 100% (Plus) Compliance “Virginia has implemented one of the most successful point source trading programs in the nation to achieve significant nutrient reductions from the wastewater sector.” Cut 9.93 mlbs/yr N (-50%) & 437,410 lbs/yr P (-38%) Nitrogen loads for facilities registered … have declined every year since 2010 The facilities currently produce greater than 6 million pounds of unused TN credits every year Phosphorus performance has averaged more then 640,000 pounds of unused TP credits over past 8 yrs

3. Nevertheless, WIP3 Changes the Rules: “Initiative (52): Require Additional Nutrient Reductions From WWTPs” “VA will initiate actions to achieve additional nutrient reductions from ... facilities that have not yet upgraded to achieve 4 mg/l of TN and 0.3 mg/l of TP.” “This action will consist of modifications to the WQMP Regulation to include secondary, “floating” wasteload allocations for significant municipal facilities.” “The floating wasteload allocations will be based on the flow treated by the facility in a given year and nutrient concentrations of 4 mg/l TN and 0.3 mg/l TP.” Some limited exceptions TBD

4. WIP3’s Estimated Impact 46 Facilities Immediately Impacted, Others Later “Of the 87 significant publicly owned treatment works (POTWs) included in the Watershed General Permit, 41 have already upgraded their facilities to achieve 4 mg/l TN and 0.3 mg/l TP.” State Offers Trading, But Removes Most Credits “Because this initiative is being implemented through the WQMP Regulation and the Watershed GP, no facilities will be required to upgrade but rather may choose to trade nutrient credits to achieve their reduction goals.”

5. How We Got to This Point Localities Relied on Decisions & Succeeded Ex: 2005/2007 (State Regulations) Ex: 2010 (EPA TMDL Regulation) Ex: 2012/2017 (State Permit Reissuances) Now State Ordering Changes Late in the Game Year 9 of 15 WIP3 Based on False Backsliding Assumption Beginning in 2025, especially in Potomac River Contrary to data and WIP3’s own statements This Fundamental Error Creates the “Need” When the error is corrected, “problem” is solved

6. More About How We Got Here State Gave Industries a Pass and Hit Local Govt Energy, pulp and paper, chemical manufacturers excluded Instead, State put new regulatory burden on Localities VAMWA Offered Numerous Compromises Would have resulted in full compliance & met State’s goals For the First Time in 20 Years, VAMWA’s Recommendations Were Flatly Rejected by State Every other time VAMWA has reach major compromises and agreements that have more than met State’s goals

7. Final WIP3 Initiative (52): State’s Claimed Rationale “In this Phase III WIP Virginia relies upon the continued overperformance by the wastewater sector…” “Virginia … is confident that the sector will continue to out-perform their regulatory requirements.” The use of 2018 flows and the concentration assumptions included in the WIP III input deck…is expected to generate conservative loading projections for 2025. Actually, Excessively Conservative

8. WIP3 Fails to Take Credit for Existing Overtreatment (Shown in Table)Instead WIP3 Assumes WWTP Discharges Will Spike Up in 2025 to Unrealistically High Levels

9. To Make Up for the Assumed Spike, the WIP3 Adds New Regulations Called “Floating Caps” (Impact Below)

10. We Can Meet the WIP3 Target In Much Smarter, More Cost-Effective Way Correct the falsely assumed wastewater load spike Eliminate the new floating cap regulation Accept HRSD’s offer to reduce its James-N allocation by 1 million pounds (thank you) Base WIP3 2025 forecast on these net credits Use resulting credits to cover needs (like WIP3 did) Plenty of credits – No need for costly new regs!

11. Meet WIP3 Target Smarter: Potomac When the incorrectly assumed WWTP load spike is corrected, the Potomac flips from “Nonattainment” to “Full Compliance”

12. Meet WIP3 Target Smarter: Other Basins Even once the incorrectly assumed WWTP load spike is corrected, there are still credits needed in 3 basins (shown below)

13. As With WIP3, There Is Plenty of James River Credits to Cover Other Basins The James still has plenty of credits (4.2 mlbs) to cover the other basins, so absolutely no need for new regulations

14. Prior Upgrade Proposals Beyond HRSD 1 mlbs Reduction(All “Gravy”) Projects (for Future WQIF Agreements) HRSD / Chesapeake-Elizabeth WWTP Spotsylvania County / FMC* South Central Wastewater Authority* * VAMWA Proposal meets WIP3 target without these projects but we still support them because the Owners support them

15. Operations Incentive Grant Concept(More “Gravy”) Establish voluntary prgm for all basins / all WWTPs Annual incentive payments for exceptional nutrient removal performance producing credits Partner on 2020 legislation to adopt Incentives Fully operational by 2025, earlier phase-in if possible Consider including Blue Plains too

16. Plus, Other Existing Programs Will Produce Even More Credits Over Time(Even More “Gravy”) WQIF Grants for Nutrient Removal Technology Design & Installation (Va. Code §10.1-2131) WQIF Grants for Nutrient Reducing Flow Transfers (HB 1822 (2019), Va. Code § 10.1-2131) Technology-Based Regulations for New and Expanding Facilities (9VAC25-40-70) PLUS, HRSD SWIFT in future (no credit taken here)

17. While State Says WIP3 “Is Just a Plan,” the Actual WIP3 Language is Mandatory “The Commonwealth will initiate actions to achieve additional nutrient reductions…” “This action will consist of modifications to the Water Quality Management Planning Regulation…” “The floating wasteload allocations will be based on the flow treated by the facility in a given year and nutrient concentrations of 4 mg/l TN and 0.3 mg/l TP…” Hope to Work with State to Fix WIP3