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CHESAPEAKE BAY PROGRAM EXECUTIVE COUNCIL GUNSTON HALL ▪ LORTON, VA ▪ JULY 9 , 2012

This article discusses strategies implemented in Virginia to meet infrastructure finance goals, including shared financial commitment, innovative regulation, and market-based flexibility. It also highlights the success of the point source nutrient trading program.

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CHESAPEAKE BAY PROGRAM EXECUTIVE COUNCIL GUNSTON HALL ▪ LORTON, VA ▪ JULY 9 , 2012

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  1. CHESAPEAKE BAY PROGRAM EXECUTIVE COUNCIL GUNSTON HALL ▪ LORTON, VA ▪ JULY 9, 2012 Strategies To Meet Infrastructure Finance Goals Christopher D. Pomeroy

  2. 3-Part Point Source Strategy in Virginia • Shared Financial Commitment • Partial grant funding for Wastewater Plant upgrades • Innovative Regulation • One Watershed General Permit for all dischargers • Market-Based Flexibility • Flexible permittee-led trading with accountability

  3. 1. Shared Financial Commitment: Water Quality Improvement Grants • Role of the Commonwealth of Virginia • Fund Grants Program through State Budget • Use cash (% of budget surplus, if any) or debt as needed • Reimburse Localities for set % of construction costs • Role of Locality (WWTP Owner) • Plan, design and construct facility upgrade • Operate facility to meet nutrient performance standards • Finance local share (~ 50% to 75% of total project) usually with 20 to 30-year debt

  4. Shared Financial Commitment:Investment History • A Reliable State-Local Partnership • 16-year track record (1998-2013) • State Contribution of $744 Million through FY13 • Average of $47 million per year • FY13 Budget adds an above-average $88 million • Locality Contributions (est.) • State grants leveraged ~ $1.5 billion in local funds • Over $2 billion (total) invested

  5. 2. Innovative Regulation • Watershed General Permit (WGP) • A single permit covers all wastewater treatment plants • Focuses on “significant” facilities first • WGP Set a Common Schedule for All Facilities • Set effective date of Jan. 1, 2007 • Set compliance deadline of Jan. 1, 2011 • Supports stable, predictable regulatory climate • WGP Authorized Use of Trading for Compliance

  6. 3. Market-Based Flexibility:Point Source Nutrient Trading • Participant-Run Trading Program • Exchange Assn & Members create 5-year trading plan • Member-operated Exchange facilitates most trades • DEQ has oversight authority, but no direct role in trades • Outstanding Results • 75 Owners, 110 Facilities, and 100% compliance • 246,000 N and 77,000 P credits traded and used in 2011 • Total credit value of $1.9 million for 2011

  7. Stakeholder Perspective on Keys to This Success • Reliable financial partnerships • Willingness to change old regulatory models • Predictable rules that focus on the big picture • Appropriate flexibility for implementation details • Long-term stable regulatory climate

  8. THANK YOUFOR MORE INFORMATIONChristopher D. Pomeroychris@AquaLaw.comwww.AquaLaw.com(804) 716-9021

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