This report was developed to comply with consolidated water quality reporting requirements set forth in § 62.1-44.118 of the Code of Virginia. This section requires the Secretary of Natural Resources to submit a progress report on implementing the impaired waters clean-up plan as described in § 62.1-44.117 of the Code of Virginia. This consolidated report also includes the “Annual Report on the Water Quality Improvement Fund" by the Department of Conservation and Recreation (DCR) and Department of Environmental Quality (DEQ) pursuant to § 10.1-2134 of the Code of Virginia and incorporates the reports on “Cooperative Nonpoint Source Pollution Programs" required in subsection D of § 10.1-2127 and the “Watershed Planning and Permitting Report" required in subsection B of § 10.1-1193 of the Code of Virginia. The report also encompasses DCR’s report of “Annual Funding Needs for Effective Implementation of Agricultural Best Management Practices" pursuant to subsection C of § 10.1-2128.1 of the Code of Virginia. This consolidated report also includes the “2014 Chesapeake Bay Watershed Agreement Progress Report: State of the Chesapeake Bay Program Report to the Chesapeake Bay Executive Council," August 2018 as required in § 2.2-220.1. This consolidated report also addresses Item 361.A. in the 2018 Special Session I Budget (Chapter 2) for FY 2019 and FY 2020.

Water Quality Improvement Fund and Cooperative Nonpoint Source Pollution Programs

For FY 2018 (the period July 1, 2017 – June 30, 2018), DCR allocated over $16 million in agricultural cost-share and technical assistance funds to Soil and Water Conservation Districts. This included over $500,000 in Conservation Reserve Enhancement Program (CREP) cost-share funds to be disbursed by Districts as state match for completed projects. Of the $16 million, approximately $13.88 million was distributed to farmers through the Virginia Agricultural Cost-Share Program (VACS) and CREP for implementation of best management practices (BMPs). An additional $2.2 million was allocated in technical assistance to Districts to provide implementation assistance to participants. The implementation of backlogged Stream Exclusion SL-6 Pending VACS cost-share applications was reduced from approximately $4 million in the Chesapeake Bay watershed to less than $720,000 ($8 million statewide). Practices installed on farms during FY 2018 will result in estimated edge of field nitrogen reductions of approximately 9.4 million pounds, phosphorus reductions of approximately 3.1 million pounds, and sediment reductions of approximately 856 thousand tons.

Under the Water Quality Improvement Fund (WQIF) Point Source Program, DEQ currently has 66 signed agreements that obligated $799.8 million in state grants ranging from 35% to 90% cost-share, for design and installation of nutrient reduction technology at Bay watershed point source discharges. Within this total number of projects receiving cost-share, 62 have been completed and four are active in the construction stage. For calendar year 2017, facilities registered under the Chesapeake Bay Watershed Nutrient Discharge General Permit reported discharged loads that, in aggregate, were significantly below the total Waste Load Allocations for all Bay tributary basins. Tables of discharged and delivered loads for each individual facility and basin totals are available at this DEQ webpage: https://www.deq.virginia.gov/Portals/0/DEQ/Water/PollutionDischargeElimination/Watershed%20GP/2017%20Published%20Loads%20Draft%203_28_2018.pdf?ver=2018-04-05-085935-537

As part of a WQIF Nonpoint Source Program, through a Request for Assistance (RFA) directed at local government applicants (cities, towns, counties, Soil and Water Conservation Districts, and Planning District Commissions) along with state agencies, DEQ awarded $3.4 million to implement nonpoint source (NPS) pollution control projects. Within the Chesapeake Bay Watershed, projects that maximize reduction of nitrogen, phosphorous or sediment were a funding priority. In addition, projects with the highest pollution reduction relative to dollars requested were given priority. These projects will implement pollution control actions that will have a significant and lasting impact on local and state water quality. Anticipated pollution reductions include approximately 2,979 pounds per year of total nitrogen, approximately 87 pounds per year of total phosphorus, and approximately 92 tons per year of total suspended solids.

Funding Needs for Effective Implementation of Agricultural Best Management Practices

Funding projections for the Chesapeake Bay were developed in coordination with stakeholders based on a detailed analysis of practices identified in the Chesapeake Bay Phase II Watershed Implementation Plan (WIP). This included a review of 2014 progress in implementing the WIP and the inclusion of reductions projected from $103 million of stream exclusion practices statewide that either have been installed or were underway as of June 30, 2018 ($95 million, including nearly $53 million in the Bay watershed), or await funding ($7.9 million, including $711,000 in the Bay watershed). The WIP implementation schedule focuses on full implementation by 2025, recognizing that based on 2017 mid-term targets, with the exception of sediment, the existing level of effort is currently on track for achieving the Commonwealth’s commitment to reducing agricultural loads.

For the fiscal years 2019 – 2025, the final scheduled year of the Chesapeake Bay WIP, a revised estimate of $1.61 billion may be required from state and federal funds as well as farmer financial contributions to meet water quality goals. Approximately 50% of this total ($807 million) could be needed from State sources, the vast majority of which is direct funding of the Virginia Agricultural Cost-Share (VACS) Program and support for Soil and Water Conservation Districts that implement the VACS program.

Actual FY 2018 allocations from state sources for implementation of agricultural best management practices had the following breakdown:

FY 2018 (Program Name – agency subprogram code – amount):

VACS Cost-Share program funding (50323) - $13.8 million

District Technical Assistance (50322) - $2.2 million

District Financial Assistance (50320) - $7.1 million

FY 2018 support figures exclude engineering support via DCR staff, IT support, and training assistance (e.g. Conservation Planning Certification). These have been itemized separately.

Projected funding needs from state sources for implementation of agricultural best management practices through the FY 2018-2019 biennium are estimated in the 2018 Ag Needs Assessment Table on page 14. With the exception of sediment reductions, current funding levels will likely provide the estimated funding necessary to achieve 60% of the Chesapeake Bay agricultural implementation by 2017 as was indicated in Table 5.4-4 of Virginia’s Phase I WIP. It is anticipated that progress towards the Commonwealth’s 2017 Bay goals will be furthered by over-achievement in other sectors, specifically wastewater treatment plants. Improved tracking of voluntarily installed practices, technological improvements in practices, program efficiency, other cost reduction strategies, and changes to improve the Bay Watershed Model are difficult to quantify, but all are expected to further reduce overall costs and enhance progress towards the 2018 goals.

Chesapeake Bay and Virginia Waters Clean-Up Plan Report

During FY 2018, many strategies were implemented to reduce pollutants entering the Chesapeake Bay tributaries and Southern Rivers basins. Significant progress was made in reducing point source pollutant discharges from sewage treatment plants, installing agricultural best management practices with a continuing focus on livestock exclusion practices, the reissuance of all remaining administratively continued Municipal Separate Storm Sewer System (MS4) permits, and implementing revised Stormwater Management Regulations. The implementation of Virginia’s Chesapeake Bay Phase II WIP continues. Virginia agencies successfully completed most of the 2016-2017 WIP milestones. EPA approved the 2018-2019 milestones in July 2018.

In FY 2018, DEQ developed 44 Total Maximum Daily Load (TMDL) equations for small watersheds and completed 3 TMDL implementation plans covering 16 impaired waterbody segments. A total of 185 small TMDL Implementation Watersheds saw BMP activity resulting in a total of 2,003 BMPs installed using a total of $5,913,645 of Federal and State funds and landowner contributions.