Vol. 32 Iss. 13 - February 22, 2016



Development of Long-Term, OffsettingMethods within the Virginia Nutrient Credit Exchange Program

Importance of theInitiative

The Chesapeake Bay is a nationaltreasure and an ecological andeconomic asset for Virginia.In 2005, the General Assembly established a watershed general permitand nutrient credit tradingprogram to help manage total point source discharges of nitrogen andphosphorous into the Chesapeake Bay watershed. This market-based tool wasdesigned to assist Virginia's point sourcedischargers, including municipal wastewater treatment plants andprivate industries, with complyingwith nutrient waste load allocations necessary to improve the health of the Chesapeake Bay and its tributaries. New sources are able to purchaseavailable allocations and/orcredits through the Virginia NutrientCredit Exchange Program on a year-to-year basis. It is vital that this programcontinues to serve as atoolto protect and improve the health of the Chesapeake Bay watershed while allowing economicgrowth and the development of anew Virginia economy.

Accordingly, by virtueof the authority vestedin me as Governor under Article V of the Constitution of Virginia andunder the laws of the Commonwealth, I herebydirect the Secretaries of Commerce and Trade, NaturalResources, and Agriculture and Forestry to jointly convene a work group comprisedof the Virginia Economic Development Partnership,the Department of Environmental Quality, the Virginia Manufacturers Association, the Virginia Association ofMunicipal Wastewater Agencies, the Virginia Nutrient CreditExchange Association, the ChesapeakeBay Foundation, the James River Association and other interested stakeholders to studyand recommend methodsto facilitate the acquisition of nutrient allocationsand/or credits through the Virginia Nutrient CreditExchange Program to offset discharges of nutrients by point-source dischargers in theChesapeake Bay watershed on a long-term (20+ year)basis.

Such methods shallbe in accordance with the State Water Control Board's authorityto establish and assign nutrientwaste load allocations, and shallnot cause or contribute to an exceedance of applicable water quality standards orthe aggregate point sourceloading caps for Virginia's tributariesto the Chesapeake Bay.

Scope and Guidance

The Work Group shouldconsider: (1) the protection ofestablished nutrient allocations of existing facilities andinvestments that have been made pursuantto such allocations; (2) the needs of expanding and new point sources in the watershed; (3) the minimization of offset demandsby new or expanding facilities by analysis of technologically and economically feasible alternatives; (4) the establishment of a merit-based qualification process for nutrient creditacquisition to align offset supplies with state and local economicdevelopment goals; (5) the cost and value of existinginfrastructure, of creditgeneration, of credit use for offset purposes, andof other offset methods; (6) supportfor innovation andvoluntary incentives to promotecredit generation, exchange and use to meet offset needs; (7) priorities for continuedstate investment in waterquality improvement, including the NutrientOffset Fund, the Water Quality Improvement Fund andother state economic development incentives; and (8) flexibility inachieving water quality standardsunder the ChesapeakeBay Total Maximum DailyLoad (TMDL).

The Work Group shallcomplete its work, including the development of recommendationsas to viable offset supply augmentation methods by November1, 2016. The Secretaries shall provide a report on the recommendations of the Work Group to me by December 1, 2016.

Effective Date of the Executive Order

This Executive Order shallbe effective upon itssigning and shall remain in full force andeffect for one yearafter its signing unless amendedor rescinded by further executiveorder.

Given under my handand under the Seal of theCommonwealth of Virginia this 28th Dayof January, 2016.

/s/ Terence R. McAuliffe