Title of Regulation: 9VAC25-600. Eastern Virginia Ground Water Management Area (amending 9VAC25-600-10, 9VAC25-600-20).

Statutory Authority: § 62.1-256 of the Code of Virginia.

Public Hearing Information:

November 26, 2012 - 1:30 p.m. - James City County, Board Room, Building F, 101 Mounts Bay Road, Williamsburg, VA

December 4, 2012 - 2 p.m. - Spotsylvania County, Holbert Building, Board of Supervisors Meeting Room, 9104 Courthouse Road, Spotsylvania, VA

Public Comment Deadline: January 11, 2013.

Agency Contact: Melissa Porterfield, Department of Environmental Quality, 629 East Main Street, P.O. Box 1105, Richmond, VA 23218, telephone (804) 698-4234, FAX (804) 698-4346, or email melissa.porterfield@deq.virginia.gov.

Basis: Section 62.1-256 of the Code of Virginia authorizes the Board of Health to adopt regulations to administer and enforce the Ground Water Management Act of 1992 (§ 62.1-254 et seq.) of the Code of Virginia. The designation process is outlined in 9VAC25-610-70 and 9VAC25-610-80.

Purpose: Groundwater levels in the undesignated portion of Virginia's coastal plain are continuing to decline. Impacts from groundwater withdrawals are propagating along the fall line into the undesignated portion of Virginia's coastal plain and have the potential to interfere with wells in these areas without assigned mitigation responsibilities. Given current groundwater declines, the entire coastal plain aquifer system must be managed to maintain a sustainable future supply of groundwater for the protection of the health, safety, or welfare of the citizens in the Eastern Virginia Groundwater Management Area.

Substance: The regulations are being amended to expand the groundwater management area to include localities that are included in Virginia's coastal plain, with boundaries extending westward to Interstate 95. The term "ground water" is being revised in the regulation to the term "groundwater" to be consistent with common usage and the use of the term by United States Geological Survey (USGS).

Issues: The primary advantage to the public will be that these regulations will manage groundwater resources sustainably within the entire coastal plain. This will ensure that Virginia's groundwater resources are being managed in order to maintain resource availability for future Virginians. There are no disadvantages to the public from managing the groundwater resource.

The primary advantage to the Commonwealth is that groundwater resources will be comprehensively managed. There are no disadvantages to the Commonwealth from managing the groundwater resource.

With the expansion of the groundwater management area, additional withdrawers of groundwater will be required to obtain groundwater withdrawal permits. These permits are issued based on demonstrated need for groundwater, require water conservation and mitigation of impacts, and specify maximum amounts of groundwater that may be withdrawn. All withdrawers of groundwater, unless exempted by statute, are required to obtain a permit, which places additional regulations on withdrawers of groundwater occurring within the management area.

Department of Planning and Budget's Economic Impact Analysis:

Summary of the Proposed Amendments to Regulation. The State Water Control Board proposes to expand the Eastern Virginia Groundwater Management Area to include the counties of Essex, Gloucester, King George, King and Queen, Lancaster, Mathews, Middlesex, Northumberland, Richmond, and Westmoreland, and the areas of Arlington, Caroline, Fairfax, Prince William, Spotsylvania, and Stafford counties east of Interstate 95.

Result of Analysis. There is insufficient data to accurately compare the magnitude of the benefits versus the costs. Detailed analysis of the benefits and costs can be found in the next section.

Estimated Economic Impact. The State Water Control Board proposes to expand the Eastern Virginia Groundwater Management Area to include the counties of Essex, Gloucester, King George, King and Queen, Lancaster, Mathews, Middlesex, Northumberland, Richmond, and Westmoreland, and the areas of Arlington, Caroline, Fairfax, Prince William, Spotsylvania, and Stafford counties east of Interstate 95. The proposed expansion is quite large which is about the size of the current management area.¹

Groundwater is a valuable economic resource due to its many beneficial uses. These include, but are not limited to provision of drinking water; provision of water for crop irrigation, for livestock, for industrial and commercial processes, for aquaculture, for fire protection, and for drought relief; provision of non-use services (e.g. wetlands supported by groundwater, bequest motivations); and provision of supplemental discharge to surface water supplies.

According to Department of Environmental Quality (DEQ) groundwater levels in the proposed expansion areas are continuing to decline two to four feet per year. Since the entire coastal plain aquifer system is interconnected, the system must be managed as a whole to maintain a sustainable future groundwater supply.

With the proposed changes, entities withdrawing 300,000 gallons or more of groundwater per month will be required to obtain a permit. The permits will be for a period of ten years. The levels of initial permitted withdrawals will be based on the historical withdrawal levels to make sure the current users are not forced to reduce their usage for a period of ten years. After the initial ten-year period, the current users may be required to reduce their usage or no permit may be issued depending on the review of the application.

The proposed regulations will introduce compliance costs on the regulated users of groundwater. There will be an application fee of $1,200 for initial permits based on historic groundwater withdrawals for a ten-year permit term. No fees are required for agricultural withdrawals. Since 111 known entities are expected to be affected, approximately $133,200 in total application fees will be paid by the regulated entities during the initial ten-year period. After the initial ten-year period, application fee for a subsequent permit is $6,000.

In some cases an aquifer test may be required. This test is needed when an applicant disagrees with the area of impact determined by DEQ or the model used for evaluating drawdown impacts is known to have problems predicting drawdowns in a specific area. The cost of an aquifer test typically ranges from $10,000 to $25,000.

The new users are required to provide a geophysical log which is estimated to cost approximately $1,200, but may vary depending on the depth of the well. If a camera survey is required, costs may range from $1,000 to $2,000 depending on whether the pump must be removed and the depth of the well.

When there is enough uncertainty whether a proposed withdrawal can meet the drawdown criteria, monitoring wells may be required. The cost of monitoring wells can range from $50,000 to $100,000 depending on the depth and number of wells.

In cases where no permits can be issued, the users will have to absorb the cost differences between the groundwater and the alternate water source chosen. Alternate water sources may include development of surface water reservoirs, withdrawals from existing lakes or rivers, desalination of salt water, reuse of water for non-potable uses, or water conservation measures. The size of the economic effects in these cases will primarily depend on the differential cost of the alternate water source and the quantity of water needed.

Also, according to DEQ, there are 27 known local government withdrawals. These local governments may pass some or all of the additional compliance costs onto their end users. The ability of an entity passing additional regulatory compliance costs on their customers is generally determined by the strength of the demand for the product, which is groundwater in this case.

The proposed regulations will also introduce administrative costs on DEQ due to the additional permit workload anticipated. DEQ estimates that approximately six full-time staff will be needed to accommodate the additional workload. At a cost of $40,000 per full-time position, the total staffing costs is expected to be about $240,000 per year. However, since the current users will be able to continue to withdraw their historical usage levels, DEQ anticipates that the need for the additional staff may be phased in over time.

The main benefit of the proposed regulations is to achieve a sustainable future groundwater supply. As mentioned before, DEQ estimates that the groundwater levels in the proposed expansion areas are continuing to decline two to four feet per year. The recharge rate, on the other hand, is estimated to be 1/10th of an inch per year for some aquifers. Thus, it takes a very long time for groundwater to recharge to its pre-withdrawal levels. Furthermore, significant reductions in groundwater levels may lead to dewatering of aquifers, which causes irreversible damage to the aquifers.

Also, since the entire coastal plain aquifer system is interconnected, withdrawals from one well may affect others. According to DEQ, the mechanics of Virginia's coastal plain aquifer system is such that groundwater levels start declining along the fall line first (approximately Interstate 95 line) and propagate toward the Atlantic Ocean. For example, a major users withdrawal in the Tidewater region may reduce the level of groundwater first in Richmond area and then in Tidewater area. Thus, the protection of groundwater levels is anticipated to benefit the areas closer to the fall line more than the others since they are at more risk.

Furthermore, the proposed regulations are expected to mitigate negative externalities that could exist in an unregulated groundwater management area and lead to an improved allocation of groundwater among different users. When actions of an individual impose involuntary costs on somebody else, a negative externality is said to exist. In the example given, a groundwater user in Tidewater may force the user in Richmond to develop alternate water sources and impose involuntary costs.

A negative externality obscures the true price of a commodity and consequently leads to inefficient allocation of that resource. For example, the user in Tidewater would not pay the full cost of his or her usage and would tend to consume more groundwater than he or she would if he or she was paying the full price, which would include the costs imposed on the user in Richmond. On the other hand, the user in Richmond would tend to consume less than the optimal level as he or she is paying more than what the resource would have cost if there were no externalities. As the proposed regulations will reduce negative externalities and bring the actual cost of groundwater closer to its true cost, an improvement in the efficient allocation of groundwater resources in the proposed groundwater management areas and possibly in some of the current management areas may be expected.

Businesses and Entities Affected. There are 111 known users of groundwater withdrawing 300,000 gallons or more in the proposed expansion area. Of these, 27 are local governments.

Localities Particularly Affected. The proposed expansion of the Eastern Virginia Groundwater Management Area includes the counties of Essex, Gloucester, King George, King and Queen, Lancaster, Mathews, Middlesex, Northumberland, Richmond, and Westmoreland, and the areas of Arlington, Caroline, Fairfax, Prince William, Spotsylvania, and Stafford counties east of Interstate 95.

Projected Impact on Employment. The demand for labor to review applications by DEQ and to prepare the applications for the users by the consultants is expected to increase. It is conceivable that a sustainable future supply of groundwater may lead to a sustainable economic activity and have a positive impact on demand for labor in the long term. However, the withdrawals of new users or of existing users after the initial ten-year period may be limited or prohibited in the expanded management area. If such reduction or prohibition of groundwater withdrawals causes some economic activities to slow down or cease, a reduction in demand for labor may result.

Effects on the Use and Value of Private Property. Similarly, the permit fees and compliance costs may reduce the use and value of private property in the proposed expansion areas. It is conceivable that a sustainable future supply of groundwater may preserve the use and value of private property in the long term. However, the withdrawals of new users or of existing users after the initial ten-year period may be limited or prohibited in the expanded management area. If such reduction or prohibition of groundwater withdrawals occurs, a negative impact on the use and value of private property may be expected.

Small Businesses: Costs and Other Effects. Of the 111 known entities using more than 300,000 gallons of groundwater, 8 are estimated to be small businesses. The costs and other effects on the small businesses are the same as the ones discussed above which include permit fees and costs and added cost of alternate source of water if no permit is issued for groundwater.

Small Businesses: Alternative Method that Minimizes Adverse Impact. There is no known alternative that accomplishes the same goals.

Real Estate Development Costs. If a real estate development project relies on groundwater as a resource, permit fees, other permit costs, and the added cost of alternate source of water may contribute to the development costs of the real estate project. Otherwise, no significant effect on real estate development costs is expected.

Legal Mandate. The Department of Planning and Budget (DPB) has analyzed the economic impact of this proposed regulation in accordance with § 2.2-4007.04 of the Administrative Process Act and Executive Order Number 14 (10). Section 2.2-4007.04 requires that such economic impact analyses include, but need not be limited to, the projected number of businesses or other entities to whom the regulation would apply, the identity of any localities and types of businesses or other entities particularly affected, the projected number of persons and employment positions to be affected, the projected costs to affected businesses or entities to implement or comply with the regulation, and the impact on the use and value of private property. Further, if the proposed regulation has adverse effect on small businesses, § 2.2-4007.04 requires that such economic impact analyses include (i) an identification and estimate of the number of small businesses subject to the regulation; (ii) the projected reporting, recordkeeping, and other administrative costs required for small businesses to comply with the regulation, including the type of professional skills necessary for preparing required reports and other documents; (iii) a statement of the probable effect of the regulation on affected small businesses; and (iv) a description of any less intrusive or less costly alternative methods of achieving the purpose of the regulation. The analysis presented above represents DPB's best estimate of these economic impacts.

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¹ Current Eastern Virginia Groundwater Management Area includes the counties of Charles City, Isle of Wight, James City, King William, New Kent, Prince George, Southampton, Surry, Sussex, and York; the areas of Chesterfield, Hanover, and Henrico east of Interstate 95; and the cities of Chesapeake, Franklin, Hampton, Hopewell, Newport News, Norfolk, Poquoson, Portsmouth, Suffolk, Virginia Beach, and Williamsburg.

Agency's Response to Economic Impact Analysis: The department has reviewed the economic impact analysis prepared by the Department of Planning and Budget and has no comment.

Summary:

The proposed amendments expand the Eastern Virginia Groundwater Management Area to include the counties of Essex, Gloucester, King George, King and Queen, Lancaster, Mathews, Middlesex, Northumberland, Richmond, and Westmoreland, and those areas of Arlington, Caroline, Fairfax, Prince William, Spotsylvania, and Stafford counties that lie east of Interstate 95.

CHAPTER 600
EASTERN VIRGINIA GROUND WATER GROUNDWATER MANAGEMENT AREA

9VAC25-600-10. Definitions.

The following words and terms, when used in this chapter shall have the following meaning, unless the context clearly indicates otherwise:

"Act" means the Groundwater Ground Water Management Act of 1992 (§ 62.1-254 et seq. of the Code of Virginia).

"Area" means the Eastern Virginia Groundwater Management Area.

"Board" means the State Water Control Board.

"Ground water "Groundwater management area" means a geographically defined ground water groundwater area in which the board has deemed the levels, supply or quality of ground water groundwater to be adverse to public welfare, health and safety.

"Ground water" "Groundwater" means any water, except capillary moisture, beneath the land surface in the zone of saturation or beneath the bed of any stream, lake, reservoir or other body of surface water wholly or partially within the boundaries of this Commonwealth, whatever may be the subsurface geologic structure in which such water stands, flows, percolates or otherwise occurs.

9VAC25-600-20. Declaration of ground water groundwater management area.

A. The board hereby orders the declaration of the eastern part of Virginia as a ground water groundwater management area. This area shall be known as the Eastern Virginia Groundwater Management Area.

B. The area encompasses the counties of Charles City, Essex, Gloucester, Isle of Wight, James City, King George, King and Queen, King William, Lancaster, Mathews, Middlesex, New Kent, Northumberland, Prince George, Richmond, Southampton, Surry, Sussex, Westmoreland, and York; the areas of Arlington, Caroline, Chesterfield, Fairfax, Hanover, and Henrico, Prince William, Spotsylvania, and Stafford counties east of Interstate 95; and the cities of Chesapeake, Franklin, Hampton, Hopewell, Newport News, Norfolk, Poquoson, Portsmouth, Suffolk, Virginia Beach, and Williamsburg.

C. All aquifers located between the land surface and basement rock within the geographic area defined will be included in the area and will be subject to the corrective controls set forth in Act.