As signed into law:  http://www.leg.state.vt.us/docs/2012/Acts/ACT138.pdf

H.779, an act relating to the water quality of state surface waters, which included the Water Quality Remediation, Implementation, and Funding Report, was incorporated into Senate Bill 202 and was passed by the Senate on March 23. The bill was further amended and was passed by the House on April 27.  The amended bill went back to the Senate where the House amendments were concurred with on May 2.  It was signed by the Governor on May 14 and is now law.  S.202, which became Act 138 with the Governor’s signature, is a long (72 pages) and extremely complex piece of legislation that affects many aspects of water quality management in Vermont.  We will break it down into several sections over the next several weeks
The first part of Act 138 addresses issues that arose in the aftermath of the statewide flooding that occurred as a result of Tropical Storm Irene last August.  Act 138 modifies existing state requirements, establishes new requirements, and provides towns with assistance to ensure compliance with National Flood Insurance Program (NFIP) requirements for the regulation of development and to ensure eligibility for flood insurance under the NFIP.  It requires ANR to conduct training programs and develop permit programs to regulate stream alterations, stormwater discharges, and repairs and maintenance to stormwater infrastructure during emergencies such as flooding.
Act 138 also addresses assessing the sensitivity of rivers to flooding, requires river corridor mapping and recommendations for best management practices, and requires technical and financial planning assistance for towns to reduce the risk of harm to life, property, or infrastructure in floodplains, river corridor protection areas and flood hazard areas.  
In Act 138 the general assembly agreed that: All waters of the state are at risk of pollution or impairment.  Our lakes, ponds, and rivers are further compromised because of last year’s flooding.  Under state and federal law, the state is required to prevent impairment or degradation of its waters.  The ability to respond to multiple state and federal water quality requirements is going to require significant funding and the state does not currently have the money to respond to the demands of protecting water quality and to repair those waterbodies that need attention.  The development of a statewide mechanism, such as a statewide clean water utility, is necessary to address regulatory demands and to prioritize investment in water quality projects throughout the state so that the protection and improvement of water quality is achieved in the most cost-effective manner.
In order to identify how the state should respond to existing and future demands to remediate and protect state surface waters, Act 138 requires that the secretary of natural resources (ANR) submit a report on or before December 15, 2012 to the house committee on fish, wildlife and water resources; the house and senate committees on natural resources and energy; the house and senate committees on agriculture; and the house and senate committees on transportation with recommendations on how to remediate or improve the water quality of the state’s surface waters, how to implement remediation or improvement of water quality, and how to fund the remediation or improvement of water quality.
The report must address the following issues:
1. How should state and local water quality remediation and conservation efforts be paid for?  A recommendation for funding sources or a funding mechanism(s) for ongoing water quality efforts in the state must be included in the report. The report must address whether toimplement a statewide assessment or fee, such as a clean water utility fee, an impervious surface fee, a Clean Water Act certification fee, impact fees, or other fees or charges.
2. How should water quality programs and funds be designed and administered?  The report must recommend whether a statewide “clean water utility” should be established, whether the utility should be run by an existing agency of state government (such as ANR or the Natural Resources Board), or is more suitable for an independent, nongovernmental organization to implement (perhaps using a model similar to that employed by Efficiency Vermont). If the clean water utility is to be administered by an independent, nongovernmental organization, the report needs to address how this organization should be established and administered.  The report must also address whether water quality programs could be effectively implemented through regional water quality utilities or similar mechanisms already authorized under 24 V.S.A. chapters 105 and 121.
3. How should the funds be allocated?  Should a science-based system that focuses on high risk areas be used?  Should funds be made available for the development of municipal or regional water quality utilities?  How can funds be distributed to make sure all regions in Vermont are treated in an equitable way?  Should additional priority points be awarded to certain water quality projects eligible for funding from the special environmental revolving fund under 24 V.S.A. chapter 120?
4. The report also needs to address agricultural water quality.  ANR must consult with the secretary of agriculture, food and markets and the agricultural community to figure out how to regulate agricultural runoff and how to implement water quality standards for agricultural operations.  Are additional requirements, standards, technical assistance, or financial assistance needed to increase compliance with AAPs (accepted agricultural practices)?  Should all small farms, or just a subset of small farms, be required to have nutrient management plans or apply nutrients at a more stringent soil loss tolerance than currently required? 
5. Stormwater needs to be taken into consideration.  How should stormwater runoff be regulated to meet Vermont Water Quality Standards?  Are additional requirements, standards, technical assistance, or financial assistance necessary to improve the management of stormwater runoff in the state?
6. How should the state work toward protecting and restoring lake shorelands?  How should the state regulate activities within shorelands of lakes?  Should the state enact statewide regulation for these activities?  Should there be site-specific criteria for these sensitive areas?
7. How should the state respond to and remediate nutrient pollution from critical source areas?  The report needs to address how to identify critical source areas, including the Lake Champlain Basin; propose a process and provide a cost estimate for developing site-specific implementation plans to reduce discharges from critical source areas; and explain how basin planning will be used in such a process.
8. How should the state prioritize its response to these water quality concerns?  How should the state prioritize funding and water quality personnel so that individual water quality issues are addressed and remediated?
9. How will the recommendations or plans included in the report be implemented?  ANR must consult with interested parties within the legislature and across the state that are relevant to the completion of this report.  Meetings with interested parties must be warned by posting a meeting notice to ANR’s website no later than seven days before the meeting.
The report required by Act 138, which is to be presented to the legislature on or before December 15, 2012, may include recommended draft legislation.
Act 138 also transfers rulemaking authority from the Natural Resources Board’s Water Resources Panel to ANR for the following:
            Wetlands Rules for the identification, classification and protection of significant wetlands
            Rules for the Classification of Waters of the State
            Water Quality Standards and related declaratory rulings
            Rules Regulating Use of Public Waters
            Rules Regulating Surface Water Levels of Public Waters
            Rules implementing the Management of Lakes and Ponds Program (Shoreline Encroachment Program)
Next blog entry:  More detail on the transfer of Natural Resources Board/Water Resources Panel rulemaking authority to ANR

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