H 481

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No. 37. An act relating to stormwater management.
                                     (H.481)
It is hereby enacted by the General Assembly of the State of Vermont:
Sec. 1. 10 V.S.A. § 1264 is amended to read:
§ 1264. STORMWATER MANAGEMENT
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   (c) Prohibitions.
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      (7) In accordance with the schedule established under subdivision (g)(3)
of this section, a person shall not discharge stormwater from impervious
surface of three or more acres in size without first obtaining an individual
permit or coverage under a general permit issued under this section if the
discharge was never previously permitted or was permitted under an individual
permit or general permit that did not incorporate the requirements of the 2002
Stormwater Management Manual or any subsequently adopted Stormwater
Management Manual. The Secretary shall provide notice to all owners of
property subject to the permit required under this subdivision.
   (d) Exemptions.
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      (2) No permit is required under subdivision (c)(1), (5), or (7) of this
section and for which a municipality has assumed full legal responsibility as
part of a permit issued to the municipality by the Secretary. As used in this
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subdivision, “full legal responsibility” means legal control of the stormwater
system, including a legal right to access the stormwater system, a legal duty to
properly maintain the stormwater system, and a legal duty to repair and replace
the stormwater system when it no longer adequately protects waters of the
State. Notwithstanding the provisions of 24 V.S.A. § 3254 to the contrary,
when a municipality assumes or has assumed full legal responsibility for a
stormwater system, the municipality may assess municipal special assessment
fees on users of the stormwater system provided that a majority of the property
owners subject to the special assessment fee consented and the fee assessed is a
fair apportionment to the user of the cost of the improvement in accordance
with the benefits the user received.
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   (g) General permits.
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      (3) Within 120 days after the adoption by the Secretary of the rules
required under subsection (f) of this section, the Secretary shall issue a general
permit under this section for discharges of stormwater from impervious surface
of three or more acres in size, when the stormwater discharge previously was
not permitted or was permitted under an individual permit or general permit
that did not incorporate the requirements of the 2002 Stormwater Management
Manual or any subsequently adopted Stormwater Management Manual. Under
the general permit, the Secretary shall:
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         (A) Establish a schedule for implementation of the general permit by
geographic area of the State. The schedule shall establish the date by which an
owner of impervious surface shall apply for coverage under this subdivision
(3). The schedule established by the Secretary shall require an owner of
impervious surface subject to permitting under this subdivision to obtain
coverage by the following dates:
            (i) for impervious surface located within the Lake Champlain
watershed, the Lake Memphremagog watershed, or the watershed of a
stormwater-impaired water on or before October 1, 2023 2028; and
            (ii) for impervious surface located within all other watersheds of
the State, no not later than October 1, 2033 2038 or not later than five years
after a binding stormwater-specific waste-load allocation has been established
for that watershed, whichever occurs first.
         (B) Establish criteria and technical standards, such as best
management practices, for implementation of stormwater improvements for the
retrofitting of impervious surface subject to permitting under this subdivision
(3).
         (C) Require that a discharge of stormwater from impervious surface
subject to the requirements of this section comply with the standards of
subsection (h) of this section for redevelopment of or renewal of a permit for
existing impervious surface.
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         (D) Allow the use of stormwater impact fees, offsets, and phosphorus
credit trading within the watershed of the water to which the stormwater
discharges or runs off.
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Sec. 2. REPEALS; SUNSET OF PROPERTY TRANSFER TAX CLEAN
         WATER SURCHARGE
   (a) 2017 Acts and Resolves No. 85, Sec. I.10 (sunset of clean water
surcharge), as amended by 2024 Acts and Resolves No. 181, is repealed.
   (b) 2017 Acts and Resolves No. 85, Sec. I.11(a)(5) (effective date of sunset
of clean water surcharge) is repealed.
Sec. 3. 2017 Acts and Resolves No. 85, Sec. I.1(b) is amended to read:
   (b) Purpose and intent.
      (1) The purpose of Secs. I.1–I.12 of this act is to promote the
development and improvement of housing for Vermonters.
      (2) It is the intent of the General Assembly:
         (A) to extend the clean water surcharge to provide an interim a
source of revenue for addressing water quality issues throughout the State; and
         (B) to continue its work on identifying a long-term funding source or
sources that are sufficient in scope and targeted in design to address these
water quality issues; and
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         (C) once one or more long-term funding sources are identified and
enacted, but not later than July 1, 2027, to reduce the amount of the clean
water surcharge to 0.04 percent.
Sec. 4. 2017 Acts and Resolves No. 85, Sec. I.12 is amended to read:
   Sec. I.12. EFFECTIVE DATES
   (a) Secs. I.1–I.12 shall take effect on July 1, 2017, except that Sec. I.10
(allocating clean water surcharge revenue to Vermont Housing and
Conservation Trust Fund) shall take effect on July 1, 2027.
Sec. 5. 2017 Acts and Resolves No. 85, Sec. I.7(d) is amended to read:
   (d) To compensate for this reduction of available property transfer tax
revenue, it is the intent of the General Assembly through this act to provide for
the transfer of $2,500,000.00 to the Vermont Housing and Conservation Trust
Fund, as follows:
      (1) Sec. D.100 of this act appropriates $11,304,840.00 in fiscal year
2018 from the Vermont Housing and Conservation Trust Fund to the Vermont
Housing and Conservation Board. Upon the effective date of this act,
$1,500,000.00 shall revert to the Fund, resulting in a fiscal year 2018 total
appropriation to the Board of $9,804,840.00. In fiscal year 2018 only, the
amount of $1,500,000.00 from the Vermont Housing and Conservation Trust
Fund shall be transferred to the General Fund.
      (2) As provided in Sec. I.9 of this act, from July 1, 2017 until
July 1, 2027, pursuant to 32 V.S.A. § 9602a, the first $1,000,000.00 in revenue
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generated by the clean water surcharge of 0.2 0.22 percent shall be transferred
to the Vermont Housing and Conservation Trust Fund. In fiscal year 2018
only, the Commissioner shall transfer the amount of $1,000,000.00 from the
Vermont Housing and Conservation Trust Fund to the General Fund.
      (3) After July 1, 2027, pursuant to 32 V.S.A. § 9602a as amended in
Sec. I.10 of this act, $1,000,000.00 in total revenue generated by the clean
water surcharge of 0.04 percent shall be transferred to the Vermont Housing
and Conservation Trust Fund. [Repealed.]
      (4) As provided in Sec. I.11 of this act, the clean water surcharge will be
repealed in its entirety on July 1, 2039. [Repealed.]
Sec. 6. 10 V.S.A. §§ 927 and 928 are amended to read:
§ 927. DEVELOPED LANDS IMPLEMENTATION GRANT PROGRAM
   The Secretary shall administer a Developed Lands Implementation Grant
Program to provide grants or financing financial assistance to persons who are
required to obtain a permit to implement regulatory requirements that are
necessary to achieve water quality standards. The grant or financing program
shall only be available in basins where a clean water service provider has met
its annual goals or is making sufficient progress, as determined by the
Secretary, towards those goals. This grant program shall fund or provide
financing for projects related to the permitting of impervious surface of three
acres or more under subdivision 1264(g)(3) of this title and for a permit
renewal under subdivision 1264(h)(2) of this title for a discharge to a
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stormwater-impaired water that was permitted under an individual permit or a
general permit that did not incorporate the requirements of the 2002
Stormwater Management Manual or any subsequently adopted Stormwater
Management Manual. Not more than 15 percent of the total grant amount
awarded shall be used for administrative costs.
§ 928. MUNICIPAL STORMWATER IMPLEMENTATION GRANT
         PROGRAM
   The Secretary shall administer a Municipal Stormwater Implementation
Grant Program to provide grants financial assistance to any municipality
required under section 1264 of this title to obtain or seek coverage under the
municipal roads general permit, the municipal separate storm sewer systems
permit, a permit for impervious surface of three acres or more, or a permit
required by the Secretary to reduce the adverse impacts to water quality of a
discharge or stormwater runoff. The grant program shall only be available in
basins where a clean water service provider has met its annual goals or is
making sufficient progress, as determined by the Secretary, towards those
goals. Not more than 15 percent of the total grant amount awarded shall be
used for administrative costs. This program also shall be available to a
municipality to comply with a permit for impervious surface of three acres or
more for a residential subdivision when the municipality assumes or has
assumed full legal responsibility for the stormwater system of the residential
subdivision under subdivision 1264(c)(7) of this title. Municipalities may
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receive assistance under this program for design or engineering services
necessary for the formation of a municipal stormwater utility.
Sec. 7. 10 V.S.A. § 1389(e) is amended to read:
   (e) Priorities. In making recommendations under subsection (d) of this
section regarding the appropriate allocation of funds from the Clean Water
Fund, the Board shall prioritize as follows:
       (1) As a first priority, make recommendations regarding funding for the
following grants and programs, which shall each be given equal priority:
          (A) grants to clean water service providers to fund the reasonable
costs associated with the inspection, verification, operation, and maintenance
of clean water projects in a basin;
          (B) the Water Quality Restoration Formula Grant under section 925
of this title;
          (C) the Agency of Agriculture, Food and Markets’ agricultural water
quality programs; and
          (D) the Water Quality Enhancement Grants under section 926 of this
title at a funding level of at least 20 percent of the annual balance of the Clean
Water Fund, provided that the maximum amount recommended under this
subdivision (D) in any year shall not exceed $5,000,000.00; and
          (E) funding to partners for basin planning, basin water quality
council participation, education, and outreach as provided in subdivision
1253(d)(3) of this title, provided funding shall be at least $500,000.00.
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      (2) As the next priority after reviewing funding requests for programs
identified under subdivision (1) of this subsection:
         (A) funding to programs or projects that address or repair riparian
conditions that increase the risk of flooding or pose a threat to life or property;
         (B) funding for education and outreach regarding the implementation
of water quality requirements, including funding for education, outreach,
demonstration, and access to tools for the implementation of the Acceptable
Management Practices for Maintaining Water Quality on Logging Jobs in
Vermont, as adopted by the Commissioner of Forests, Parks and Recreation;
         (C) funding for the Municipal Stormwater Implementation Grant
Program as provided in section 928 of this title, including at least
$1,000,000.00 annually for costs of complying with permitting requirements
under subdivision 1264(c)(7) of this title;
         (D) funding for innovative or alternative technologies or practices
designed to improve water quality or reduce sources of pollution to surface
waters, including funding for innovative nutrient removal technologies and
community-based methane digesters that utilize manure, wastewater, and food
residuals to produce energy; and
         (E) funding to purchase agricultural land in order to take that land out
of practice when the State water quality requirements cannot be remediated
through agricultural Best Management Practices.
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      (3) As the next priority after reviewing funding requests under
subdivisions (1) and (2) of this subsection, funding for the Developed Lands
Implementation Grant Program as provided in section 927 of this title.
Sec. 7a. 10 V.S.A. § 1389a is amended to read:
§ 1389a. CLEAN WATER INVESTMENT REPORT
   (a) Beginning on January 15, 2017, and annually thereafter, the Secretary
of Administration shall publish the Clean Water Investment Report. The
Report shall summarize all investments, including their cost-effectiveness,
made by the Clean Water Board and other State agencies for clean water
restoration over the prior fiscal year. The Report shall include expenditures
from the Clean Water Fund, the General Fund, the Transportation Fund, and
any other State expenditures for clean water restoration, regardless of funding
source.
   (b) The Report shall include:
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      (7) Beginning on January 2028 and every four years thereafter, a review
of the sufficiency of the Clean Water Surcharge to the Property Transfer Tax
under 32 V.S.A. § 9602a, including an assessment of whether the revenue
generated by the surcharge remains necessary to fulfill the State’s clean water
initiatives. The review shall include an assessment of whether the Clean Water
Surcharge should be continued, whether the amount of the surcharge should be
adjusted, and whether the surcharge should be repealed at a specified date.
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Sec. 8. RECOMMENDED APPROPRIATION; PRIORITIES
   (a) Notwithstanding any other provision of law, the Clean Water Board
shall recommend $5,000,000.00 from the Clean Water Fund in fiscal year 2027
to the Municipal Stormwater Implementation Program in 10 V.S.A. § 928 for
costs of complying with permitting requirements under 10 V.S.A.
§ 1264(c)(7), including for residential subdivisions when the municipality
assumes full legal responsibility for the stormwater system.
   (b) Before January 1, 2032, the Secretary of Natural Resources shall
provide properties subject to the three-acre stormwater permit under 10 V.S.A.
§ 1264(c)(7) additional priority points when awarding financing under the
Municipal Stormwater Implementation Program and under the Developed
Lands Implementation Program when residential housing used as primary
residences are located on the relevant properties.
Sec. 9. STORMWATER MANAGEMENT PUBLIC RESOURCE GUIDE
   (a) On or before January 1, 2027, the Secretary of Natural Resources shall
publish a Public Resource Guide to Stormwater Management that informs
persons subject to stormwater operating permits under 10 V.S.A. § 1264 with
information and resources related to complying with and paying for
stormwater permitting requirements. The Resource Guide shall be user
friendly and designed to encourage the public to engage with the Agency of
Natural Resources in finding solutions to stormwater permitting needs.
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   (b) The Resource Guide shall:
      (1) summarize the statutory requirements for stormwater permits, with
specific emphasis on the three-acre stormwater permit required under 10
V.S.A. § 1264(c)(7), including why the permits are required;
      (2) recommend available, practical, cost-effective measures for how
persons subject to stormwater permit requirements can address parcel-based
issues, including:
         (A) the lack of a homeowner’s association to assume permitting
responsibility;
         (B) lack of available property to implement stormwater management,
including whether and how a person subject to stormwater permits can
implement an off-site offset project to comply with permitting requirements;
and
         (C) how to address or manage stormwater runoff from other
stormwater systems entering stormwater systems subject to permitting;
      (3) recommend resources where funding for compliance with
stormwater permitting requirements may be accessed or applied for, including
how to apply for financial assistance from the Agency of Natural Resources;
      (4) provide a contact at the Agency of Natural Resources that can assist
persons subject to stormwater permitting by answering questions, providing
referrals to creative or alternative solutions for achieving permit compliance,
and recommending available financial resources; and
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      (5) provide a model bylaw or ordinance for the formation of a municipal
stormwater utility.
   (c) The Secretary of Natural Resources shall submit a copy of the Resource
Guide to the Senate Committee on Natural Resources and Energy and the
House Committee on Environment. The Secretary shall also make the
Resources available free of cost to the public from the Agency’s website.
Sec. 10. 10 V.S.A. § 1389(e)(2)(C) is amended to read:
         (C) funding for the Municipal Stormwater Implementation Program
as provided in section 928 of this title, including at least $1,000,000.00
annually for costs of complying with permitting requirements under
subdivision 1264(c)(7) of this title;
Sec. 11. 24 V.S.A. § 3616 is amended to read:
§ 3616. RENTS; RATES
   (a) A municipal corporation, through its board may establish rates, rents, or
charges to be paid as the board may prescribe. The board may establish annual
charges separately for bond repayment, fixed operations and maintenance costs
and variable operations and maintenance costs dependent on flow.
   (b) The rates, rents, or charges may be based upon:
      (1) the metered consumption of water on premises connected with the
sewer system, however, the board may determine no user will be billed for
fixed operations and maintenance costs and bond payment less than the
average single-family charge;
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      (2) the number of equivalent units connected with or served by the
sewage system based upon their estimated flows compared to the estimated
flows from a single-family dwelling, however, the board may determine no
user will be billed less than the minimum charge determined for the single-
family dwelling charge for fixed operations and maintenance costs and bond
payment;
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      (6) for groundwater, surface, or stormwater an equivalent residential
unit based on an average or median of the area of impervious surface on
residential property within the municipality; or
      (7) any combination of these bases, provided the combination is
equitable.
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Sec. 12. STUDY COMMITTEE ON STORMWATER MANAGEMENT
           AND CREATION OF REGIONAL STORMWATER UTILITY
           DISTRICTS
   (a) Creation. There is created the Study Committee on the Creation of
Regional Stormwater Utility Districts to review the feasibility and benefit of
creating regional stormwater utility districts to facilitate implementation and
compliance with the water quality laws of the State.
   (b) Membership. The Study Committee shall be composed of the
following members:
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      (1) the Commissioner of Environmental Conservation or designee;
      (2) a representative of the Vermont League of Cities and Towns,
appointed by the Speaker of the House;
      (3) a representative of a municipality subject to the municipal separate
storm sewer system (MS4) permit, appointed by the Committee on
Committees;
      (4) a representative of a municipality with a population under 2,500
persons, appointed by the Speaker of the House;
      (5) a representative of the Green Mountain Water Environment
Association, appointed by the Speaker of the House;
      (6) a commercial or industrial business owner subject to the three-acre
stormwater permit or other stormwater requirements, appointed by the
Committee on Committees;
      (7) a representative of an environmental advocacy organization,
appointed by the Speaker of the House;
      (8) a representative of a regional planning commission, appointed by the
Committee on Committees; and
      (9) a representative of a municipality with a designated downtown area
served by water and sewer infrastructure that is not subject to a MS4 permit,
appointed by the Speaker of the House.
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   (c) Powers and duties. The Study Committee shall review the feasibility of
establishing regional stormwater utility districts in the State. The Study
Committee shall:
      (1) review current statutory authority for the development of regional
stormwater utility districts comprised of multiple municipalities, including
identifying any potential disincentives or obstacles to utility formation;
      (2) propose an approach the State could use for implementing a regional
stormwater utility that would allow the utilities to assume liability and
responsibility for compliance with water quality laws, including how a utility
could assume responsibility for:
         (A) securing the permitting of properties subject to the three-acre
stormwater permit; and
         (B) achieving the phosphorus reduction targets for the three-acre
stormwater permitted properties within the utility district;
      (3) review and recommend cost-effective and equitable approaches for
regional level revenue raising and distribution of project funding for the
purpose of stormwater controls to meet total maximum daily load plans
(TMDLs) including:
         (A) consider prior revenue-raising recommendations made in the
2017 Clean Water Report from the Office of the State Treasurer;
         (B) recommend whether and how to authorize a regional stormwater
utility to assess fees or charges to all landowners, residents, and businesses
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within the regional stormwater utility district for the purpose of stormwater
controls to meet TMDLs;
         (C) propose how a regional stormwater utility district could be
eligible for Clean Water State Revolving Loan Fund awards and access State-
level financial assistance for the design, construction, and operation and
maintenance of regulatory and nonregulatory stormwater systems, including
from the Clean Water State Revolving Loan Fund;
         (D) recommend whether and how a regional stormwater utility can
allocate resources and cost-effectively and equitably achieve pollutant
reduction measures that are not fully achieved by regulated sites, as might be
articulated in a regional stormwater management plan; and
         (E) recommend whether and how a regional stormwater utility could
improve the management of parcel-based issues in a more cost-effective and
equitable manner, such as how a regional utility could address regulation of
stormwater systems lacking a homeowners’ association or other accountable
entity or how a regional utility could improve management of upstream
properties that drain into stormwater systems subject to permitting;
      (4) recommend whether stormwater permitting for municipalities or
others could be streamlined to improve the application process, permit
renewal, or fee requirements;
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       (5) propose how statute should be amended to implement any of the
recommendations of the Study Committee, including stormwater management
planning for purposes of overall regional phosphorus pollutant reductions; and
       (6) estimate a cost to operate proposed regional stormwater utility
districts.
   (d) Assistance. The Study Committee shall have the administrative,
technical, and legal assistance of the Department of Environmental
Conservation.
   (e) Report. On or before January 15, 2027, the Study Committee shall
submit a written report to the House Committees on Environment and on
Government Operations and Military Affairs and the Senate Committees on
Natural Resources and Energy and on Government Operations with its findings
and any recommendations for legislative action.
   (f) Meetings.
       (1) The Commissioner of Environmental Conservation or designee shall
call the first meeting of the Study Committee.
       (2) The Commissioner of Environmental Conservation or designee shall
be the Chair.
       (3) A majority of the membership shall constitute a quorum.
       (4) The Study Committee shall cease to exist on March 1, 2027.
   (g) Compensation and reimbursement. Members of the Study Committee
shall be entitled to per diem compensation and reimbursement of expenses as
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permitted under 32 V.S.A. § 1010 for not more than eight meetings. These
payments shall be made from monies appropriated to the Agency of Natural
Resources.
Sec. 13. EFFECTIVE DATES
   This act shall take effect on July 1, 2025, except that Sec. 10 (future Clean
Water Fund priorities) shall take effect October 1, 2032.
Date Governor signed bill: May 27, 2025
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