The Chesapeake Executive Council last year asked for high-powered help about how to pay for the costly Chesapeake cleanup effort.

In October, it got its response: A recommendation for a regional finance authority that would collect money from all jurisdictions in the watershed and from the federal government—$15 billion in all—and redistribute it throughout the region for nutrient and sediment control projects.

When the Executive Council gets together for its annual meeting Dec. 13, it will decide what to do with the findings of the Blue Ribbon Finance Panel, which it appointed earlier this year.

Initial reaction to the report from state officials has been positive.

“I’m really grateful to the panel for coming up with such a bold recommendation,” said Virginia Natural Resources Secretary Tayloe Murphy, adding that two decades of “incremental improvements” have not been enough to restore the Bay. “We know the Bay’s health is not good.”

At its meeting last December, the Executive Council said it would create a high-level panel to explore ways to finance the cleanup. The Executive Council is the top policy-making body for the Bay Program, and includes the governors of Maryland, Pennsylvania and Virginia; the District of Columbia mayor; the EPA administrator; and the chairman of the Chesapeake Bay Commission, which represents state legislatures.

The 15-member finance panel, chaired by former Virginia Gov. Gerald Baliles, recommended a radical new approach to cleaning up the Bay: a regional financing authority that would oversee a huge revolving loan fund to be capitalized with $12 billion in federal money and $3 billion in state funds (all paid in over a six-year period).

The authority, which would have representatives from the states, business, agriculture, nonprofit groups and others, would use the funds to make low-interest loans and, in some cases, outright grants to communities, farmers and others using nutrient control practices.

In addition, states would establish ongoing sources of revenue, such as Maryland’s “flush tax” on sewer system users, that would keep the authority financed into the future, although states would keep a portion of that money for Bay-related projects.

Because the authority covers the entire region, it would distribute money across state borders to support projects most beneficial to the Bay—regardless of which jurisdiction the money originated from.

“The magnitude of the problem requires a very bold response,” said Maryland Department of Natural Resources Secretary Ron Franks. “We’re willing to look at a bold response to this particular problem.” He added that the Bay’s condition requires “regional fund-raising and regional enforcement.”

David Bancroft, director of the Alliance for the Chesapeake Bay, which had pushed for the creation of the panel before last year’s Executive Council meeting, said he was pleased with the recommendation for a regional financing authority. “It focuses on the most effective investments rather than doing parochial decisions or sector decisions,” he said. “They are saying they want to put the money where it is going to do the most good. That is a giant leap forward. If it can be funded, I think it’s a great idea.”

The fund envisioned by the blue ribbon panel would operate similar to the EPA’s Clean Water State Revolving Loan Fund, which makes low-interest loans for water infrastructure improvements nationwide. The SRF loans are financed using an 80/20 federal-state funding formula—the same funding mix the panel recommended for capitalizing the Bay fund. But facing tight budgets, Congress in November slashed the SRF from $1.34 billion this year to $1.1 billion next year—something that may bode poorly for a new, Chesapeake-specific program.

Indeed, while the panel’s report received a generally positive reaction from state officials and others involved in the Bay cleanup effort, many expressed doubt that the federal government—with staggering budget deficits—will chip in the full $12 billion requested.

Chesapeake Bay Foundation President Will Baker, a member of the blue ribbon panel, warned that “the Bay will not be saved unless funding of this magnitude is provided, and pollution controls laws are vigorously enforced.”

In November, Sen. Paul Sarbanes, D-MD, was circulating a letter among lawmakers from the region asking the Bush administration to commit $1 billion to the Bay cleanup in its 2006 budget, which will be released in February.

“While this is a significant sum of money, it is important to point out that investment in the health and productivity of this national treasure would return dividends to the economy, the environment and our quality of life,” said the letter, which cited the Blue Ribbon Finance Panel’s recommendation in requesting the money.

A similar letter, signed by all six senators from Virginia, Maryland and Pennsylvania, was sent last year but produced no result. “Without executive leadership, without presidential sign-off, I don’t anticipated the funding will be forthcoming,” said Charlie Stek, an aide to Sarbanes.

The letter also said that some of the existing levels of spending approved in the 2002 Farm Bill should be redirected to support the Bay cleanup effort. In addition, it called for the Corps of Engineers to play a larger role in the Chesapeake through the restoration of wetlands and underwater grass beds as well as erosion control.

In addition to its main recommendation for the new funding authority, the blue ribbon panel’s report also included more than two dozen other ideas, such as inviting the U.S. Secretary of Agriculture to become a member of the Executive Council, and trying to leverage increased Farm Bill funding for the Bay region. Reducing agricultural runoff is generally considered the lowest-cost method of achieving nutrient reductions.

“Expanding the representation and the knowledge of the agricultural community into the efforts of Bay restoration seems to make a lot of sense,” Bancroft said.

The panel’s report also called for extending Bay Program membership to the headwater states of New York, Delaware and West Virginia; developing programs to fund stormwater runoff systems; and more stringent enforcement of the Clean Air Act, among other recommendations.

Executive Council Meeting

The Executive Council is expected to meet Dec. 13 at Mount Vernon in Virginia. For information, visit the Bay Program web site at www.chesapeakebay.net

For information about the Blue Ribbon Finance Panel Report, see “Panel urges feds, states to create $15 billion bay cleanup fund,” Bay Journal, November 2004.

For a copy of the panel’s report, visit www.chesapeakebay.net/blueribbon.htm