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Since the implementation of the federal and state stormwater management regulations, the Virginia Department of Transportation (VDOT) has constructed hundreds of best management practices (BMPs) for controlling stormwater runoff from highways and its other facilities, such as maintenance headquarters, storage areas, etc. In recent years, the U.S. Environmental Protection Agency (USEPA) has promoted the watershed approach in controlling pollution from various sources in a watershed. One of the key elements of the watershed approach is to include the participation of all stakeholders in the planning and implementation of control measures. The USEPA expects stakeholders, such as regulators, pollutant dischargers, citizens, etc., to work together to develop the best strategy for pollution control with the entire watershed as a planning unit. VDOT is such a stakeholder in many watersheds in Virginia. In the present study, a holistic methodology for determining the cost-effective placement and configuration of stormwater BMPs for VDOT was developed. The methodology involves the coupling of a comprehensive watershed simulation model with an optimization technique. Specifically, the methodology consists of three interacting functional components: a watershed simulation model, a BMP simulation module (the impoundment routine), and an optimization model.