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Chesapeake Bay

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Chesapeake Bay Water Quality Trading * * What is Water Quality Trading? Voluntary exchange of pollutant reduction credits. Sources with higher pollutant control costs ... – PowerPoint PPT presentation

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Title: Chesapeake Bay


1
  • Chesapeake Bay
  • Water Quality Trading

2
  • What is Water Quality Trading?
  • Voluntary exchange of pollutant reduction
    credits.
  • Sources with higher pollutant control costs may
    purchase pollutant reduction credits from
    sources with lower control costs.
  • How are Trading and Offsets Related?
  • Trading is the economic activity used to purchase
    sufficient pollutant loadings to offset a
    facilitys excess discharge.
  • Trade Economic
  • Offset Pollutant

3
What is Being Traded?
  • Pollutant Reduction Credits
  • A unit of pollutant reduction needed by a buyer
    usually measured in pounds equivalent.
  • Generated by a point source (regulated)
    over-controlling its discharge.
  • Generated by a non-point source (unregulated)
    from the installation of best management
    practices beyond those required for baseline.

4
Baselines for Credit Generators
  • A source that wants to sell pollutant reduction
    credits must first meet a baseline level of
    discharge.

Point Source Pre-TMDL -WQBEL in
permit TMDL -WQBEL in permit which is consistent
with the TMDL wasteload allocation (WLA)
Non-point Source Pre-TMDL -State and local
requirements and/or existing practice TMDL -TMDL
load allocation (LA)
5
Trade Ratios
  • In most cases, pollutant credits are not
    generated on a 11 basis. Rather a trading ratio
    is used to normalize differences between the
    sources discharges.
  • There are four types of trade ratios
  • Delivery or Location Ratios
  • Account for fate and transport, pollutant
    attenuation
  • Equivalency Ratio
  • Account for different forms of the same pollutant
    (e.g., total vs. dissolved nitrogen)
  • Uncertainty Ratio
  • Account for uncertainty about the actual volume
    of credits produced (generally seen with PS-NPS
    trading)
  • Retirement Ratio
  • Accelerate the rate of water quality improvement

6
When Can Trading Not Occur?
  • Trading cannot be used to meet technology-based
    effluent limitations.
  • Trades cannot cause nonattainment of an
    applicable water quality standard.
  • Trading cannot cause an exceedance of a cap
    established under a TMDL.

7
EPAs New Dischargers and Offsets Rulemaking
  • Will address the appropriate use of offsets to
    compensate for new discharger loadings both prior
    to the issuance of a TMDL and where a TMDL is in
    place.
  • Potential schedule
  • -March 2012 Options Selection
  • -Summer 2012 Proposed Rule/Public Comment.

8
The Chesapeake Bay TMDL and Tradings Role in
Meeting its Goals
  • The question is what can be done in the interim?
  • In Section 10 and Appendix S of the Chesapeake
    Bay TMDL established on December 29, 2010, EPA
    states it will use the full scope of its
    authority to ensure offsets and trades for
    nitrogen, phosphorus, and sediment are fully
    consistent with the Clean Water Act, its
    implementing regulations and NPDES permits.
  • Unlike the Clean Air Act, under the Clean Water
    Act EPA lacks clear authority to establish
    requirements for water quality trading programs.
    Thus, the offset appendix provides EPAs
    expectations for water quality trading in the
    Chesapeake Bay under the new TMDL

9
The Chesapeake Bay TMDL and Tradings Role in
Meeting its Goals
  • Appendix S (Offsets) outlines the minimum common
    elements for the Chesapeake Bay jurisdictions
    offset and trading programs.
  • Authority
  • Offsets Baseline That any point or non-point
    source generating a credit has implemented
    practices or met any reductions necessary to be
    consistent with the Bay TMDL allocations.
  • Minimum Controls That any point or non-point
    source using a credit has implemented certain
    minimum controls (e.g., a discharger using a
    credit will meet on-site any relevant minimum
    technology based standards or secondary treatment
    standards).

10
The Chesapeake Bay TMDL and Tradings Role in
Meeting its Goals
  • Eligibility
  • Credit Calculation and Verification Ensuring
    that credits are quantified using appropriate
    metrics and are verified to ensure that they are
    producing the expected reductions.
  • For example, accounting for uncertainty of source
    reductions due to factors such as practice
    efficiencies related to the use of BMPs, a lack
    of required reporting compared to other sources,
    and/or lack of regulation of the source by
    federal, state and/or local regulations.
  • This process also entails verifying the credit
    was and continues to be generated, via
    monitoring, inspection, reporting or some other
    mechanism.
  • Issue is the scope of information gathering and
    inspection authority (non-point sources vs. point
    sources).

11
The Chesapeake Bay TMDL and Tradings Role in
Meeting its Goals
  • Safeguards Including in the basis and record
    for any offset, safeguards to ensure that the
    entire delivered load is accounted for and that
    water quality will be protected.
  • Safeguards include restricting the use or
    generation of offsets by an unpermitted point
    source or a source in noncompliance with its
    NPDES permit.
  • Additionally, EPA and states must ensure temporal
    consistency between the period when a credit or
    offset is generated and when it is used.

12
The Chesapeake Bay TMDL and Tradings Role in
Meeting its Goals
  • Certification and Enforceability Designating
    the process to be used and responsibility for
    credit/offset certification and ensuring the
    enforceability of permits and offset
    transactions.
  • Must ensure an NPDES permittee remains
    accountable for meeting the water quality based
    effluent limits in its permit. After all, CWA
    Section 309 enforcement provisions do not apply
    to non point source credit generators.

13
The Chesapeake Bay TMDL and Tradings Role in
Meeting its Goals
  • Accountability and Tracking Developing
    accountability and tracking system(s) that are
    holistic and focused on performance outcomes
    while providing maximum transparency, operational
    efficiency, and accessibility to all interested
    parties.
  • The systems should include the NPDES permit
    number or other identification of the purchaser
    of the offset or credit, where and when the
    credit was generated, and documentation of
    agreements between parties to the offset
    transaction.

14
The Chesapeake Bay TMDL and Tradings Role in
Meeting its Goals
  • Nutrient-impaired Segments Ensuring that
    offsets in nutrient-impaired water segments
    result in progress toward attainment of WQS in
    the impaired segment and do not lead to
    exceedances of WQS elsewhere.
  • Credit Banking Articulating whether aggregation
    and/or banking of offsets is permissible under
    the jurisdictions program and, if so, under what
    circumstances these will be allowed and the
    procedures for such activity.
  •  

15
The Chesapeake Bay TMDL and Tradings Role in
Meeting its Goals
  • EPA intends to maintain regular oversight of
    jurisdictions offset and trading programs
    through periodic audits and evaluations.
  • EPA will report its findings to the respective
    jurisdiction.
  • First such review of jurisdictional offset and
    trading programs will take place in calendar year
    2011.
  • Expectation is that the findings of this review
    will inform offset and trading provisions
    included in the jurisdictions Phase II Watershed
    Implementation Plans (WIPs).

16
Bay Jurisdictions Existing Trading Programs
  • Jurisdictions with existing water quality
    trading statutes, regulations and/or policies
  • Maryland ,Pennsylvania, Virginia, West
    Virginia
  • Jurisdictions that do not have water quality
    trading statutes, regulations and/or policies
  • New York, Delaware, District of Columbia

17
Review Legal and Technical Considerations
  • Baseline that any PS or NPS generating a credit
    has implemented practices or met any reductions
    necessary to be consistent with the Bay TMDL
    allocations.
  • Minimum controls any PS or NPS using a credit
    has implemented certain minimum controls.
  • Credit calculation and verification ensure
    credits are quantified using appropriate metrics
    and verified to ensure they produce the expected
    reductions.
  • Concerns exist about the scope of CWA Section 308
    and how it applies to nonpoint sources.

18
Review Legal and Technical Considerations
  • Safeguards
  • Restrict the use or generation of offsets by an
    unpermitted PS or a source in noncompliance with
    its NPDES permit.
  • Ensure the entire delivered load is accounted for
    and water quality will be protected.
  • Accountability and tracking holistic and focused
    on performance outcomes while providing maximum
    transparency, operational efficiency, and
    accessibility to all interested parties.
  • Certification and enforceability ensure an NPDES
    permittee remains accountable for meeting the
    WQBELs in its permit.
  • CWA Section 309s enforcement provisions do not
    apply to NPS credit generators.

19
Review Legal and Technical Considerations
  • Nutrient-impaired Segments ensure that offsets
    in nutrient-impaired water segments result in
    progress toward attainment of WQS in the impaired
    segment and do not lead to exceedances of WQS
    elsewhere.
  • Credit Banking articulate whether aggregation
    and/or banking of offsets is permissible under
    the jurisdictions program and, if so, under what
    circumstances these will be allowed and the
    procedures for such activity.
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