69th SWCS International Annual Conference July 27-30, 2014 Lombard, IL

1. Trading and Offset Programs in
the Chesapeake Bay Watershed
Olivia H. Devereux
Devereux Environmental Consulting, Inc.
Soil and Water Conservation
Society Annual Conference
July 29, 2014

2. Outline
• 2010 Chesapeake Bay TMDL
• Opportunities for trades and offsets
• Impact on conservation practice implementation
• Programmatic requirements
• Tools for calculating credits
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3. 2010 Chesapeake Bay TMDL for
Nitrogen, Phosphorus, and Sediment
The Bay TMDL
expects the Bay
jurisdictions to offset
all new or increased
loads and identifies
trading as a potential
tool that the Bay
jurisdictions could
use to implement the
Bay TMDL.
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4. Approaches to Meeting the Pollutant
Load Caps Under the TMDL
• Permits (CAFO, NPDES)
• Nonpoint source controls (agriculture, urban
stormwater, septic)
• Water quality trading
– Allow sources that are more efficient at reducing N,
P, sediment to sell credits to less efficient sources
– Achieve overall N, P, sediment reductions at lower
total cost
– Realize the same benefits as the successful SOx
cap-and-trade policy that reduced “acid rain”
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5. Current Status of Trades
• Very few have occurred or are planned within the
Bay watershed
• Barriers to successful trades include:
– Limited incentives for non-point sources (esp.
agriculture) to participate
– Significant technical and policy details remain
unresolved
• Consistency in credit calculations across jurisdictions
• Verification
• Credit permanence
• Additionally
• Local water quality protection
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6. Incentives to Trade for Agriculture and
Other Nonpoint Sources
• Financial:
– Practices will be implemented anyway to comply with federal,
state, and local laws, regulations and guidelines
– Trading can reduce compliance costs
– But, cannot trade a cost-shared practice in several state programs
• Environmental benefits: Soil, air, and water quality;
excess/insufficient water; and habitat
• Social Benefits:
– Encourages dialogue among stakeholders
– Fosters concerted and holistic solutions for watersheds with
multiple sources of water quality impairment
– Demonstrates commitment to achieving policy objectives
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7. Programmatic Requirements
• Consistency in credit calculations across
jurisdictions
• Additionally
• Verification
• Credit permanence
• Local water quality protection
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8. Tools for calculating credits
• Chesapeake Bay Nutrient Trading Tool
cbntt.org
• BayFAST.org
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9. BayFAST Features
• Is replicable , consistent, and transparent
– Consistent with the CBP TMDL model
• Allows users to set boundaries and land use
• Offers an adaptive management approach,
scenario development is iterative
• Can accommodate many simultaneous users
– Online with private log in
– Private and public scenarios
– Users can share scenarios with other specified users
(access control)
– County scenarios can be merged for the entire state
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10. Consistent with the EPA TMDL
• Since it is based on the same model used to
determine the TMDL and the allocations, it has
internal consistency for loads, geographical
scale and sectors
• Other available tools have assumptions that
may be different from those used in developing
the current TMDL
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11. Acknowledgements
EPA Region 3
Chesapeake Bay Program
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12. 07/29/2014 12

13. Extra Slides
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14. Legal Foundation for Trading to Meet
Permit Requirements
• Clean Water Act
– requires that any permitted discharge of pollutants include limitations
“necessary to meet water quality standards” established under any
federal or state law
• EPA’s implementing regulations
– “No permit may be issued…[w]hen the imposition of conditions cannot
ensure compliance with the applicable water quality requirements of all
affected states” , and that no permit may be issued “[t]o a new source or
new discharger, if the discharge from its construction or operation will
cause or contribute to the violation of water quality standards.”
– The regulations further provide that a discharge may be allowed to an
impaired water body (or which might cause or contribute to
nonattainment of water quality standards) only if there is a “pollutant load
allocation” set aside or created to offset the new or expanded discharge,
and the discharges contributing to the water quality impairment are on a
schedule leading to eventual achievement of water quality standards.
– Any credit which is used to satisfy NPDES permit requirements must be
sufficiently “permanent” and otherwise reliable so as to ensure
compliance with these requirements.
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15. Additional Policies
• EPA’s 2003 Water Quality Trading Policy
• EPA’s 2007 Water Quality Trading Toolkit for
NPDES Permit
• EPA’s Technical Memoranda
– Elaborate on EPA’s expectations, set out in the Bay
TMDL for the Bay jurisdictions’ offset and/or trading
programs.
– Applicable only in the Chesapeake Bay watershed.
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16. Maryland Accounting for Growth
• MDE has in place an Enhanced Nutrient
Removal (ENR) Cap Strategy that allows flow
increases at major sewage treatment plants to
design capacity, while establishing a nutrient
loading cap and wasteload allocations (WLAs)
in NPDES permits. The interim and target point
source loads were set to allow growth up to the
permitted WLAs.
• Maryland’s strategy to account for growth will
outline a policy and an implementation strategy
to offset new loads.
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