From the inbox:
Yo Tim [great start to any message--'Yo' signals 'this probably isn't spam'],
Did you know that Benjamin Cardin of the Sen. Environment and Public Works Committee introduced an amendment to put nutrient trading in the Chesapeake Bay Program?
The way I understand it S. 1816, “To amend the Federal Water Pollution Control Act to improve and reauthorize the Chesapeake Bay Program).” It will establish a private market (modeled on the sulfur credits that are used to control acid rain) and will allow private contracts between say farmers, factories, municipalities, and others to take low cost conservation measures. A municipal wastewater system or factory could simply pay a farmer to make the desired reduction in nutrients if it finds that doing so is cheaper.
I guess he has been working with the World Resources Inst. (Jonathan Lash, Wri President, announced it recently in a speech
The Bill (S. 1816,) is here.
Hat Tip: Duncan Brown
The relevant portion of the bill is pasted below the jump.
‘(6) NITROGEN AND PHOSPHORUS TRADING PROGRAM-
‘(A) ESTABLISHMENT- Not later than May 12, 2012, the Administrator, in cooperation with each Chesapeake Bay State, shall establish an interstate nitrogen and phosphorus trading program for the Chesapeake Bay for the generation, trading, and use of nitrogen and phosphorus credits to facilitate the attainment and maintenance of the Chesapeake Bay-wide TMDL for nitrogen and phosphorus.
‘(B) TRADING SYSTEM- The trading program established under this subsection shall, at a minimum--
‘(i) define and standardize nitrogen and phosphorus credits and establish procedures or standards for ensuring equivalent water quality benefits for all credits;
‘(ii) establish procedures or standards for certifying and verifying nitrogen and phosphorus credits to ensure that credit-generating practices from both point sources and nonpoint sources are achieving actual reductions in nitrogen and phosphorus;
‘(iii) establish procedures or standards for generating, quantifying, trading, and applying credits to meet regulatory requirements and allow for trading to occur between and across point source or nonpoint sources;
‘(iv) establish baseline requirements that a credit seller must meet before becoming eligible to generate saleable credits;
‘(v) establish points-of-regulation at the sub-State level to facilitate trading and promote water quality goals under which--
‘(I) States may designate point sources as points-of-regulation;
‘(II) States may aggregate multiple sources to serve as points-of-regulation; and
‘(III) the Administrator shall establish guidelines or standards to ensure that points-of-regulation shall be generally consistent across States;
‘(vi) ensure that credits are used in accordance with permit requirements under the national pollutant discharge elimination system established under section 402 and trade requirements have been adequately incorporated into the permits;
‘(vii) ensure that private contracts between credit buyers and credit sellers contain adequate provisions to ensure enforceability under applicable law;
‘(viii) establish procedures or standards for providing public transparency on nutrient trading activity;
‘(ix) ensure that, if the local receiving water is impaired for the nutrient being traded but a TMDL has not yet been implemented for the impairment--
‘(I) trades are required to result in progress toward or the attainment of water quality standards in the local receiving water; and
‘(II) sources in the watershed may not rely on credits produced outside of the watershed;
‘(x) require that the application of credits to meet regulatory requirements under this section not cause or contribute to exceedances of water quality standards, total maximum daily loads, or wasteload or load allocations for affected receiving waters, including avoidance of localized impacts;
‘(xi) except as part of a consent agreement, prohibit the purchase of credits from any entity that is in significant noncompliance with an enforceable permit issued under section 402;
‘(xii) consider and incorporate, to the maximum extent practicable, elements of State trading programs in existence as of the date of enactment of the Chesapeake Clean Water and Ecosystem Restoration Act of 2009; and
‘(xiii) allow for, as appropriate, the aggregation and banking of credits by third parties.
‘(C) FACILITATION OF TRADING- In order to attract market participants and facilitate the cost-effective achievement of water-quality goals, the Administrator shall ensure that the trading program established under this paragraph--
‘(i) includes measures to mitigate credit buyer risk;
‘(ii) makes use of the best available science in order to minimize uncertainty and related transaction costs to traders, including the Administrator, in consultation with the Secretary of Agriculture, supporting research and other activities that increase the scientific understanding of nonpoint nutrient pollutant loading and the ability of various structural and nonstructural alternatives to reduce the loads;
‘(iii) eliminates unnecessary or duplicative administrative processes; and
‘(iv) incorporates a permitting approach under the national pollutant discharge elimination system established under section 402 that allows trading to occur without requiring the reopening or reissuance of permits to incorporate individual trades.
