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PA Bulletin, Doc. No. 08-978


Nutrient and Sediment Reduction Credit Trading Program; Nutrient Trading Program Activities and NPDES Permits

[38 Pa.B. 2420]
[Saturday, May 24, 2008]

   The Department of Environmental Protection (Department) provides notice of the following actions regarding the Nutrient and Sediment Reduction Credit Trading Program (Trading Program). These actions were taken in relation to the Interim Final Policy and Guidelines for Nutrient and Sediment Trading issued in 2005 and the Final Trading of Nutrient and Sediment Reduction Credits--Policy and Guidelines (Policy) (DEP ID# 392-0900-001) (see 36 Pa.B. 7999 (December 30, 2006)). The Policy called for a transparent system of credit reviews and approvals.

   Trading is a market-based program that provides incentives for entities to create nutrient reduction credits by going beyond statutory, regulatory or voluntary obligations and goals by removing nutrients from a watershed. The credits can be traded to help others more cost-effectively meet their obligations or goals. The primary purpose of the Trading Program is to provide for more efficient ways for National Pollutant Disposal Elimination System (NPDES) permittees to meet their effluent limits for nutrients and sediment. Currently, the focus of the program is on the Chesapeake Bay Watershed.

   The actions described in this notice relate to: (1) submitted proposals; (2) approved proposals; and (3) registered credits, through May 9, 2008.


   Before a credit can be used by an NPDES permittee, a three-step process is followed. First, the credit or offset proposal must be approved, second, it must be verified and third, it must be registered.

   Approval is also known as ''certification,'' which is a written approval by the Department for the use of proposed or implemented activities to generate credits (in some cases the person generating the credits is not permitted to transfer them to another person, in which case they are called ''offsets''). Certifications are based on at least: (1) a credit or offset proposal to be submitted describing the qualifying activities that will reduce the nutrient loadings delivered to the applicable watershed; (2) the calculation to quantify the pounds of reductions expected; and (3) a verification plan that, when implemented, ensures that the qualifying nutrient reduction activities have taken place. Proposals, certifications and registrations described in this Notice apply to the Chesapeake Bay Watershed.

   Once the credits or offsets are certified, they must be verified. ''Verification'' means implementation of the verification plan contained in a certified credit or offset proposal as required by the Department. Verification plans require annual submittal of documentation to the Department that demonstrates that the qualifying nutrient reduction activities have taken place for the applicable compliance year.

   The credits or offsets also need to be registered by the Department before they can be used in an NPDES permit. ''Registration'' occurs only after credits or offsets have been certified and verified, and a trading contract for credits has been submitted to the Department. For the Chesapeake Bay Watershed, the Department will register credits on an annual basis for use during the compliance year in which the qualifying nutrient reduction activities have taken place and will provide the credits with an annual registry number for reporting and tracking purposes.

   The Department has received 39 proposals that have been submitted for review to generate nutrient reduction credits in the Chesapeake Bay Watershed. Of those, 27 have been approved, 6 are in review, 1 has been withdrawn and the remaining proposals need additional clarification before they can be considered complete and further reviewed for certification.

Proposals under Review

   The following proposals are being reviewed by the Department.

Proposal Applicant Proposal Description
1.  Union County Conservation District Nitrogen and Phosphorus Credits generated by field lane stabilization projects.


   To date, there are no new certifications.

Verifications and Registrations:

   To date, there are no verifications and registrations.

Future notices:

   In the future, the Department plans to provide notice in the Pennsylvania Bulletin at three separate times during the Trading Program.

   First, notice will be provided when a complete proposal to generate credits or offsets has been received. Submitted proposals will be reviewed for technical feasibility, consistency with the Department's Trading Program and legal and policy requirements.

   Second, upon approval of a proposal (certification), the Department will provide notice in the Pennsylvania Bulletin of the proposal details including the generation method and number of credits or offsets to be certified. This notice will include the chance for informal public input into the certification decisions.

   Finally, the Department will also provide notice in the Pennsylvania Bulletin when the credits and offsets have been verified and registered.

   For further information about the previous information or the Department's Nutrient Trading Program, contact Ann Smith, Water Planning Office, P. O. Box 2063, Harrisburg, PA 17105-2063, (717) 787-4726, or visit the Department's web site at www.depweb. (DEP Keywords: ''Nutrient Trading'').


[Pa.B. Doc. No. 08-978. Filed for public inspection May 23, 2008, 9:00 a.m.]

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