See other bills
under the
same topic
                                                      PRINTER'S NO. 4220

THE GENERAL ASSEMBLY OF PENNSYLVANIA


HOUSE BILL

No. 2717 Session of 2008


        INTRODUCED BY DePASQUALE, PERRY, BEAR, BELFANTI, BENNINGTON,
           BOYD, CALTAGIRONE, CARROLL, DALEY, FRANKEL, JOSEPHS, KULA,
           LONGIETTI, MACKERETH, McGEEHAN, McILVAINE SMITH, MYERS,
           NICKOL, ROSS, RUBLEY, SAYLOR, SIPTROTH, K. SMITH, STERN,
           STURLA, SWANGER, THOMAS, WALKO AND YOUNGBLOOD, JULY 14, 2008

        REFERRED TO COMMITTEE ON ENVIRONMENTAL RESOURCES AND ENERGY,
           JULY 14, 2008

                                     AN ACT

     1  Authorizing programs relating to nutrient credit; providing for
     2     powers and duties of the Department of Environmental
     3     Protection, the Environmental Quality Board and the Nutrient
     4     Credit Trading Program Board; further providing for the
     5     Pennsylvania Infrastructure Investment Authority; and
     6     providing for the promulgation of regulations.

     7     The General Assembly of the Commonwealth of Pennsylvania
     8  hereby enacts as follows:
     9                             CHAPTER 1
    10                       PRELIMINARY PROVISIONS
    11  Section 101.  Short title.
    12     This act shall be known and may be cited as the Nutrient
    13  Credit Trading Program Act.
    14  Section 102.  Definitions.
    15     The following words and phrases when used in this act shall
    16  have the meanings given to them in this section unless the
    17  context clearly indicates otherwise:
    18     "Aggregator" or "broker."  An individual or entity that

     1  obtains and compiles credits from individual sources for sale
     2  to:
     3         (1)  the Nutrient Credit Trading Program Board;
     4         (2)  entities required to comply with nutrient limits; or
     5         (3)  other entities created for the purpose of obtaining,
     6     compiling and selling credits.
     7     "Board."  The Nutrient Credit Trading Program Board
     8  established in this act.
     9     "Credit."  The unit of compliance that corresponds with a
    10  pound of reduction of nutrient or sediment and that has been
    11  approved by the Department of Environmental Protection pursuant
    12  to Chapter 3.
    13     "Department."  The Department of Environmental Protection of
    14  the Commonwealth.
    15     "Entities required to comply with nutrient limits."  An
    16  entity that is required to reduce, prevent or eliminate nutrient
    17  or sediment discharges into surface waters, including:
    18         (1)  municipalities;
    19         (2)  municipal authorities;
    20         (3)  point source entities;
    21         (4)  developers; and
    22         (5)  nonpoint source entities.
    23     "Nonpoint source."  A source of potential water pollution
    24  that is not a point source.
    25     "Nutrient."  Nitrogen or phosphorus.
    26     "Point source."  A discernable, confined and discrete
    27  conveyance, including, but not limited to, any pipe, ditch,
    28  channel, tunnel, conduit, well, discrete fissure, container,
    29  rolling stock, landfill leachate collection system or vessel or
    30  other floating craft from which pollutants are or may be
    20080H2717B4220                  - 2 -     

     1  discharged.
     2                             CHAPTER 3
     3              NUTRIENT AND SEDIMENT REDUCTION CREDITS
     4  Section 301.  Scope of chapter.
     5     This chapter relates to the process by which nutrient and
     6  sediment reduction credits are calculated, approved, verified,
     7  tracked and used. Credits approved by the department may be
     8  sold, purchased or traded as provided by this chapter or by
     9  Chapter 5.
    10  Section 302.  Oversight of credit approval process.
    11     The department shall have the power and the responsibility
    12  to:
    13         (1)  Accept and review applications to create credits.
    14         (2)  Make determinations on applications for credits.
    15         (3)  Provide for the verification of nutrient and
    16     sediment reductions.
    17         (4)  Approve and calculate credits.
    18         (5)  Register and track credits.
    19         (6)  Provide for the use of credits by entities required
    20     to comply with nutrient limits.
    21         (7)  Cooperate with the board.
    22  Section 303.  Applications.
    23     (a)  Process.--The Environmental Quality Board shall
    24  establish, by regulation, procedures and requirements relating
    25  to applications for credits and the process by which such
    26  applications shall be reviewed. Applications shall be reviewed
    27  for completeness, technical acceptability and consistency with
    28  regulatory and legal requirements.
    29     (b)  Determinations.--The department shall make a
    30  determination on an application to generate credits within 60
    20080H2717B4220                  - 3 -     

     1  days after receipt of a complete application.
     2     (c)  Notice.--The department shall post credit application
     3  requirements and review procedures on its publicly accessible
     4  Internet website.
     5  Section 304.  Verification.
     6     (a)  General rule.--
     7         (1)  Prior to a determination on an application to
     8     generate credits, the department shall verify that the
     9     relevant regulatory and legal requirements have been met by
    10     the applicant.
    11         (2)  The department shall establish a process to verify
    12     nutrient and sediment reductions after approval of an
    13     application.
    14     (b)  Third parties.--The department may allow approved third
    15  parties to perform verifications on its behalf or on behalf of
    16  entities that have submitted applications.
    17  Section 305.  Calculation of credits.
    18     (a)  Measurement.--Credits shall be measured in terms that
    19  correspond to a unit of compliance and a time period.
    20     (b)  Procedures.--The Environmental Quality Board shall, by
    21  regulation, establish procedures and methodologies by which
    22  credits will be calculated. Such procedures and methodologies
    23  may have general applicability or they may be specific to a
    24  particular watershed, as determined by regulation.
    25     (c)  Farmland preservation.--Credits shall not be generated
    26  from the purchase and idling of whole or substantial portions of
    27  farms to provide credits for use offsite. Credits may be
    28  generated when converting one land use to another, as provided
    29  by regulation.
    30  Section 306.  Registration and tracking of credits.
    20080H2717B4220                  - 4 -     

     1     (a)  Registration.--The department shall create a registry of
     2  credits that have been approved and that are available for sale
     3  to:
     4         (1)  the board;
     5         (2)  entities required to comply with nutrient limits; or
     6         (3)  aggregators or brokers.
     7     (b)  Tracking.--The department shall track and verify the
     8  disposition of credits registered under this section.
     9  Section 307.  Use of credits.
    10     Credits approved and registered under this chapter may be
    11  used to meet the requirements of permits administered by the
    12  department, including National Pollutant Discharge Elimination
    13  System permits required under the Federal Water Pollution
    14  Control Act (62 Stat. 1155, 33 U.S.C. § 1251 et seq.).
    15  Section 308.  Priority review.
    16     Nutrient reduction projects funded by the board under section
    17  504(a) shall have priority for review.
    18  Section 309.  Regulations.
    19     (a)  Environmental Quality Board.--The Environmental Quality
    20  Board shall promulgate regulations as necessary for the
    21  implementation of this chapter. The Department of Agriculture
    22  and the board shall be consulted in the drafting of regulations.
    23     (b)  Temporary regulation.--Notwithstanding any other
    24  provision of law to the contrary and in order to facilitate the
    25  prompt implementation of this chapter, regulations promulgated
    26  during the two years following the effective date of this
    27  chapter shall be deemed temporary regulations which shall expire
    28  no later than three years following the effective date of this
    29  chapter or upon promulgation of regulations as generally
    30  provided by law. The temporary regulations shall not be subject
    20080H2717B4220                  - 5 -     

     1  to:
     2         (1)  Sections 201, 202, 203, 204 and 205 of the act of
     3     July 31, 1968 (P.L.769, No.240), referred to as the
     4     Commonwealth Documents Law.
     5         (2)  The act of June 25, 1982 (P.L.633, No.181), known as
     6     the Regulatory Review Act.
     7     (c)  Expiration of authority.--The authority provided to
     8  adopt temporary regulations in this subsection shall expire two
     9  years from the effective date of this chapter. Regulations
    10  adopted after the two-year period shall be promulgated as
    11  provided by law.
    12                             CHAPTER 5
    13               NUTRIENT CREDIT TRADING PROGRAM BOARD
    14  Section 501.  Scope of chapter.
    15     This chapter relates to the powers and duties of the Nutrient
    16  Credit Trading Program Board.
    17  Section 502.  Board established.
    18     There is hereby established a Nutrient Credit Trading Program
    19  Board. The board shall adopt policies and implement programs to
    20  purchase and sell credits in the Chesapeake Bay watershed and
    21  fund projects that generate credits in the Chesapeake Bay
    22  watershed.
    23  Section 503.  Board composition.
    24     (a)  Membership.--The board shall consist of:
    25         (1)  Three members as follows:
    26             (i)  The Secretary of Environmental Protection or a
    27         designee.
    28             (ii)  The Secretary of Agriculture or a designee.
    29             (iii)  The executive director of the Pennsylvania
    30         Infrastructure Investment Authority or a designee.
    20080H2717B4220                  - 6 -     

     1         (2)  Four members as follows:
     2             (i)  One member appointed by the President pro
     3         tempore of the Senate.
     4             (ii)  One member appointed by the Minority Leader of
     5         the Senate.
     6             (iii)  One member appointed by the Speaker of the
     7         House of Representatives.
     8             (iv)  One member appointed by the Minority Leader of
     9         the House of Representatives.
    10         (3)  Nine members appointed by the Governor as follows:
    11             (i)  One member from county conservation districts
    12         from a list of no more than three individuals nominated
    13         by the State Conservation Commission.
    14             (ii)  Three members from local government as follows:
    15                 (A)  one member representing boroughs from a list
    16             of no more than three individuals nominated by the
    17             Pennsylvania State Association of Boroughs;
    18                 (B)  one member representing townships from a
    19             list of no more than three individuals nominated by
    20             Pennsylvania State Association of Township
    21             Supervisors; and
    22                 (C)  one member representing cities from a list
    23             of no more than three individuals nominated by the
    24             Pennsylvania League of Cities and Municipalities.
    25             (iii)  One member from the agricultural sector from a
    26         list of no more than three individuals nominated by the
    27         Pennsylvania Farm Bureau.
    28             (iv)  One member from municipal authorities
    29         representing wastewater treatment facilities from a list
    30         of no more than three individuals nominated by the
    20080H2717B4220                  - 7 -     

     1         Pennsylvania Municipal Authorities Association.
     2             (v)  One member of the housing industry from a list
     3         of no more than three individuals nominated by the
     4         Pennsylvania Builders Association.
     5             (vi)  One water quality engineer from a list of no
     6         more than three individuals nominated by the chair of the
     7         Joint Legislative Air and Water Pollution Control and
     8         Conservation Committee.
     9             (vii)  One representative from an environmental
    10         organization from a list of no more than three
    11         individuals nominated by the Chesapeake Bay Foundation.
    12     (b)  Officers.--The members shall annually elect, by a
    13  majority vote of the members, such officers as the members shall
    14  determine as necessary.
    15     (c)  Terms.--Members shall serve terms as follows:
    16         (1)  Members under subsection (a)(1) shall serve
    17     concurrently with their position.
    18         (2)  Members under subsection (a)(2) shall serve a term
    19     concurrent with the term of the appointing authority.
    20         (3)  Members under subsection (a)(3) shall serve a term
    21     of four years. The initial terms of members appointed under
    22     subsection (a)(3) shall be staggered by the Governor so that
    23     two members are appointed to a term of one year, two members
    24     are appointed to a term of two years, two members are
    25     appointed to a term of three years and three members are
    26     appointed to a term of four years.
    27     (d)  Quorum.--Nine members shall constitute a quorum.
    28  Section 504.  Powers and duties.
    29     (a)  Fees.--
    30         (1)  The board shall set fees and payment schedules for
    20080H2717B4220                  - 8 -     

     1     the sale of credits to entities required to comply with
     2     nutrient discharge limits. The schedule shall provide for the
     3     sale of credits in advance of the time period for which the
     4     credits are needed. Credits sold under this paragraph may be
     5     used as provided in section 307.
     6         (2)  The fees collected from an advance sale of credits
     7     shall be used by the board to fund nutrient reduction
     8     projects that will generate at least the number of credits
     9     sold by the board in the time period for which they were
    10     sold. Such credits shall be determined by the department
    11     under Chapter 3.
    12     (b)  Credits.--The board may purchase credits that have been
    13  approved by the department under Chapter 3.
    14     (c)  Sale of credits.--The board may sell credits to entities
    15  required to comply with nutrient discharge limits.
    16     (d)  Trading program.--The board shall operate the nutrient
    17  credit trading program to generate revenues sufficient to offset
    18  its cost operations. Administrative or overhead expenses
    19  incurred by the Pennsylvania Infrastructure Investment Authority
    20  under section 505 shall not be considered in this determination.
    21     (e)  Reserve.--The board shall hold credits in reserve to
    22  offset any failures or loss of credits. In addition to this
    23  reserve, the board shall hold a minimum percentage of credits in
    24  reserve for new growth. The board shall set these reserves at
    25  percentages it deems necessary, but in no instance shall the
    26  reserve for new growth be lower than 5%.
    27     (f)  Internet website.--The board shall post information
    28  regarding the cost and methods of purchasing and selling credits
    29  on its Internet website. The board shall post on its Internet
    30  website a list of those projects that have been determined by
    20080H2717B4220                  - 9 -     

     1  the department to generate credits.
     2     (g)  Technical assistance.--The board shall establish a
     3  technical subcommittee to provide technical assistance to
     4  entities proposing projects to generate credits. Members of the
     5  subcommittee shall be appointed by the board and shall have
     6  appropriate technical training and experience.
     7  Section 505.  Administration.
     8     The Pennsylvania Infrastructure Investment Authority shall
     9  provide staff and administrative and technical support to the
    10  board in the performance of its powers and duties under this
    11  chapter.
    12  Section 506.  Private market preserved.
    13     Nothing in this chapter prohibits the private purchase and
    14  sale of credits.
    15  Section 507.  Regulations.
    16     (a)  Other regulations.--The board shall promulgate
    17  regulations as necessary for the implementation of this chapter.
    18  The board shall consult with the department and the Department
    19  of Agriculture in the drafting of regulations.
    20     (b)  Temporary regulations.--Notwithstanding any other
    21  provision of law to the contrary and in order to facilitate the
    22  prompt implementation of this chapter, regulations promulgated
    23  by the board during the two years following the effective date
    24  of this chapter shall be deemed temporary regulations which
    25  shall expire no later than three years following the effective
    26  date of this chapter or upon promulgation of regulations as
    27  generally provided by law. The temporary regulations shall not
    28  be subject to:
    29         (1)  Sections 201, 202, 203, 204 and 205 of the act of
    30     July 31, 1968 (P.L.769, No.240), referred to as the
    20080H2717B4220                 - 10 -     

     1     Commonwealth Documents Law.
     2         (2)  The act of June 25, 1982 (P.L.633, No.181), known as
     3     the Regulatory Review Act.
     4     (c)  Expiration of authority.--The authority provided to the
     5  board to adopt temporary regulations in this section shall
     6  expire two years from the effective date of this chapter.
     7  Regulations adopted after the two-year period shall be
     8  promulgated as provided by law.
     9                             CHAPTER 9
    10                      MISCELLANEOUS PROVISIONS
    11  Section 901.  Continuation of policy.
    12     Policies and procedures created by the department for the
    13  approval, calculation and trading of credits that are in effect
    14  on the effective date of this act shall be superseded by this
    15  act 120 days after the effective date of this act or upon the
    16  publication of temporary regulations under section 309,
    17  whichever comes first.
    18  Section 902.  Existing credits.
    19     Subject to section 901, credits approved by the department
    20  shall remain in effect and shall be subject to the terms and
    21  conditions imposed by the department at the time of approval.
    22  Section 903.  Effective date.
    23     This act shall take effect in 60 days.





    G1L27JKL/20080H2717B4220        - 11 -