THE GENERAL ASSEMBLY OF PENNSYLVANIA

SENATE BILL

INTRODUCED BY VANCE, M. WHITE, MUSTO, BRUBAKER, WAUGH, BAKER, ERICKSON, VOGEL, WOZNIAK, ALLOWAY, BROWNE, GORDNER, PICCOLA, RAFFERTY, TOMLINSON AND WONDERLING, APRIL 3, 2009

REFERRED TO ENVIRONMENTAL RESOURCES AND ENERGY, APRIL 3, 2009  

AN ACT

Providing for nutrient and sediment reduction credits;

establishing the Nutrient Credit Trading Board and providing

for its powers and duties; and providing for powers and

duties of the Department of Environmental Protection, the

Environmental Quality Board and the Pennsylvania

Infrastructure Investment Authority.

The General Assembly of the Commonwealth of Pennsylvania

hereby enacts as follows:

CHAPTER 1

PRELIMINARY PROVISIONS

Section 101.  Short title.

This act shall be known and may be cited as the Nutrient

Credit Trading Program Act.

Section 102.  Definitions.

The following words and phrases when used in this act shall

have the meanings given to them in this section unless the

context clearly indicates otherwise:

"Aggregator" or "broker."  An individual or entity that

obtains and compiles credits from individual sources for sale

to:

(1)  the Nutrient Credit Trading Board;

(2)  entities required to comply with nutrient limits; or

(3)  other entities created for the purpose of obtaining,

compiling and selling credits.

"Board."  The Nutrient Credit Trading Board established in

Chapter 5.

"Credit."  The unit of compliance that corresponds with a

pound of reduction of nutrient or sediment and that has been

approved by the Department of Environmental Protection pursuant

to Chapter 3.

"Department."  The Department of Environmental Protection of

the Commonwealth.

"Entities required to comply with nutrient discharge limits."

An entity that is required to reduce, prevent or eliminate

nutrient or sediment discharges into surface waters, including:

(1)  Municipalities.

(2)  Municipal authorities.

(3)  Point source entities.

(4)  Developers.

(5)  Nonpoint source entities.

"Nonpoint source."  A source of potential water pollution

that is not a point source.

"Nutrient."  Nitrogen or phosphorus.

"Point source."  A discernable, confined and discrete

conveyance, including, but not limited to, any pipe, ditch

channel, tunnel, conduit, well, discrete fissure, container,

rolling stock, landfill leachate collection system or vessel or

other floating craft from which pollutants are or may be

discharged.

CHAPTER 3

NUTRIENT AND SEDIMENT REDUCTION CREDITS

Section 301.  Scope.

This chapter relates to the process by which nutrient and

sediment reduction credits are calculated, approved, verified,

tracked and used. Credits approved by the department may be

sold, purchased or traded as provided by this chapter or by

Chapter 5.

Section 302.  Oversight of credit approval process.

The department shall have the power and the responsibility

to:

(1)  Accept and review applications to create credits.

(2)  Make determinations on applications for credits.

(3)  Provide for the verification of nutrient and

sediment reductions.

(4)  Approve and calculate credits.

(5)  Register and track credits.

(6)  Provide for the use of credits by entities required

to comply with nutrient limits.

(7)  Cooperate with the board.

Section 303.  Applications.

(a)  Process.--The Environmental Quality Board shall

establish, by regulation, procedures and requirements relating

to applications for credits and the process by which

applications shall be reviewed. Applications shall be reviewed

for completeness, technical acceptability and consistency with

regulatory and legal requirements.

(b)  Determinations.--The department shall make a

determination on an application to generate credits within 60

days after receipt of a complete application.

(c)  Notice.--The department shall post credit application

requirements and review procedures on its publicly accessible

Internet website.

Section 304.  Verification.

(a)  General rule.--

(1)  Prior to a determination on an application to

generate credits, the department shall verify that the

relevant regulatory and legal requirements have been met by

the applicant.

(2)  The department shall establish a process to verify

nutrient and sediment reductions after approval of an

application.

(b)  Third parties.--The department may allow approved third

parties to perform verifications on its behalf or on behalf of

entities that have submitted applications.

Section 305.  Calculation of credits.

(a)  Measurement.--Credits shall be measured in terms that

correspond to a unit of compliance and a time period.

(b)  Procedures.--The Environmental Quality Board shall, by

regulation, establish procedures and methodologies by which

credits will be calculated. The procedures and methodologies may

have general applicability or they may be specific to a

particular watershed, as determined by regulation.

(c)  Farmland preservation.--Credits shall not be generated

from the purchase and idling of whole or substantial portions of

farms to provide credits for use offsite. Credits may be

generated when converting one land use to another, as provided

by regulation.

Section 306.  Registration and tracking of credits.

(a)  Registration.--The department shall create a registry of

credits that have been approved and that are available for sale

to:

(1)  The board.

(2)  Entities required to comply with nutrient limits.

(3)  Aggregators or brokers.

(b)  Tracking.--The department shall track and verify the

disposition of credits registered under this section.

Section 307.  Use of credits.

Credits approved and registered under this chapter may be

used to meet the requirements of permits administered by the

department, including National Pollutant Discharge Elimination

System (NPDES) permits required under the Federal Water

Pollution Control Act (62 Stat. 1155, 33 U.S.C. § 1251 et seq.).

Section 308.  Priority review.

Nutrient reduction projects funded by the board under section

504(a) shall have priority for review.

Section 309.  Regulations.

(a)  General rule.--The Environmental Quality Board shall

promulgate regulations as necessary for the implementation of

this chapter. The Department of Agriculture and the board shall

be consulted in the drafting of regulations.

(b)  Temporary regulations.--Notwithstanding any other

provision of law to the contrary and in order to facilitate the

prompt implementation of this chapter, regulations promulgated

during the two years following the effective date of this

chapter shall be deemed temporary regulations which shall expire

no later than three years following the effective date of this

chapter or upon promulgation of regulations as generally

provided by law. The temporary regulations shall not be subject

to:

(1)  Sections 201, 202, 203, 204 and 205 of the act of

July 31, 1968 (P.L.769, No.240), referred to as the

Commonwealth Documents Law.

(2)  The act of June 25, 1982 (P.L.633, No.181), known as

the Regulatory Review Act.

(c)  Expiration.--The authority provided to adopt temporary

regulations in this section shall expire two years from the

effective date of this chapter. Regulations adopted after the

two-year period shall be promulgated as provided by law.

CHAPTER 5

NUTRIENT CREDIT TRADING BOARD

Section 501.  Scope.

This chapter relates to the powers and duties of the Nutrient

Credit Trading Board.

Section 502.  Board established.

There is hereby established a Nutrient Credit Trading Board.

The board shall adopt policies and implement programs to

purchase and sell credits in the Chesapeake Bay watershed and

fund projects that generate credits in the Chesapeake Bay

watershed.

Section 503.  Board composition.

(a)  Membership.--The board shall consist of:

(1)  Three members as follows:

(i)  The Secretary of Environmental Protection or a

designee.

(ii)  The Secretary of Agriculture or a designee.

(iii)  The executive director of the Pennsylvania

Infrastructure Investment Authority or a designee.

(2)  Four members as follows:

(i)  One member appointed by the President pro

tempore of the Senate.

(ii)  One member appointed by Minority Leader of the

Senate.

(iii)  One member appointed by the Speaker of the

House of Representatives.

(iv)  One member appointed by the Minority Leader of

the House of Representatives.

(3)  Nine members appointed by the Governor as follows:

(i)  One member from county conservation districts

from a list of no more than three individuals nominated

by the State Conservation Commission.

(ii)  Three members from local government, one

representing boroughs from a list of no more than three

individuals nominated by the Pennsylvania State

Association of Boroughs, one representing townships from

a list of no more than three individuals nominated by the

Pennsylvania State Association of Township Supervisors

and one representing cities from a list of no more than

three individuals nominated by the Pennsylvania League of

Cities and Municipalities.

(iii)  One member from the agricultural sector from a

list of no more than three individuals nominated by the

Pennsylvania Farm Bureau.

(iv)  One member from municipal authorities

representing wastewater treatment facilities from a list

of no more than three individuals nominated by the

Pennsylvania Municipal Authorities Association.

(v)  One member of the housing industry from a list

of no more than three individuals nominated by the

Pennsylvania Builders Association.

(vi)  One water quality engineer from a list of no

more than three individuals nominated by the chair of the

Joint Legislative Air and Water Pollution Control and

Conservation Committee.

(vii)  One representative from an environmental

organization from a list of no more than three

individuals nominated by the Chesapeake Bay Foundation.

(b)  Officers.--The board members shall annually elect, by a

majority vote of the members, such officers as the members shall

determine necessary.

(c)  Terms.--Members shall serve terms as follows:

(1)  Members under subsection (a)(1) shall serve

concurrently with their position.

(2)  Members under subsection (a)(2) shall serve a term

concurrent with the term of the appointing authority.

(3)  Members under subsection (a)(3) shall serve a term

of four years. The initial terms of members appointed under

subsection (a)(3) shall be staggered by the Governor so that

two members are appointed to a term of one year, two members

are appointed to a term of two years, two members are

appointed to a term of three years and three members are

appointed to a term of four years.

(d)  Quorum.--Nine board members shall constitute a quorum.

Section 504.  Powers and duties.

(a)  Sale of credits.--

(1)  The board shall set fees and payment schedules for

the sale of credits to entities required to comply with

nutrient discharge limits. The schedule shall provide for the

sale of credits in advance of the time period for which the

credits are needed. Credits sold under this paragraph may be

used as provided in section 307.

(2)  The fees collected from an advance sale of credits

shall be used by the board to fund nutrient reduction

projects that will generate at least the number of credits

sold by the board in the time period for which they were

sold. The credits shall be determined by the department under

Chapter 3.

(b)  Board purchase.--The board may purchase credits that

have been approved by the department under Chapter 3.

(c)  Sale of credits.--The board may sell credits to entities

required to comply with nutrient discharge limits.

(d)  Revenues and expenses.--The board shall operate the

nutrient credit trading program to generate revenues sufficient

to offset its cost of operations. Administrative or overhead

expenses incurred by the Pennsylvania Infrastructure Investment

Authority under section 505 shall not be considered in this

determination.

(e)  Credits in reserve.--The board shall hold credits in

reserve to offset any failures or loss of credits. In addition

to this reserve, the board shall hold a minimum percentage of

credits in reserve for new growth. The board shall set these

reserves at percentages it deems necessary, but in no instance

shall the reserve for new growth be lower than 5%.

(f)  Internet availability of information.--The board shall

post information regarding the costs and methods of purchasing

and selling credits on its Internet website. The board shall

post on its Internet website a list of those projects that have

been determined by the department to generate credits.

(g)  Technical subcommittee.--The board shall establish a

technical subcommittee to provide technical assistance to

entities proposing projects to generate credits. Members of the

subcommittee shall be appointed by the board and shall have

appropriate technical training and experience.

Section 505.  Administration.

The Pennsylvania Infrastructure Investment Authority shall

provide staff and administrative and technical support to the

board in the performance of its powers and duties under this

chapter.

Section 506.  Private market preserved.

Nothing in this chapter prohibits the private purchase and

sale of credits.

Section 507.  Regulations.

(a)  General rule.--The board shall promulgate regulations as

necessary for the implementation of this chapter. The board

shall consult with the department and the Department of

Agriculture in the drafting of regulations.

(b)  Temporary regulations.--Notwithstanding any other

provision of law to the contrary and in order to facilitate the

prompt implementation of this chapter, regulations promulgated

by the board during the two years following the effective date

of this chapter shall be deemed temporary regulations which

shall expire no later than three years following the effective

date of this chapter or upon promulgation of regulations as

generally provided by law. The temporary regulations shall not

be subject to:

(1)  Sections 201, 202, 203, 204 and 205 of the act of

July 31, 1968 (P.L.769, No.240), referred to as the

Commonwealth Documents Law.

(2)  The act of June 25, 1982 (P.L.633, No.181), known as

the Regulatory Review Act.

(c)  Expiration.--The authority provided to the board to

adopt temporary regulations in this section shall expire two

years from the effective date of this chapter. Regulations

adopted after the two-year period shall be promulgated as

provided by law.

CHAPTER 21

MISCELLANEOUS PROVISIONS

Section 2101.  Continuation of policy.

Policies and procedures created by the department for the

approval, calculation and trading of credits that are in effect

on the effective date of this act shall be superseded by this

act 120 days after the effective date of this act or upon the

publication of temporary regulations under section 309,

whichever occurs first.

Section 2102.  Existing credits.

Subject to section 2101, credits approved by the department

shall remain in effect and shall be subject to the terms and

conditions imposed by the department at the time of approval.

Section 2103.  Effective date.

This act shall take effect in 60 days.