PRINTER'S NO. 4220
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 -