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Virginia’s Chesapeake Bay Nutrient Credit Trading Program

Virginia’s Chesapeake Bay Nutrient Credit Trading Program. Glenn Harvey Prince William County Service Authority ExChange Implementation Committee Chair. So, You Want to Trade ?. What are you offering? Do you own it? Why do I need it? Principles Fine Print How much? $$.

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Virginia’s Chesapeake Bay Nutrient Credit Trading Program

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  1. Virginia’s Chesapeake BayNutrient Credit Trading Program Glenn Harvey Prince William County Service Authority ExChange Implementation Committee Chair

  2. So, You Want to Trade ? What are you offering? Do you own it? Why do I need it? Principles Fine Print How much? $$

  3. What are you offering? • Nutrient credits are -- ?? • Wastewater plants: Flow X Concentration • Non-point: model defined by land use • Non-point: removals expected for various BMP types – midpoint %, range of %, safety factor • Time frame: annual, life of BMP • Difference between credits and offsets • Need firm legislative definitions

  4. Do you own it? • Who buys a car or house without Title? • Must have legal clarity • Touchy subject with environmentalists. • Can not be cast as ‘right to pollute’.

  5. Why do I need it? • Must have clear legislative / regulatory driver requiring entity to obtain credits or meet Waste Load Allocations. • Limited number of sources regulated now. • MS4, CAFO and other non-point permits not written around measured, delivered nutrient pounds.

  6. Guiding Principles • # 1 – Trading is voluntary • # 2 – Benefits for all • # 3 – Compliance first (“safety first”) • # 4 – Never forget the CWA “base case”

  7. Fine Print • Nutrient Credit Services Agreement • Entered among Participants & Exchange • Based directly on the Compliance Plan & Credit Exchange Policy below • Compliance Plan • One for each basin • Covers all participants • Developed together • Approved by DEQ • Credit Exchange Policy • Sets trading procedures • Developed together • Issued by Exch Board

  8. How Much?Cash Flow & The Bucket Sources of Funds Class A Buyer $4 P / $2 N ExChange Buyer $ 6 P / $ 3 N Outside Buyer $ 8 P / $ 4 N $$ $$ THE BUCKET Disbursement of Funds 90 % 10% Class B Supply B Pool / Total B Credits Class A Supply Pool A Pool / Total A Credits Class B credit price > Class A? “Excess” reverts to Class A fund

  9. Legislative Background Virginia Legislature amended State Water Control Law (S1275, March 2005) Mandated Watershed General Permit Wasteload allocation for significant dischargers Basin-wide compliance schedules (2011) Provisions for non-significants, new facilities Requirements for compliance plans Authorized Nutrient Credit Exchange Authorized trading

  10. Trading Principles • Trading is VOLUNTARY • Non-participants submit individual plans • Trading occurs within 5 river basins • Inter-basin trades not allowed • Some intra-basin sales restrictions due toregional water quality

  11. Credit Price Schedule • The prices for Credits generated during and applied to Compliance Years 2011 and 2012 (i.e., prices for next 5 years, 2008-2012) are firm. • Prices shown for 2013 through 2015 are estimates. • Price schedule to be updated annually to maintain a firm price for next 5-year period (i.e., in 2008, credit prices for 2013 will be set).

  12. Saves Ratepayer $$$ • Lower taxes/rates, same pollutant control Virginia cost savings estimate through 2030: ~~$800 M on $2.2 B program

  13. Questions? • Glenn Harvey • gharvey@pwcsa.org • 703 393 2063 • Aqualaw • Chris Pomeroy • Chris@AquaLaw.com • ExChange Web Site • http://www.theexchangeassociation.org • Admin@TheExchangeAssociation.org

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