1. Virginia’s Chesapeake Bay Nutrient 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
90 %
10%
Disbursement of Funds
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 to regional water quality 10

11. Credit Price Schedule Compliance Year Class A Price Nitrogen
Phosphorus 1
2008 - 2
2009 3
2010 4
2011
$2.00
$4.00 5
2012 6
2013
$2.15
$4.30 7
2014
$2.30
$4.60 8
2015
$2.45
$4.90
The prices for Credits generated during and applied to Compliance Years 2011 and 2012 (i.e., prices for next 5 years, ) 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 12

15. Questions? Glenn Harvey Aqualaw ExChange Web Site gharvey@pwcsa.org
Aqualaw
Chris Pomeroy
ExChange Web Site