Credit Generation Requirements
DEP issued an interim Final Trading Policy in October of 2005, which was finalized in November of 2006. This policy was the basis for the development of the Nutrient Credit Trading Program.
DEP issued requirements for participation in its nutrient credit trading program regulations (25 Pa. Code § 96.8), entitled "Use of offsets and tradable credits from pollution reduction activities in the Chesapeake Bay Watershed," in the Pennsylvania Bulletin (40 Pa. B. 5790).
In April 2014, the U. S. Environmental Protection Agency (EPA) began objecting to the issuance of NPDES permits prepared by the Department of Environmental Protection (DEP) that contained annual mass load effluent limitations ("cap loads") and permit language that enabled the use of credits to achieve compliance with those cap loads.
The objections were based on EPA's concerns with the nonpoint source agricultural baseline requirements in the nutrient trading regulations. EPA asserted that DEP had not made a quantitative demonstration that these requirements achieve the load allocations for agricultural sources in the Chesapeake Bay Total Maximum Daily Load (TMDL).
Unlike point source discharges with NPDES permits, agricultural operations cannot quantitatively measure the potential nonpoint source loading of nutrients from their fields.
To resolve EPA's objections and retain the ability to issue the NPDES permits in question, DEP has established additional eligibility and credit calculation requirements to ensure the effectiveness of the use of credits to meet legal requirements of the Chesapeake Bay TMDL as authorized by its regulations (25 Pa. Code §§ 96.8(d)(5) & (e)(3)(vi)).
Further details on these requirements and how a credit generator can comply with these new provisions can be found in the Phase 2 Watershed Implementation Plan (Phase 2 WIP) Nutrient Trading Supplement (PDF).
A summary of the changes as they impact Point Source Credit Generators and Nonpoint Source Credit Generators is below.
Point Source (PS) Credit Generators
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Point Source (PS) facilities are authorized to utilize offsets and credits for compliance purposes through specific language in their NPDES permit.
Requirements for the use of offsets as credits for compliance purposes are further explained in the Phase 2 Watershed Implementation Plan (WIP) Wastewater Supplement (PDF).
Effective October 1, 2015, to be eligible to generate credits for sale, all significant sewage PS discharges within the Chesapeake Bay Watershed with cap loads in an NPDES permit listed in the Point Source Credit Generators Table (PDF) (Table 7.1 of the Phase 2 WIP Wastewater Supplement) must demonstrate treated effluent concentrations below 6 mg/L Total Nitrogen (TN) and 0.8 mg/L Total Phosphorus (TP) (i.e. "baseline concentrations") in accord with the procedures for credit verification described in the Phase 2 WIP Nutrient Trading Supplement (PDF).
Where effluent limitations for TN and/or TP are established in Part A of the permit for reasons other than the cap load assigned for protection of the Chesapeake Bay ("local nutrient limits"), the permittee is eligible to generate credits when the permittee demonstrates that these effluent limitations have been achieved in accord with the procedures described in the Phase 2 WIP Nutrient Trading Supplement.
DEP published notice in the Pennsylvania Bulletin of its mass certification of credits by eligible point sources with assigned cap loads to establish the procedures for PS to generate and trade credits after October 1, 2015, consistent with the following:
- To generate credits, facilities must be able to demonstrate that they are in compliance with their NPDES permit.
- The total amount of credits the facility is certified to generate cannot exceed its permitted cap load.
- The PS mass certification will expire September 30, 2017.
- Effective October 1, 2015 (Compliance Year 2016), the calculation of credits will be made using new formulas described in the Phase 2 WIP Nutrient Trading Supplement (PDF).
The individual cap loads, amount of offsets, and delivery ratios for each significant permitted PS facility are also listed in the Point Source Credit Generators Table (PDF).
In summary, the main changes to the existing program in relation to PS facilities as a result of the negotiations with EPA are:
- The sampling frequency for total nitrogen and total phosphorus will be increased from once to twice a week. This change will be effective upon permit renewal.
- Effective October 1, 2015, a baseline concentration of 6 mg/L TN and 0.8 mg/L TP must be met before a significant sewage PS discharge with an assigned cap load (see the Point Source Credit Generators Table (PDF) - Table 7.1 of the Phase 2 WIP Wastewater Supplement) can generate credits. Where effluent limitations for TN and/or TP are established in Part A of the permit for reasons other than the cap load assigned for protection of the Chesapeake Bay ("local nutrient limits"), the permittee is eligible to generate credits when the permittee demonstrates that these effluent limitations have been achieved.
DEP published notice in the Pennsylvania Bulletin of a 2017 mass certification of credits by eligible PS with assigned cap loads to establish the procedures for point sources to generate and trade credits effective October 1, 2017. This new PS mass certification has the same conditions as the 2015 mass certification. It expires September 30, 2019.
Nonpoint Source (NPS) Credit Generators
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Currently, there are three types of Nonpoint Source (NPS) pollutant reduction activities generating credits in Pennsylvania:
- Agricultural best management practices (BMPs)
- Manure nutrient destruction and conversion technologies
- The export of poultry manure (litter) and agricultural application outside of the Chesapeake Bay watershed
Other NPS pollutant reduction activities may be eligible to generate credits. Contact the PA Nutrient Trading Program for more information.
In order to be eligible to generate credits, these NPS activities must be in compliance with the following rules and regulations, as applicable:
- 25 Pa. Code Chapter 102, Erosion and Sedimentation Control Regulations
All plowing and tilling activities must implement and maintain BMPs to minimize the potential for accelerated erosion and sedimentation. Written erosion and sedimentation control plans are required for agricultural plowing or tilling or animal heavy use areas that disturb 5,000 square feet or more.
- 25 Pa. Code Section 91.36
These regulations define pollution control and prevention requirements at agricultural operations, including requirements related to land application of animal manure.
- 25 Pa. Code Section 92a.29
These regulations define the requirements for Concentrated Animal Feeding Operations (CAFOs) with NPDES permits.
- 25 Pa. Code Chapter 83, Subchapter D
These regulations promulgated by the State Conservation Commission define and regulate Concentrated Animal Operations (CAOs) through the development and implementation of Nutrient Management Plans.
In addition, one of the following conditions must be met at the location of NPS credit generation:
- Manure is not mechanically applied within 100 feet of a perennial or intermittent stream with a defined bed or bank, a lake, or a pond, and a commercial fertilizer is applied at or below appropriate agronomic rates.
- A minimum of 35 feet of permanent vegetation is established and maintained between the field and any perennial or intermittent stream with a defined bed or bank, a lake, or a pond. The area may be grazed of cropped under a specific management plan provided that permanent vegetation is maintained at all times and there is no mechanical application of manure within the buffer area.
- The applicant applies an increase of at least 20% to the overall amount of pollution reduction generated by the pollution reduction activity.
In order to be eligible to generate and sell credits, potential NPS credit generators must request credit certification using the process described in the Phase 2 WIP Nutrient Trading Supplement (PDF). Further details on this process can be found on the Credit Generation Process webpage.
The delivery ratios that all NPS generators must use can be found in the Table of Nonpoint Source Delivery Ratios (PDF).
In addition to the regulatory and threshold requirements identified above, in order to be able to generate credits from the hauling of poultry manure, the poultry manure must be applied to a site outside of the Chesapeake Bay watershed that is nutrient deficient in accordance with a nutrient management plan or nutrient balance sheet completed by a certified nutrient planner. The application of commercial fertilizer to the site where the poultry manure is removed must be tracked and documented. An additional 3:1 trading ratio will be applied to the final number of credits generated.
For manure destruction and conversion technologies, eligibility will be determined based upon a thorough review of the individual technology, and, at a minimum, compliance with all local, state, and federal requirements. If the number of credits generated will be verified using a comprehensive sampling and monitoring protocol, where actual reductions in nutrients can be measured and verified, no additional adjustment may be necessary. However, if it is determined during the technical review of the verification plan that the sampling and monitoring protocols are not sufficient to ensure consistency with defined Chesapeake Bay Program protocols, additional adjustments may be applied.
The main changes to the existing program as it relates to nonpoint source credit generators resulting from the negotiations with EPA are:
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- There were no adjustments to the credit calculation methodology for any existing certifications approved by DEP prior to October 1, 2013. The majority of these certifications expired on September 30, 2015. The few existing certifications approved prior to October 1, 2013 with designated expiration dates after September 30, 2015 all expired on September 30, 2016. Generators should continue to check this website and the Phase 2 WIP Nutrient Trading Supplement (PDF) for any changes in the certification request process.
- All credit certification requests must have an additional 3:1 trading ratio applied. These certifications will expire September 30, 2017, provided the performance-based calculation tool is in place. Should this performance-based modeling tool not be available by September 30, 2017, DEP will continue to review requests for credit certification using the practice-based approach with the 3:1 trading ratio until the performance-based modeling tool becomes available. Credit certification requests previously approved under the practice-based approach that expire on September 30, 2017, may be administratively extended until the performance-based modeling tool becomes available on an annual basis for a total term of not more than five years.
For further information, contact:
Department of Environmental Protection
Bureau of Clean Water ¦ Division of Operations
RCSOB, P.O. Box 8774
Harrisburg, PA 17105-8774
The information outlined on this website is intended to supplement existing requirements. Nothing on this site shall affect regulatory requirements. The information herein is not an adjudication or a regulation. There is no intent on the part of DEP to give the information on this website that weight or deference. This information establishes the framework, within which DEP will exercise its administrative discretion in the future. DEP reserves the discretion to deviate from this statement if circumstances warrant.