Trading Program Overview
Pennsylvania is working to address water quality issues across the Commonwealth and as part of the Chesapeake Bay Watershed. The Nutrient Trading Program (Program) is one part of the Bay restoration strategy being implemented.
The primary purpose of the Program is to provide a more cost-efficient way for National Pollutant Discharge Elimination System (NPDES) permittees in the Chesapeake Bay Watershed to meet their effluent cap load limits for nutrients.
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.
On October 9, 2010, DEP published its nutrient 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). Requirements for generating credits were updated effective October 1, 2015 in the Phase 2 Watershed Implementation Plan Nutrient Trading Supplement (PDF). Details of what requirements must be met to generate credits can be found on the Credit Generation Requirements page.
The Program involves three steps: certification, verification, and registration.
Certification means approval has been given by DEP for a pollutant reduction activity to generate credits. The approved credit generator may or may not generate credits during a compliance year. Generated credits must be verified by DEP before they may be sold and registered to an NPDES permit.
Verification means approval has been given by DEP that a generator has used their approved verification plan to demonstrate that a pollutant reduction activity generated credits during the compliance year. Verified credits may be sold.
Registration means approval has been given by DEP for a sale of credits upon review of an agreement between a buyer and seller. Registered credits may be applied to meet NPDES permit cap load requirements or resold.
Trades can take place through direct communication between credit buyers and credit generators, or the participating parties may use PENNVEST nutrient credit auctions to buy or sell credits. Credits bought/sold through PENNVEST auctions must still go through all three steps in the DEP Nutrient Trading Program. Details on how to participate in these auctions can be found on the PENNVEST IHS Markit Auction website.
Trading Website Overview
A history of previous requirements and a summary of the various current requirements for point sources and nonpoint sources to become certified to generate credits may be found on the Credit Generation Requirements page.
Details of the processes involved in the three steps and instructions on how to complete them may be found on the Credit Trading Process page.
Lists of all certified credit generators, their contact information, credits available for purchase, and current and historical trading data (including buyers, sellers, and details of individual trades) can be found on the Nutrient Trading Reports page.
A list of all deadlines for submission as well as forms, instructions, calculation spreadsheets, and other nutrient trading resources can be found on the Trading Resources page.
Nutrient Trading Basics
There are a few important concepts that you need to know to understand the rest of the information on DEP’s nutrient trading webpages.
Compliance Year (CY)
The NPDES permit Compliance Year (CY) runs from October 1st to September 30th of each year. Credits may be traded to meet permit cap load requirements during the truing period of Oct. 1st to Nov. 28th immediately following the end of a CY, but may only be used to meet the permit cap load requirements for the same CY as when the credits were generated. They expire at the end of the truing period on Nov. 28th after the CY in which they were generated.
- A wastewater treatment facility runs its treatment processes between Oct. 1, 2017 and Sept. 30, 2018 (CY 2018). On Oct. 1, 2018, the facility completes entry of sampling data for CY 2018 into their Chesapeake Bay Annual Spreadsheet and determines if and how many credits were generated by their facility. They have met their cap load and generated credits.
- These credits generated in CY 2018 may only be used by another facility to meet permit cap load requirements for CY 2018. The credits may be traded during the truing period between Oct. 1, 2018 and Nov. 28, 2018, but expire Nov. 28, 2018. They may not be used by another facility to meet cap load compliance for the following Oct. 1, 2018 – Sept. 30, 2019 compliance year.
Delivery Ratio: Credits vs Pounds
Pollutant reduction activities used to generate credits result in a reduction in the amount of nitrogen and/or phosphorus being discharge to surface waters, which is measured in pounds.
Within the Chesapeake Bay watershed, surface waters transport nutrients to the Bay. Not all nutrients discharged into the watershed surface waters make it to the Bay.
Some nutrients are deposited or used up along the way through natural attenuation. As a result, less of the nutrients discharged into surface waters further from the Bay (e.g., near Williamsport) make it to the Bay compared to nutrients discharged closer to the Bay (e.g., near York).
To account for this, pounds of credit reductions are converted to credits using a delivery ratio based on the watershed segment and distance from the Bay. Segments close to the Bay have delivery ratios close to 1.0, while those further from the Bay have lower values.
The delivery ratios that all nonpoint source generators must use can be found in the Nonpoint Source Delivery Ratios (PDF) table. Point source delivery ratios are listed in the Point Source Credit Generators Table (PDF)(Table 7.1 of the Phase 2 WIP Wastewater Supplement).
All calculation methodologies to determine credits generation must include a 10% set aside for DEP’s credit reserve. This reserve is set aside by DEP to address pollutant reduction failures and uncertainty. Credits in the reserve that are not used to address reduction failures and uncertainty represent nutrient reductions to the Bay
Request submissions are logged in and processed in the order they are received. See the Credit Trading Process page for more details on the request submission process.
To ensure processing can be completed in time for credits to be sold and applied to permit limits no later than the November 28th Chesapeake Bay annual DMR submission deadline, submit complete requests for compliance year 2018 (10/1/17 – 9/30/18) electronically to the Nutrient Credit Trading Program email (EPPANutrientTrad@pa.gov) by the following dates:
- Certification Requests: Tuesday, April 3, 2018
- Verification Requests: Friday, November 9, 2018
- Registration Requests: Monday, November 19, 2018
The Department of Environmental Protection (DEP) will make requests for Certification and Notices related to the Nutrient Credit Trading Program available for public comment. Typically, DEP allows 30 days for public comment.
Please see the applicable PA Bulletin Notice found on eComment for the exact days and timeframe for comments on each item listed below. Upon conclusion of the comment period, DEP may remove these documents from this website.
Individuals wishing to comment can utilize DEP's eComment website.
DEP will accept comments submitted by e-mail. Comments submitted by facsimile will not be accepted. A return name and address must be included in each e-mail transmission. Written comments should be submitted to:
Nutrient Trading Program
Department of Environmental Protection
Bureau of Clean Water ¦ Division of Operations
RCSOB, P.O. Box 8774
Harrisburg, PA 17105