Public Workshops on Water Quality Credit Trading Rule (Chapter 62-306, FAC)

Received in an email:

Greetings,

The Department has scheduled additional public workshops to address proposed revisions to Chapter 62-306, Florida Administrative Code (F.A.C.), Water Quality Credit Trading, as follows:

DATE AND TIME: Wednesday, January 14, 2015, 9:00 a.m.
PLACE: Florida Department of Environmental Protection, Central District Office, 3319 Maguire Boulevard, Suite 232, Conference Rooms A/B/C, Orlando, Florida

DATE AND TIME: Thursday, January 15, 2015, 9:00 a.m.
PLACE: Florida Department of Environmental Protection, Bob Martinez Center, Conference Room 609, 2600 Blair Stone Road, Tallahassee, Florida

This is a follow-up to public workshops held on August 20, 2014 (Tallahassee) and August 27, 2014 (Palm Bay). Two copies of the draft rule language are attached: (1) a coded copy with underline/strike thru showing changes from the currently adopted rule, and (2) a clean copy of the proposed rule with draft changes accepted. There are extensive proposed revisions to Chapter 62-306, F.A.C., so the clean copy may be helpful. The draft rule language will be discussed at the public workshops above. Also attached is a copy of the draft affidavit that would be used to submit information about a proposed trade.

Please let me know if you have any questions or need additional information about this rulemaking effort.

Eric Shaw

Attachment 1

DRAFT​December 8, 2014
CHAPTER 62-306
WATER QUALITY CREDIT TRADING

62-306.100​Scope and Intent
62-306.200​Definitions
62-306.300​General Requirements
62-306.400​Credit Eligibility for Generation of Credits
62-306.500​Credit Generation and Validation (Repealed)
62-306.600​Use of Credits and Credit Adjustments
62-306.700​Water Quality Credit Trade Tracking
62-306.800​Compliance with Trade Provisions

62-306.100 Scope and Intent.
(1)​This chapter establishes the requirements for a pilot program for water quality credit trading between pollutant sources to reduce or eliminate nutrient or nutrient-related impairments among the pollutant sources to the Lower St. Johns River (LSJR) Basin pursuant to Section 403.067, F.S.
(2)​The generation, registration, and trading of water quality credits provided for in this chapter are intended to provide flexibility among pollutant sources to meet the nutrient reduction requirements of an adopted the LSJR Basin Management Action Plan (BMAP) or Reasonable Assurance Plan (RAP), as adopted by Secretarial Order on October 14, 2008. Copies of the LSJR BMAP and RAP documents may be obtained from the Department’s internet site at http://www.dep.state.fl.us/water/watersheds, or by writing to the Florida Department of Environmental Protection, Water Quality Restoration Program Bureau of Assessment and Restoration Support, 2600 Blair Stone Road, MS 3560, Tallahassee, FL 32399-2400.
(3)​A The LSJR BMAP provides for the implementation of Total Maximum Daily Loads (TMDL) for Total Nitrogen and Total Phosphorus adopted by the Department in Chapter 62-304 subsections 62-304.415(1) and (2), Florida Administrative Code (F.A.C.). A RAP, pursuant to Rule 62-303.600, F.A.C., provides for the restoration of impaired waters without calculation of a TMDL, and is adopted by Final Order of the Secretary. The following parts of the LSJR BMAP, which are hereby incorporated by reference, will be used to implement the trading program in the LSJR Basin:
(a) Figure 1, which identifies and delineates the watershed boundaries of the LSJR in which trading may occur;
(b) Point and nonpoint source baseline allocations (Tables 9-14) or management practices for sources that may generate, use, or trade credits in the plan area; and
(c) Tables 22 and 23, which provide Location Factors.
(4)​This chapter does not address aggregation of wasteload allocations by an entity with multiple wastewater facilities, which may Aggregate load allocations will be implemented via an aggregate permit that limits the total allocated nutrient TMDL load for the entity.
(5)​Nothing in this rule is intended to limit any actions by federal, state, or local agencies, affected persons, or citizens pursuant to other rules or regulations.
Rulemaking Authority 403.067(9) FS. Law Implemented 403.067(8)-(10) FS. History–New 9-6-10, Amended .

62-306.200 Definitions.
(1) “Act” means the Florida Watershed Restoration Act, as codified under Section 403.067, F.S.
(1) (2) “Baseline” means the threshold nutrient load used to establish whether water quality credits may be generated. The baseline for a point source is the entity’s annual wasteload allocation under the BMAP or RAP or a water quality-based effluent limitation established in a permit, whichever is more stringent. For a concentrated animal feeding operation, the baseline is defined by the entity’s comprehensive nutrient management plan. The baseline for a source covered under a categorical load allocation is the annual nutrient load expected following the entity’s implementation of the minimum threshold BMPs as required under section 403.067, F.S pollutant-specific point source discharge or nonpoint source load allowable under the TMDL or BMAP.
(2) (3) “Best management practices (BMPs)” means a practice or combination of practices adopted by rule by the Department of Agriculture and Consumer Services, the Department of Environmental Protection, or the applicable Water Management District as an the most effective and practicable means for reducing nutrient inputs, generally from nonpoint sources improving water quality, taking into account economic and technological considerations.
(4) “Clean Water Act” means the Federal Water Pollution Control Act, commonly referred to as the Clean Water Act, 33 U.S.C. §1251 et seq.
(3) (5) “Credit” means the amount of an entity’s future nutrient the pollutant-specific point source load reduction below the baseline, which will be available for trading purposes pursuant to the requirements of this chapter or nonpoint source load reduction that is generated and may be used or traded as water quality credits (WQCs). A credit may only be generated when pollutants loads are reduced below the baseline load allowable under the TMDL or BMAP. Credits shall be in either the units of pounds per year or kilograms per year.
(4) (6) “Department” means the Florida Department of Environmental Protection.
(5) (7) “Estimated credits” means a credit for nutrient load reductions that from nonpoint sources that are used for credit trading but which cannot be reasonably measured through direct monitoring.
(6) (8) “Location Factors” (LFs) means adjustments to credits made by the Department the WBID-specific numbers, as listed in the LSJR BMAP Tables 22 and 23, that are used to ensure that trades do not result in localized water quality impacts on the river. Location Factors represent the relative impact a given unit of nitrogen or phosphorus discharged at a WBID has on water quality in the worst case WBID compared to the same amount of nitrogen or phosphorus discharged directly to the worst case WBID. LFs are used in trades to provide reasonable assurance that the seller’s credits are functionally equivalent in protecting the water quality of the waterbody water body or water segment.
(9) “Lower St. Johns River (LSJR)” means the main stem of the St. Johns River that flows between the mouth of the Ocklawaha River and the mouth of the St. Johns River.
(7) (10) “Measured credits” means a credit for nutrient load reductions from point sources that are used for credit trading that can be directly monitored using water quality effluent samples.
(8)​“Municipal separate storm sewer” or “MS4” has the same meaning as in Rule 62-624.200, F.A.C.
(9) (11) “Nonpoint source” means a those sources of pollutants that discharge to surface or ground water in response to rainfall events that is not defined as a point source, and which are not defined as point sources and do not have a point source permit.
(12) “NPDES permit” means a surface water discharge permit issued by the Department under Section 403.0885, F.S., or by the U.S. Environmental Protection Agency pursuant to the National Pollutant Discharge Elimination System (NPDES) under Section 402 of the Clean Water Act.
(10) (13) “Permit” means an authorization issued by the Department pursuant to Chapter 403, F.S., to discharge into surface or ground waters issued by the Department pursuant to Chapter 403, F.S.
(14) “Person” means a person as defined by Section 403.031(5), F.S.
(11) (15) “Point source” has the same meaning as in Rule 62-620.200 means a point source as defined by subsection 62-620.200(37), F.A.C.
(16) “TMDL” means the total maximum daily load for nutrients for the LSJR adopted in subsections 62-304.415(1) and (2), F.A.C.
(12) (17) “Trading Registry” means the water quality credit database created and maintained by the Department to register for the purpose of registering the generation and trading of water quality credits (WQCs).
(13) (18) “Technology-Based Effluent Limitation” (TBEL) means a minimum waste treatment requirement established by the Department based on treatment technology.
(14) (19) “Uncertainty Factor” (UF) means the ratio of the estimated number of pounds or kilograms of nutrient load reduction by a nonpoint source to the number of pounds or kilograms of credit that will be authorized. The UF reflects the uncertainty associated with estimated credits estimates of nonpoint source pollutant reductions.
(15) “Wastewater facility” means a facility that accepts and treats domestic wastewater or industrial wastewater as those terms are defined in Rule 62-620.200, F.A.C.
(16) (20) “Water Quality Credit Trading” means the exchange of credits pursuant to the requirements of this chapter between nutrient point and nonpoint sources in a basin the LSJR Basin to achieve or maintain the TMDL.
(17) (21) “WBID” means a the unique waterbody identification unit that was used by the Department to divide a waterbody into discrete segments for purposes of assessment and restoration under section 403.067, F.S. the Lower St. Johns River Basin into water assessment polygons, as shown in LSJR BMAP Figure 1.
(18) (22) “Worst case WBIDs” means the WBID or WBIDs in the basin marine and freshwater portions of the river where adverse impacts due to nutrient loadings are were greatest, and which control controlled the maximum allowable nutrient loading to the waterbody LSJR.
Rulemaking Authority 403.067(9) FS. Law Implemented 403.067(8)-(10) FS. History–New 9-6-10, Amended .

62-306.300 General Requirements.
(1)​Credits may be generated and traded only within the boundaries of a single BMAP or RAP. To be eligible to generate and trade credits between point and nonpoint sources, the following must be met:
(2) (a) Credits generated by a point source, other than an MS4, must be confirmed by effluent monitoring, which for the pollutant subject to the trade. This monitoring must be undertaken and provided to the Department throughout the lifetime of the trade.
(3) (b) Credits generated by a nonpoint source or an MS4 must can either be measured where treatment methods allow influent and effluent water quality to be measured, or, where direct measurement is not possible, they may can be estimated for the type of operation. However, if credits are estimated, the Department will apply applicant must provide reasonable assurance, using peer reviewed literature-based estimates of removal efficiency, that the estimate is scientifically defensible, and any applicable uncertainty factors to adjust the credits available for trading shall be applied.
(c)​At least one of the trading parties must have an individual wastewater or stormwater permit. The activities necessary to generate credits must be authorized under the appropriate point source stormwater or wastewater NPDES permit. The permit application shall describe how the activities necessary to achieve the load reductions required to generate the credits will be implemented and monitored.
(4) (d) An individually permitted facility or system Wastewater or stormwater facilities that purchases or sells credits must obtain a new Department permit or permit revision revise their existing NPDES permit or acquire a new NPDES permit if necessary, to authorize the use or sale of such credits. The NPDES permit shall reflect the amount by which the permitted nutrient load has been adjusted by the purchase or sale of credits or, if no load was identified in the previous permit, the new or revised permit must reflect the new permitted load, the baseline load, and the basis for the load reduction associated with the trade.
(5)​For entities not required to obtain a permit, or authorized under general permit, the Department shall authorize the approved use or sale of credits in a BMAP or RAP, which will reflect the baseline nutrient load or minimum threshold BMPs and the basis for the nutrient load reduction associated with the credits. Such an entity must fully comply with the baseline nutrient load or minimum threshold BMPs to be eligible for credits resulting from other management actions that reduce the nutrient load below the baseline. In the case of an agricultural nonpoint source, the entity must undergo an onsite assessment to identify applicable minimum threshold BMPs, assisted by the Florida Department of Agriculture and Consumer Services (DACS); submit to DACS a BMP checklist and a signed Notice of Intent to implement the BMPs; and fully implement the BMPs before the Department will authorize credits.
(e)​Credits are only generated when a source’s load is reduced below the baseline established for the entity, which is the wasteload allocation for point sources. For a trade involving credits generated by a nonpoint source, the loading from the nonpoint source must be less than that expected following implementation of applicable BMPs and any additional reductions required for the nonpoint source category under the BMAP.
(f)​Credits must be used in the same calendar year in which they are generated.​
(6) (2) No facility or activity may generate or use water quality credits until the Department has authorized the credits in a permit, BMAP or RAP such time as all required permits have been obtained. Credits will be based on annual average loading of nitrogen or phosphorus, and the environmental value of each credit is the corresponding annual average loading and is not aggregated from year to year. A credit retains its environmental value only as long as the activity resulting in its creation continues to provide at least the same level of nutrient load reduction below the baseline load authorized by the Department and the Department’s authorization for the credit remains in effect. A credit included in an ongoing Department-authorized trade is not available for another trade. The Department will maintain the accounting of credits in its Trading Registry. Facilities that meet their TMDL obligations via trading must demonstrate that their discharge, including any trades, will not cause or contribute to violations of water quality standards. Credits generated under this part shall not be used to offset violations of a discharge permit or to comply with any applicable technology-based effluent limits (TBELs).
(7) (3) A water Water quality credit trades shall not cannot result in an increased nutrient load to a waterbody or cause or contribute to a violation of water quality standards, nor shall it be used to offset violations of a discharge permit or to comply with any applicable TBELs above the LSJR TMDLs.
(4)​Nothing in this rule is intended to limit any actions by federal, state, or local agencies, affected persons, or citizens pursuant to other rules or regulations.
Rulemaking Authority 403.067(9) FS. Law Implemented 403.067(8)-(10) FS. History–New 9-6-10, Amended .

62-306.400 Credit Eligibility for Generation of Credits.
(1)​For discharge or load reductions to be generated and registered as credits, a credit generator shall meet each of the following conditions:
(a)​The pollutant load reduction shall continue to be generated after the effective date of this chapter.
(b)​Reasonable assurance shall be provided that discharge or load reductions will result in credits.
(c)​Applicable control devices or best management practices must be fully implemented and properly maintained throughout the period of the trade.
(1) (2) Activities that are eligible to generate credits upon Department authorization include:
(a) ​Installation or modification of water pollution control equipment.
(b)​Operational changes or the modification of a process or process equipment that reduce the quantity of water discharged through reuse, recycling, water conservation, or other measures and thereby reduce the load of nutrients discharged.
(c)​Implementation of structural nonpoint source and MS4 BMPs management controls.
(d)​Installation, operation and maintenance of new drainage projects designed to treat control stormwater as part of a city or county drainage improvements.
(e) Implementation by agricultural operations of soil or water treatment technologies or water-quality enhancing production practices or systems, confirmed by DACS, that reduce nutrient loads below the baseline.
(f) (e) Other similar pollution controls, technologies or management practices with a demonstrated ability to reduce nutrient loads below the baseline established in a BMAP or RAP the load of nutrients discharged.
(g)​A documented change in land use that results in a reduction of nutrient loads below the baseline land use in the TMDL, BMAP or RAP. The owner shall notify the Department in writing in the event the land use resulting in eligible credits changes, which may result in an adjustment to authorized credits.
(2) (3) Activities that are not eligible to generate credits include:
(a)​A reduction in nutrient loading that is required under a regulatory program. However, reductions beyond those required under a regulatory program shall be eligible to generate credits.
(b)​A change in land use, including taking agricultural lands out of production and changes in crops grown, unless the change results in post development pollutant loading being equal to or less than loading under natural conditions for the property.
(b) (c)​Implementation of BMPs that are required under a permit or the adopted BMAP or RAP LSJR BMAP.
(3)​The Department will calculate credits generated using the same method used to calculate nutrient loading during TMDL, BMAP or RAD development unless the Department approves an alternative method.
Rulemaking Authority 403.067(9) FS. Law Implemented 403.067(8)-(10) FS. History–New 9-6-10, Amended .

62-306.500 Credit Generation and Validation.
(1)​Point Sources.
(a)​The baseline for point sources, including both wastewater and stormwater dischargers, shall be the source’s wasteload allocation under the LSJR BMAP, unless a lower water quality-based effluent limitation has been established for the discharge.
(b)​Credits shall only be generated by point sources after the entity provides reasonable assurance that it can meet an effluent loading limit that is lower than its baseline allocation and the source’s applicable permit limits are revised to reflect the reduced load.
(2)​Nonpoint Sources.
(a)​The baseline for nonpoint sources shall be the source’s load allocation specified under the LSJR BMAP or, for nonpoint sources that are covered under categorical load allocations, shall be the load expected following implementation of applicable BMPs and the additional reductions required for agricultural sources.
(b)​Credits shall only be generated by nonpoint sources if the source reaches an agreement with a permitted point source and the activity generating the credits is incorporated into the point source’s permit.
Rulemaking Authority 403.067(9) FS. Law Implemented 403.067(8)-(10) FS. History–New 9-6-10, Repealed .

62-306.600 Use of Credits and Credit Adjustments.
(1)​Wastewater Facilities.
(a)​The use of credits must be authorized in the buyer’s permit. At the time of permit application, the A credit buyer must submit to the Department an affidavit, signed by the buyer and seller, disclosing the term of the trade, the number of credits traded, the date when the credits will be generated, the unit price, and the amount of any state funding used to generate the credits traded. The affidavit used by the Department for Water Quality Credit Trading, Form 62-306, “Water Quality Credit Trading Affidavit” effective XXXXX (Dept. of State link) 9-6-10, is hereby adopted and incorporated. Copies of the form may be obtained from the Department’s internet site at http://www.dep.state.fl.us/water/tmdl, the Northeast District Office, or by writing to the Florida Department of Environmental Protection, Division of Environmental Assessment and Restoration Bureau of Assessment and Restoration Support, 2600 Blair Stone Road (MS 3560), Tallahassee, FL 32399.
(b)​The Fact Sheet or Statement of Basis for the buyer’s permit shall note that the permit authorizes a trade and identify the source of the credits purchased.
(c)​If the buyer subsequently decides to change the source of credits during the permit cycle, the buyer must submit a new Water Quality Credit Trading Affidavit pursuant to paragraph (1)(a) and apply for a permit revision. The Department will evaluate the permit revision and determine whether the seller has credits available in accordance with Rules 62-306.300, 62-306.400, and 62-306.500, F.A.C.
(2)​The Department will determine whether the seller has credits available in accordance with this chapter.
(3)​The Department will notify the buyer within thirty days if the buyer has not provided the required information to determine whether the seller has credits available. When the buyer has provided the required information, the Department will timely notify the buyer of that fact. Any trade to be accomplished using the available credits will be documented and become effective in the next revision to the BMAP or RAP for the basin or in an applicable permit or permit revision.
(2)​Municipal Separate Storm Sewer Systems (MS4s) and Nonpoint Sources.
(a)​The buyer must submit a Water Quality Credit Trading Affidavit, signed by the buyer and seller, disclosing the term of the trade, the number of credits traded, the date when the credits will be generated, the unit price, and the amount of any state funding used to generate the credits traded. The Department will determine whether there is reasonable assurance that the seller has credits available. The Department shall notify the buyer within thirty days if the buyer has not provided reasonable assurance that the seller has credits available.
(4) (b) If the buyer subsequently proposes decides to change the source of credits, the buyer must submit a new Water Quality Credit Trading Affidavit and obtain so that the Department’s written authorization can evaluate whether the buyer has provided reasonable assurance that the proposed seller has sufficient credits available. The Department shall notify the NPS within thirty days if the NPS has not provided reasonable assurance that the seller has credits available.
(5) Credit sellers shall maintain records demonstrating that the control devices and systems, technologies, BMPs, land use changes, or other management actions upon which credits are based continue to be fully implemented and properly operated and maintained throughout the period of the trade. The records shall be retained for five years after conclusion of the period covered by the trade. Each seller shall allow the Department, or an agent of the Department, to inspect the records and the control devices and systems, technologies, BMPs, land use changes, or other management actions.
(3) If the seller of credits is a nonpoint source, the buyer must provide information about the nonpoint source activity that will generate the credits, including the baseline loading for the type of operation, a description of the management activities that will generate the reduction, and calculations, signed and sealed by a Professional Engineer, supporting the credit generation.
(a)​If the credits to be traded are based on measured credits, the point source permittee must propose monitoring locations and submit monthly discharge monitoring reports to validate the generation of the credits.
(b)​If the credits purchased are estimated, the permittee must:
1.​Provide information describing the basis for the estimates, including references or models used, calculations showing the amount of credits generated, and any needed adjustment factors to address uncertainty pursuant to subsection (4);
2.​Keep detailed records demonstrating they are in compliance with any applicable BMP requirements; and
3.​Agree to be subject to inspections at the nonpoint source activity.
(6) (4) Use of Location Factors to Adjust Credits.
(a)​For trades where the seller and buyer discharge to different WBIDs covered under a BMAP or RAP, the amount of credits proposed to be traded shall be adjusted by the applicable LF Location Factors to provide reasonable assurance that the proposed trade does not result in localized adverse impacts to the waterbody water body or water segment.
(b)​The number of credits needed for a proposed trade shall be calculated as follows: Number of Credits Needed = (Number of Pounds or Kilograms Needed) x (LF for Buyer’s WBID/LF for Seller’s WBID).
(c)​This formula may not be used to reduce the number of credits needed below the number of pounds or kilograms needed.
(7) (5)​Use of Nonpoint Source Uncertainty Factors to Adjust Credits Ratios.
(a)​For proposed trades involving estimated credits for nonpoint sources, the Department shall use default UF Uncertainty Factor (“UF”) ratios of 2:1 for urban stormwater (if 2 pounds or kilograms of removal are estimated, 1 pound of credit will be created) and 3:1 for agricultural runoff. However, a buyer or seller an applicant may propose and document the basis for a lower UF ratio to the Department if justified by site-specific considerations.
(b)​Any sSite-specific UF, including the use of a lower proposed UF, will must be based on the Department’s best professional judgment, taking into account the scientific support for the estimate, the level of confidence that the BMP will be properly designed, installed, maintained, and the potential for failure of the BMP, and the level of uncertainty that the estimated load reduction will be achieved.
Rulemaking Authority 403.067(9) FS. Law Implemented 403.067(8)-(10) FS. History–New 9-6-10, Amended .

62-306.700 Water Quality Credit Trade Tracking.
(1)​The Department shall track all credits and trades generated or trades authorized in permits, and shall post the information about trades and available credits on its the Department’s website at http://www.dep.state.fl.us/water/watersheds.
(2)​Information tracked related to credits and trades will generators and sellers shall include, at a minimum:
(a)​The generator or seller’s names, and street addresses of all parties, locations of discharges, receiving water (WBID), and the nutrient involved pollutant being traded;
(b)​The buyer’s and generator or seller’s baselines, permit number for permit authorizing the credit generation, the new permit limit authorizing a reduced discharge level, and the amount of credits generated by the seller;
(c)​A description of the actions that generated credits and whether the credits are measured or estimated;
(d)​Effective date of the permit, tThe date when credits will start to be generated, and the effective period duration of the credits;
(e)​The amount of credits traded to date and any adjustments for location or uncertainty; and
(f)​The unit price of the credits, including the amount of any state public funding used to generate the credits.
(3)​Information tracked related to buyers of credits shall include:
(a)​The buyer’s name, location, permit number, receiving water (WBID), and pollutant being traded;
(f) (b) A The description of the source of the credits, including permit number of seller if applicable, and the amount of credits purchased; and
(c)​The new permit limit authorizing an increased discharge level, effective date of the permit, and the date when credits will be available for use; and
(g) (d) The unit price of the credits, including the amount of any public funding used to generate the credits.
Rulemaking Authority 403.067(9) FS. Law Implemented 403.067(8)-(10) FS. History–New 9-6-10, Amended .

62-306.800 Compliance with Trade Provisions.
(1)​The seller shall certify and document to the Department annually during the life of the trade that the control devices and systems, technologies, BMPs, land use changes, or other actions on which the credits are based, continue to be fully implemented and properly operated and maintained throughout the life of the trade, and that nutrient load reductions below the baseline continue to be achieved at the authorized level.
(2) (1) If the credits traded are measured credits, the seller permittee shall report to the Department the quantity of the Total Nitrogen or Total Phosphorus discharged on a monthly basis to demonstrate fulfillment of the nutrient load reduction resulting in credits compliance with the effluent limitations, and monitoring and reporting requirements specified in their NPDES permit. If applicable, a permittee Permittees may use the precoded Discharge Monitoring Report form provided by the permitting office to the permit holder at the time of permit issuance to report the amount of Total Nitrogen or Total Phosphorus discharged.
(3) (2) If the credits traded are estimated credits, the seller permittee shall submit a quarterly report to the Department quarterly providing the following information:
(a)​The name and location of the activity generating the credits site;
(b)​The pollutants controlled;
(c) ​The BMPs implemented or, in the case of concentrated animal feeding operations, the activities conducted under a comprehensive nutrient management plan;
(d) (c) The control devices installed or management practices implemented and date completed, and information on their proper operation and maintenance;
(e) (d) The linear feet or acres for which BMPs or other management measures or controls or management practices have been completed; and
(f) (e) A calculation of the quantity of each pollutant controlled using the same methods and procedures used to determine the load reductions and credits.
(3)​Liability:
(a)​A seller Sellers of water quality credits is are responsible for achieving the load reductions on which the credits are based and complying with the terms of its their permit, or the BMAP or RAP, if applicable, and any trading agreements into which it has they may have entered.
(b)​A buyer Buyers of water quality credits is are responsible for complying with all terms of the trade and the BMAP, RAP or their permit. In the event the Department determines the purchased credits are invalid because the seller fails to achieve the load reductions on which the that credits are based, purchased are determined to be invalid but the buyer otherwise meets its applicable requirements permit limit, the invalidation of credits shall not be a violation by the buyer of the buyer’s permit. In such cases, the Department shall allow re-open the permit and issue an Administrative Order requiring the buyer, within a reasonable amount of time, to obtain credits from another source, increase treatment, or otherwise reduce the discharged load to meet its baseline load, and the Department will reflect this fact in the BMAP, RAP, permit, or Administrative Order, as appropriate.
Rulemaking Authority 403.067(9) FS. Law Implemented 403.067(8)-(10) FS. History–New 9-6-10, Amended .

Attachment 2

DRAFT​​December 8, 2014

CHAPTER 62-306
WATER QUALITY CREDIT TRADING

62-306.100​Scope and Intent
62-306.200​Definitions
62-306.300​General Requirements
62-306.400​Credit Eligibility
62-306.500​Credit Generation and Validation (Repealed)
62-306.600​Use of Credits and Credit Adjustments
62-306.700​Water Quality Credit Trade Tracking
62-306.800​Compliance with Trade Provisions

62-306.100 Scope and Intent.
(1)​This chapter establishes the requirements for water quality credit trading between pollutant sources to reduce or eliminate nutrient or nutrient-related impairments pursuant to Section 403.067, F.S.
(2)​The generation, registration, and trading of water quality credits provided for in this chapter are intended to provide flexibility among pollutant sources to meet the nutrient reduction requirements of an adopted Basin Management Action Plan (BMAP) or Reasonable Assurance Plan (RAP). Copies of BMAP and RAP documents may be obtained from the Department’s internet site at http://www.dep.state.fl.us/water/watersheds, or by writing to the Florida Department of Environmental Protection, Water Quality Restoration Program, 2600 Blair Stone Road, MS 3560, Tallahassee, FL 32399-2400.
(3)​A BMAP provides for the implementation of Total Maximum Daily Loads (TMDL) adopted by the Department in Chapter 62-304, Florida Administrative Code (F.A.C.). A RAP, pursuant to Rule 62-303.600, F.A.C., provides for the restoration of impaired waters without calculation of a TMDL, and is adopted by Final Order of the Secretary.
(4)​This chapter does not address aggregation of wasteload allocations by an entity with multiple wastewater facilities, which may be implemented via an aggregate permit that limits the total allocated nutrient TMDL load for the entity.
(5)​Nothing in this rule is intended to limit any actions by federal, state, or local agencies, affected persons, or citizens pursuant to other rules or regulations.
Rulemaking Authority 403.067(9) FS. Law Implemented 403.067(8)-(10) FS. History–New 9-6-10, Amended .

62-306.200 Definitions.
(1) “Baseline” means the threshold nutrient load used to establish whether water quality credits may be generated. The baseline for a point source is the entity’s annual wasteload allocation under the BMAP or RAP or a water quality-based effluent limitation established in a permit, whichever is more stringent. For a concentrated animal feeding operation, the baseline is defined by the entity’s comprehensive nutrient management plan. The baseline for a source covered under a categorical load allocation is the annual nutrient load expected following the entity’s implementation of the minimum threshold BMPs as required under section 403.067, F.S.
(2) “Best management practices (BMPs)” means a practice or combination of practices adopted by rule by the Department of Agriculture and Consumer Services, the Department, or the applicable Water Management District as an effective and practicable means for reducing nutrient inputs, generally from nonpoint sources, taking into account economic and technological considerations.
(3) “Credit” means the amount of an entity’s future nutrient load reduction below the baseline, which will be available for trading purposes pursuant to the requirements of this chapter. Credits shall be in either the units of pounds per year or kilograms per year.
(4) “Department” means the Florida Department of Environmental Protection.
(5) “Estimated credit” means a credit for nutrient load reductions that cannot be reasonably measured through direct monitoring.
(6) “Location Factors” (LFs) means adjustments to credits made by the Department to ensure that trades do not result in localized water quality impacts. Location Factors represent the relative impact a given unit of nitrogen or phosphorus discharged at a WBID has on water quality in the worst case WBID compared to the same amount of nitrogen or phosphorus discharged directly to the worst case WBID. LFs are used in trades to provide reasonable assurance that the seller’s credits are functionally equivalent in protecting the water quality of the waterbody or water segment.
(7) “Measured credit” means a credit for nutrient load reductions that can be directly monitored using water quality samples.
(8) “Municipal separate storm sewer” or “MS4” has the same meaning as in Rule 62-624.200, F.A.C.
(9) “Nonpoint source” means a discharge to surface or ground water in response to rainfall events that is not defined as a point source.
(10) “Permit” means an authorization issued by the Department pursuant to Chapter 403, F.S., to discharge into surface or ground waters.
(11) “Point source” has the same meaning as in Rule 62-620.200, F.A.C.
(12) “Trading Registry” means the water quality credit database created and maintained by the Department to register the generation and trading of water quality credits.
(13) “Technology-Based Effluent Limitation” (TBEL) means a minimum waste treatment requirement established by the Department based on treatment technology.
(14) “Uncertainty Factor” (UF) means the ratio of the estimated number of pounds or kilograms of nutrient load reduction by a nonpoint source to the number of pounds or kilograms of credit that will be authorized. The UF reflects the uncertainty associated with estimated credits.
(15) “Wastewater facility” means a facility that accepts and treats domestic wastewater or industrial wastewater as those terms are defined in Rule 62-620.200, F.A.C.
(16) “Water Quality Credit Trading” means the exchange of credits pursuant to the requirements of this chapter between nutrient sources in a basin.
(17) “WBID” means a unique waterbody identification unit used by the Department to divide a waterbody into discrete segments for purposes of assessment and restoration under section 403.067, F.S.
(18) “Worst case WBID” means the WBID or WBIDs in the basin where adverse impacts due to nutrient loadings are greatest, and which control the maximum allowable nutrient loading to the waterbody.
Rulemaking Authority 403.067(9) FS. Law Implemented 403.067(8)-(10) FS. History–New 9-6-10, Amended .

62-306.300 General Requirements.
(1)​Credits may be generated and traded only within the boundaries of a single BMAP or RAP.
(2) Credits generated by a point source, other than an MS4, must be confirmed by effluent monitoring, which must be undertaken and provided to the Department throughout the lifetime of the trade.
(3) Credits generated by a nonpoint source or an MS4 must be measured where treatment methods allow influent and effluent water quality to be measured or, where direct measurement is not possible, they may be estimated for the type of operation. However, if credits are estimated, the Department will apply uncertainty factors to adjust the credits available for trading.
(4) An individually permitted facility or system that purchases or sells credits must obtain a new Department permit or permit revision to authorize the use or sale of such credits. The permit shall reflect the amount by which the permitted nutrient load has been adjusted by the purchase or sale of credits or, if no load was identified in the previous permit, the new or revised permit must reflect the new permitted load, the baseline load, and the basis for the load reduction associated with the trade.
(5)​For entities not required to obtain a permit, or authorized under general permit, the Department shall authorize the approved use or sale of credits in a BMAP or RAP, which will reflect the baseline nutrient load or minimum threshold BMPs and the basis for the nutrient load reduction associated with the credits. Such an entity must fully comply with the baseline nutrient load or minimum threshold BMPs to be eligible for credits resulting from other management actions that reduce the nutrient load below the baseline. In the case of an agricultural nonpoint source, the entity must undergo an onsite assessment to identify applicable minimum threshold BMPs, assisted by the Florida Department of Agriculture and Consumer Services (DACS); submit to DACS a BMP checklist and a signed Notice of Intent to implement the BMPs; and fully implement the BMPs before the Department will authorize credits.
(6) No facility or activity may generate or use water quality credits until the Department has authorized the credits in a permit, BMAP or RAP. Credits will be based on annual average loading of nitrogen or phosphorus, and the environmental value of each credit is the corresponding annual average loading and is not aggregated from year to year. A credit retains its environmental value only as long as the activity resulting in its creation continues to provide at least the same level of nutrient load reduction below the baseline load authorized by the Department and the Department’s authorization for the credit remains in effect. A credit included in an ongoing Department-authorized trade is not available for another trade. The Department will maintain the accounting of credits in its Trading Registry.
(7) A water quality credit trade shall not result in an increased nutrient load to a waterbody or cause or contribute to a violation of water quality standards, nor shall it be used to offset violations of a discharge permit or to comply with any applicable TBELs.
Rulemaking Authority 403.067(9) FS. Law Implemented 403.067(8)-(10) FS. History–New 9-6-10, Amended .

62-306.400 Credit Eligibility.
(1) Activities that are eligible to generate credits upon Department authorization include:
(a) ​Installation or modification of water pollution control equipment.
(b)​Operational changes or the modification of a process or process equipment that reduce the quantity of water discharged through reuse, recycling, water conservation, or other measures and thereby reduce the load of nutrients discharged.
(c)​Implementation of structural nonpoint source and MS4 BMPs.
(d)​Installation, operation and maintenance of new drainage projects designed to treat stormwater.
(e) Implementation by agricultural operations of soil or water treatment technologies or water-quality enhancing production practices or systems, confirmed by DACS, that reduce nutrient loads below the baseline.
(f) Other pollution controls, technologies or management practices with a demonstrated ability to reduce nutrient loads below the baseline established in a BMAP or RAP.
(g)​A documented change in land use that results in a reduction of nutrient loads below the baseline land use in the TMDL, BMAP or RAP. The owner shall notify the Department in writing in the event the land use resulting in eligible credits changes, which may result in an adjustment to authorized credits.
(2) Activities that are not eligible to generate credits include:
(a)​A reduction in nutrient loading that is required under a regulatory program. However, reductions beyond those required under a regulatory program shall be eligible to generate credits.
(b)​Implementation of BMPs that are required under a permit or the adopted BMAP or RAP.
(3)​The Department will calculate credits generated using the same method used to calculate nutrient loading during TMDL, BMAP or RAD development unless the Department approves an alternative method.
Rulemaking Authority 403.067(9) FS. Law Implemented 403.067(8)-(10) FS. History–New 9-6-10, Amended .

62-306.500 Credit Generation and Validation.
Rulemaking Authority 403.067(9) FS. Law Implemented 403.067(8)-(10) FS. History–New 9-6-10, Repealed .

62-306.600 Use of Credits and Credit Adjustments.
(1)​A credit buyer must submit to the Department an affidavit, signed by the buyer and seller, disclosing the term of the trade, the number of credits traded, the date when the credits will be generated, the unit price, and the amount of any state funding used to generate the credits traded. The affidavit used by the Department for Water Quality Credit Trading, Form 62-306, “Water Quality Credit Trading Affidavit” effective XXXXX (Dept. of State link), is hereby adopted and incorporated. Copies of the form may be obtained from the Department’s internet site at http://www.dep.state.fl.us/water/tmdl or by writing to the Florida Department of Environmental Protection, Division of Environmental Assessment and Restoration, 2600 Blair Stone Road (MS 3560), Tallahassee, FL 32399.
(2)​The Department will determine whether the seller has credits available in accordance with this chapter.
(3)​The Department will notify the buyer within thirty days if the buyer has not provided the required information to determine whether the seller has credits available. When the buyer has provided the required information, the Department will timely notify the buyer of that fact. Any trade to be accomplished using the available credits will be documented and become effective in the next revision to the BMAP or RAP for the basin or in an applicable permit or permit revision.
(4) If the buyer subsequently proposes to change the source of credits, the buyer must submit a new Water Quality Credit Trading Affidavit and obtain the Department’s written authorization that the proposed seller has sufficient credits available.
(5) Credit sellers shall maintain records demonstrating that the control devices and systems, technologies, BMPs, land use changes, or other management actions upon which credits are based continue to be fully implemented and properly operated and maintained throughout the period of the trade. The records shall be retained for five years after conclusion of the period covered by the trade. Each seller shall allow the Department, or an agent of the Department, to inspect the records and the control devices and systems, technologies, BMPs, land use changes, or other management actions.
(6) Use of Location Factors to Adjust Credits.
(a)​For trades where the seller and buyer discharge to different WBIDs covered under a BMAP or RAP, the amount of credits proposed to be traded shall be adjusted by the applicable LF to provide reasonable assurance that the proposed trade does not result in localized adverse impacts to the waterbody or water segment.
(b)​The number of credits needed for a proposed trade shall be calculated as follows: Number of Credits Needed = (Number of Pounds or Kilograms Needed) x (LF for Buyer’s WBID/LF for Seller’s WBID).
(c)​This formula may not be used to reduce the number of credits needed below the number of pounds or kilograms needed.
(7)​Use of Uncertainty Factors to Adjust Credits.
(a)​For proposed trades involving estimated credits, the Department shall use default UF ratios of 2:1 for urban stormwater (if 2 pounds or kilograms of removal are estimated, 1 pound of credit will be created) and 3:1 for agricultural runoff. However, a buyer or seller may propose and document the basis for a lower UF ratio to the Department if justified by site-specific considerations.
(b)​Site-specific UF, including the use of a lower proposed UF, will be based on the Department’s best professional judgment, taking into account the scientific support for the estimate, the level of confidence that the BMP will be properly designed, installed, maintained, the potential for failure of the BMP, and the level of uncertainty that the estimated load reduction will be achieved.
Rulemaking Authority 403.067(9) FS. Law Implemented 403.067(8)-(10) FS. History–New 9-6-10, Amended .

62-306.700 Water Quality Credit Trade Tracking.
(1)​The Department shall track all credits and trades, and shall post the information on its website at http://www.dep.state.fl.us/water/watersheds.
(2)​Information tracked related to credits and trades will include, at a minimum:
(a)​The names and street addresses of all parties, locations of discharges, receiving water (WBID), and the nutrient involved;
(b)​The buyer’s and seller’s baselines and the amount of credits generated by the seller;
(c)​A description of the actions that generated credits and whether the credits are measured or estimated;
(d)​The date when credits will start to be generated, and the effective period of the credits;
(e)​The amount of credits traded and any adjustments for location or uncertainty;
(f) A description of the source of the credits and the amount of credits purchased; and
(g) The unit price of the credits, including the amount of any public funding used to generate the credits.
Rulemaking Authority 403.067(9) FS. Law Implemented 403.067(8)-(10) FS. History–New 9-6-10, Amended .

62-306.800 Compliance with Trade Provisions.
(1)​The seller shall certify and document to the Department annually during the life of the trade that the control devices and systems, technologies, BMPs, land use changes, or other actions on which the credits are based, continue to be fully implemented and properly operated and maintained throughout the life of the trade, and that nutrient load reductions below the baseline continue to be achieved at the authorized level.
(2) If the credits traded are measured credits, the seller shall report to the Department the quantity of the Total Nitrogen or Total Phosphorus discharged on a monthly basis to demonstrate fulfillment of the nutrient load reduction resulting in credits. If applicable, a permittee may use the precoded Discharge Monitoring Report form provided by the permitting office to the permit holder at the time of permit issuance to report the amount of Total Nitrogen or Total Phosphorus discharged.
(3) If the credits traded are estimated credits, the seller shall report to the Department quarterly providing the following information:
(a)​The name and location of the activity generating the credits;
(b)​The pollutants controlled;
(c) ​The BMPs implemented or, in the case of concentrated animal feeding operations, the activities conducted under a comprehensive nutrient management plan;
(d) The control devices installed and date completed, and information on their proper operation and maintenance;
(e) The linear feet or acres for which BMPs or other management measures or controls have been completed; and
(f) A calculation of the quantity of each pollutant controlled using the same methods and procedures used to determine the load reductions and credits.
(3)​Liability:
(a)​A seller of water quality credits is responsible for achieving the load reductions on which the credits are based and complying with the terms of its permit, or the BMAP or RAP, and any trading agreements into which it has entered.
(b)​A buyer of water quality credits is responsible for complying with all terms of the trade and the BMAP, RAP or permit. In the event the Department determines the purchased credits are invalid because the seller fails to achieve the load reductions on which the credits are based, but the buyer otherwise meets its applicable requirements, the invalidation of credits shall not be a violation by the buyer. In such cases, the Department shall allow the buyer, within a reasonable amount of time, to obtain credits from another source, increase treatment, or otherwise reduce the discharged load to meet its baseline load, and the Department will reflect this fact in the BMAP, RAP, permit, or Administrative Order, as appropriate.
Rulemaking Authority 403.067(9) FS. Law Implemented 403.067(8)-(10) FS. History–New 9-6-10, Amended .

Affidavit

DRAFT​​December 8, 2014
WATER QUALITY CREDIT TRADING AFFIDAVIT (DEP Form 62-306)
STATE OF FLORIDA
COUNTY OF_______________________________

Before me, the undersigned authority, personally appeared, ___________________________
as the authorized representative for ________________________ (“Buyer”), and __________________________ as the authorized representative for ___________________________ (“Seller”), who each being duly sworn aver:
1) The Buyer and Seller are engaged in a Water Quality Credit Trade pursuant to Chapter 62-306, F.A.C., for _______________________ (nitrogen, phosphorous or both).
2) Buyer has purchased ________ (pounds/year) of Water Quality Credits for __________________ (nitrogen or phosphorous) from Seller for the term of ____________ (date) to _______________ (date).
3) Buyer has paid Seller $_______________ for the purchase of the Water Quality Credits, which reflects a purchase price of $__________________ per credit.
4) The Seller acknowledges that state funding in the amount of $_________was received for the facilities or activities that generated the purchased credits.
5) The Seller’s load allocation under the __________________________ (BMAP or RAD name) is ______________pounds/year, and the Buyer’s load allocation under the __________________________ (BMAP or RAD name) is _________________ pounds/year.
6) The Seller generated credits by implementing the following activities thus reducing its pollutant load below the baseline load allowable under the BMAP or RAD: __________________________________________________ __________________________________________________ __________________________________________________ __________________________________________________ __________________________________________________ _____
7) The activities in (6) above will reduce Seller’s load by __________ (number of pounds/year) based upon _________________________ (water quality monitoring, calculation method or estimation method).
8) The Buyer/Seller has been issued or has applied for an individual wastewater or stormwater permit (Permit No.) _______________________________________.
9) The WaterBody IDentification (WBID) number and Location Factor (LF) for the discharge location of the Buyer and Seller, and any calculations used to account for differences in location (attach additional material as needed) are as follows: __________________________________________________ ___________________________________ 
DEP Form 62-306 ​Page 1 of 2
(Effective Month, xx, xxxx)

DRAFT​​December 8, 2014

__________________________________________________ __________________________________________________ __________________________________________________ ____________________
10) For estimated or calculated credits, please attach a professional engineer statement, signed and sealed, verifying the credits generated, identifying the calculation methods and including any calculations used to account for the uncertainty in the estimated reductions. (If default uncertainty factor (UF) ratios were not used, attach documentation supporting the use of site-specific UF ratios).
11) A description of any proposed monitoring that will be done to verify credit generation (attach additional material as needed):
__________________________________________________ __________________________________________________ __________________________________________________ __________________________________________________ __________________________________________________ _____
12) As the seller of credits generated by a nonpoint source, I agree to allow DEP to access the property and inspect the activities generating the credits. __________________________________________________ ___________________________________

13) 11) The Seller certifies that the credits purchased in this Water Quality Credit Trade have not been previously sold to another buyer.

___________________________________​​​____________ ____________________
Representative for Buyer​ ​​​​Representative for Seller


Sworn to and subscribed before me on _________________________ by
__________________________________ (Buyer) and ________________________________ (Seller)
​​​​​​____________________________________________ _
Notary Public
Personally Known ____________ OR Produced Identification ______________
Type of Identification Produced ______________________________________


DEP Form 62-306 ​​​​Page 2 of 2
(Effective Month, xx, xxxxx)



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Agenda


FLORIDA DEPARTMENT OF
ENVIRONMENTAL PROTECTION
BOB MARTINEZ CENTER
2600 BLAIRSTONE ROAD
TALLAHASSEE, FLORIDA 32399-2400
RICK SCOTT
GOVERNOR

CARLOS LOPEZ-CANTERA
LT. GOVERNOR

CLIFFORD D. WILSON III
INTERIM SECRETARY




AGENDA

Public Workshops
Water Quality Credit Trading Rule


DATE AND TIME: Wednesday, January 14, 2015, 9:00 a.m.
PLACE: Florida Department of Environmental Protection, Central District Office, 3319 Maguire Boulevard, Suite 232, Conference Rooms A/B/C, Orlando, Florida

DATE AND TIME: Thursday, January 15, 2015, 9:00 a.m.
PLACE: Florida Department of Environmental Protection, Bob Martinez Center, Conference Room 609, 2600 Blair Stone Road, Tallahassee, Florida



THESE MEETINGS ARE OPEN TO THE PUBLIC



I.​Welcome and Introduction

II.​Proposed Amendments to Chapter 62-306, F.A.C. (Water Quality Credit Trading)

III.​Rulemaking Schedule

IV.​Public Comments

V.​Adjournment







Pursuant to the provisions of the Americans with Disabilities Act, any person requiring special accommodations to participate in this workshop/meeting is asked to advise the agency at least 5 days before the workshop/meeting by contacting: Eric Shaw, Water Quality Standards Program, MS 6511, 2600 Blair Stone Road, Tallahassee, FL 32399-2400; telephone 850/245-8429. If you are hearing or speech impaired, please contact the agency using the Florida Relay Service, 1(800)955-8771 (TDD) or 1(800)955-8770 (Voice).
www.dep.state.fl.us


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