The Virginia Chesapeake Bay Watershed Nutrient Credit Exchange Program

In 2003, the Chesapeake Bay Program adopted new annual mass load goals for nitrogen and phosphorus entering the Chesapeake Bay and allocated these loads by river basin and state. To help implement and achieve the point source allocations, and at the urging of the Virginia Association of Municipal Wastewater Agencies and the Virginia Manufacturers Association, the Virginia General Assembly passed legislation in 2005 establishing a nutrient trading program. The General Assembly believed that a market-based point-source nutrient credit trading program would: (1) assist in meeting the combined wasteload allocations of the 125 significant point source dischargers more quickly cost-effectively than requiring every one of them to install and operate advanced nutrient removal technology; (2) help accommodate continued economic growth and development; and (3) provide a foundation for establishing market-based incentives to help achieve nonpoint-source nutrient reduction goals.The statute also directed the State Water Control Board to issue a Watershed General Virginia Pollutant Discharge Elimination System (“VPDES”) Permit for dischargers of nitrogen and phosphorus in the Chesapeake Bay watershed and to develop a regulation governing this permit. The General Permit, when issued, will include a list of the significant dischargers governed by the permit, the nutrient wasteload allocations for total nitrogen and total phosphorus expressed as annual mass loads established by regulation, and a schedule for compliance with the combined wasteload allocations for each tributary (i.e., the aggregate loads of all the dischargers) as soon as possible. It also requires the dischargers to submit a plan for complying with the allocations.Finally, the legislation authorized creation of the Virginia Nutrient Credit Exchange Association as a private, nonprofit organization comprised of municipal and industrial dischargers. The main purposes of the Exchange are to facilitate nutrient trading among its members and to provide input to the regulatory process.Since its incorporation in August, 2005, the Exchange has appointed a governing Board and slate of officers, adopted bylaws, obtained grant funding from the state, hired a technical consultant, prepared education and outreach materials, held meetings for prospective members, conducted an intensive data gathering effort, developed a trading optimization model, and produced Compliance Plan Options and Construction Schedule Compliance Report Draft Report (April 2006). This paper describes these activities and the findings of the Draft Report.