Workshop. By: Jim Klang, PE Kieser & Associates. Kalamazoo, MI 49007

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Osborne Farmer
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1 By: Jim Klang, PE Kieser & Associates 536 East Michigan Ave Suite 300 Kalamazoo, MI 49007

2 Why Trade? TN Reduction Cost Comparisons

3 Minnesota has: Why Trade? Two point-nonpoint p permits One basin overlay point-point permit Trading allows new NPDES discharge into a fully allocated river Saves on cost of upgrades for some Rahr Malting, point-nonpoint, costs per credit ~$3.50 (Feng Fang, JAWRA, 2005) Point-point trading costs $2 $13 a credit Small WWTP upgrade costs of $0.5 M WQT 20-year costs ~$10K to $20K 3

4 Why Trade? Maryland Intends to accomplish: Allow New WWTPs Allow Expansion of Existing WWTPs Allow continued growth Offset all loads associated with growth Create incentives for NPS reductions Incentives for septic hookups Avoid high stormwater costs (All Maryland information provided by: Cy Jones, WRI) 4

5 The Minnesota story Regulatory requirements Estimation of credits Discussion on where trading works Why Minnesota trades Lessons learned Nonpoint site examples 5

6 Regulatory Authority Requirements on Credits Credit is a unit of mass for a given period of time A credit is: Accountable / enforceable Additional to what is already being done Equivalent, same time, same parameter and same location Economic (decisions i are the permittees) 6

7 NPDES Permit Requirements for Trades Enforceable NPDES permit provisions Monitoring and reporting requirements Effluent limits o Conventional treatment requirements o Trading structure in special actions section o Coverage o Credit structure (organization) Location factors Equivalence factors (if appropriate) o Trade Ratio Net benefit for water resource Uncertainty factors (safety factor) 7

8 Generating a Credit Reductions beyond what s required! Point sources (effluent mass limit) Trade credits created when treatment is beyond Water Quality Based Effluent Limits (WQBEL) Monitoring and reporting Daily flow and sufficient concentration sampling NPDES permit adjustment Trading limits: = old mass limit credits obligated 8

9 Generating a Credit Non-permitted nonpoint sources Monitoring (establishment) Modeling of load reduction Uncertainty factor Verification, adaptive management Established baseline TMDL, rules or requirements not eligible ibl Legally binding agreements (civil contracts) Credit = Load reduction - requirements 9

10 Wastewater Minimum Requirements Total Phosphorus (mg/l) 6 TP (m mg/l) Must Treat Tradable 1 0 Raw Secondary TMDL 10

11 Wastewater Minimum Requirements Total Phosphorus (mg/l) 6 TP (m mg/l) Must Treat Tradable = 0 Raw Past Standard TMDL 11

12 The Maryland story: Regulatory requirements Estimation of credits Challenges 12

13 Maryland and the Chesapeake Bay 13

14 Maryland and the Chesapeake Bay Current Trading Areas Potential Trading Area 14

15 Maryland s Perspective Nitrogen (Million pounds per year) Phosphorus (million pounds per year) Category Strategy Strategy Agriculture Resource Land Urban Point Source Urban Nonpoint Source Septic Stormwater Grand Total Future Growth Maryland s allocation was incorporated into its cleanup plan, or Tributary Strategy, as a loading cap 15

16 Maryland s Perspective Nutrient Reduction by Source Percent of necessary nitrogen load reduction States expect to achieve from Tributary Strategies* from 2002 to 2010 by source. Annualized Cost Percent of Total Annualized Cost of Tributary Strategy Implementation* By Source Point Source 20% Septic 3% Agriculture 13% Point Sources 5% Urban Runoff 13% Septic 15% Agriculture 64% Urban Uba 67% High cost strategies: Urban, septic systems and possibly certain WWTPs 16

17 Maryland s Perspective Challenges Enough credits to meet demand? High baselines WWTPs can t trade to achieve Residual skepticism Leakage detection and prevention 17

18 Where Trading Works Regulators willing New plant in a capped watershed Existing facilities with new and expensive nutrient limits Confidence in supply of credits Efficient mechanisms for transaction cost management 18

19 Where Trading Works (continued) Pollutant suitability Persistent in the environment Cumulative source problem Common to buyer and seller Pollutant Parameters: sediment, nutrients, D O stressors No bioaccumulative pollutants: mercury, pesticides, PCBs 19

20 Where Trading Works (concluded) d) Watershed settings Scale of watershed large enough to provide multiple sources with excess reductions Will not cause or contribute to a water quality violation Local hotspots Watershed plan in place for water resource of concern (TMDL, schedule, nondegredation, ) 20

21 Why Minnesota Trades Resolves drivers and compliance uses Managing TMDLs, measurable milestones Negotiation of wasteload allocations Longer TMDL compliance schedules Leverage cumulative source control Manage future growth in a fully allocated water Leverage variance applications Implements emerging water quality issues Nutrient standards 21

22 Minnesota River Basin Point - Nonpoint SMBSC Facility Dissolved Oxygen Impaired Reach Rahr Malting Facility 22

23 Two Types of Trades Rahr Malting Company (1997) Same Issue Southern Minnesota Beet Sugar Cooperative (2000) Multi-parameters affecting DO By sediment and sediment attached; erosion protection Phosphorus By sediment attached phosphorus; erosion protection Direct BOD/Ammonia 23

24 July 8, 2002 Blue Earth River Eutrophication 24

25 Phosphorus Causing Dissolved Oxygen Problems Phosphorush Increases algae Algae die Bacteria use oxygen as they break down algae Other sources use oxygen (BOD*) = Results: decreased oxygen MPCA TMDL 25

26 Rahr Malting Company 26

27 Southern Minnesota Beet Sugar Cooperative 27

28 Lessons Learned Point - Nonpoint Individual permit public notice extended on both permits; resolving comments and concerns Understanding the watershed: High flow BMP contribution to low flow issues Contributions from different sectors Weak Law of Large Numbers; averaging works best across many sites 28

29 Lessons Learned Point - Nonpoint (Concluded) d) Administrative overhead high Accountability Documentation Door knocking for new sites Short Best Management Practice life versus long life or permanent easements Public concerns need to be addressed d o Buying their way out o NRCS erosion estimates are over estimating reality Local champions are important 29

30 Minnesota River Basin Point to Point (2005) Minnesota River Basin Phosphorus Permit Coverage Pomme de Terre River Watershed Areas Covered By the Permit MN River Basin from Jordan to Shakopee MN River Basin Watersheds Upstream of Jordan Areas Not Covered By the Permit Upper Minnesota River Watershed N t Covered Not C db By P Permitit Montevideo Shakopee Lac Qui Parle River W t Watershed h d Jordan Marshall Mankato Blue Earth Miles

31 Minnesota River Basin General Phosphorus Permit Phase I Achieve 35% ( ) cumulative reduction Collect data for use by other TMDLs Phase II Achieve 51% cumulative reduction 1 mg/l TP effluent Adaptive management 31

32 Minnesota River Basin General Phosphorus Permit Initial coverage: g 40 large continuously discharging WWTF (98% of WWTP loading) 29 smaller continuously discharging WWTF 71 controlled discharge ponds 12 unsewered and untreated communities Future growth 32

33 Lessons Learned MPCA pleased Developing state-wide rule Permit removed a pending law suite Managing future growth (4 new facilities) with no net increase in phosphorus loads Accelerated e TMDL load reductions when compared to normal reissuance schedule 33

34 Lessons Learned (concluded) 2008 began reduction requirements 14 buyers and 3 sellers Traded (~1/3 of WWTPs required to reduce) Leveraged other WWTP to upgrade within this permit cycle Some plants will use trading in the long-term; those that have loadings that are slightly above their allocation 34

35 Working Examples in Minnesota