1. Developing a Water Quality Trading Framework
#IowaLeague18
Developing a Water Quality Trading Framework
Dustin Miller, Attorney, Nyemaster Goode P.C.
Handouts and presentations are available through the event app and at

2. Water Quality Numeric Nutrient Criteria Clean Water Act Point Source
Total Maximum Daily Loading
Concentrated Animal Feeding Operation
Total Phosphorus
Total Suspended Solids
Water Quality
National Pollutant Discharge Elimination System
Watershed
Environmental Protection Agency
Water Quality Standards
Publically Owned Treatment Works
Total Nitrogen
Hydrologic Unit Code
Nonpoint Source
Turbidity
Iowa Department of Natural Resources

3. Iowa Nutrient Reduction Strategy
Focused on Nitrogen and Phosphorus to the Mississippi River
Final Draft Released in January 2013
Total Reduction Goal: 45% for Non-Point Source (NPS) and Point Source (PS)
Integrated Strategy
Non-Point Source: Science Assessment for NPS agricultural producers with voluntary implementation of conservation practices
Point Source: Technology Assessment for major wastewater treatment facilities
Estimated Cost
NPS: Initial Investment Costs range from $1.2 to $4 billion
PS: Capital and operation costs over 20 years of approximately $1.5 billion
Water Quality Trading Included in Final Draft and Annual Updates

4. Water Quality Trading 2003 EPA Water Quality Trading Policy
Allows a Point Source to Purchase "Credits" to Reduce Pollutants More Cost Effective Than with Technology at the Plant
Previously Solely Compliance Driven with Numeric Nutrient Criteria or TMDL
Too Restrictive and Limited Success
Updated Language in the INRS in 2016 to reflect efforts of the Iowa League of Cities

5. Iowa League of Cities’ Efforts
2014 USDA NRCS Conservation Innovation Grant
2015 USDA NRCS Conservation Innovation Grant
Technical Advisory Committee
Storm Lake and Dubuque Pilot Trades
Early Adoption Letter
Housing of NRE

7. Iowa Nutrient Reduction Exchange (NRE)
Utilize Motivations
Environmental benefits, flood mitigation, source water protection, economic development, habitat development, nutrient reduction, increased production
Data Points
Watershed, permit number, project name, funding source, practice type, install data, term of practice (years), type of credits generated (N, P, sediment, etc.), credit calculation method, verifying entity, monitoring, pollutant reductions, ancillary benefits
Track Multi-Benefit Investments
Provide Incentives for Investment
Improved ratios, environmental excellence, longer term schedules, etc.

8. NRE Incentives
If/when the point source is subjected to water quality-based nutrient limits in its NPDES permit, DNR will provide compliance flexibility to the extent allowed by law (e.g., net-addition, longer-term compliance schedule if demonstrated to be necessary; a 1 to 1 trade ratio for projects with quantified performance developed pre-compliance; preferred access to credits if more demand than supply).
The verified reductions may be applied by the point source as an offset against its new or expanded loading (i.e., in a growth scenario).
DNR will provide official recognition through some kind of “environmental excellence” program, along with any discretionary incentives that DNR is legally authorized to provide (e.g., reduced agency inspections, streamlined permit processing, reduced monitoring, reduced paperwork).
If/when the point source demonstrates that additional technology-based reductions are not feasible, DNR will provide an option allowing the point source to achieve equivalent reductions through the NRE.
In situations where other sources join together in a watershed plan, then the affected point sources will be eligible for a “bubble” or watershed permit that enables them to trade between themselves and other sources for compliance with watershed-wide nutrient reduction goals.
If the State adopts a formal water quality incentive program in the future with a different baseline, then DNR will waive the programmatic baseline for up to two NPDES permit cycles in connection with voluntary projects that are initiated and maintained before the formal program is adopted.
SRF applications for Sponsored Projects may receive priority scoring if they anticipate registering projects into the NRE.

9. NRE Next Steps Process Incentives Database NRE placement
NPDES permit integration (DNR) and practice application submittals (ISU and DNR)
Incentives
Evaluation of regulatory authority and potential for use
Database
USACE RIBITS Iowa Pilot – ensuring an easy to use electronic application submittal process
NRE placement
Evaluation of NRE placement in rule or policy
Nutrient Load Reduction Model
Evaluation and implementation of a specific model or models for load reduction estimates.
Streambank Stabilization

10. Questions? Dustin Miller Attorney at Nyemaster Goode P.C.
(515)
Robert Palmer
General Counsel & Director of Government Affairs
(515)