1. Water Quality Credit Trading Florida League of Cities 2013 Annual Meeting

2. Overview Clean Water Act 101 Complexities of Regulating Nutrients Water Quality Credit Trading – New statewide policy – A tool in the toolbox for water body restoration Future Policy Modifications? David Childs Hopping Green & Sams2

3. Clean Water Act 101 Water Quality Criteria – Protect “designated uses” of water bodies – Translated into discharge permit limits TMDL Program (safety net) – Restoration program – Point and non-point sources allocated pollutant loads Discharge Permits – Wastewater Treatment Plants – Municipal Storm Water Discharges 3David Childs Hopping Green & Sams

4. Nutrient TMDLS Florida already has over 80 nutrient TMDLs – FDEP Numeric Nutrient Criteria Rule approved by EPA means even more nutrient TMDLs Significant nutrient reductions for storm water – Bayou Chico: 30% TN & TP reductions – North Escambia Bay: 35% TP reduction – Hillsborough River (channelized segment): 50% TN & 60% TP reductions – Lake Dora: 67% reduction in TP 4David Childs Hopping Green & Sams

5. Complexity of Regulating Nutrients Citizens have an expectation of healthy natural rivers, streams, lakes, and marine waters… 5David Childs Hopping Green & Sams

6. …but public expectations do not always mesh with scientific, economic, & regulatory realities. National Academy of Sciences: Reality Check – Report on Chesapeake Bay TMDL – Public concern ≠ public willingness to pay the price – Disconnect between achievement of a standard & appreciable water quality improvement – Substantial public commitment and “some level of sacrifice from all who live and work in the watershed” Complexity of Regulating Nutrients 6David Childs Hopping Green & Sams

7. What tools are available to help cities restore water bodies and comply with nutrient load reduction requirements (i.e. TMDLs) in a cost effective manner? 7David Childs Hopping Green & Sams

8. Water Quality Credit Trading TMDL Program (safety net) – Restoration program – Point and non-point sources allocated pollutant loads Water Quality Credit Trading – Pollutant reductions are environmentally valued in the form of “credits,” which can then be traded on a local “market” to promote cost-effective water quality improvements. – Goal: better water quality protection for less $$. 8David Childs Hopping Green & Sams

9. Water Quality Credit Trading HB 713 (2013) – Bipartisan Passage – Supporters included the League of Cities, Southeast Milk, Audubon, and other diverse interests – Expanded the St. Johns Pilot Program Statewide – Trading is voluntary & completely market driven References: – §403.067(9), F.S. – Rule 62-306, F.A.C. (not yet updated) 9David Childs Hopping Green & Sams

10. Water Quality Credit Trading 10 CAFOStorm Water Utility Economic Solution $$$ Nitrogen Load ► Water Quality Standards Achieved ►Local Government Saves Money

11. Water Quality Credit Trading The nitty-gritty – Credits must be quantifiable & enforceable – Point source credits must be measured – Nonpoint sources can be estimated Reasonable assurance Uncertainty factor – Location factors may increase credits needed – Creditable actions include…installing treatment equipment…operational changes…structural nonpoint source management David Childs Hopping Green & Sams11

12. Water Quality Credit Trading Practical & Program Limitations – Trading will not work everywhere – Need willing buyer and willing seller – Seller must meet its allocation & can only sell its surplus reductions – Transaction must include a surface water discharge permit holder – No credit for land use changes that don’t result in loadings equal to or less than natural conditions – Ongoing nutrient criteria litigation = chilling effect 12David Childs Hopping Green & Sams

13. Credit Trading 2.0? Remove barriers to entry into marketplace – Allow trading in absence of discharge permit – Loosen timing requirements – Enable “mitigation banking” style credit generation Expand concept into water supply arena – Promote land use conversions that restore landscape and promote aquifer recharge 13David Childs Hopping Green & Sams

14. Discussion 14 David W. Childs DavidC@hgslaw.com Hopping Green & Sams 119 S. Monroe Street Suite 300 Tallahassee, FL 32301 (850) 222-7500