Water Quality Pollutant Trading Guidance

Transcript

1 Water Quality Trading Guidance State of Idaho Department of Environmental Quality October 201 6

2 Disclaimer: ing water quality trading will be governed by existing requirements of the Clean Implement Water Act (CWA), US Environmental Protection Agency (EPA) implementing regulations, and w ater q uality s tandards . This document is Idaho not a substitute for those provisions, regulation s , or rules. The recommendations in this guidance are not binding; the Idaho Department of Environmental Quality (DEQ) and EPA may consider other approaches consistent with CWA , EPA regulations , and Idaho w ater q uality s tandards . Decisions regarding pollutant trades will be made within specific NPDES or other permits as required and will be guided by CWA , , tak e applicable federal regulations and state standards into account comments and and information presented a about the appropriateness of applying t that time by interested persons these recommendation s to the particular situation. DEQ may change the recommendations in this guidance in the future. 201 6 , PID February Printed on recycled paper, DEQ, WPAW , CA cod e 82932 . Costs associated with this publication are available from the State of Idaho Department of Environmental Quality in accordance with Section 60 - 202, Idaho Code.

3 Water Quality Trading Guidance Table of Contents ... ... ... ... v Acronyms and Abbreviations Introduction ... ... ... ... 1 1 Purpose of Water Quality Trading ... ... ... 1 1.1 Authority in Rule or Regulation for Water Quality Trading in Idaho ... 1 1.2 1.3 Background ... ... ... ... 2 ... ... ... 2 1.4 Trading Guidance, Framework, and Plan ... ... 2 3 Questions and Answers about Water Quality Trading 3 Essential Safeguards for Any Water Quality Trading Program ... ... 4 4 Scenarios Where Trading Can Be Used ... ... ... 6 4.1 ... ... ... 7 Pollutants Not Considered for Trading ... ... ... 7 4.2 Pollutants DEQ Recommends for Trading Incorporating Trading into NPDES Permits ... ... 4.3 7 ... 4.4 Trading Parties and Types of Trades ... ... 7 ... 4.4.1 Point - Point Trading ... ... ... ... 8 ... 4.4. Point - Nonpoint Trading ... ... 8 2 4.5 Trading in Pre - TMDL § 303(d) - Impaired Waters ... ... 8 9 5 Steps for Developing Water Quality Trading Frameworks or Plans in Idaho ... 6 ... ... ... ... 12 Trading Components ... ... ... 12 6.1 Project Eligibility for Credits Baseline ... ... 6.2 ... 13 ... 6.3 Quantifying Pollutant Reductions for Water Quality Credits ... ... 15 6.4 Trading Ratios ... ... ... ... 16 ... 6.5 ... ... Credit Characteristics ... 17 6.6 Preparing a Cred it Project Plan ... ... ... 18 ... 6.7 Project Stewardship ... ... ... 18 7 Approval for Credit - Generating BMPs and Quantification Methods ... ... 19 7.1 ... ... 19 Approved BMPs in a Trading Framework or Plan ion Method ... ... 19 7.2 Approved for a New BMP and Quantificat Step 1: Prepare and Submit Proposed BMP Package ... 7.2.1 19 ... 7.2.2 Step 2: Initial Screening of BMP Proposal ... ... 20 7.2.3 Step 3: Review Process and Criteria for BMP Consideration ... ... 20 7.2.4 Step 4: DEQ Concurrence, Public Noti ce and Comment and Final Decision ... 20 7.2.5 Step 5: BMP Revision Post Approval ... ... ... 20 8 Process for Generating and Tracking Credits ... ... ... 21 21 8.1 Initial Project Screening ... ... ... . iii

4 Water Quality Trading Guidance Initial Verification ... ... ... ... 21 8.2 2 Inspections of NPDES ... Permitted Facilities for Point Source Credits 2 - 8.2.1 Review of Best Management Practices for Nonpoint Source Credits ... 8.2.2 22 ... ... Certification and Tracking 22 8.3 ... Certifying and Issuing Credits 8.3.1 Reduction Credit Certificate ... .. 22 — 8.3.2 Registering a Trade — Trade Notification Forms ... ... 23 ... ... 8.3.3 ... 23 Discharge Monitoring Reports ... 8.3.4 ... ... Annual Reports ... 23 23 8.4 Ongoing Verification and Credit Tracking ... ... ... ... 8.5 ... ... Trade Tracking ... 24 8.6 Adaptive Management ... ... ... ... 24 ... 9 Co nclusion ... ... ... 24 ... References ... ... ... ... 25 Glossary ... ... ... ... ... 27 Appendix A. Upper Snake - Rock Trading Framework ... ... . 31 Appendix B. Lower Boise Trading Framework ... ... ... 37 Appendix C. Reserve ... ... ... ... 39 iv

5 Water Quality Trading Guidance Acronyms and Abbreviations Idaho Agricultural Pollution Abatement Plan APAP Best m BMP p ractice anagement CFR Code of Federal Regulations CWA Clean Water Act DEQ Idaho Department of Environmental Quality DMR Discharge m onitoring r eport EPA United States Environmental Protection Agency National Pollutant Discharge Elimination System NPDES IPDES Discharge Elim ination System Idaho Pollutant NRCS Natural Resources Conservation Service I S W CC Idaho Soil and Water Conservation Commission TBEL Technology based effluent limit TMDL Total m aximum d aily l oad WAG Watershed advisory group WQBEL Water quality based effluent limit v

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7 Water Quality Trading Guidance I 1 ntroduction trading within Idaho. This document provides updated guidance for implementing water quality Water quality trading is a highly evaluated and regulated environment designed to realize specific and measureable water quality improvements in areas of a watershed that might not normally see improvements. Trading takes work, money , and commitment to achieve real goals. This guidance is designed to provide a understanding of the details involved in water quality n trading. q uality t Water also known as pollutant trading under Idaho water quality standards . rading is This updated guidance the 2010 Water Quality Pollutant Trading Guidance (DEQ replaces Regional . T update incorporates concepts 2010) developed from the his guidance Recommendations for the Pacific Northwest on Water Quality Trading (i.e . , Joint Regional Rec ommendations) ( Willamette Partnership et al. 2014) . The Joint Regional Recommendations were developed by state water quality agencies from Idaho, and Washington, facilitat ed Oregon, y Willamette Partnership and The Freshwater Trust, and tion of the US b with the participa (EPA), Region 10. Using workshops to generate dialogue, the Environmental Protection Agency identified critical components of water quality trading and recommended several states approaches to achieve these components . 1.1 Purpose of Water Qual ity Trading Water quality trading occurs when a contractual agreement is made to exchange pollution agreement reductions between two parties i a business - like way . This n help s to solve water quality problems by focusing on cost - effective, local solutions to problems caused by pollutant : discharges to surface waters. T he following are three important aspects of water quality trading T  rading is voluntary . to Trading allows parties to decide how best pollutant load s reduce wi thin the limits  their the Clean Water Act (CWA) and other federal and state requirements of . rading must provide a n et environmental benefit. Either as T specific added pollutant  a reduction, or as ancillary benefits such as stream/riparian restoration, wildlife habitat, and aesthetics to name a few. The appeal of trading emerges when pollutant sources face substantially different pollutant reduction costs . Typically, a party facing relatively high pollutant reduction costs compensates another party to achieve a better than equivalent, though less costly, pollutant reduction ; with the potential of added ancillary benefits such as stream restoration, wildlife habitat, aesthetics, and other ecological . services for Water Q 1.2 T rading Authority in Rule or Regulation in Idaho uality CWA provides authority for EPA, states, and tribes to develop a variety of programs and activities to control pollution. Water quality trading, as described in EPA’s Water Quality uality Trading Policy (EPA 2003) , is one of those tools. Trading is author ized in Idaho w ater q .06 s ( IDAPA 58.01.02.05 5 tandards ) for the purpose of achiev ing compliance with water quality allow standards . Currently, the Idaho Department of Environmental Quality ’s ( DEQ ’s ) rules 1

8 Water Quality Trading Guidance as a means helping water quality limited water bodies compl y with the water quality trading of DEQ ater t rading g uidance outlines the components uality consider s when w standards. This q frameworks and trading plans . reviewing water quality trading Background 1.3 uidance adopted a d raft t radi , g DEQ , which was used to guide trades in the In November 2003 ng u River w atershed and helped to inform discussions about expand ing trading to other pper Snake watersheds such as Bear, North Fork Payette, Spokane , Portneuf, and Lower Boise Rivers . In , its g uidance to further articulate key concepts of 2010, DEQ updated and finalized adoption of trading and to provide watershed advisory groups (WAGs) more details on the elements and More recently DEQ participated in documentation needed to develop a local trading framework. the Regional Recommendations for the Pacific Northwest on Water Quality developing Draft (i.e., Joint Regional Recommendations) (WP et al. 2014). Trading result, DEQ has updat ed As a the water common questions about g uidance again to stay current and to answer stakeholder’s quality trading. 1.4 Trading Guidance, Framework, and Plan point source A comply with the requirements included and referenced in a permittee must National Pollutant Discharge and Elimination System ( NPDES ) permit or equivalent (e.g. , Idaho Pollutant Discharge Elimination System [ ] ) and other enforceable documents (e.g. IPDES Comprehensive Environmental Response, Compensation, and Liability Act con sent order) . Water quality trading is based on the following types of documents: this Trading g uidance — EPA guidance on trading , and Idaho statewide guidance , outlines  how water quality trading should occur within Idaho . Trading  ramework — Watershed - level documents approved by DEQ which acts as f guidance on the details of trading processes and standards for a specific geographical area (e.g., the Lower Boise River Trading Framework ). Trading framework elements are enforceable only when incorp orated into an NPDES permit. p lan — S pecific incorporation of trading elements into a permit or other binding  Trading agreement. A permittee’s trading plan may incorporate the terms of a relevant watershed trading framework by include all o therwise , the permi t’s trading plan m ust reference; specific details necessary to support trading. 2

9 Water Quality Trading Guidance Questions and Answers about 2 Water Quality Trading What is Q water quality trading ? Water quality trading total phosphorus is one strategy to reduce problem pollutants ( or A e.g., 1 rivers and lakes. Trading allows a point source discharger temperature to ) in meet enter into an agreement under which the discharger obtains regulatory requirements by ing in the watershed instead of installing tighter pollutant reductions from another source conditions of trading must be point controls for that pollutant at T he specific the discharge . ’ s NPDES permit or similar enforceable document, included in the point source discharger cility license. such as a hydroelectric fa Q Who can participate in water quality trading ? - y occur between two point source dischargers (point ma point trading) or a point A Trading discharger (point - nonpoint trading). For this source discharger and a nonpoint source ources under an enforceable agreement (e.g., hydroelectric facilities guidance, nonpoint s a - issued license ) operate similar to a point with Federal Energy Regulatory Commission Section 4.4 provides source. more information on types of trades. Before anyone can ensure consistency with participate in trading, DEQ must approve specific analysis t hat water quality goals , total maximum daily load ( TMDL ) wasteload NPDES permits, and CWA , EPA regulations, Idaho allocations, water quality standards , provisions this g uidance . Q Why would dischargers want to trade? A Trading can save dischargers money. The intent is to achieve expected reductions of a pollutant at a lower cost. Trading also allows dischargers to allocate resources for watershed improvement to enhance recreation opportunities and promote better fish and wildlife habitat that otherwise would be spent on expensive facilities . trading Q What are the benefits of water quality ? A an incentive to reduce pollutants beyond current limits , helps to achieve Trading provides more quickly, s and foster water quality standards technological innovation while maintaining an . The potential exists, in some emphasis on water quality improvement watersheds, to realize cost savings through water quality trading. 1 point sources . Per Most discharges relevant to trading will come from point source means “[a]ny Idaho water quality standards, discernible, confined, and discrete conveyance, including, but not limited to any pipe, ditch, channel, tunnel, conduit, well , discrete fissure, container, rolling stock, concentrated animal feeding operation, or vessel or other floating craft, from wh ich pollutants are, or may be, discharged. This term does not include return flows from irrigated agriculture, discharges from da ms and hydroelectric generating facilities or any source or activity considered a nonpoint source by definition” (IDAPA 58.01.02.0 10(79) [2014]). Trading may also be authorized for hydroelectric facilities or other permitted nonpoint source discharges operating under a § 401 certification or other enforceable agreement. 3

10 Water Quality Trading Guidance What is a ‘net environmental benefit’ in water quality trading? Q Trading must increase pollutant reduction above and beyond legally required load levels. A e required to provide additional reductions to cover inefficiency and Credit producers ar uncertainty about load calculations. Credit producers may also create ancillary benefits such as stream/riparian restoration, wildlife habitat and aesthetics. s up In short, water quality end better with trading than without. What are the key s to successful water quality trading ? Q Compliance monitoring , performance tracking , and enforceability are the key s to successful A . Although p oint sources are regulated through NPD ES permits , water quality trading onpoint sources are not n regulated and are not typically monitored . Because always onitoring is essential, point source should require third parties to monitor and m permits any nonpoint source projects used for permit compliance . Transparency, which report on , trading plan details includes clearly articulated permit conditions and public participation , . for is a water quality trading critical component successful Q What are the potential problems with water quality trading ? Trading be used if the A cannot may not be available to all dischargers . For example, trading point source’s discharge would create localized areas of impact (pollution h ). Trading otspots may not always provide the greatest opportunity for water quality improvement in some approaches it should be considered in tandem with wat ersheds, so . Trading may not other always be the cheapest alternative for a source, but its flexibility and scalability might still be appealing. 3 Essential Safeguards for Any Water Quality Trading Program Individual trades and different watersheds will face unique situations and issues. In general, trading frameworks and plans should follow these guiding principles: Trades should be based in science and more effectively accomplish regulatory and  environmen tal goals than other alternatives . A ccountability is required that allows regulators to confirm th e  promised water quality improvements are actually delivered and to verify compliance with CWA requirements . The benefits of trading must be produces a net environmental benefit and so it  delivered 2 . Trades must be does not result in localized exceedance of water quality standards consistent with Idaho water quality standards , NPDES permits, TMDL wasteload allocations, the CWA and its implementing regulatio ns . and 2 For the purposes of trading, a localized impact occurs if the continued discharge from the purchasing source would impact existing and designated uses in the area immediately surrounding the discharge. 4

11 Water Quality Trading Guidance ompliance with w q uality s tandards and a water quality trading program requires safeguards C ater trading to solve existing water quality problems without creating successful to ensure that helps . Such safeguards include the following: new ones —  Consistency with existing regulations Water quality trades and trading programs must CWA, Code of Federal Regulation s (CFR) be consistent with statutes and the , Idaho . administrative rules, and all other applicable laws and regulations TMDLs are t ypically a rerequisite — A T MDL provide s the basis for a watershed by  p setting the overall cap on a specific pollutant and divid the reductions among various ing TMDLs also may variations in sources. provide the science and analysis to support . S ituations where a TMDL may not be a pollution reductions based on geography are prerequisite Section 4.5 “ T rading in Pre - TMDL Impaired Waters . ” discussed in Good c ompliance r ecords — Dis chargers should have a good track record of compliance  p with their NPDES permits including an EPA - compliant q uality a ssurance p rogram lan , , monitoring and reporting, , in a trade . to sell credits Pollution d ischarge l imits in p ermits — Trading can be used to mee t p art or all of a  ffluent discharger’s ater q uality - b ased e w l imits (WQBELs) , provided that applicable technology - based effluent limits (TBELs) are met . In some cases, DEQ may determine that a n advanced technology option for the permit tee is not as reasonable as trading to . meet all of a WQBEL. Trading to achieve TBEL s is not allowed by Idaho Implementation through nforceable m echanisms — Trading is typically implemented  e NPDES ing transactions are memorialized in a through a permit, order, or license. Trad between the trading parties , and trading is contract, or similar formal agreement in the NPDES permit . authorized Adequate ccounting for u — The trading framework a or plan must be designed  ncertainty to account for uncertainty through adequate adjustments such as trading ratios. The trading framework /plan must take into account all the variables and uncertainty of the , loc b anagement p ractices ( BMPs ) installed to generate credits m ations in the est watershed to trade , and under what conditions the trades are valued . Clear t rading a reas — Trading frameworks and plans need to define a geographic  boundary where trades are appropriate and , based in the science of a watershed, permissible . A t rading area helps to ensure no localized impacts occur and trades contribute to meeting water quality standards. The easiest way to avoid localized impacts is to set a trading area so that the seller of credits is upstream from the buyer. However, in some watershe ds, depending on the pollutant and number of sources and points of may be able to Generally, compliance, downstream sellers sell to upstream buyers. trading between basins is inappropriate . Clear b aseline p olicy — Nonpoin t credit sellers must meet baseline requirements before  selling credits to ensure progress towards meeting water quality improvement goals in the ( watershed ection 6.2 ). s Policies that a void l ocalized i mpacts/ h ot s pots — Any trading framework or plan must  analyze the potential for localized impacts and be specific about measures and/or monitoring that will be to ensure no localized impacts occur . If completed some or all of the analysis has occurred in a TMDL , it should be used . Implementation of p rojects a ccording to q uality s tandards — Credit - generating trading  projects must be designed and managed in a consistent manner to ensure that such . projects result in w ater quality benefits throughout the project’s lifetime or permit cycle 5

12 Water Quality Trading Guidance Time rame for t rading ( c redit l ife) — Credits can only be used within the same time  f to align the timing of the pollutant reduction with period generated a time when the The time period, or credit life, must be based . discharge is not being reduced permittee’s watershed in be per month, science and tied to the critical period for a . Credit life may annual basis . Credits cannot be banked (e.g., a pollutant reduction seasonal, or on an in . 2012 cannot be used to offset a discharge in 2014) — m and t ransparency A consistent and verifiable monitoring program  Sufficient onitoring already required to is essential for a successful trading program. Point sources are within the watershed is g (a responsibility of the state) but ambient monitorin , monitor important to ensure water quality improvements are occurring and localized impacts also P roject specific monitoring is the responsibility of the credit generator . are not. Nonpoint source site condi tions should also be regular ly and consist e nt ly verifi ed by third parties to the water quality improvements achieved by the project generating ensure are continually Important information to determine compliance should be readily credits. needed Trading frameworks or plans should describe how information on available to the public . trading projects will be made available to the public. trades and EPA for Idaho r ole — EPA is currently the NPDES permitting authority and is directly  ’s . responsible for incorporating any trading provisions into an NPDES permit DEQ is obtain authorit y for the IPDES permit program . O nce the IPDES Program is working to , w ill administer DEQ the program , including those delegated to Idaho by EPA Region 10 permits with trading provisions EPA Region 10 retains oversight of the IPDES . permitting process after delegation including authorization of trades address ed in IPDES permits. Public i nvolvement — DEQ , in concert with Region 10 , oversees development of  EPA w ater q uality t rading f rameworks on a w atershed basis with local WAGs and public P participation s ection 5 ) . ( ublic involvement is crucial to the success of a t rading program. Public participation is also a requirement of the NPDES permit program. 4 Scenarios Where Trading Can Be Used Trading can be used to offset pollutant loads under the following scenarios consistent with a 6 watershed - specific trading framework (IDAPA 58.01.02.05 5 .0 .) : O CWA § 303(d) - impaired water body with an EPA - approved  ffset existing discharges to a — Section 4.5 provides TMDL or similar watershed analysis needed to support trades on pre - TMDL trades with existing discharges. Point sources must ensure more criteria uality and trade is consistent with the TMDL and w ater q s tandards . the discharge O ffset new or e xpanding point source discharges to a § 303(d) - impaired water body with  or - approved TMDL — P oint sources must ensure their discharge and without an EPA trade does not cause or contribute to a violation of w ater q uality s tandards and is 122.4(i) consistent with the req CFR uirements of 40 and IDAPA 58.01.25.103.07 . . T rades that would allow discharges in excess of applicable TBELs are prohibited 6

13 Water Quality Trading Guidance Pollutants Not Considered for Trading 4.1 m and DEQ does not anticipate trades involving bacteria. Bacteria, such as fecal colifor , have the potential to threaten public health and not be considered for will Escherichia coli trading. do not support trading of persistent bioaccumulative toxics. DEQ and EPA also 4.2 Pollutants DEQ Recommends for Trading and temperature appropriate pollutants for trading specifically, DEQ considers nutrients — . The unit of credit should be tied to the unit of ing phosphorus, nitrogen, and thermal load and allocations in a TMDL. . Sediment or suspended solids trading to pollutant in a permit address s edimentation may be considered, particularly where dissolved oxygen impacts occur. DEQ supports trades - by - case basis where adequate involving other pollutants on a case ing information exists to establish and correlate water quality improvements from implement or technological measures. BMPs Incorporating Trading into NPDES Permits 4.3 he authority to trade comes from a discharger’s NPDES permit, which is currently issued in T Idaho by EPA. DEQ would expect a permit to include a trading plan providing detail (or incorporating the detail from an approved watershed trading framework) on how trades will be conducted. As part of DEQ’s § 401 certification of NPDES permits, DEQ would confirm that a permit and , as described in Section material trading plan adequately detail or clearly reference the nece ssary 5 of this guidance . DEQ would also review the permit for clarity on any connection between trading and compliance schedules, mixing zones, antidegradation provisions, and related federal provisions. The Water Quality Toolkit for Permit Writers ( EPA 2007 ) and Water Quality Trading Assessment Handbook ( EPA 2004) provide additional information and recommendations on trading . NPDES permittees participating in trades are responsible for the quantity and quality of the credits even when a third party or DEQ supports implementation of some required components of a permit . 4.4 Trading Parties and Types of Trades Both point and nonpoint sources are eligible to trade. Although this g uidance focuses on regulated point sources as buyers, DEQ supports voluntary purchases of water quality credits outside of compliance obligations. G enerally , two different types of trades are recognized for nonpoint trading. water quality trading - point trading and point - : point DEQ treats hydro - facilit ies as point sources for trading purposes. 7

14 Water Quality Trading Guidance Point Point Trading 4.4.1 - - water quality A point source may voluntarily reduce its pollutant discharge below its based effluent limit by a particular amount for a particular period of time. This voluntary reduction . crea tes a credit that may be sold to another point source still required to meet its individual effluent limit Each point source is , which is not officially changed in the permit . However, the discharger demonstrates compliance with the permit limit purch as by credits that make up a portion of the required load limit . The credits along with ing effluent quality are reported in the d ischarge m onitoring r (DMR) ( s ection 8.3.3 ) . EPA eport under the NPDES program (or DEQ under IPDES) retains full enforcement authority in the event that the , despite its use of credit s , is exceeded. point source’s effluent limit ts intra DEQ suppor plant trading (trading between different outfalls within a facility or plant) - ing that involves generat and us ing credits between multiple outfalls that discharge to the same receiving water. DEQ will treat intra - plant trading like a point - point tr ade. 4.4.2 - Nonpoint Trading Point A nonpoint source may voluntarily reduce its amount of pollutant run - off. Saleable credits can be created when an approved BMP is installed and the pollutant reduction is measured or calculated , the project is documented accord ing to BMP requirements , and is verified by a third BMP party . C redits are then adjusted for any relevant baseline requirements and trading ratios . approval is discussed further in Section 7. The process for generating and tracking credits, and the role of T he point source retains full responsibility for third parties, is discussed in Section 8. party verification for the quantity and delivery of the credits it purchases from a nonpoint - third source and uses to meet its effluent limits. 303(d) Trading in - TMDL § - Impaired Waters 4.5 Pre § 303(d) - impaired waters for a pollutant that still needs a TMDL may be challenging ; Trading in it is difficult to determine the allowable load for a pollutant to a receiving water body without the TMDL trading for a analysis process. Wi TMDL pre - § 303(d) - listed parameter , DEQ th respect to will consider the following : under consideration If trading is to allow for a discharge from an existing permittee, the  sources involved should and/or biological or conduct an analysis of pollutant load a TMDL or 4b Plan development process. The analysis would physical need, similar to be subject to a public notice and review process as well as DEQ review and approval (e.g., as part of the 401 certification or NPDES permit process) . § Similar requirements apply to a new or expanded discharge , although this trading  scenario will be very limited . Trading must be impleme nted through an NPDES permit . Generally, a permit limit for the new source be to an impaired water body would developed to meet the applicable water quality standard at the end of pipe . If trading is allowed to meet that limit, the discharger must demonstrate the trade is consistent with the pollutant load analysis described above (i.e., show sufficient remaining load to a llocate in the system so that the discharge does not cause or contribute to a violation of . w ater q uality s tandards ) 8

15 Water Quality Trading Guidance The proposed trad work or plan achieves e direct environmental benefit relevant  ing fram to the conditions for which the water body is impaired. EPA approve s a TMDL , When trading agreement s made before the TMDL that are any inconsistent with TMDL requirements will have to be modified. , including generated credits, - DEQ encourages parties involved in pre TMDL TMDL trading to contact DEQ early in the development process to ensure that future revisions to trading agreements do not create disincentives for early action. 5 Steps for Developing Water Quality T radin g Frameworks or Plans in Idaho s Idaho ater q DEQ must ensure that trades do not violate w tandards or impair existing or uality designated uses and are consistent with the CWA . DEQ and EPA need adequate information to ensure complian and federal law s and to enable incorporating a trade in a NPDES ce with state permit . A trading framework helps structure those information needs and can be developed by permitte e s and/or watershed stakeholders , but must be approved by DEQ after public DEQ can modify the proposed trading framework based on public involvement and comme nt. comment it receives during the public comment period. Trading frameworks not meeting DEQ and EPA expectations will not be approved, however, individual plans developed independently between willing buyers and sellers can be incorporated into discharge permits if they meet expectations . Current DEQ - approved trading frameworks are listed in appendices to this agency guidance document . These frameworks may or may not meet this guidance depending on when they were developed. It is anticipated that these frameworks will be revised to meet current expectations before use. new trading framework A be consistent with this g uidance, applicable TMDLs, and other should state and federal requirements. A t rading framework is an optional method for developing trades . In the absence of a trading framework, a permittee can work directly with EPA and DEQ to build § a trading plan into its permit or state 401 certification . DEQ believes that the following information should be developed , and the following steps should be taken to for each framework ents ( Figure 1 ) : ensure trades are consistent with state and federal requirem Step 2. Step 4. Step 5. Step 3. Step 1. Framework/plan DEQ approves a Multiple TMDL or similar Draft a trading referenced in a trading framework permittees want to study framework or plan permit trade or plan or . Steps to developing pollutant trading framework . 1 Figure plan 9

16 Water Quality Trading Guidance - Normally, a TMDL should be in place or under development . As discussed in s ection Step 1. I nterest in , specific issues should be addressed to conduct trades in the absence of a TMDL. 4.5 should be identified , which involves m t rading eeting with likely trading partners, determining if , and determining if opportunities to reduce the pollutant of choice is viable for trading exist pollutant load current requirements , create a net environmental benefit and contribute to above meeting water quality standards . - Where multiple credit , a trading framework should be Step 2. buyers exist in a watershed with an opportunity for public comment, and included as an developed , approved by DEQ, to this g attachment . uidance Step 3. A TMDL or TMDL implementation document will provide guidance for trading in a - watershed or may contain requirements that should be incorporated into a trading framework. In the absence of a trading framework, DEQ will be responsible for approving eligible BMPs in a permit’s trading plan and/or through a §401 water quality cert ification. A trading framework or plan must identify:  that would be eligible to trade and Eligible trading participants: Locations and sources the specific conditions for their eligibility; uses will be Where trades may occur and description of how benefi cial  Trading area: protected (e.g., applicable trading framework and TMDL), and processes to identify and assess localized impacts. If a TMDL covers any of the trading area, the trading framework must be consistent with the TMDL, including specific wasteloa d allocations and load allocations (e.g., actual allocations, timing, and baseline assumptions).  Baseline: The level of pollutant load reduction needed before credits are generated. Sources of applicable regulation or law in trading area and how baseline i s expressed (e.g., federal, state, and local regulations applicable to the land uses at play in the trading area, TMDLs and/or TMDL implementation plans, and trading guidance/framework) Additional discussion of baseline can be found in Section 6.2.  Credit Quantification: Methods for quantifying credits, how pre - and anticipated post - project conditions are modeled; how credit values are derived; how baseline is provided .  Trading ratio : A discount in saleable credits to account for uncertainty . Describe t he a ssumptions, calculations, and components of applicable trading ratios (e.g., delivery, equivalency, retirement, etc.).  Risk mitigation mechanisms: Describe how uncertainty and risk will be managed (e.g., reserve pool, insurance, and performance bonding req uirements).  Project pre - screening: Note whether project pre - screening is required or suggested.  Allowable BMPs: List approved credit - generating actions, identify quality and performance standards (e.g., NRCS practice guides, state forestry, or agricultural program BMPs. Section 7 provides more on approving BMPs). 10

17 Water Quality Trading Guidance Credit life: When credits become valid, how long credits remain valid, and renewability  of credits.  Project site design, maintenance, implementation, and performance confirmation: Determine whethe r these components are required and their frequency.  Verify project site implementation and performance: Whether it is required, which entity will perform, the frequency, and the standards by which performance is judged. king: An accounting of credit sources and purchases. Credit registration and trade trac  C haracteristics of credit file storage system/database and information disclosure minimums. Permit conditions: Direction about how to incorporate these watershed - specific details  plan documents and NPDES permits. Where only a single buyer into permittees’ trading exists and there is no framework, this information will be incorporated into the trading plan contained within an NPDES permit. Adaptive management: how to improve the operations, science, and ef fectiveness of  trading over time. The adaptive management component would clarify which framework changes warrant public review and comment (e.g., changes that could affect how effluent limits are met). - DEQ believes that public comment and input i itical for successful trading. Therefore, Step 4. s cr rading should f ramework document and/or trading plan t go to public comment for no less each as appropriate , would be made based on the public than 30 days. Changes to the document , s received. A comment approves the final t rading f ramework or plan for the specific fter DEQ watershed or discharge , the framework /plan w ater q uality would be incorporated into Idaho’s . t rading g uidance as a n appendix Step 5. permit and/or § 401 certification is the mechanism A dischrage that translates general - trading authorization into a set of enforceable conditions based on the DEQ - approved t rading f ramework for the watershed or individual trading plan , and any additional conditions the permit The writer determines are necessary to protec quality . elements of a trading framework t water should provide as much information as needed for a permittee’s trading plan ( s ection 4.3 ) . Th e for this step timing depends on when the last permit was issued ; permits that are closer to their expiration date are likely to be higher on the priority list for reissuance . modifying DEQ supports quality improvements may be achieved existing NPDES permits to include trading so that water . as soon as practical discharge permit Once incorporated into the t rading can then commence between the discharger , and a nonpoint source or another point source , under the conditions of the permit and consistent filing with t t rading f ramework for the specific watershed. Th ese conditions include the timely he of all required trade execution documents with DEQ (and/or its designated and confirmation trade administrator, should DEQ establish one d by EPA when a , and any documents require ) . trade occurs (e.g. reporting the trade in the permittee’s DMR, as described in Section 8.3.3) 11

18 Water Quality Trading Guidance n independent third party will maintain a single trade tracking database for DEQ anticipates that a each framework to ensure that documentation fo r all trades can be found in one central place. rading Components 6 T mponents of a water quality trading This framework or plan . The s ection describes the co majority of trades will occur after a TMDL is developed, and so this section assumes a TMDL is see s ection 4.5 for in pre - TMDL trades). place ( water quality trading are trading parties (buyers and sellers) and The major components of ratios (the commodity being bought and sold) . Additionally, are used to address credits . All trading activity must be documented and uncertainty and ensure net water quality benefit the documents DEQ ( and/or its designated trade administrator) . Both point and nonpoint provided to , which baseline : sources may create marketable credits are a reduction of a pollutant beyond Point sources create credits by reduc es pollutant discharges below  taking an action that - based effluent limits , which must be consistent water quality that source’s wasteload with allocation in a manner that results in , and then selling that extra reduction to other sources . a net environmental benefit Nonpoint sources create credits by implementing approved BMPs that reduce the amount  Nonpoi off of pollutant run - nt sources must follow specific above established baselines . design, maintenance, monitoring , and reporting requirements for each BMP as outlined in . the trading framework/plan Project Eligibility for Credits 6.1 rces may create Both point sources and nonpoint sou . However, not all pollutant reductions reductions can necessarily be counted as credits. A pollutant reduction may need to be discounted to reflect uncertainty, attenuation, and/or policy choices , o r a reduction may come Pollutant from an unproven an unknown methodology. BMP, or be quantified according to reductions may also need to be adjusted to meet baseline requirements. Before that reduction can become a credit, the reduction must go through several checks: Project uses an approved B MP — For a BMP type to be eligible, it must be approved by  DEQ via a watershed trading framework or plan. The process for incorporating BMPs . into frameworks and plans is described in S ection 7 Projects need to be consistent with other laws and in good standing To generate a  — in addition to with applicable federal baseline, a project should compl y credit, meeting state permit requirements necessary to implement the project. and Project BMP ’s pollutant reduction quantified in a verifiable way — While pollutant  reductions from point sources must be directly measured, credits produced by nonpoint source practices can be quantified using BMP efficie as identified in a trading ncy rates , DEQ framework/plan approved modeling, and/or direct measurement. T his - quantification requires clear documentation of pre - project conditions and a consistent methodology for measuring or estimating post project conditio ns . - Projects must adequately account for risk and uncertainty — Pollutant reductions may be  approved modeling. When - directly measured, or based on BMP efficiency rates or DEQ 12

19 Water Quality Trading Guidance - level reductions with efficiency rates or modeling, it may be neces to estimating site sary account for uncertainty in model inputs or assumptions, or for unknowns related to the of the pollutant through the water system ( 6.4 ). It may also be s attenuation ection implementation important to adjust the reduction amount to account for risk of delayed or nonperformance , , decreased . results effectiveness rojects need to demonstrate consistency with baseline requirements — 6.2 .  P See section Credit portions of project cannot be funded with c funds , but cost share funds  ost share Cost share funds , or more specifically p ublic dollars — can be used to meet baseline dedicated to conservation purposes, can make bigger and more robust projects. DEQ using supports funds to help nonpoint sources meet baseline requirements , cost share including using those funds to install baseline BMPs (e.g., a nutrient mana gement plan or . However, the proportion of a credit eligible project funded irrigation management plan) - by public dollars dedicated to conservation cannot be used to generate credits. For es 50% of a example, if NRCS’ Environmental Quality Incentives Program cost shar sediment basin, and a farmer pays for 50%, then the farmer could sell 50% of the total credits from the project . must be from BMPs installed after a base year — Trading frameworks and plans  Credits can be created. Th need to define a base year after which credits base year should be as e current as possible and tied to the watershed analysis (e.g., a TMDL) used to support Trading frameworks and plans can update the base year from time to time. trading. mited look - back period to bring in Trading frameworks and plans may provide a li otherwise eligible early action projects 2 years before a TMDL is , typically no more than . project site approv ed by EPA - A ny look - back credits must have clear and complete pre condition information. 6.2 Baseline Trading baseli ne is the threshold that must be met before selling credits , specified in existing regulations, rules or discharge permits or documents such as a trading framework, or a TMDL . Credits are established by sources delivering additional pollutant reductions beyond a baseline level of reduction . For point source sellers, baseline is represented as the most stringent numeric effluent limitation ( WQBEL or TBEL) for the pollutant in question in their NPDES permit, which typically means that a point source can on ly sell credits if it reduces its discharge concentration below its effluent limit . and associated wasteload allocation For nonpoint sources, t Water Trading Policy states that “pollutant reductions he 2003 EPA egulatory requirement [should be] greater than those required by a r or established under a TMDL” (EPA 2003). These baseline obligations can be derived from a variety of sources : Area - based or other derivative portions of TMDL load allocations   Idaho agriculture or forest management rules R equirements of a federal land management plan or an agreement between a federal  agency and the state R equirements established in a CWA § 401 water quality certification   O ther applicable federal and state rules establish ing nonpoint source requirements 13

20 Water Quality Trading Guidance Ad ditional (above and beyond) p  rojects completed as part of compensatory mitigation, or § CWA required under a permit or approval issued pursuant to 404, or a supplemental environmental project used to settle a civil penalty imposed under CWA that provide mor e than required compensation or mitigation. egulatory requirements a designated management agency establishes to comply with a  R DEQ - issued TMDL, water quality management plan , or another water pollution control under Idaho law . plan adopted by rule or issued by order EPA Trading Toolkit states that in the absence of a TMDL, baseline is equal to the pollutant ’s When control requirements that apply to a buyer and seller in the absence of trading (EPA 2007). TMDL, the EPA ’s Trading Toolkit notes that a one of the applicable sources of baseline is a nonpoint source’s baseline “would be derived from the nonpoint source’s [load allocation]” Determining baseline for nonpoint sources may be difficult if (EPA 2007). particular watershed goal s , TMDL load allocati ons , law s , or regulation s overlap or need to be translated for control ground, baseline is a pollutant - requirements specific to an individual nonpoint source. On - the load reduction, BMP requirement, or site condition that must be met under regulatory requi rements in place at the time of trading project initiation. 2 Figure entitie s, with DEQ approval , identify provides a decision tree to help watershed nonpoint source baselines that would apply to individual landowners who generate credits. Landowner operations must be consistent with current applicable federal, state, local, requirements. In addition to consistency with these existing requirements, if TMDL load allocations exist, further baseline requirements may be expressed as (a) an extra amount of load that must be reduced by a nonpoint source at a site (e.g., as a percentage of the total overall load, or as a numeric amount); (b) a minimum set of BMPs or actions that must be installed at a site ; . Depending on the wat or (c) a site condition that must be met ershed, baseline requirements may be phased in over time as part of staged implementation. Consistent with EPA ’s policy on staged requirements would implementation (EPA 2006), the plan to stage implementation of baseline need to be spelled out in the TMDL itself, its implementation plan, or the trading framework. Depending on the nature of the baseline requirements, they may apply to the whole farm or to individual field s /area s where credits will be generated. Landowners can establish BMPs to meet the base line at the same time they are implementing actions to generate credits. And a single BMP may generate enough load reduction to more than meet baseline, in which case only the excess reduction would generate a saleable credit. 14

21 Water Quality Trading Guidance Figure 2 . Options for deriving nonpoint source baselines. baseline will on The level of information differ in each of DEQ’s regulatory documents related to trading. This statewide g uidance document describes the general parameters and decision points that must be considered when structuring baseline obligations for trading programs. More specific detail on baseline requirements should be articulated in basin geographically level - trading frameworks and/or individual permit, license documents. In the documentation for or or individual trades made under permits, licenses, consistency with applicable baseline should be confirmed and reported upon as part of demonstrating eligibility. requirements Trading frameworks and associated b aselines not meeting DEQ and EPA expectations will not be approved . Older trading frameworks will need updating to ensure expectations are met. for Water Quality Credits Quantifying Pollutant Reductions 6.3 Pollutant reductions can be quantified in several way to generate water quality credits . s of the pollutant reduced at the end of a pipe (point source) , Quantification includes measurement or a measurement or an estimate of the pollutant reduced at the edge of a field or end of a drain (nonpoint source) , and may include adjustments for pollutant delivery and attenuation through the watershed as well as application of any trade ratios. Reductions can be measured directly, or they can be estimated using models and BMP efficiency rates. Different quantification methods will work better for different BMPs in different watersheds. A trading framework or plan’s credit quantification approach must be approved by . DEQ DEQ, rely on a scientific basis , and be accurate, repeatable, sensitive, and transparent 15

22 Water Quality Trading Guidance pproval of a new quantification method will occur as part of approving new types of review and a ection S . 7 ) BMPs for a trading framework or plan ( For point source pollutant reductions and for nonpoint BMPs where appropriate, DEQ prefers uality q direct measurement. For BMPs and projects that use direct measurement, an approved p roject p lan (QAPP) a is needed . The trading plan should require a QAPP and ssurance Direct measurement may not be the most feasible documentation for verifying credits. quantification method for some nonpoint source BMPs. For all quantification methods, a trading framework or plan should articulate potential sources of uncertain ty and how those uncertainties will be managed and mitigated. - project and post For all projects, quantification should be based on pre project conditions. The - BMP guidelines mentioned in should articulate what documentation a trading framework or plan information is needed to accurately quantify pollutant reductions in a way that can be and reviewed during the verification process. 6.4 Trading Ratios A trading ratio is a numeric value used to adjust the number of credits generated from a trading adjust the number of credits that a credit user needs to obtain. Trading ratios project, or to depend on the specific circumstances in the watershed. Factors that drive the use of trading ratios (EPA 2007). Trading might relate to environmental conditions, pollutants, or programmatic goals ratios can be applied either to the buyer or seller. If applied to the seller, a ratio would affect the number of credits available for sale. If applied to a buyer, a ratio would increase the number of urchase. Credits from pollutant reductions produced at the end credits the buyer would need to p of a pipe or edge of a field be adjusted to protect overall water quality . Ratios can adjust should : credit quantities of pollution reduction to account for the following factors 1. a field or project to a water body Delivery from before reaching a point of environmental concern 2. Attenuation through a water body and/ or trading framework ) (as described in the TMDL Equivalent environmental impact between different pollutants (e.g., between 3. phosphorous and ) dissolved particulate phosphorous 4. or Uncertainty (e.g., measurement error or margin of error in the estimate measurement method) 3 Reserve 5. (e.g., for BMP failure or temporary diminishment) 4 6. w ater quality contribution Retirement/ 3 A type of uncertainty ratio in which credits are held in reserve and then used to account for uncertainty and off set failures in project performance. A reserve ratio is not necessary if other program elements address force majeure and other unforeseen events causing catastrophic BMP failure. This risk can be addressed by aggregators, private ovisions between parties. insurance, or contract pr 4 The ratio indicates the proportion of credits that must be purchased in addition to credits needed to meet regulatory obligations. These excess credits are taken out of circulation (retired) to accelerate water quality improvem ents. A trading framework could choose to apply a retirement ratio only to certain BMPs, such as those that provide little or no ancillary benefits. 16

23 Water Quality Trading Guidance ed to increase credit quantities to provide s for priority area Ratios may also be us incentive plan and . Each trading framework and/ or trading early action should consider these restoration factors six Specific choices related to ratios should ratio to determine the applicable trading ratio. . I to be approved by DEQ needed , ratios that be documented in the trading framework or plan f can be established individually and in combination to ensure that a make sense for the watershed net environmental benefit is being achieved through trading. In combination, an overall trade ratio should be greater than 1 :1. .5 if their In some watersheds, available models can quantify pollutant delivery and attenuation capability is dee med sufficient to accurately reflect the fate and transport of the pollutant throughout the watershed In some watersheds, a model may be used to account for pollutant . and t delivery and attenuation if it is deemed capable of accurately reflecting the fat e ransport of must be approved by DEQ and may the pollutant through the watershed. In this case, the model s ection 7 be reviewed through the process described in Finally, any investment in more . sophisticated modeling should be done as part of the TMDL development or modification . process, not just for developing ratios for trading purposes 6.5 Credit Characteristics onverted into a credit, several aspects of that credit are Once a pollutant reduction has been c important to define: Credit life — P eriod from the date a credit becomes usable by a permittee for compliance  life depend purposes through the date the credit expires and is no longer valid. Credit s upon the type of BMP and pollution reduction generated .  Credit projects can be renewed If projects are continuing to function and are — properly maintained, the pollutant reductions from projects can be renewed to generate credits in subsequent compliance cycles ( al though the reduction calculations may need to be adjusted to reflect the ratios and baseline requirements that apply at that future point in . time) Credit s can be released in phases — Most BMPs , once implemented, will sta rt generating  water quality improvements immediately. All credits can be released as soon as these BMPs are installed. For BMPs that take time to mature (e.g., restored wetlands or riparian planting), credits may be released in phases or a ratio can be us , ed to account for time lag . C — Similar to a point source’s effluent limit, c redits are tied  redits are not property rights t to a specific permit ee’s authorization to discharge. Just as EPA and DEQ may need to also need to be adjusted. DEQ does adjust a point source’s effluent limit, credits may recognize that credits are created consistent with an approved trading framework or plan tradable with a n ascertainable value, and encourages predictable and transparent management of trading and other water quality programs .  — A credit generated from a BMP on an acre of land or project cannot No double counting be sold to offset the impacts from two different credit buyers. For example, a restored wetland cannot sell the same credit to offset a phosphorous impact from a point source and the wetland impact from a road project. However, projects with multiple environmental benefits are important. DEQ supports us ing proportional accounting that lets landowners sell, for example, 25% of their phosphorous credits from that wetland as seller proportionally reduces the amount of wetland credits available to sell by long as the 17

24 Water Quality Trading Guidance n equivalent needs to offset multiple types of pollutant a 25%. If a single permittee discharge (e.g., phosphorous and temperature), credits can purchase the permittee BMP of . DEQ does not consider this that pollutant reduction types produce that same array double counting. ject Plan Preparing a Credit Pro 6.6 generating projects need to prepare a c redit p roject All credit esign and m anagement p lan - d p p lan) , and submit the plan to the entity roject (usually an independent third party designated by ( ) administering a given trading framework or plan . The p roject p lan should be prepared by DEQ a 5 professional qualified who can select and properly design appropriate DEQ - approved BMPs s ection ) to i mprove water quality at a specific location. 7 ( developing BMP projects for water quality trading are encouraged to use the Landowners in coordination with NRCS and the Idaho Soil and Water conservation planning process S I Conservation Commission W CC ) , but they also may choose to develop a private p roject p lan. ( p A p lan should meet the following requirements: roject esigned with the goal of improvi ng water quality .  D  , Meet all applicable laws and regulations ( e.g., wetlands and stream channel alteration ) credi t characteristics, trading ratios, and baseline requirements . Out .  line specific restoration goals Describe the proposed BMPs, their efficiencies and quality standards (e.g. , from  relevant NRCS) for each BMP, and the BMP implementation plan . P monitoring and maintenance plan and how it will ensure the BMPs  Describe the BM stay viable, consistent , and support quality standards during the project ’s life. Whether the p roject p lan addresses resource issues other than water quality is up to the . l andowner and/or pr oject planners 6.7 Project Stewardship project for a minimum Adequate legal and financial safeguards must be in place to protect the years for nonstructural BMPs and 20 5 s ) . These time period (e.g., years for structural BMP maintaining minimum stewardship times recognize the balance between operation al flexib ility for l andowners and the need to provide some certainty for point source buyers over the life of their permit and facility plan. Legal protections might incl ude leases, deed restrictions, easements that protect the BMPs as and operat they for the life of the project. Credit sellers should also demonstrate that they have e adequate funding to operate and maintain BMPs for the duration of the credit life. These t ypes of 5 A qualified professional could be any of the following: an NRCS - certified planner or an NRCS employee, a certified crop advisor, or a professional services provider . Some BMPs , such as constructed wetlands, will require consulting with other experts as well. Some BMPs on the list may specify the type of expert that must be consulted in the project’s design, i nstallation, and maintenance requirements. 18

25 Water Quality Trading Guidance may maintenance funds, performance bonds, restricted accounts, financial protections include and financial certification. Different BMPs may require different lengths and amounts insurance, of funding. Approval for Credit - Generating BMP s 7 and Quanti fication ethod M s Approved BMP s in a Trading Framework or Plan 7.1 list of approv able BMP packages Trading frameworks or plans must include a including procedures quantifying credits and monitoring and maintenance requirements. in a trading framework or plan must be supported by a BMP Each BMP proposed for inclusion package that includes the following information:  a description of the BMP and how it works; where the BMP should be applied (e.g., appropriate site conditions); potential side effects and ancillar y benefits;  frequency and intensity of ongoing monitoring requirements;   frequency and intensity of ongoing maintenance design, installation, operation, and requirements; a method for verification of and quantifying credits, including any appropriate BMP  efficiency or uncertainty ratio; and substantiating information for proposed credit quantification methods (e.g., background  and technical documentation, protocol for applying the method, estimation of me thod accuracy, sensitivity, and uncertainty). s during review of proposed trading frameworks or DEQ must approve proposed BMP package plans and DEQ may choose to modify or deny inclusion of proposed BMPs . Approved 7.2 BMP and Quantification Method for a New N ew p ractices and the associated methods to quantify credits can be developed and added to a framework or plan’s of approved BMPs by following the steps outlined below. Practices and list associated quantification methods approved by DEQ may be added to a B MP l ist at any time . after their approv al 7.2.1 Prepare and Submit Proposed BMP Package Step 1: 6 New practices, practices already on the Idaho Agriculture Pollution Abatement Plan existing (APAP) list ( I SWCC 20 15 ), or improved design, measurement, or quantific ation methods may 6 The Idaho Agriculture Pollution Abatement Plan is Idaho's response to CWA § 208 (PL 92 - 500), detailing how agricultural nonpoint source pollution must be managed. This plan includes a list of nonpoint source BMPs that can be used in Idaho to achieve water quality benefits. 19

26 Water Quality Trading Guidance BMP a or plan ’s BMP l ist. A trading framework be nominated by anyone for inclusion on (described in Section 7.1) must be submitted to DEQ or its designee for each BMP or package quantification method proposed . Step 2: 7.2.2 Initial Screening of BMP Proposal For new or modified practices, will perform an initial screening of the DEQ or its designee . DEQ that are consis s complete packages package for completeness tent with the APAP forward mission to be reviewed by a BMP technical committee , which may be comprised of NRCS, DEQ, I SWCC , and other agencies and administered by I S W CC . Additional technical experts may be engaged to review any proposed quantification methods. The BMP committee only agricultural consistent with the APAP’s mission . BMPs that may reviews nonpoint source BMPs involve structures and entities outside of the APAP arena (e.g. stormwater, septic systems, urban development) will be addressed by DEQ separ ately . 7.2.3 Step 3: Review Process and Criteria for BMP Consideration This section describes the recommended process of reviewing BMPs consistent new or modified with the APAP . T he BMP technical committee review s the package. If the proposed BMP is modifications already in s only the cluded in the APAP, the committee review portion of the BMP package and related supporting documentation for consideration on the BMP l ist. If the BMP is APAP not included in APAP, the BMP technical committee can reject , or proceed to ad d it to the BMP l found acceptable. If the new or modified BMP is found acceptable by the ist if it is committee, it is then eligible for inclusion in a trading framework or plan. However, in order for the BMP to be included in a framework or plan, cre dit cycle components (i.e. credit If quantification, verification, registration, etc.) must be added to these APAP BMP descriptions. the proposed BMP involves new technology or methods for which data and experience are fication, the BMP is initially approved only if the BMP can insufficient to support credit quanti be directly measured and if the monitoring is scientifically credible and not cost prohibitive. If the practice’s measurements are too variable based on type of crop planted or field size, it the may only be allowed using modeling or BMP efficiency rates. 7.2.4 Step 4: DEQ Concurrence , Public Notice and Comment and Final Decision All BMPs, whether they are new, modified, on the existing APAP list, or for entities outside of the APAP arena , will be reviewed by DEQ consistent with Section 7.1 as part of the review and will approval of the trading framework or plan. DEQ conduct a public notice and comment period associated with that approval process, and will accept comments on the acceptability of luded BMP packages DEQ may revise or remove inc . BMP package based on public comments, a in consultation with the BMP technical committee, and potentially other technical experts . If the BMP package is a cceptable , the BMP and associated quantification method r emain on the appropriate BMP lists for a trading framework or plan. Approval of BMP packages will occur simultaneously with framework or plan approval. 7.2.5 Step 5: BMP Revision Post Approval Revisions to BMPs , revisions to a quantification method, or a new qu antification method for a after BMP that has already been approved follow ing the above process can be requested by DEQ 20

27 Water Quality Trading Guidance . BMP revisions may be triggered by the monitoring results or a framework or plan is approved any other monitoring of the BMP’s overall ef fectiveness and impact on environmental other sites. the trade or parameters, as well as research of the BMP’s performance on 8 Process for Generating and Tracking Credits track credits over time In general, a similar process to generate, review, and is used for projects . A standard process is customized trading frameworks and plans once a permittee has within determined that trading is desirable ( Figure 3 ) . The steps described below occur after a watershed framework is developed and approved by DEQ . T he customized version is submitted as a trading plan to be incorporated into a discharge permi t. Th e process appl ies to individual credit - generating projects . . Figure 3 . Credit generation process DEQ anticipates delegating the management of program administration, verification, and registration/trade tracking. Administrative, verification, and tracking roles may be filled by one or more independent third parties. 8.1 Initial Project Screening ability . Project screening occurs after a Project screening is used to confirm a project’s desir specific site has been identified and an initial project design has been developed but before the project is implemented. The available project information is reviewed relative to the or plan. Project screening is conducted by the permittee requirements in the trading framework the third party or designated to conduct verification (verification entity) . T his step is a good practice to minimize invest ing time and money on projects that are not eligible or not likely to screening gene rate saleable credits, and can provide information used to refine project design before implementation however, project screening is typically optional. ; 8.2 Initial Verification Credit generating activities (e.g., nonpoint source project, point sour ce reduction in discharge below WQBELs) must be verified and registered before they can be used for compliance purposes . Verification review may be conducted by the permittee, designated independent third party (verification entity), and/or DEQ and includ e the following components:  Administrative r eview — Confirm project eligibility ( s ection 6.1 ) . 21

28 Water Quality Trading Guidance Technical r — Confirm that credits were quantified accurately .  eview roject implementation — hat the nonpoint source project was installed (via a  P Confirm t ) consistent with approved design and construction criteria, and or other means site visit , confir any BMPs expected as part of baseline are in place. the pollutant From DMRs m for point sources . load reductions Inspections of Permitted Facilities for P oint S ource C redits 8.2.1 oint source credit project plan s are reviewed by EPA and DEQ as part of the P roposed p permits. The credit transaction is also required to be reported in the procedures for discharge DMRs for both the point source buyer and seller in the same time period the point source buyer s ection 8.4 ). The DMR is using the credits ( reviewed and compared with trading information is contained in the applicable report s generated by DEQ or a framework/plan and associated independent ing entity) . A ny material designated third party managing trade tracking (track investigated by EPA and DEQ. will be anomalies Review of Best Management Practices for N 8.2.2 S ource C redits onpoint anticipates designat DEQ verification entity to conduct reviews of some or all nonpoint ing a source credit . Verification occur s on a schedule and projects at a frequency determined by DEQ for a particular trading framework . from T he verification entity describes in a report(s) findings and technical the administrative review s s project implementation. The se ve rification report s either confirm that all and confirm (as described in Section 6) have been met, or describe relevant protocols and standards material of the must be addressed. inconsistencies that verification reports will be deficiencies/ Copies files/ database of the entity designated for trade tracking (tracking entity) . posted to the In addition, EPA and DEQ DEQ’s designee , may visit the BMP sites to verify the or reduction mechanism, documentation of the BMP design, maintenance, and monitoring performance. Prior to requesting verification, project developers should obtain signed authorization from landowners that the BMP site may be inspected by the regulatory authorities (advance notice may be provided to the sellers, but is not required) or their designee, to verify a permit holder’s compliance. Discharge permit holders who purchased nonpoint source - generated credits remain BMPs are responsible for ensuring proper ly implement ed and the credit amount s that are traded are in fact Only DEQ and/or EPA will resolve compliance matters or enforcement produced. . actions with the NPDES permit holder Certification and Tracking 8.3 Certifying and Issuing Credits — Reduction Credit Certificate 8.3.1 Certification signifies that credits are ready to be issued. The certification proc ess includes final confirmation that the necessary documentation is available, verification review is complete, and all aspects of the project are in place. redits must be certified C r ough a signed attestation by th EPA or DEQ (for point source credits) or by the verification entity (for nonpoint source credits) . Upon submission of this form, DEQ or a designated tracking entity can register credits into the Attachments to credit registration database. framework or plan ’s administrative files/ 22

29 Water Quality Trading Guidance ll likely include the project’s verification report, certification, and other documentation wi relevant information needed to register credits . Trading parties must generate and maintain records substantiat by credits pollutant ing reductions These records be made available to EPA and DEQ upon request . Buyers should . and trades must 5 year s after complet ing a trade retain copies of trading records on site for a minimum of contract. Registering a Trade — Trade Notification Forms 8.3.2 om the project developer/seller to the buyer. After registration, credits can be transferred fr or ally register Trades must be with DEQ a designated tracking entity in a n open, form ed - based trade - transparent and web . The NPDES permittee must tracking file system/database report the trade on its DMR where it shows the credit purchase or sale as an adjust ment to the (by adjusting the actual discharge amount on the DMR, as explained in section pollutant limit ongoing . ), subject to credit verification for nonpoint source credits 8.3.3 trade The signed by both contractual parties and submitted to registered documentation must be , or tracking entity DEQ The DEQ tracking entity enter s the information into a trade - tracking . file/ database . 8.3.3 Discharge Monitoring Reports DMRs to summarize monitoring results and Point source discharger s involved in a trade use report actual effluent discharges. he permittee report s the actual effluent On the DMR, t i.e., , and its adjusted discharge ( discharge, the amount of credits sold or bought for that period . the actual discharge plus purchas ed) any credits sold The DMR should also or minus any credits note the location of a registry where additional credit information may be found. D DMRs both EPA and DEQ. to etailed instructions on how to are generally submitted monthly complete DMRs to reflect a permittee’s credit purchases and sales transactions applicable for that reportin g month are provided to the permittee by the permitting authority . 8.3.4 Annual Reports DEQ require s dischargers participating in water quality trades to summariz e all trade activity for the year as well as the performance of the associated credit - projects in an annual generating . nts shown on the report The trade amounts shown on the DMRs must match the trade amou t rade s ummary r annual . If an independent tracking entity exists, that entity will prepare eports and send a trade summary report to the point source discharger , DEQ , and EPA at intervals defined in a framework or plan. trading 8.4 Ongoing Verification and Credit Tracking trading credit tracking must occur on a cycle described in the Ongoing verification and framework and plan to confirm that projects are maintained and function as promised. 23

30 Water Quality Trading Guidance Trade 8.5 Tracking - ultimately trade s and the day - to tracking day oversight of trading. DEQ is responsible for DEQ establish ma designat ion of an independent third party y , in a trading framework or plan, the to assist with those tasks. Major functions of t rade tracking include the following : tracking entity S et a submittal time for credit registration document  ting ing trades meet program requirements  Verify T all trades in a central database and show ing ing account balances of buyers and  rack sellers R econcil ing trading area to ensure credits are not used more than once or  all trades in the oversold M ak ing trading information and effluent limits available to regulatory agencies and the  public  P roduc ing t rade s ummary r eports as described in s ection 8.3.4 By maintainin trade - tracking database, DEQ , or its designee , ensures that an accounting of all a g trades and credits is available to the public and environmental agencies. The database must be subject to sound data system and accounting principles with the ability to s upport outside review . and audit 8.6 Adaptive Management , Adaptive management is a systematic approach for improving natural resource management with an emphasis on learning about management outcomes and incorporating what is learned into ongoing management (f eedback loop). Adaptive management in water quality trading programs may focus on improving program operations, trade administration, quantification methods, and overall effectiveness. and plans are expected to Water quality trading frameworks include adap tive management to improve the elements within them with new information over time. 9 Conclusion s trading in watersheds where water quality problems exist and where point and DEQ encourage nonpoint sources can combine strengths for greater improvement. DEQ believes that water is quality trading ises a viable option in many regions of the state. However, DEQ strongly adv that this and other guidance on water quality trading be studied carefully. Trading is not a panacea for sources’ obligations to undertake the necessary pollutant reductions where they are needed to improve water quality, as established in the TMDL . W ater quality trading is a highly evaluated and regulated environment designed to realize specific and measureable water quality improvements in areas of the watershed that might not normally see improvements. Trading takes work, money , and commitment to ac hieve real goals. This guidance is designed to provide readers with a n understanding of the details involved in water quality trading. In this arena, experience matters and experts in the field of water quality operation are essential. trading, permitting, and BMP construction and 24

31 Water Quality Trading Guidance References . Water Quality Pollutant Trading DEQ (Idaho Department of Environmental Quality). 2010 : DEQ. . Boise, ID Guidance . Federal EPA (US Environmental Protection Agency). 2003. Water Quality Trading Policy and 1610. Register. 68 FR 1608 EPA (US Environmental Protection Agency). 2004. Water Quality Trading Assessment Handbook https://owp ubauthor.epa.gov/type/watersheds/trading/upload/2004_11_08_wa . tershed_trading_handbook_national wqt - handbook - 2004.pdf - “ Wong memorandum to Water - EPA (US Environmental Protection Agency). 2006. Benita Best d” Total Maximum Daily Loads. ” Division Directors re: Clarification regarding “Phase - http://www.epa.gov/sites/production/files/2015 10/documents/2006_08_08_tmdl_tmdl_clarification_letter.p df EPA (US Environmental Protection Agency). 2007. Water Quality Trading Toolkit for Permit . Writers . Glossary - 2. http://www3.epa.gov/npdes/pubs/wqtradingtoolkit.pdf Grafe, C.S., C.A. Mebane, M.J. McIntyre, D.A. Essig, D.H. Brandt, and D.T. Mosier. 2002. . 2nd ed. Boise, ID: Idaho Department of Water Body Assessment Guidance Environmental Quality. deq.idaho.gov/med - wbag_02_entire.pdf . ia/457010 I SW CC (Idaho Soil and Water Conservation Commission) 2015. Idaho Agricultural Pollution Abatement Plan . Boise, ID: Resource Planning Unlimited, Inc. Willamette Partnership et al. ( Willamette Partnership, The Freshwater Trust, Idaho Department of Environmental Quality, Oregon Department of Environmental Quality, and Washington Department of Ecology ) . 2014. Draft Regional Recommendations for the Pacific Northwest on Water Quality Trading http://willamettepartnership.org/wp - . content/uploads/2014/09/PNW - Joint - Regional - Recommendations - on - WQT_ThirdDraft_2014 - 08 - 05_full1.pdf . 25

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33 Water Quality Trading Guidance Glossary Refers to Section 303, subsection “d” of the Clean Water Act. Section 303(d) requires states §303(d) tandards. This section also to develop a list of water bodies that do not meet water quality s requires that total maximum daily loads (TMDLs) be prepared for listed waters. Both the list and the TMDLs are subject to US Environmental Protection Agency approval. Pollutant load reductions, BMP requirements, or site conditions that must be met under Baseline regulatory requirements in place at the time of trading project initiation. federal and state Structural, nonstructural, and All manner of approved pollutant reduction measures/projects. Best management managerial techniques that are effective and practical means to control nonpoint source practice (BMP) produci ng management - pollutants. BMPs can be applied before, during, and after pollution activities to reduce or eliminate the introduction of pollutants into receiving waters (EPA In this guidance BMPs include all project types and can consist of land management 2007). , constructed wetlands or basins, and in - practices rovements (e.g., in - stream stream imp restoration actions and in stream flow augmentation). - Conclusion and/or interpretation derived by a trained and/or technically competent Best professional individual by applying interpretation and synthesizing informati on. judgment Formal application and approval process of the credits generated from a BMP. Certification Certification occurs after project verification and is the last step before credits can be used toward a compliance obligation. The Federal Water Pollution Control Act (i.e., Clean Water Act) establishes a process for Clean Water Act states to use to develop information on, and control the quality of, the nation’s water (CWA) resources (33 §§1251 – 1387). USC 131.10, designated uses are specified in water CFR As defined in 40 CFR 131.3(f) and 40 Designated use quality standards for each water body or segment whether or not they are being attained. As defined in 40 CFR 131.10(a), examples of designated uses include public water supply, protection and propagati on of fish, shellfish, and wildlife, recreation, agriculture, industrial, and navigation. In compliance with water quality standards and within the range of biological reference Fully supporting conditions for all designated and exiting beneficial uses as determined through the Water Body Assessment Guidance (Grafe et al . 2002). One of a nested series of numbered and named watersheds arising from a national Hydrologic unit standardization of watershed delineation. The initial 1974 effort described four levels (region, subregion, accounting unit, and cataloging unit) of watersheds throughout the digit code built of two nited States. The fourth level is uniquely identified by an eight - digit - U fields for each level in the classification. Originally termed a cataloging unit, fourth - field field hydrologic units have been more commonly called subbasins. Fifth - and sixth - hydrologic units have since been delineated for much of the country and are known as watershed and subwatersheds, respectively. c units. field hydrologi Number assigned to a hydrologic unit. Often used to refer to fourth - Hydrologic unit code (HUC) Portion of receiving water’s load capacity that is allocated to one or more nonpoint sources Load allocation CFR 130.2(g)). Load allocations specify of pollution or to natural background pollution (40 roup of nonpoint sources may release to a how much pollutant each nonpoint source or g water body. Load allocations are best estimates of the load, which may range from reasonably accurate estimates to gross allotments, depending on the availability of data and appropriate techniques for predicting t he load. Periodic or continuous measurement of the properties or conditions of some medium of Metric interest, such as monitoring a water body. Periodic or continuous measurement of the properties or conditions of some medium of Monitoring as monitoring a water body. interest, such 27

34 Water Quality Trading Guidance National program established by CWA for permitting point sources of pollution National Pollutant §1342). Discharge of pollution from point sources is not allowed without a permit. (33 USC Discharge Elimination System (NPDES) Dispersed source of pollutants, generated from a geographical area when pollutants are Nonpoint source dissolved or suspended in runoff and then delivered into waters of the state (40 CFR 35.1605 - 4). Nonpoint sources are without a discernable point or orig in. They include, but are not limited to irrigated and nonirrigated lands used for grazing; crop production and silviculture; rural roads; construction and mining sites; log storage or rafting; and recreation sites. Variable, measurable property whose value is a determinant of the characteristics of a Parameter system (e.g., temperature, dissolved oxygen, and fish populations are parameters of a stream or lake). Source of pollutants characterized by having a discrete conveyance, such as a pipe, ditch, or Point source point of discharge into a receiving water (33 USC §1362(14)). Common other identifiable point sources of pollution are industrial and municipal wastewater. Generally, any anthropogenic substance introduced into the environment that adversely tant Pollu affects the usefulness of a resource or the health of humans, animals, or ecosystems. This vegetation removal includes fertilizer runoff, pesticides, heavy metals, heat load caused by or bacteria introduced from human and animal wastes, among others. caused changes in the environment that alter the - Broad concept encompassing human Pollution functioning of natural processes and produce undesirable environmental and he alth effects. This includes human - induced alteration of the physical, biological, chemical, and radiological integrity of water and other media. - generating action will be designed and Document detailing (a) how the proposed credit Project plan o meet BMP guidelines, including a description of the proposed actions, installed t installation practices, anticipated timelines, restoration goals, and anticipated threats to project performance; and (b) how the project developer plans to maintain/steward the practi ce or action for the duration of the project life, keep the practice or action consistent with BMP guidelines, and report on that progress. screening process through which a project developer receives confirmation that - Initial site Site screening their pr oposed project is likely eligible to produce credits, based on the information available at that time. Precipitation, snow melt, or irrigation water in excess of what can infiltrate the soil surface Surface runoff and be stored in small surface depressions; a major transporter of nonpoint source pollutants in rivers, streams, and lakes. Surface runoff is also called overland flow. All water naturally open to the atmosphere (e.g., rivers, lakes, reservoirs, streams, Surface water impoundments, seas, and estuaries) and all springs, wells, or other collectors that are directly influenced by surface water. Fine material (usually sand size or smaller) that remains suspended by turbulence in the Suspended water column until deposited in ar eas of weaker current. These sediments cause turbidity sediments and, when deposited, reduce living space within streambed gravels and can cover fish eggs or alevins. A TMDL is a water body’s pollutant load capacity that will still a llow the water body to Total maximum CFR meet its applicable water quality standards (33 130.2(1)). A USC §1313(d)(1)(C); 40 daily load TMDL can be expressed on a time basis other than daily if appropriate. Sediment loads, for (TMDL) example, are often calculated on an annual basis. A TM DL is equal to the load capacity, such that load capacity = margin of safety + natural background + load allocation + wasteload allocation = TMDL. In common usage, a TMDL also refers to the written document that contains the statement of loads and supporti ng analyses, often incorporating TMDLs for several water bodies and/or pollutants within a given watershed. Dry weight of all material in solution in a water sample as determined by evaporating and Total dissolved 28

35 Water Quality Trading Guidance drying filtrate. solids Materials that cause death, disease, or birth defects in organisms that ingest or absorb them Toxic pollutants (EPA 2003) . The quantities and exposures necessary to cause these effects can vary widely. area, as defined within a water A watershed or other hydrologically - connected geographic Trading Area quality management plan adopted for a TMDL, trading framework or trading plan. A trading area must encompass the location of the discharge to be offset, or its downstream point of impact, if applicable, and the trading proj ect to be implemented. level documents, which provide specificity on how - DEQ - approved and vetted watershed Trading trading should be implemented in a particular watershed. These documents may be framework developed by watershed stakeholder groups and are included as appendices to the trading guidance once approved by DEQ. - Permittee level plans, either included in or attached to permits that detail how a particular Trading plan trading solution will be designed, implemented, verified, and tracked to meet e ffluent limits. Trading plans can also reference DEQ - approved trading frameworks where they exist. A trading ratio is a numeric value used to adjust the number of credits generated from a Trading ratio . that a credit user needs to obtain trading project, or to adjust the number of credits Process of confirming that a credit generating project has completed certain elements that - Verification should help ensure the project provides the water quality benefits it promises. Specifically, (project) generating activities and credits conform to the confirmatio n that project site BMPs or credit - applicable quality standards required by a program administrator or regulator. This process includes (1) an administrative review for the completeness and correctness of do cumentation; (2) technical review for the completeness and accuracy of quantification; and (3) confirmation of project implementation and/or performance. Portion of receiving water’s load capacity that is allocated to one of its exist ing or future Wasteload 130.2(h)). Wasteload allocations specify how much point sources of pollution (40 CFR allocation pollutant each point source may release to a water body. Stream, river, lake, estuary, coastline, or other water feature, or portion thereof. Water body Any alteration of the physical, thermal, chemical, biological, or radioactive properties of any Water pollution waters of the state, or the discharge of any pollutant into the waters of the state, which will or is likely to create a nuisance or to render s uch waters harmful, detrimental, or injurious to: public health, safety, or welfare; to fish and wildlife; or to domestic, commercial, industrial, recreational, aesthetic, or other designated uses. Term used to describe the biological, chemi cal, and physical characteristics of water with Water quality respect to its suitability for a designated use. 131.3, water quality criteria are elements of state water quality CFR Defined in 40 Water quality standards, expressed as constituent concentrations, levels, or narrative statements, criteria representing a quality of water that supports a particular use. When criteria are met, water quality will generally protect the designated use. The US Environmental Protection Agency develops criteria guidance; states esta blish criteria. approved ambient standards for - State - adopted and US Environmental Protection Agency Water quality water bodies. The standards prescribe the use of the water body and establish the water standards quality criteria that must be met to protec t designated uses (40 CFR 131.3(i)). 29

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37 Water Quality Trading Guidance Upper Snake Rock Trading Framework Appendix A. - Rock Subbasin Upper Snake — - Middle Snake River Water Quality Trading Ratios m iddle This document provides information on the ratios used to trade phosphorus specific to the pper Snake - Rock Snake River in the ubbasin (HUC 17040212). U s Application Limits of Ratios The ratios should not be adapted to other trading markets or scenario s without reevaluation of the relationships, flow characteristics, and overall qualifications defined for the m iddle Snake River. The ratios described in this document are only applicable to the m iddle Snake River for total phosphorus . (TP) Hydrologic Mode l Basis for Establishing Ratios The ratios are based upon a mass balance model that tracks the flow of water and phosphorus from Milner Dam to King Hill, Idaho. The phosphorus TMDL ) target total maximum daily load ( milligrams per liter ( mg/L ) TP i s the central basis of the model. The TMDL assumes that of 0.075 the water quality pollutant targets by the various water user industries are implemented until beneficial use support is achieved. The target is applicable only to the iddle Snake River. m does not make any assumptions related to the uptake of phosphorus in the m This model iddle Snake River. Recent analysis by TetraTech in September 2014 indicates that ) ( deq.idaho.g ov/media/1118007/mid - snake - river - wag - tmdl - reevaluation - report.pdf flow and attenuation is not occurring and that phosphorus is not being transported out of the system. As such, DEQ ) has determi the Idaho Department of Environmental Quality ( ned that the prior trading ratio of a pound in equaling a pound out at any place on the river is not appropriate as a trading ratio for use by a quaculture facilities who wish to engage in water quality trading. Through this U pper Snake - Rock/ m id dle Snake R iver t rading f ramework , DEQ seeks to adopt a for each pound revised trading ratio of 2:1. By requiring a facility to purchase pounds of TP 2 they need to meet their discharge requirement, a margin of safety is created to account for variability in uptake of TP, and provides a net environmental benefit to achieve overall water quality goals. S even compliance points on the m iddle Snake River relate to meeting beneficial uses and/or water quality standards as defined in the Upper Snake Rock subbasin TMDL. The compliance points - include Milner Dam, Pillar Falls, Crystal Springs, Below Box Canyon, Gridley Bridge, Shoestring Bridge, and King Hill, Idaho. Because of these seven compliance points, six segments are defined on the m iddle Snake River. The six segments are Segment 1 (Milner Dam to Pillar Falls), Segment 2 (Pillar Falls to Crystal Springs), Segment 3 (Crystal Springs to Box Can yon), Segment 4 (Box Canyon to Gridley Bridge), Segment 5 (Gridley Bridge to Shoestring Bridge), and 31

38 Water Quality Trading Guidance Segment 6 (Shoestring Bridge to King Hill, Idaho). Figure 1 illustrates all of the compliance points, segments, and major tributaries that discharge to the m iddle Snake River ; however, pollutant trading is only provided for on the first three segments at this time. — segments and major tributaries. Figure 1. Middle Snake River The mass balance model stipulates the following assumption: Total Flow = Groundwat er Flow + Point Source Flow + Nonpoint Source Flow To the extent practical, each component of the mass balance model was subdivided into flows that U nited States Geological Survey could be accounted versus flows that could not be accounted. quadrangle maps (1:24,000) were consulted to define more accurately which sources were unaccounted. This ended up being unnamed springs or tributaries that discharged directly into the m iddle Snake River. Most unnamed tributaries are ephemeral streams. Conceptualization of Mass Balance Model - The mass balance model for the Upper Snake Rock subbasin TMDL operates under the premise that the m iddle Snake River will obtain the instream target of 0.075 mg/L TP as an overall average for the river system. Seven compliance points along a 94 - mile stretch of river have been selected for monitoring purposes to ascertain if the concentration target is reached. 32

39 Water Quality Trading Guidance m id Snake m odel : Several assumptions are included in the dle s. In the case of The dle Snake m odel incorporates all known inputs and diversion id 1. m iddle Snake River, the mass balance centers primarily on inputs since the m the effects come from inputs and very minimally from outputs (or diversions). majority of No diversions occur in Segments 1, 2, and 3. 2. m id dle Snake m odel begins at Milner Dam (River Mile The upstream portion of the 638.5). Although the model runs all the way to King Hill, Idaho (River Mile 545.0), m iddle Snake River. pollutant trading is allowed in only the first three segments of the Therefore, the furthest downstr eam site is below Box Canyon (River Mile 587.0). 3. The flow information was derived for 1983 through 1998. These years were chosen m because they aptly describe the more recent flow conditions on the iddle Snake River. The baseline years are defined as 1990 1 991. High flow years are defined for 8 – – 1987 and 1996 1998. Low flow years are defined for 8 years: 1988 – 1995. years: 1983 - The median flow is based on flows from 1995 and 1987, whereas the mean flow is from 1983 to 1998. The TP methodology is United States 4. EPA ) 365.2 Environmental Protection Agency ( method detection limit at an of 0.005 mg/L or SM4500 - P as unfiltered TP. TP = Suspended TP + Dissolved TP. River Location Ratios The main phosphorus sources within the watershed, aquaculture fish hatcheries, municipalities, food processors, industrials, confined animal feeding operations, irrigated agriculture, and m iddle Snake River directly or indirectly. There are no grazing, eventually discharge to the m iddle Snake River, diversions from Milner Dam to Gridley Bridge. Along this stretch of the numerous discharges to the river occur . These discharges are from point and nonpoint sources. . Segment 1 of the m iddle Snake River runs from Milner to Pillar Falls ( Table 1 ) Table 1. Segment 1 — Milner Dam to Pillar Falls. hosphorus P otal T Diversion Point Discharge Source River Mile Ratio Milner Dam . 5 63 8 630.6 Dry Creek 2:1 627.6 Northside A Drain 2:1 619.5 Southside A10 Drain 2:1 619.0 2:1 Northside C55 Drain 618.0 Southside Twin Falls Coulee 2:1 617.9 Vinyard Creek 2:1 Pillar Falls 613.1 Notes : Springs are not identified in this table. However, 57 springs are identified as discharging directly to the m iddle Snake River. It is uncertain how many additional unnamed springs exist. Unnamed surface waters are not included. . Segment 2 of the m iddle Snake River runs from Pillar Falls to Crystal Springs ( Table 2 ) 33

40 Water Quality Trading Guidance — Pillar Falls to Crystal Springs. Table 2. Segment 2 T otal hosphorus P Discharge Source Diversion Point River Mile Ratio Pillar Falls 613.1 East Perrine Coulee 2:1 612.7 610.9 2:1 Main Perrine Coulee Canyon Springs Fish Hatchery 2:1 610.1 610.0 2:1 Alpheus Creek Blue Lakes Fish Hatchery 2:1 609.9 2:1 609.1 Southside West Perrine Coulee Pristine Springs Fish Hatchery 608.9 2:1 608.5 City of Twin Falls Municipality 2:1 Southside 43 Drainage 2:1 608.3 Warm Springs Creek 608.0 2:1 607.5 2:1 Jerome Golf Course Drain 2:1 607.2 Auger Falls Rock Creek 2:1 606.4 605.3 2:1 Southside 30 Drain 603.4 Southside LS/LQ Drain 2:1 602.2 Southside LS2/39A Drain 2:1 600.9 Northside N42 Drain 2:1 600.9 2:1 Southside 39 Drain Crystal Springs Fish Hatchery 2:1 600.5 Crystal Springs 600.4 Notes: Springs are not identified in this table. However, 74 springs are identified as discharging directly to the m iddle Snake River. It is uncertain how many additional unnamed springs exist. Unnamed surface waters are not included. Segment 3 of the m iddle Snake River runs from Crystal Springs to Below Box Canyon Area . ( Table 3 ) 34

41 Water Quality Trading Guidance — Crystal Springs to Lower Box Canyon Table 3. Segment 3 . T otal P hosphorus Discharge Source River Mile Diversion Point Ratio Crystal Springs 600.4 Magic Valley Fish Hatchery 2:1 600.0 2:1 599.1 Cedar Draw Niagara Springs Fish Hatchery 2:1 599.0 2:1 598.7 Rim View Fish Hatchery 598.1 2:1 Southside I Drain 595.0 Northside J8 Drain 2:1 2:1 Clear Springs and Lake: 598.0 Snake River Fish Hatchery Clear Springs Processing Middle Fish Hatchery Clear Lakes Fish Hatchery Gary Wright Fish Hatchery 592.5 2:1 591.8 Kanaka Rapids 2:1 Southside N Drain 2:1 591.5 2:1 591.5 Catfish Fish Hatchery 591.5 2:1 Mud Creek 2:1 591.4 Deep Creek 590.3 Briggs Creek Fish Hatchery 2:1 589.5 Northside S29 Drain 2:1 589.8 Kaster Trout Fish Hatchery 2:1 588.4 Northside S19/S Drains 2:1 588.4 Box Canyon Fish Hatchery 2:1 588.1 Blind Canyon Creek 2:1 588.1 2:1 Blind Canyon Fish Hatchery 587.8 2:1 Box Canyon “Creek” Below Box Canyon 587.0 Area Notes: Springs are not identified in this table. However, 66 springs are identified as discharging directly to the m m id dle Snake iddle Snake River. It is uncertain how many additional unnamed springs exist. Under the TMDL (1997) and the Upper Snake Rock TMDL (1999), the Clear Springs and Lake is considered a part of the m iddle Snake River. It is another ground water source that discharges directly to the river. Unnamed surface waters are not included. Equations Used in the Mass Balance Model The standard equation used in the mass balance model is the same one used for calculating loads: Load, lb/day = Concentration, mg/L x Flow, cfs x 5.4 35

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43 Water Quality Trading Guidance Appendix B. Lower Boise Trading Framework Effluent Trading Demonstration Project: Lower Boise River f or a Trading Summary of Participant Recommendations Framework by Prepared for the Idaho Division of Environmental Quality Ross & Associates Environmental Ltd. September 2000 . Consulting, http://www.deq.idaho.gov/media/489512 Available at: - boise_river_lower_effluent_report.pdf To be updated in 2016 . 37

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45 Water Quality Trading Guidance Appendix C. Reserve 39

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