SB 557

Generally, under current law, a person may not discharge pollutants into the

waters of this state from a point source (such as a pipe) without a permit from the

Department of Natural Resources (DNR) that specifies limits on the discharge of

water pollutants. Current law requires DNR to administer at least one pilot project

to evaluate the trading of water pollution credits. Under a pilot project, a person who

is required to obtain a water pollution permit may be authorized to discharge more

pollutants than would otherwise be allowed if the person reaches an agreement

under which another person agrees to reduce the amount of water pollution that the

other person causes or if the person reaches an agreement to provide money that

DNR or a local government uses to reduce water pollution.

This bill requires DNR to administer a program, rather than at least one pilot

project, for the trading of water pollution credits. In addition to providing for

agreements as under current law, the bill provides that DNR may authorize a person

who is required to obtain two water pollution permits to discharge more pollutants

than would otherwise be allowed under one permit if the person agrees to reduce the

amount of water pollution below what would otherwise be allowed under the second

permit. The bill also provides that DNR may authorize a person to discharge more

pollutants than would otherwise be allowed if the person agrees to construct a project

or implement a plan that results in reducing water pollution from sources other than

the permitted source.

Under current law and under the bill, a water pollution credit trading

agreement is only allowed if it results in an improvement in water quality and if the

increase and the reduction involve the same pollutant or the same water quality

standard. Under current law, a water pollution trading project may only be

conducted within a project area that meets specified criteria. This bill eliminates the

requirement concerning a project area, but requires that the increase and the

reduction in pollution occur within the same water basin or portion of a water basin,

as determined by DNR. Under current law, the term of a water pollution trading

agreement may not exceed five years. This bill eliminates the restriction on the term

of an agreement. Both current law and the bill require that trading of water pollution

credits be conducted in accordance with the federal Water Pollution Control Act.