Substitute Senate Bill No. 1012
AN ACT CONCERNING NITROGEN REDUCTION IN LONG ISLAND SOUND.
Be it enacted by the Senate and House of Representatives in General Assembly convened:
Section 1. (NEW) As used in sections 2 to 5, inclusive, of this act:
(1) "Equivalency factor" means a ratio of the unit response of dissolved oxygen to nitrogen in Long Island Sound for each publicly-owned treatment works based on the geographic location of the specific publicly-owned treatment works' discharge point divided by the unit response of the geographic area with the highest impact;
(2) "Equivalent nitrogen credit" means a nitrogen credit multiplied by the equivalency factor;
(3) "Equivalent pounds" means the actual pounds of nitrogen discharged by a publicly-owned treatment works multiplied by the equivalency factor for that publicly-owned treatment works;
(4) "Individual waste load allocation" means that portion of the state-wide waste load allocation apportioned to an individual publicly-owned treatment works;
(5) "Nitrogen" means the total of ammonia nitrogen, organic nitrogen, nitrite nitrogen and nitrate nitrogen;
(6) "Nitrogen Credit Advisory Board" means the board appointed by the Commissioner of Environmental Protection pursuant to section 3 of this act;
(7) "Nitrogen credit exchange program" means the program within the Department of Environmental Protection established pursuant to section 4 of this act;
(8) "Nitrogen credit" means the difference between the annual total nitrogen load specified for a publicly-owned treatment works in the general permit for nitrogen discharges and the annual total nitrogen load discharged by that publicly-owned treatment works expressed as pounds of nitrogen per day;
(9) "Nonpoint source" means any source of nitrogen originating from other than a readily discernable end of pipe source;
(10) "Publicly-owned treatment works" means a system used for the collection, treatment or disposal of sewage from one or more parcels of land and that discharges to the waters of the state and is owned by a municipality or the state;
(11) "State-owned equivalent nitrogen credits" means the difference between the annual state-wide waste load allocation established in the total maximum daily load and the sum of the annual discharges for all publicly-owned treatment works;
(12) "State-wide waste load allocation" means the maximum allowable nitrogen load from publicly-owned treatment works into Long Island Sound that will meet water quality standards as specified in the total maximum daily load;
(13) "Total maximum daily load" means the total maximum daily load analysis to achieve water quality standards for dissolved oxygen in Long Island Sound, as established by the Department of Environmental Protection and as approved by the United States Environmental Protection Agency; and
(14) "Unit response" means the reaction of dissolved oxygen in Long Island Sound to a change in nitrogen loading of 1.0 pound.
Sec. 2. (NEW) Notwithstanding any provision of section 22a-430 or 22a-430b of the general statutes and notwithstanding nitrogen limits specified in individual discharge permits issued pursuant to said section 22a-430, the Commissioner of Environmental Protection shall issue a general permit specifying effluent limits for nitrogen in accordance with the total maximum daily load. In order to meet water quality standards, the commissioner may incorporate compliance schedules into permits issued under this section and said sections 22a-430 and 22a-430b. The general permit shall establish effluent limits for nitrogen and shall establish an annual compliance schedule for nitrogen for each publicly-owned treatment works. Under the general permit, the commissioner may require publicly-owned treatment works to (1) meet effluent limits and other conditions for discharging nitrogen to the waters of the state pursuant to their individual waste load allocations, (2) comply with monitoring requirements as set forth in the general permit, and (3) comply with any other requirements as determined by the commissioner necessary to carry out the provisions of this section. Publicly-owned treatment works may participate in the nitrogen credit exchange program in order to comply with effluent limits for nitrogen specified in the general permit.
Sec. 3. (NEW) (a) The Commissioner of Environmental Protection shall establish a Nitrogen Credit Advisory Board to assist and advise the commissioner in administering the nitrogen credit exchange program. The board shall consist of the Commissioner of Environmental Protection or the commissioner's designee, the Secretary of the Office of Policy and Management or the secretary's designee, the State Treasurer or the Treasurer's designee and nine public members to be appointed in accordance with this section. The nine public members shall include an official of a major publicly-owned treatment works appointed by the speaker of the House of Representatives, a municipal public works official appointed by the president pro tempore of the Senate, a representative from a municipality with a population of greater than twenty thousand that purchases nitrogen credits and a representative from a municipality with a population of less than twenty thousand that sells credits appointed by the majority leader of the House of Representatives, a representative from a municipality with a population of greater than twenty thousand that sells nitrogen credits and a representative from a municipality with a population of less than twenty thousand that purchases nitrogen credits appointed by the majority leader of the Senate, and three persons having experience in either wastewater treatment, environmental law or finance, one to be appointed by the minority leader of the House of Representatives, one to be appointed by the minority leader of the Senate, and one to be appointed by the Governor. All initial appointments shall be made not later than August 1, 2001, and shall be made so the composition of the board is, to the extent possible, balanced with regard to buyers and sellers of credits, large and small municipalities and representatives from different geographic regions of the state.
(b) The Commissioner of Environmental Protection, or the commissioner's designee, shall serve as chairperson of the board and shall schedule the first meeting of such board not later than September 1, 2001. A majority of the members shall constitute a quorum for the transaction of business. The principal office of such board shall be the office of the Commissioner of Environmental Protection. At its first meeting, the board shall determine by lot which members shall serve for one, two or three years, provided the terms of office of not more than fifty per cent of the board shall expire in any one year. Thereafter, each term of office shall be for three years. The board shall choose a secretary by ballot from its membership.
(c) Not later than September thirtieth, annually, the board shall submit to the joint standing committee of the General Assembly having cognizance of matters relating to the environment its findings that address the following:
(1) A summary of the nitrogen credit exchange program's progress in achieving the total maximum daily load;
(2) The adequacy of the Clean Water Fund financing pursuant to section 22a-477 of the general statutes, as amended by this act, to support the nitrogen credit exchange program and the total maximum daily load;
(3) Recommendations for changes to the program including, but not limited to: (A) Exchanging nitrogen credits with entities outside the state; (B) expanding the general permit for nitrogen discharges and the nitrogen credit exchange program to include additional point and nonpoint sources; and (C) exchange transactions executed outside of the nitrogen credit exchange program;
(4) Identification of any other issues that need to be resolved; and
(5) Recommendations relating to the use of federal funding to assist distressed municipalities in the planning, design and construction of nitrogen removal facilities in implementing the provisions of this act.
Sec. 4. (NEW) (a) The Commissioner of Environmental Protection shall establish a nitrogen credit exchange program to assist in the implementation of the total maximum daily load. The nitrogen credit exchange program shall apply to all publicly-owned treatment works included in the general permit issued pursuant to section 2 of this act.
(b) The commissioner, in consultation with the Nitrogen Credit Advisory Board, shall:
(1) Establish a schedule and monitor all nitrogen removal construction projects;
(2) Establish an equivalency factor for each publicly-owned treatment works, which may be revised at the commissioner's discretion consistent with the total maximum daily load. The equivalency factor and any proposed revisions shall be made available for public comment at least thirty days prior to being implemented in the nitrogen credit exchange program;
(3) Establish the individual waste load allocation for each publicly-owned treatment works utilizing the equivalency factors and taking into consideration the schedule for nitrogen removal construction projects;
(4) Monitor annual progress in meeting the fifteen-year implementation schedule in the total maximum daily load;
(5) Propose modifications, as may be necessary, to the general permit for nitrogen discharges;
(6) Oversee and execute all equivalent nitrogen credit exchanges;
(7) Maintain a separate account of state-owned equivalent nitrogen credits;
(8) Purchase all equivalent nitrogen credits created by publicly-owned treatment works at the annually established value;
(9) Sell available state-owned equivalent nitrogen credits including nitrogen credits purchased from publicly-owned treatment works at the annually established value to enable publicly-owned treatment works to meet nitrogen limits specified in the general permit for nitrogen discharges;
(10) Whenever practicable, sell remaining state-owned equivalent nitrogen credits to any other public or private entity;
(11) Establish accounts of funds created from the purchase and sale of equivalent nitrogen credits to be used for administration of the nitrogen credit exchange program and which may be used for nitrogen removal projects, habitat restoration projects and research;
(12) Establish any other policies or procedures the commissioner may deem necessary to carry out the nitrogen credit exchange program; and
(13) Establish a technical assistance program to educate and assist municipalities in implementing the nitrogen credit exchange program.
(c) (1) Not later than March thirty-first, annually, the commissioner shall audit the performance of each publicly-owned treatment works operating from January first to December thirty-first of the preceding year and shall (A) determine the number of equivalent nitrogen credits for sale and the number of equivalent nitrogen credits to be purchased, (B) publish the annual value of equivalent nitrogen credits as determined by the procedure established in section 8 of this act, and (C) notify each publicly-owned treatment works of their equivalent nitrogen credit balance.
(2) Not later than July thirty-first, annually, each publicly-owned treatment works shall purchase equivalent nitrogen credits necessary to meet its nitrogen limits. Such purchase shall be paid by certified bank check or money order made payable to the "nitrogen credit exchange program". The check or money order shall state on its face "nitrogen credit purchase".
(3) Not later than August fourteenth, annually, the commissioner shall purchase all available equivalent nitrogen credits.
Sec. 5. (NEW) The Commissioner of Environmental Protection may audit the annual operating data of publicly-owned treatment works participating in the nitrogen credit exchange program in order to assess permit compliance. Publicly-owned treatment works that do not meet permit limits through treatment or the purchase of credits shall be subject to the enforcement provisions of chapter 446k of the general statutes.
Sec. 6. The Commissioner of Environmental Protection may adopt regulations, in accordance with chapter 54 of the general statutes, to carry out the provisions of sections 2 to 5, inclusive, of this act.
Sec. 7. Subsection (h) of section 22a-477 of the general statutes is repealed and the following is substituted in lieu thereof:
(h) Amounts in the water pollution control state account of the Clean Water Fund shall be available: (1) To be invested by the Treasurer of the state to earn interest on moneys in such account; (2) for the commissioner to make grants to municipalities in the amounts and in the manner set forth in a project funding agreement; (3) for the commissioner to make loans to municipalities in amounts and in the manner set forth in a project funding agreement for planning and developing eligible projects prior to construction and permanent financing; (4) for the commissioner to make loans to municipalities, for terms not exceeding twenty years, for an eligible water quality project; (5) for the commissioner to pay the costs of environmental studies and surveys to determine water pollution control needs and priorities and to pay the expenses of the department in administering the program; (6) for the payment of costs for administration and management of the Clean Water Fund; (7) provided such amounts are not required for the purposes of such fund, for the Treasurer of the state to pay debt service on bonds of the state issued to fund the Clean Water Fund, or for the purchase or redemption of such bonds; (8) for the commissioner to make grants to municipalities for the development and installation of structural improvements to secondary clarifier operations including, but not limited to, flow distribution mechanisms, baffle-type devices, feed well design and sludge withdrawal mechanisms. Grants under this subdivision shall be for one hundred per cent of the construction cost and not more than three million dollars from the fund shall be used for such grants; [and] (9) for the commissioner to pay the costs for the establishment, administration and management of the nitrogen credit exchange program described in section 4 of this act, including, but not limited to, the purchase of equivalent nitrogen credits from publicly-owned treatment works in the event that the account of state funds established pursuant to section 4 of this act is exhausted; and (10) for any other purpose of the Clean Water Fund and the program relating thereto.
Sec. 8. (NEW) (a) As used in this section:
(1) "Eligible capital costs" means all costs associated with improvements beyond local water quality needs (A) the actual planning, design and construction costs for a nitrogen removal facility, except for costs related to the modification of a facility for purposes other than the enhancement of the nitrogen treatment process, and (B) costs of equipment and land that is necessary for nitrogen treatment. The Commissioner of Environmental Protection, with the approval of the Nitrogen Credit Advisory Board, may designate other eligible capital costs associated with the improvement of existing secondary sewage treatment facilities;
(2) "Total eligible annual operation and maintenance cost" means the incremental increase in the cost of labor administration, electricity, and chemicals to remove nitrogen;
(3) "Total eligible capital cost" means one hundred per cent of the eligible capital costs, based on a thirty per cent grant provided to the facility pursuant to section 22a-478 of the general statutes and the loan to finance the remaining seventy per cent of the eligible capital costs;
(4) "Total annual capital cost" means the total amount of the facility's loan attributable to the total eligible capital cost divided by a twenty-year loan repayment period; and
(5) "Total annual project cost" means the total annual capital cost and the total eligible annual operation and maintenance cost.
(b) The Nitrogen Credit Advisory Board, established pursuant to section 3 of this act, shall propose the annual value of equivalent nitrogen credits by dividing the total annual project cost by the reduction of equivalent pounds of nitrogen. Upon proposing such value, the board shall notify each municipality with sewage treatment facilities, in writing, of such proposal.
(c) The Commissioner of Environmental Protection shall issue a draft ruling on the proposal pursuant to subsection (b) of this section. Such draft opinion shall become final if no municipality or group of municipalities petition for a review of the proposal pursuant to this section.
(d) No later than fifteen business days after the issuance of the draft ruling of the commissioner, a municipality or a group of municipalities may petition the board to review the proposed value of the credits.
(e) No later than ten business days following the submission of a petition for review, the board shall appoint an arbitration panel comprised of (1) a municipal official from a municipality that is expected to sell credits in the upcoming fiscal year, (2) a municipal official from a municipality that is expected to purchase credits in the upcoming fiscal year, and (3) a third member selected by mutual agreement by such officials.
(f) No later than ten business days after the appointing of an arbitration panel, the board shall convene the arbitration meeting of the petitioners and the commissioner.
(g) No later than ten business days after the convening of the arbitration meeting, the arbitration panel shall issue a final ruling on the annual value of equivalent nitrogen credits.
Sec. 9. This act shall take effect July 1, 2001.
Approved July 6, 2001