water quality trading framework for the laguna de … · 2.1 potential credit demand and supply ......
TRANSCRIPT
Technical Report
Prepared for:
Sonoma Resource Conservation District 1221 Farmers Lane, Suite F Santa Rosa, CA 95405
Prepared under funding from
USDA - NRCS Conservation and Innovation Grant
Kieser & Associates, LLC
536 East Michigan Ave, Suite 300
Kalamazoo, MI 49007
September 2015 - FINAL
Water Quality Trading Framework for the Laguna de
Santa Rosa Watershed, California
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TABLE OF CONTENTS
Foreword ......................................................................................................................................... ii
1 Introduction ............................................................................................................................. 1
1.1 Purpose ............................................................................................................................. 1
1.2 Overview .......................................................................................................................... 1
1.3 Stakeholder Involvement.................................................................................................. 2
1.4 Guiding Principles for WQT in the Laguna ..................................................................... 3
2 Current Setting for WQT in the Laguna ................................................................................. 4
2.1 Potential Credit Demand and Supply ............................................................................... 4
2.2 Obtaining credits under the Current Nutrient Offset Program ......................................... 5
3 Recommended Role for an Aggregator .................................................................................. 7
4 Recommended WQT Program Framework ............................................................................ 8
4.1 Eligibility for Program Participation and Credit Calculation ......................................... 10
4.1.1 Location .................................................................................................................. 11
4.1.2 Participants .............................................................................................................. 11
4.1.3 Baseline Requirements............................................................................................ 12
4.1.4 Credit-Generating Projects...................................................................................... 13
4.1.5 Credit Calculations.................................................................................................. 14
4.1.6 Offset/Trade Ratios ................................................................................................. 14
4.1.7 Credit Life and Renewal ......................................................................................... 16
4.1.8 Use of Credits ......................................................................................................... 17
4.2 Administrative Framework ............................................................................................ 17
4.2.1 Administrative Roles .............................................................................................. 17
4.2.2 Completeness Review ............................................................................................. 17
4.2.3 Contracting .............................................................................................................. 18
4.2.4 Third-party Verification .......................................................................................... 19
4.2.5 Program Registry .................................................................................................... 22
4.2.6 Audit Procedures ..................................................................................................... 23
4.3 Monitoring ...................................................................................................................... 23
5 Works Cited .......................................................................................................................... 25
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FOREWORD
This report is intended to serve as guidance for a Water Quality Trading framework in the
Laguna de Santa Rosa watershed, California. Recommendations in this report are part of a
larger program development effort funded by a USDA-NRCS Conservation Innovation Grant
(CIG) awarded to the Sonoma Resource Conservation District. This document will serve as
template for the interim application of water quality trading opportunities for the City of Santa
Rosa and potentially the Town of Windsor through incorporation into revised Offset Resolutions
for NPDES permits issued to both entities. It is expected that final elements of the Offset
Resolutions will be negotiated with each permittee and as such, some aspects of this
recommended framework may change. The long-range vision for this report is that Offset
revisions and recommendations herein will ultimately be formally incorporated into a final
Laguna de Santa Rosa TMDL implementation plan. A separate final project report under the
CIG describes project efforts to arrive at the recommendations in this report.
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1 INTRODUCTION
1.1 Purpose
This document outlines the recommended framework for a water quality trading (WQT) program
in the Laguna de Santa Rosa (Laguna) watershed in California. The framework identifies
programmatic elements for trading and offers an initial policy and operational guidance
framework which has been developed based on feedback from Project Advisory Committee
members. The framework builds on three years of stakeholder meetings in the Laguna using
principles of accountability and scientifically-defensible approaches. As such, the recommended
water quality trading program will assist progress towards sustainable long-term watershed
benefits in the Laguna de Santa Rosa, eventually through its incorporation in a Laguna Total
Maximum Daily Load (TMDL). In the short-term, the program will provide efficient
mechanisms to meet pre-TMDL requirements of net zero phosphorus discharges for municipal
wastewater treatment facilities.
1.2 Overview
The recommended Laguna de Santa Rosa WQT program seeks to support an efficient system
that meets current offset requirements for the City of Santa Rosa under a 2014 NPDES permit,
and that supports fulfillment of future offset/credit demand from other entities and regulatory
requirements. Santa Rosa’s permit is guided by Nutrient Offset Resolution No. R1 -2008-0061
that requires a pre-TMDL net-zero load for the City’s phosphorus discharges to the Laguna de
Santa Rosa. The Town of Windsor will be subject to similar requirements starting in 2018. In
the future, it is recommended that this trading framework be incorporated in a Laguna TMDL
that will allow other potential WQT buyers (specifically, permitted municipal separate storm
sewer systems—MS4s) to help cost-effectively meet discharge requirements assigned to them by
a wasteload allocation.
The North Coast Regional Water Quality Control Board (Regional Board) prepared Nutrient
Offset Resolution No. R1-2008-0061for the City of Santa Rosa in 2008. The Resolution outlined
a program that allowed for the use of nonpoint source reductions as offsets to the City’s seasonal
discharges of nutrients. Originally, the resolution specified nitrogen and phosphorus, however,
the City’s current permit requires only phosphorus offsets. The water quality trading program,
recommended herein, for the Laguna was developed using the Offset Resolution and permit as
the initial drivers for nonpoint source offsets.1 This report represents a final guidance document
1 A summary of the major requirements under the Offset Resolution and how those requirements are addressed in
the WQT framework can be found in Appendix A of this report.
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with recommendations that may be utilized by the Regional Board in revised Offset Resolutions
for the City of Santa Rosa and the Town of Windsor, and/or in the development of a Total
Maximum Daily Load (TMDL) implementation plan for the Laguna.
In addition to helping regulated agencies meet current and anticipated compliance needs, WQT
program objectives include:
Developing, testing, and applying trading tools that will facilitate improvements to
natural, rural and agricultural resources in the watershed
Engaging a broad level of stakeholder participation
Establishing acceptable, concise, and consistent credit calculation methods
Defining administrative, regulatory, and eligibility protocols and standards for offset
credit sellers
Establishing credit monitoring and certification infrastructure
Identifying agencies and organizations to assist with implementation
Minimizing transaction and administrative costs
Assessing future supply and demand in the area
Establishing accepted and repeatable verification and tracking protocols for certified
nutrient load reductions as offsets
Producing transferrable program templates
Improving water quality
Identifying a creditable range of project types and BMPs
Promoting best use of compliance efforts/funds toward benefiting ecosystem
conditions
1.3 Stakeholder Involvement
Under a 2012 USDA-NRCS Conservation Innovation Grant (CIG), the Sonoma Resource
Conservation District (Sonoma RCD) facilitated stakeholder engagement to help formulate WQT
program recommendations. CIG project partners and their roles on the project included:
Sonoma RCD: Project administration, communication, coordination, facilitation and
technical input on land-based offset projects
Gold Ridge RCD: Technical support to Sonoma RCD for the western portions of the
Laguna watershed under their jurisdiction
Regional Board: A co-project lead on framework input
California Department of Conservation: A co-project lead on statewide applicability of
WQT program implications and applications
City of Santa Rosa: Point source credit purchaser (buyer)
Kieser & Associates, LLC (K&A): Technical Co-lead under Sonoma RCD
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Merritt Smith Consulting: Technical Consultant to City of Santa Rosa
Texas Institute for Applied Environmental Research (TIAER): Nutrient Tracking Tool
(NTT) applications for credit calculation
Willamette Partnership: Advisor on trading program elements related to credit project
verification and trading registries
USDA-NRCS State office: Input on quantification protocols for agriculture
These project partners and others served on a Project Advisory Committee (PAC) that provided
feedback to the RCDs. K&A led the development of the trading framework for this project. The
PAC also included the following local, state, regional and federal agencies, conservation
representatives and other interested parties:
Laguna de Santa Rosa Foundation
Russian Riverkeeper
Russian River Watershed Association
Sonoma County Agricultural Preservation and Open Space District
Sonoma County Water Agency
Town of Windsor
UC Cooperative Extension
USDA-NRCS Local Service Center
A project Stakeholder Advisory Committee (SAC) ensured that the majority of land uses and
agricultural sectors in the Laguna watershed were represented in the development of this
program. The SAC provided feedback on specific elements of the recommended WQT program.
SAC participation included representation by the:
Western United Dairymen
Sonoma County Winegrape Commission
Sonoma County Horse Council
CA Cattlemen’s Association
Local Agricultural Producers and Landowners
Sonoma and Gold Ridge RCDs
1.4 Guiding Principles for WQT in the Laguna
Early in the facilitation process with the PAC and SAC, a series of guiding principles were
established for the project and for the WQT program framework. General agreement was
reached on the founding principles for the program. These included:
Program must be beneficial to the watershed and its residents:
Net water quality benefits must be realized. Those benefits must be greater and occur faster
than they would without trading.
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The program will be voluntary for both buyers and sellers of credits, and economical for
those participating
The program will be flexible, adaptable and scalable, so that it can change and grow with
future needs, and achieve maximum benefit to the beneficial uses of the watershed.
Program must be accountable to watershed stakeholders:
Projects that generate credits must result in actual pollutant reductions.
The process must be transparent, open and accessible.
Trading rules must be clear and enforceable.
Program must be defensible to watershed stakeholders:
Projects and credit calculations must be science-based.
Program decisions will be equitable and non-biased.
Consistent with CWA and any watershed or site specific regulatory requirements
2 CURRENT SETTING FOR WQT IN THE LAGUNA
This section describes the current setting in the Laguna that is driving both efforts by the City of
Santa Rosa to generate offsets, and the development of recommendations for a future WQT
program.
2.1 Potential Credit Demand and Supply
The administrative framework for WQT programs depends principally on the size of the trading
market; i.e., the volume of trading demand and supply. More sophisticated programs, like
central clearinghouse programs, for example, are most efficient where there is substantial market
demand for trading credits with multiple buyers and thus the need for multiple sellers in a single
watershed or across many watersheds. Clearinghouse program structures can manage complex
program accounting and reporting, as well as related activities for verification and oversight.
Limited compliance demand for WQT credits in the Laguna however, dictates that such a robust,
complex framework with numerous moving parts would be inefficient and expensive considering
costs and human resources. Markets with limited demand may function more effectively and
cost-efficiently with a simpler framework which is herein being recommended for the Laguna.
At present a single buyer exists in the Laguna de Santa Rosa; the City of Santa Rosa (City).
Demand by the City is limited to treated seasonal wastewater discharges. The Town of Windsor
is expected to begin a permit compliance timeline towards a net-zero discharge of phosphorus
starting in 2018. In accordance with a future Laguna TMDL, expected to be finalized in 2018
per Regional Board projections, both the City and Town, as well as MS4 permittees within the
Laguna watershed may also be credit buyers. There is potential that TMDL wasteload
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allocations will require MS4s to reduce stormwater loads by a yet-to-be determined quantity of
nutrient loading. This will likely spur the necessity of credit trading. Despite these likely
additions to the market, at most possibly five to six entities (Santa Rosa, Windsor, Rohnert Park,
Cotati, Sebastopol and the County of Sonoma), will presumably utilize compliance options
available with WQT under the future TMDL.
For supply in the recommended WQT program, numerous landowners (public and private), and
agriculturally-related operations exist that can provide reductions in nutrient runoff beyond what
may already be required of their operations and land uses. Beneficial management practices
(BMPs) in various urban and rural settings, and agricultural conservation practices will provide
opportunities to supply credits for current and future buyers. In addition, other voluntary
opportunities to generate credits such as instream restoration projects may be considered. For the
purposes of this document, BMPs and other projects that can generate credits are collectively
referred to as “projects.”
2.2 Obtaining credits under the Current Nutrient Offset Program
The current process for the City of Santa Rosa to secure credits under the Nutrient Offset
Program is administratively burdensome and continuously evolving. From the outset (adoption
of Nutrient Offset Resolution No. R1-2008-0061), the Nutrient Offset Program has lacked
standardized methods or protocols for calculating credits from agricultural conservation
practices, infrastructure or tools to readily facilitate trades and a formal means to engage
agriculture in this existing marketplace. Though the Sonoma and Gold Ridge RCDs and others
have assisted the City in finding and/or facilitating crediting projects, functioning in a ‘broker’
role, the process still remains burdensome. Figure 1 illustrates this current process.
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Figure 1: Process for obtaining credits under the current Nutrient Offset Program
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The Nutrient Offset Program presently requires several approval steps for identifying potential
credit projects. This approval process is generally costly. An extensive approval process is not
unique to trading, and is often necessary; however when trades only occur through simple
bilateral transactions between buyers and sellers, the lengthy process may be economically
inefficient. Consequently, PAC and SAC discussions focused on the opportunity to develop a
more efficient WQT program in the Laguna. The recommended program framework is designed
to provide a timely, consistent, and transparent process. Such a framework may be an applicable
template for other areas of California with heavy agricultural production and potential credit
demand from regulated buyers.
The framework recommended herein will focus on improving efficiencies of credit trading under
the current Offset Resolution as well as under a future Laguna TMDL. Given to the limited
credit demand from the City of Santa Rosa, and the fact that future demand will be relegated to
only a few additional buyers, the WQT framework is recommended herein will focus on
improving efficiencies of credit trading under the current Offset Resolution as well as under a
future Laguna TMDL. The report herein describes a recommended WQT framework that
includes a potential role of an aggregator to facilitate trading within the Laguna.
3 RECOMMENDED ROLE FOR AN AGGREGATOR
Credit aggregation in water quality trading (WQT) programs is becoming an increasingly
popular method for bolstering trading markets, particularly in easing access to the market for
both nonpoint and point source participants. While the recommended framework includes a role
for aggregators, transactions will still be based on bilateral trades either directly between buyers
and sellers, or between buyers and an aggregator. Aggregators are trusted purchasers of credits
and can take much of the risk out of participation in credit transactions, thereby encouraging
participation in the market. Performance risk is reduced though the uses of an aggregator,
however an aggregator does not absolve a discharger of their requirements under an NPDES
permit. Furthermore, aggregators, having already performed the work of collecting credits for
existing or proposed projects, make it much easier for point sources such as municipal
wastewater treatment facilities (or MS4s) to buy multiple offset credits.
By performing these roles, aggregators can reduce both costs and risks of participation in water
quality trading markets. Figure 2 provides a basic illustration of how an aggregator functions in
WQT programs.
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Credit sellers have opportunities to implement nutrient reduction projects and in turn, generate
credits to be sold. A credit aggregator, in this type of point source to nonpoint source trading
framework recommended for the Laguna, is an entity that purchases credits from one or multiple
nonpoint sources, and re-sells them to an interested buyer(s). Buyers are not required to use
aggregators, and may in some circumstances opt to implement their own credit generating
projects (e.g., on municipally-owned land or through pre-existing relationships with landowners).
For this reason, throughout this document there are references to tasks that can be carried out by
the buyer alone, or with assistance from an aggregator, or with assistance from a broker who
facilitates credit generating projects but does not at any point own the credits.
In addition to lowering costs and risk associated with program participation, aggregators will
perform a variety of other roles and duties in WQT. Further details on the role and function of
aggregators are defined in Appendix B.
4 RECOMMENDED WQT PROGRAM FRAMEWORK
The recommended WQT framework for the present, pre-TMDL setting, and future TMDL
applications in the Laguna builds upon the current approach portrayed in Figure 1 by
incorporating an optional aggregator role and simplifying the project approval process. Figure 3
illustrates the interworkings of this recommended framework.
Figure 2: Conceptual Schematic of Aggregator Participation and Typical Contractual Roles in a WQT Framework
Credit Sellers
(Nonpoint Sources with
Credit Project
Opportunities)
Contract #1, Aggregator Buys
Credits Aggregator
Contract #2, Aggregator Sells
Credits
Credit Buyers
(Point Sources Seeking
Credits)
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Figure 3: Recommended WQT Framework for the Laguna de Santa Rosa
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The framework is summarized below with additional details of the recommended program in the
remainder of the document.
The credit transaction process begins with a credit buyer that has identified the need for WQT
credits to meet compliance requirements and a credit seller (e.g. landowner that has an identified
project need). The buyer, or with the assistance of an aggregator or broker, would pursue
potential crediting project opportunities. A fundamental improvement of the recommended
program compared to the current approach under the Nutrient Offset Program is the introduction
of pre-qualified project types whose quantification protocols have been identified. Pre-qualified
projects allow a buyer or aggregator the ability to assess the potential of a project to generate
credits without multiple consultations with the Regional Board.
If the buyer or aggregator determines that the potential project meets their needs, and comes to
an agreement with the seller to move the project forward, a formal project application will be
submitted to the Regional Board for a “completeness review”. Such a review will be used to
determine whether the application addresses regulatory expectations for the project to produce
credits whereby all provisions in the proposal are acceptable under the trading framework. This
review will also ensure that the project complies with the California Environmental Quality Act
(CEQA). If the Regional Board confirms that the project application is complete and the project
complies with CEQA, the buyer, aggregator, or broker will begin the process of project
implementation with the seller/land owner(s) at the proposed location. During and after project
implementation, an independent third-party will verify and document that project conditions are
consistent with the original proposal. Finally, public disclosure of relevant project information
and reporting by the buyer or aggregator to a designated entity will be required.
Based on this recommended operating framework, the following sections identify key WQT
program elements that apply to participants and processes in the framework. The following
discussions focus on a variety of specific program considerations applicable to participant
eligibility, program administration, monitoring, tracking, and reporting. Supporting information,
including background and additional details of the recommended program elements, is provided
in appendices.
4.1 Eligibility for Program Participation and Credit Calculation
Establishing appropriate guidelines for program participation and credit calculations is necessary
and critical for ensuring that actual water quality improvements occur through WQT programs.
Such guidelines for the recommended WQT framework include commonly recognized eligibility
criteria including:
Credit-generation project and buyer locations
Eligible pollutants for trading
Trading participants
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Baseline requirements for credit sellers
Approved credit generating project types
Approved credit calculation methods
Timeline for credit generation
Appropriate use of credits
Considerations associated with each of these eligibility categories are described in the following
sections.
4.1.1 Location
Activities for credit generation and use must be
located within the Laguna de Santa Rosa
watershed, upstream of the confluence of the
Laguna with the Russian River. The watershed
includes Mark West Creek and all other
tributaries to the Laguna. Projects may be
carried out on private or public lands, including
lands within Municipal Separate Storm Sewer
System (MS4) footprints. Figure 4 illustrates the
watershed, and therefore the trading boundaries.
Such boundaries are necessary to ensure water
quality benefits from load reductions are realized
in the Laguna.
4.1.2 Participants
In the Laguna de Santa Rosa, eligible credit generators include farming operations, vineyards,
landowners, municipalities, other agencies, or any entity that can implement nutrient reduction
activities. Under Nutrient Offset Resolution No. R1 -2008-0061, credits cannot be generated by
urban stormwater runoff controls that are required by a regulatory mechanism. However, this
restriction does not apply to urban stream restoration projects. Currently, the City of Santa Rosa
is developing credit calculation protocols for BMPs associated with such restoration projects.
These actions are not required to mitigate urban stormwater runoff within the MS4 system. Once
a crediting methodology for stream restoration projects is established and approved by the
Regional Board, that methodology will be incorporated into the pre-qualified project list. Eligible
credit purchasers, in the current regulatory setting and prior to the adoption of a Laguna de Santa
Rosa TMDL, include wastewater treatment plants for the City of Santa Rosa and the Town of
Windsor. At present, credits eligible for purchase are for phosphorus only. Other pollutant
reductions may be tracked and later used for compliance if deemed appropriate by the Regional
Board. Once a TMDL is adopted, permitted municipal separate storm sewer systems (MS4s)
Figure 4: Laguna de Santa Rosa Watershed
Trading Boundaries
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will additionally be considered as eligible buyers. Such credit purchases may be related to
phosphorus and nitrogen depending on the objectives of the future Laguna TMDL. It may also
be such that the Laguna TMDL (or other sub-basin TMDLs in the Laguna) would consider other
constituents for trading. Depending on the final program framework approved by the Regional
Board as part of an updated Offset Resolution and/or the Laguna TMDL, other natural resource
or conservation organizations may also be able to purchase credits to improve conditions in the
Laguna.2
The Laguna WQT program will not allow credit generation from activities required to address a
current/ongoing compliance violation. This is consistent with EPA recommendations that
compliance should be considered when “determining source eligibility to participate in trading,”
(EPA, 2003). That said, the Laguna WQT program will not make past compliance history of
credit generators a formal eligibility requirement. Trading partners in the Laguna may rather
simply consider compliance history in contracting decisions with potential trading partners.
4.1.3 Baseline Requirements
Baselines are threshold levels that buyers must meet prior to purchasing a credit or that sellers
must meet prior to generating a credit. Baseline recommendations are derived from the City of
Santa Rosa’s current Nutrient Offset Program (Regional Board, 2008), EPA Water Quality
Trading Policy (2003) and PAC and SAC input. These recommendations are related to on-farm
management practices or other on-the-ground projects that result in nonpoint source pollutant
load reductions and may offer other ecosystem benefits and that could enhance future
compliance options. Point source credit generation, which could potentially occur under the
TMDL, is not addressed here.
Where General Permits or other regulatory instruments require BMPs, those requirements are
considered the baseline. Presently, the following Regional Board nonpoint source regulatory
programs exist:
• Cow Dairies and Concentrated Animal Feeding Operations (CAFOs)
• 401 Certifications
• Timber harvest activities
• Onsite wastewater treatment systems
• Cannabis cultivation
Of the nonpoint sources regulated through the above programs, to date only dairies have been
afforded the option to generate limited timeframe offsets for nutrient pollutant reduction
2 It is presently anticipated that the Regional Board will utilize this framework document to negotiate a new Offset
Resolution with the City of Santa Rosa under their current NPDES permit for their net zero phosphorus discharge
requirement. As such, the new Offset Resolution would memorialize the recommended framework and other
beneficial provisions, making it easier to ultimately incorporate WQT into a final Laguna TMDL for nutrients,
sediments and/or other water resource issues.
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activities required by a regulatory program (Regional Board, 2012). Absent the provision of such
an option for the other regulated land uses, required actions undertaken pursuant to these
regulatory programs are considered baseline and are not eligible to generate credits. When new
nonpoint source regulatory programs are developed by the Regional Board, requiring particular
conservation activities, this framework recommends that these regulations incorporate provisions
for credit generation from the newly required practices under a limited window of eligibility and
limited life of credits. Such provisions (which will require Regional Board approval) should be
similar to the water quality permitting provisions for existing cow dairies in the North Coast
Region (Regional Board, 2012) and apply to the time period before a final TMDL is approved
for the Laguna. Nonpoint source regulatory programs slated for development by the Regional
Board that would impact the range of potential offset projects in the Laguna de Santa Rosa are
for orchards and vineyards, and non-dairy livestock operations (as part of the draft Russian River
pathogen TMDL) as of this writing. Other local, state and federal requirements may also
become baseline requirements at the determination of the Regional Board or the State Water
Resources Control Board.
Voluntary BMPs/projects that are implemented beyond those required in water quality permits
will be eligible to generate credits so long as practices are maintained for the approved lifespan
of the credit. Such credits for maintained voluntary projects will also remain eligible into the
TMDL period even if generated in the pre-TMDL period. Through the implementation of
approved TMDLs for the Laguna de Santa Rosa, the Regional Board could use its discretion to
establish alternative baselines, for example by choosing to allow credit generation from practices
that are required under regulatory programs in order to incentivize expeditious compliance.
Currently unregulated rural land uses that will have no baseline restrictions include:
• Rural Roads
• Vegetable Farms
• Public Land
• Rural Residential Properties
Voluntary implementation of BMPs/projects in these cases will have “current practice” baselines
that also reflect the prior three-year practice history. This history will take into account the
practices that have taken place at the potential project site over the past three years, and any
major activities or changes that would influence the load calculations “before” practice
implementation. New practice benefits are calculated as credits based on the change from this
“before” implementation load. Using a three-year history to establish baseline minimizes
concerns that a landowner could take out an existing practice only to receive payment to reinstall
it or another similar practice.
4.1.4 Credit-Generating Projects
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The Regional Board has approved a select number of projects for credit generation through the
existing Nutrient Offset Program. Appendix C provides a brief summary and function of these
BMPs used in approved projects, as well as a variety of other BMPs expected to be commonly
implemented in the Laguna that may also serve as potential credit generating activities. Pre-
qualification for these other BMP/project types within the WQT program by the Regional Board
is recommended.
Trading programs often promote innovative strategies for cost-effective credit generation beyond
traditional BMPs. Such strategies, if not currently listed in Appendix C, will need to be
reviewed by the Regional Board for consideration in WQT on a case-by-case basis. This is
reflected in the WQT program schematic previously introduced as Figure 3.
4.1.5 Credit Calculations
Determining appropriate credit quantification methods is vital for the demonstration of water
quality benefits necessary to offset a buyer’s compliance requirement. Quantification methods
approved by the Regional Board for crediting projects that have been implemented under the
Nutrient Offset Program are provided in the Appendix C table, cited previously in Section 4.1.4.
Other recommended quantification methods for determining load reductions associated with
additionally listed BMPs/project types are included in Appendix C as well.
As with innovative projects noted above, Regional Board review and approval of related
quantification practices will need to be on a case-by-case basis. Once such innovative practices
and calculation methods are approved, these can be added to the Appendix C list and considered
to be pre-qualified in the future.
Credit calculations are quantified assuming projects are being operated and maintained in a way
that reflects the assumptions and information modeled in the credit calculation. Developing
BMP/project guidelines that set design, installation, maintenance, and performance standards (as
noted for select BMPs in Appendix C) is necessary to ensure projects are performing as
anticipated. A project maintenance plan (Section 4.1.7) and project verification schedule
(Section 4.2.4) will help to ensure these necessary conditions.
4.1.6 Offset/Trade Ratios
A trade ratio of 2:1 will be used in the Laguna de Santa Rosa Watershed. This means that two
pounds of reduction, which equals one credit, are needed to offset one pound of phosphorus
discharged into the Laguna. The trade ratio replaces the Margin of Safety in the 2008 offset
resolution. Ratios can adjust credit quantities produced at the end of a pipe or edge of a field and
account for variations in pollutant fate and transport, goals of water quality trading, and other
technical uncertainties specific to the Laguna. Trade ratios specifically address uncertainties and
considerations related to the following: 1) Delivery of pollutants to the waterbody of concern, 2)
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Location of dischargers relative to the waterbody of concern, 3) Equivalence of pollutant forms,
4) Pollutant load reduction calculations, 5) Retirement of credits to net water quality
improvement. These five components of trade ratios are outlined by the U.S. EPA’s guidance for
water quality trading and permit writers (EPA, 2007). The following provides a brief
explanation on each of these trade ratio considerations.
Delivery ratios- Account for watershed-specific features that may affect pollutant fate and
transport between trading partners, often in the form of physical or hydrologic conditions. The
greater the distance between trading partners the higher the delivery ratio may need to be.
Location ratios- These ratios are used to account for the relative location between pollutant
dischargers and the waterbody of concern. The location factor adjusts the site’s estimated load
reduction to address losses from potential assimilation associated with watershed dynamics. The
location factor can be developed empirically through model runs to fit watershed monitoring data
or can use a conservative estimate based on regional, national and/or international data and
literature. A simplistic tool used to generate this ratio may introduce more uncertainty to
calculating credits. Regional and national based factors are not specific to local watershed
characteristics contributing to assimilation. This creates situations where managers must decide
between introducing potential uncertainty, or use conservative assumptions. Use of sophisticated
models to estimate reductions can also create uncertainty if there are insufficient water quality
data to calibrate and verify model assumptions.
Equivalency ratios- Pollutants may exist in several forms depending on the discharging entity.
Equivalency ratios are used to adjust for trading different forms of the same pollutant.
Equivalency ratios may be based on literature and/or monitoring data estimates. Pollutants from
different sources can be traded as long as the effect on the waterbody of concern is uniform
between all pollutant types.
Uncertainty ratios- Addresses uncertainties related to measuring pollutant load reductions and
subsequent credit generation, particularly for nonpoint source dischargers. Without
appropriately characterizing uncertainty, trading programs may default to overly protective
safety factors resulting in credit prices above cost margins, causing a disincentive to trade.
Similarly, if programs do not account for enough uncertainty, a credit may be considered
questionable for meeting compliance requirements. Watershed factors or considerations that
introduce uncertainty and variability in credit calculations for trading programs include:
o Type of water resource concern
o Critical period for the water quality concern
o Critical runoff events that contribute to the water quality stress
o Regulated time period of the discharge (instantaneous, monthly, seasonally,
annual)
o Pollutant loading sources
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o Trading between different source types (agriculture versus wastewater)
o Credit estimation methods available for each source type
o Available documentation for these methods
o Current level of watershed understanding (monitoring and modeling)
o Size or scale of the watershed
o Potential buyers and sellers of credits
o Differences in buyer and seller regulatory requirements
Retirement ratios- Retirement ratios may be applied if the goal of the program is to achieve
water quality improvements above regulatory standards. These ratios retire a portion of each
credit. Usually this is given as a percentage and included only in the buyer’s trade ratio; the
amount is determined by trading program policy. This ratio does not introduce any uncertainty
or provide protection against uncertainty.
Trade ratios, and the components used to develop the ratio, are heavily specific to each trading
program. When assigning a 2:1 the trade ratio for the Laguna de Santa Rosa WQT framework,
consideration was given to delivery, location, equivalency, and uncertainty as justified and
currently applied for credit-generating projects under pre-TMDL conditions for the City of
Santa Rosa (Kieser & Associates, 2012) A 2:1 trade ratio is also supported by US EPA Region 3
Technical Memorandum (2014). This 2:1 ratio addresses uncertainty associated with estimating
pollutant loading reductions (i.e., average site conditions, form of pollutant equivalency,
calculation coefficients), transport and delivery and weather variability (associated with annual
loading assumptions).
The trade ratio can be adjusted downward by approval from the Regional Board based on:
BMP types that restore the ecological function of the Laguna;
Projects that are protected by a permanent easement or similar legal instrument;
Ratios will be reviewed in conjunction with the reissuance of NPDES permits for point sources.
The reviews will be conducted by the Regional Board or its designee
4.1.7 Credit Life and Renewal
Credits have a finite life, which is dependent on the type of project that is generating credits.
Standard credit lives are listed for each BMP/project type in Appendix C. Pre-TMDL offset
credits already approved by the Regional Board will persist into the TMDL period unless
otherwise specified in Regional Board-approved credit proposals (e.g., limited-life credits for
BMPs required by an order) so long as they have been properly maintained. The Regional Board
may choose to allow renewal of credits (i.e. generation of additional credits beyond the initial
credit life, provided the project continues to be maintained for the duration of the additional
17
credits). The option for credit renewal could be used to incentivize particular project types, such
as those associated with a permanent easement, or those achieving habitat restoration outcomes.
4.1.8 Use of Credits
Approved credits are eligible for compliance purposes after proper and complete project
installation has been verified by an appropriate entity defined by the WQT program. As part of
the eligibility for the approved use of credits by a buyer, the credit generator or aggregator on
their behalf will provide a project maintenance plan to the buyer. The buyer (or aggregator) will
be responsible for demonstrating to the Regional Board that a plan is in place to ensure: A)
adequate resources are available to maintain the project for its contracted life; B) responsibilities
for maintaining the project are in place; C) minimum performance standards for project
operation will be maintained; and, D) contingency plans are in place in case the project fails. The
buyer (or aggregator) may, through contracting with the seller, delegate A through D to the
seller. The buyer would be responsible for enforcing the terms of this contract, and would still be
ultimately responsible for the performance and maintenance of the project as part of their
NPDES permit compliance.
4.2 Administrative Framework
4.2.1 Administrative Roles
The Regional Board will assume two primary administrative roles within the WQT program: 1)
providing a completeness review for proposed crediting projects; and, 2) administering audit
procedures. Any actions pertaining to program registry maintenance will be carried out by the
program Administrator, the Sonoma RCD. These roles fit into the Regional Board’s and RCD’s
overarching goal of administering a program that is transparent to ease any potential public
information concerns. While this overarching goal has been defined and discussed amongst the
Regional Board, RCDs and participating stakeholders, specific functions within the program
concerning the roles and participation of aggregators may vary when the framework is adopted.
The difference in roles between administrative frameworks with and without aggregator
participation is illustrated in Appendix D of this report.
4.2.2 Completeness Reviews
All proposed crediting projects by buyers (or aggregators) will pass through an initial inspection
by the Regional Board for a completeness review per the recommended WQT framework. This
process will confirm participant eligibility for trading and verify project type and quantification
methods as being appropriate and scientifically determined based on a pre-qualified list (see
Appendix C). The Regional Board will also verify the project’s CEQA compliance as part of the
completeness review. Figure 3 illustrates the mechanism for project approval for WQT in the
18
Laguna. Proposals that are not pre-qualified (i.e., have not been previously proposed), will have
to go through a separate approval process prior to implementation, also as illustrated in Figure 3.
Once approved, these additional activities will be added to the pre-qualified list.
4.2.2.1 Credit Generation Approval
A major component of the completeness review by the Regional Board is the determination of
project eligibility pursuant to pre-qualified project lists. The completeness review process begins
with review of crediting proposals from a buyer or aggregator to ensure that all eligibility
requirements noted above are met. This includes determining if the proposed project is a pre-
qualified project type and uses appropriate quantification methods (e.g., Appendix C). If the
proposed project does not meet these criteria, sufficient documentation will be required to
support project approval.
Credit calculations are first reviewed by the Regional Board during the completeness review. A
second review is provided by a third-party verifier when site-specific conditions have been fully
identified in site designs, and a third time following verified project implementation. The
Regional Board is only be responsible for reviewing calculations during the completeness
review, however the Regional Board will receive reports from third-party verifiers which will be
the determinant of final credit amounts that may be traded.
Complete and confirmed credit-generating project applications will then move into the
contracting phase for design and implementation of the project. Contracted projects are then
subject to third-party verification before final implementation and official credit generation.
4.2.3 Contracting
As referenced throughout this document, the process of generating credits will involve one or
more contracts. In the simplest scenario, the buyer and seller enter into a contract to implement
the credit-generating project. In the scenario outlined in Section 3 an aggregator would enter into
two separate contracts, one with the seller and one with the buyer. In a scenario where a broker is
engaged to facilitate the project, the primary contract for credit-generating activities would be
between the buyer and seller. In this case there would also be a contract between the buyer and
broker (for the broker’s services in facilitating the project), and potentially a contract between
the seller and broker (detailing the terms of access to the seller’s land for the purposes of
facilitating the project).
In any case, the terms of each contract will be negotiated between the parties entering into that
contract. Contract terms will need to take into consideration the credit life of the project and the
requirement that the project be operated and maintained to meet minimum performance
standards, as described in Section 4.1.8. The recommended framework does not require
permanent easements as part of credit project implementation. However, the inclusion of a
permanent easement in the contract for a credit-generating project could be incentivized by the
19
Regional Board through reduced trade ratios (see Section 4.1.6) or allowance for credit renewal
beyond the initial life of the credit (see Section 4.1.7).
4.2.4 Third-party Verification
Verification of credit generating practices is a crucial component in the Laguna WQT framework
to ensure credibility, transparency, and maintenance of credit-generating practices. Verifiers are
experts, trained and accredited specifically with regard to the WQT program, who act as third-
party reviewers in WQT programs. Verifiers work directly in the field with aggregators and/or
credit generating project developers to ensure that practices are implemented and functioning as
planned, thereby legitimizing credits. Specific verification responsibilities may vary between
project sites but generally the processes follow these specific verification protocols
recommended for the Laguna. Additional information on the use of third-party verifiers, as well
as relevant forms and documents for the verification process are provided in Appendix E.
The verification process under the trading framework will include the following elements:
1) Review of credit calculations; updates to calculations based on changes, if any, to the
project during implementation. This may be carried out by a qualified verifier, or by the
program Administrator.
2) Field verification, including:
Verify accuracy of measurements used to calculate credits
Determine whether the practice was built based on the approved design. Any
deviations should be noted and these should be assessed to determine potential
impacts on treatment efficiency.
After initial field verification, site visits will be carried out at regular intervals
throughout the life of the credits to assure that the project is being maintained
adequately to meet performance standards. Table 1 lists the verification schedule
for practices with various credit lives.
Standardized field checklists for each project type will serve as a guide for field
observations/data collection.
3) Streamlined review of annual monitoring reports from credit Buyer (may be generated by
landowner, aggregator, or seller)
4) Documentation of verification activities, including:
Initial verification report/notification of project completion (credits cannot be
used for compliance purposes until this report is complete and submitted). Report
shall include project information, verifier identification, offset generation begin
date, and whether the practice is operational as designed.
Subsequent reports for each site visit
Verification log describing verification actions and dates achieved.
Field notes with opinions of credit estimates, activities, and any other relevant
findings.
20
Table 1. Verification Schedules, by Credit Life.
Credit
Life
Timeframe Activity
Annual
credits
Year 1 - After initial practice
installation
Field verification & credit calculation check
Years 2 through 5 Field verification
Credits
spread
over 4
years
Year 1 - After initial practice
installation
Field verification & credit calculation check
Year 2 – After first rainy
season since installation
Field verification
Year 3 Streamlined review of annual monitoring report
Year 4 if practice takes place
on a property where 5-, 10-, or
20- year credit life practices
also took place, this
verification can occur during
Year 5 to coincide with
verification of other practices
Field verification
5-year
credit life
Year 1 - After initial practice
installation
Field verification & credit calculation check
Year 2 – After first rainy
season since installation
Field verification
Years 3 through 4 Streamlined review of annual monitoring report
Year 5 Field verification
10-year
credit life
Year 1 - After initial practice
installation
Field verification & credit calculation check
Year 2 – After first rainy
season since installation
Field verification
Years 3 through 4, 6 through 9 Streamlined review of annual monitoring report
Years 5 & 10 Field verification
20-year
credit life
Year 1 - After initial practice
installation
Field verification & credit calculation check
Year 2 – After first rainy
season since installation
Field verification
Years 3 through 4, 6 through 9,
11 through 14, 16 through 19
Streamlined review of annual monitoring report
Years 5, 10, 15 & 20 Field verification
Third party verifiers will be selected by the Administrator, based on professional experience
relevant to the projects being verified. Applicable professional skills, by project category, are
listed in Table 2. Verifiers will be trained to ensure that verification activities are carried out in a
consistent manner that specifically addresses the requirements of this program. Common
21
agricultural community concerns with verifiers focus on government officials accessing their
land for verification. These concerns can create a barrier to trading and should be respected by
opening verification practices to alternative third parties. Regardless of who performs
verification, communicating with landowners about when, where, how, and why verifiers need to
access their properties is important for maintaining trust and transparency.
Table 2. Verifier Professional Skills, by Project Category
Project Category Applicable Professional Skills (non-exhaustive list)
Livestock/manure management Agronomy, Agricultural Engineering
Road-related Geology, Erosion Control
Water & sediment basins Stormwater Practices, Engineering
Veg enhancement, buffers, filters Ecology, Biology, Grazing Management
Cultural practices Agronomy
Stream channel and habitat restoration Engineering, Hydrology, Ecology, Geomorphology,
Landscape Architecture
Wetlands Botany, Ecology, Wetland Mitigation
Verifiers will be subject to a Conflict of Interest Code, and will be required to complete and
submit (to the Administrator) a Conflict of Interest Form for each project prior to beginning
verification.
The process for verification is summarized in Figure 5.
Figure 5. Verification Process
22
4.2.5 Program Registry
The term “registry” is used here to reference a system used to account for credits within the
program. The registry will be used to track information regarding account credits, debits, and
balances for all entities that own water quality credits for the Laguna. When multiple entities are
trading in the same watershed and/or under the same trading program, utilizing a central registry
to track all program credits reduces the chance that credits will be sold more than once (National
Network on Water Quality Trading, 2015). Having information on all trades consolidated in a
local database where information is made available upon request and at regular reporting
intervals may make it easier for regulatory agencies, administrators, and other stakeholders to
assess and monitor trading activities. The Administrator will be responsible for maintaining a
spreadsheet-based registry, and periodically reporting relevant information on trades within the
watershed to the Regional Board and/or the public.
4.2.5.1 Registry Contents and Reporting
The buyer or aggregator will be responsible for compiling a standard set of information on
credit-generating projects and submitting that information to the program Administrator.
Standardized forms will be used to consistently compile and report information, which may
include:
Credit generation
o Types of implemented crediting practices
o Acres treated by each practice (if applicable)
o Nutrient reductions generated by each practice
o Cost of practice implementation
o Location of each practice
o Landowner contact information
Trade transaction
o Buyer contact information
o Aggregator contact information (if applicable)
o Seller contact information (may be the same as landowner)
o Credit sale price
o Number of credits and duration associated with trade agreement
Project verification information
o Verifier’s identification
o Project inspection dates
o Field verification report will include
Status of implemented practices
Identification of practice deficiencies
23
Not all information that is tracked and managed by the program Administrator will be made
public. Final decisions on a subset of this tracked information to be included in public reporting
will ultimately be determined by the Regional Board. Reports on select trading activities
provided to the public will, however, balance the need for transparency with the desire to
maintain the privacy of participants. Many agricultural producers, for example, may be reluctant
to participate in a program that will disclose information about the individual or farm operations.
Likewise, designers and implementers of credit projects may have concerns regarding
intellectual property protection and competitive advantage within the marketplace. As such, care
should be taken to respect the privacy of program participants. In some instances, private
information (such as names and contact information) can be excluded from public
documentation. In addition, certain information can be aggregated to address privacy concerns.
Public reporting of activities must be consistent with the requirements of the Regional Board,
while specific actions or activities can be more efficiently captured and reported in standardized
forms which might will include the following:
Total Projects implemented by practice type
Total credits generated
Number of credit transactions
Total number of buyers
Total number of sellers
Additional forms may exist depending on the exact implementation of the WQT program. The
aforementioned list represents necessary information for reporting. Total credits generated, and
those used for compliance should be reported on an annual basis. The program Administrator
will produce, based on information recorded in the program registry, an annual summary of
trades conducted within each permit to be used by buyers to document permit compliance.
Periodic reporting to the public may be carried out directly by the Administrator, or may occur
through Regional Board public reporting channels.
4.2.6 Audit Procedures
The Regional Board holds authority for random project and trade transaction audits. While these
audits allow the Board to verify project implementation and progress, they also promote an
overarching goal of providing public assurances that offsets/trades are meeting expectations.
Such expectations are associated with individual trades and program functions, goals and
requirements. Preserving public trust in WQT will be essential for program success.
4.3 Monitoring
24
This framework recommends that monitoring associated with the WQT program be carried out
under the Russian River Regional Monitoring Program (R3MP) or a similar, regionally-
coordinated program. Members of the Russian River Watershed Association, many of whom are
likely WQT program participants, already collect water quality data in the Laguna de Santa Rosa
watershed. The R3MP, which is still in its formative stages, is intended to leverage the efforts of
these members (and others) to improve project planning, data collection, assessment, and
reporting – all of which can be tailored to serve the needs of the WQT program.
Monitoring in WQT programs is typically conducted on a broader, less site-specific, scale in
order to keep the program both cost- and time-effective. The recommendation to accomplish
monitoring of the Laguna WQT program through R3MP or similar is consistent with this
approach. Programs with burdensome monitoring may result in higher transaction costs,
decreased program participation, and reduced opportunities to improve water quality.
Monitoring in the Laguna must consider physical and/or climatic differences throughout the
program area. High variation in annual precipitation in the Laguna, as well as a relatively low
gradient in the Santa Rosa plain, leads to seasonal uncertainty in runoff volume, a variable used
to quantify loading. A broad monitoring plan for the Laguna carried out through a regional
program such as R3MP may better account for this seasonal uncertainty. Such monitoring will
be important for addressing progress under a future Laguna TMDL as well the WQT program.
25
5 WORKS CITED
California Regional Water Quality Control Board, North Coast Region. (Regional Board).
(2008). “RESOLUTION NO. R1-2008-0061 Approving Santa Rosa Subregional Water
Reclamation Facility, Sonoma County; Attachment 1.” Dated July 31, 2008.
California Regional Water Quality Control Board, North Coast Region (Regional Board). (2012).
Conditional Waiver of Waste Discharge Requirements, Order No. R1-2012-0003 for Existing
Cow Dairies In the North Coast Region, January 19, 2012.
Kieser & Associates. (2012). Beretta Dairy Summary of Best Management Practice Reduction
Estimation Methods for City of Santa Rosa Offset Credits.
Kieser & Associates. (2012). Pepperwood Preserve Summary of Best Management Practice
Reduction Estimation Methods for City of Santa Rosa Offset Credits.
National Network on Water Quality Trading. (2015). Building a Water Quality Trading Program:
Options and Considerations, Version 1.0.
United States Environmental Protection Agency (EPA). (2003). Final Water Quality Trading
Policy. EPA Water: Water Quality Trading. Retrieved 8 November 2013 from
http://water.epa.gov/type/watersheds/trading/finalpolicy2003.cfm
U.S. Environmental Protection Agency (EPA) Office of Wastewater Management. (2007). Water
Quality Trading Toolkit for Permit Writers. Accessed from
http://www.epa.gov/npdes/pubs/wqtradingtoolkit_fundamentals.pdf
U.S. Environmental Protection Agency (EPA) Region 3. (2014). Accounting for Uncertainty in
Offset and Trading Programs (EPA Technical Memorandum).
http://www.epa.gov/reg3wapd/pdf/pdf_chesbay/TradingTMs/Final_Uncertainty_TM_2-12-
14.pdf
Appendix A
Current Nutrient Offset Program
Requirements (per Resolution No. R1-
2008-0061)
WQT Framework
1. Discharger’s nutrient load to be offset :
• Identify the anticipated total N and P to be
offset
• Calculated based on water balance model
estimates
The purpose of the framework document is not to
identify the total load that must be reduced in order to
meet regulations. Instead, the framework outlines how
WQT can be utilized to help required reductions for
the Laguna.
2. Nutrient reduction credits to be gained by
performance of selected removal/reduction actions
• Direct measurements of nutrient reduction
• Estimated nutrient reduction
• Margin of safety
The RWQCB will conduct a ‘completeness review’ of
every proposed credit generating project. As part of
this review, appropriate methods to quantify and verify
reductions will be in place. This framework includes a
compilation of project types recommended for “pre-
qualification,” along with recommended quantification
protocols to estimate nutrient load reductions
(Appendix C). A margin of safety is included when
applying a trade ratio (Section 4.1.6). As such trade
ratios recognized and account for uncertainty in load
reduction measurements.
3. Nutrient reduction credit accounting No change from the offset resolution requirements
except that credit accounting will only apply to
phosphorus.
Current Nutrient Offset Program
Implementation WQT Framework
1. Discharger identifies nutrient reduction projects
• Estimate N & P removed
• Identify preferred projects for
implementation
Appendix C of the Framework document outlines
several project types recommended for “pre-
qualification”. These projects have verified and
reliable methods to quantify load reductions
resulting from their implementation.
2. Discharger submits description of reduction
projects to RWQCB • Includes general information, i.e., location
and facilities needed
• N and P removed through practice
• Monitoring and reporting plan
• CEQA documentation
For non-pre-qualified projects, (pre-qualified
projects provided in Appendix C) developers will
submit an application to the RWQCB for a
“completeness review”. This approval process will
include verification the project will result in water
quality improvements. CEQA review will occur in
conjunction with the Board review. Figure 3 of the
Framework document illustrates this process.
3. RWQCB accepts proposed nutrient reduction
project(s) • Load reduction determined according to
monitoring and reporting plan
Projects will be accepted by the Board during the
“completeness review”. The Board will confirm
proper quantification, verification, and monitoring
methods are applied. If a proposed project does not
meet review criteria, the developer must revise their
proposed project (Figure 3).
4. Discharger implements load reduction project(s) Once accepted as complete, a project developer will
work with appropriate landowners and design
contractors to implement the project. Under the
proposed framework, project developers may be a
third party aggregator (Appendix B).
5. Discharger submits annual report documenting
nutrient discharged and controlled • Mass of N and P discharged in a given
season
• Mass of N and P controlled through projects
Tracking, reporting and documenting program
activities are essential activities outlined in the
framework (Section 4.2.5). Information documented
includes: credit generation, trade transaction, and
practice verification information. Furthermore, the
framework recognizes the need for public disclosure
of program activities including: BMPs implemented,
total credits generated, number of transactions, total
credit buyers sellers.
Appendix: B
To: Valerie Minton,
Sonoma RCD Date: August 11, 2014
From: Mark Kieser
Joanna Allerhand
Joshua Kieser
Kieser & Associates, LLC
cc: Project Files
RE: DRAFT – Laguna de Santa Rosa WQT Program Framework: Aggregators
Introduction
Credit aggregation in water quality trading (WQT) programs is becoming an increasingly
popular method for bolstering trading markets, particularly in easing access to the market
for both non-point and point source participants. Aggregators are trusted purchasers of
credits and can take much of the risk out of participation in non-point source credit
generating projects, thereby encouraging participation in the market. Further,
aggregators, having already performed the work of collecting credits for existing or
proposed projects, make it much easier for point sources such as municipal facilities
looking to buy offset credits to purchase a bundle of credits they need. By performing
these roles, aggregators can reduce both costs and risks of participation in water quality
trading markets.
Aggregators are now considered common third-party intermediaries in water quality
trading programs, though overall credit aggregation in WQT is a burgeoning practice.1 A
handful of examples exist that suggest that aggregators work successfully within markets.
For example, WQT programs in Pennsylvania, Virginia and North Carolina have been
seeing the active use of aggregators over the past 3-5 years. However, little definitive
information is available on costs as many aggregators in the private sector do not reveal
such information to protect their competitive opportunities. Nonetheless, there is much
1 Walker, Sara, and Mindy Selman. (2014, February). Addressing Risk and Uncertainty in Water Quality
Trading Markets.
K Environmental Science and Engineering MEMORANDUM
IESER ASSOCIATES, LLC &
discussion that credit aggregation can significantly ease access to WQT in a number of
ways.
This technical memorandum includes examples of how aggregation may best be utilized
in water quality trading, with specific application to the proposed Laguna de Santa Rosa
WQT Program framework. The recommendations in this memo have been shaped by
several discussions among the Project Advisory Committee (PAC) and Stakeholder
Advisory Committee (SAC) for the Laguna project, and are put forth now for
consideration and further feedback. The memo stops short of recommending aggregators
in the Laguna, however as decisions to perform aggregators roles must individually be
evaluated by agencies or entities with such interests.
Technical information on aggregators is presented in the following sections:
“Aggregators” Defined
Aggregators in WQT Markets
Aggregator Roles & Duties
Mitigating Market Risks
Reducing Program Costs
Easing Access to Trading for Smaller (typically non-point) Sources
Who Should be an Aggregator?
“Aggregators” Defined
An aggregator, in non-point source – point source WQT programs, is an entity that
purchases credits from multiple nonpoint sources, and re-sells them to an interested
point-source buyer(s).2 In other words, the aggregating individual or entity finds,
purchases, and compiles credits from multiple individual non-point source credit
generators to bundle and sell to permitted facilities seeking offsets.3, 4, 5
2 Lal, Harbans. (n.d.). Nutrient Credit Trading – a Market-based Approach for Improving Water Quality.
WNTSC / NRCS / USDA. Page 7. 3 McCarthy, Jamie, Brian Brandt, and George W. Kelly. (n.d.). Aggregators: Examples and Opportunities.
4 Borisova, Tatiana, and Fritz Roka. (n.d.). Water Quality Credit Trading: General Principles. University of
Florida IFAS Extension. Page 5. 5 Conservation Technology Information Center. (2006, July). Getting Paid for Stewardship: An
Agricultural Community Water Quality Trading Guide. Funded by U.S. Environmental Protection Agency
(EPA). Page 27.
Aggregators in WQT Markets
Aggregators act within, rather than outside of, WQT markets, yet they operate as
independent agents not central to program functionality.6 Thus, multiple aggregators may
operate within a single program.7 Aggregators will enter into separate agreements with
sellers and buyers, respectively (Figure 1).8 Aggregation thereby negates the need for
direct contact and contracting between nonpoint-source generators and point-source
purchasers.9
Figure 1: Structure and flow of aggregated agreements (after Harbans, n.d.).
Aggregator Roles & Duties
Aggregator roles and duties may vary between WQT programs as each program’s
specific structural framework differs. Nonetheless, insights from market innovators like
Environmental Banc & Exchange, LLC10
afford some basic suggestions concerning what
roles aggregators should be able to fulfill. These roles are built on the principles of
understanding trading mechanisms, accepting liability, and maintaining accountability.
Specific roles and duties of an aggregator may include:
1) Understanding program policies, including aggregator approval processes and
contracting standards
2) Understanding basic market factors, including the ability to undertake baseline and
market viability analyses
3) Completing sales transactions, including comparative cost analyses, certification
processes, market pricing discovery, regulatory sales approvals, negotiating contracts,
working with verifiers, and more
6 Lal, Harbans. Page 7.
7 Ibid.
8 Ibid.
9 Conservation Technology Information Center. Page 27.
10 Kelly, George W. (2009, June 8-9). CTIC Water Quality Credit Aggregators. Environmental Banc &
Exchange, LLC. Presentation: CTIC Water Quality. Atwood Lake Lodge, Sherrodsville, OH. Page 4.
4) Entering into trading contracts, including scheduling payments, establishing prices
and durations of trades, insuring credits in case of deficits, transferring liability,
understanding monitoring and maintenance needs, and other program regulations
5) Funding and managing the project, including managing landowner payments and
ensuring cash flow to cover implementation
6) Managing a diverse credit portfolio, including multiple generators and inherent
structural differences
7) Assuming and managing market risks and insuring projects11, 12
Recognizing the cost-reducing effects of credit aggregation, the Rogue River WQT
program in Oregon enlisted The Freshwater Trust to aggregate credits aimed at meeting
temperature requirements. This program, assisted by the Willamette Partnership, offers
important insights into contracting between aggregators and landowners (item number 4
above). Specifically, contracting advice includes13
:
1) Defining and clarifying the amount and timing of payments
2) Defining and clarifying the length of contracts
3) Defining and clarifying BMP maintenance responsibilities
4) Clarifying credit ownership assignment
5) Ensuring aggregator permission to regularly inspect BMPs
6) Setting language standards for contract termination, dispute resolution, and
indemnification
7) Complying with federal, state, and local requirements.
Mitigating Market Risks
Notably, incorporating aggregators into WQT markets can reduce inherent market risks
for credit generators and purchasers.14
This reduced risk results primarily from delinking
liability between regulated entities and unregulated non-point sources. Thus, the
aggregator absorbs both delivery and performance risks, thereby easing access to
markets.15
An aggregator’s credit portfolio diversifies the quantity and character of
projects while reserve credits absorb the risks of delivery or implementation failure.16
11
McCarthy, Jamie, Brian Brandt, and George W. Kelly. (n.d.). Aggregators: Examples and Opportunities. 12
Kelly, George W. Page 10. 13
Willamette Partnership. (2012, June). In It Together: A How-To Reference for Building Point-Nonpoint
Water Quality Trading Programs. Designing & Operating a Trading Program (Part 2 of 3). 14
Borisova, Tatiana, and Fritz Roka. Page 5. 15
Selman, Mindy, Suzie Greenhalgh, Evan Branosky, Cy Jones, and Jenny Guiling. (2009, March). Water
Quality Trading Programs: An International Overview. World Resources Institute Issue Brief: Water
Quality Trading, No.1. Page 13. 16
Valderrama, Alisa, Lawrence Levine, Eron Bloomgarden, Ricardo Bayon, Kelly Wachowicz, and
Charlotte Kaiser. (2013, January). Creating Clean Water Cash Flows: Developing Private Markets for
Green Stormwater Infrastructure in Philadelphia. r:13-01-a. Page 7.
Reducing Program Costs
Transaction costs tend to increase with the involvement of non-point sources. This is due
in part to their potential spatial distribution, limited credit generation capacities, and
unfamiliarity or distrust of environment markets and/or regulations.17
Costs for buyers in
disaggregated schemes may therefore include site-specific project identification,
contractor search and negotiation, management and policing of multiple contracts from a
variety of sellers, and more.18, 19, 20
Aggregators, however, can reduce capital costs through economies of scale.21
In an
aggregated scheme, the aforementioned transaction costs are covered by the Aggregator.
Thus, point sources are no longer responsible for the costs of finding enough non-point
source credit generators to fulfill their offset needs, while non-point sources can work
with a trusted entity, the Aggregator, to more easily enter into market transactions.
Though there are costs associated with using Aggregators (who must recoup all costs,
including profit in the case of private sector aggregators) these should be relatively lower
overall than expenses associated with a disaggregated system of credit purchases.
Easing Access to Trading
Just as aggregation can reduce program transaction costs, so does aggregation ease access
to trading. By helping a scattered group of smaller projects to function like on large
project through credit bundling, the typical barriers inhibiting investments into small
projects are mitigated.22
This eases access for both nonpoint-source credit generators and
point-source offset purchasers, who no longer need to establish a relationship between
one another.23
Who Should be an Aggregator?
Aggregators should be trusted entities in the nonpoint-source community. In this sense
entities such as farm bureaus, RCDs (California)/SWCDs (other states), crop consultants,
Certified Crop Advisors (CCAs), or other organizations already established in the
17
Musengezi, Jessica, Pelayo Alvarez, Michelle Bacon, Molly Cheatum, and Clayton Ogg. (2012, March).
The Feasibility of Water Quality Markets for Rangelands in California’s Central Valley. Conservation
Economics White Paper. Washington, DC: Defenders of Wildlife. Conservation Economics and Finance
Program. Page 18. 18
Valderrama, Alisa, Lawrence Levine, Eron Bloomgarden, Ricardo Bayon, Kelly Wachowicz, and
Charlotte Kaiser. Page 15. 19
Selman, Mindy, Suzie Greenhalgh, Evan Branosky, Cy Jones, and Jenny Guiling. Page 14. 20
Ibid. 21
Valderrama, Alisa, Lawrence Levine, Eron Bloomgarden, Ricardo Bayon, Kelly Wachowicz, and
Charlotte Kaiser. Page 15. 22
Ibid. 23
Lal, Harbans. Page 7.
community may represent good candidates for aggregation. Unlike third-party verifiers,
pre-existing relationships between potential aggregating entities and credit producers
(even credit buyers) will not inherently cause a conflict of interest. Nonetheless, other
agencies, including state agencies, private entities, NGOs, individual entrepreneurs, and
others, may functionally act as an aggregator as well.24, 25,
26
Overall, any entity able to fulfill the following roles could reasonably take on the
aggregator position:
1) Provide technical expertise to help landowners implement BMPs and assess credit
value
2) Have the trust/respect of the landowner
3) Aggregate enough credits to meet buyer needs, possible credit retirement needs of
the WQT program, and self-insurance requirements to cover crediting project
default (a substantial cash-flow requirement if credits are created in advance of
buyer payments, and/or credit demand—market speculation)
4) Verify credits on an annual basis (though this may require separate third party
verification and additional costs)
5) Negotiate sales agreements and performance contracts with credit generators and
credit buyers 27, 28
Other third party entities in WQT programs with some similar functions include brokers,
central credit exchanges, and clearinghouses. Aggregators differ from brokers in that they
actively purchase and sell credits while brokers find matches and draft agreements but do
not participate in the actual credit transfer. Typically, aggregators and brokers will not be
found actively participating in the same program.
Central exchanges and clearinghouses, however, are entities under which an aggregator
may still function. In a central exchange situation (e.g., Virginia), aggregators may work
within the program but filter all trades through the single central exchange. Aggregators
may work similarly in a clearinghouse model (e.g., Pennsylvania), which converts
differently priced source credits into fixed priced resale commodities.
24
Bodine, Susan Parker. (2013, May 22). Nutrient Trading and Water Quality. Testimony of Susan Parker
Bodine, Partner, Barnes & Thronburg, Before the Senate Committee on Environmental and Public Works
Subcommittee on Water and Wildlife. 25
Lal, Harbans. (n.d.). Nutrient Credit Trading – a Market-based Approach for Improving Water Quality.
WNTSC / NRCS / USDA. 26
Conservation Technology Information Center. (2006, July). Getting Paid for Stewardship: An
Agricultural Community Water Quality Trading Guide. Funded by U.S. Environmental Protection Agency. 27
McCarthy, Jamie, Brian Brandt, and George W. Kelly. (n.d.). Aggregators: Examples and Opportunities. 28
Bodine, Susan Parker. (2013, May 22). Nutrient Trading and Water Quality. Testimony of Susan Parker
Bodine, Partner, Barnes & Thronburg, Before the Senate Committee on Environmental and Public Works
Subcommittee on Water and Wildlife.
Appendix C: Projects for Credit Generation in the Laguna de Santa Rosa Watershed
Contents Introduction ............................................................................................................................................................ 1
Credit Calculation Method Descriptions ................................................................................................................. 2
Category 1 Projects ................................................................................................................................................. 4
Category 2 Projects ................................................................................................................................................. 7
Category 3 Projects ................................................................................................................................................. 9
Category 4 Projects ............................................................................................................................................... 11
Introduction The following list of project types and Beneficial Management Practices (BMPs) was developed in
collaboration with the Project Advisory Committee and Stakeholder Advisory Committee to encompass
practices that:
Have common applicability within the Laguna de Santa Rosa watershed
Are desirable from a water quality perspective
May have additional natural resource co-benefits in addition to water quality
Present potential for generating water quality credits
These project types are recommended for pre-qualification by the Regional Water Quality Control Board
(Regional Board). The project types are organized into four categories, based on the status of recommended
credit calculation methods for each practice.
Category 1 encompasses project types that have already received crediting approvals from the Regional
Board. We recommend that the Regional Board pre-qualify these BMPs and associated credit calculation
methods for future proposed credit projects.
Category 2 encompasses project types with common applicability in the watershed where credits could be
calculated using the methods from Category 1. We recommend that the Regional Board pre-qualify these
project types and the use of the associated credit calculation methods for future proposed credit projects.
Category 3 encompasses project types with common applicability in the watershed where credits could be
calculated using Nutrient Tracking Tool (NTT, see “Credit Method Descriptions” for further information), which
has been updated for the Laguna watershed through the 2012 USDA-NRCS Conservation Innovation Grant.
We recommend that the Regional Board pre-qualify these BMPs and the use of NTT as a credit calculation
method for future proposed credit projects.
Category 4 encompasses project types with common applicability in the watershed, where potential credit
calculation methods have been identified but not fully developed. We recommend that the Regional Board
pre-qualify these BMPs in concept as appropriate for generating credits. If such a project were to be brought
forward for credit generation, it would be incumbent upon the project proponent to propose an appropriate
credit calculation method, and the Regional Board would review and approve/deny the proposal. Once a
credit calculation method was approved for a specific project, the Regional Board could choose to pre-qualify
that method for future use, or require that future projects of that type continue to have credit calculations
proposed and approved on a case-by-case basis.
Project types that are not reflected in the below list may be brought forward to the Regional Board on a case-
by-case basis.
Credit Calculation Method Descriptions
Nutrient Tracking Tool (NTT)
Nutrient Tracking Tool (NTT) provides a Microsoft Windows-based interface for the Agricultural Policy /
Environmental eXtender (APEX) model. APEX is a land management watershed model that can be applied
from the field scale to small watershed level for estimating nonpoint source loading associated with surface
runoff. These estimates can be preformed for particulates using sheet and rill erosion as well as soluble water
quality parameters. APEX also estimates shallow groundwater recharge to streams and deep groundwater
infiltration. The NTT-based versions of the model sometimes include algorithms to estimate other NPS loading
sources and reduction measures, such as wetlands, bank erosion, and livestock access in the stream. The
estimates for these loading sources are created outside of the APEX framework and should be
tailored/adjusted for the specific watershed where the model is being applied. For instance, wetland
treatment efficiencies can be greatly impacted by differences in contributing area and/or the depth and shape
of the wetland. Therefore, the assumptions used for wetland removal efficiencies should be vetted by local
experts prior acceptance of the loading reduction results. Nutrient Tracking Tool has been updated for the
Laguna de Santa Rosa watershed by loading local data on soils, weather patterns, and agricultural crops and
practices.
USDA-Natural Resources Conservation Service
Michigan Pollutants Controlled Calculation and Documentation for Section 319 Watersheds, Training
Manual (A.K.A. Region V model and the STEPL model)
This field-scale model provides calculation procedures for estimating upland sheet and rill erosion, as well as
gully and bank erosion estimates. The sheet and rill erosion estimations are based on the Revised Universal
Soil Loss Equation (RUSLE) and a sediment and particulate erosion enrichment procedure developed and
documented as part of the Chemicals, Runoff, and Erosion from Agricultural Management Systems (CREAMS)
model. The gully and bank erosion estimates are based on the volume of material voided by channelized flow
during of time during which the erosion occurred. The estimation processes combine the parent material soil
nutrient concentrations and estimates of dry density to estimate only sediment-attached and particulate
forms of nutrients. Different national programs apply their own estimation methods to assess delivery ratios.
In the Santa Rosa process, the RWQCB has accepted the Minnesota delivery ratio methodology.
Michigan Department of Environmental Quality (Pollutants Controlled Calculation and Documentation)
EPA (Region V model)
Tetra Tech, Inc. (STEPL)
Pennsylvania Phosphorus Spreadsheet and Pennsylvania Nitrogen Spreadsheet Calculation Methods
This spreadsheet-based tool calculates phosphorus and nitrogen loading estimates based on RUSLE and
sediment-attached or particulate loading, as well as estimates of soil release of soluble nutrient
concentrations and runoff volumes. The estimates combine the field-scale predictive methods with best
management practice (BMP) treatment efficiencies derived in conjunction with the Chesapeake Bay Model.
The Chesapeake Bay Model is based on a Hydrological Simulation Program - Fortran (HSPF) platform. Further
information on this method is available in a Memo from Kieser & Associates to the City of Santa Rosa, dated
July 6, 2012 and titled “Beretta Dairy Summary of Best Management Practice Reduction Estimation Methods
for City of Santa Rosa Offset Credits.”
Upslope Erosion and Sediment Control Guidance (PWA) This set of procedures was developed by Pacific
Watershed Associates, Inc. and is reflected in Chapter 10 of the California Salmonid Stream Habitat
Restoration Manual and the Handbook for Forest and Ranch Roads. The “PWA” methodology is considered
the industry standard for assessing potential erosion on unpaved roads in northern California. As with the
Michigan procedures, erosion estimates can be combined with soil nutrient content data to estimate nutrient
loading reduction.
Pacific Watershed Associates, LLC
4
Category 1 Projects
Basic Information Credit Calculation BMP Quality Standards Credit
Issuance
Description Load Source Addressed by
BMP
Credit Calculation Method1
Italic text indicates a high potential for a RWQCB-
approved method, but the method is not currently
developed
Factors to Establish Credit Worthiness2
Design Criteria Performance Standards
Discharge Type
Addressed (Chronic or
Episodic) and Credit Life
Livestock/Manure Management Practices
Store manure in highest areas of pasture to protect from runoff and/or establish manure storage facility
Livestock facilities/ pastures with temporary storage piles prior to land application or around shelter areas (P & N)
Pennsylvania calculation methods for nitrogen and phosphorus
Site visit for precondition, photo documentation
Fact Sheet-Manure Storage for Horse Facilities June 2003, Stormwater Runoff Management at High Use Areas, Horse Manure Management
Photo documentation Chronic 20 year life for structural practices Annual credits for non-structural practices, up to 10 years
Heavy use lots: Alteration of heavy use lots to improve water quality
Denuded areas around livestock barns, shelters, and gated access points (P & N)
Pennsylvania calculation methods for nitrogen and phosphorus
Site visit for precondition, photo documentation/ record keeping, vegetation/ fencing inspections
NRCS Practice Standard Standard 561: Heavy Use Lots, 635: Wastewater Treatment Strip, 634: Manure Transfer, 341: Critical Area Planting, 382: Fencing, 528: Prescribed Grazing, 393: Filter Strip, 635: Vegetated Treatment Area, 472: Access Control, and 512: Forage and Biomass Planting
Establishment of practices meeting practice standards as referenced in design criteria
Chronic 20 year life
Road-related Practices
Culverts: replacement of existing crossings that are unstable or that expose livestock to waterways.
Road and street crossings, equipment and animal crossings that have signs of severe erosion or manure discharges. (P & N, Sediment)
PWA methods when available; Michigan Pollutants Controlled Calculation and Documentation methods are yet to be approved
Pre-condition site inspection, application materials justify erosion rates and associated testing for nutrient concentrations.
NRCS Practice Standard Standard 578: Stream Crossing; Handbook for Forest and Ranch Roads, PWA road typicals or PE design
Constructed and performing as designed, based on verification monitoring Culvert maintained free of debris.
Chronic 20 year life Episodic Credits spread over 4 years
1 See “Credit Method Descriptions” for further detail 2 Credit worthiness of any given project is also dependent on eligibility and baseline criteria described in “Water Quality Trading Framework for the Laguna de Santa Rosa Watershed, California,” Section 4
5
Stream Crossings (non-bridges): replacement of existing crossings that are unstable or that expose livestock to waterways.
Road crossings, equipment and animal crossings that have signs of severe erosion or manure discharges. (P & N, Sediment)
PWA methods when available; Michigan Pollutants Controlled Calculation and Documentation methods are yet to be approved
Pre-condition site inspection, application materials justify erosion rates and associated testing for nutrient concentrations.
NRCS Practice Standard Standard 578: Stream Crossing, including fords and other hard surface crossings; Handbook for Forest and Ranch Roads, PWA road typicals or PE design
Constructed and performing as designed, based on verification monitoring
Chronic 20 year life Episodic Credits spread over 4 years
Decommission stream crossing: removal of stream crossings that are unstable and returning channel to stable grade, elimination of unnatural impoundments – constrictions from bridge abutments.
In active or seasonal Ag and Forestry roads and equipment crossings (P & N, Sediment)
PWA methods when available; Michigan Pollutants Controlled Calculation and Documentation methods are yet to be approved
Pre-condition site inspection, application materials justify erosion rates and associated testing for nutrient concentrations.
Handbook for Forest and Ranch Roads, PWA road typicals or PE design and signature block
Constructed and performing as designed, based on verification monitoring
Episodic Credits spread over 4 years
Outsloping: The act of converting a flat or insloped road to an outsloped road or excavating the fill along the outside of the road and placing and grading it against the cutbank, thereby creating an outsloped surface where the roadbed once existed. This allows water to sheet off the road rather than building volume and velocity and causing erosion.
Forest and Ag roads in close proximity or hydrologically connected to streams and rivers (P & N, Sediment)
PWA assessment approach when available or an approach developed based on Michigan Pollutants Controlled Calculation and Documentation
Pre-condition site inspections documenting erosion types, material volumes and nutrient content of soils. Development of a comprehensive road-related erosion control plan
Engineered design and/or typicals from Handbook for Forest, Ranch and Rural Roads
Annual and storm period inspections. Check the area after all major storms and at least twice per year. Timely repair of any eroded areas before creating gully formations. Maintenance required in a timely fashion when rill erosion is greater than 2-inch depths.
Chronic 10 year life
Rolling Dips: Shallow, rounded dip in the road where road grade reverses for a short distance and surface runoff is directed in the dip or trough to the outside or inside of the road. Rolling dips are drainage facilities constructed to remain effective while allowing passage of motor vehicles at reduced road speed.
Forest and Ag roads in close proximity or hydrologically connected to streams and rivers (P & N, Sediment)
PWA assessment approach when available or an approach developed based on Michigan Pollutants Controlled Calculation and Documentation
Pre-condition site inspections documenting erosion types, material volumes, and nutrient content of soils. Development of a comprehensive road-related erosion control plan
NRCS Practice Standard 587: Structure for Water Control; Handbook for Forest and Ranch Roads, PWA road typicals
Annual and storm period inspections. Check the area after all major storms and at least twice per year. Timely repair of any eroded areas before creating gully formations. Maintenance required in a timely fashion when rill erosion is greater than 2-inch depths.
Chronic 10 year life
Road decommissioning: Remove existing roads and replace with foot trails, ATV trails, limited access roads, or re-contour to no road/trail footprint.
Forest and Ag roads in close proximity or hydrologically connected to streams and rivers (P & N, Sediment)
PWA assessment approach when available or an approach developed based on Michigan Pollutants Controlled Calculation and Documentation
Pre-condition site inspections documenting erosion types, material volumes and nutrient content of soils. Development of a comprehensive road-related erosion control plan
NRCS Practice Standard 560: Access Road; Engineered design and/or typicals from Handbook for Forest, Ranch and Rural Roads
Maintain vigorous growth of vegetative cover. This includes reseeding, fertilization, and application of herbicides when necessary. Periodic mowing may also be needed to control height.
Chronic 10 year life
6
Springs: Stabilization of fills where roads have been built on springs.
Forest and Ag roads in close proximity or hydrologically connected to streams and rivers (P & N, Sediment)
PWA assessment approach when available or an approach developed based on Michigan Pollutants Controlled Calculation and Documentation
Pre-condition site inspections documenting erosion types, material volumes and nutrient content of soils. Development of a comprehensive road-related erosion control plan
Engineered design and/or typicals from Handbook for Forest, Ranch and Rural Roads
Maintenance required in a timely fashion when rill erosion is greater than 2-inch depths. Annual and storm period inspections. Check the area after all major storms and at least twice per year. Timely repair of any eroded areas before creating gully formations.
Episodic Credits spread over 4 years
Road surface discharge point: alter or armor road discharge points to minimize erosion.
Forest and Ag roads in close proximity or hydrologically connected to streams and rivers (P & N, Sediment)
PWA assessment approach when available or an approach developed based on Michigan Pollutants Controlled Calculation and Documentation
Pre-condition site inspections documenting erosion types, material volumes and nutrient content of soils. Development of a comprehensive road-related erosion control plan
Engineered design and/or typicals from Handbook for Forest, Ranch and Rural Roads
Maintenance required in a timely fashion when rill erosion is greater than 2-inch depths.Annual and storm period inspections. Check the area after all major storms and at least twice per year. Timely repair of any eroded areas before creating gully formations.
Chronic 10 year life
Inboard ditch: Install or alter inboard ditch to minimize erosion.
Forest and Ag roads in close proximity or hydrologically connected to streams and rivers, only where outsloping or other methods to eliminate need for inboard ditch are infeasible. (P & N, Sediment)
PWA assessment approach when available or an approach developed based on Michigan Pollutants Controlled Calculation and Documentation
Pre-condition site inspections documenting erosion types, material volumes and nutrient content of soils. Development of a comprehensive road-related erosion control plan
NRCS Practice Standard 578: Stream Crossing Engineered design and/or typicals from Handbook for Forest, Ranch and Rural Roads
Maintenance required in a timely fashion when rill erosion is greater than 2-inch depths. Annual and storm period inspections. Check the area after all major storms and at least twice per year. Timely repair of any eroded areas before creating gully formations.
Chronic 10 year life
7
Category 2 Projects
Basic Information Credit Calculation BMP Quality Standards Credit
Issuance
Description Load Source Addressed
by BMP
Credit Calculation Method3 Italic text indicates a high
potential for a RWQCB-approved method, but the
method is not currently developed
Factors to Establish Credit Worthiness4
Design Criteria Performance Standards
Discharge Type
Addressed (Chronic or
Episodic) and Credit Life
Vegetation Enhancement, Buffers & Filter Strips
Channel Bank Vegetation: Establishing and maintaining vegetative cover on channel banks, berms, spoil, and associated areas.
Riparian areas (P & N, Sediment, Oxygen demanding substances)
PWA for in-channel erosion (where applicable)
Site inspection recording current conditions of plant stand density, exposed bank dimensions, and recession rates. Documentation that vegetation in the area where practice is to be applied was not removed in the last 3 years.
NRCS Practice Standard 342: Critical Area Planting
Annual photo documentation that the vegetation was established across the area and at the expected density.
Chronic 10 year life Vegetation establishment can take up to 3 years
Riparian Forest Buffer: areas of permanent vegetation adjacent to water bodies; managed for the purpose of filtering pollutants from runoff or ground water.
Riparian areas (P & N, Sediment, Oxygen demanding substances)
PWA for in-channel erosion (where applicable)
Site inspection recording current conditions of plant stand density, exposed bank dimensions, and recession rates. Documentation that vegetation in the area where practice is to be applied was not removed in the last 3 years.
NRCS Practice Standard 391: Riparian Forest Buffer,612: Tree/Shrub Establishment, and 490: Tree/Shrub Site Preparation
Annual photo documentation that the vegetation was established across the area and at the expected density. Plant survival rates consistent with site plan.
Chronic 20 year life Vegetation establishment can take up to 3 years
Vegetative Barrier: Permanent strips of stiff, dense vegetation established along the general contour of slopes or across concentrated flow areas.
Runoff from roads, agricultural and other disturbed areas of soil. (P & N, Sediment, Oxygen demanding substances)
Adaptation of Pennsylvania approach already approved by the NCRWQCB
Site inspection recording current conditions of plant stand density, exposed bank dimensions, and recession rates. Development of a comprehensive management plan - site plan, erosion control plan, nutrient management plan, or farm plan
NRCS Practice Standard 601: Vegetative Barrier
Annual photo documentation that the vegetation was established across the area and at the expected density. Plant survival rates consistent with site plan.
Chronic 10 year life Vegetation establishment can take up to 3 years
3 See “Credit Method Descriptions” for further detail 4 Credit worthiness of any given project is also dependent on eligibility and baseline criteria described in “Water Quality Trading Framework for the Laguna de Santa Rosa Watershed, California,” Section 4
8
Road-related Practices
Bridges: replacement of existing crossings that are unstable or that expose livestock to waterways.
Road and street crossings, equipment and animal crossings that have signs of severe erosion or manure discharges. (P & N, Sediment)
PWA methods when available; Michigan Pollutants Controlled Calculation and Documentation methods are yet to be approved
Pre-condition site inspection, application materials justify erosion rates and associated testing for nutrient concentrations.
Engineered designs and/or NRCS Practice Standard 578: Stream Crossing when implemented under NRCS technical services
Chronic 20 year life Episodic Credits spread over 4 years
Road Relocation: Relocate existing roads away from the riparian zone to minimize erosion and direct runoff into waterway.
Forest and Ag roads in close proximity or hydrologically connected to streams and rivers (P & N, Sediment)
PWA assessment approach when available or a developed approach based on Michigan Pollutants Controlled Calculation and Documentation
Pre-condition site inspections documenting erosion types, material volumes and nutrient content of soils. Development of a comprehensive road-related erosion control plan
NRCS Practice Standard 654 Road/Landing/Trail Closure and Treatment; Engineered design and/or typicals from Handbook for Forest, Ranch and Rural Roads
Maintain vigorous growth of vegetative coverings on retired roadway.
Chronic 10 year life
Water Bars: Shallow, abrupt excavated dips or troughs with an adjacent, downslope hump or mounded berm, that are built at an oblique angle across the road. Water bars are usually built on seasonal or temporary roads that receive little or no traffic during the winter.
Forest and Ag roads in close proximity or hydrologically connected to streams and rivers (P & N, Sediment)
PWA assessment approach when available or an approach developed based on Michigan Pollutants Controlled Calculation and Documentation
Pre-condition site inspections documenting erosion types, material volumes and nutrient content of soils. Development of a comprehensive road-related erosion control plan
NRCS Practice Standard 587: Structure for Water Control; Engineered design and/or typicals from Handbook for Forest, Ranch and Rural Roads
Annual and storm period inspections. Check the area after all major storms and at least twice per year. Timely repair of any eroded areas before creating gully formations. Maintenance required in a timely fashion when rill erosion is greater than 2-inch depths.
Chronic 10 year life
9
Category 3 BMPsProjects
Basic Information Credit Calculation BMP Quality Standards Credit Issuance
Description Load Source Addressed by
BMP
Credit Calculation Method5 Italic text indicates a high
potential for a RWQCB-approved method, but the
method is not currently developed
Factors to Establish Credit Worthiness6
Design Criteria Performance Standards
Discharge Type Addressed
(Chronic or Episodic) and Credit Life
Livestock/Manure Management Practices
Feed Management: Manipulating and controlling the quantity and quality of available nutrients, feedstock, or additives fed to livestock (e.g., adding phytase to feedstock).
Manure land application sites (P & N)
NTT (used to calculate how reduced nutrient content of manure would impact runoff from fields where that manure was applied) An additional calculation (or sampling of manure) would be necessary in order to quantify reduced nutrient content od manure)
Manure sampling NRCS Practice Standard 592: Feed Management + plan developed by professional animal nutritionist
Manure management plan/CNMP for regulated livestock and agronomic rate guidance by crop consultants and/or public technical staff
Chronic Annual credits up to 5 years Phosphorus response in manure is quick, soil testing response is slow.
Vegetation Enhancement, Buffers & Filter Strips
Riparian Herbaceous cover: Grasses, sedges, rushes, ferns, legumes, and forbs tolerant of intermittent flooding or saturated soils, established or managed as the dominant vegetation in the transitional zone between upland and aquatic habitats.
Riparian areas (P & N, Sediment, Oxygen demanding substances)
NTT preferred, Michigan Pollutants Controlled Calculation and Documentation; Shade-a-lator
Site inspection recording current conditions of plant stand density, exposed bank dimensions. Documentation that vegetation in the area where practice is to be applied was not removed in the last 3 years.
NRCS Practice Standard 390: Riparian Herbaceous Cover
Annual photo documentation that the vegetation was established across the area and at the expected density.
Chronic 10 year life Vegetation establishment can take up to 3 years
Critical Area Planting: Planting vegetation, such as grasses, shrubs, and trees, on highly erodible slopes.
Sites with highly erodible conditions where other vegetation establishment methods are not adequate to prevent erosion (P & N, Sediment)
NTT or Michigan Pollutants Controlled Calculation and Documentation (gully and/or subsoil erosion)
Documentation that vegetation in the area where practice is to be applied was not removed in the last 3 years.
NRCS Practice Standard 342: Critical Area Planting
Annual photo documentation that the cover crop was established across the field and at the expected density. Density should be measured using the line-transect method (Shelton & Jasa, 2009)
Chronic 20 year life
5 See “Credit Method Descriptions” for further detail 6 Credit worthiness of any given project is also dependent on eligibility and baseline criteria described in “Water Quality Trading Framework for the Laguna de Santa Rosa Watershed, California,” Section 4
10
Nutrient Management: Managing the amount (rate), source, placement (method of application), and timing of plant nutrients and soil amendments.
Cropped fields (P & N)
NTT Nutrient management records and soil testing Baseline: manure is applied at agronomic rates, outside of flood‐prone areas, and outside of the storm‐prone season
NRCS Practice Standard 590: Nutrient Management
Manure facilities with manure management plans and CNMPs, other sources use agronomic rates as approved by crop consultants and/or public technical service providers
Chronic Annual credits up to 5 years Nitrogen response is quick (annually). Phosphorus response is slow (decades).
Contour Buffer Strips: Strips of perennial vegetation alternating with wider cultivated strips farmed on the contour. Perennial vegetation strips consist of adapted species of grasses or a mixture of grasses, legumes, and forbs.
Existing steeply sloped Ag fields (P & N, Sediment)
NTT Pre-condition documentation of the site and erosion problems.
NRCS Practice Standard 332: Contour Buffer Strips
Chronic 5 year life
Cultural Practices
Conservation Cover: Establishing and maintaining perennial vegetative cover to protect soil and water resources on land retired from agricultural production or other lands needing permanent protective cover that will not be used for forage production.
Cropped fields and other highly sensitive areas under intensive land management or neglect. (P & N, Sediment)
NTT Pre-condition documentation of the site and erosion problems.
NRCS Practice Standard Standard 327: Conservation Cover
Multiple species of perennial cover, noxious weed control, and expected establishment stand density. Annual photo documentation that conservation cover is established and maintained to address the identified erosion issues. Density should be measured using the line-transect method (Shelton & Jasa, 2009)
Chronic Annual credits up to 10 years
Residue and Tillage Management: Reduced Till Managing the amount, orientation, and distribution of crop and other plant residue on the soil surface year round, limiting soil-disturbing activities to those necessary to place nutrients, condition residue, and plant crops.
Cropped fields (P & N, Sediment)
NTT Three-year history of field management establishing this as a new BMP.
NRCS Practice Standard Standard 345: Residue Management
Leave 30% or more of the soil surface covered with crop residue following tillage and planting. Density should be measured using the line-transect method (Shelton & Jasa, 2009)
Chronic Annual credits up to 10 years
No Till: A form of conservation tillage in which the seed is planted directly into vegetative cover or crop residue with little disturbance of the surface soil.
Cropped fields (P & N, Sediment)
NTT Three-year history of field management establishing this as a new BMP.
NRCS Practice Standard Standard 329: Residue Management
Annual photo documentation that the cover crop was established across the field and at the expected density, and that tillage did not occur. Density should be measured using the line-transect method (Shelton & Jasa, 2009)
Chronic Annual credits up to 10 years
11
Category 4 Projects
Basic Information Credit Calculation BMP Quality Standards Credit Issuance
Description Load Source Addressed by BMP
Credit Calculation Method7 Italic text indicates a high
potential for a RWQCB-approved method, but the method is not
currently developed
Factors to Establish Credit Worthiness8
Design Criteria Performance Standards
Discharge Type Addressed (Chronic or
Episodic) and Credit Life
Livestock/Manure Management Practices
Clean water diversion: structures to divert clean water away from manured or enriched areas
Upstream of production areas, denuded areas from animal high density (P & N)
To be determined; recommend an adaptation of the Pennsylvania calculation methods for nitrogen and phosphorus sheet flow exposure/Pollutants Controlled methodology for channelized flow
Site visit for precondition NRCS Practice Standard 362: Diversion
Vegetation establishment requirements
Chronic 10 year life
Compost manure: composting manure to reduce volume, improve suitability as a soil amendment
Land application areas receiving manure (P & N)
To be determined; recommend an adaptation of the Pennsylvania calculation methods for nitrogen and phosphorus land application/possibly NTT
Site visit for precondition Baseline: manure applied to fields is applied at agronomic rates, outside of flood‐prone areas, and outside of the storm‐prone season
Fact Sheet Composting Horse Manure; NRCS Practice Standard 317: Composting Facility, and 633: Waste Recycling (when active in CA)
Chronic 20 year life for structural practices Annual credits for non-structural practices, up to 10 years
Riparian Fencing: fencing to limit animal access to streams and riparian areas
Livestock (P & N, Sediment)
To be determined; recommend methods for nitrogen and phosphorus sheet flow exposure and bank stabilization for sediment using the Pollutants Controlled methodology for animal foot traffic
Site visit for precondition, including animal density rates, bank recession rates. Development of a comprehensive management plan - site plan, erosion control plan, nutrient management plan, or farm plan
Site plan development informed by NRCS Practice Standard 382: Fence; 614: watering facility; 528: prescribed grazing; for flash grazing approaches Grazing within riparian pastures limited to a maximum of 2 weeks per year in summer/fall or as specified by a certified rangeland manager.
Fences maintained to limit animal access; grazing in riparian areas only as desingated in plan
Chronic 20 year life
7 See “Credit Method Descriptions” for further detail 8 Credit worthiness of any given project is also dependent on eligibility and baseline criteria described in “Water Quality Trading Framework for the Laguna de Santa Rosa Watershed, California,” Section 4
12
Additional Water Sources: Moving or adding livestock water source(s) to improve livestock distribution and reduce animal time in streams.
Livestock (P & N, Sediment)
To be determined; recommend methods for nitrogen and phosphorus sheet flow exposure and bank stabilization for sediment using the Pollutants Controlled methodology for animal foot traffic
Site visit for precondition, including animal density. Development of a comprehensive management plan - site plan, erosion control plan, nutrient management plan, or farm plan
NRCS Practice Standard 614: watering facility; 528: prescribed grazing for rotational grazing approaches
Chronic 20 year life
Supplemental Feed Location: Moving or adding supplemental feed location(s) to improve livestock distribution.
Livestock/Pastures (P & N, Sediment)
To be determined; recommend methods for nitrogen and phosphorus sheet flow exposure and bank stabilization for sediment using the Pollutants Controlled methodology for animal foot traffic
Site visit for precondition, including animal density rates, bank recession rates. Development of a comprehensive management plan - site plan, erosion control plan, nutrient management plan, or farm plan
NRCS Practice Standard 382: Fence, 614: watering facility; site plan informed by 528: prescribed grazing for flash grazing approaches
Chronic 20 year life for structural practices Annual credits for non-structural practices, up to 10 years
Rotational grazing: Adjusting intensity, frequency, timing and duration of grazing to improve pasture use and water quality. May involve infrastructure (fence, watering facility, etc.)
Pastures (P & N, Sediment)
To be determined; recommend methods for nitrogen and phosphorus sheet flow exposure and bank stabilization for sediment using the Pollutants Controlled methodology for animal foot traffic
Site visit for precondition, including animal density rates, bank recession rates.Development of a comprehensive management plan - site plan, erosion control plan, nutrient management plan, or farm plan
NRCS Practice Standard 382: Fence; 614: watering facility; 528: prescribed grazing for rotational grazing and flash grazing approaches
Chronic 20 year life for structural practices Annual credits for non-structural practices, up to 10 years
Vegetation Enhancement, Buffers & Filter Strips
Channel Bank Vegetation: Establishing and maintaining vegetative cover on channel banks, berms, spoil, and associated areas.
Riparian areas (P & N, Sediment, Oxygen demanding substances)
Michigan Pollutants Controlled Calculation and Documentation; Shade-a-lator (if PWA not applicable, see Category 2)
Site inspection recording current conditions of plant stand density, exposed bank dimensions, and recession rates. Documentation that vegetation in the area where practice is to be applied was not removed in the last 3 years.
NRCS Practice Standard 342: Critical Area Planting
Annual photo documentation that the vegetation was established across the area and at the expected density.
Chronic 10 year life
13
Riparian Forest Buffer: areas of permanent vegetation adjacent to water bodies; managed for the purpose of filtering pollutants from runoff or ground water.
Riparian areas (P & N, Sediment, Oxygen demanding substances)
Michigan Pollutants Controlled Calculation and Documentation; Shade-a-lator (if PWA not applicable, see Category 2)
Site inspection recording current conditions of plant stand density, exposed bank dimensions, and recession rates. Documentation that vegetation in the area where practice is to be applied was not removed in the last 3 years.
NRCS Practice Standard 391: Riparian Forest Buffer,612: Tree/Shrub Establishment, and 490: Tree/Shrub Site Preparation
Annual photo documentation that the vegetation was established across the area and at the expected density. Plant survival rates consistent with site plan.
Chronic 20 year life Vegetation establishment can take up to 3 years
Filter Strips: A strip or area of herbaceous vegetation that removes contaminants from overland flow. Water and contaminants traveling through a filter strip must be in sheet flow prior to entering the filter strip.
Runoff from roads, agricultural and other disturbed areas of soil. (P & N, Sediment, Oxygen demanding substances)
To be determined; suggested adaptation of Pennsylvania approach, combined with EMC treatment reduction efficiency data
Site inspection recording current conditions of plant stand density, exposed bank dimensions, and recession rates. Development of a comprehensive management plan - site plan, erosion control plan, nutrient management plan, or farm plan
NRCS Practice Standard 393: Filter Strip or City of Santa Rosa Low Impact Development Technical Design Manual (Vegetated Buffer Strip) Filter strips must be designed in a way that does not re-route flow, thus creating erosion.
Annual photo documentation that the vegetation was established across the area and at the expected density.
Chronic 5 year life
Grassed waterway: A shaped or graded channel that is established with suitable vegetation to carry surface water at a non-erosive velocity to a stable outlet.
Areas of concentrated flow and gullying (P & N, Sediment, Oxygen demanding substances)
To be determined; suggested adaptation of Michigan Pollutants Controlled Calculation and Documentation for volume voided calculations
Site inspection recording current conditions of plant stand density, exposed bank dimensions, and recession rates. Development of a comprehensive management plan - site plan, erosion control plan, nutrient management plan, or farm plan
NRCS Practice Standard 412: Grassed waterway or City of Santa Rosa Low Impact Development Technical Design Manual (Vegetated Swale)
Annual photo documentation that the vegetation was established across the area and at the expected density.
Chronic 10 year life Vegetation establishment can take up to 3 years
Stream Channel Reconfiguration/Habitat Restoration
Increased Lateral Connectivity: reconnect channel to floodplain, increase flood protection capacity, allow sediment and nutrients to settle outside of channel, and allow riparian buffer areas to act as a nutrient sink.
Sediment and nutrients within the water column.
The City of Santa Rosa is currently working with the Freshwater Trust to develop credit calculation methods for these types of projects.
TBD TBD TBD TBD
Legacy Nutrient and Sediment Removal: removal of sediment and nutrient-rich organic matter within Laguna mainstem & tributary streams.
Existing sediment and nutrient-rich organic matter within Laguna mainstem & tributary streams.
The City of Santa Rosa is currently working with the Freshwater Trust to develop credit calculation methods for these types of projects.
TBD
Sonoma County Water Agency, Stream Maintenenace Program Manual, Section 5.3.4 Design Guidance for Sediment Removal
TBD TBD
14
Projects and Section 9.4 Project Design and Description
Prevented Nutrient Loading from Reduced Streambank Erosion
Sediment and nutrients from eroded streambanks.
The City of Santa Rosa is currently working with the Freshwater Trust to develop credit calculation methods for these types of projects.
TBD TBD TBD TBD
Stream Habitat Improvement and Management: Maintain, improve or restore physical, chemical and biological functions of a stream, and its associated riparian zone, necessary for meeting the life history requirements of desired aquatic species. May include stream meanders, large wood & boulder placements, constructed riffles, improved hyporheic exchange, etc.
Loads that could be addressed through instream actions but are not specifically covered by the practices listed above (lateral connectivity, legacy nutrient removal, streambank erosion).
The City of Santa Rosa is currently
working with the Freshwater
Trust to develop credit calculation
methods for these types of
projects.
TBD TBD TBD TBD
Wetlands
Constructed Wetlands: Treatment systems that use natural processes involving wetland vegetation, soils, and their associated microbial assemblages to improve water quality.
Runoff from roads, parking lots, urban landscapes, agricultural and other disturbed areas of soil. (P & N, Sediment)
To be determined; preferred approach is Rahr Malting Company methodology, also consider EMC and flow methodology
Site delineation. NRCS Practice Standard 656: Constructed Wetland Projects must be located such that they do not affect native vernal pool wetlands, and should include the use of wetland plants that thrive in nutrient‐rich environments. Designer should be a certified Professional Wetland Scientist or have earned a minimum of a Bachelor’s degree from an accredited university in wetland science, biology, biological engineering, civil and environmental engineering, ecology, soils science, environmental science, environmental studies, geology, physical geography, hydrology, or any similar biological, physical, or natural resources science curriculum with specific or
Constructed and performing as designed, based on verification monitoring
Chronic 20 year life
15
related course work in wetland ecology, botany, hydrology, ecology, or soil science and have at least four (4) years of current professional experience in wetland delineation, functional assessment, and mitigation techniques in northern California or equivalent experience
Wetland Restoration: Return of an ecosystem to a close approximation of its condition or function prior to disturbance. Can be subdivided into Re-establishment or Rehabilitation projects.
Runoff from roads, agricultural and other disturbed areas of soil with low pollutant concentrations. (P & N, Sediment)
To be determined; preferred approach is Rahr Malting Company methodology, also consider EMC and flow methodology
Site delineation. NRCS Practice Standard 657: Wetland Restoration Projects must be located such that they do not affect native vernal pool wetlands, and should include the use of wetland plants that thrive in nutrient‐rich environments. Designer criteria as specified in "Constructed Wetlands"
Constructed and performing as designed, based on verification monitoring This practice provides for multiple wetland functions and values and as such generally has to be protected from substantial NPS pollutant loadings by use of vegetative buffers and other BMPS
Chronic 20 year life
Wetland Creation: The creation of a wetland on a site location that was historically non-wetland.
Runoff from roads, agricultural and other disturbed areas of soil with low pollutant concentrations. (P & N, Sediment)
To be determined; preferred approach is Rahr Malting Company methodology, also consider EMC and flow methodology
Site delineation. NRCS Practice Standard Standard 658: Wetland Creation Projects must be located such that they do not affect native vernal pool wetlands, and should include the use of wetland plants that thrive in nutrient‐rich environments. Designer criteria as specified in "Constructed Wetlands"
Constructed and performing as designed, based on verification monitoring This practice provides for multiple wetland functions and values and as such generally has to be protected from substantial NPS pollutant loadings by use of vegetative buffers and other BMPS
Chronic, 20 year life
Water/Sediment Basins
Sediment basin: A basin constructed with an engineered outlet, formed by an excavation and/or embankment to form a sediment trap.
Sediment runoff from roads, agricultural and other disturbed areas of soil. (P & N, Sediment)
Michigan Pollutants Controlled Calculation and Documentation
Application site visit to evaluate and document existing conditions.
NRCS Practice Standard 350: Sediment Basin and/or engineered design
Maintain capacity to capture expected sediment flows.
Chronic 20 year life
16
Water and Sediment Control Basin: An earthen embankment or combination of a ridge and channel constructed across the slope of a minor water course to form a sediment trap and water detention basin with a stable outlet.
Sediment running through minor watercourses (P & N, Sediment)
Michigan Pollutants Controlled Calculation and Documentation
Application site visit to evaluate and document existing conditions.
NRCS Practice Standard 638: Water and Sediment Control Basin and/or engineered design
Maintain capacity to capture expected sediment flows.
Chronic 20 year life
17
Appendix: D
Step Entity - with Aggregator Entity - w/o Aggregator
1 Identify potential project (pre-qualified type*) Aggregator Buyer or Broker
2 Calculate potential project credits (using pre-qualified method**) Aggregator Buyer or Broker
3 Submit project and credit calculation for "Completeness Review" Aggregator Buyer
4 Conduct "Completeness Review" > Check eligibility > Verify that project type and credit calculation are consistent with those pre-qualified > Public notice that proposal has been deemed complete
RWQCB RWQCB
5 Conduct CEQA review (to determine whether project fits into Program-level EIR) CEQA Lead Agency CEQA Lead Agency
6 Contract with landowner to complete project and secure credits. Contract would include a project maintenance plan to which landowner must agree and adhere.
Aggregator Buyer
7 Implement project Aggregator, or Landowner with oversight from
Aggregator
Buyer or Broker, or Landowner with
oversight from the above
8 Hire third party verifier Aggregator Buyer
9 Verification: > Determine whether project was built based on approved design > Complete verification report > Provide notification of project completion/verification to [Aggregator? Administrator?]
Verifier Verifier
10 Turn verified credits over to Aggregator or Buyer Landowner N/A
11 Document all standard info associated with a credit Aggregator Buyer
12 Bundle credits from multiple projects Aggregator N/A
13 Sell credits to Buyer, along with assurances of credit quality and quantity Aggregator N/A
14 Track credits in a registry Administrator Administrator
15 Report to the public regarding credit generating and purchasing activities (info from registry)
RWQCB or Administrator
RWQCB or Administrator
16 Ongoing verification & reporting to Administrator (per schedule)
Verifier Verifier
* Steps for projects not pre-qualified
Entity- with Aggregator Entity- w/o Aggregator
1.1 Determine method and calculate potential project credits Aggregator Buyer or Broker
1.2 Submit project and credit calculation for initial review Aggregator Buyer
1.3 Review project and respond regarding interest/feasibility RWQCB RWQCB
1.4 If RWQCB demonstrates interest, move on to Step 2 Aggregator Buyer or Broker
** Steps for projects with no pre-qualified crediting method (these steps replace 2 through 4 above)
2 Develop credit proposal for project (more detailed than in 1.2) Aggregator Buyer or Broker
3 Submit project and credit calculation for approval Aggregator Buyer
4 Review and approve or deny credit proposal RWQCB RWQCB
4.1 If RWQCB approves proposal, move on to Step 5 above CEQA Lead Agency CEQA Lead Agency
Steps outside of individual credit process Entity- with Aggregator Entity- w/o Aggregator
Train and accredit verifiers Administrator Administrator
House verifier conflict of interest information Administrator Administrator
Examples of entities that could fill each role
Administrator - RWQCB, RCDs, other Special Districts or Government Agencies, Non-profits
Sonoma RCD
Aggregator - RCDs, other Special Districts or Government Agencies, JPAs, Non-profits, For-profits
Currently not filled
CEQA Lead Agency - must be a government agency or JPA
Individual for projects, until someone wants to take on programmatic document CEQA lead would likely be
buyer or broker
Buyer - any point source that has a water quality permit where
offsets/credits are a compliance option; philanthropists, environmental organizations, anyone who wants to buy credits for environmental
benefit
Current: Santa Rosa - WWTP Near-term potential:
Windsor – WWTP Future potential: MS4s
Broker - RCDs, other Special Districts, Non-profits, For-profits Thus far RCDs; potential
interest from SCWA, Laguna Foundation
Verifier - RCDs, other Special Districts, Non-profits, For-profits Potential interest from Gold
Ridge RCD, Laguna Foundation
Appendix: E
To: Valerie Minton
Sonoma RCD
Date: July 17, 2014
From: Mark Kieser
Joanna Allerhand
Josh Kieser
Kieser & Associates, LLC
cc:
RE: PRELIMARY DRAFT – Laguna de Santa Rosa WQT Program
Framework: Project Verification
Overview:
Verification of credit generating practices is a crucial component which ensures credibility,
transparency, and maintenance of best practices in water quality trading (WQT) programs.
Verifiers are typically accredited experts who act as third party reviewers of actions that reduce
pollutant loading to surface waters for the purposes of credit generation for WQT. They work
directly, in the field, with credit generating project developers to ensure that practices are
implemented and functioning as planned. While specific roles and responsibilities may vary in
form between programs or even project sites, general verification processes typically follow set,
standard protocols. As such this Technical Memorandum provides relevant background for
project verification in WQT in the context of its application in a Laguna de Santa Rosa WQT
program now under development.
The Conservation Technology Information Center (CTIC) calls attention in their Agricultural
Community Water Quality Trading Guide to the importance of verification in WQT. Particularly
noting the importance of proper implementation and maintenance of practices for long-term
successes, CTIC suggests that verifying and certifying credit generating practices are absolutely
imperative.1 Monitoring to verify load reductions and trade ratios is further explicitly supported
1 Conservation Technology Information Center. (2006, July). Getting Paid for Stewardship: An Agricultural
Community Water Quality Trading Guide. Funded by U.S. Environmental Protection Agency (EPA). Page 32.
K Environmental Science and Engineering MEMORANDUM
IESER ASSOCIATES, LLC &
by US EPA policy and guidelines as a means to ensure the efficacy of WQT on the ground.2
However, quantitative sampling and monitoring of water quality is not typically part of third-
party verification.
To better understand the importance of verification in water quality trading, this Technical
Memorandum explores what a verifier does, how they function within a program, and who might
best play the part. Referencing specific active programs throughout, this memorandum further
investigates potential benefits and challenges and, ultimately, explains why verification is
necessary for creating and maintaining a credible, transparent, and equitable trading program.
This memorandum therefore includes the following sections:
1. Definition of a Verifier
2. Verifiers in Water Quality Trading
3. Verifier Roles & Responsibilities
4. General Verification Processes
5. Who should be a Verifier?
6. Benefits of Verification
7. Challenges & Potential Costs
8. Proposed Laguna WQT Program Verification Process
Works cited in the document are listed in Section 9. Attachment A contains relevant DRAFT
forms and supporting documentation for a proposed project verification framework for a Laguna
de Santa Rosa WQT Program.
1. Definition of a Verifier
A third party verifier in water quality trading programs is typically considered an administrative
authority or individual that ensures credit generating practices are installed as designed and
performing as expected.3 The Willamette Partnership, which has refined verifier roles and
protocols in select trading programs in the Pacific Northwest, defines third party verification as:
“An independent expert assessment of the accuracy and conformity of a Project Developer’s
Credit Estimate with agreed upon criteria.”4 This includes ensuring that plans for monitoring and
maintenance are appropriately developed and implemented and that offset credits are properly
estimated.5 While there may be several active “third parties” functioning within in a program,
third party verifiers are specifically chosen and trained to verify credits for trade.
2 United States Environmental Protection Agency. (2003, January 13). Final Water Quality Trading Policy. EPA
Water: Water Quality Trading. 3 Klang, James, Joanna Allerhand, Andrew Fang, Mark Kieser. (2013, June 14). Results and Findings of Task 2 –
Conduct a Basic Literature Search for the Central Big Sioux River Water Quality Trading Project. Memorandum.
Kieser & Associates, LLC. Kalamazoo, MI. Page 7. 4 Willamette Partnership. (2012, June). Verification Protocol: Pilot Version 1.0. In It Together: A How-To
Reference for Building Point-Nonpoint Water Quality Trading Programs. Page 2. 5 Ibid, pages 3-4.
2. Verifiers in WQT Programs
Verifiers play a crucial part in maintaining the validity of markets. Verifying credit generating
practices boosts market participant confidence that credits faithfully and fairly represent actual
water quality benefits and offset impacts.6 In this manner, a program may avoid misstatements
and conform to standards for accounting and credit generation.7
Not only do verifiers ensure the authenticity of credits by verifying that proposed projects are
implemented as designed, they also ensure that all necessary supporting documentation is
completed.8 Thus, by following specific, standardized guidance to assess projects, verifiers can
provide confidence to stakeholders and investors. This further bolsters trust and market
transparency.9 Verification protocols will also intrinsically function within and support the
development of general crediting and accounting protocols.
3. Verifier Roles & Responsibilities
While verification processes should be standardized within a program, specific verifier roles and
responsibilities may differ between programs. The Willamette Partnership, in their pilot
Verification Protocol suggests three broad verifier roles: 1) reviewing credit estimations; 2)
verifying measurement accuracy; and 3) submitting the verification report.10
Examples of
specific responsibilities include ensuring that data collection and management are accurate and
consistent, that projects are implemented as planned, and that contracts ensure proper protection,
maintenance, and monitoring of credits.11
4. General Verification Process
Specific details of verification may differ between and even within programs. The proposed
Laguna de Santa Rosa WQT Program Verification Process is outlined in Section 8. Generally,
verification processes include BMP definitions and design standards, site inspections during
construction and operation, record keeping, and reporting protocols.12
In Pennsylvania’s Water
Quality Credit Trading program, credits must go through a three step process – certification,
6 Ibid, page 2.
7 Ibid.
8 Joint Regional Agreement on Water Quality Trading. (2013, April 9-10). Interagency Workshop #1. Union, WA
98592. 9 Willamette Partnership. (2012, June). Verification Protocol: Pilot Version 1.0. In It Together: A How-To
Reference for Building Point-Nonpoint Water Quality Trading Programs. Page 2. 10
Ibid, page 1. 11
Willamette Partnership. (2012, June). Verification Protocol: Pilot Version 1.0. In It Together: A How-To
Reference for Building Point-Nonpoint Water Quality Trading Programs. Page 7. 12
Klang, James, Joanna Allerhand, Andrew Fang, Mark Kieser. (2013, June 14). Results and Findings of Task 2 –
Conduct a Basic Literature Search for the Central Big Sioux River Water Quality Trading Project. Memorandum.
Kieser & Associates, LLC. Kalamazoo, MI. Page 7.
verification, and registration – before becoming eligible for trading.13
Similar processes exist
among other active programs as well.
The verification process must be ongoing throughout the life of the credit generating practice,
and so is likely to span several years. The Willamette Partnership requires full verification in the
1st, 5
th, 10
th, and 20
th years, with check-ins between for temperature credits involving riparian
restoration for thermal credits. Full verification in this program includes eligibility
documentation and credit calculation reviews, as well as an on-site visit.14
An example timeline from this process includes:15
Year 1: Review credit generation information; Confirm as-built conditions for actions;
Confirm contracts are in place for protection, maintenance, monitoring.
Year 2-4: Streamlined review of annual monitoring reports.
Year 5: Visit site to confirm data in annual monitoring reports. Change Verifier.
Year 6-9: Streamlined review of annual monitoring reports.
Year 10: Visit site to confirm data in annual monitoring reports.
Year 11: Continue as required for the active credit life of a project.16
Throughout these processes, verifiers will complete summary reports which should be available
to buyers, regulators and the public (as specified by program rules or guidance), as well as field
notes with opinions of credit estimates, activities, and any other findings. Thorough recording of
verification activities supports program transparency and the accurate application of crediting
values.
5. Who Should be a Verifier?
Third party verifiers must be chosen carefully, with equity, transparency, and potential conflicts
of interest in mind. CTIC calls attention to common agricultural community concerns about
allowing government officials to access their land for verification. These concerns can create a
barrier to trading and should be respected by opening verification practices to alternative third
parties.17
Still, regardless of who performs verification, communicating with landowners about
13
Ibid, page 13. 14
Willamette Partnership. (2012, June). Verification Protocol: Pilot Version 1.0. In It Together: A How-To
Reference for Building Point-Nonpoint Water Quality Trading Programs. Page 7. 15
See Annex 1 for a more detailed overview of the Willamette Partnership’s verification process 16
Willamette Partnership. (2012, June). Verification Protocol: Pilot Version 1.0. In It Together: A How-To
Reference for Building Point-Nonpoint Water Quality Trading Programs. Page 3. 17
Conservation Technology Information Center. (2006, July). Getting Paid for Stewardship: An Agricultural
Community Water Quality Trading Guide. Funded by U.S. Environmental Protection Agency (EPA). Page 10.
when, where, how, and why verifiers need to access their properties is important for maintaining
trust and transparency in verification processes.18
As is the case with the Willamette Partnership, verifiers should be qualified to review and
understand ecosystem currencies, including the assessment of underlying actions and approved
metrics.19
This standard is echoed in Minnesota’s policies which require all bilateral permits to
be verified by qualified professionals. These could include professional engineers, certified crop
consultants, NRCS, and/or soil and water conservation staff.20
Similarly, Ohio’s Great Miami
River trading program utilizes Soil & Water Conservation Districts (SWCDs) to handle both
credit applications and verifying credits.21
Importantly, those having conflicts of interest with credit generators should not be verifying
practices for these same generators. For example, agricultural consultants having long standing
relationships with agricultural concerns may not be best suited to verify credits for those
concerns.22
Such conflicts of interest detract from a project’s credibility. In the Laguna program
specifically, RCDs, while trusted entities, may not be appropriate verifiers for projects they have
previously brokered. To ensure credibility, verifiers should be well trained, accredited, and
willing to report truthfully about the state of projects and their relationships with credit
generators. Verifiers must be willing to accept a certain amount of liability for verified credits.
Where conflicts of interest arise, verifiers must notify the appropriate administrative entity
immediately.23
6. Benefits of Verification
Verification benefits water quality trading programs in a number of important ways. Perhaps
most substantially, verification ensures that practices are actually being implemented which will
positively affect the watershed in question. It further assures offset purchasers that credits have
met quality and sustainability standards laid out by program administration.24
Establishing a
verification process will also help to standardize monitoring and reporting practices. From the
18
Conservation Technology Information Center. (2006, July). Getting Paid for Stewardship: An Agricultural
Community Water Quality Trading Guide. Funded by U.S. Environmental Protection Agency (EPA). Page 34. 19
Willamette Partnership. (2012, June). Verification Protocol: Pilot Version 1.0. In It Together: A How-To
Reference for Building Point-Nonpoint Water Quality Trading Programs. Page 5. 20
Klang, James, Joanna Allerhand, Andrew Fang, Mark Kieser. (2013, June 14). Results and Findings of Task 2 –
Conduct a Basic Literature Search for the Central Big Sioux River Water Quality Trading Project. Memorandum.
Kieser & Associates, LLC. Kalamazoo, MI. Page 18. 21
Ibid, page 29. 22
Steinzor, Rena, Nick Vidargas, Shana Jones, and Yee Huang. (2012, May). Water Quality Trading in the
Chesapeake Bay. Briefing Paper No. 1205 by the Center for Progressive Reform. Page 13. 23
Willamette Partnership. (2012, June). Verification Protocol: Pilot Version 1.0. In It Together: A How-To
Reference for Building Point-Nonpoint Water Quality Trading Programs. Page 5-6. 24
Ibid, page 3.
public’s point of view, consistent and accurate verification provides evidence that the program is
actually delivering the ecological benefits which it aims to achieve.25
7. Challenges & Potential Costs
As mentioned in Section 5, conflicts of interest may present a significant challenge to credible
verification if left unchecked. It is therefore imperative that verifiers work independently,
transparently, and in a credible, nondiscriminatory manner.26
The possibility of fraud or
misrepresentation illuminates the need for such accurate and comprehensive project
verification.27
The Willamette Partnership addresses this issue, in part, by placing a five-year cap
on verification services between an individual verifier and a project developer.28
The volume of trades and the scope of trading programs can also present new challenges. A
nonpoint-point source trading scheme could potentially involve hundreds of nonpoint sources all
providing reductions sought by a single point source.29
The diversity of each nonpoint source and
of the BMPs implemented by each source creates verification challenges on multiple levels.
Point sources, regulatory agencies, and public tracking groups, to name a few, all have a stake in
the integrity of credit generating practices. Further diversity between trading programs amplifies
this challenge.30
Guidelines, protocols, and standards of practice are thus critically important for both credit
generators and verifiers. Variables may include: Cost balancing, conflicts of interest, educational
needs of those with whom verifiers may work, and more.31
However, by defining eligibility for
verifiers, standardizing review and decision making practices, and preparing dispute resolution
practices, a program can remove uncertainty and shift liabilities to better suit proper
implementation.32
The Willamette Partnership, for example, has written into their protocols a way to deal with the
inherent uncertainty involved in field data collection.33
In this program, credits must fall within a
25
Ibid. 26
Willamette Partnership. (2012, June). Verification Protocol: Pilot Version 1.0. In It Together: A How-To
Reference for Building Point-Nonpoint Water Quality Trading Programs. Page 6. 27
Steinzor, Rena, Nick Vidargas, Shana Jones, and Yee Huang. (2012, May). Water Quality Trading in the
Chesapeake Bay. Briefing Paper No. 1205 by the Center for Progressive Reform. Page 13. 28
Willamette Partnership. (2012, June). Verification Protocol: Pilot Version 1.0. In It Together: A How-To
Reference for Building Point-Nonpoint Water Quality Trading Programs. Page 6. 29
Joint Regional Agreement on Water Quality Trading. (2013, April 9-10). Interagency Workshop #1. Union, WA
98592. 30
Ibid. 31
Ibid. 32
Ibid. 33
Willamette Partnership. (2012, June). Verification Protocol: Pilot Version 1.0. In It Together: A How-To
Reference for Building Point-Nonpoint Water Quality Trading Programs. Page 4.
15% accuracy range compared to the proposed practice in order to be considered verifiable.34
This 15% standard addresses inherent discrepancies due to reporting uncertainties, resulting from
potential sampling and calculation differences.35
Directly incorporating such variables into
program protocols, programs can much more effectively avoid the dangers of uncertainties that
hold the potential to cause significant discrepancies.
Potential costs of verifiers will vary depending on who is conducting verification and their level
of involvement in project processes. In the Great Miami River Watershed WQCT Program, for
example, SWCDs provide assistance to producers which includes verification roles. Overall, the
average initial assistance cost was $527 per project. This figure includes costs covering
recruitment, design and implementation, credit calculation, and more.36
The Willamette
Partnership offers certified verifiers a rate of $75/hour. At 15 to 20 hours for verification
practice, verification may cost up to $1500 per site. Again, the range of potential costs may
depend on the level of involvement as well as the financing structure of the program, including
variables such as administrative costs and opportunities for bundling costs.
8. Proposed Laguna WQT Program Verification Process
This section proposes a preliminary verification process for a WQT framework in the Laguna. It
is envisioned that this will be presented to and discussed with stakeholders to identify issues and
additional needs, refine details, and serve as an initial template that can be updated and adapted
as the remainder of the WQT framework is developed. The term “offset” is used in the current
version of this proposed process to reflect the current “Pre-TMDL” offsetting provisions for the
City of Santa Rosa. As appropriate, these can be modified to better represent a future WQT
framework where such offsets will likely become WQT credits under a Laguna TMDL.
Fundamentally, project verification activities in the Laguna must ensure that BMPs are installed
and operating appropriately. This, in turn, ensures nutrient reductions for offsets are achieved to
maintain program credibility. The verification process involves selecting an accredited verifier
and scheduling site visits to inspect BMPs upon completion of construction, as well as at
regularly scheduled intervals following construction through the life of the practice. These
intervals can be established using a verification timeline (a timeline template is provided in
Attachment A).
During the initial inspection, the verifier shall inspect the BMP and perform the following:
34
Ibid. 35
Ibid. 36
Kieser, Mark S., and Jamie L. McCarthy. (2012, January 23). Great Miami River Watershed Water Quality Credit
Trading Program. EPI Water. Grant Agreement no. 265212. Page 19.
Determine whether the practice was built based on the approved design. Any deviations
should be noted and these should be assessed to determine potential impacts on treatment
efficiency.
Complete a verification report, documenting the following: project information, verifier
identification, offset generation begin date, and whether the practice is operational as
designed. (A template for a verification report is provided in Attachment A.)
Provide notification of project installation completion. (A template for a notification form
is provided in Attachment A.)
Maintain a verification log describing verification actions and dates achieved. (A
template for a verification log is provided in Attachment A.)
Another potential role for verifiers may be to review credit estimations in the Laguna. This,
however, will need to be discussed with involved parties.
During subsequent, regularly scheduled inspections, the verifier would perform the following
tasks:
Inspect the BMP for any conditions that might impact treatment effectiveness.
Provide notification of completion of annual project inspection. (A template notification
form is provided in Attachment A.)
Complete a verification report (as described previously).
Maintain a verification log (as described previously).
The Laguna WQT Program administrator or the authorizing agency also should ensure that
verifiers do not have any conflicts of interest when performing their inspections. It is
recommended that verifiers sign and adhere to a conflict of interest code. This code describes the
program conflict of interest policy and potential sources of conflict. An example conflict of
interest code and accompanying conflict of interest signature form are provided in Attachment A.
The following verification documents and forms are also provided in Attachment A:
Example outline for a project verification protocol outline (Form 1)
Verification report (Form 1.1)
Verification log (Form 1.2)
Example verifier conflict of interest code (Form 1.3)
Conflict of interest form (Form 1.4)
Notification of project installation completion (Form 1.5)
Notification of annual project inspection (Form 1.6)
Water quality monitoring efforts are expected for this offset program and will be part of
verifying reduction values of offset and back-up pool offsets. Such monitoring may, however, be
a responsibility of the permitting agency or other independent third party. Such efforts will be
tailored separately in a Laguna de Santa Rosa WQT Program Framework document.
9. Works Cited
Conservation Technology Information Center. (2006, July). Getting Paid for Stewardship: An
Agricultural Community Water Quality Trading Guide. Funded by U.S. Environmental
Protection Agency (EPA).
Joint Regional Agreement on Water Quality Trading. (2013, April 9-10). Interagency Workshop
#1. Union, WA 98592.
Kieser, Mark S., and Jamie L. McCarthy. (2012, January 23). Great Miami River Watershed
Water Quality Credit Trading Program. EPI Water. Grant Agreement no. 265212.
Klang, James, Joanna Allerhand, Andrew Fang, Mark Kieser. (2013, June 14). Results and
Findings of Task 2 – Conduct a Basic Literature Search for the Central Big Sioux River Water
Quality Trading Project. Memorandum. Kieser & Associates, LLC. Kalamazoo, MI.
Steinzor, Rena, Nick Vidargas, Shana Jones, and Yee Huang. (2012, May). Water Quality
Trading in the Chesapeake Bay. Briefing Paper No. 1205 by the Center for Progressive Reform.
Willamette Partnership. (2012, June). Verification Protocol: Pilot Version 1.0. In It Together: A
How-To Reference for Building Point-Nonpoint Water Quality Trading Programs.
Willamette Partnership. (2013, June). Issuing Credits in Oregon: Some Case Examples.
Presentation.
Project Verification Packet (v1; 3/14/14)
Attachment A -
Project Verification Packet
Form 1 – Verification Protocol – Example Outline37
Form 1.1 – Verification Report38
Form 1.2 – Verification Log39
Form 1.3 – Conflict of Interest Code – Example40
Form 1.4 – Conflict of Interest Form41
Form 1.5 – Notification of Completion of Project Installation42
Form 1.6 – Notification of Annual Project Inspection43
37
Derived from: Willamette Partnership. (2009, September 1). Verification Protocol. Willamette Ecosystem
Marketplace, Pilot Version 1.0, General Crediting Protocol. 38
Derived from: Willamette Partnership. (2012, October 3). Verification Report. Ecosystem Credit Accounting
System, Version 1.1. 39
Derived from: Willamette Partnership. (2012, October 3). Verification Report. Ecosystem Credit Accounting
System, Version 1.1. 40
Willamette Partnership. (2010, February 22). Conflict of Interest Code. Ecosystem Credit Accounting System. 41
Derived from: Willamette Partnership. (2012, December 17). Conflict of Interest Form. Ecosystem Credit
Accounting System, Version 1.1. 42
Derived from: The Miami Conservation District. (2006). Notification of Completion of Project Installation. Great
Miami River Watershed Water Quality Credit Trading Program. 43
Derived from: The Miami Conservation District. (2006). Notification of Annual Project Inspection. Great Miami
River Watershed Water Quality Credit Trading Program.
Project Verification Packet (v1; 3/14/14)
Form 1: Verification Protocol – Example Outline
1. Verification Process Overview
2. Accredited Verifier Overview
3. Verification Timeline
Month/Year: Activities:
4. Completing the Verification Process
Project Verification Packet (v1; 3/14/14)
Form 1.1: Verification Report
Date submitted:
Submitted by:
Project Information
Project Name:
Project Number:
Service Area
Subwatershed:
Municipality:
Other:
Project Location
Latitude/Longitude:
Property Area (acres):
Project Developer
Organization:
Contact Person:
Phone/Email:
Verification
Verifier 1
Name:
Title:
Offset Types:
Verified:
Accreditation Number:
Verifier 2
Name:
Title:
Offset Types:
Verified:
Accreditation Number:
Project Verification Packet (v1; 3/13/14)
Verification Activity Offset Practice Type
BMP
Start
Date
BMP
End
Date
Practice
Operational
as Designed?
Verification
Date Comments:
□Yes □ No
□Yes □ No
□Yes □ No
□Yes □ No
□Yes □ No
□Yes □ No
□Yes □ No
□Yes □ No
□Yes □ No
□Yes □ No
□Yes □ No
□Yes □ No
_________________ ___________
Verifier Date
Project Verification Packet (v1; 3/13/14)
Form 1.2: Verification Log
Date submitted:
Submitted by:
Action Date Achieved (initial)
Determining eligibility
Project application completed
Project funded
Determining offset quantity
Baseline conditions verified
Offset calculation verified
Final offset quantities determined
Preparing for verification
Verification Notice and Conflict of Interest Form submitted
Installation verification
Site visited to confirm project installation
Operational verification
Long-term maintenance plan in place to protect activities for
required times and geographies
Monitoring plans in place
Annual verification conducted
Documentation submission
Prepare detailed Verification Report
Documentation submitted for review
Reviewed report submitted for recording purposes
Project Verification Packet (v1; 3/13/14)
Form 1.3: Conflict of Interest Code
*This CONTENT was created in part through the adaptation of procedures and publications
developed by the Willamette Partnership (www.willamettepartnership.org), but is not the
responsibility or property of the Willamette Partnership.*
Overview
This document describes the conflict of interest code for the Laguna de Santa Rosa WQT
Program Administrator, with particular focus on conflicts between offset project developers and
verifiers. After becoming an accredited verifier and as an agreement is reached between a
verifier and project developer, the verifier must submit a Conflict of Interest Form with a notice
of verification services to the Laguna WQT Program Administrator. The purpose of this form is
to protect the integrity of the verification process and the quality of a project developer’s offsets
by identifying and avoiding situations in which a verifier may be viewed as having an impaired
ability to objectively review a potential participant’s estimated offsets, usually from a pre-
existing business or personal relationship.
If there is low risk of a conflict of interest, the verifier can initiate verification activities. If the
risk of conflict of interest is substantial, a verifier can either abandon the proposed agreement or
work with the Laguna WQT Program Administrator to identify measures to alleviate conflict of
interest risk areas, or appeal the decision. The Laguna WQT Program Administrator will
periodically audit Conflict of Interest Forms.
Policy
Complex relationships may exist between a verifier and a project developer. Thus it may be
difficult to make an obvious judgment regarding potential conflict of interest. A conflict of
interest is a situation in which a verifier has competing professional and/or personal interests that
could impede their ability to objectively review and evaluate an offset project developer’s
estimated offsets. A conflict of interest could also involve a situation where the appearance of
impropriety could undermine confidence in the verifier’s ability to assess the estimated offsets.
The Laguna WQT Program Administrator will use objective criteria and professional judgment
to formulate conflict of interest opinions and will work with all interested parties to resolve
problem areas. If the Laguna WQT Program Administrator determines a conflict might exist, it
will request the verifier demonstrate how it can be avoided, eliminated, or otherwise mitigated.
As necessary, the Laguna WQT Program Administrator may request additional information to
assist in making this determination. Factors for evaluating potential conflict of interest include
the nature of past and present relationships, prior and existing service commitments, magnitude
of financial relationships, and the sensitivity of proposed work.
Cause for automatic determination of conflict of interest
- A verification body and project developer share any management
- Preparation of an offset project developer’s offset report: A verifier is prohibited
from consulting on or preparing any part of an offset project developer’s offset report,
regardless of the point in time that that may have occurred. The verifier must declare all
of its previous, existing, and planned involvement with an offset project developer’s
offset monitoring, accounting, and reporting activities.
Project Verification Packet (v1; 3/13/14)
- A financial stake in offsets being sold from the project: A verifier is prohibited from
having any financial stake in the quantity of offsets sold from a project. A verifier is also
prohibited from providing verification services to any client who provided more than 3%
of the verifier's annual revenue from activities other than verification in any year over the
prior 3 years.
Potentially conflicting services
The following list of services may cause a conflict of interest. The list is not exhaustive, nor do
these services automatically constitute a conflict of interest.
- Designing or developing offset information systems
- Developing offset calculation methodologies
- Designing projects to explicitly create offsets
- Brokering, advising, or assisting in any way in offset programs
- Preparing or producing offset-related manuals for the project developer
- Legal and expert services unrelated to verification
Appeal process
If a verifier receives a notice of conflict of interest from the Laguna WQT Program
Administrator, it can mitigate its conflict or appeal the notice. A mitigation plan must be
submitted to the Laguna WQT Program Administrator for review and at minimum include:
Demonstration that any conflicted individuals have been removed or insulated from the project;
Explanation of any changes to organizational structure or verification team; Other circumstances
that specifically address conflicts.
A verifier can also appeal a notice of conflict of interest to the Laguna WQT Program
Administrator. All information will be kept confidential. It will determine a final answer by an
administrative vote and this decision will be binding.
Rescission of Accreditation
If the verifier is found to have intentionally violated the conflict of interest code, the Laguna
WQT Program Administrator reserves the right to rescind a verifier’s accreditation for any
appropriate period of time.
Project Verification Packet (v1; 3/13/14)
Form 1.4: Conflict of Interest Form
Date submitted:
Submitted by:
Project Information
Site name: Subwatershed:
Project ID: Service area:
Project developer: Project location (lat/long):
Contact person: Project size (hectares):
Title: Other:
Phone/Email:
Verifier(s)
Verifier 1: Verifier 2:
Offset types verified: Offset types verified:
Accreditation number: Verifier accreditation number:
Valid until: Valid until:
Offset Quantity & Types:
Verification Activity Offset Type
Start
Date
End
Date
Project
Operational?
Verification
Date
□Yes
□ No
Based on the information provided, we believe our risk of Conflict of Interest for
verification of the project site(s) is:
□ High □ Medium □ Low
Please Explain:
To the best of my knowledge, I __________ attest that the information provided in support of
this conflict of interest form is true and complete and that I have complied with the project's
current Conflict of Interest Code.
____________________ ____________
Verifier Signature Date
Project Verification Packet (v1; 3/13/14)
Form 1.5: Notification of Project Installation Completion
Date submitted:
Submitted by:
This serves as notice that the installation of best management practices as specified in the Project
Scope of Services for Agreement No. ________ is complete.
Notification by: Print Name:
Signature:
Date: RCD District or County Name:
Project Information:
ID:
Location (lat/long):
Name of Owner/Operator: Telephone Number:
Address:
Send completed notification to:
Project Verification Packet (v1; 3/13/14)
Form 1.6: Notification of Annual Project Inspection Completion
Date submitted:
Submitted by:
This serves as notice that the installation of best management practices as specified in the
Project Scope of Services for Agreement No. _______ have been inspected and are
operating as designed.
Notification by: Print Name:
Signature:
Date: RCD District or County Name:
Project Information:
ID:
Location (lat/long):
Name of Owner/Operator: Telephone Number:
Address:
Send completed notification to: