Under this bill, DNR may authorize a permit holder to discharge a pollutant
above the levels authorized in the permit if the permit holder purchases credits from
a clearinghouse that has contracted with the Department of Administration. The
purchase of credits must result in an improvement in water quality, and the increase
and reduction in pollutants under the agreement must involve the same pollutant
or the same water quality standard and occur within the same area, as determined

by DNR. That area must be the largest area possible within this state to facilitate
implementation of the water pollution trading program while achieving water
quality standards and any federally approved total maximum daily load allocations.
The bill also allows DNR to authorize a permit holder to discharge a pollutant above
the levels authorized in the permit if the permit holder enters into a contract with
a third party that works with other sources of water pollution to reduce the amount
of water pollution that those other sources cause.
The bill requires DOA to solicit vendors to operate as the single clearinghouse
in this state for the purpose of buying and selling water pollution credits. The
department may not contract with a clearinghouse unless the clearinghouse has
established certain policies and procedures specified under the bill. Under the bill,
the term of a contract between DOA and a clearinghouse is five years.
Under the bill, the clearinghouse that contracts with DOA must generate
credits by entering into agreements with parties to reduce pollution; maintain a
bank of credits; sell credits to any person; establish and maintain a centralized
registry of credits generated and sold in this state; and maintain an Internet-based
platform to facilitate the location of potential buyers, available credits, and other
information that will facilitate credit transactions. Credits must be generated with
the clearinghouse at a ratio of one credit for every 1.2 units, at a minimum, of
pollution reduction. When the clearinghouse contracts with a party for pollution
reduction activities, the clearinghouse must also seek to minimize transaction costs,
maximize the performance of the pollution reduction activities, and reduce the
overall amount of pollutants introduced into the applicable area.
The bill also allows DOA to contract with the clearinghouse to further the
implementation of any adaptive management, multidischarger variance, water
quality trading, or future market-based water quality programs in this state.
For further information see the state and local fiscal estimate, which will be
printed as an appendix to this bill.
The people of the state of Wisconsin, represented in senate and assembly, do
enact as follows:
SB91,1 1Section 1. 16.9685 of the statutes is created to read:
SB91,2,6 216.9685 Clean water clearinghouse. (1) In this section, “water pollution
3prevention or environmental enhancement services” means any activity, practice, or
4project undertaken by any person who certifies that it will result in a quantifiable
5reduction of a specified pollutant in the overall mass balance of water pollution over
6a specified period of time.
SB91,3,4
1(2) The department shall solicit services from a single clearinghouse to perform
2the functions under subs. (3) to (5). The department may not enter into a contract
3with a clearinghouse under this section unless the department determines that all
4of the following requirements have been met:
SB91,3,75 (a) The clearinghouse has established or is capable of establishing the contract
6terms, conditions, and information required to document and enforce transactions
7under sub. (3) (a) and (c) in a commercially reasonable manner.
SB91,3,118 (b) The clearinghouse has established a policy that requires a commercially
9reasonable amount of financial reserves, insurance, reserve credit pool, or other risk
10management mechanism for use in the event that a party defaults on an agreement
11under sub. (3) (a).
SB91,3,1312 (c) The clearinghouse has established a commercially reasonable process for
13soliciting and entering into transactions under sub. (3) (a) and (c).
SB91,3,1614 (d) The clearinghouse has established a clearly defined fee structure describing
15the manner in which and the amount that the clearinghouse will be paid for
16facilitating and executing transactions under sub. (3) (a) and (c).
SB91,3,1817 (e) The clearinghouse has the capability to facilitate and execute transactions
18under sub. (3) (a) and (c).
SB91,3,2019 (f) The clearinghouse has satisfied all other applicable requirements to
20transact business in this state.
SB91,3,2221 (g) The clearinghouse and the department have consulted with the department
22of natural resources about the terms of the contract.
SB91,4,2 23(3) The clearinghouse with which the department enters into a contract under
24sub. (2) shall be the primary entity responsible for facilitating a financially stable

1market for the activities described in this subsection and sub. (4) and shall do all of
2the following:
SB91,4,73 (a) Produce credits by entering into contracts with other parties to undertake
4water pollution prevention or environmental enhancement services. Each credit
5generated by a contracting party under this paragraph shall require the party to
6undertake at least 1.2 times that amount in water pollution prevention or
7environmental enhancement services.
SB91,4,88 (b) Maintain a bank of credits produced or to be produced under par. (a).
SB91,4,99 (c) Sell credits produced under par. (a) to any person.
SB91,4,1310 (d) Seek to establish, with the approval of the department of natural resources,
11methods for determining the amount of credits that may be produced by various
12water pollution prevention or environmental enhancement services. These methods
13may include tables and models based on the best available scientific protocols.
SB91,4,1814 (e) When contracting with a party under par. (a), determine the amount of
15credits that may be produced by the water pollution prevention or environmental
16enhancement services by using the methods established under par. (d) or, if such
17methods are not available, by using environmental impact modeling approved by the
18department of natural resources.
SB91,4,1919 (f) When contracting with a party under par. (a), seek to do all of the following:
SB91,4,2020 1. Minimize transaction costs.
SB91,4,2221 2. Maximize the performance of the water pollution prevention or
22environmental enhancement services.
SB91,4,2423 3. Reduce the overall amount of pollutants introduced into the applicable
24hydrologic area, as defined under s. 283.84 (1m) (e) 2., over time.
SB91,5,10
1(g) Establish and maintain a centralized registry of all credits generated and
2sold in this state and of the verification of all such credits and maintain an
3Internet-based platform to facilitate the location of potential credit buyers, available
4credits, and any other information that will facilitate credit transactions. The
5clearinghouse shall report this and other pertinent trading information annually to
6the department and to the department of natural resources. The clearinghouse shall
7enter into a data-sharing agreement with the department of natural resources to
8facilitate the clearinghouse's ability to collect and make publicly available pertinent
9information relating to water quality improvement programs administered in this
10state.
SB91,5,12 11(4) The clearinghouse with which the department enters into a contract under
12sub. (2) may do any of the following:
SB91,5,1613 (a) Charge fees and use funds received for general program operations of the
14clearinghouse, including costs associated with facilitating transactions, purchasing
15water pollution prevention or environmental enhancement services, and repayment
16of funds granted or loaned to the clearinghouse.
SB91,5,2117 (b) Hold excess funds in trust for the purpose of making grants, in collaboration
18with county land conservation offices, the department of natural resources, or the
19department of agriculture, trade and consumer protection, for targeted water
20pollution prevention, water pollution remediation, and other environmental
21enhancement projects that improve the water quality of this state.
SB91,5,2422 (c) Establish a reserve pool of credits produced under sub. (3) (a) and maintain
23the reserve credit pool for the purpose of maintaining a risk management mechanism
24under sub. (2) (b).
SB91,6,2
1(d) Conduct research on other innovative approaches to environmental
2improvement.
SB91,6,6 3(5) The department, in consultation with the department of natural resources,
4may contract with the clearinghouse under sub. (2) to further the implementation
5of any adaptive management, multidischarger variance, water quality trading, or
6future market-based water quality programs in effect in this state.
SB91,6,11 7(6) The term of a contract entered into under sub. (2) shall be 5 years. The
8department may terminate a contract entered into under sub. (2) if the clearinghouse
9fails to meet any of the requirements under this section or rules promulgated under
10s. 283.84. The department shall give the clearinghouse at least 120 days' notice of
11the default and a right to cure before terminating a contract under this subsection.
SB91,2 12Section 2. 283.84 (1) (f) of the statutes is created to read:
SB91,6,1613 283.84 (1) (f) Reaches a binding, written agreement with a clearinghouse that
14holds a valid contract under s. 16.9685 to purchase credits from the clearinghouse,
15if the clearinghouse has consulted with the department about the agreement to the
16extent required under the contract under s. 16.9685.
SB91,3 17Section 3. 283.84 (1) (g) of the statutes is created to read:
SB91,7,318 283.84 (1) (g) Reaches a binding, written agreement approved by the
19department with a 3rd party under which the 3rd party agrees to work with one or
20more persons, other than the permit holder, to reduce the amount of water pollution
21that those persons cause below the levels of water pollution that those persons cause
22when the agreement is reached. If an agreement is reached under this paragraph,
23the person who is required to obtain a permit or the 3rd party shall notify the
24clearinghouse that holds a valid contract under s. 16.9685, if any, and shall report
25to the clearinghouse, in the time and manner specified by the department, any

1information that the department, in consultation with the department of
2administration, determines is reasonable and necessary for the operation of the
3centralized registry under s. 16.9685 (3) (g).
SB91,4 4Section 4. 283.84 (1m) (d) of the statutes is amended to read:
SB91,7,75 283.84 (1m) (d) The Except as provided under par. (e) 1., the increase in
6pollutants and the reduction in pollutants occur within the same basin or portion of
7a basin, as determined by the department.
SB91,5 8Section 5. 283.84 (1m) (e) of the statutes is created to read:
SB91,7,119 283.84 (1m) (e) 1. If the person has entered into an agreement under sub. (1)
10(f), the increase in pollutants and the reduction in pollutants occur within the same
11applicable hydrologic area, as determined by the department.
SB91,7,1512 2. In this paragraph, “applicable hydrologic area” means the largest area
13possible within this state to facilitate implementation of this section while achieving
14water quality standards and any applicable federally approved total maximum daily
15load allocations.
SB91,6 16Section 6. 283.84 (5) of the statutes is created to read:
SB91,7,1917 283.84 (5) The department may enter into a memorandum of understanding
18with the federal environmental protection agency relating to the administration of
19this section and s. 16.9685 in relation to the operations of a central clearinghouse.
SB91,7 20Section 7. Nonstatutory provisions.
SB91,8,221 (1) As soon as possible after the effective date of this act, the department of
22natural resources shall review any methods established by the clearinghouse under
23s. 16.9685 (3) (d) and any environmental impact modeling proposed by the
24clearinghouse under s. 16.9685 (3) (e) and shall approve such methods and models
25if they have been developed according to any applicable requirements under the

1federal Water Pollution Control Act, as amended, 33 USC 1251 et seq., and any
2regulations or guidance documents adopted consistent with that act.
SB91,8,33 (End)
Loading...
Loading...