Water Quality Trading Framework for the Laguna

July 21, 2016

RRWPC Comments to:
North Coast Regional Water Quality Control Board
Attention: David Kuszmar
Delivered by Email to: David.Kuszmar@waterboards.ca.gov

Re: Water Quality Trading Framework for the Laguna de Santa Rosa Watershed:
Sonoma County

These comments apply to Resolution NO. R1-2017-0027 and the attachment entitled: Water Quality Trading Framework for the Laguna de Santa Rosa Watershed.

Introductory Comments:
RRWPC wants to support this program, but we are informed by our experience with the Biological Opinion that public input is essential if a new program, especially one as complicated as credit trading, is going to succeed. It is significant that credit trading has failed in many places (outside of California) to accomplish its goals, and therefore it is essential that this program have a healthy and vigorous public involvement component.

The Biological Opinion’s Estuary Project, for which low flow is a forever requirement in the lower river, is proving to be an abject failure, although other options are thus far not possible. There is nothing built into the document that allows for NOT lowering flows under any circumstances, even while severe environmental effects occur. This is a major failure on the part of the Agency as it has cost a great deal of anxiety because of possibly severe environmental impacts, and has not helped the fish one bit, not to mention major funds being expended and staff time utilitized that could have been better used somewhere else.

RRWPC is unfamiliar with the details of determining values of credits, but we are aware that this is a process meant to initially provide offset options to the cities of Santa Rosa and Windsor in order to control some phosphorus pollution in the Laguna and therefore also the lower Russian River, while meeting their NPDES Permit requirements. We support the goals of the project as applied to Santa Rosa and Windsor and believe they are a good first step in the direction of controlling phosphorus inputs. We do not feel this should be a replacement for a phosphorus TMDL however, and hope you continue to move forward in defining the Laguna’s amounts and sources of phosphorus pollution.

We believe that the biggest failing of this proposal is the lack of public involvement after initial framework is approved. While we feel most of the general proposal has been well thought out, considering it is an initial effort, yet the elimination of future public involvement is a serious drawback and probable mistake.

We very much want to support this initial phase allowing Santa Rosa and Windsor to choose a credit trading option as a trial balloon. We feel that for point source discharges, most of the program appears well planned at this point. The Resolution is an excellent and detailed description of the situation with the dischargers, yet we would like to see the following adopted before final approval of the program:

• RRWPC feels there should be a three or four-year trial period where this program is considered an experiment and that there should be an annual report to the Regional Board where public comment can occur on measured progress, details of the program and accomplishments, if any, and reports from traders if desired, etc. Also, new measures may be proposed and considered that were not originally anticipated. The Board should have an opportunity to make changes to the program on an annual basis during this trial period.

• The goals of the program should be spelled out and the measurement of success defined. The circumstances under which ending the program (or not moving forward) should be considered and addressed. Also, if problems arise that were not initially foreseen, information should be available to describe how and whether they were resolved or if changes have become necessary.

• There is little stated about the circumstances under which enforcement will occur. If credit trades don’t occur in a timely manner, at what point will enforcement actions begin to occur? What happens if appropriate projects don’t come forward, or an inadequate number of credits obtained?

• We wish to see more details about how non-point source credits will be developed and enforced. This has been a sticky wicket in other locales. This should not be treated the same as point source discharges.

We want to acknowledge that Santa Rosa has been dragged into this process against their will. Their biggest argument for not wanting this trading project is that in many years they do not even discharge and that this program is a lot of time and expense for small value. That may appear true during drought, but this last year saw record rainfall. Apparently, Santa Rosa has a leaky system, because they discharged 1.1 billion gallons (I don’t know if that’s the final amount for the water year, but I know it was at least that much.) into the Laguna and Russian River. That’s 25% of the approximately 4 billion gallons discharged annually before the Geysers was online. I don’t know how many pounds of phosphorus that contains, but surely it is a significant amount, and demonstrates the weakness of their opposition argument and conversely, the necessity for this project.

Comments on Water Quality Trading Framework:
Our comments are organized, not by topic, but rather page by page notes on content. (The Framework Proposal was a very well organized and easy to follow.)
Last bullet on page 3: Do you mean to say: The benefits of WQT must be realized without allowing NEGATIVE water quality impacts associated with credit-generating actions to occur in place, in kind, or in time? (I’m sure you do want positive impacts.)

1. Policy & Regulatory Instruments to Support Trading (page 4)
1.3 Public Review: It appears as though the only public comment allowed on trading project is right before Executive Officer’s approval of supporting documentation for practices to be prequalified under Framework. Is there any circumstance, such as subsequent to major revisions, where public review process can be reopened for additional comment? Also, will there be an announcement to the public if the project is denied?

2. Trading Basics (page 5-6)
2.3 Can you provide a larger colored map of the area where credits will be traded?
2.4: It would be nice to have a note here saying how many credit obligations Santa Rosa and Windsor have already accrued. Does Santa Rosa’s wastewater have the same amount of phosphorus in every gallon of treated wastewater? Can you estimate how much phosphorus is in the 1.1 billion gallons of wastewater discharged this last water year? (I realize this information is probably not essential for the “Framework”, but it would be interesting to have a little contextual information to illustrate program.)
2.5: Can SR or Windsor utilize ONLY pre-qualified practices? What if they propose NEW practices for pre-qualification, or is there only one opportunity to qualify practices? If new practices are proposed, would they go through the same public review process that allows public input?
2.5.1 Practice Standards: Do all of these apply? Can you describe term ‘practice’? Is it the same as a project? (Some examples would be helpful here.)
Credit Quantification Methods: Do all of these apply or can they pick and choose?
Project Review/Verification Procedure:
Who verifies practices, projects and procedures for each project? Also, how is it determined whether professional certification or special expertise is necessary for design, installation, maintenance, credit quantification, or verification of a particular practice? What type of expertise (qualification level and standards) should be provided? I think this Framework needs to be more explicit here about Board expectations. I realize you refer to other sections where you do this. I will also note comments in those sections, if inadequate in our view.
2.5.2: Process for Approving Pre-qualified Practices (page 8): if there is a credit project proposed to plant hundreds of riparian trees, is that termed a ‘practice’? At the top of page 8, the approval process is equated with the pre-qualifying process. If practices are pre-qualified, why do they need approval? This is confusing.
Bottom of page 8 states that ‘significant’ updates and/or revisions to practices that had received prior approval shall also be subjected to public review. How would the word ‘significant’ be interpreted here? Can you give a few examples?

3. Trading Eligibility Criteria:
3.2.1: Avoiding Localized Impacts: I believe that the sentence: ‘There can be no negative localized impacts as a result of a credit trade.’ I believe it would be better if you add the word negative as impacts can be positive and that is not intended here.
3.2.5: Timing of Framework Applicability: Does this section apply if any activities that were given prior approval, currently come under regulatory requirements? If so, that would seem to contradict prior statements and be illegal.

4. Quantifying Pollutant Reductions for Water Quality Credits
I have concerns about the sentence (page 11) stating: “Once approved, credit quantification methods for those practices shall be considered pre-qualified for future use.” I have concerns about the ‘forevermore’ aspect of this. Surely there may be circumstances where conditions change and the methods are no longer appropriate. We suggest revisiting these methods, and other aspects of the program, every five years. This should also include a public comment component. There will be a learning curve with this program and it is very important to leave a pathway to revisions.

5.1: Applicable Trading Ratios: (page 12)
Three situations for applying reduced retirement ratios:
The first application gives an example of “environmental values”. This is helpful.
The second application is self-explanatory.
The third application needs more explanation and an example. What is meant by:
‘Reduced uncertainty ratio’ and how are ‘direct measurement of pollutant reductions’
conveyed? Example needed here.

6. Credit Characteristics & accounting Convention
6.1: Credit Life: (page 13)
I am a bit unclear about how the Credit life, Project life, and Banking
Credits for future use life interweave with one another. The credit life is for one
year only. Does that mean it must connect to a project before the year ends, but
the project life can be varying amounts of time depending on the project? It
seems as though immediately after the year is up, they can also decide to bank
the credit for up to three years if no project has been discovered before the year
ends. The three-year limit for banking credits seems very controversial. We
would suggest extending it to 5 years ONLY for this first round when Frame-
work is in its initial phases and then go back to three years after that.

7. Project planning, Pre-Screening, and Approval (page 14)
7.1 Credit Project Plans: (page 14)
The statement is made that projects should be designed with the primary goal of
Improving water quality. This is general and vague. Shouldn’t there be some kind of
ranking of water quality improvements? Or could it be specified that improvements
should address Laguna, Santa Rosa, and Mark West Creek impairments? It seems
that addressing creek impairments should take a higher priority. Furthermore, this section says nothing about required offsets of phosphorus. How can that be? We thought the whole point of this process was no net increase of phosphorus.
Project Design and Credit Information: fifth item down: When would this item not be necessary?
Project Maintenance Plan: (page 15): Will there be a maintenance term attached to this plan? Will Regional Board retain oversight during term of maintenance or if there is no term? Would there be any enforcement if maintenance plan not adhered to? (see other comments for 8.3)

7.2 Credit Project Approval Process (page 15)
It is disturbing that there is no public review of this process and we believe that
there should be. It is especially disturbing because the main impetus for this
project appears to be ignored and dismissed: that is, the control of phosphorus in
the Laguna and the supposed credit trade to limit the amount that gets circulated
in the waterways.

(Footnote on bottom of page: What happens if parties do not provide adequate
maintenance of credit projects? At what point might Regional Board enforce-
ment measures be taken?)

8.Project Implementation & Verification (page 16)
8.1: Documenting Pre- and Post-Project Site Conditions
This is very vague. What kind of site conditions, and to what level of detail would you
expect to see this? Does RB staff definitely check this or maybe check it?
8.2 and 8.2.1 Verification:
How does Regional Board staff assure that verification is unbiased and accurate? Is
there a list of third party companies who are trusted and qualified to conduct verification that credit seller is required to use?

Implementation Review (page 17):
It states in this section that: “Any discrepancies between the approved Credit Project Plan and as-built conditions must be noted”. And then what? Will someone take action
on such a notation? What will that be (in general)?

9.3 Changes in Credit Status (page 19)
Retired: Why wouldn’t a credit be used? What are the circumstances? Would drought
be the only circumstance? Would there be any circumstances where an extension might
be allowed? If the credit is developed, and all steps are followed, what other purpose
might it be used for, if not for offset of wastewater discharges by City and Town?

9.4 Changes in Credit Ownership
If a project is completed and appropriate numbers of credits are received by City or
Town, and this is the only purpose for which credits can be issued, how can others end
up with the credits? Who else might end up with the credits and for what purpose?
This seems incredibly complicated. Why would credits be needed for any other entities? Can you give some examples so a layperson can understand? Why are credits subject to
change over time? Are credits ever good for over 3 years?

RRWPC thanks you for the opportunity to comment.