DEPARTMENT OF ENVIRONMENTAL QUALITY

                      SURFACE WATER QUALITY DIVISION

                        WATER RESOURCES PROTECTION

(by authority  conferred  on  the  department  of  environmental  quality  by 
sections 3103 and 3106 of 1994 PA 451, MCL 324.3103 and 324.3106)

                      Part 30. Water Quality Trading


R 323.3001    Definitions.
  Rule 1.  As used in this part:
  (a)  "Act" means part 31, water resources  protection,  1994  PA  451,  MCL 
324.3101 et seq.
  (b)   "Administrator"  means  the  administrator  of  the   United   States 
environmental protection agency.
  (c)  "Applicable requirement" means any of the following:
  (i)  A standard of performance, management practice,  effluent  limitation, 
total maximum daily load, recordkeeping, monitoring, or reporting requirement 
established by the clean water act, 40 C.F.R.  §25  (2000),  40  C.F.R.  §117 
(2000), 40 C.F.R. §121 (2000), 40 C.F.R. §122 (2000), 40 C.F.R. §123  (2000), 
40 C.F.R. §124 (2000), 40 C.F.R. §125  (2000),  40  C.F.R.  §129  (2000),  40 
C.F.R. §130 (2000), 40 C.F.R. §131 (2000), 40 C.F.R. §132 (2000),  40  C.F.R.
§133 (2000), 40 C.F.R. §135 (2000), 40 C.F.R. §136  (2000),  40  C.F.R.  §140 
(2000), 40 C.F.R. subchapter n  (2000),  40  C.F.R.  471  (2000),  40  C.F.R.
subchapter o (2000) or part 31, water resources protection, 1994 PA 451,  MCL 
324.3101 et seq. and rules promulgated under the act.
  (ii)  A national permit issued or order entered by the department.
  (iii)  A consent judgement entered in, or an order issued by,  a  court  of 
competent jurisdiction.
  (iv)  A watershed management plan approved by the  department  pursuant  to 
this part.
  (v)  A plan  developed  and  funded  under  a  grant  administered  by  the 
department under section 319 of the clean water act.
  (d)  "Attainment area" means a waterbody, a receiving water,  or  watershed 
where water quality standards are being met.
  (e)  "Banked credits" means credits for total phosphorus and total nitrogen 
that are generated and that have been registered prior  to  the  time  period 
during which they are used or traded under this part.
  (f)  "Baseline" means the  pollutant-specific  point  source  discharge  or 
nonpoint source loading level below which reductions must be made to generate 
a credit.
  (g)   "Best  management  practices"  means   structural,   vegetative,   or 
managerial practices that reduce or prevent the  detachment,  transport,  and 
delivery of point and nonpoint source pollutants to the surface waters.
  (h)  "Calendar year" means the time period from January 1 until December 31 
inclusive for a given year.
  (i)  "Cap" means the  combined  total  allowable  pollutant-specific  point 
source discharges and nonpoint source loadings established by a total maximum 
daily load or specified  in  a  watershed  management  plan  which  has  been 
approved under this part.
  (j)  "Clean water act" means  the  federal  water  pollution  control  act, 
commonly referred to as the clean water act, Public Law 92-500, as amended by 
Public Law 95-217, Public Law 95-576, Public Law 96-483, Public Law  97-1171, 
and Public Law 100-4, 33 U.S.C. §1251 et seq.
  (k)  "Closed trading" means the exchange of credits among or between  point 
and  nonpoint  sources  in  a  watershed  or  receiving  water  for  which  a 
pollutant-specific cap and allocations have been established  to  achieve  or 
maintain a water quality standard or to implement a watershed management plan 
approved under this part.
  (l)  "Contemporaneous" means that the generation of credits  occurs  during 
the same day, week, month, season, calendar year,  or  other  specified  time 
period during which the  credits  are  used  to  comply  with  an  applicable 
requirement.
  (m)  "Credit" means the pollutant-specific point source discharge reduction 
or nonpoint source load reduction, minus the water quality contribution, that 
is generated and entered into the water quality trading  registry  and  which 
may be used or traded under this part.
  (n)   "Cross-pollutant  trading"  means  the  use  of  discharge  or   load 
reductions generated for one pollutant  to  be  used  to  compensate  for  an 
increase in the discharge or loading of a different pollutant.
  (o)  "Department" means the Michigan Department of environmental quality.
  (p)  "Directionality" means an upstream  discharge  or  load  reduction  to 
compensate for a downstream use of credits.
  (q)  "Director" means the director of the department.
  (r)  "Discharge reduction" means the difference between  the  baseline  and 
the reduced discharge level that constitutes the  surplus  pollutant-specific 
reduction generated by a point source.
  (s)  "Discount factor" means a trading ratio different  than  1:1  that  is 
applied to different sources or different pollutants to  provide  equivalency 
or address uncertainty.
  (t)  "Intra-plant trading" means the generation and use of credits  between 
multiple outfalls discharging into the same receiving  water  from  a  single 
facility that has been issued a national permit.
  (u)  "Lakewide management plan" means a plan developed and  implemented  to 
address critical  pollutants  pursuant  to  the  Great  lakes  water  quality 
agreement of 1978, as amended.
  (v)  "Load allocation" means the portion of  a  receiving  water's  loading 
capacity that is attributed to a nonpoint source or group of nonpoint sources 
under a total daily maximum load or  a  watershed  management  plan  approved 
under this part.
  (w)  "Loading capacity" means the greatest amount of pollutant loading that 
a receiving water can receive without violating water quality standards.
  (x)  "Load reduction" means the difference between  the  baseline  and  the 
reduced  loading  level  that  constitutes  the  surplus   pollutant-specific 
reduction generated by a nonpoint source.
  (y)  "National permit" means a  national  pollutant  discharge  elimination 
system  permit,  or  equivalent  document  or  requirements,  issued  by  the 
department to a discharger pursuant to part 31, water  resources  protection, 
1994 PA 451, MCL 324.3101 et seq. for discharges  into  surface  waters,  and 
"permitted" refers to this permit.
  (z)  "Nonpoint source" means a source of pollutant loading to  the  surface 
waters of the state other than a source defined as a point source.
  (aa)  "Nutrient trading" means the generation and use of  total  phosphorus 
or total nitrogen credits among and between point and nonpoint sources.
  (bb)  "Open trading" means the exchange of credits among or  between  point 
and nonpoint sources in a watershed or receiving  water  for  which  a  total 
maximum daily load or a pollutant-specific cap and allocations have not  been 
established by an applicable requirement.
  (cc)  "Person" means an individual, partnership, association,  corporation, 
industry, municipality, state agency, or interstate body.
  (dd)  "Point source" means a discharge that  is  released  to  the  surface 
waters of the state by a  discernible,  confined,  and  discrete  conveyance, 
including any of the following from which wastewater is or may be discharged:
  (i)  A pipe.
  (ii)  A ditch.
  (iii)  A channel.
  (iv)  A tunnel.
  (v)  A conduit.
  (vi)  A well.
  (vii)  A discrete fissure.
  (viii)  A container.
  (ix)  A concentrated animal feeding operation.
  (x)  A vessel or other floating craft.
  (ee)  "Pollution prevention" means  source  reduction  and  environmentally 
sound on-site or off-site reuse or recycling.  Pollution prevention  includes 
equipment or technology modifications, substitution of raw materials, process 
or procedure modifications and improvements in housekeeping, maintenance,  or 
inventory control.  Pollution prevention does not include a practice  applied 
after a waste or wastewater has been generated and does not promote, include, 
or require incineration.  Waste treatment, control, management,  or  disposal 
are not considered pollution prevention.
  (ff)  "Quantifiable" means that the amount, rate, and characteristics of  a 
discharge reduction or increase can be  determined  or  measured  through  an 
accurate, reliable, and replicable method, procedure, or set of  calculations 
established by an applicable requirement or approved by the department or the 
administrator.
  (gg)  "Real" means a change that results in a  point  source  discharge  or 
nonpoint source load reduction.
  (hh)   "Reasonable  further  progress"  means  incremental   point   source 
discharge or  nonpoint  source  load  reductions  to  achieve  water  quality 
standards or to implement a total maximum daily load established pursuant  to 
section 303(d) of the clean water act.
  (ii)  "Reduced discharge level" means the real, surplus,  and  quantifiable 
pollutant-specific discharge reduction achieved by a point source.
  (jj)  "Reduced loading level" means the  real,  surplus,  and  quantifiable 
pollutant-specific load reduction that is achieved by a nonpoint source.
  (kk)  "Remedial action plan" means a  plan  developed  and  implemented  to 
address an area  of  concern  pursuant  to  the  Great  lakes  water  quality 
agreement of 1978, as amended.
  (ll)  "Responsible individual" means,  for  the  purposes  of  signing  and 
certifying as to the truth,  accuracy,  and  completeness  of  a  notice  and 
certification required by this part, any of the following:
  (i)   For  a  corporation,  then  a  president,  secretary,  treasurer,  or 
vice-president in charge of a  principal  business  function,  or  any  other 
person who performs similar policy  or  decision  making  functions  for  the 
corporation,  or  an  authorized  representative  of  that  person   if   the 
representative is  responsible  for  the  overall  operation  of  1  or  more 
manufacturing, production, or operating facilities.
  (ii)  For a partnership or sole proprietorship, then a general  partner  or 
the proprietor.
  (iii)  For a county or municipality or a state, federal,  or  other  public 
agency,  then  either  a  principal  executive  officer  or  ranking  elected 
official.  For this purpose, a  principal  executive  officer  of  a  federal 
agency includes the chief executive officer  having  responsibility  for  the 
overall operations of a principal geographic unit of the agency.
  (mm)  "Source reduction" means any practice which  reduces  either  of  the 
following:
  (i)  The amount of  any  hazardous  substance,  pollutant,  or  contaminant 
entering any wastestream or otherwise released into  the  environment  before 
recycling, treatment, or disposal.
  (ii)  Hazards to public health and environment associated with the  release 
of a substance, pollutant, or contaminant.
  (nn)  "Surface waters of the state" means all of the  following,  but  does 
not include drainage ways and ponds used solely  for  wastewater  conveyance, 
treatment, or control:
  (i)  The Great Lakes and their connecting waters.
  (ii)  All inland lakes.
  (iii)  Rivers.
  (iv)  Streams.
  (v)  Impoundments.
  (vi)  Open drains.
  (vii)  Other surface bodies of water within the confines of the state.
  (oo)  "Surplus" means a point source  discharge  or  nonpoint  source  load 
reduction greater than that required by an applicable requirement.
  (pp)  "Total maximum daily load" means the maximum  amount  of  a  specific 
pollutant that a waterbody can assimilate and  still  meet  applicable  water 
quality standards and which has been established pursuant to  section  303(d) 
of the clean water act or R 323.1207.
  (qq)  "Trade" means the purchase, sale, conveyance, or other transfer of  a 
registered credit from one person or source to another person or source under 
this part.
  (rr)  "Trading activities"  means  all  requirements  established  and  all 
activities regulated by this part.
  (ss)  "True-up" means to correct or make whole an insufficient quantity  of 
discharge reductions and credits that are generated and registered, used,  or 
traded.
  (tt)  "Unregulated source" means any point or  nonpoint  source  for  which 
performance standards, effluent limitations, work practices,  and  monitoring 
requirements have not been established by an applicable requirement.
  (uu)  "Use" means the application of  a  credit  to  comply  with  a  water 
quality-based effluent limitation or  other  applicable  requirement  or  the 
retirement of a credit to provide a water quality benefit.
  (vv)  "Water quality-based effluent limitation"  means  a  discharge  limit 
developed for a national permit that will ensure  that  the  level  of  water 
quality to be achieved by the point source complies with all applicable water 
quality standards.
  (ww)  "Water quality standards" means R323.1041  et  seq.  developed  under 
part 31, water resources protection, 1994 PA 451, MCL 324.3101 to 324.3119.
  (xx)  "Wasteload allocation" means the pollutant-specific allocation for an 
individual point source, which ensures that the level of water quality to  be 
achieved by the point source  complies  with  all  applicable  water  quality 
standards.
  (yy)  "Watershed" means an area of the land that drains to a  common  lake, 
pond, river, stream, or other surface waters  of  the  state  delineated  and 
designated as a trading area under this part.
  (zz)  "Watershed management plan" means a comprehensive water resource plan 
approved by the department under this part and that includes a cap, point and 
nonpoint source allocations, responsible parties,  management  strategies  to 
improve water quality or achieve and maintain water quality  standards  in  a 
specific receiving water or watershed.

  History: 2002 AACS.


R 323.3002    Purpose.
  Rule 2.  (1)  The  purpose  of  this  part  is  to  establish  a  voluntary 
statewide water quality trading program which has all of the following goals:
  (a)  Improving water quality and optimizing  the  costs  of  achieving  and 
maintaining water quality standards.
  (b)  Creating  economic  incentives  for  voluntary  nonpoint  source  load 
reductions, point source discharge reductions beyond those  required  by  the 
clean water act, implementation of  pollution  prevention  programs,  wetland 
restoration and creation, and the development of emerging  pollution  control 
technologies.
  (c)  Facilitating the implementation of total maximum  daily  loads,  urban 
storm water  control  programs,  and  nonpoint  source  management  practices 
required under the clean water act.  Nothing in this part shall be  construed 
to obviate the requirement to develop a total maximum daily load  for  waters 
that do not meet water quality standards as required by section 303(d) of the 
clean water act or to delay implementation of a total maximum daily load that 
has been approved by the department and the administrator.
  (d)  Providing incentives for the development of new and more accurate  and 
reliable quantification protocols and procedures.
  (e)  Providing greater flexibility through community-based,  nonregulatory, 
and performance-driven watershed management planning.

  History: 2002 AACS.


R 323.3003    Applicability.
  Rule 3.  (1)  This part  shall  apply  to  all  persons  and  sources  that 
participate in water quality trading.
  (2)  This part shall apply to the generation, registration,  use,  banking, 
and trading of credits and all trading activities that occur under this part.

  History: 2002 AACS.


R 323.3004    General requirements.
  Rule 4.  (1)  The generation, use, and trading of credits among and between 
point and nonpoint sources shall occur within the  same  receiving  water  or 
watershed designated under this part.
  (2)  Credits shall be generated before or contemporaneously with  the  time 
they are used or traded.
  (3)  The generation, use, and trading of credits and all trading activities 
approved  under  this  part  shall  be  consistent  with  the  following,  if 
applicable:
  (a)  A total maximum daily load established pursuant to section  303(d)  of 
the clean water act.
  (b)  A remedial action plan.
  (c)  A lakewide management plan.
  (d)  A watershed management plan approved by the department under this part.
  (4)  Credits used to comply with a  daily,  weekly,  monthly,  or  seasonal 
effluent  limitation  established  to  achieve  or  maintain  water   quality 
standards in a stream or a lake with a retention time of  less  than  1  year 
shall be generated during  the  same  time  period  for  which  the  effluent 
limitation applies.

  History: 2002 AACS.


R 323.3005    Prohibitions and restrictions.
  Rule 5.  (1)  The use of credits that would  cause  a  violation  of  water 
quality standards is prohibited.
  (2)  Credits generated in one watershed shall not be used or  traded  in  a 
different watershed.  This rule shall not prohibit  credits  generated  in  a 
nonattainment area being used  in  an  attainment  area  within  a  watershed 
designated in a watershed management plan approved by  the  department  under 
this part.
  (3)  Trading activities for any bioaccumulative chemical of concern  listed 
below are prohibited:
  (a)  Chlordane.
  (b)  4,4'-ddd.
  (c)  4,4'-dde.
  (d)  4,4'-ddt.
  (e)  Dieldrin.
  (f)  Hexachlorobenzene.
  (g)  Hexachlorobutadiene.
  (h)  Hexachlorocyclohexanes.
  (i)  Alpha-hexachlorocyclohexane.
  (j)  Beta-hexachlorocyclohexane.
  (k)  Delta-hexachlorocyclohexane.
  (l)  Lindane.
  (m)  Mercury.
  (n)  Mirex.
  (o)  Octachlorostyrene.
  (p)  Polychlorinated biphenyls (pcbs).
  (q)  Pentachlorobenzene.
  (r)  Photomirex.
  (s)  2,3,7,8-tcdd.
  (t)  1,2,3,4-tetrachlorobenzene.
  (u)  1,2,4,5-tetrachlorobenzene.
  (v)  Toxaphene.
  (4)  Except as provided under 40 C.F.R. §420.03 (2000), and other types  of 
trades approved by the department and the administrator, credits shall not be 
used to comply with a technology-based effluent limitation.
  (5)  Nothing in this part shall be construed to obviate the need to  obtain 
a national  permit  or  a  permit  modification  required  by  an  applicable 
requirement.  A point source is  prohibited  from  participating  in  trading 
under this part unless a national permit has first been obtained as  required 
under the clean water act.
  (6)  Nothing in this part shall be construed to prohibit a municipality  or 
regional  sewerage  authority  from  developing  and  implementing  its   own 
pretreatment trading  program  for  the  purposes  of  complying  with  local 
limitations and to comply with federal technology-based categorical standards 
to the extent allowed under federal regulations.
  (7)  The use of banked credits shall occur in a manner consistent with this 
part, shall be approved by the department before any  such  activity  occurs, 
and shall be restricted to the following:
  (a)  Complying with a 1 milligram per liter  water  quality-based  effluent 
limitation established under R 323.1060(1).
  (b)  Complying with a water quality based effluent limitation for a  source 
that discharges into a lake or other water body with a retention time of more 
than 1 year.
  (8)  Banked credits shall not be used  to  comply  with  a  daily,  weekly, 
monthly, or seasonal water quality-based effluent limitation by a source that 
discharges into a stream or a lake with a retention time of less than 1 year.

  History: 2002 AACS.


R 323.3006    Eligibility requirements for generation of point source discharge 
and nonpoint source load reductions and credits.
  Rule 6.  (1)   For  discharge  or  load  reductions  to  be  generated  and 
registered as credits, all of the following conditions shall be met:
  (a)  The  discharge  or  load  reductions  shall  be  generated  after  the 
effective date of this part.
  (b)   The  discharge  or  load  reductions  shall  be  real,  surplus,  and 
quantifiable.
  (c)  The control devices or management practices that have  been  installed 
or implemented have been fully and properly maintained  from  the  time  they 
were established and remain so for the time they are registered  to  generate 
credits.
  (2)  Discharge or load reductions to generate credits may be created by any 
of the following:
  (a)  Installation or modification of water pollution control equipment.
  (b)  Operational changes and the  modification  of  a  process  or  process 
equipment.
  (c)  Reformulating raw materials or products.
  (d)  Implementation of pollution prevention programs.
  (e)  Implementation of energy conservation programs.
  (f)   Implementation  of  early  discharge  or  load  reductions  before  a 
compliance  date  specified  by  an  applicable  requirement  defined  in   R 
323.3001(c)(i); but not for early compliance with a schedule  resulting  from 
violations of applicable requirements defined in R 323.3001(c)(i).
  (g)  Implementation of nonpoint source management practices.
  (h)Implementation of storm water controls or management practices.
  (i)  Restoring or creating and maintaining a wetland.
  (j)  The installation of equipment or implementation  management  practices 
at orphan sites of environmental contamination to control discharges  to  the 
waters of the state by a person or party that  is  not  responsible  for  the 
contamination or liable for  response  activities  under  state  and  federal 
regulations.
  (k)  The installation, operation,  and  maintenance  of  drainage  projects 
designed to control storm water as part of a county drain improvement project.
  (l)  Implementation of streambank erosion controls.
  (m)  Other pollution controls  or  management  practices  approved  by  the 
department.
  (3)  Discharge or load reductions required to  achieve  compliance  with  a 
technology-based effluent limitation established by an applicable requirement 
shall not be eligible to generate credits under this part.
  (4)  A source that generates discharge or load reductions and credits to be 
used or traded shall discharge directly or  otherwise  be  connected  to  the 
receiving water or watershed in which the credits are used or traded.
  (5)  Discharge or load reductions made  by  a  source  in  violation  of  a 
monitoring,  recordkeeping,  or  reporting  requirement  applicable  to   the 
specific pollutant for which the discharge or load reduction  has  been  made 
shall not be eligible to generate credits under this part.
  (6)  The implementation of management  practices  or  the  installation  of 
control structures required to eliminate the discharge of  manure  or  runoff 
containing manure or other animal wastes from agricultural  operations  shall 
not be eligible to generate credits after 5 years from the effective date  of 
this part.
  (7)  Generally accepted agricultural management practices required to abate 
a nuisance complaint referred to the department under the Michigan  right  to 
farm act, 1981 PA 93, MCL 286.471 et seq., shall not be eligible to  generate 
a discharge reduction credit under this part.
  (8)  Nonpoint source load reductions which result  from  implementation  of 
management practices or the installation of control structures under programs 
administered by the United States department of agriculture, natural resource 
conservation service,  shall  be  eligible  to  generate  credits  in  direct 
proportion to the percent local match and any contribution greater  than  the 
local match required under these federal programs.
  (9)  Nonpoint source load reductions which result  from  implementation  of 
projects or programs funded by 1998 PA 288, MCL 324.19601 et seq. and §319 of 
the clean water act shall not be eligible to generate credits under this part.
  (10)  Nothing in this rule shall be construed to  prohibit  or  restrict  a 
municipality from generating credits by installing controls  or  implementing 
management practices under publicly funded projects or  programs  implemented 
within the same jurisdiction.
  (11)   Sources  that  install  control  devices  or  implement   management 
practices to control streambank erosion or storm water or agricultural runoff 
as part of a pilot project conducted  with  approval  by,  or  involving  the 
active participation of, the department shall be eligible to generate credits 
that may be used for  trading  under  this  part  if  all  of  the  following 
conditions are met:
  (a)  The control devices have been installed or  the  management  practices 
implemented within the 18-month period immediately proceeding  the  effective 
date of this part.
  (b)  The control devices or management practices  have  been  installed  or 
implemented in a manner that is consistent with all applicable provisions  of 
this part.
  (c)  All applicable requirements established under this part shall be fully 
complied with,  including  the  requirements  to  establish  baselines,  load 
reductions and reduced loading levels and the submittal of notices and annual 
reports.
  (d)  The notice and certification required under  R  323.3019(1)  shall  be 
submitted to the department within 6 months of the  effective  date  of  this 
part.

  History: 2002 AACS.


R 323.3007    Nutrient   trading;    contemporaneous    upstream    reduction 
requirements; credit use.
  Rule 7.  (1)  Open nutrient trading may occur  in  an  attainment  area  or 
other area where a total maximum daily load has not been  established  and  a 
watershed management plan has not been approved for purposes of trading under 
this part if either of the following conditions is met:
  (a)   There  is  a  contemporaneous  upstream  generation  of  credits   to 
compensate for a use of credits to comply with a water quality-based effluent 
limitation or other applicable requirement.
  (b)  The source using credits to comply with a water quality-based effluent 
limitation or other applicable requirement discharges to the  same  receiving 
water or  watershed  either  upstream  or  downstream  of  the  source  which 
generates the credits and both of the following conditions are met:
  (i)  The generation of credits is contemporaneous with the use of credits.
  (ii)  The sources which generate and use credits are upstream of  the  site 
in  the  receiving  water  or  watershed  for  which  the  applicable   water 
quality-based effluent limitation has been established to meet water  quality 
standards.
  (2)  The use of credits pursuant  to  subdivisions  (a)  and  (b)  of  this 
subrule shall not be construed to constitute  a  lowering  of  water  quality 
pursuant to R 323.1098(8)(k).
  (3)  The use of credits by a point source  to  increase  the  discharge  of 
total phosphorus or total nitrogen under the provisions of R  323.3020  shall 
be limited to a 20% increase  above  the  discharge  level  authorized  in  a 
national permit, unless a greater use of credits is  specifically  authorized 
by special conditions in the  permit  or  by  a  formal  permit  modification 
approved by the department  in  accordance  with  federal  and  state  permit 
regulations and the provisions of this  part.   The  20%  increase  of  total 
phosphorus and total nitrogen above the discharge level shall  be  authorized 
in the point source national permit before the point source can use credits.

  History: 2002 AACS.


R 323.3008    Nutrient trading in areas for which a total maximum daily load or 
a watershed management plan has been established.
  Rule 8.  (1)  Closed nutrient trading may occur within a receiving water or 
in a watershed where water quality  standards  are  not  being  met  for  the 
pollutant that is being traded if all of the following conditions are met:
  (a)  A total maximum daily load for the nutrient  to  be  traded  has  been 
approved by the department and the administrator pursuant to  section  303(d) 
of the clean water act.
  (b)  The point sources and nonpoint sources that generate,  use,  or  trade 
credits shall be located in the same nonattainment area and included  in  the 
inventory upon which the total maximum daily load is based.
  (c)  The nutrient cap, point source waste  load  allocations  and  nonpoint 
source load allocations shall constitute the  respective  baselines  for  the 
generation, use, and trading of credits.
  (d)  The generation, registration, use, and trading  of  credits  shall  be 
consistent with the total maximum daily load and this part.
  (2)  Closed nutrient trading may occur within any receiving water or  in  a 
watershed for which a watershed management plan has  been  prepared  for  the 
purpose of trading if all of the following conditions are met:
  (a)  The watershed management plan has  been  approved  by  the  department 
pursuant to the provisions of R 323.3023.
  (b)  The point sources and nonpoint sources that generate, use,  and  trade 
credits shall be located  in  the  same  receiving  water  or  watershed  and 
included in the inventory upon which the watershed management plan is based.
  (c)  The nutrient cap and point source wasteload allocations, and  nonpoint 
source load allocations specified in the watershed management plan to achieve 
or maintain water quality standards shall constitute the respective baselines 
for the generation and use of credits.
  (d)  The generation, registration, use, and trading  of  credits  shall  be 
consistent with the approved watershed management plan and this part.

  History: 2002 AACS.


R 323.3009    Other  types  of  trading;  trading  of  pollutants  other  than 
nutrients; intra-plant trading;  cross-pollutant  trading;  trading  under  a 
remedial action or lakewide management plan.
  Rule 9.  (1)  Except for the provisions in R 323.1005(3), nothing  in  this 
part shall be construed to prohibit the department from approving other types 
of water quality-based trades that are not specifically provided for in  this 
part.  Trades that are not specifically provided for in this part,  including 
trading of  pollutants  other  than  total  phosphorus  and  total  nitrogen, 
intra-plant trading, and cross  pollutant  trading,  must  be  authorized  in 
national permits.
  (2)  Trading of pollutants other than total phosphorus and total  nitrogen, 
intra-plant trading, cross pollutant trading, trading under a remedial action 
or lakewide management plan, and any other types of trades shall occur  in  a 
manner consistent with all applicable requirements of this part and shall  be 
approved by the department before any such activity occurs.
  (3)  A person or source seeking to engage in other types  of  trades  under 
subrule (2) of this rule shall do either of the following:
  (a)  Demonstrate that social or economic development and  the  benefits  to 
the area in which the receiving waters are located would be  forgone  if  the 
use of credits is  not  allowed  in  accordance  with  the  provisions  of  R 
323.1098(4).
  (b)  Show that the use of credits does not constitute a lowering  of  water 
quality pursuant to R 323.1098(8) or (9).
  (4)  Other types of trades that are embodied in or affect a national permit 
shall be subject  to  final  approval  by  the  United  States  environmental 
protection agency.

  History: 2002 AACS.


R 323.3010    Baselines; general requirements.
  Rule 10.  (1)  Baselines shall be established by using the  most  accurate, 
representative, and reliable process and operational  information,  flow  and 
monitoring data, discharge and loading data, and records that are available.
The baseline and discharge and load  reductions  shall  be  calculated  using 
methods and procedures specified by  an  applicable  requirement  where  they 
exist.
  (2)  Unless specified otherwise by an applicable requirement, the  baseline 
for all sources, except storm water sources regulated under a national permit 
for which a numerical effluent limitation has not been established, shall  be 
established by using the information and data representative  of  the  3?year 
period before the date that a change is made to generate a discharge or  load 
reduction.  A different time period that is more representative of historical 
operations and provides  more  accurate  and  reliable  actual  discharge  or 
existing loading data may be used if approved by the department.
  (3)  The baseline for storm water sources regulated under a national permit 
for which a numerical effluent limitation has not been established  shall  be 
the pollutant-specific loading achieved through implementation of  management 
practices specified in or approved under a national  permit  at  the  time  a 
change is made to generate a discharge or load reduction.
  (4)  Unless specified otherwise by an applicable requirement, baselines for 
agricultural, industrial, urban, and residential storm water runoff shall  be 
calculated by using the meteorological information and precipitation data for 
a 10-year  period  or  the  period-of-record,  whichever  is  longer.    This 
information and data shall be obtained  from  the  nearest  national  weather 
service station unless a different location or  source  is  approved  by  the 
department.

  History: 2002 AACS.


R 323.3011    Baseline for point sources  other  than  storm   water;   reduced 
discharge level; generation of discharge reductions and credits.
  Rule 11.  (1)  The point source baseline shall be  the  actual  or  allowed 
discharge level that  complies  with  the  most  protective  of  any  of  the 
following:
  (a)  A water quality-based effluent limitation established by an applicable 
requirement.
  (b)  A cap and wasteload allocation specified under a total  maximum  daily 
load.
  (c)  A cap and wasteload allocation specified  in  a  watershed  management 
plan approved by the department under this part.
  (d)  A cap and wasteload allocation determined  by  the  department  to  be 
consistent with water quality standards and specified in  a  remedial  action 
plan or lakewide management plan.
  (2)  Margins of safety achieved in practice shall be  maintained  by  using 
the actual discharge flows and concentrations to calculate the baseline under 
subrule (3) of this rule.
  (3)  The point source baseline shall  be  expressed  in  the  pounds  of  a 
specific pollutant discharged per day and calculated by using  the  following 
equation:

B = f x c x  k

where:

B = the baseline 
f = flow expressed in million gallons  per  day  (mgd)  
c  = pollutant concentration expressed in milligrams per liter (mg/l) 
k =  a  unit conversion constant of 8.346  liter  pounds  per  million  gallons 
milligrams.

  (4)  The reduced discharge level (RDL) which will result after  changes  or 
methods and procedures have been implemented to generate discharge reductions 
shall be calculated by using the following equation:

RDL = fr x cr x k

RDL  =  reduced discharge level 
Fr  =  flow after changes have been made to generate  discharge  reductions, 
expressed in million gallons per  day  (mgd) 
Cr  =  pollutant concentration after  changes  have  been  made  to  generate 
discharge reductions, expressed in milligrams per liter (mg/l) 
k  =   a  unit conversion constant of 8.346 liter pounds  per  million  gallons 
milligrams.

  (5)  The quantity of discharge reductions generated shall be determined  by 
subtracting the reduced discharge level calculated under subrule (4) of  this 
rule from the baseline calculated under subrule (3) of this rule.
  (6)  The quantity of credits generated and which may be registered under  R 
323.3019(1) shall be the quantity of discharge  reductions  calculated  under 
subrule (5) of this rule minus the water quality contribution required  under 
R 323.3016(1).
  (7)  The same methods  and  procedures  shall  be  used  to  calculate  the 
baseline,  reduced  discharge  level,  discharge  reductions  generated,  and 
credits. The baseline, reduced discharge level,  and  quantity  of  discharge 
reductions generated shall be expressed in the same units.

  History: 2002 AACS.


R 323.3012    Baseline for sources of storm water regulated  under  a  national 
permit; reduced discharge or loading level; generation of discharge  or  load 
reductions and credits.
  Rule 12.  (1)  The baseline shall be the numerical effluent  limitation  or 
the pollutant-specific loading achieved after  implementation  of  management 
practices specified in or approved under a national permit.
  (2)   The  baseline,  reduced  discharge  level,  generation  of  discharge 
reductions, and credits for  storm  water  sources  with  numerical  effluent 
limitations specified by a national permit shall be  calculated  by  using  R 
323.3011(2), (3), (4), (5), (6), and (7).
  (3)  The baseline, reduced loading level, generation  of  load  reductions, 
and credits for storm water sources controlled through the implementation  of 
management practices specified by national  permit  shall  be  calculated  by 
using R 323.3013(2), (3), (4), (5), and (6).
  (4)  Monitoring data and actual measurements of load reductions achieved in 
practice  from  changes  in  land  use,  pollution  control  facilities,  and 
implementation of management practices shall be  used  where  required  by  a 
permit; and, otherwise, may be used where such information is available.

  History: 2002 AACS.


R 323.3013    Baseline for unpermitted nonpoint sources of storm  water  runoff 
other than  agriculture,  reduced  loading  level,  and  generation  of  load 
reductions and credits.
  Rule 13.  (1)  The storm water runoff  baseline  shall  be  either  of  the 
following:
  (a)   For  nonpoint  sources  that  are  not  subject  to   an   applicable 
requirement, the pollutant-specific loading  associated  with  existing  land 
uses and management practices, if any.
  (b)  For nonpoint sources that are subject to  an  applicable  requirement, 
the most protective of any of the following:
  (i)  A pollutant-specific cap and loading allocation specified in  a  total 
maximum daily load.
  (ii)  A pollutant-specific cap and loading  allocation  or  the  management 
practices specified in watershed management plan approved by  the  department 
under this part.
  (iii)  A pollutant-specific cap and loading allocation  or  the  management 
practices determined by the department to be consistent  with  water  quality 
standards and specified in a remedial action plan or lakewide management plan.
  (2)  If not otherwise specified by an  applicable  requirement,  the  storm 
water runoff baseline shall be calculated by  using  the  equations  in  this 
subrule.
  (a)  The pollutant-specific loading factor (ml) shall be computed for  each 
land use (l) within a watershed or drainage area by the following equation 1:

ML = EMCL x RL x K

where:

ML  =  pollutant-specific loading factor for land use L (lbs/ac/yr).
EMCL=  event mean concentration of storm water runoff from a specific  land 
use L (mg/l) as specified in table 1 or as approved by the  department  on  a 
case-by-case basis.
RL  =  total average annual storm water runoff from land use L computed  from 
equation 2 (in/yr).
K  =  0.2266, a unit conversion constant, for all parameters.
Table
1.   Event  mean  concentrations.



 

  

  
Land  use   category

  
(non-site  specific)
  
  

  
Percent

  
Impervious

  
  

  
TSS

  
(mg/l)
 
  
  

  
BOD

  
(mg/l)
 
  
  

  
TP

  
(mg/l)
 
  
  

  
DP

  
(mg/l)
 
  
  

  
TKN

  
(mg/l)
 
  
  

  
NO2+3
< /p>
  
(mg/l)
 
  
  

  
Pb

  
(ug/l)
 
  
  

  
Cu

  
(ug/l)
 
  
  

  
Zn

  
(ug/l)
 
  
  

  
Cd

  
(ug/l)
  
 
 

  

  
Forest/rural  open
  
  

  
N/a
< u1:p>
  
  

  
51

  
  

  
3

  
  

  
0.11
 
  
  

  
0.027

  
  

  
0.94
 
  
  

  
0.80
 
  
  

  
0.0
< o:p>
  
  

  
0.0
< o:p>
  
  

  
0.0
< o:p>
  
  

  
0.0

  
 
 

  

  
Urban  open
  
  

  
0.5%
 
  
  

  
51

  
  

  
3

  
  

  
0.11
 
  
  

  
0.03
 
  
  

  
0.94
 
  
  

  
0.80
 
  
  

  
14.2
 
  
  

  
0.0
< o:p>
  
  

  
40.2
 
  
  

  
0.8

  
 
 

  

  
Agricultural

  
  

  
N/a
< o:p>
  
  

  
145
< o:p>
  
  

  
3

  
  

  
0.37
 
  
  

  
0.09
 
  
  

  
1.92
 
  
  

  
4.06
 
  
  

  
0.0
< o:p>
  
  

  
0.0
< o:p>
  
  

  
0.0
< o:p>
  
  

  
0.0

  
 
 

  

  
Low density
  residential
  
  

  
10.0%

  
  

  
70

  
  

  
38

  
  

  
0.52
 
  
  

  
0.27
 
  
  

  
3.32
 
  
  

  
1.83
 
  
  

  
56.9
 
  
  

  
26.2
 
  
  

  
161.1

  
  

  
3.9

  
 
 

  

  
Medium density
  residential
  
  

  
30.0%

  
  

  
70

  
  

  
38

  
  

  
0.52
 
  
  

  
0.27
 
  
  

  
3.32
 
  
  

  
1.83
 
  
  

  
56.9
 
  
  

  
26.2
 
  
  

  
161.1

  
  

  
3.9

  
 
 

  

  
High density
  residential
  
  

  
N/a
< o:p>
  
  

  
97

  
  

  
14

  
  

  
0.24
 
  
  

  
0.08
 
  
  

  
1.17
 
  
  

  
2.12
 
  
  

  
40.5
 
  
  

  
33.0
 
  
  

  
217.9

  
  

  
3.2

  
 
 

  

  
Commercial  
  
  

  
90.0%

  
  

  
77

  
  

  
21

  
  

  
0.33
 
  
  

  
0.17
 
  
  

  
1.74
 
  
  

  
1.23
 
  
  

  
49.3
 
  
  

  
37.0
 
  
  

  
156.3

  
  

  
2.7

  
 
 

  

  
Industrial  
  
  

  
80.0%

  
  

  
149
< o:p>
  
  

  
24

  
  

  
0.32
 
  
  

  
0.11
 
  
  

  
2.08
 
  
  

  
1.89
 
  
  

  
72.4
 
  
  

  
58.0
 
  
  

  
670.8

  
  

  
4.8

  
 
 

  

  
Highways

  
  

  
90.0%

  
  

  
141
< o:p>
  
  

  
24

  
  

  
0.43
 
  
  

  
0.22
 
  
  

  
1.82
 
  
  

  
0.83
 
  
  

  
49.3
 
  
  

  
37.0
 
  
  

  
156.3

  
  

  
2.7

  
 
 

  

  
Water/wetlands

  
  

  
100.0%

  
  

  
6

  
  

  
4

  
  

  
0.08
 
  
  

  
0.04
 
  
  

  
0.79
 
  
  

  
0.59
 
  
  

  
11.1
 
  
  

  
6.5
< o:p>
  
  

  
30.3
 
  
  

  
0.6

  
 

 


  (b)  The average annual storm water runoff  volume  for  the  pervious  and 
impervious areas in each land use category shall be calculated by multiplying 
the average annual rainfall  volume  by  a  runoff  coefficient.   The  total 
average annual  surface  runoff  from  a  specific  land  use,  l,  shall  be 
calculated by weighting the pervious and impervious area runoff  factors  for 
each land use category by the following equation 2:

RL = [CP +(CI-CP)IMPL] * I

where:

RL  =  total average annual surface runoff from land use L (in/yr).
IMPL=  fractional imperviousness of land use L, as specified in Table 1  or 
as approved by the department on a case-by-case basis.
I  =  long-term average annual precipitation (in/yr).
CP  =  pervious  area  runoff  coefficient  of  0.2  or  a  different  runoff 
coefficient approved by the department.
CI  =  impervious area runoff coefficient  of  0.95  or  a  different  runoff 
coefficient approved by the department.
and, where the total runoff in a watershed shall be the area-weighted sum  of 
RL for all land uses.

  (c)  The average total annual load from a watershed or drainage area  shall 
be computed by the following equation 3:

Load P, = Σ ML* AL

where:

LoadP=  total average annual load, expressed in pounds.
ML   =  loading factor for land use L (lbs/ac/yr) from equation 1.
AL   = area (acres) for land use L.

  (d)  The percent  storm  water  load  reduction  from  existing  management 
practices in each subbasin  of  the  watershed  or  drainage  area  shall  be 
calculated by the following equation 4:

Pl,SB = (AC1,SB * Rem 1) . . . . . .(ACn, SB * Remn)
where:

Pl,SB  =  percent of annual storm water pollutant load captured  in  subbasin 
SB by application of the n management practices on land use L.
AC . . .AC,SB= fractional area coverage of management practices 1 through  n 
on subbasin SB.
Rem1. . .Remn = removal  efficiency  of  management  practices  1  through  n 
derived from table 2.





Table 2.  Annual
pollutant removal rates for retention and detention basin storm water
management practices.


 

  

  

Pollutant
  
  

  
Pollutant removal rates (%)

  
 
 

  
  

  
 
  
  

  
Extended   dry

  
Detention

  
  

  
Wet

  
Detention

  
  

  
Retention

  
  

  
Swales

  
 
 

  

  
BOD

  
COD
  
TSS
  
TDS

  
  

  
30%

  
30%
  
90%
  
0%

  
  

  
30%

  
30%
  
90%
  
40%

  
  

  
90%

  
90%
  
90%
  
90%

  
  

  
30%

  
30%
  
80%
  
10%
  
 
 

  

  
Total-P

  
Dissolved-P

  
TKN
  
NO2+NO3

  
  

  
30%

  
0%
  
20%
  
0%

  
  

  
50%

  
70%
  
30%
  
30%

  
  

  
90%

  
90%
  
90%
  
90%

  
  

  
40%

  
10%
  
40%
  
40%
  
 
 

  

  
Lead

  
Copper
  
Zinc
  
Cadmium

  
  

  
80%

  
60%
  
50%
  
80%

  
  

  
80%

  
70%
  
50%
  
80%

  
  

  
90%

  
90%
  
90%
  
90%

  
  

  
75%

  
50%
  
50%
  
65%
  
 

 



  (e)  The storm water runoff baseline for a watershed or drainage area under 
a given  land  use  scenario  and  existing  management  practices  shall  be 
calculated by subtracting the percent  storm  water  runoff  load  reductions 
calculated under subdivision (d) of  this  subrule  from  the  average  total 
annual loading calculated under subdivision (c) of this subrule  and  summing 
over all land uses and all subbasins by the following equation 5:



where:
MASS  =   annual  storm  water  runoff  pollutant-specific  loading  for  the 
watershed or drainage area, expressed in lbs/yr for a given land use scenario.

  (3)  Reduced loading levels achieved after making changes in  land  use  or 
the  implementation  of  new  or  modified  management  practices  shall   be 
calculated by using the procedure and equations specified in subrule  (2)(a), 
(b), (c), (d), and (e) of this rule.
  (4)  The quantity  of  storm  water  load  reductions  generated  shall  be 
calculated by subtracting the reduced loading levels calculated under subrule 
(3) of this rule from  the  storm  water  runoff  baseline  calculated  under 
subrule (2) of this rule.
  (5)  The quantity of credits generated and which may be registered under  R 
323.3019(1) shall be the quantity of storm water load  reductions  calculated 
under subrule (4) of this rule minus the water quality contribution  required 
under R 323.3016(2).
  (6)  The same methods  and  procedures  shall  be  used  to  calculate  the 
baseline, reduced loading level, load reductions generated, and credits.  The 
baseline, reduced loading level, and quantity of  load  reductions  generated 
shall be expressed in the same units.
  (7)  Monitoring data and actual measurements of pollutant  load  reductions 
achieved  in  practice  from  changes  in  land  use  and  implementation  of 
management practices may be used where such information is available.

  History: 2002 AACS.


R 323.3014    Agricultural nonpoint source  baseline;  reduced  loading  level; 
generation of load reductions and credits.
  Rule 14.  (1)  The baseline for agricultural operations shall be  the  most 
protective of any of the following:
  (a)  The pollutant-specific loading from existing  agricultural  operations 
that are not subject to an applicable requirement.
  (b)   The  pollutant-specific  loading  achieved  after  implementation  of 
management practices established by an applicable requirement.
  (c)  A  pollutant-specific  cap  and  loading  allocation  specified  in  a 
watershed management plan approved by the department under this part.
  (d)  A pollutant-specific cap and  loading  allocation  determined  by  the 
department to be consistent with water quality standards and specified  in  a 
remedial action plan or lakewide management plan.
  (2)  The baseline for agricultural operations that are not  subject  to  an 
applicable requirement shall be established by a plan prepared  by  a  person 
who is a certified planner under  the  program  administered  by  the  United 
States department of agriculture, natural resource conservation service.
  (3)  The plan required under subrule (2) of this rule shall include all  of 
the following:
  (a)  Documentation  of  existing  agricultural  operations  and  management 
practices.
  (b)   Quantification  of  the  pollutant-specific  loading  from   existing 
operations and management practices.
  (c)  Identification of operational changes and management  practices  which 
may be implemented to reduce loadings.
  (d)  Quantification of the pollutant-specific  load  reductions  from  each 
operational change and management practice recommended in the plan.
  (4)  If not specified otherwise by an applicable requirement, the  baseline 
and pollutant-specific reduced loading level for each operational change  and 
management practice recommended in the plan prepared pursuant to subrules (2) 
and (3) of this rule shall be established by one of the following methods and 
procedures, as applicable:
  (a)..For sediment, sediment-borne phosphorus, sediment-borne nitrogen,  and 
concentrated animal feedlot runoff, "pollutants  controlled  calculation  and 
documentation," Michigan Department of environmental quality, 1999.
  (b)  For commercial fertilizer application and manure  management,  methods 
and procedures approved by the department on a case-by-case basis.
  (c)..Alternate methods and procedures or models provided electronically  by 
the  department  may  be  used  for  sediment,   sediment-borne   phosphorus, 
sediment-borne  nitrogen,  concentrated  animal  feedlot  runoff,  commercial 
fertilizer application, and manure management when they become available.
  (5)  The quantity of load  reductions  generated  shall  be  determined  by 
subtracting from the baseline calculated under subrule (1)  or  (2)  of  this 
rule, the combined reduced loading level for  each  operational  change,  and 
management practice implemented under the plan as  calculated  under  subrule 
(4) of this rule.
  (6)  The baseline, reduced loading levels, and quantity of load  reductions 
generated shall be expressed in pounds of a specific pollutant  per  year  or 
month.
  (7)  The quantity of credits generated and which may be registered under  R 
323.3019(1) shall be the quantity of load reductions calculated under subrule 
(6) of this rule minus  the  water  quality  contribution  required  under  R 
323.3016(2).
  (8)  The same methods  and  procedures  shall  be  used  to  calculate  the 
baseline, reduced loading level, load reductions generated, and credits.  The 
baseline, reduced loading level, and quantity of  load  reductions  generated 
shall be expressed in the same units.

  History: 2002 MR 21, Eff. Nov. 22, 2002.


R 323.3015    Streambank erosion  nonpoint  source  baseline;  reduced  loading 
level; generation of load reductions and credits.
Rule 15.  (1)  The baseline for streambank erosion sources shall  be  one  of 
the following, whichever is applicable and most protective:
  (a)   The  pollutant-specific  loading  from  existing  streambank  erosion 
sources that are not subject to an applicable requirement.
  (b)   The  pollutant-specific  loading  achieved  after  implementation  of 
management practices established by an applicable requirement.
  (c)  A pollutant-specific cap and loading allocation specified in watershed 
management plan approved by the department under this part.
  (d)  A pollutant-specific cap and  loading  allocation  determined  by  the 
department to be consistent with water quality standards and specified  in  a 
remedial action plan or lakewide management plan.
  (2)  If not specified otherwise by an applicable requirement, the  baseline 
and pollutant-specific reduced loading level for each operational change  and 
management practice  implemented  to  control  streambank  erosion  shall  be 
established by the most conservative of the following methods:
  (a)  The use of historical aerial photographs over a period of at not  less 
than 10 years and current aerial photographs representative of the  site  and 
approved by the department.
  (b)  Lateral recession  rates  calculated  in  accordance  with  procedures 
specified in "pollutants controlled calculation and documentation,"  Michigan 
Department of environmental quality, 1999.
  (c)  Using gully erosion  estimates  at  ½  of  the  amount  calculated  as 
specified in the USDA field office technical  guide  for  Michigan  which  is 
adopted by reference in R323.3026.
  (d)  Other methods or procedures approved by the department.
  (3)  The quantity of load  reductions  generated  shall  be  determined  by 
subtracting from the baseline calculated under subrule (1)  or  (2)  of  this 
rule, the reduced loading level for each  control  installed  and  management 
practice implemented to control streambank erosion.
  (4)  The baseline, reduced loading levels, and quantity of load  reductions 
generated shall be expressed in pounds of a specific pollutant per  month  or 
year.
  (5)  The quantity of credits generated and which may be registered under  R 
323.3019(1) shall be the quantity of load reductions calculated under subrule 
(3) of this rule minus  the  water  quality  contribution  required  under  R 
323.3016(2).
  (6)  The same methods  and  procedures  shall  be  used  to  calculate  the 
baseline, reduced loading level, load reductions generated, and credits.  The 
baseline, reduced loading level, and quantity of  load  reductions  generated 
shall be expressed in the same units.

  History: 2002 AACS.


R 323.3016    Water quality contribution and uncertainty.
  Rule 16.  (1)  Except for  a  source  of  storm  water  regulated  under  a 
national permit, each point source that generates  discharge  reductions  and 
registers credits under this part  shall  contribute  10%  of  the  discharge 
reductions to the department to address uncertainty  and  to  provide  a  net 
water quality benefit.  This 1-time 10% contribution shall  be  effective  at 
the time the department issues a notice  of  completeness  for  a  notice  of 
generation.
  (2)  Each storm water source regulated under a  national  permit  and  each 
nonpoint source that generates load reductions and  registers  credits  under 
this part shall contribute 50% of the load reductions to  the  department  to 
address uncertainty and to provide a net water quality benefit.  A source may 
request approval from the director for a contribution less than 50%  but  not 
less than 10%.  This 1-time contribution shall be effective at the  time  the 
department issues a notice of completeness for a notice of generation.
  (3)  The 1-time contribution required under subrules (1) and  (2)  of  this 
rule shall be calculated in the same units and  for  the  same  time  periods 
during which the discharge or load reductions are made to generate credits.

  History: 2002 AACS.


R 323.3017    Discount factors applied to the use of credits.
  Rule 17.  (1)  A source that  uses  credits  generated  by  another  source 
upstream of a wetland, pond, lake, or impoundment located between the sources 
in an attainment area or a nonattainment area for which a total maximum daily 
load has not been established shall obtain a quantity of credits 10%  greater 
than the amount required  to  comply  with  a  water  quality-based  effluent 
limitation specified by an applicable requirement.  This  equivalence  factor 
shall be applied at the time a notice of use is submitted under R 323.3020(1).
  (2)  A source that uses credits in a nonattainment area for which  a  total 
maximum daily load has not  been  established  shall  obtain  a  quantity  of 
credits 10%  greater  than  the  amount  required  to  comply  with  a  water 
quality-based effluent limitation or the loading that would  be  achieved  in 
practice through implementation  of  management  practices  specified  by  an 
applicable requirement, whichever is applicable. This  water  quality  factor 
shall be applied at the time a notice of use is submitted under R 323.3020(1).
  (3)  Discount factors different than those specified in subrules (1)and (2) 
of this rule may be established by the department where necessary to  achieve 
and maintain water quality standards or as  a  requirement  for  a  watershed 
management plan or other type of trade authorized by the department  pursuant 
to this part.

  History: 2002 AACS.


R 323.3018    Nutrient discharge and  load  reductions;  early  reductions  and 
credit life.
  Rule 18.  (1)  Banked credits for total phosphorus and total nitrogen which 
are entered in the water quality trading registry under R 323.3021(1) may  be 
used or traded for a period of 5 calendar years after the year of generation, 
subject to the prohibitions, restrictions, and conditions established in this 
part.
  (2)  Point source discharge reductions and nonpoint source load  reductions 
of total phosphorus or total nitrogen that are necessary to  comply  with  an 
applicable requirement defined in R 323.3001(c)(i) and which occur before the 
final compliance date specified by the applicable requirement  defined  in  R 
323.3001(c)(i); excluding early compliance with  a  schedule  resulting  from 
violations of applicable requirements defined in  R  323.3001(c)(i),  may  be 
registered for use at a later time.  These banked  credits  may  be  used  or 
traded for a period of 5 calendar years after the year  of  generation  or  1 
calendar year after the effective date of final compliance, whichever  occurs 
first, subject to the prohibitions, restrictions, and conditions  established 
in this part.
  (3)  Credits not used within the credit life specified in subrules (1)  and 
(2) of this rule shall be retired to provide  a  water  quality  benefit  and 
shall not be eligible for use under this part.

  History: 2002 AACS.


R 323.3019    Notification  requirements  for  generation  of  discharge,  load 
reductions, and registration of credits.
  Rule 19.  (1)  A person who generates a discharge  or  load  reduction  and 
wishes to register credits shall provide, to the  department,  a  notice  and 
certification of the discharge or load  reduction  being  generated  and  the 
credits being registered.
  (2)  The notification required by subrule (1) of this  rule  shall  include 
all of the following information:
  (a)  The name and location,  by  street  address,  zip  code,  county,  and 
watershed, of the source, process, or operation at which  discharge  or  load 
reductions have been or will be generated and the location where records  are 
or will be kept.  Point sources shall also provide the latitude and longitude 
coordinates  of  the  outfalls  at  which  discharge  reductions  are   being 
generated.  Unpermitted sources of storm  water  runoff  and  other  nonpoint 
sources shall either provide latitude and longitude coordinates  or  section, 
township, and range to the nearest one quarter.
  (b)  The name, street address, and  telephone  number  of  the  responsible 
individual providing notice  and  certification  of  the  discharge  or  load 
reductions generated and credits being registered.
  (c)  The numerical effluent limitation or management practices specified by 
an applicable requirement, the actual discharge level or existing  management 
practices, and associated loadings that constitutes the baseline, the reduced 
discharge level, or loading that  must  be  complied  with  during  the  time 
reductions are made to generate credits.
  (d)  The total pollutant-specific quantity of discharge or load  reductions 
generated and the quantity of credits to be registered, by watershed.
  (e)  An identification of  the  source,  process,  or  operation  at  which 
discharge or load reductions have or will be generated.
  (f)  A description of the method or methods used to generate the  discharge 
or load reduction.
  (g)  The date that the discharge or load reduction will take effect and the 
period of time that the reduction will remain in effect.
  (h)  The methods,  procedures,  and  calculations  used  to  determine  the 
baseline, reduced discharge, or loading level, discharge  or  load  reduction 
generated, and credits registered.
  (i)   An  identification  of  quantification  and  monitoring  methods  and 
procedures established by an applicable requirement, if any.
  (3)  The notice required by subrule (2) of this rule shall  be  accompanied 
by a certification by the responsible individual of all of the following:
  (a)  That to the  best  of  the  responsible  individual's  knowledge,  the 
information contained in the notice is true, accurate, and complete.
  (b)  The discharge or load reductions are real, surplus, and  quantifiable, 
and if the reductions have not already been generated,  that  the  reductions 
will be generated by the date and for the period of  time  specified  in  the 
notice of  generation  that  has  been  determined  to  be  complete  by  the 
department pursuant to subrule (4) of this rule.
  (c)  The discharge or load reductions  have  not  been  used  elsewhere  as 
credits.
  (4)  The notice  and  certification  required  under  this  rule  shall  be 
submitted electronically  or  by  certified  mail  to  the  department.   The 
department shall review the notice and  certification  for  completeness  and 
consistency with this part.  Within 30 days of  receipt  of  the  notice  and 
certification, the department  shall  make  a  determination  and  provide  a 
written response to the person submitting the notice  and  certification.   A 
determination made by the department  shall  be  considered  a  final  agency 
decision subject to review by a court of competent jurisdiction under section 
631 of 1961 PA  236,  MCL  600.631.   A  determination  of  completeness  and 
consistency by the department does not  constitute  an  agency  certification 
that the credits are real, surplus,  or  quantifiable.   If  the  notice  and 
certification include all the information required under subrules (2) and (3) 
of this rule and the department determines that the generation of credits  is 
consistent with all applicable provisions of this part, then  the  department 
shall,  within  5  business  days,  enter  the  information  required  by   R 
323.3021(2) in the water quality trading registry.  Immediately upon entry in 
the water quality  trading  registry,  the  information  in  the  notice  and 
certification shall be available to the public, except for  information  that 
is determined to be confidential under the provisions of section 3111 of part 
31, water resources protection, 1994 PA 451, R 323.2128, and the  freedom  of 
information act,  1976  PA  442,  MCL  15.231  et  seq.   If  the  department 
determines  that  the  notice  and  certification  do  not  include  all  the 
information required under subrules (2) and (3) of  this  rule  or  that  the 
proposed generation of credits is inconsistent with  any  provision  of  this 
part, then the discharge or load reductions  are  not  eligible  to  generate 
credits.  A determination of incompleteness  or  inconsistency  made  by  the 
department under this  subrule  shall  include  an  explanation  of  why  the 
determination was made.  A determination of incompleteness  or  inconsistency 
shall not preclude a person from submitting a corrected or revised notice and 
certification.
  (5)  The methods used, operational changes made,  or  management  practices 
implemented to generate credits for which a complete notice and certification 
is submitted to the department shall become legally enforceable requirements, 
upon the effective date of the determination of completeness  issued  by  the 
department or the  date  that  the  discharge  or  load  reductions  will  be 
generated as specified in  the  notice  determined  to  be  complete  by  the 
department.
  (6)  Issuance of a notice of credit generation by the  department  pursuant 
to subrule (4) of this rule shall constitute departmental notice that a point 
source is subject to alternate national permit limits in the national  permit 
for the period specified in the notice.  The discharge from a source shall be 
considered by the department to be in compliance if the actual  discharge  is 
equal to or less than the baseline specified in the notice minus the quantity 
of discharge reductions that are generated.
  (7)  A source which generates credits pursuant to this part shall report to 
the department the baseline, the quantity of discharge  or  load  reductions, 
and the credits generated for each pollutant, expressed in  pounds  per  day, 
week, month, or year.  Except  for  storm  water  sources  without  numerical 
effluent limitations specified by a  national  permit,  point  sources  shall 
submit this information to the  department  on  discharge  monitoring  report 
forms provided by the department as  necessary  to  be  consistent  with  the 
effluent limitations, monitoring, and reporting requirements specified  in  a 
national permit.  The discharge  monitoring  report  forms  provided  by  the 
department shall include data fields to show the baseline and the quantity of 
discharge reductions and credits generated for each  pollutant  expressed  in 
pounds per day, week, month, or year, as necessary to be consistent with  the 
corresponding effluent limitation specified  in  the  national  permit.   For 
nonpoint sources and storm water sources subject to a national permit without 
numerical effluent limitations, an quarterly report shall be submitted to the 
department on a form provided by the department. The  reports  shall  include 
all of the following information:
  (a)  The name and location of the site.
  (b)  The pollutants controlled.
  (c)  The control devices installed or management practices implemented  and 
dated completed.
  (d)  The lineal feet or acres for which controls  or  management  practices 
have been completed.
  (e)  A calculation of the quantity of each pollutant controlled  using  the 
same methods and procedures used to determine the baseline, load  reductions, 
and credits.

  History: 2002 AACS.


R 323.3020    Notification requirements for the registration, use, and  trading 
of credits.
  Rule 20.  (1)  A  person  applying  to  use  or  trade  credits  under  the 
provisions of this part shall provide prior notice to  the  department.   The 
notice shall include all of the following information:
  (a)  The name and location,  by  street  address,  zip  code,  county,  and 
watershed, of the source, process, or operation at which credits  are  to  be 
used or traded.  Point sources shall also provide the latitude and  longitude 
coordinates of the outfalls where credits are to be used.   Nonpoint  sources 
where credits are to be  used  shall  also  provide  latitude  and  longitude 
coordinates or section, township, and range to the nearest one quarter.
  (b)  The name, address, and telephone number of the responsible  individual 
providing notice of use or trading of credits.
  (c)  The numerical effluent limitation or management practices specified by 
an applicable requirement, the number of credits  used  to  comply  with  the 
effluent limitation or the  loadings  associated  with  management  practices 
specified by an applicable  requirement,  and  the  actual  discharge  level, 
management practices, and associated  loading  that  must  be  complied  with 
during the use of credits.
  (d)  The pollutant-specific quantity of credits, in pounds per  day,  week, 
month, or year, that are used or traded, on a watershed basis.
  (e)  A description of the  source,  process,  or  operation  at  which  the 
credits are to be used.
  (f)  An identification of all applicable requirements to be  complied  with 
through the use of credits and the methods and procedures  used  to  quantify 
loading and to determine compliance with each applicable requirement.
  (g)   The  effective  dates  of  use  of  the  credits   and   calculations 
demonstrating compliance through the use of credits.
  (h)  A copy of the notice of generation required under  R  323.3019(1)  for 
the credits to be traded or used.
  (2)  The notice required by subrule (1) of this rule shall  be  accompanied 
by a certification by the responsible individual, that the information in the 
notice is true, accurate, and complete  and  that  the  source,  process,  or 
operation shall be operated in compliance with  all  applicable  requirements 
and the conditions and requirements for the use of credits under this part.
  (3)  The notice  and  certification  required  under  this  rule  shall  be 
submitted electronically  or  by  certified  mail  to  the  department.   The 
department shall review the notice and  certification  for  completeness  and 
consistency with this part.  The department shall enter the  proposed  notice 
of use in the registry within 3 business days of receipt.  Within 30 days  of 
receipt of  the  notice  and  certification,  the  department  shall  make  a 
determination as to whether the notice and certification are complete and the 
proposed use is consistent with all applicable provisions of this  part,  and 
provide  a  written  response  to  the  person  submitting  the  notice   and 
certification.  A determination made by the department shall be considered  a 
final agency decision subject to review by a court of competent  jurisdiction 
under  section  631  of  600.631  1961  PA  236,  MCL.   If  the  notice  and 
certification include all the information required under subrules (1) and (2) 
of this rule and the department determines that the proposed use  of  credits 
is  consistent  with  all  applicable  provisions  of  this  part,  then  the 
department shall, within 5 business days, enter the information required by R 
323.3021(2) in the water quality trading registry.  Immediately upon entry in 
the water quality  trading  registry,  the  information  in  the  notice  and 
certification shall be available to the public, except for  information  that 
is determined to be confidential under the provisions of section 3111 of part 
31, water resources protection, 1994 PA 451, R 323.2128, and the  freedom  of 
information act, 1976 PA 442, MCL 15.231 et seq.
  (4)  The department shall not issue a  determination  of  completeness  and 
consistency for a notice and certification that  does  not  provide  all  the 
information required under subrules (1)  and  (2)  of  this  rule  or  for  a 
proposed use of credits that the department determines  would  violate  water 
quality standards, or is inconsistent with any other applicable provision  of 
this part.  If the department determines the  notice  and  certification  are 
incomplete or the department determines the proposed use of  credits  is  not 
consistent with water quality standards, or other provisions  of  this  part, 
then the proposed use of credits shall not occur.  The determination made  by 
the department under  this  rule  shall  explain  why  the  determination  of 
incompleteness and inconsistency was made.  A determination of incompleteness 
or inconsistency with the provisions of this part by the department shall not 
preclude a person applying to use credits from submitting  a  revised  notice 
and certification to correct the inconsistencies identified by the department.
  (5)  The methods used, and operational changes made,  to  use  credits  for 
which a notice and  certification  are  determined  to  be  complete  by  the 
department shall become legally enforceable operating requirements, effective 
on the date the department issues a  notice  of  completeness,  or  the  time 
period that is specified in the notice of use determined to  be  complete  by 
the department.
  (6)  A person who purchases, trades, or uses credits under this part  shall 
include the price paid for the credits in the notice required by subrule  (1) 
of this rule, or by separate  written  notice  to  the  department  within  7 
business days of the purchase, trade, or use.
  (7)  A person who has registered the use of  credits  with  the  department 
shall be allowed a period of time, not to exceed 60 days, commencing with the 
end of the use period specified in the notice of use to amend the  notice  of 
use and to submit a notice and certification pursuant  to  R  323.3019(1)  to 
register any unused credits in excess of the quantity  needed  for  the  uses 
specified in the original notice of use.
  (8)  Issuance of a notice for use of credits by the department pursuant  to 
subrule (3) of this rule shall constitute departmental notice  that  a  point 
source is  subject  to  alternate  national  permit  limits  for  the  period 
specified in the notice.  The discharge from a source shall be considered  by 
the department to be in compliance if the actual discharge  is  equal  to  or 
less than the  water  quality-based  effluent  limitation  specified  in  the 
national permit plus the credits achieved  by  the  source  or  sources  that 
generate the credits used by the source expressed in pounds  per  day,  week, 
month, or year, and minus any discount factor applied to the use  of  credits 
under R323.2019 as necessary to be consistent with the corresponding effluent 
limitation specified in a national permit.
  (9)  A source which uses credits pursuant to this part shall report to  the 
department the number of credits used for each pollutant, expressed in pounds 
per day, week, month, or year.  For point sources, this information shall  be 
submitted to the department through discharge monitoring reports provided  by 
the department as necessary to be consistent with the corresponding  effluent 
limitation specified in a national permit.  The discharge  monitoring  report 
forms provided by the department  shall  include  data  fields  to  show  the 
quantity of credits used for each pollutant, expressed  in  pounds  per  day, 
month, or year as necessary to be consistent with the corresponding  effluent 
limitation specified in a national permit.  For nonpoint sources,  an  annual 
report shall be submitted to  the  department  on  a  form  provided  by  the 
department.

  History: 2002 AACS.


R 323.3021    Water quality trading registry.
  Rule 21.  (1)  The department shall establish and maintain a water  quality 
trading registry for all of the following purposes:
  (a)  Registering discharge and load reductions  that  are  generated  under 
this part.
  (b)  Registering and tracking the generation, use, and trading of credits.
  (c)  Registering the discharge and load reductions that are contributed  to 
the state for retirement as a water quality contribution under R  323.3016(1) 
and (2).
  (d)  Providing real time public access to information on the water  quality 
trading program.
  (2)  The water quality trading registry shall contain all  the  information 
required by R 323.3019(2) and R 323.3020(1).
  (3)  The water quality trading registry  shall  be  updated  daily  by  the 
department.
  (4)  The department shall make all of the following  information  contained 
in the water quality trading registry available to the public  through  daily 
updates to an electronic bulletin board:
  (a)  The name and location, by address,  county,  and  receiving  water  or 
watershed, of the sources, processes, and operations at  which  discharge  or 
load reductions have been or will be generated.
  (b)  A brief description of the source, process,  or  operations  at  which 
discharge or load reductions and credits have been or will be generated.
  (c)  The numerical effluent limitation or management practices specified by 
an applicable requirement, the actual discharge level or existing  management 
practices, and associated loadings that constitute the baseline, the  reduced 
discharge level, or loading that  must  be  complied  with  during  the  time 
reductions are made to generate credits.
  (d)  The pollutant-specific quantity of credits, in pounds per  day,  week, 
month, or year that have been registered.
  (e)  A brief description of the method or methods used, or to be  used,  to 
generate discharge or load reductions and credits.
  (f)  The effective date and the life of credits that have been or  will  be 
generated.
  (g)  Identification of the methods and  procedures  used  to  quantify  the 
generation of discharge or load reductions, and the use of credits to  comply 
with applicable requirements.
  (h)  The name and location, by address,  county,  and  receiving  water  or 
watershed, of the source, process, and operations at which credits are being, 
or will be, used.
  (i)  A description of the source, process, or operations at  which  credits 
are, or will be, used.
  (j)  The numerical effluent limitation or management practices specified by 
an applicable requirement, the number of credits  used  to  comply  with  the 
effluent limitation or the  loadings  associated  with  management  practices 
specified by an applicable  requirement,  and  the  actual  discharge  level, 
management practices, and associated  loading  that  must  be  complied  with 
during the use of credits.
  (k)  The pollutant-specific quantity of credits used, in  pounds  per  day, 
week, month, or year on a watershed basis.
  (l)  The effective date and period of time during  which  credits  will  be 
used.
  (m)  An identification of the applicable requirement that credits are being 
or will be used to comply with.
  (n)  The net water quality benefit, by pollutant, for each watershed  where 
trading occurs.
  (5)  The responsible individual who certified  the  generation  or  use  of 
credits shall notify the department of any data entry  errors  and  necessary 
corrections to the information posted on the electronic bulletin board within 
10 business days of the receipt of a determination of completeness  from  the 
department.  The department shall promptly correct any data entry  errors  on 
the electronic bulletin board.

  History: 2002 AACS.


R 323.3022    Delineation of watersheds for purposes of water quality trading.
  Rule 22.  (1)  A watershed in which trading occurs under this part shall be 
delineated by one of the following methods, whichever is applicable:
  (a)  For open nutrient trading, the watersheds shall be delineated  by  the 
department's map of Michigan's major watersheds (figure 1).  This map may  be 
obtained  electronically  from  the  department's  web  page  or   from   the 
department's land and water management division.



  (b)  For closed nutrient trading in areas for which a total  maximum  daily 
load has been established, the watersheds shall be delineated as described in 
the section 303(d) of the clean water act list prepared by the department and 
approved by the administrator.
  (c)  For closed nutrient trading in areas  for  which  the  department  has 
approved a watershed management plan under this part, the watershed shall  be 
the surface water and area identified and delineated in the plan.
  (d)  For other types of trades approved by the department under this  part, 
the trading area for the specific pollutant or pollutants to be traded  shall 
be established on a case-by-case basis.

  History: 2002 AACS.


R 323.3023    Watershed management plans for water quality trading;  submittal; 
approval.
  Rule 23.  (1)  Water quality trading under this part may occur under any of 
the following plans that include all the information required in subrule  (2) 
of this rule:
  (a)   A  plan  approved  by  the  department  and  the  administrator   for 
implementation of a total maximum daily load developed under  section  303(d) 
of the clean water act.
  (b)  A remedial action plan or  lakewide  management  plan  that  has  been 
determined by the department to be consistent with water quality standards.
  (c)  A watershed management plan developed under a  grant  awarded  by  the 
department under section 319 of the clean  water  act  and  implemented  with 
other sources of funding.
  (d)  A watershed-based storm water management  program  or  a  storm  water 
pollution prevention initiative approved by the department under  a  national 
permit.
  (e)  A watershed-based storm water management  program  submitted  under  a 
voluntary national permit issued by the department.
  (f)  A nonpoint source watershed management plan developed  under  a  grant 
awarded by the department under the clean Michigan initiative, 1998  PA  287, 
MCL 324.8801 et seq. and implemented with other sources of funding.
  (2)  In addition to the plan content and specifications established  by  an 
applicable requirement, each plan listed in subrule (1) of  this  rule  shall 
also include all of the  following  information  for  the  purpose  of  water 
quality trading:
  (a)  An identification and statement of the purpose of the plan.
  (b)  An identification and delineation of the boundaries of  the  receiving 
water or watershed for which the plan has been prepared and where trading may 
occur.
  (c)  A pollutant-specific inventory of point and nonpoint sources that  may 
engage in trading in the plan area.
  (d)  A pollutant-specific cap for the receiving  water  or  watershed  that 
includes all the point and nonpoint sources that may engage in trading in the 
plan area and that is consistent with achieving and maintaining water quality 
standards.
  (e)  Point and nonpoint source baseline allocations or management practices 
for all the sources that may generate, use, or trade credits in the plan area.
  (f)  Either a demonstration that the use of credits under the plan does not 
constitute a lowering of water quality pursuant to R 323.1098(8) or (9) or  a 
demonstration that social or economic development and  the  benefits  to  the 
area in which the receiving waters are located would be forgone if the use of 
credits is not allowed in accordance with the provisions of R 323.1098(4).
  (3)  Plans listed under subrule (1) of this rule shall be approved  by  the 
department for the purposes of trading before  any  trading  activity  occurs 
under the plan and this part.
  (4)  In addition to the plans listed under subrule (1) of  this  rule,  any 
person may submit to the department for approval  a  comprehensive  watershed 
management plan to conduct water quality trading for  any  of  the  following 
purposes:
  (a)  Implementing programs or projects to improve water quality and enhance 
aquatic habitat.
  (b)  Reestablishing or creating wetlands or floodplains.
  (c)  Encouraging environmentally sound land use practices.
  (d)  Accommodating growth and economic development.
  (e)  Creating nature conservancies, parks, and natural areas.
  (f)  Other projects or programs  included  in  a  plan  determined  by  the 
department to be consistent with water quality standards.
  (5)  Watershed management plans submitted pursuant to the department  under 
subrule (4) of this rule may be prepared by any of the following entities:
  (a)  Any person living in the plan area.
  (b)  Any municipality in the area for which the plan is prepared.
  (c)  Any watershed council or other organization authorized to prepare  and 
submit a plan on behalf of those affected in the plan area.
  (6)  Watershed management plans prepared under subrule  (4)  of  this  rule 
shall be based  on  the  most  complete,  accurate,  and  reliable  data  and 
information  available.   The  plans  shall  include  all  of  the  following 
information:
  (a)  A statement of the purpose of the plan.
  (b)  An identification and delineation of the boundaries of  the  receiving 
water or watershed for which the plan has been prepared and where trading may 
occur.
  (c)  A description of current and projected land use activities within  the 
area for which the plan is prepared.
  (d)  An assessment of  existing  water  quality  and  comparison  to  water 
quality standards for the receiving waters or watershed for which the plan is 
prepared.
  (e)  A pollutant-specific inventory of point and nonpoint  sources  in  the 
plan area for the pollutant proposed to be traded.
  (f)  An identification of goals and priorities for implementing the plan.
  (g)   Specific  activities,  management  options,  and   a   schedule   for 
implementation of the plan.
  (h)  An  identification  of  those  persons,  organizations,  and  agencies 
responsible for implementation of the plan.
  (i)  A  pollutant-specific  cap  that  is  consistent  with  achieving  and 
maintaining water quality standards in the receiving water or  watershed  and 
that includes all point and nonpoint sources that may engage in trading.
  (j)  Point and nonpoint source baseline allocations or management practices 
for the generation and use of credits by  all  sources  that  may  engage  in 
trading in the plan area.
  (k)  Either a demonstration that the use of credits does not  constitute  a 
lowering of water quality pursuant to R 323.1098(8) or (9) or a demonstration 
that the social or economic development and the benefits to the area in which 
the receiving waters are located would be forgone if the use  of  credits  is 
not allowed in accordance with the provisions of R 323.1098(4).
  (l)  A program to  periodically  assess  the  effectiveness  of,  and  make 
revisions to, the plan.
  (m)  A process for  stakeholder  involvement  throughout  the  development, 
implementation, and revision of the plan.
  (n)  A written agreement, and all approvals as may be required by law, from 
each person that is affected by or may engage in trading under the plan.
  (7)  The department shall review and approve  plans  for  the  purposes  of 
trading that are consistent with this part, comply  with  applicable  federal 
and state regulations, and which provide  reasonable  assurances  that  water 
quality will be achieved and maintained.
  (8)  Before approving a watershed management plan submitted  under  subrule 
(1) or (4) of this rule, the department shall provide  public  notice  and  a 
30-day comment period on the watershed management plan and  the  department's 
proposed action to approve the plan.  The  department  shall  hold  a  public 
hearing if the department determines that  a  sufficient  public  controversy 
exists or that additional information is necessary under subrule (2)  or  (6) 
of this rule.  The department shall consider all comments received during the 
comment period and the public hearing, if held, before taking final action to 
approve the plan.
  (9)  Approval or disapproval  of  the  watershed  management  plan  by  the 
department shall be final.
  (10)  A watershed management plan and revisions to the  plan,  approved  by 
the department, shall be effective for a period of not more than  5  years.
The plan and revisions to the plan shall  be  binding  for  the  purposes  of 
trading on the department and the parties to the plan,  unless  the  plan  is 
withdrawn.

  History: 2002 AACS.


R 323.3024    Program evaluation.
  Rule 24.  (1)  The department shall conduct  an  evaluation  of  the  water 
quality  trading  program  established  under  this  part   to   assess   the 
environmental and economic performance of the program.  The first  evaluation 
shall be conducted 3 years after the effective date of this part.  The  first 
evaluation shall  include  all  trading  activity  that  occurs  statewide.
Thereafter, watershed-specific evaluations shall be conducted every 5  years, 
or more frequently if deemed necessary by  the  department,  in  a  receiving 
water  or  watershed  where   trading   occurs.    These   watershed?specific 
evaluations shall be conducted  during  the  same  basin  year  that  ambient 
monitoring and permitting cycles for national permits are  conducted  by  the 
department.  The evaluations shall include all of the following information:
  (a)  Identification of the receiving water or watershed where  trading  has 
occurred.  The identification shall include  a  delineation  of  the  trading 
area, the number and mix of point and nonpoint sources in the  trading  area, 
and the status of water quality in the trading area.
  (b)  Ambient monitoring conducted by  the  department  to  quantify  actual 
nonpoint source load reductions and assess water quality in a receiving water 
or  watershed  where  trading  has  occurred.   The  department  may  include 
monitoring data and information conducted by  other  agencies,  institutions, 
organizations, or  persons  where  such  monitoring  has  been  conducted  in 
accordance with procedures outlined in  40  C.F.R.  §136  (2000),  which  are 
adopted by reference in R323.3027, or in  accordance  with  other  procedures 
approved by the department.
  (c)  The type and number of trades, by pollutant, for each watershed  where 
trading occurs.
  (d)  The quantity of credits that have been traded.
  (e)  The quantity of discharge or load reductions that have been retired.
  (f)  A comparison of the cost of reducing pollutant discharges and loadings 
through trading to  the  cost  of  achieving  equivalent  reductions  without 
trading, where  adequate  information  for  point  and  nonpoint  sources  is 
available.
  (g)  The price paid for credits that are used or traded, by pollutant.
  (h)  The costs incurred by  the  department  to  administer,  monitor,  and 
enforce the program.
  (i)  The transaction costs incurred by  point  and  nonpoint  sources  that 
participate in the program where such information is available.
  (2)  The department shall evaluate the information provided  under  subrule 
(1) of this rule to make the following determinations:
  (a)  Whether the program is consistent with achieving and maintaining water 
quality standards in the receiving waters or  watersheds  where  trading  has 
occurred.
  (b)  Whether water quality trading has resulted in a net reduction  in  the 
loadings of pollutants from point and nonpoint sources that have  engaged  in 
trading.
  (c)  Whether the program has achieved voluntary  and  early  reductions  of 
pollutant discharges and loadings from point and nonpoint sources and whether 
the program has resulted in the development  of  emerging  pollution  control 
technology or new or improved methods and procedures for  the  quantification 
of point and nonpoint source discharges.
  (d)  Whether the program has caused any localized adverse  effects  to  the 
public health, safety, welfare, or environment.
  (e)   Whether  monitoring,  recordkeeping,   reporting,   and   enforcement 
provisions of the program have resulted  in  a  sufficiently  high  level  of 
accountability and compliance.
  (3)  The department shall prepare and make available to the public a report 
of the program evaluation conducted pursuant to subrules (1) and (2) of  this 
rule.  The report shall include  the  findings  of  the  evaluation  and  any 
proposed program modifications deemed necessary by the department  to  assure 
all of the following:
  (a)  Trading occurs in a manner  that  is  consistent  with  water  quality 
standards.
  (b)  Localized adverse impacts to the public health,  safety,  welfare,  or 
environment do not occur as a result of the use of credits.
  (c)  Trading results in a net water quality improvement.
  (d)  To improve the environmental or economic performance of the program.
  (4)  The department shall provide a public  notice  and  a  30-day  comment 
period and opportunity for public  hearing  before  finalizing  the  findings 
contained in the report and any proposed program  modifications  pursuant  to 
subrule (3) of this rule.  The department shall hold a public hearing if  the 
department determines that a  sufficient  public  controversy  exists  or  if 
additional information is desired  before  action  by  the  department.   The 
department shall consider all comments received during the comment period and 
public hearing, if held, before finalizing  the  findings  contained  in  the 
report and any proposed program modifications.
  (5)  The department shall, after public notice,  comment,  and  opportunity 
for hearing,  modify  the  program  as  necessary  to  achieve  the  purposes 
established in R 323.3002.

  History: 2002 AACS.


R 323.3025    Compliance and enforcement.
  Rule 25.  (1)  Notwithstanding another person's liability,  negligence,  or 
false representation, a person or source that uses credits  under  this  part 
shall be solely responsible to assure that any  source,  process,  equipment, 
property, and  operation  under  his  or  her  ownership  or  control  is  in 
compliance with all applicable discharge standards and effluent limitations.
A person or source that generates discharge or load reductions and  registers 
credits that are traded or used under this part shall be strictly liable  for 
assuring that the reductions are real, surplus, quantifiable,  and  equal  to 
the quantity of credits that are registered.
  (2)  A person or source at any time  may  provide  written  notice  to  the 
department that  the  quantity  of  discharge  or  load  reductions  actually 
generated or the quantity of credits used or traded are  not  real,  surplus, 
quantifiable, or are insufficient for the purpose  they  are  registered.   A 
person or source that provides a notice of insufficient reductions or credits 
without first having been notified by the  department  shall  be  provided  a 
reconciliation period of not more than 30 days to  true-up  the  insufficient 
reductions or credits if all of the following conditions are met:
  (a)  The notice of insufficient  reductions  or  credits  is  submitted  by 
certified mail to the department within 7 days  of  the  discovery  that  the 
reductions  or  credits  are  insufficient  or  are  not  real,  surplus,  or 
quantifiable.
  (b)  The notice of insufficient reductions or credits submitted pursuant to 
subrule (2)(a) of this rule shall include all of the following information:
  (i)  A detailed description and explanation of how, and the date when,  the 
insufficient reductions or credits were discovered.
  (ii)  A statement of the corrective actions taken or to be taken,  and  the 
time when the actions were  completed  or  a  schedule  describing  when  the 
actions will be taken and completed.
  (iii)  A revised notice and certification of discharge  or  load  reduction 
generation or credit use, whichever is applicable.
  (iv)  Certification by a responsible individual that, to the  best  of  the 
individual's  knowledge,  the  information  in  the  notice  of  insufficient 
reductions or credits is true, accurate, and complete.
  (c)  Upon submitting the notice of insufficient reductions or credits,  the 
person submitting the notice shall  also  do  either  of  the  following,  as 
applicable:
  (i)  If insufficient credits are registered and have  been  traded  or  are 
being used, then the person or source submitting the notice shall, within  30 
days, implement and register discharge or load reductions or  obtain  credits 
from another person or source to true-up the quantity of  discharge  or  load 
reductions or credits that were insufficient or were not  real,  surplus,  or 
quantifiable.
  (ii)  If the credits have not been used  or  traded,  then  the  person  or 
source   submitting   the   notice   of   insufficient    reductions    shall 
contemporaneously submit either of the following:
  (A)  A revised notice of generation of discharge or load reductions.
  (B)  A written request for the department to withdraw the credits from  the 
water quality trading registry.
  (3)  If the department finds, without being  provided  notice  pursuant  to 
subrule (2) of this rule, that a person or source has registered  a  quantity 
of reductions that are not  real,  surplus,  or  quantifiable,  or  that  the 
quantity of reductions and resulting credits is less than the  quantity  that 
have been used or traded  then,  the  person  or  source  who  generated  the 
insufficient reductions and registered credits shall generate or obtain,  and 
donate credits to the department in an amount equal to treble the  number  of 
insufficient  reductions  and  credits  that  are  not  real,   surplus,   or 
quantifiable. Discharge and load reductions generated and credits donated  to 
the department under this subrule shall be retired to provide a water quality 
benefit.
  (4)  A person or source that  is  granted  a  reconciliation  period  under 
subrule (2) of this rule and who complies with the  requirements  of  subrule 
(2) of this rule and has not violated other provisions of this part shall  be 
considered to be in compliance with this part.
  (5)  If the department determines that a person or source has violated  the 
provisions of the act or a provision of a permit, order, rule, or stipulation 
of the department, then  the  department  may  take  appropriate  enforcement 
action as provided under the act and this  part.   In  any  such  enforcement 
proceeding, a person  or  source  that  generates  reductions  and  registers 
credits shall have the burden of proof  that  the  reductions  generated  and 
credits registered are real, surplus, quantifiable, and sufficient.  A person 
who uses credits under this part shall  have  the  burden  of  proof  of  due 
diligence to comply with all  applicable  discharge  standards  and  effluent 
limitations established by an applicable requirement and to comply  with  the 
requirements of this part.
  (6)  Notwithstanding other provisions of this  rule,  a  source  that  uses 
credits that are later determined not to be real, surplus,  quantifiable,  or 
sufficient shall have a reconciliation period  of  90  days  to  true-up  the 
quantity  of  credits  that  were  determined  not  to  be   real,   surplus, 
quantifiable, or sufficient.  The reconciliation period shall  begin  on  the 
date of discovery by the source or the date of a  written  notification  from 
the department, whichever is first.  A source or person that knows, or should 
have known, that the credits used were not real, surplus,  quantifiable,  and 
sufficient shall not be entitled to the reconciliation period provided  under 
this subrule.

  History: 2002 AACS.


R 323.3026    Availability of documents
  Rule 26  (1)  The following documents referenced in this part  are  adopted 
by reference and are available for inspection at, and may be obtained at  the 
cost as of the time of adoption of these rules of 5  cents  per  page  and  a 
labor rate of $19.78 per hour from, the Lansing office of the  Department  of 
environmental quality, 525 Allegan Street, P.O. Box 30273, Lansing,  Michigan 
48909-7773:
  (a)   "Pollutants  Controlled  Calculation  and  Documentation,"   Michigan 
Department of environmental quality, 1999.
  (b)   The  United  States  Department  of  Agriculture,  Natural   Resource 
Conservation Service, Field Office Technical Guide for Michigan, Section I-c.
Water Erosion Prediction, 1982.
  (c)  Great Lakes Water Quality Agreement of 1978, as amended.

  History: 2002 AACS.


R 323.3027    Availability of federal regulations:
  Rule 27  (1)  The following sections of the  code  of  federal  regulations 
referenced in this part are  adopted  by  reference  and  are  available  for 
inspection at, and may be obtained from, the Lansing office of the Department 
of environmental quality,  525  Allegan  Street,  P.O.  Box  30273,  Lansing, 
Michigan 48909-7773 at the cost as of the time of adoption of these rules  of 
5 cents per page and a labor rate of $19.78 per hour.   Copies  may  also  be 
obtained via the  internet  at  http://www.access.gpo.gov/nara  or  from  the 
Superintendent of  Documents,  Government  Printing  Office,  Washington,  DC 
20402.  The costs for orders from the government printing office  as  of  the 
time of adoption of these rules are as follows:
  (a)  40 C.F.R. 25 (2000), public participation requirements for RCRA,  safe 
drinking water act and clean water act.  $54.00.
  (b)  40 C.F.R. 117  (2000),  determination  of  reportable  quantities  for 
hazardous substances.  $38.00.
  (c)  40 C.F.R. 121 (2000), state certification of  activities  requiring  a 
federal license or permit.  $38.00.
  (d)  40 C.F.R. 122 (2000), EPA administered permit programs:  the  national 
pollutant discharge elimination system.  $38.00
  (e)  40 C.F.R. 123 (2000), state program requirements.  $38.00.
  (f)  40 C.F.R. 124 (2000), procedures for decisionmaking.  $38.00.
  (g)  40  C.F.R.  125  (2000),  criteria  and  standards  for  the  national 
pollutant discharge elimination system.  $38.00.
  (h)  40 C.F.R. 129 (2000), toxic pollutant effluent standards.  $38.00.
  (i)  40 C.F.R. 130 (2000), water quality planning and management.  $38.00.
  (j)  40 C.F.R. 131 (2000), water quality standards.  $38.00.
  (k)  40 C.F.R. 132 (2000), water  quality  guidance  for  the  Great  Lakes 
system.  $38.00.
  (l)  40 C.F.R. 133 (2000), secondary treatment regulation.  $38.00.
  (m)  40 C.F.R. 135 (2000), prior notice of citizen suits.  $38.00.
  (n)  40 C.F.R. 136 (2000), guidelines establishing test procedures for  the 
analysis of pollutants.  $55.00.
  (o)  40 C.F.R. 140 (2000), marine sanitation device standard.  $55.00.
  (p)  40 C.F.R. 401-424 (2000),  subchapter  n  -  effluent  guidelines  and 
standards.  $51.00.
  (q)  40 C.F.R. 471 (2000), nonferrous  metals  forming  and  metal  powders 
point source category.  $55.00.
  (r)  40 C.F.R. 501-503 (2000), subchapter o - sewage sludge.  $55.00. 

  History: 2002 AACS.