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[Congressional Bills 112th Congress]
[From the U.S. Government Publishing Office]
[H.R. 4153 Introduced in House (IH)]

112th CONGRESS
  2d Session
                                H. R. 4153

To support efforts to reduce pollution of the Chesapeake Bay watershed, 
                        and for other purposes.

_______________________________________________________________________

                    IN THE HOUSE OF REPRESENTATIVES

                             March 7, 2012

  Mr. Goodlatte (for himself and Mr. Holden) introduced the following 
    bill; which was referred to the Committee on Transportation and 
 Infrastructure, and in addition to the Committees on Agriculture and 
Energy and Commerce, for a period to be subsequently determined by the 
  Speaker, in each case for consideration of such provisions as fall 
           within the jurisdiction of the committee concerned

_______________________________________________________________________

                                 A BILL

 
To support efforts to reduce pollution of the Chesapeake Bay watershed, 
                        and for other purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Chesapeake Bay 
Program Reauthorization and Improvement Act''.
    (b) Table of Contents.--The table of contents for this Act is as 
follows:

Sec. 1. Short title; table of contents.
Sec. 2. Modification of Chesapeake Bay Program under Federal Water 
                            Pollution Control Act.
Sec. 3. Establishment of independent commission to oversee and 
                            administer nitrogen, phosphorus, and 
                            sediment trading program for Chesapeake Bay 
                            States.
Sec. 4. Chesapeake Bay watershed partnerships.
Sec. 5. Technical guidelines for environmental services markets.
Sec. 6. Chesapeake Bay watershed pilot program for creating 
                            environmental service markets.
Sec. 7. Offset.

SEC. 2. MODIFICATION OF CHESAPEAKE BAY PROGRAM UNDER FEDERAL WATER 
              POLLUTION CONTROL ACT.

    (a) Definitions.--Section 117(a) of the Federal Water Pollution 
Control Act (33 U.S.C. 1267(a)) is amended--
            (1) by redesignating paragraphs (5) and (6) as paragraphs 
        (6) and (10), respectively;
            (2) by inserting after paragraph (4) the following new 
        paragraph:
            ``(5) Chesapeake bay state.--The term `Chesapeake Bay 
        State' or `State' means Delaware, Maryland, New York, 
        Pennsylvania, Virginia, West Virginia, and the District of 
        Columbia.''; and
            (3) by inserting after paragraph (6), as redesignated, the 
        following new paragraphs:
            ``(7) Chief executive.--The term `chief executive' means--
                    ``(A) in the case of a State or Commonwealth, the 
                Governor of the State or Commonwealth; and
                    ``(B) in the case of the District of Columbia, the 
                Mayor of the District of Columbia.
            ``(8) Nonindustrial private forest land.--The term 
        `nonindustrial private forest land' means rural land, as 
        determined by the Secretary, that--
                    ``(A) has existing tree cover or is suitable for 
                growing trees; and
                    ``(B) is owned by any nonindustrial private 
                individual, group, association, corporation, Indian 
                tribe, or other private legal entity that has 
                definitive decisionmaking authority over the land.
            ``(9) Restoration activities.--The term `restoration 
        activities' means one or more practices or programs that 
        directly protect, conserve, or restore habitat, water 
        resources, or water quality in the Chesapeake Bay watershed, 
        including practices and programs that promote conservation and 
        land stewardship in the Chesapeake Bay watershed.
            ``(10) Total maximum daily nutrient or sediment load in the 
        chesapeake bay.--The term `total maximum daily nutrient or 
        sediment load in the Chesapeake Bay' means a total maximum 
        daily load for nitrogen, phosphorus, or sediment established 
        under section 303(d) for a segment or tributary of the 
        Chesapeake Bay, whether established under paragraph (1) of such 
        section by the State in which the segment or tributary is 
        located or under paragraph (2) of such section by the 
        Administrator.''.
    (b) Chesapeake Bay Crosscut Financial Report.--Section 117 of the 
Federal Water Pollution Control Act (33 U.S.C. 1267) is amended by 
striking subsection (j) and inserting the following new subsection:
    ``(j) Financial Report.--
            ``(1) Financial report required.--With the budget 
        submission for each fiscal year, the Director of the Office of 
        Management and Budget, in consultation with other appropriate 
        Federal agencies and the chief executive of each Chesapeake Bay 
        State, shall submit to Congress a financial report containing--
                    ``(A) a summary of an interagency crosscut budget 
                that displays--
                            ``(i) the proposed funding for Federal 
                        restoration activities to be carried out in the 
                        succeeding fiscal year, including any planned 
                        interagency or intra-agency transfer, for each 
                        of the Federal agencies that carry out 
                        restoration activities;
                            ``(ii) to the extent that information is 
                        available, the estimated funding for any State 
                        restoration activities to be carried out in the 
                        succeeding fiscal year;
                            ``(iii) all expenditures for Federal 
                        restoration activities from the preceding 3 
                        fiscal years, the current fiscal year, and 
                        estimated expenditures for the succeeding 
                        fiscal year; and
                            ``(iv) all expenditures, to the extent that 
                        information is available, for State restoration 
                        activities during the equivalent time period 
                        described in clause (iii);
                    ``(B) a detailed accounting of all funds received 
                and obligated by all Federal agencies for restoration 
                activities during the current and preceding fiscal 
                years, including the identification of funds which were 
                transferred to a Chesapeake Bay State for restoration 
                activities;
                    ``(C) to the extent that information is available, 
                a detailed accounting from each State of all funds 
                received and obligated from a Federal agency for 
                restoration activities during the current and preceding 
                fiscal years; and
                    ``(D) a description of each of the proposed Federal 
                and State restoration activities to be carried out in 
                the succeeding fiscal year (corresponding to those 
                activities listed in clauses (i) and (ii) of 
                subparagraph (A)).
            ``(2) Submission.--Not later than 30 days after the 
        submission by the President of the annual budget to Congress, 
        the Director shall submit the report required by paragraph (1) 
        to the following congressional committees:
                    ``(A) The Committees on Agriculture, 
                Appropriations, Natural Resources, Energy and Commerce, 
                and Transportation and Infrastructure of the House of 
                Representatives.
                    ``(B) The Committees on Agriculture, Nutrition, and 
                Forestry, Appropriations, Environment and Public Works, 
                and Commerce, Science, and Transportation of the 
                Senate.''.
    (c) Transparency and Accountability.--Section 117 of the Federal 
Water Pollution Control Act (33 U.S.C. 1267) is amended by adding at 
the end the following new subsection:
    ``(k) Transparency and Accountability Requirements.--
            ``(1) State reports.--Not later than October 10 of each 
        year, each State that received funds from a Federal agency 
        under subsection (n)(1)(B) shall submit a report to the head of 
        the agency that--
                    ``(A) identifies the total amount of funds received 
                from the agency under such provisions during the 
                preceding fiscal year;
                    ``(B) identifies the amount of funds received from 
                the agency under such provisions that were obligated or 
                expended for projects or activities during the 
                preceding fiscal year; and
                    ``(C) contains a list of all projects or activities 
                for which the funds were obligated or expended, except 
                that such list shall not include personal identifying 
                information of individual recipients.
            ``(2) Agency reports.--Not later than November 10 of each 
        year, the Secretary of Agriculture shall provide to the 
        Administrator the information received in any report submitted 
        to the Secretary under paragraph (1). The Administrator shall 
        publish on a publicly available website, in accordance with 
        paragraph (5), any information submitted to the Administrator 
        under this paragraph or paragraph (1).
            ``(3) Economic analysis.--
                    ``(A) In general.--The Administrator shall complete 
                an economic analysis of each agency statement described 
                in subparagraph (B) that is issued by the 
                Administrator.
                    ``(B) Agency statement described.--An agency 
                statement described in this subparagraph is any 
                guidance, policy, memorandum, regulation, or statement 
                of general applicability and future effect that is 
                designed to implement, interpret, or prescribe law or 
                policy relating to water quality in the Chesapeake Bay.
                    ``(C) Contents of analysis.--An economic analysis 
                required under subparagraph (A) shall include--
                            ``(i) the impact of the agency statement on 
                        the economies and budgets of States and 
                        municipalities;
                            ``(ii) the impact of the agency statement 
                        on the private sector, including such impact on 
                        small entities and farm income;
                            ``(iii) the availability of Federal funding 
                        to offset the impacts identified under clause 
                        (ii); and
                            ``(iv) the benefits of the agency statement 
                        to water quality in the Chesapeake Bay.
                    ``(D) Consultation.--In conducting an economic 
                analysis required under subparagraph (A), the 
                Administrator shall consult with other Federal agencies 
                that may be affected by the agency statement.
            ``(4) Initial compliance.--Not later than 180 days after 
        the date of enactment of the Chesapeake Bay Program 
        Reauthorization and Improvement Act, the head of each Federal 
        agency providing funds under subsection (n)(1)(B) shall 
        require, as a condition of receipt of the funds, a State 
        recipient of the funds to provide the information required 
        under paragraph (1).
            ``(5) Website.--
                    ``(A) Website required.--The Administrator shall 
                establish and maintain, not later than 30 days after 
                the enactment of the Chesapeake Bay Program 
                Reauthorization and Improvement Act, a user-friendly, 
                publicly available website to promote greater 
                accountability and transparency regarding the use of 
                funds provided under subsection (n)(1)(B).
                    ``(B) Content and function.--The website shall 
                provide the following:
                            ``(i) Accountability information, including 
                        findings from audits, inspectors general, and 
                        the Government Accountability Office.
                            ``(ii) Data on relevant economic, 
                        financial, grant, and contract information in 
                        user-friendly visual presentations to enhance 
                        public awareness of the use of covered funds.
                            ``(iii) Links to other government websites 
                        where key information relating to efforts to 
                        improve the water quality of the Chesapeake Bay 
                        watershed may be found.
                            ``(iv) Printable reports on covered funds 
                        obligated by month to each State and 
                        congressional district.
                            ``(v) Links to other government websites 
                        with information concerning covered funds, 
                        including Federal agency and State websites.
                    ``(C) Revisions.--The Administrator shall enhance 
                and update the website as necessary.''.
    (d) Independent Evaluation and Technical Advisory Committee for 
Chesapeake Bay Program.--Section 117 of the Federal Water Pollution 
Control Act (33 U.S.C. 1267) is amended by inserting after subsection 
(k), as added by subsection (c), the following new subsection:
    ``(l) Independent Evaluation and Technical Advisory Committee.--
            ``(1) Establishment.--There is established an Independent 
        Evaluation and Technical Advisory Committee (in this subsection 
        referred to as the `Advisory Committee').
            ``(2) Review and report.--Beginning on a date that is not 
        more than 180 days after the date of enactment of the 
        Chesapeake Bay Program Reauthorization and Improvement Act, and 
        every two years thereafter, the Advisory Committee shall review 
        and report to Congress on--
                    ``(A) Federal and State, and, to the extent 
                practicable, other, restoration activities in the 
                Chesapeake Bay watershed, including relevant topics 
                suggested by the Chesapeake Executive Council and the 
                Chesapeake Bay Commission; and
                    ``(B) any progress made by such activities toward 
                reaching applicable water quality goals of the 
                Chesapeake Bay States.
            ``(3) Duties.--
                    ``(A) Administration review.--The duties of the 
                Advisory Committee shall be to provide recommendations 
                to the Administrator and Secretary of Agriculture 
                concerning the administration of this section.
                    ``(B) Program and activities review.--The Advisory 
                Committee shall, after reviewing the Chesapeake Bay 
                Program, provide to the Administrator and the Secretary 
                of Agriculture a report evaluating whether--
                            ``(i) funds authorized for restoration 
                        activities are being distributed and used to 
                        improve water quality in the Chesapeake Bay 
                        watershed;
                            ``(ii) mechanisms to track restoration 
                        activities are in place and restoration 
                        activities are being properly implemented;
                            ``(iii) mechanisms are in place to evaluate 
                        progress toward achieving water quality goals 
                        for the Chesapeake Bay watershed;
                            ``(iv) the allocation of funds among 
                        Chesapeake Bay States reflects the 
                        responsibility and contribution towards 
                        achieving water quality goals of each 
                        Chesapeake Bay State;
                            ``(v) restoration activities are being 
                        carried out in accordance with this section;
                            ``(vi) the factual information and 
                        assumptions incorporated in Chesapeake Bay 
                        modeling efforts are accurate;
                            ``(vii) implementation of restoration 
                        activities is being adequately tracked and 
                        accounted for in Chesapeake Bay modeling 
                        efforts, including tracking of privately funded 
                        and government-funded practices; and
                            ``(viii) the achievability and 
                        practicability of water quality goals are being 
                        considered in the implementation of the 
                        Program.
            ``(4) Membership.--
                    ``(A) Number and appointment.--The Advisory 
                Committee shall be composed of 16 members appointed by 
                the Administrator and the Secretary of Agriculture, 
                composed of the following:
                            ``(i) Two individuals who are engineers or 
                        scientists who worked for the Government or in 
                        academia and have technical expertise in water 
                        quality modeling.
                            ``(ii) One individual who has an 
                        affiliation with an institution of higher 
                        education and technical expertise in water 
                        quality.
                            ``(iii) Nine individuals, of whom at least 
                        one shall have professional experience and 
                        expertise in each of the following areas:
                                    ``(I) Urban storm water issues.
                                    ``(II) Agricultural storm water 
                                issues.
                                    ``(III) Urban and suburban 
                                development.
                                    ``(IV) Water quality modeling.
                                    ``(V) Economics.
                                    ``(VI) Agronomy, crop science, or 
                                soil science.
                                    ``(VII) Wastewater treatment 
                                systems.
                                    ``(VIII) Marine biology or fish and 
                                wildlife habitats.
                                    ``(IX) Applying for and complying 
                                with building permits.
                            ``(iv) Four individuals, at least one of 
                        whom shall be affiliated with each of the 
                        following:
                                    ``(I) An environmental or 
                                conservation organization.
                                    ``(II) A fishing, hunting, or 
                                outdoor sporting organization operating 
                                in the Chesapeake Bay watershed.
                                    ``(III) Nongovernmental agriculture 
                                producer associations or other groups 
                                of producers related to livestock.
                                    ``(IV) Agricultural conservation 
                                organizations with an established 
                                history of working cooperatively with 
                                producers on agricultural lands.
                    ``(B) Term.--Each member of the Advisory Committee 
                shall be appointed for a term of two years. No member 
                may be appointed for more than three terms.
                    ``(C) Meetings.--The Advisory Committee shall meet 
                on a quarterly basis.
            ``(5) Bylaws.--The Advisory Committee shall establish any 
        bylaws necessary for the advisory committee to carry out its 
        duties under this subsection. Such bylaws shall include 
        provisions to prevent any conflict of interest or the 
        appearance of any conflict of interest in the actions taken or 
        recommendations made by the Advisory Committee or by any member 
        of the Advisory Committee.
            ``(6) Administrative support.--The Secretary of Agriculture 
        shall provide to the Advisory Committee any administrative 
        support services necessary for the Advisory Committee to carry 
        out its responsibilities under this section.
            ``(7) Coordination.--To avoid duplication of effort, the 
        Advisory Committee shall coordinate activities with other 
        Federal advisory committees working in related areas.
            ``(8) No regulatory authority.--The Advisory Committee does 
        not have the authority to recommend or promulgate 
        regulations.''.
    (e) Nitrogen, Phosphorus, and Sediment Trading Technical 
Guidelines.--Section 117 of the Federal Water Pollution Control Act (33 
U.S.C. 1267) is amended by inserting after subsection (l) (as added by 
subsection (d)), the following new subsection:
    ``(m) Nitrogen, Phosphorus, and Sediment Trading Technical 
Guidelines.--
            ``(1) Establishment.--Not later than 14 months after the 
        date of enactment of the Chesapeake Bay Program Reauthorization 
        and Improvement Act, the Administrator, in consultation with 
        the Secretary of Agriculture and the Chesapeake Bay States, 
        shall establish technical guidelines to be used by the 
        Chesapeake Bay Nutrient and Sediment Trading Commission in 
        establishing a voluntary interstate nitrogen, phosphorus, and 
        sediment trading program for the Chesapeake Bay.
            ``(2) Limitation on application.--Technical guidelines 
        established under this subsection shall not apply to 
        agricultural nonpoint sources or nonindustrial private forest 
        lands except to the extent that such guidelines consist of 
        guidelines issued under section 1245 of the Food Security Act 
        of 1985 (16 U.S.C. 3845).
            ``(3) Elements.--The technical guidelines established under 
        this subsection shall, at a minimum--
                    ``(A) define and standardize nitrogen, phosphorus, 
                and sediment credits and establish procedures or 
                standards for ensuring equivalent water quality 
                benefits for all credits;
                    ``(B) establish procedures or standards for credit 
                practices, for both point sources and nonpoint sources 
                (except as provided in paragraph (2)), that measure 
                reductions in nitrogen, phosphorus, and sediment from 
                credit-generating practices;
                    ``(C) establish procedures or standards for 
                generating, quantifying, trading, banking, and applying 
                credits to meet regulatory requirements;
                    ``(D) establish baseline requirements, relevant to 
                the credit being traded, that a credit seller must meet 
                before becoming eligible to generate saleable credits; 
                and
                    ``(E) develop and incorporate an approach, 
                consistent with subsection (o), that creates a general 
                approval for trading, thereby avoiding the need to 
                reopen or reissue permits issued under section 402 to 
                incorporate individual trades.''.
    (f) Authorization of Appropriations and Grant Authority.--Section 
117 of the Federal Water Pollution Control Act (33 U.S.C. 1267) is 
amended by inserting after subsection (m) (as added by subsection (e)) 
the following new subsection:
    ``(n) Funding.--
            ``(1) Authorization of appropriations.--There are 
        authorized to be appropriated to the Administrator for each of 
        fiscal years 2013 through 2018, to remain available until 
        expended--
                    ``(A) $50,000,000 to carry out this section; and
                    ``(B) $40,000,000 to support the Chesapeake Bay 
                States in carrying out activities related to a total 
                maximum daily nutrient or sediment load in the 
                Chesapeake Bay.
            ``(2) Incentive payments.--
                    ``(A) Reservation of funds.--Of the amounts 
                appropriated under paragraph (1)(B), the Administrator 
                shall reserve the following percentages for allocation 
                in accordance with subparagraph (B):
                            ``(i) Ten percent in each of fiscal years 
                        2013 and 2014.
                            ``(ii) Twenty percent in each of fiscal 
                        years 2015 and 2016.
                            ``(iii) Fifty percent in each of fiscal 
                        years 2017 and 2018.
                    ``(B) Allocation to chesapeake bay states.--
                            ``(i) Determination.--For each fiscal year, 
                        the Administrator, in consultation with the 
                        Secretary of Agriculture and using information 
                        provided in the report of the Advisory 
                        Committee required under subsection (l), shall 
                        determine whether each Chesapeake Bay State has 
                        made sufficient progress toward meeting water 
                        quality goals and is properly managing 
                        financial resources intended to enable the 
                        State to meet such goals.
                            ``(ii) Allocation.--The Administrator, in 
                        consultation with the Secretary of Agriculture, 
                        shall allocate the amounts reserved under 
                        subparagraph (A) in each fiscal year among the 
                        Chesapeake Bay States the Administrator has 
                        determined under clause (i) have made 
                        sufficient progress toward meeting water 
                        quality goals and are properly managing 
                        financial resources intended to enable the 
                        State to meet such goals.
                    ``(C) Use of funds.--A State may use amounts 
                allocated under this paragraph for carrying out 
                activities related to a total maximum daily nutrient or 
                sediment load in the Chesapeake Bay.
            ``(3) Grants.--Of the amounts authorized to be appropriated 
        under paragraph (1)(B), after the reservation of funds under 
        paragraph (2)--
                    ``(A) 30 percent shall be used for grants to any 
                municipal, intermunicipal, or State agency in a 
                Chesapeake Bay State, or to any interstate agency in 
                two or more Chesapeake Bay States, for the 
                construction, operation, and maintenance of publicly 
                owned treatment works, as defined in section 212;
                    ``(B) 35 percent shall be used for grants to any 
                municipality in a Chesapeake Bay State for the 
                construction, operation, and maintenance of a municipal 
                separate storm sewer system subject to regulation under 
                section 402(p); and
                    ``(C) 35 percent shall be distributed to the 
                Secretary of Agriculture to carry out section 1240Q(i) 
                of the Food Security Act of 1985 (which amounts shall 
                be in addition to funding provided under such Act).
            ``(4) Distribution.--
                    ``(A) Priority.--The Administrator shall distribute 
                amounts under paragraphs (2), (3)(A), and (3)(B) with 
                priority given to Maryland, Virginia, Pennsylvania, and 
                the District of Columbia.
                    ``(B) Minimum amount.--The Administrator shall 
                distribute to each Chesapeake Bay State not less than 7 
                percent of the amounts under paragraphs (3)(A) and 
                (3)(B).''.
    (g) Total Maximum Daily Loads for Nitrogen, Phosphorus, or Sediment 
in the Chesapeake Bay.--Section 117 of the Federal Water Pollution 
Control Act (33 U.S.C. 1267) is amended by inserting after subsection 
(n) (as added by subsection (f)), the following new subsection:
    ``(o) Total Maximum Daily Loads for Nitrogen, Phosphorus, or 
Sediment in the Chesapeake Bay.--
            ``(1) Total maximum daily nutrient or sediment load in the 
        chesapeake bay duration.--Any total maximum daily nutrient or 
        sediment load in the Chesapeake Bay shall use timeframes other 
        than daily (such as annual, monthly, or seasonal) for certain 
        economic sectors, including agriculture, in which a nondaily 
        timeframe is appropriate.
            ``(2) Use of trading.--In any case in which a point source 
        is subject to an effluent limit in a permit issued under 
        section 402 for nitrogen, phosphorus, or sediment, such point 
        source may meet that permit limit in whole or in part through a 
        trade administered by the Chesapeake Bay Nutrient and Sediment 
        Trading Commission established by section 117A.
            ``(3) Corresponding load reductions.--For any total maximum 
        daily nutrient or sediment load in the Chesapeake Bay, a 
        process shall be developed--
                    ``(A) to account for reductions in loadings to the 
                Chesapeake Bay watershed of nitrogen, phosphorus, and 
                sediment, including those achieved by entities that do 
                not have a total maximum daily load allocation for such 
                pollutants, and including reductions achieved by 
                restoration activities implemented by private entities, 
                local governments, States, and Federal agencies, 
                including the Department of Agriculture; and
                    ``(B) to increase wasteload and load allocations on 
                a proportional basis by the amount of such reductions.
            ``(4) State implementation.--Powers are reserved solely to 
        the States to implement a total maximum daily nutrient or 
        sediment load in the Chesapeake Bay, including authority to 
        assign load and waste load allocations to individual sources 
        and source sectors to achieve a total maximum daily nutrient or 
        sediment load in the Chesapeake Bay. At the request of a 
        Chesapeake Bay State, the Administrator may review a State 
        implementation plan and offer non-binding recommendations for 
        consideration by the State, but may not take any action to 
        supersede any such State implementation.
            ``(5) Adaptive management.--
                    ``(A) In general.--If a Chesapeake Bay State 
                develops a plan to implement a total maximum daily 
                nutrient or sediment load in the Chesapeake Bay that 
                provides for reductions in loading through an iterative 
                process that employs adaptive management principles, 
                permits may be issued under section 402 for new or 
                existing point source discharges that--
                            ``(i) include wasteload allocations 
                        consistent with such plan; and
                            ``(ii) demonstrate progress towards 
                        achieving the wasteload allocation specified in 
                        such plan by treatment, trading, or other 
                        means, in accordance with the schedule provided 
                        in such plan, as determined by the permit 
                        issuing authority.
                    ``(B) Assessment of progress.--In assessing 
                sufficient progress by municipal dischargers and other 
                point sources toward meeting water quality goals and 
                plans, the availability, cost, effectiveness, and 
                appropriateness of practices, techniques, methods, or 
                other provisions for the control of such pollutants 
                shall be considered.
            ``(6) Options for offsetting of stormwater management 
        requirements.--An individual or entity undertaking land 
        development activities may meet the applicable stormwater 
        management requirements by offsetting such activities through 
        the establishment of stormwater management practices off-site 
        within the Chesapeake Bay watershed. Offsetting stormwater 
        management practices shall include, at a minimum, the 
        establishment of riparian forest buffers, streambank fencing, 
        or other best management practices on agricultural lands.
            ``(7) Relation to watershed partnerships.--A Chesapeake Bay 
        State may use funds made available to the State under section 
        319 for activities related to reducing losses of nitrogen, 
        phosphorus, or sediment from agricultural or nonindustrial 
        private forest land through a watershed partnership developed 
        under section 1240Q(i) of the Food Security Act of 1985. Use of 
        funds in such manner shall have no effect on the availability 
        to the State of other funds under this Act.''.

SEC. 3. ESTABLISHMENT OF INDEPENDENT COMMISSION TO OVERSEE AND 
              ADMINISTER NITROGEN, PHOSPHORUS, AND SEDIMENT TRADING 
              PROGRAM FOR CHESAPEAKE BAY STATES.

    The Federal Water Pollution Control Act is amended by inserting 
after section 117 (33 U.S.C. 1267) the following new section:

``SEC. 117A. CHESAPEAKE BAY NUTRIENT AND SEDIMENT TRADING COMMISSION.

    ``(a) Definitions.--In this section:
            ``(1) Commission.--The term `Commission' means the 
        Chesapeake Bay Nutrient and Sediment Trading Commission 
        established in subsection (b).
            ``(2) Chesapeake bay state.--The term `Chesapeake Bay 
        State' means Delaware, Maryland, New York, Pennsylvania, 
        Virginia, West Virginia, and the District of Columbia.
            ``(3) Chesapeake executive council.--The term `Chesapeake 
        Executive Council' means the signatories to the Chesapeake Bay 
        Agreement.
            ``(4) Chesapeake bay agreement.--The term `Chesapeake Bay 
        Agreement' means the formal, voluntary agreements executed to 
        achieve the goal of restoring and protecting the Chesapeake Bay 
        ecosystem and the living resources of the Chesapeake Bay 
        ecosystem and signed by the Chesapeake Executive Council.
    ``(b) Establishment of Commission; Purpose.--
            ``(1) In general.--There is established a Chesapeake Bay 
        Nutrient and Sediment Trading Commission to oversee and 
        administer a nitrogen, phosphorus, and sediment trading program 
        for the Chesapeake Bay States to ensure credits are generated 
        to attract market participants and facilitate trading 
        mechanisms among and within such States to meet water quality 
        goals.
            ``(2) Independent establishment.--The Commission shall be 
        an independent establishment, as defined in section 104 of 
        title 5, United States Code.
            ``(3) Location.--The Commission shall be housed at the 
        Office of the Chesapeake Bay Program directed by the Chesapeake 
        Executive Council in accordance with the Chesapeake Bay 
        Agreement.
    ``(c) Duties.--
            ``(1) Credits for water quality trading.--In consultation 
        with market developers, Chesapeake Bay States, and appropriate 
        Federal agencies, the Commission shall develop a system to 
        facilitate and generate credits for interstate water quality 
        trading among and within the Chesapeake Bay States.
            ``(2) Water quality trading registry.--The Commission shall 
        obtain information from the Administrator, the Secretary of 
        Agriculture, and other Federal agencies to operate and oversee 
        a registry for interstate water quality trading in the 
        Chesapeake Bay States.
            ``(3) Trade recordkeeping.--The Commission shall develop 
        and maintain a system to record specific interstate water 
        quality trades among and within the Chesapeake Bay States.
            ``(4) Point source and nonpoint source trades.--In 
        consultation with market developers and appropriate Federal 
        agencies, the Commission shall develop a system to allow for 
        trading to occur between point sources and nonpoint sources, 
        and any combination thereof, among and within the Chesapeake 
        Bay States.
            ``(5) Consistency with state program.--The Commission shall 
        not establish or operate a program that conflicts with or 
        modifies a State program for intrastate trading.
            ``(6) Deadline; publication.--Not later than 2 years after 
        the date of enactment of the Chesapeake Bay Program 
        Reauthorization and Improvement Act, the Commission shall 
        promulgate rules for interstate water quality trading among and 
        within the Chesapeake Bay States, and shall publish such rules 
        in the Federal Register.
    ``(d) Use of Technical Guidelines.--The Commission shall rely on 
the Administrator to provide technical guidelines under section 117(m) 
and the Secretary of Agriculture to provide technical guidelines under 
section 1245(b) of the Food Security Act of 1985.
    ``(e) Members of Commission.--
            ``(1) Composition.--The Commission shall consist of five 
        members, of which--
                    ``(A) one member shall be appointed by the 
                Secretary of Agriculture;
                    ``(B) one member shall be appointed by the 
                Administrator; and
                    ``(C) three members shall be appointed jointly by 
                the Administrator and the Secretary of Agriculture from 
                among persons nominated by the Governors of each of the 
                signatory States of the Chesapeake Bay Agreement.
            ``(2) Special considerations.--Of the members of the 
        Commission--
                    ``(A) one member shall be a representative of the 
                general public;
                    ``(B) not more than two of the members may have 
                similar professional experience or expertise in the 
                same field;
                    ``(C) at least one of the members shall be 
                experienced in a market-based pollutant trading 
                mechanism; and
                    ``(D) not more than three of the members may be of 
                the same political party.
            ``(3) Terms.--The members of the Commission shall serve a 
        term of five years and may be reappointed.
            ``(4) Chairperson.--The members of the Commission shall 
        designate one of the members to serve as chairperson.
            ``(5) Meetings.--The Commission shall meet at the call of 
        the chairperson or a majority of its members, and shall hold 
        public meetings at intervals as are necessary to carry out the 
        functions of the Commission, but not less frequently than 2 
        times per year.
    ``(f) Officers and Staff.--The Commission may appoint, employ, fix 
the pay of, and provide other allowances and benefits for such officers 
and employees of the Commission as the members determine to be 
appropriate.
    ``(g) Relationship With Other Entities.--
            ``(1) Liaisons.--
                    ``(A) Commission liaisons.--
                            ``(i) In general.--The Commission shall, in 
                        cooperation with the Administrator and the 
                        Secretary of Agriculture, maintain--
                                    ``(I) a liaison between the 
                                Commission and the Environmental 
                                Protection Agency; and
                                    ``(II) a liaison between the 
                                Commission and the Department of 
                                Agriculture.
                            ``(ii) Effective maintenance.--The 
                        Administrator and Secretary of Agriculture 
                        shall take such steps as may be necessary to 
                        enable the Commission to obtain information and 
                        utilize such services and facilities of the 
                        Environmental Protection Agency and Department 
                        of Agriculture as may be necessary in order to 
                        maintain effectively such liaisons.
                    ``(B) Agency liaison officers.--The Administrator 
                and Secretary of Agriculture shall each appoint a 
                liaison officer, who shall be an employee of the 
                Environmental Protection Agency and the Department of 
                Agriculture, respectively, for the purpose of 
                communicating with the liaison maintained under 
                subparagraph (A) and the Commission.
                    ``(C) Attendance.--The Commission shall allow the 
                liaisons and liaison officers to attend and observe all 
                deliberations and proceedings of the Commission.
            ``(2) Maintenance of communications.--The Commission shall 
        maintain communications with the Chesapeake Executive Council 
        and the Chesapeake Bay States for the purposes of--
                    ``(A) keeping such entities fully informed of 
                Commission activities that relate to the 
                responsibilities of those entities;
                    ``(B) seeking views of those entities on such 
                activities; and
                    ``(C) consultation with such entities regarding the 
                relationships between Commission activities and the 
                jurisdiction of such entities.
    ``(h) Duration.--The Commission shall terminate on September 30, 
2018.''.

SEC. 4. CHESAPEAKE BAY WATERSHED PARTNERSHIPS.

    Section 1240Q of the Food Security Act of 1985 (16 U.S.C. 3839bb-4) 
is amended--
            (1) by striking subsection (a) and inserting the following:
    ``(a) Definitions.--In this section:
            ``(1) Chesapeake bay state.--The term `Chesapeake Bay 
        State' or `State' means Delaware, Maryland, New York, 
        Pennsylvania, Virginia, West Virginia, and the District of 
        Columbia.
            ``(2) Chesapeake bay watershed.--The term `Chesapeake Bay 
        watershed' means all tributaries, backwaters, and side 
        channels, including their watersheds, draining into the 
        Chesapeake Bay.
            ``(3) Chief executive.--The term `chief executive' means--
                    ``(A) in the case of a State or Commonwealth, the 
                Governor of the State or Commonwealth; and
                    ``(B) in the case of the District of Columbia, the 
                Mayor of the District of Columbia.''; and
            (2) by adding at the end the following new subsection:
    ``(i) Chesapeake Bay Watershed Partnerships.--
            ``(1) In general.--At the request of the chief executive of 
        a Chesapeake Bay State, the Secretary shall enter into a 
        memorandum of understanding with such chief executive 
        establishing a partnership between the Secretary and the State 
        (in this subsection referred to as a `watershed partnership') 
        in accordance with this subsection.
            ``(2) Watershed strategy.--Each watershed partnership may 
        establish a watershed strategy for demonstrating aggregate 
        reductions in losses of nitrogen, phosphorus, and sediment, on 
        a basin or subbasin scale in the Chesapeake Bay watershed, from 
        agricultural or nonindustrial private forest land in the State, 
        including developing processes for--
                    ``(A) identifying basins or subbasins in which 
                implementation of enhanced conservation practices could 
                significantly impact water quality;
                    ``(B) identifying achievable and cost-effective 
                conservation practices that result in such reductions 
                to improve water quality;
                    ``(C) statistically validating and verifying 
                conservation practices;
                    ``(D) establishing methods of estimating such 
                reductions that are statistically valid and accurate, 
                based on field- and farm-level surveys conducted by the 
                Secretary, to the extent practicable using existing 
                data collection methods; and
                    ``(E) collecting other relevant information on 
                practices that demonstrate such reductions, as 
                determined by the Secretary and the chief executive of 
                the State.
            ``(3) Assurance.--
                    ``(A) Establishment of assurance process.--Each 
                watershed strategy established by a watershed 
                partnership shall require the chief executive of the 
                State, in collaboration with the Secretary, to 
                establish an assurance process in which producers or 
                owners of nonindustrial private forest land in the 
                State may participate if such producers or owners of 
                nonindustrial forest land are qualified under 
                subparagraph (B) by implementing and maintaining 
                conservation practices, on agricultural or 
                nonindustrial forest land in the Chesapeake Bay 
                watershed, that are designed to reduce losses of 
                nitrogen, phosphorus, and sediment from such land, as 
                determined by the State.
                    ``(B) Qualified producers and owners.--For the 
                purposes of this paragraph, a qualified producer or 
                owner of nonindustrial private forest land is a 
                producer or owner of nonindustrial private forest land 
                that implements and maintains conservation practices, 
                on agricultural or nonindustrial forest land in the 
                Chesapeake Bay watershed, that are designed to reduce 
                losses of nitrogen, phosphorus, and sediment from such 
                land, as determined by the State.
                    ``(C) Effect of participation in assurance 
                process.--
                            ``(i) In general.--A qualified producer or 
                        owner of nonindustrial private forest land that 
                        participates in an assurance process under this 
                        paragraph shall be considered to be in full 
                        compliance with applicable water quality 
                        requirements, if any, regarding nitrogen, 
                        phosphorus, and sediment in the Chesapeake Bay 
                        watershed, with respect to such land, such that 
                        no additional water quality-related 
                        conservation practices may be required on such 
                        land during the period of time in which the 
                        producer or owner of nonindustrial private 
                        forest land participates in the assurance 
                        process.
                            ``(ii) Operations on land.--Operations on 
                        such land conducted by such a qualified 
                        producer or owner shall not be considered to be 
                        a significant contributor of nitrogen, 
                        phosphorus, or sediment to waters in the 
                        Chesapeake Bay watershed.
                    ``(D) Verification.--The chief executive of the 
                State shall verify conservation practices maintained by 
                qualified producers and owners participating in an 
                assurance process under this paragraph.
            ``(4) Use of existing programs required.--In accordance 
        with subsection (e)(1), a watershed partnership shall use 
        existing programs, including for risk assessment, conservation 
        planning, measurement and assessment of progress in improving 
        water quality, and validation and verification of practices in 
        the State to reduce losses of nitrogen, phosphorus, and 
        sediment from agricultural or nonindustrial private forest land 
        in the Chesapeake Bay watershed.
            ``(5) State water quality goals.--The chief executive of a 
        State that has entered into a watershed partnership under this 
        subsection shall ensure that any watershed strategy established 
        under paragraph (2) is incorporated into the overall water 
        quality goals established by the State, on a basin or subbasin 
        level, for agricultural and nonindustrial private forest land 
        in the State.
            ``(6) Assessments of progress.--
                    ``(A) Assessment.--Not later than 5 years after the 
                date on which a watershed partnership is established 
                under paragraph (1), and every 5 years thereafter, the 
                chief executive of the Chesapeake Bay State shall make 
                public an assessment of the progress in the State in 
                reducing losses of nitrogen, phosphorus, and sediment 
                from agricultural and nonindustrial private forest land 
                in the Chesapeake Bay watershed, on a basin or subbasin 
                level, in accordance with the water quality goals of 
                the State described in paragraph (5). Such assessment 
                shall incorporate an analysis of data developed and 
                published under subparagraph (B).
                    ``(B) Development and publication of data.--The 
                Secretary shall publish in a conservation assessment 
                report issued by the Natural Resources Conservation 
                Service data developed by the Secretary for 
                incorporation into assessments required under 
                subparagraph (A).
                    ``(C) Effect of assessment.--If the chief executive 
                of a Chesapeake Bay State determines, in an assessment 
                required under subparagraph (A), that aggregate 
                reductions in losses of nitrogen, phosphorus, and 
                sediment from agricultural and nonindustrial private 
                forest land in a basin or subbasin of the Chesapeake 
                Bay watershed in the State have been achieved in 
                accordance with the water quality goals of the State 
                described in paragraph (5)--
                            ``(i) during a period determined by the 
                        chief executive of the State, no further 
                        reductions in losses of nitrogen, phosphorus, 
                        or sediment may be required by the State or 
                        Federal Government from agricultural or 
                        nonindustrial private forest land in the basin 
                        or subbasin; and
                            ``(ii) during such period, no operations 
                        conducted on agricultural or nonindustrial 
                        private forest land in the basin or subbasin 
                        shall be considered to be a significant 
                        contributor of nitrogen, phosphorus, or 
                        sediment to waters in the Chesapeake Bay 
                        watershed.
            ``(7) Assistance from secretary.--
                    ``(A) Technical assistance.--In carrying out a 
                watershed partnership, the Secretary shall provide 
                technical assistance--
                            ``(i) to the State to assist in developing 
                        the water quality goals of the State to result 
                        in reductions in losses of nitrogen, 
                        phosphorus, and sediment from agricultural or 
                        nonindustrial private forest land in the 
                        Chesapeake Bay watershed to improve water 
                        quality in the Chesapeake Bay watershed; and
                            ``(ii) to producers and owners of 
                        nonindustrial private forest land in the 
                        State--
                                    ``(I) for education regarding 
                                activities they can undertake to reduce 
                                losses of nitrogen, phosphorus, and 
                                sediment from such land in the 
                                Chesapeake Bay watershed; and
                                    ``(II) for assistance with 
                                conservation planning, implementation, 
                                and maintenance to reduce losses of 
                                nitrogen, phosphorus, and sediment from 
                                such land in the Chesapeake Bay 
                                watershed.
                    ``(B) Economic analysis.--In providing assistance 
                under this paragraph, the Secretary shall consider the 
                practicability and economic achievability of the 
                conservation practices that may be needed to reduce 
                losses of nitrogen, phosphorus, and sediment from 
                agricultural or nonindustrial private forest land in 
                the Chesapeake Bay watershed to improve water quality 
                in the Chesapeake Bay watershed.
            ``(8) Rule of construction.--Nothing in this subsection may 
        be construed as a grant of regulatory authority to the 
        Secretary.''.

SEC. 5. TECHNICAL GUIDELINES FOR ENVIRONMENTAL SERVICES MARKETS.

    (a) Types of Guidelines Required.--
            (1) Impaired watershed guidelines.--Section 1245(a) of the 
        Food Security Act of 1985 (16 U.S.C. 3845(a)) is amended by 
        adding at the end ``In addition, not later than 14 months after 
        the date of the enactment of the Chesapeake Bay Program 
        Reauthorization and Improvement Act, the Secretary shall 
        establish guidelines for farmer, rancher, and forest landowner 
        participation in voluntary nutrient and sediment trading 
        systems established for the purpose of addressing impaired 
        watersheds.''.
            (2) Additional guidelines.--Section 1245(b) of the Food 
        Security Act of 1985 (16 U.S.C. 3845(b)) is amended by striking 
        paragraphs (1), (2), and (3) and inserting the following new 
        paragraphs:
            ``(1) Methodologies for quantifying environmental service 
        benefits.
            ``(2) Baseline methodologies for environmental service 
        benefits.
            ``(3) Methodologies to account for reversals and leakage 
        for environmental services markets.
            ``(4) Methodologies for verification of the environmental 
        service benefits.
            ``(5) A protocol to report environmental service benefits.
            ``(6) A registry to collect, record, and maintain the 
        benefits measured.
            ``(7) A procedure to verify and ensure that environmental 
        service benefits comply with Federal and State regulations.''.
            (3) Conforming amendments.--Section 1245(c)(1) of the Food 
        Security Act of 1985 (16 U.S.C. 3845(c)(1)) is amended--
                    (A) by striking ``paragraph (2)'' and inserting 
                ``paragraph (5)''; and
                    (B) by striking ``paragraph (3)'' and inserting 
                ``paragraph (6)''.
    (b) Additional Requirements.--Section 1245 of the Food Security Act 
of 1985 (16 U.S.C. 3845) is amended by adding at the end the following 
new subsections:
    ``(f) List of Eligible Activities.--
            ``(1) List required.--The Secretary shall publish a list of 
        eligible domestic agricultural and forestry activities that 
        result in environmental service benefits.
            ``(2) Deadline; publication.--Not later than 14 months 
        after the date of the enactment of the Chesapeake Bay Program 
        Reauthorization and Improvement Act, the Secretary shall 
        publish in the Federal Register the list of domestic 
        agricultural and forestry activities that are eligible for 
        trading under the guidelines established under subsection (a).
            ``(3) Recommendations.--In preparing the list under this 
        subsection, the Secretary shall take into consideration the 
        recommendations of the entities referred to in subsection (e).
            ``(4) Additions and revisions.--Not later than 4 years 
        after the date of the enactment of the Chesapeake Bay Program 
        Reauthorization and Improvement Act, and every two years 
        thereafter, the Secretary shall update and revise the list 
        prepared under this subsection. The updates and revisions shall 
        be made only after the Secretary provides an opportunity for 
        public notice of and an opportunity for comment on the proposed 
        updates and revisions.
    ``(g) Guidelines for Provision of Technical Assistance.--
            ``(1) Verification guidelines.--The Secretary shall 
        establish guidelines for, and provide, technical assistance 
        under this section to ensure that--
                    ``(A) environmental service benefits have been 
                implemented properly; and
                    ``(B) the quantification of such benefits has 
                resulted in an environmental benefit.
            ``(2) Technical assistance provider accreditation.--As part 
        of the guidelines established under this section, the Secretary 
        shall develop a process and requirements for periodic 
        accreditation of certified technical assistance providers for 
        environmental service benefits to ensure that such providers 
        are professionally qualified and have no conflicts of interest. 
        Each technical service provider meeting the requirements for 
        accreditation in accordance with this paragraph shall be listed 
        in a publicly accessible database, which shall be maintained 
        and updated by the Secretary.''.

SEC. 6. CHESAPEAKE BAY WATERSHED PILOT PROGRAM FOR CREATING 
              ENVIRONMENTAL SERVICE MARKETS.

    Section 1240Q of the Food Security Act of 1985 (16 U.S.C. 3839bb-4) 
is amended by inserting after subsection (i) (as added by section 4), 
the following new subsection:
    ``(j) Pilot Program for Creating Environmental Service Markets.--
            ``(1) Establishment.--The Secretary shall establish a pilot 
        program for the Chesapeake Bay watershed, for the facilitation 
        of creating environmental service markets based on the 
        guidelines outlined in section 1245(g), that does not result in 
        removing eligible land wholly from agricultural production or 
        eliminating the economic viability of such agricultural 
        production. The Secretary shall ensure that the pilot program 
        is consistent with local government rules and the policies, 
        protocols, and regulations established under existing 
        environmental service markets and State trading programs in the 
        Chesapeake Bay watershed.
            ``(2) Transmission of data to chesapeake bay nutrient and 
        sediment trading commission.--The Secretary shall transmit to 
        the Chesapeake Bay Nutrient and Sediment Trading Commission 
        established under section 117A of the Federal Water Pollution 
        Control Act, any data the Secretary determines is necessary to 
        the effective administration of nutrient and sediment trading 
        programs administered by such Commission.''.

SEC. 7. OFFSET.

    There is authorized to be appropriated to the Environmental 
Protection Agency for the Environmental Programs and Management account 
for each of fiscal years 2013 through 2018 the amount that is 
$40,000,000 less than the amount appropriated for such account for 
fiscal year 2012, to be derived from amounts available for 
administrative expenses.
                                 <all>
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