I 
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 Infrastruc-
ture, 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 juris-
diction 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 Representa-
tives 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 Improve-
ment Act’’. 
(b) TABLE OF CONTENTS.—The table of contents for 
this Act is as follows: 
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Sec. 1. Short title; table of contents. 
Sec. 2. Modification of Chesapeake Bay Program under Federal Water Pollu-
tion Control Act. 
Sec. 3. Establishment of independent commission to oversee and administer ni-
trogen, phosphorus, and sediment trading program for Chesa-
peake 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 CON-
TROL 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 fol-
lowing 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 redesig-
nated, the following new paragraphs: 
‘‘(7) CHIEF EXECUTIVE.—The term ‘chief exec-
utive’ means— 
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‘‘(A) in the case of a State or Common-
wealth, the Governor of the State or Common-
wealth; and 
‘‘(B) in the case of the District of Colum-
bia, 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, In-
dian 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 re-
store 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 
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term ‘total maximum daily nutrient or sediment load 
in the Chesapeake Bay’ means a total maximum 
daily load for nitrogen, phosphorus, or sediment es-
tablished under section 303(d) for a segment or trib-
utary 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 Adminis-
trator.’’. 
(b) CHESAPEAKE BAY CROSSCUT FINANCIAL RE-
PORT.—Section 117 of the Federal Water Pollution Con-
trol Act (33 U.S.C. 1267) is amended by striking sub-
section (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 con-
sultation 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 
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the succeeding fiscal year, including any 
planned interagency or intra-agency trans-
fer, 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 res-
toration activities from the preceding 3 fis-
cal years, the current fiscal year, and esti-
mated expenditures for the succeeding fis-
cal year; and 
‘‘(iv) all expenditures, to the extent 
that information is available, for State res-
toration activities during the equivalent 
time period described in clause (iii); 
‘‘(B) a detailed accounting of all funds re-
ceived and obligated by all Federal agencies for 
restoration activities during the current and 
preceding fiscal years, including the identifica-
tion 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 
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of all funds received and obligated from a Fed-
eral 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 (cor-
responding 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 re-
port required by paragraph (1) to the following con-
gressional committees: 
‘‘(A) The Committees on Agriculture, Ap-
propriations, Natural Resources, Energy and 
Commerce, and Transportation and Infrastruc-
ture of the House of Representatives. 
‘‘(B) The Committees on Agriculture, Nu-
trition, and Forestry, Appropriations, Environ-
ment 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 fol-
lowing new subsection: 
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‘‘(k) TRANSPARENCY
AND ACCOUNTABILITY RE-
QUIREMENTS.— 
‘‘(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 re-
ceived 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 activi-
ties for which the funds were obligated or ex-
pended, except that such list shall not include 
personal identifying information of individual 
recipients. 
‘‘(2) AGENCY REPORTS.—Not later than No-
vember 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 pub-
lish on a publicly available website, in accordance 
with paragraph (5), any information submitted to 
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the Administrator under this paragraph or para-
graph (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 subpara-
graph 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 eco-
nomic analysis required under subparagraph 
(A) shall include— 
‘‘(i) the impact of the agency state-
ment on the economies and budgets of 
States and municipalities; 
‘‘(ii) the impact of the agency state-
ment on the private sector, including such 
impact on small entities and farm income; 
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‘‘(iii) the availability of Federal fund-
ing to offset the impacts identified under 
clause (ii); and 
‘‘(iv) the benefits of the agency state-
ment 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 Adminis-
trator shall establish and maintain, not later 
than 30 days after the enactment of the Chesa-
peake Bay Program Reauthorization and Im-
provement Act, a user-friendly, publicly avail-
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able 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, in-
cluding findings from audits, inspectors 
general, and the Government Account-
ability Office. 
‘‘(ii) Data on relevant economic, fi-
nancial, grant, and contract information in 
user-friendly visual presentations to en-
hance public awareness of the use of cov-
ered 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 cov-
ered funds, including Federal agency and 
State websites. 
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‘‘(C) REVISIONS.—The Administrator shall 
enhance and update the website as necessary.’’. 
(d) INDEPENDENT EVALUATION
AND TECHNICAL 
ADVISORY COMMITTEE
FOR CHESAPEAKE BAY PRO-
GRAM.—Section 117 of the Federal Water Pollution Con-
trol 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 ‘Ad-
visory 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 Reau-
thorization and Improvement Act, and every two 
years thereafter, the Advisory Committee shall re-
view 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 
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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 du-
ties of the Advisory Committee shall be to pro-
vide recommendations to the Administrator and 
Secretary of Agriculture concerning the admin-
istration of this section. 
‘‘(B) 
PROGRAM
AND
ACTIVITIES
RE-
VIEW.—The Advisory Committee shall, after re-
viewing the Chesapeake Bay Program, provide 
to the Administrator and the Secretary of Agri-
culture 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 ac-
tivities are being properly implemented; 
‘‘(iii) mechanisms are in place to 
evaluate progress toward achieving water 
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quality goals for the Chesapeake Bay wa-
tershed; 
‘‘(iv) the allocation of funds among 
Chesapeake Bay States reflects the respon-
sibility 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 as-
sumptions 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 practica-
bility of water quality goals are being con-
sidered in the implementation of the Pro-
gram. 
‘‘(4) MEMBERSHIP.— 
‘‘(A) NUMBER
AND
APPOINTMENT.—The 
Advisory Committee shall be composed of 16 
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members appointed by the Administrator and 
the Secretary of Agriculture, composed of the 
following: 
‘‘(i) Two individuals who are engi-
neers or scientists who worked for the Gov-
ernment or in academia and have technical 
expertise in water quality modeling. 
‘‘(ii) One individual who has an affili-
ation with an institution of higher edu-
cation 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 de-
velopment. 
‘‘(IV) Water quality modeling. 
‘‘(V) Economics. 
‘‘(VI) Agronomy, crop science, or 
soil science. 
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‘‘(VII) 
Wastewater 
treatment 
systems. 
‘‘(VIII) Marine biology or fish 
and wildlife habitats. 
‘‘(IX) Applying for and com-
plying with building permits. 
‘‘(iv) Four individuals, at least one of 
whom shall be affiliated with each of the 
following: 
‘‘(I) An environmental or con-
servation organization. 
‘‘(II) A fishing, hunting, or out-
door sporting organization operating 
in the Chesapeake Bay watershed. 
‘‘(III) 
Nongovernmental 
agri-
culture producer associations or other 
groups of producers related to live-
stock. 
‘‘(IV) Agricultural conservation 
organizations with an established his-
tory of working cooperatively with 
producers on agricultural lands. 
‘‘(B) TERM.—Each member of the Advi-
sory Committee shall be appointed for a term of 
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two years. No member may be appointed for 
more than three terms. 
‘‘(C) MEETINGS.—The Advisory Com-
mittee shall meet on a quarterly basis. 
‘‘(5) BYLAWS.—The Advisory Committee shall 
establish any bylaws necessary for the advisory com-
mittee 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 Sec-
retary of Agriculture shall provide to the Advisory 
Committee any administrative support services nec-
essary for the Advisory Committee to carry out its 
responsibilities under this section. 
‘‘(7) COORDINATION.—To avoid duplication of 
effort, the Advisory Committee shall coordinate ac-
tivities with other Federal advisory committees 
working in related areas. 
‘‘(8) NO REGULATORY AUTHORITY.—The Advi-
sory Committee does not have the authority to rec-
ommend or promulgate regulations.’’. 
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(e) NITROGEN, PHOSPHORUS, AND SEDIMENT TRAD-
ING TECHNICAL GUIDELINES.—Section 117 of the Fed-
eral 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 Chesa-
peake Bay Program Reauthorization and Improve-
ment 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 trad-
ing program for the Chesapeake Bay. 
‘‘(2) LIMITATION ON APPLICATION.—Technical 
guidelines established under this subsection shall not 
apply to agricultural nonpoint sources or nonindus-
trial 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). 
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‘‘(3) ELEMENTS.—The technical guidelines es-
tablished under this subsection shall, at a min-
imum— 
‘‘(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 para-
graph (2)), that measure reductions in nitrogen, 
phosphorus, and sediment from credit-gener-
ating practices; 
‘‘(C) establish procedures or standards for 
generating, quantifying, trading, banking, and 
applying credits to meet regulatory require-
ments; 
‘‘(D) establish baseline requirements, rel-
evant 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 
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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 in-
serting 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 Ad-
ministrator 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 Chesa-
peake Bay States in carrying out activities re-
lated to a total maximum daily nutrient or sedi-
ment 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): 
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‘‘(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 fis-
cal 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 suf-
ficient progress toward meeting water 
quality goals and is properly managing fi-
nancial resources intended to enable the 
State to meet such goals. 
‘‘(ii) 
ALLOCATION.—The 
Adminis-
trator, 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 
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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 car-
rying out activities related to a total maximum 
daily nutrient or sediment load in the Chesa-
peake 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 mainte-
nance of publicly owned treatment works, as de-
fined 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 sub-
ject to regulation under section 402(p); and 
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‘‘(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 Mary-
land, Virginia, Pennsylvania, and the District of 
Columbia. 
‘‘(B) MINIMUM
AMOUNT.—The Adminis-
trator 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 sub-
section (n) (as added by subsection (f)), the following new 
subsection: 
‘‘(o) TOTAL MAXIMUM DAILY LOADS FOR NITRO-
GEN, PHOSPHORUS, OR SEDIMENT IN THE CHESAPEAKE 
BAY.— 
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‘‘(1) TOTAL
MAXIMUM
DAILY
NUTRIENT
OR 
SEDIMENT LOAD IN THE CHESAPEAKE BAY DURA-
TION.—Any total maximum daily nutrient or sedi-
ment load in the Chesapeake Bay shall use time-
frames other than daily (such as annual, monthly, or 
seasonal) for certain economic sectors, including ag-
riculture, in which a nondaily timeframe is appro-
priate. 
‘‘(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, phos-
phorus, 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 de-
veloped— 
‘‘(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 pollut-
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ants, and including reductions achieved by res-
toration activities implemented by private enti-
ties, local governments, States, and Federal 
agencies, including the Department of Agri-
culture; and 
‘‘(B) to increase wasteload and load alloca-
tions on a proportional basis by the amount of 
such reductions. 
‘‘(4) STATE IMPLEMENTATION.—Powers are re-
served solely to the States to implement a total max-
imum daily nutrient or sediment load in the Chesa-
peake Bay, including authority to assign load and 
waste load allocations to individual sources and 
source sectors to achieve a total maximum daily nu-
trient or sediment load in the Chesapeake Bay. At 
the request of a Chesapeake Bay State, the Adminis-
trator may review a State implementation plan and 
offer non-binding recommendations for consideration 
by the State, but may not take any action to super-
sede any such State implementation. 
‘‘(5) ADAPTIVE MANAGEMENT.— 
‘‘(A) IN GENERAL.—If a Chesapeake Bay 
State develops a plan to implement a total max-
imum daily nutrient or sediment load in the 
Chesapeake Bay that provides for reductions in 
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loading through an iterative process that em-
ploys adaptive management principles, permits 
may be issued under section 402 for new or ex-
isting point source discharges that— 
‘‘(i) include wasteload allocations con-
sistent 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 sched-
ule provided in such plan, as determined 
by the permit issuing authority. 
‘‘(B) ASSESSMENT OF PROGRESS.—In as-
sessing sufficient progress by municipal dis-
chargers and other point sources toward meet-
ing water quality goals and plans, the avail-
ability, cost, effectiveness, and appropriateness 
of practices, techniques, methods, or other pro-
visions 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 man-
agement requirements by offsetting such activities 
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through the establishment of stormwater manage-
ment practices off-site within the Chesapeake Bay 
watershed. Offsetting stormwater management prac-
tices 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
PARTNER-
SHIPS.—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 non-
industrial 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 PRO-
GRAM FOR CHESAPEAKE BAY STATES. 
The Federal Water Pollution Control Act is amended 
by inserting after section 117 (33 U.S.C. 1267) the fol-
lowing new section: 
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‘‘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 sig-
natories to the Chesapeake Bay Agreement. 
‘‘(4) CHESAPEAKE
BAY
AGREEMENT.—The 
term ‘Chesapeake Bay Agreement’ means the for-
mal, voluntary agreements executed to achieve the 
goal of restoring and protecting the Chesapeake Bay 
ecosystem and the living resources of the Chesa-
peake 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 gen-
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erated 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 Pro-
gram directed by the Chesapeake Executive Council 
in accordance with the Chesapeake Bay Agreement. 
‘‘(c) DUTIES.— 
‘‘(1) CREDITS
FOR
WATER
QUALITY
TRAD-
ING.—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 reg-
istry for interstate water quality trading in the 
Chesapeake Bay States. 
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‘‘(3) TRADE
RECORDKEEPING.—The Commis-
sion 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 pro-
gram 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 Chesa-
peake Bay Program Reauthorization and Improve-
ment 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 Com-
mission shall rely on the Administrator to provide tech-
nical guidelines under section 117(m) and the Secretary 
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of Agriculture to provide technical guidelines under sec-
tion 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 mem-
bers 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 ex-
pertise in the same field; 
‘‘(C) at least one of the members shall be 
experienced in a market-based pollutant trading 
mechanism; and 
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‘‘(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 re-
appointed. 
‘‘(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 allow-
ances 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 Adminis-
trator and the Secretary of Agriculture, 
maintain— 
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‘‘(I) a liaison between the Com-
mission and the Environmental Pro-
tection Agency; and 
‘‘(II) a liaison between the Com-
mission and the Department of Agri-
culture. 
‘‘(ii) 
EFFECTIVE
MAINTENANCE.— 
The Administrator and Secretary of Agri-
culture shall take such steps as may be 
necessary to enable the Commission to ob-
tain information and utilize such services 
and facilities of the Environmental Protec-
tion Agency and Department of Agri-
culture 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, re-
spectively, 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 at-
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tend and observe all deliberations and pro-
ceedings 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 re-
sponsibilities of those entities; 
‘‘(B) seeking views of those entities on 
such activities; and 
‘‘(C) consultation with such entities re-
garding 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, 
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Maryland, New York, Pennsylvania, Virginia, West 
Virginia, and the District of Columbia. 
‘‘(2) CHESAPEAKE
BAY
WATERSHED.—The 
term ‘Chesapeake Bay watershed’ means all tribu-
taries, backwaters, and side channels, including their 
watersheds, draining into the Chesapeake Bay. 
‘‘(3) CHIEF EXECUTIVE.—The term ‘chief exec-
utive’ means— 
‘‘(A) in the case of a State or Common-
wealth, the Governor of the State or Common-
wealth; and 
‘‘(B) in the case of the District of Colum-
bia, the Mayor of the District of Columbia.’’; 
and 
(2) by adding at the end the following new sub-
section: 
‘‘(i) CHESAPEAKE
BAY
WATERSHED
PARTNER-
SHIPS.— 
‘‘(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 sub-
section referred to as a ‘watershed partnership’) in 
accordance with this subsection. 
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‘‘(2) WATERSHED STRATEGY.—Each watershed 
partnership may establish a watershed strategy for 
demonstrating aggregate reductions in losses of ni-
trogen, 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 qual-
ity; 
‘‘(B) identifying achievable and cost-effec-
tive 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 prac-
ticable using existing data collection methods; 
and 
‘‘(E) collecting other relevant information 
on practices that demonstrate such reductions, 
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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 non-
industrial private forest land in the State may 
participate if such producers or owners of non-
industrial forest land are qualified under sub-
paragraph (B) by implementing and maintain-
ing 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
OWN-
ERS.—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 imple-
ments and maintains conservation practices, on 
agricultural or nonindustrial forest land in the 
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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
AS-
SURANCE PROCESS.— 
‘‘(i) IN
GENERAL.—A qualified pro-
ducer or owner of nonindustrial private 
forest land that participates in an assur-
ance 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 water-
shed, with respect to such land, such that 
no additional water quality-related con-
servation practices may be required on 
such land during the period of time in 
which the producer or owner of nonindus-
trial private forest land participates in the 
assurance process. 
‘‘(ii) OPERATIONS
ON
LAND.—Oper-
ations on such land conducted by such a 
qualified producer or owner shall not be 
considered to be a significant contributor 
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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
RE-
QUIRED.—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 improv-
ing water quality, and validation and verification of 
practices in the State to reduce losses of nitrogen, 
phosphorus, and sediment from agricultural or non-
industrial private forest land in the Chesapeake Bay 
watershed. 
‘‘(5) STATE WATER QUALITY GOALS.—The chief 
executive of a State that has entered into a water-
shed partnership under this subsection shall ensure 
that any watershed strategy established under para-
graph (2) is incorporated into the overall water qual-
ity goals established by the State, on a basin or 
subbasin level, for agricultural and nonindustrial pri-
vate forest land in the State. 
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‘‘(6) ASSESSMENTS OF PROGRESS.— 
‘‘(A) ASSESSMENT.—Not later than 5 
years after the date on which a watershed part-
nership 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 re-
ducing losses of nitrogen, phosphorus, and sedi-
ment from agricultural and nonindustrial pri-
vate forest land in the Chesapeake Bay water-
shed, on a basin or subbasin level, in accord-
ance 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 con-
servation assessment report issued by the Nat-
ural Resources Conservation Service data devel-
oped by the Secretary for incorporation into as-
sessments required under subparagraph (A). 
‘‘(C) EFFECT
OF
ASSESSMENT.—If the 
chief executive of a Chesapeake Bay State de-
termines, in an assessment required under sub-
paragraph (A), that aggregate reductions in 
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losses of nitrogen, phosphorus, and sediment 
from agricultural and nonindustrial private for-
est land in a basin or subbasin of the Chesa-
peake 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 re-
ductions 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 con-
tributor of nitrogen, phosphorus, or sedi-
ment to waters in the Chesapeake Bay wa-
tershed. 
‘‘(7) ASSISTANCE FROM SECRETARY.— 
‘‘(A) TECHNICAL
ASSISTANCE.—In car-
rying out a watershed partnership, the Sec-
retary shall provide technical assistance— 
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‘‘(i) to the State to assist in devel-
oping the water quality goals of the State 
to result in reductions in losses of nitro-
gen, phosphorus, and sediment from agri-
cultural 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 non-
industrial private forest land in the 
State— 
‘‘(I) for education regarding ac-
tivities they can undertake to reduce 
losses of nitrogen, phosphorus, and 
sediment from such land in the 
Chesapeake Bay watershed; and 
‘‘(II) for assistance with con-
servation 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 
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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 Chesa-
peake 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 regu-
latory authority to the Secretary.’’. 
SEC. 5. TECHNICAL GUIDELINES FOR ENVIRONMENTAL 
SERVICES MARKETS. 
(a) TYPES OF GUIDELINES REQUIRED.— 
(1) IMPAIRED WATERSHED GUIDELINES.—Sec-
tion 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 Pro-
gram Reauthorization and Improvement Act, the 
Secretary shall establish guidelines for farmer, 
rancher, and forest landowner participation in vol-
untary nutrient and sediment trading systems estab-
lished for the purpose of addressing impaired water-
sheds.’’. 
(2) 
ADDITIONAL
GUIDELINES.—Section 
1245(b) of the Food Security Act of 1985 (16 
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U.S.C. 3845(b)) is amended by striking paragraphs 
(1), (2), and (3) and inserting the following new 
paragraphs: 
‘‘(1) Methodologies for quantifying environ-
mental 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 envi-
ronmental 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 envi-
ronmental 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 in-
serting ‘‘paragraph (5)’’; and 
(B) by striking ‘‘paragraph (3)’’ and in-
serting ‘‘paragraph (6)’’. 
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(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 sub-
sections: 
‘‘(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 serv-
ice benefits. 
‘‘(2) DEADLINE; PUBLICATION.—Not later than 
14 months after the date of the enactment of the 
Chesapeake Bay Program Reauthorization and Im-
provement 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 enti-
ties 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 Im-
provement Act, and every two years thereafter, the 
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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 Sec-
retary 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
AC-
CREDITATION.—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 envi-
ronmental service benefits to ensure that such pro-
viders are professionally qualified and have no con-
flicts of interest. Each technical service provider 
meeting the requirements for accreditation in ac-
cordance with this paragraph shall be listed in a 
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publicly accessible database, which shall be main-
tained 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 sub-
section (i) (as added by section 4), the following new sub-
section: 
‘‘(j) PILOT PROGRAM
FOR CREATING ENVIRON-
MENTAL SERVICE MARKETS.— 
‘‘(1) ESTABLISHMENT.—The Secretary shall es-
tablish a pilot program for the Chesapeake Bay wa-
tershed, for the facilitation of creating environmental 
service markets based on the guidelines outlined in 
section 1245(g), that does not result in removing eli-
gible land wholly from agricultural production or 
eliminating the economic viability of such agricul-
tural production. The Secretary shall ensure that the 
pilot program is consistent with local government 
rules and the policies, protocols, and regulations es-
tablished under existing environmental service mar-
kets and State trading programs in the Chesapeake 
Bay watershed. 
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‘‘(2) TRANSMISSION OF DATA TO CHESAPEAKE 
BAY NUTRIENT AND SEDIMENT TRADING COMMIS-
SION.—The Secretary shall transmit to the Chesa-
peake Bay Nutrient and Sediment Trading Commis-
sion established under section 117A of the Federal 
Water Pollution Control Act, any data the Secretary 
determines is necessary to the effective administra-
tion of nutrient and sediment trading programs ad-
ministered by such Commission.’’. 
SEC. 7. OFFSET. 
There is authorized to be appropriated to the Envi-
ronmental Protection Agency for the Environmental Pro-
grams 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 ad-
ministrative expenses. 
Æ 
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