Despite a pair of court challenges, the state says it's full steam ahead for its nutrient-trading program in which farmers are paid by developers and municipal sewage-plant owners for conservation measures.

Pennsylvania's nutrient-trading program, the most ambitious in the nation, was unveiled in December 2006 by Gov. Ed Rendell and the state Department of Environmental Protection.

It is presented as a way to boost much-needed income for farmers while making it more cost-effective to clean up polluted Pennsylvania streams and the Chesapeake Bay.

This is the idea: Farmers, other landowners or conservation groups perform soil-saving and runoff measures beyond what they already are required to do.

No-till planting, exporting poultry manure to other areas and planting cover crops on bare winter fields are among the approved measures in the early going.

The farmer or group is assigned pollution credits, which can then be sold for cash to a developer or, say, a municipality seeking a cheaper alternative to meeting clean-stream laws than overhauling its sewage-treatment plant.

Lancaster County figures to be a major player. Four of the first five nutrient-trading contracts in the state have been brokered by Red Barn Trading Co., a Manheim Township-based company formed several years ago in anticipation of a robust nutrient-trading market.

But a pair of court challenges to similar nutrient-trading programs, one in Minnesota and one in Arizona, raises questions about this non-regulatory way to reduce the state's large-scale nutrient-pollution problem.

So much so that the U.S. Environmental Protection Agency commissioned a "white paper" study into the ramifications for Pennsylvania's fledgling nutrient-trading program.

The result, "Pennsylvania's Nutrient Trading Program: Legal Issues and Challenges," concludes that "a number of hurdles may await Pennsylvania and the other Chesapeake Bay states."

The heart of the legal question that has emerged is whether the Clean Water Act &tstr; which doesn't mention trading &tstr; permits a discharger to offset pollution by cleaning up water in another area, especially if the original body of water is already classified as substandard.

Many streams in Pennsylvania are.

EPA rules forbid a state agency to issue a permit for a new or expanding discharger that will "cause or contribute" to the impairment of a water body.

In Minnesota last May, the state Supreme Court said yes, such offset trading could be done. But in October in Arizona, a federal court said no, it cannot.

Pennsylvania's nutrient-trading program has been slow to develop.

Last week, a coalition of groups including the Pennsylvania Farm Bureau and the Chesapeake Bay Foundation called on state officials to strengthen a nutrient-trading market by allowing "banking" of credits. Currently, credits must be performed within 15 months.

The time limit is hindering the program, agrees Don McNutt, director of the Lancaster County Conservation District, which has recruited four Lancaster County farmers into the program.

"Wastewater plants are looking to bank credits. That's not in the cards right now for nutrient trading," McNutt said.

DEP officials shrugged off the legal challenge study.

"We're moving forward. This is a program that we believe in. We're very confident in it," said Marcus Kohl, of DEP's Water Management Program.

"We fully believe in it. Our staff has looked at it from every angle possible to make sure it will work in Pennsylvania."

He added DEP has worked closely with EPA in developing the program.

Peter Hughes, president of Red Barn Trading, also expressed optimism about nutrient trading's future.

"I would say that DEP is as committed as ever," he said. "The ag community is behind the program still."

Red Barn was the first to broker a nutrient trade in the state and the latest. This week, DEP approved a 15-year agreement in which Fairview Township in York County will pay Red Barn for transporting poultry manure from four farms in Lancaster, York and Dauphin counties to strip mines outside the Chesapeake Bay watershed in Somerset County.

Red Barn pays the farmers for the manure and pays to have it transported to earn the nutrient credits, which are sold to Fairview Township.

The move spares Fairview Township from a $4 million upgrade of its sewage plant, a savings of 68 percent, according to township officials.


Staff writer Ad Crable can be reached at acrable@LNPnews.com or 481-6029.