§9–1605.4.    IN EFFECT

    // EFFECTIVE UNTIL JUNE 30, 2030 PER CHAPTERS 694 AND 695 OF 2021 //

    (a)    (1)    In this section the following words have the meanings indicated.

        (2)    “Account” means the Clean Water Commerce Account.

        (3)    “Aggregator” means a person that facilitates or coordinates the establishment of practices or projects that:

            (i)    Are implemented by the person or by others;

            (ii)    Produce a quantifiable environmental outcome;

            (iii)    Are registered by the person; and

            (iv)    Are made available for purchase by the Department under this section.

        (4)    (i)    “Agricultural practice” means a best management practice that is:

                1.    Approved by the Chesapeake Bay Program Partnership; and

                2.    Implemented on land or water that is used for the production or processing of an agricultural crop.

            (ii)    “Agricultural practice” includes agricultural, horticultural, silvicultural, and aquacultural operations.

        (5)    “Chesapeake Bay TMDL” means the total maximum daily load approved by the U.S. Environmental Protection Agency under the Clean Water Act for the Chesapeake Bay.

        (6)    “Environmental outcome” means nitrogen load reductions that can be directly measured or modeled using the Chesapeake Bay Program Models.

        (7)    (i)    “Nonagricultural landscape restoration project” means a project that:

                1.    Is installed on nonagricultural lands;

                2.    Has an intended lifespan of at least 10 years; and

                3.    Provides environmental outcomes.

            (ii)    “Nonagricultural landscape restoration project” includes a project that returns land to native or natural land cover, such as afforestation or reforestation projects.

        (8)    “Quantification plan” means a plan approved by the Department that describes:

            (i)    The method that will be used to measure or model environmental outcomes;

            (ii)    The required compliance monitoring that will occur to ensure that the proposed actions were taken;

            (iii)    Any verification steps that may be carried out by the Department or the owner of a project or practice to confirm environmental outcomes; and

            (iv)    The timeline for proposed payments under a contract with the Department.

    (b)    There is a Clean Water Commerce Account.

    (c)    The purpose of the Account is to purchase environmental outcomes in support of the State’s efforts to achieve the Chesapeake Bay TMDL.

    (d)    The Secretary shall administer the Account.

    (e)    The Account consists of:

        (1)    Revenue transferred to the Account under § 9–1605.2(i)(2)(xiii) of this subtitle; and

        (2)    Any other money from any other sources accepted for the benefit of the Account.

    (f)    (1)    Subject to the provisions of this subsection, the Account may be used only for the purchase of cost–effective environmental outcomes that:

            (i)    Support the State’s efforts to achieve the Chesapeake Bay TMDL; and

            (ii)    Have an expected life of at least 10 years.

        (2)    Except as provided in paragraph (3) of this subsection, in each fiscal year:

            (i)    At least 35% shall be used to procure environmental outcomes from agricultural practices, with priority given to projects that are:

                1.    A fixed natural filter practice, as defined in § 8–701 of the Agriculture Article; or

                2.    An agricultural ditch management practice, as defined by the Chesapeake Bay Program;

            (ii)    At least 20% shall be used to procure environmental outcomes from projects, including stormwater management and green infrastructure projects, established in communities disproportionately burdened by environmental harms and risks as identified by the Department in consultation with the Commission on Environmental Justice and Sustainable Communities; and

            (iii)    At least 10% shall be used to procure environmental outcomes from nonagricultural landscape restoration projects that take into consideration the project’s ecological suitability, including the hydrological conditions and other physical characteristics of the location at which the project will be implemented.

        (3)    Any unencumbered funds not used to purchase environmental outcomes as specified under paragraph (2) of this subsection are:

            (i)    No longer subject to the allocation requirements specified under paragraph (2) of this subsection; and

            (ii)    Available for use consistent with this section in subsequent fiscal years.

        (4)    A project may include environmental outcomes from one or more of the project types specified under paragraph (2) of this subsection.

    (g)    Expenditures from the Account may be made only in accordance with the State budget.

    (h)    The Department may establish subaccounts within the Account to carry out the purposes of this section.

    (i)    An environmental outcome purchased under this section may not be resold or transferred to any other person separately from the property on which the environmental outcome is located.

    (j)    In calculating pollution reductions under the Chesapeake Bay TMDL by various major source sectors recognized in the Watershed Implementation Plan, credit for any reductions funded under this section shall be attributed to the sector of the source that makes the reductions.

    (k)    (1)    The Department shall:

            (i)    Use a competitive process to invite funding proposals from aggregators and other persons for the provision of environmental outcomes that will contribute toward the achievement of the Chesapeake Bay TMDL;

            (ii)    Develop and use a scoring system to evaluate a submitted funding proposal;

            (iii)    Provide each person that submits a funding proposal with a copy of the scoring system, including the weight given to the co–benefits specified under paragraph (3)(ii)2 of this subsection; and

            (iv)    At least once a year, publicly announce a request for proposals or otherwise initiate a procurement process for environmental outcomes to be funded under this section.

        (2)    The Department shall require each funding proposal submitted under this section to include:

            (i)    The legal name of the person submitting the proposal;

            (ii)    A description of the projects or practices to be used or implemented to achieve the environmental outcomes;

            (iii)    The location where the projects or practices will be used or implemented;

            (iv)    The expected life of each environmental outcome that will be achieved under the projects or practices;

            (v)    To ensure that the applicant has the legal authority to implement the projects or practices, a description of the ownership of each parcel of land or facility that will be used in the projects or practices;

            (vi)    A proposed quantification plan and verification procedure;

            (vii)    An implementation timetable for the projects or practices;

            (viii)    A proposed cost and payment schedule;

            (ix)    An explanation of whether the proposal meets the requirements for funding specified in subsection (g) of this section;

            (x)    If the projects or practices will achieve a co–benefit specified under paragraph (3)(ii)2 of this subsection, a description of the co–benefit, including as much information as is reasonably possible regarding the nature, extent, duration, and means of verifying the co–benefit;

            (xi)    A statement on whether any portion of the projects or practices are being funded or will be funded, in whole or in part, with federal funds, local funds, or State funds other than funds provided under this section, and a description of any such funding, including:

                1.    The name of the department or agency providing the funds;

                2.    The amount of funding received or that will be received; and

                3.    The portion of the projects or practices for which the funds are being or will be provided; and

            (xii)    Any other information required by the Department.

        (3)    (i)    When initiating a competitive process under this subsection, the Department shall announce the criteria that will be used to evaluate funding proposals.

            (ii)    When evaluating funding proposals, the Department shall prioritize the following factors in the following order:

                1.    The dollar cost per unit of environmental outcome; and

                2.    The provision of expected co–benefits related to:

                A.    Enhancing the mitigation of and resiliency to the anticipated adverse effects of climate changes;

                B.    Alleviating the environmental harms and risks borne by communities disproportionately burdened by environmental harms and risks as identified by the Department in consultation with the Commission on Environmental Justice and Sustainable Communities;

                C.    Contributing toward the attainment of water quality standards in a locally impaired watershed; or

                D.    Reductions in phosphorus or sediment loads that are directly measured or modeled by the Chesapeake Bay Program Models and can be counted toward the State’s pollution load reductions required under the Chesapeake Bay TMDL.

    (l)    The Department shall:

        (1)    Approve a process to verify environmental outcomes for which funding is provided under this section; and

        (2)    Use consistent standards and processes for verifying environmental outcomes through the confirmation of modeling results, the confirmation of installations, or, where appropriate, the measurement of outcomes during or after the initiation of a project or practice.

    (m)    An environmental outcome purchased under this section shall:

        (1)    Result from a new project or practice designed and established following the selection of a proposal and the execution of a contract in accordance with this section;

        (2)    Be in addition to any load reduction required by any federal, State, or local law, regulation, policy, or permit, including any applicable total maximum daily load; and

        (3)    Be consistent with the Chesapeake Bay Program Models so as to ensure the load reductions will count toward the achievement of the Chesapeake Bay TMDL.

    (n)    A contract entered into by the Department under this section may be funded for the expected life of the project or practice yielding the environmental outcome, not to exceed 20 years.

    (o)    A contract entered into by the Department under this section shall:

        (1)    Require the owner of the project or practice to periodically submit status updates in accordance with the quantification plan for the environmental outcomes of the project or practice;

        (2)    Require that payment for environmental outcomes be conditioned on the achievement and verification of the environmental outcomes in accordance with the quantification plan;

        (3)    Include a schedule of payments that will be made as environmental outcomes are achieved and verified; and

        (4)    Require reporting on the amount of nitrogen and, to the extent that it can be feasibly determined without significant expense, phosphorus and sediment that are removed annually by the project or practice.

    (p)    The Department shall:

        (1)    Maintain a public registry for the environmental outcomes of each project or practice that includes:

            (i)    A description of the project or practice and the associated spatial information; and

            (ii)    To ensure that the environmental outcomes are maintained for the life expectancy of the environmental outcome, a summary of the contract provisions for the project or practice; and

        (2)    Make the registry available to the public on the Department’s website.

    (q)    (1)    (i)    Subject to subparagraph (ii) of this paragraph, a project or practice that is partially financed with another source of State funds may be funded under this section.

            (ii)    Funding provided to a project or practice under this subsection shall be prorated to cover only the portion of the environmental benefit not funded by another State source.

        (2)    (i)    An environmental outcome that is funded entirely with public funds is not eligible to be purchased with funds from the Account.

            (ii)    If an environmental outcome is partially funded with public funds and is verified under subsection (l) of this section, funds from the Account may be used to purchase the remaining portion of the environmental outcome that is not funded with public funds.

    (r)    In conjunction with the report required under § 9–1605.2(j)(6) of this subtitle, on or before December 31 each year, the Bay Restoration Fund Advisory Committee shall report, in accordance with § 2–1257 of the State Government Article, to the Senate Education, Health, and Environmental Affairs Committee and the House Environment and Transportation Committee on:

        (1)    The total amount expended and encumbered under this section:

            (i)    During the immediately preceding fiscal year; and

            (ii)    Since July 1, 2022;

        (2)    The amount and type of environmental outcomes purchased under this section and the types of projects or practices that produced those outcomes, including information on:

            (i)    The cost per unit of nitrogen reduced or removed; and

            (ii)    The relative contribution of each environmental outcome toward closing any gaps in achieving the nutrient and sediment targets of the Chesapeake Bay TMDL;

        (3)    The type and value of any co–benefits provided by projects or practices funded under this section;

        (4)    The cost–effectiveness of environmental outcomes purchased under this section as compared with other approaches to reducing nitrogen; and

        (5)    For fiscal year 2025 only, any amendments to this section necessary to reflect historic and projected demand for funding from the Account and the Bay Restoration Fund, including an assessment and recommendation on possible changes to the percentages specified under subsection (f) of this section.

    (s)    The Department may adopt regulations to implement this section.