Water quality trades in Minnesota

Point sources are regulated sources of water pollution, such as industrial and municipal wastewater facilities or municipal stormwater. Nonpoint sources are unregulated and includes things like agricultural runoff and streambank erosion.

Point to nonpoint trading

Rahr Malting Company, Shakopee (Permit ID: MN0031917)

Receiving Water: Minnesota River

Pollutant of Concern: Carbonaceous biochemical oxygen demand (CBOD)

Trade Start Year: January 8, 1997

Credit Demand: 150 lbs/year

Credit Supply: 212.8

Rahr wanted to expand their discharge to include treated process wastewater to be discharged to the Minnesota River. This receiving water was impaired for dissolved oxygen, so no additional loadings were allowed. In order to grant Rahr a permit for 150 pounds per year of CBOD, they were required to reduce nonpoint loadings within the Minnesota River basin. It was agreed that if the trades they implemented resulted in more than the required 150 lbs/yr, they would be granted the additional loading. Therefore, a limit of 212.8 lbs/yr was issued. This value cannot be increased without additional trades and analysis.

Trade Ratio: 2.6:1

Trading Projects: Rahr implemented five trades on four sites:

        Trade site 1 - Riparian area natural and woody vegetation establishment on the Minnesota River.

        Trade site 2 - Riparian area natural and woody vegetation establishment on the Cottonwood River.

        Trade site 3 - Livestock exclusion and bank stabilization on 8 Mile Creek.

        Trade site 4 - Bluff stabilization on the Rush River.

Southern Minnesota Beet Sugar Cooperative, Renville County (Permit ID: MN0040665)

Receiving Water: County Ditch 37 and County Ditch 45

Pollutant of Concern: Phosphorus

Trade Start Year: April 7, 1999

This facility originally discharged to County Ditch 37. The co-op desired to expand, and they added a discharge to County Ditch 45, which was required to be offset by nonpoint trading for phosphorus.

Trade ratio: 2.6:1

Trading Projects: SMBSC implemented three trading projects on one site and one trading practice on many sites:

        Trade site 1 - Cattle exclusion, filter strip and bank stabilization on the East Fork of Beaver Creek.

        Trade site 2 - Cover crops planted on beet fields

Princeton Wastewater Treatment Facility, Princeton (Permit ID: MN0024538)

Receiving Water: Rum River

Pollutant of Concern: Phosphorus

Trade Start Year: July 24, 2015

In 2009, Princeton received a NPDES permit for a discharge to the Rum River, which was considered a new discharge upstream of an impaired water. Princeton had not received a waste load allocation from any downstream TMDL and therefore was required to offset their phosphorus discharge by conducting a Point-Point trade. They entered into a trading agreement with the MCES - Metro WWTF. Prior to the 2009 permit expiring, MCES informed Princeton that it was no longer interested in continuing the Point-Point trade. In order to continue discharging, Princeton pursued a NPDES permit that included Point-Nonpoint trading requirements in place of the Point-Point trading requirements.

Trade Ratio: 2.6:1

Trading Projects: Princeton implemented five trading projects on five sites. Each trading project consisted of bank and/or bluff stabilization along the Rum River.

Oronoco Wastewater Treatment Facility, Oronoco (Permit ID: MN0071421)

Receiving Water: Zumbro River, Middle Fork

Pollutant of Concern: Phosphorus

Trade Start Year: 2020

In 2020, Oronoco received an NPDES permit for the construction of a new wastewater treatment facility and discharge to the Middle Fork of the Zumbro River. This is a new discharge upstream of an impaired water. Oronoco had not received a waste load allocation from any downstream TMDL and therefore was required to offset their phosphorus discharge by conducting pollutant trading. Oronoco chose to purse nonpoint trading projects. The WWTF and trading projects are currently scheduled for construction in 2020/2021.

Trade ratio: 2.6:1

Trading projects: Oronoco is planning to construct two nonpoint trading projects the stabilize banks along the Middle Fork of the Zumbro River.

Mankato Water Resource Recovery Facility, Mankato (Permit ID: MN0030171)

Receiving water: Minnesota River

Pollutant of concern: Phosphorus

Trade Start Year: 2021

In 2021, Mankato’s NPDES permit was reissued. The permit authorized the development of a nonpoint trading program.

Trade Ratio: 2.6:1

Trading Projects: No projects have been proposed at this time.

Hutchinson Wastewater Treatment Facility, Hutchinson (Permit ID: MN0055832)

Receiving Water: Crow River, South Fork

Pollutant of Concern: Phosphorus

Trade Start Year: 2021

In 2021, Hutchinson’s NPDES permit was reissued with a new river eutrophication standard effluent limit. The current WWTF is not designed to meet this new effluent limit. The permit includes a compliance schedule for meeting the new effluent limit that includes facility planning and point-nonpoint trading analysis. 

Trade Ratio: 2.6:1

Trading Projects: No projects have been proposed at this time.

Point to point trading

Granite Falls Energy LLC and Mankato Water Resource Recovery Facility

Buyer: Granite Falls Energy LLC (Permit ID: MN0066800)

Seller: Mankato Water Resource Recovery Facility (Permit ID: MN0030171)

Target waterbody: Minnesota River

Pollutant of concern: Total Phosphorus

Trade Start Year: 2005

Trade Ratio: 1.2:1

Credit Demand: 350 lbs/year

Credit Supply: 421 lbs/year

Total Value: $3,317/year (2017)

Unit cost: $17.36/kg (2017)

The Granite Falls Energy LLC was issued a permit for a new discharge of process wastewater and industrial stormwater to the Minnesota River in 2004. A phosphorus TMDL to address a low dissolved oxygen impairment was in development at the time. In order to expedite permit issuance the company agreed to offset its effluent phosphorus load through trading. Upon completion, the TMDL did not provide a wasteload allocation for Granite Falls Energy or any other new phosphorus discharges to the Minnesota River. The company offsets its potential annual effluent phosphorus load through a point source trade with the Mankato Water Resource Recovery Facility. 

Redwood Falls WWTP and New Ulm WWTP

Buyer: Redwood Falls WWTP (Permit ID: MN0020401)

Seller: New Ulm WWTP (Permit ID: MN0030066)

Target Waterbody: Lake Pepin

Pollutant of Concern: Total Phosphorus

Trade Start Year: 2016

Credit Demand: 1,384 lbs/year

Credit Supply: 1,522 lbs/year

Total Value: $38,800/year

Unit cost: $25/kg

On February 24, 2014, the MPCA issued an NPDES permit for the Redwood Falls WWTP which included a 1,460 kg/year total phosphorus effluent limit and the option to achieve compliance with the limit by upgrading the existing wastewater treatment facility or through water quality trading. On February 23, 2016 the City of Redwood Falls entered into a pre-TMDL trading agreement with the City of New Ulm. The City of Redwood Falls sought water quality trading credits to offset a portion of discharge of total phosphorus from its existing wastewater treatment facility to the Minnesota River. The reissued NPDES for Redwood Falls’ existing wastewater facility contained a new water quality based effluent limit developed for the restoration of Lake Pepin.

Trade Ratio: 1.1:1

Previous trades

Princeton WWTP and Met Council's Metropolitan WWTP 

Buyer: Princeton WWTP (Permit ID: MN0024538)

Seller: Metropolitan Council/Metropolitan WWTP (Permit ID: MN0029815)

Trade Type: Point-Point

Target Waterbody: Lake Pepin

Pollutant of Concern: Total Phosphorus

Trade Start Year: 2009

Trade End Year: 2015

Credit Demand: 5,000 lbs/year

Credit Supply: 6,000 lbs/year

In December 2008, the City of Princeton (City) entered into a pre-TMDL Total Phosphorus (TP) trade agreement with the Metropolitan Council Environmental Services (MCES). The City sought water quality trading credits to offset the discharge of TP from its proposed WWTF to the Rum River. Due to the fact that the proposed discharge was upstream of an impaired water, an NPDES permit could not be issued unless the entire effluent TP loading was offset by reduction from other sources in the watershed MCES agreed to offset the City’s effluent phosphorus load; however, in lieu of monetary compensation  for the trade, the MCES required the development of nonpoint source Best Management Practices (BMPs) in or near the City to offset the TP loading resulting from the new discharge.   MCES and the City agreed to a point-nonpoint trade ratio of 2:1, resulting in the offset of 10,000 lbs/year of TP through nonpoint source reductions. Over the course of the permit term the City developed five streambank restoration projects in accordance with the trade agreement. In 2014 the MCES informed the City that the point-point trade would not be renewed upon permit expiration. The City subsequently worked with MPCA staff to incorporate credits generated by the five streambank restoration projects directly into its NPDES permit.

Trade Ratio: 1.2:1

MNDOT Heath Creek Rest Area and Northfield WWTP

Buyer: MNDOT Heath Creek Rest Area (Permit ID: MN0069639)

Seller: Northfield WWTP (Permit ID: MN0024368)

Target Waterbody: Byllesby Reservoir

Pollutant of Concern: Total Phosphorus

Trade Start Year: 2011

Credit Demand: 8.33 kg/year

Credit Supply: 10 kg/year

Total Value: $1,200/year

Unit cost: $120/kg

In May 2011, the Minnesota Department of Transportation (MnDOT) entered into a pre-TMDL Total Phosphorus (TP) trade agreement with the City of Northfield (City). MnDOT sought water quality trading credits to offset the discharge of TP from its proposed Interstate 35 Heath Creek Rest Area wastewater treatment facility (WWTF) to the Heath Creek. Due to the fact that the proposed discharge was upstream of an impaired water, an NPDES permit could not be issued unless the entire effluent TP loading was offset by reduction from other sources in the watershed. On June 30, 2011 the MPCA issued an NPDES permit for the MnDOT Heath Creek Rest Area which includes an 8 kg/year TP effluent limit. Simultaneously, the MPCA modified the Northfield WWTP NPDES permit to reduce the effluent TP limit by 10 kg/year from 7,184 kg/year to 7,174 kg/year. The trade agreement was terminated in 2017 when the Byllesby Reservoir TMDL was completed and a wasteload allocation established for the MnDOT Heath Creek Rest Area

Trade Ratio: 1.2:1

Other trading in Minnesota

Minnesota River Basin General Phosphorus Permit

Permittees under Appendix B of this permit have the option of buying or selling phosphorus credits in accordance with the terms of the permit.