EXPLANATION: CAPITALS INDICATE MAT TER ADDED TO EXISTIN G LAW.
[Brackets] indicate matter deleted from existing law.
Underlining indicates amendments to bill.
Strike out indicates matter stricken from the bill by amendment or deleted from the law by
amendment.
*sb1144*
SENATE BILL 1144
M3 4lr3477
CF HB 1266
By: Senators Guzzone and Elfreth
Introduced and read first time: February 10, 2024
Assigned to: Rules
Re–referred to: Education, Energy, and the Environment and Budget and Taxation, March
9, 2024
Committee Report: Favorable with amendments
Senate action: Adopted
Read second time: March 21, 2024
CHAPTER ______
AN ACT concerning 1
Clean Water Commerce Account – Contracts for the Purchase of Environmental 2
Outcomes 3
FOR the purpose of requiring, in entering into a certain contract under the Clean Water 4
Commerce Account for the purchase of a certain environmental outcome, the 5
Department of the Environment to allow certain nonuniform payment schedules and 6
include certain financial incentives for certain purposes; authorizing the Department 7
to require a certain payment or certain financial protections for contracts of a certain 8
size to ensure certain outcomes; and generally relating to the Clean Water Commerce 9
Account. 10
BY repealing and reenacting, without amendments, 11
Article – Environment 12
Section 9–1605.4(a)(1), (2), and (6), (b), (c), (f)(1), (m), and (n) 13
Annotated Code of Maryland 14
(2014 Replacement Volume and 2023 Supplement) 15
BY repealing and reenacting, with amendments, 16
Article – Environment 17
Section 9–1605.4(o) 18
Annotated Code of Maryland 19
(2014 Replacement Volume and 2023 Supplement) 20
2 SENATE BILL 1144
SECTION 1. BE IT ENACTED BY THE GENERAL ASSEMBLY OF MARYLAND, 1
That the Laws of Maryland read as follows: 2
Article – Environment 3
9–1605.4. 4
(a) (1) In this section the following words have the meanings indicated. 5
(2) “Account” means the Clean Water Commerce Account. 6
(6) “Environmental outcome” means nitrogen load reductions that can be 7
directly measured or modeled using the Chesapeake Bay Program Models. 8
(b) There is a Clean Water Commerce Account. 9
(c) The purpose of the Account is to purchase environmental outcomes in support 10
of the State’s efforts to achieve the Chesapeake Bay TMDL. 11
(f) (1) Subject to the provisions of this subsection, the Account may be used 12
only for the purchase of cost–effective environmental outcomes that: 13
(i) Support the State’s efforts to achieve the Chesapeake Bay 14
TMDL; and 15
(ii) Have an expected life of at least 10 years. 16
(m) An environmental outcome purchased under this section shall: 17
(1) Result from a new project or practice designed and established 18
following the selection of a proposal and the execution of a contract in accordance with this 19
section; 20
(2) Be in addition to any load reduction required by any federal, State, or 21
local law, regulation, policy, or permit, including any applicable total maximum daily load; 22
and 23
(3) Be consistent with the Chesapeake Bay Program Models so as to ensure 24
the load reductions will count toward the achievement of the Chesapeake Bay TMDL. 25
(n) A contract entered into by the Department under this section may be funded 26
for the expected life of the project or practice yielding the environmental outcome, not to 27
exceed 20 years. 28
(o) (1) [A] SUBJECT TO PARAGRAPH (2) OF THIS SUBSECTION , A contract 29
entered into by the Department under this section shall: 30
SENATE BILL 1144 3
[(1)] (I) Require the owner of the project or practice to periodically submit 1
status updates in accordance with the quantification plan for the environmental outcomes 2
of the project or practice; 3
[(2)] (II) Require that payment for environmental outcomes be 4
conditioned on the achievement and verification of the environmental outcomes in 5
accordance with the quantification plan; 6
[(3)] (III) Include a schedule of payments that will be made as 7
environmental outcomes are achieved and verified; and 8
[(4)] (IV) Require reporting on the amount of nitrogen and, to the extent 9
that it can be feasibly determined without significant expense, phosphorus and sediment 10
that are removed annually by the project or practice. 11
(2) (I) IN ENTERING INTO A CO NTRACT FOR A PROJECT THAT 12
INCLUDES CONSTRUCTIO N, RECONSTRUCTION , OR REHABILITATION , ON REQUEST, 13
UNDER THIS SECTION , THE DEPARTMENT SHALL : 14
(I) FOR THE PURPOSE OF RE DUCING FINANCING COS TS FOR 15
THE OWNER OF A PROJE CT OR PRACTICE AND T HE STATE, ALLOW NONUNIFORM 16
PAYMENT SCHEDULES THAT TAKE INTO ACCOU NT THE UPFRONT CAPIT AL 17
INVESTMENT NEEDED IN ORDER TO GENERATE THE INITIAL ENVIRONMENTAL 18
OUTCOMES OF A PROJEC T OR PRACTICE; AND THAT ALLOW FOR A COS T–PER–POUND 19
OF NITROGEN REDUCED THAT VARIES WITH THE ACHIEVEMENT OF PERFO RMANCE 20
MILESTONES, AS AGREED UPON BY BO TH PARTIES TO THE CO NTRACT. 21
(II) THE FIRST PER FORMANCE MILESTONE M AY NOT OCCUR 22
EARLIER THAN THE TIM E THAT THE CONSTRUCT ION, RECONSTRUCTION , OR 23
REHABILITATION IS CO MPLETE. 24
(II) INCLUDE FINANCIAL INC ENTIVES TO ENSURE TH E OWNER’S 25
COMMITMENT TO THE OP ERATION AND MAINTENA NCE OF THE PROJECT O R 26
PRACTICE FOR ITS PROPOSED EXP ECTED LIFE. 27
(3) IN ORDER TO ENSURE TH E ACHIEVEMENT OF ENV IRONMENTAL 28
OUTCOMES AGREED TO I N A CONTRACT, THE DEPARTMENT MAY REQUIR E: 29
(I) A MINIMUM FINAL PAYMEN T; AND 30
(II) FOR A CONTRACT AWARD GREATER THAN $500,000, 31
ADDITIONAL FINANCIAL PROTECTION S, INCLUDING A LETTER O F CREDIT, 32
INSURANCE INSTRUMENT , OR PERFORMANCE BOND . 33
4 SENATE BILL 1144
SECTION 2. AND BE IT FURTHER ENACTED, That this Act shall take effect July 1
1, 2024. 2
Approved:
________________________________________________________________________________
Governor.
________________________________________________________________________________
President of the Senate.
________________________________________________________________________________
Speaker of the House of Delegates.