Last week, the Wisconsin Department of Natural Resources (WDNR) released draft guidance on implementation of its Water Quality Trading Program for utility-scale solar farms. The trading program, authorized under Wis. Stat. § 283.84, allows owners of utility-scale solar installations to sell credits for the pollutants (such as phosphorus) they prevent from entering Wisconsin’s waterways to municipalities and industry with discharge limits under Wisconsin Pollutant Discharge Elimination System (WPDES) permits. Trading may be used by municipal and industrial WPDES permit holders to demonstrate compliance with water quality-based effluent limitation (WQBELs) or waste load allocations required under total maximum daily loads (TMDLs).  

Unfortunately, WDNR’s draft guidance limits the opportunity for utility-scale solar farms to generate credits by making much of the pollution reduction attributable to converting agricultural cropland to solar arrays ineligible to generate tradable credits. More specifically, the approach outlined in guidance sets required post-construction conditions as the “baseline” for generating credits. This means that a substantial portion of overall pollution reduction will not be creditable. There may be greater credit-generating opportunities associated with project land that is not disturbed during construction (e.g., screening areas).

We understand that WDNR’s interpretation is based on Wis. Stat. § 283.84(1)(a). That statute provides, in substance, that tradable credits may be generated when a party “agrees to reduce the discharge of pollutants below the levels that would otherwise be authorized” in their WPDES permit. Because solar farms are typically required to obtain WPDES permits for construction site stormwater that contain certain post-construction stormwater obligations, WDNR has taken the position that the solar farm must implement those post-construction practices before it can generate credits.

The cited statute (§ 283.84(1)(a)) seems to have been intended to apply to the scenario where one “end-of-pipe” point-source discharger seeks to generate credits for sale to another permitted discharger. It is not clear that it should be applied to facilities with construction site stormwater permits. Other statutory provisions seem to permit credit generation in a broader context (i.e., where a landowner “agrees to reduce the amount of water pollution that it causes below the levels of water pollution that it causes when the agreement is reached.”)

Although WDNR guidance does not have the force of law, it is a clear statement of the agency’s current thinking on water quality trading for solar farms. The draft guidance is available here in Appendix L, at page 198, and interested parties can send written comments to matthew.claucherty@wisconsin.gov by May 2, 2025.

If you have questions about the WDNR’s proposed guidance, or about taking advantage of the WDNR’s trading program as a buyer or seller, please reach out to Michael Best.