Gov. Larry Hogan's administration is scaling back his ambitious plan to jumpstart a pollution credit trading program as part of the state's Chesapeake Bay cleanup efforts.

The initial program would have allowed farmers, developers or governments who do extra to reduce pollution to sell those reduction credits to others who are struggling to cut down on pollution. It's an idea that combines science with commerce to help the environment, and the state would have spent $10 million to get the first round of credit-trading off the ground.

But after opposition from environmentalists and local governments and receiving little interest from farmers, the Republican Hogan administration is narrowing the plan, proposing a competitive grant process for certain pollution-reduction projects.

State Environment Secretary Ben Grumbles told lawmakers Tuesday that even the scaled-back program will help move the state toward focusing on "cost-effective solutions" for reducing pollution that flows into the bay and its rivers.

Maryland is part of a joint effort between the federal government and the six states that drain into the bay to reduce pollution and improve water quality in the Chesapeake. A 2025 deadline looms to get enough pollution-reduction practices in place to eventually get the Chesapeake up to an acceptable level of water quality.

Gov. Larry Hogan announced his environmental agenda for the coming legislative session Tuesday, proposing Maryland spend nearly $65 million over the next three years on tax incentives, job training and a "Green Energy Institute" at the University of Maryland.

The bulk of the money, $41 million,...

Gov. Larry Hogan announced his environmental agenda for the coming legislative session Tuesday, proposing Maryland spend nearly $65 million over the next three years on tax incentives, job training and a "Green Energy Institute" at the University of Maryland.

The bulk of the money, $41 million,...

When the nutrients nitrogen and phosphorus make their way into rivers and the bay, they fuel the growth of algae blooms that eventually suck life-sustaining oxygen from the water. Sediment that washes into the bay smothers underwater plant life. Pollution sources include farms, stormwater runoff, septic systems and sewage treatment plants.

Initially, Hogan's Clean Water Commerce Act would have used state money to pay for a wide range of environmental projects that would generate pollution credits that could be bought by others needing to reduce pollution.

Comptroller Peter Franchot's tax fraud bill will face a hearing on Wednesday in a Senate committee. (Michael Dresser/Baltimore Sun video)

Comptroller Peter Franchot's tax fraud bill will face a hearing on Wednesday in a Senate committee. (Michael Dresser/Baltimore Sun video)

Democratic members of the General Assembly are pushing for a law that would dramatically curtail state and local cooperation with federal immigration authorities.

Democratic members of the General Assembly are pushing for a law that would dramatically curtail state and local cooperation with federal immigration authorities.

For example, a farmer could plant trees along a stream, which reduces nutrient pollution by a certain amount. A suburban county needing to cut down on stormwater runoff could buy credits from the farmer for that amount of pollution.

The concept of pollution credit trading has the backing from many involved in the Chesapeake Bay restoration effort, and it's been tried with mixed success in other states. A state work group has held meetings for more than a year to discuss how it could work.

But many in Maryland said Hogan's initial plan didn't offer enough assurances that the program would lead to measurable pollution reductions and improvements in water quality.

Grumbles said he spent the past few weeks working with stakeholders, mainly the nonprofit Chesapeake Bay Foundation, to narrow the program.

Under the revised plan, the state would set up a program for the next four years that would spend up to $10 million on pollution projects in nonagricultural areas. The money would come from the part of the Bay Restoration Fund — which gets its money from the "flush fee" — that's used to upgrade sewage plants. But the money could only be spent so long as it doesn't interrupt spending on those sewage plant upgrades.

Grumbles and Hogan need lawmakers to sign off on diverting money that's dedicated to the Bay Restoration Fund.

The projects would be picked by the state based on how cost-effective and innovative they are. They could include "green infrastructure" projects such as restoring streams and planting more trees along highway projects. The work might be done by private developers, neighborhood associations or government agencies.

Farming practices — planting winter cover crops, planting forest buffers, building fences to keep livestock from defecating in streams — would not be a part of this program.

Grumbles said the scaled-back proposal would give the state a chance to try new projects and determine how much the pollution reductions might be worth — important information that could help eventually lead to a full-scale pollution credit trading program.

"We see great benefit in learning how to support the most cost-effective pollution projects," Grumbles said in an interview. "We're trying to create as much momentum as possible."

Alison Prost, Maryland executive director of the nonprofit Chesapeake Bay Foundation, said her group is comfortable with the narrowed plan.

She said there's value in learning if the state can "better spend the dollars we have."

"It's worth trying something new," Prost said.

The revised plan also has the support of the Maryland Municipal League, which represents the interests of cities and towns.

Others who have been involved in discussions over starting pollution credit trading — including other environmental groups and the Maryland Association of Counties — said they aren't sure yet whether the scaled-back plan is a good idea. Some advocates said they received details on the new plan shortly before a hearing on Tuesday in the Senate's Education, Health and Environmental Affairs Committee.

Leslie Knapp Jr., legal counsel for the Maryland Association of Counties, said the changes being proposed appear to be "favorable steps" toward making the bill more palatable.

A House of Delegates committee will hold a hearing on the bill next week.

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