EPA reveals new water quality trading policy

EPA Administrator Christie Whitman on Monday announced a new water quality trading policy to cut discharges into the nation's waterways from industry, cities, and agriculture.

Jan 13th, 2003

Jan. 13, 2003 -- At the National Press Club in Washington, D.C., U.S. Environmental Protection Agency (EPA) Administrator Christie Whitman on Monday announced a new water quality trading policy to cut discharges into the nation's waterways from industry, cities, and agriculture.

Joining Whitman from various parts of the country were G. Tracy Mehan III, EPA Assistant Administrator for Water, Bruce Knight, Chief, Natural Resources Conservation Service, U.S. Department of Agriculture, Paul Faeth, Executive Vice President and Managing Director, World Resources Institute, Tom Morrissey Director of Planning and Standards, Connecticut Department of Environmental Protection, and Thomas R. "Buddy" Morgan, General Manger, Water Works and Sanitary Sewer Board, Montgomery, Alabama.

The Water Quality Trading Policy can be seen at http://www.epa.gov/owow/watershed/trading.htm.

Eleven pilots receiving more than $800,000 in funding

In addition to releasing its final policy on water quality trading, EPA also announces support for 11 trading projects to address a range of water quality challenges across the country. EPA supplied over $800,000 in fiscal year 2002 funding support and EPA Regional offices are providing technical and other support to the projects.

Trading to Reduce Nitrogen Loads in the Chesapeake Bay Watershed - Conestoga River, PA. A project to reduce nitrogen loads in a Chesapeake Bay tributary and strive for additional environmental benefits such as creation of habitat. Contact: Allison Weideman, EPA Chesapeake Bay Program, 410-267-5733.

Create an Electronic Marketplace for Nutrient Trading in Chesapeake Bay.
Develop an internet-based board of trade for nitrogen trading in the Chesapeake Bay watershed, with the potential to be adapted for other watersheds. Contact: Allison Weideman, EPA Chesapeake Bay Program, 410-267-5733.

Outreach on Trading to the Agricultural Community. Through a partnership with the National Association of Conservation Districts, provide information to extension agents and agricultural producers on the concept, mechanics and potential benefits of water quality trading. Contact: Joel Salter, EPA Office of Water, 202-564-0642.

Trading to Reduce Selenium Loads to the Lower Colorado River. Develop trading framework aimed at reducing high selenium levels in tributaries to the Lower Colorado River requiring a Total Maximum Daily Load (TMDL).

Selenium loads in the tributaries come from point sources and (mainly) nonpoint sources such as irrigation flows. Contact: Bruce Zander, EPA Region VIII, 303-312-6846.

First-Year Assessment of Nitrogen Trading in Connecticut. Evaluate the first year's implementation of a trading program among 79 wastewater treatment plants to meet a nitrogen TMDL in Long Island Sound. Project will assess nitrogen reductions achieved, the utility of a watershed permit used for the 79 facilities, and the potential for expanding the program to include nonpoint sources. Contact: Mark Tedesco, EPA Long Island Sound Office, 203-977-1541.

Trading to Reduce Impacts from Urban and Agricultural Runoff near Montgomery, Alabama. Project to explore trading's potential to reduce sediment pollution and create additional environmental benefits in the Coosa and/or Tallapaloosa Rivers.

Pilot Feasibility Assessment of Trading to Reduce Mercury Loads to the Sacramento River. The Sacramento Regional Wastewater Treatment Plant has a National Pollutant Discharge Elimination System (NPDES) permit that requires the plant to develop a proposal for reducing mercury discharges to the watershed from sources that are either not regulated or cannot be readily controlled. This pilot project supports the Sacramento Regional Country Sanitation District's efforts to assess the feasibility of achieving net reductions in mercury loadings through such offset actions.

Contact: Matthew Mitchell, EPA Region IX, 415-972-3508.

Increasing In-Stream Flow in the Upper Charles River Watershed, MA. This project seeks innovative ways to address problems of water quality and reduced in-stream flow in the Charles River by exploring the option of wastewater treatment plants taking actions upstream to increase groundwater recharge and decrease stormwater runoff in lieu of increasing treatment capacity downstream. Contact: Bill Walshrogalski, EPA Region I, 617-918-1035.

Evaluate Feasibility of Reducing Acid Mine Drainage in the Cheat River, WV. This stakeholder-driven project will assess the potential for trading to achieve greater reductions in acid mine drainage pollution than would be achieved under current NPDES permits through actions to abate drainage from abandoned mines. Project outcomes will be tied to improved ecological conditions in the Cheat River. Contact: Bob Runowski, EPA Region III, 215-814-5385.

Nitrogen Trading in the Neuse River Basin, NC. Establishment of operational guidelines for a trading program to reduce nitrogen loads from a group of wastewater treatment plants to meet a TMDL. Contact: Dee Stewart, EPA Region IV, 404-562-9334.

Pilot Trading Framework for State of Wisconsin. Development of a trading framework that the State may use to guide development of future nutrient trading programs in Wisconsin.

Contact: Frank Anscombe, EPA Region V, 312-353-0201.

What people Are saying about the new policy

"Trading can be a cheaper answer to solving water quality problems in the United States and around the world," said Paul Faeth, Managing Director of World Resources Institute. "It creates a win-win solution for everyone involved and the new policy will allow states and others to take advantage of the newly created conservation innovation grants program in the 2002 Farm Bill."

"The States recognize the short and long term benefits of the approaches by EPA and are pleased that the Agency has formalized an effective Trading Policy. The Association of State and Interstate Water Pollution Control Administrators (ASIWPCA) is enthusiastic about the potential for trading or exchanging pollutant credits. The process outlined by EPA provides greater flexibility to the States in addressing extremely complex pollution problems; can result in significant cost savings; provides an opportunity to regulate pollutants on a watershed basis; and accelerates pollutant reduction efforts." said Roberta (Robbi) Savage, Executive Director of ASWIPCA.

"This policy will provide market-based incentives to encourage America's farmers, ranchers and woodlot owners and operators to do even more to maintain and improve the quality of our environment," said Natural Resources Conservation Service Chief Bruce Knight. "The conservation programs in the 2002 Farm Bill will help farmers and ranchers improve water quality."

Frequently Asked Questions and List of Regional Contacts

Q. What is water quality trading?

A. Water quality trading is a tool to achieve water quality goals more efficiently. It allows one source to meet its regulatory obligation by using pollutant reductions created by another source that has lower pollution control costs. Trading may only take place when a source reduces pollution beyond levels required by federal or state regulations. Trading capitalizes on economies of scale and control cost differences among sources. It is a watershed approach based on voluntary partnerships at the local level.

Q. How does trading work?

A. For trading to occur one source has to make greater pollutant reductions than required by federal and state regulations. These reductions or credits can then be used by another source to comply with a permit limit. In this way all sources in a watershed can work together to meet water quality goals.

For example, a farmer may reduce sediment and nutrient runoff by switching from conventional tillage to no-till, reducing the use of fertilizer, implementing a manure management plan and planting a buffer strip next to a stream. A municipal wastewater plant would pay the farmer to make these changes and could then use the credits to meet a phosphorus or nitrogen limit in its permit.

Q. Why is EPA issuing a water quality trading policy?

A. The policy strengthens EPA's support for trading and provides guidance to states, tribes and sources on how trading can occur under the Clean Water Act (CWA).

EPA is issuing the policy to facilitate achieving the goals of the CWA.

Specifically, trading provides incentives for voluntary pollutant reductions, especially from sources that are not regulated. It encourages early reductions and more cost effective programs for restoring impaired waters. It also provides incentives for innovative solutions to complex and diverse water quality issues across the nation. Q. What can be traded?

A. The policy supports and encourages trading of nutrients and sediments.

Total maximum daily loads (TMDLs) and watershed initiatives designed to restore impaired waters provide the greatest opportunity for trading to occur.

Q. Would the policy replace or delay the requirement to develop TMDLs for impaired waters?

A. No. The policy does not support any trading that would delay the development and implementation of TMDLs. Instead, the policy encourages early voluntary reductions to achieve water quality goals quicker and at a lower cost to those living in the watersheds that are affected. If pre-TMDL trading does not fully restore impaired waters a TMDL must be developed.

Q. Would a regulated source like a municipal wastewater treatment plant still be required to meet its permit limits?

A. Yes. The policy does not allow a source to trade away it requirements to comply with permit limits. It allows a source to obtain equivalent or greater reductions from another source to comply with its limits in a more flexible and cost effective manner.

Q. Where can I get more information on trading?

A. There are several sources of information, including the Environmental Trading Network , EPA's website, the Water Environment Research Foundation and the National Wildlife Federation website.

Q. Who in EPA should I contact if I have questions?

A. EPA Regional and Program Offices:
Region 1: Mark Tedesco, 203 977 1541
Region 2: Mark Tedesco, 203 977 1541
Region 3: Allison Wiedeman, 410 267 5733
Region 4: Dee Stewart, 404 562 9334
Region 5: Peter Swenson, 312 886 0236
Region 6: Scott Wilson, 214 665 7511
Region 7: John Houlihan, 913 551 7432
Region 8: Bruce Zander, 303 312 6846
Region 9: Matthew Mitchell, 415 972 3508
Region 10: Claire Schary, 206 977 1541
Chesapeake Bay Program Office: 410 267 5733
Long Island Sound Program Office: 203 977 1541
David Batchelor, Senior Policy Advisor: 202 564 5764
Ms. Lynda Wynn, Senior Policy Analyst: 202 564 0472
Mahesh Podar, Senior Economist: 202 564 5778

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