EPA Urged to Expand Water Quality Trading, Include Pollutants Other Than Nutrients

By Amena H. Saiyid  

The National Association of Clean Water Agencies urged the Environmental Protection Agency on July 19 to allow water quality trading for waters other than those that have total maximum daily load plans for restoration.

In a letter to Denise Keehner, director of EPA's Office of Wetlands, Oceans, and Watersheds, NACWA Executive Director Ken Kirk said an impairment should not have to be declared to participate in trading.

The association, which represents publicly owned wastewater treatment plants, wants EPA to expand the trading program to improve water quality for water bodies other than those listed as impaired and to cover pollutants other than nutrients.

“In particular, NACWA is concerned that EPA's Policy appears to focus primarily on linking water quality trading to implementation of total maximum daily loads,” Kirk wrote.

Kirk said EPA should embrace “a more holistic approach” to reducing the load and impact of pollutants irrespective of whether a water body is declared impaired under Section 303 (d) of the Clean Water Act.

Under this section of the law, states are required to develop lists of impaired waters and to develop TMDLs for them. A TMDL plan for a given river, stream, or lake establishes the level of pollutants that each point source, such as wastewater utilities, and nonpoint source, such as a farm, may discharge without adversely affecting the water quality standards.

EPA's 2003 water quality trading policy operates on a cap-and-trade basis, with the TMDL setting the cap on pollutant levels; both point and nonpoint sources can trade credits to attain compliance with water quality standards.

The EPA water quality trading program is a voluntary exchange of pollutant reduction credits under which a facility with a higher pollutant control cost may buy a pollutant reduction credit from a facility with a lower control cost, thus reducing their cost of compliance.

TMDL Process Confining, Limited.

Kirk said EPA's current 2003 policy is confining and limited to the TMDL process.

He cited the policy, which states that “all water quality trading should occur within a watershed or a defined area for which a TMDL has been approved.”

While a TMDL can help facilitate trading because it establishes a pollutant cap under which trading can occur, Kirk wrote, “it is not a requirement and should not be interpreted as such.” It is a policy, he said.

For instance, Kirk said, trading should be encouraged to address the areas of impact, including but not limited to upstream areas of impact because that will increase participation from multiple sectors and drive more trades.

“Furthermore, trading outside the TMDL process can provide a means to ensure that water quality standards will be met by reducing overall pollutant loads in a waterbody, and obviate the need for a TMDL,” Kirk wrote. “This will save costs for State and Federal agencies on the TMDL development process and benefit the environment.”

Move Beyond Nutrients.

The letter said water quality trading is a cost-effective tool for meeting water quality goals. The agency's policy so far has restricted discussions of the trading policy to nutrient-impaired waters for which states or EPA have developed TMDLs, Kirk said.

EPA in its policy has said that allowing trading beyond nutrients would pose a high level of risk, but Kirk said the agency provides no evidence of how that would be a risk proposition. Going forward, the association said the statement considering pollutants other than nutrients present a higher risk should be removed from the policy. “The fundamentals of water quality trading are such that a well-designed market should work for any type of pollutant,” Kirk said.

The association also disagreed with EPA's decision to require nonpoint sources to be at the pollutant level established by the TMDL prior to trading.

According to David Taylor, chairman of NACWA task force charged with reviewing EPA's trading policy, farmers and ranchers are not legally bound to be discharging at pollutant levels calculated in the TMDL.

Requiring them to do so would create a disincentive, Taylor, who also is special projects director for the Madison Metropolitan Sewerage District in Wisconsin, told BNA July 16 at NACWA's summer conference in Philadelphia.

Rather, Kirk wrote, “EPA should allow agricultural nonpoint sources to generate credits as they work to achieve baseline requirements. This would better incentivize nonpoint sources to meet baseline requirements and encourage reductions that go above and beyond the baseline.”

By Amena H. Saiyid  

The NACWA letter on water quality trading is available at http://www.nacwa.org/images/stories/public/2012-07-19ltr.pdf.

More information on EPA's water quality trading policy is available at http://water.epa.gov/type/watersheds/trading/tradingpolicy.cfm.