U.S. Environmental Protection Agency Administrator Andrew Wheeler announced an important step to help promote the use of market-based approaches to efficiently and cost-effectively improve water quality across the nation. Speaking at the Chesapeake Bay Executive Council meeting, Wheeler announced several new policy proposals that could simplify and give more flexibility to states, tribes and stakeholders seeking to develop market-based programs or to generate or use nutrient reduction credits.
“EPA is proposing updates to our water quality trading policy that would help state and local partners take advantage of new technologies or develop market-based programs for improving water quality,” Wheeler said. “Building on efforts already underway at the state, local and tribal level, EPA is helping facilitate the use of innovative tools and technologies that will deliver critical water quality improvements at a lower cost.”
The action seeks comments on policy options related to one of the six market-based principles identified in EPA’s Feb. 6, 2019, "Water Quality Trading Policy" memo: encouraging simplicity and flexibility in implementing baseline concepts. The proposal seeks comment on approaches to clarify and provide flexibility for non-point sources to generate credits for use in water quality trading.
Under the Clean Water Act, water quality trading is an option for those seeking compliance with a discharge permit. Under trading programs, permitted facilities facing higher pollution control costs may be able to meet their regulatory obligations by purchasing environmentally equivalent (or superior) pollution reductions from other sources at a lower cost. While EPA has long interpreted the Clean Water Act to allow for pollutant reductions from water quality trading, the practice has not been used to its fullest potential.
On Feb. 6, 2019, EPA released the "Water Quality Trading Policy" memo to modernize the agency’s water quality trading policies to leverage emerging technologies and facilitate broader adoption of market-based programs. The memo identified five additional market-based principles that EPA encourages policy-makers and stakeholders to consider in developing market-based programs:
- States, tribes and stakeholders should consider implementing water quality trading and other market-based programs on a watershed scale.
- EPA encourages the use of adaptive strategies for implementing market-based programs.
- Water quality credits and offsets may be banked for future use.
- A single project may generate credits for multiple markets.
- Financing opportunities exist to assist with the deployment of non-point land use practices.
The memo reiterates the agency’s support for water quality trading and other market-based programs to maximize pollutant reduction efforts and improve water quality. These actions are part of a larger collaboration with stakeholders across the country to better coordinate and focus federal resources on some of the nation’s most challenging water resource concerns, including addressing excess nutrients in waterways.
EPA is inviting the public to consider the policy options presented in the Sept. 5 notice and provide written comment on those options and others that may help promote market-based approaches to water quality improvements. EPA said it will host a public meeting to facilitate discussion on this important aspect of market-based programs, including water quality trading, that can be used to cost-effectively achieve water quality improvements.