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EPA's Pollution Credit Trading Policy Met With Praise, Skepticism by Advocates
A policy announced by the Environmental Protection Agency Jan. 13 to allow
trades of pollution credits was met with skepticism by environmental advocates
but praised by municipal dischargers and states.
The trading policy, published in the Jan. 13 Federal Register, is designed to
provide states and localities flexibility in their efforts to reduce discharges
of nutrients, sediments, and other pollutants (68 Fed. Reg. 1608; 8 DEN A-2,
1/13/03 ).
The policy "recognizes that within a watershed, the most effective and
economical way to reduce pollution is to provide incentives to encourage action
by those who can achieve reductions easily and cost-effectively," EPA
Administrator Christine Todd Whitman said at a briefing.
In addition to the policy, Whitman also said the agency was awarding $800,000 in
grants to 11 pilot projects experimenting with the trading concept. The agency's
fiscal year 2002 budget authorized funding for the projects, which include
trading programs to reduce nitrogen loads in the Chesapeake Bay watershed,
selenium in the lower Colorado River, and mercury in the Sacramento River.
David Batchelor, the senior policy adviser for trading in the EPA Office of
Water, said water quality standards would be the baseline for the trade, and
trades that violate the standards would not be allowed.
EPA also said it will not allow trades of persistent bioaccumulative toxics,
such as mercury. However, G. Tracy Mehan, EPA assistant administrator for water,
said the agency would consider pilot projects for trading toxics, which may lead
to allowing for such trades in the future. He said the policy does not bar
trades for all toxics, only those that are persistent and bioaccumulate. Trading
would be allowed for ammonia and selenium, for example, he said.
Skepticism Over Trading
Some environmental advocates have expressed skepticism over the trading program,
while others have denounced it outright as being illegal under the Clean Water
Act.
Nancy Stoner, an attorney for the Natural Resources Defense Council, said
trading programs should be restricted to those that involve pollution caps and
ultimately force reductions in the targeted pollutant.
The policy announced Jan. 13 will not do this, she said. Rather, it will allow
dischargers to evade their compliance responsibilities by buying credits instead
of reducing their levels of pollution.
Environmental Defense, an environmental group that came to accept pollution
trading programs before other advocacy organizations, also questioned the water
pollution trading policy because it does not establish a cap from which
reductions can be made.
"The cap is at the heart of this country's successful controls for acid rain,"
Tim Searchinger, an attorney for the group, said, referring to the trading
program under the Clean Air Act that set a specific cap for sulfur dioxide and
nitrogen oxides. "Without a cap, trades may not reduce pollution, but merely
reallocate it among sources."
Other environmental groups have questioned trades that involve a point source
discharger that must meet specific limits in a National Pollutant Discharge
Elimination System permit and a nonpoint source discharger that only must
implement best management practices to cut its pollutant load.
Difficult to Quantify
The problem, some environmental advocates have said, is that the nutrient
reduction from a buffer strip designed to filter runoff from a farm is difficult
to quantify, a point conceded by EPA officials. Thus, if a point source has an
agreement with a nonpoint source to curb nutrients based on that best management
practice, the success of the trade may be hard to ascertain.
Batchelor said the agreement between the point source and nonpoint source can be
a component of the NPDES permit. If the nonpoint source discharger does not meet
the terms of the agreement, the NPDES permit holder could be held liable. The
policy also contains tools or a menu of options on how to address issues
relating to controls on nonpoint sources.
Officials representing industrial dischargers have said that while they support
the trading concept, they are not likely to engage in such a contract because
they do not want to be held liable for the actions or inaction of a party over
which they have no control.
Municipal wastewater treatment officials, on the other hand, praised the policy
because it will allow for trades among publicly owned treatment works, which are
point sources, within the same watershed.
"POTWs nationwide believe that innovative, watershed-based approaches must be
the centerpieces of ultimately ensuring the nation's water quality future," Ken
Kirk, the executive director of the Association of Metropolitan Sewerage
Agencies, said. "AMSA is pleased that this voluntary approach can be applied on
an intra-plant basis within a single POTW, on an inter-plant basis between point
sources, and between point and nonpoint sources as well."
A trading strategy often showcased by EPA officials is the program set up by
Connecticut officials to reduce nutrient pollution in Long Island Sound.
Thomas Morrissey, director of planning and standards at the Connecticut
Department of Environmental Protection, said reductions of nutrients statewide
are 20 percent ahead of the original projections because of the trading program.
The state expects to meet its nutrient reduction goal for the sound six years
ahead of schedule and at a cost savings of about $200 million, he said.
By Susan Bruninga