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Great Lakes Article:

EPA Announces New Approach to Clean Nation's Waterways
The Washington File
01/15/2003

(Plan calls for trading of pollution reduction credits) (1810)
U.S. Environmental Protection Agency (EPA) Administrator Christie
Whitman has announced a new policy to improve water quality. The plan
calls on states and local municipalities to develop programs that
allow polluters to trade or exchange pollution reduction credits in an
effort to clean up impaired rivers, streams and lakes throughout the
country.
According to a January 13 release, Whitman said the Water Quality
Trading Policy to cut industrial, municipal and agricultural
discharges into the nation's waterways provides "incentives to
encourage action by those who can achieve reductions easily and
cost-effectively."
The new policy "will result in cleaner water, at less cost, and in
less time," Whitman added. "It provides the flexibility needed to meet
local challenges while demanding accountability to ensure that water
quality does improve."
"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 who joined Whitman at a news
conference announcing the plan.
The EPA is providing more than $800,000 in fiscal year 2002 to fund 11
pilot trading projects around the country.
The Water Quality Trading Program allows one pollution source to meet
its regulatory obligations by using pollutant reductions created by
another source that has lower pollution control costs. The water
quality standards stay the same, but the efficiency of implementing
the standards is increased and costs decreased.
To create a pollution reduction credit that can be traded, a pollution
source would need to reduce its amount of pollution beyond the level
required by the most stringent water quality-based requirements. For
example, a landowner or a farmer could create credits by changing
cropping practices and planting shrubs and trees next to a stream. A
municipal wastewater treatment plant then could use these credits to
meet water quality limits in its permit.
Following is the text of the press release:
(begin text)
U.S. Environmental Protection Agency
January 13, 2003
EPA Releases Innovative Approach to Cleaner Water 
11 Pilots Receiving More than $800,000 in Funding 
U. S. Environmental Protection Agency (EPA) Administrator Christie
Whitman has announced a new Water Quality Trading Policy to cut
industrial, municipal and agricultural discharges into the nation's
waterways. The trading policy seeks to support and encourage states
and tribes in developing and putting into place water quality trading
programs that implement the requirements of the Clean Water and
federal regulations in more flexible ways and reduce the cost of
improving and maintaining the quality of the nation's waters. The
policy will help increase the pace and success of cleaning up impaired
rivers, streams and lakes throughout the country.
"The Water Quality Trading Policy I am announcing today 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," said EPA
Administrator Christie Whitman. "Our new Water Quality Trading Policy
will result in cleaner water, at less cost, and in less time. It
provides the flexibility needed to meet local challenges while
demanding accountability to ensure that water quality does improve."
"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."
Whitman noted that the agency is providing more than $800,000 in
fiscal year 2002 funding support for technical and other support for
11 trading projects around the country. A list of the 11 pilots is
attached.
"Trading can be an important tool for states like Connecticut as we
clean up our waters. Working with New York, Connecticut has
spearheaded the efforts to keep the Long Island Sound clean. This
assistance from the EPA will help Connecticut to continue to improve
the Sound's water quality," said Connecticut Governor John G. Rowland.
Water quality trading uses economic incentives to improve water
quality. It allows one source to meet its regulatory obligations by
using pollutant reductions created by another source that has lower
pollution control costs. The standards remain the same, but efficiency
is increased and costs are decreased. Under the policy announced
today, industrial and municipal facilities would first meet technology
control requirements and then could use pollution reduction credits to
make further progress towards water quality goals.
In order for a water quality trade to take place, a pollution
reduction "credit" must first be created. EPA's water quality trading
policy states that sources should reduce pollution loads beyond the
level required by the most stringent water quality based requirements
in order to create a pollution reduction "credit" that can be traded.
For example, a landowner or a farmer could create credits by changing
cropping practices and planting shrubs and trees next to a stream. A
municipal wastewater treatment plant then could use these credits to
meet water quality limits in its permit.
Joining Whitman at today's press conference were: Bruce Knight, Chief,
Natural Resources Conservation Service, U.S. Department of
Agriculture; Paul Faeth, Executive Vice President and Managing
Director, World Resources Institute (WRI); Thomas Morrissey, Director
of Planning and Standards, Connecticut Department of Environmental
Protection and Immediate Past President, Association of State and
Interstate Water Pollution Control Administrators; and Thomas R.
"Buddy" Morgan, General Manager, Water Works and Sanitary Sewer Board,
Montgomery, Al., and Board Vice President of the Association of
Metropolitan Sewerage Agencies.
The policy could save the public hundreds of millions of dollars by
advancing more effective, efficient partnerships to clean up and
protect watersheds. The policy encourages incentives to maintain high
water quality where it exists as well as restoring impaired waters. In
addition, the policy describes provisions of credible trading programs
that are consistent with the Clean Water Act and federal regulations.
An independent study of three watersheds in Minnesota, Michigan and
Wisconsin looked at the cost of controlling phosphorous loadings
(World Resources Institute 2000). This study found that the cost of
reducing phosphorous from controlling point sources - traditional
pipe-in-the water dischargers regulated by the Clean Water Act - to be
considerably higher than those based on trading between point and
non-point sources which are not regulated by the Clean Water Act.
For more information log on to EPA's Trading website at
http://www.epa.gov/owow/watershed/trading.htm.
Water Quality Trading Projects 
In addition to releasing its final policy on water quality trading,
EPA is supporting 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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
(end text)
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