NACWA Joins Brief in Support of Water Quality Trading

(June 26, 2019) – NACWA joined a host of public clean water associations in filing an amicus brief on June 24 that defends the legality of water quality trading.

The environmental and consumer advocacy organization, Food and Water Watch (FWW), submitted an administrative petition in February 2017 with the Pennsylvania Environmental Hearing Board challenging a permit that allows a potato and egg-processing facility to use water quality trading to meet nitrogen and phosphorus discharge limits.  The permit limits are set to comply with a waste-load allocation established pursuant to the Chesapeake Bay Total Maximum Daily Load (TMDL). 

The essence of the appeal is the legality of water quality trading under the Clean Water Act (CWA). FWW contends that the CWA does not allow for trading.  While the current challenge involves a single permittee, FWW hopes to curtail trading across the country (See NACWA litigation tracking for more details on the case).

EPA fully embraces water quality trading as an innovative, market-based, voluntary compliance tool that regulated point sources can use to meet their NPDES permit limits. According to the Agency, “water quality trading can provide greater flexibility on the timing and level of technology a facility might install, reduce overall compliance costs, and encourage voluntary participation of non-point sources within the watershed.” EPA’s 2003 Water Quality Trading Policy and 2007 Water Quality Trading Toolkit for Permit Writers provide guidance to states to facilitate trading consistent with the CWA.

A recent study by the United States Government Accountability Office (GAO), conducted upon request of Congress, also noted that “trading provided point sources with flexibility that allowed them to manage risk, reduce the cost of compliance, and better manage the timing of upgrades of their nutrient removal technology.”

The Chesapeake Bay TMDL allows for water quality trading, and the trading concept has broad support within the Bay watershed across a wide spectrum of stakeholders including the Chesapeake Bay Foundation. If done properly, trading is an effective tool to reduce costs, expedite water quality improvements, and foster innovation.

FWW’s challenge, if successful, would have negative impacts on current and future water quality trading programs, not only within the Chesapeake Bay, but also nationwide. The impact would also extend beyond just nutrient trading programs to include trading regimes for any other source of pollutants. This would present challenges to the current and future efforts of many municipal wastewater and stormwater utilities—including many NACWA members—to achieve water quality improvements through innovative trading efforts and would also significantly limit the ability to engage nonpoint source dischargers in meaningful nutrient reduction efforts.

NACWA’s participation adds a valuable national perspective on this important federal CWA issue. The Association is committed to ensuring that water quality trading in the Chesapeake Bay and beyond remains a viable tool for achieving water quality improvements. 

Other organizations on the brief include the Virginia Association of Municipal Wastewater Agencies, Virginia Municipal Stormwater Association, Virginia Nutrient Credit Exchange Association, Maryland Association of Municipal Wastewater Agencies, North Carolina Water Quality Association, South Carolina Water Quality Association, West Virginia Municipal Water Quality Association, and Association of Missouri Cleanwater Agencies.  

Members with any questions on the brief can contact Amanda Waters, NACWA’s General Counsel.