The environmental and consumer advocacy organization, Food and Water Watch (FWW), filed a recent legal action calling into question the legality of water quality trading.  FWW submitted an administrative petition on February 10 with the Pennsylvania Environmental Hearing Board, challenging a permit that allows Michael Foods, Inc., 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 wasteload 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.

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.

In addition, the Chesapeake Bay TMDL allows for water quality trading, and the trading concept has broad support within the Bay watershed across a spectrum of stakeholders including the Chesapeake Bay Foundation, wastewater and stormwater utilities, and the American Farm Bureau Federation.

FWW’s stance on water quality trading was revealed in 2013 when the group, along with Friends of the Earth, sued EPA over provisions in the 2010 Chesapeake Bay plan. A federal judge issued a ruling in December 2013, dismissing the challenge, because the provisions of the TMDL discussing trading did not qualify as final agency action, and the plaintiffs lacked legal standing to bring the challenge. 

NACWA participated in the 2013 litigation to defend water quality trading, and is committed to preserving trading as an important tool to achieve water quality improvements in the Chesapeake Bay watershed and nationwide.  The Association is closely monitoring this administrative challenge and will report any developments.