Is water quality trading coming to the Mid-South?

Is water quality trading coming to the Mid-South?

Short history of water quality trading Obstacles for Mid-South/Mississippi river Basin.

While the West languishes in a prolonged drought, the Mid-South has its own water issues. During the April 17 Mid-South Agricultural and Environmental Law Conference, co-sponsored by Delta Farm Press, several water-related topics kicked off the proceedings. 

First up: water quality trading.

“Water quality trading is simply a market-based mechanism that’s promoted to achieve pollution reduction, primarily nutrient reduction – nitrogen, phosphorus,” said Stephanie Showalter Otts, director of the National Sea Grant Law Center housed at the University of Mississippi. “The trading programs are established so the sources of pollution can trade credits among each other. It can be done point-source to point-source but is usually talked about from point-source to non-point-source.

“Perhaps a sewage treatment facility needs to achieve reductions of discharges below what they feel is technologically feasible, or are too expensive to achieve, can buy credits from a farmer who has installed a best management practice that has resulted in less phosphorus discharge.”

There have been several successful pilot programs, said Otts. In 2001, Connecticut developed an innovative program among 79 sewage treatment plants located on Long Island Sound. “They looked each facility, saw what levels their discharges were, what level they wanted the discharges to be, and were then able to trade credit among themselves. From that program, Connecticut anticipates they’ll achieve a 65 percent reduction.”

There are also smaller scale water quality trading programs. “They’re usually tied to a particular watershed and to development of Total Maximum Daily Loads (TMDLs). So you get a TMDL and then figure out how to get to that level. Ohio has a program for the Great Miami River.”

The most ambitious trading program is in the Chesapeake Bay. States in the region have agreed to work with the EPA cooperatively to achieve nutrient and sediment reductions targeted for the bay, said Otts. “The EPA divided the bay into nine separate sub-basins and the states needed to come up with strategies for how they were to achieve those reductions. Water quality trading is one of the strategies in Pennsylvania, Maryland and Virginia. That’s a model that’s often looked to.”

Mid-South

So, how does this relate to the Mid-South?

“Well, water quality trading pops up every once in a while as there is talk about hypoxia in the Gulf of Mexico and innovative ways to achieve nutrient reductions necessary to deal with the problem.

“There would be some very significant challenges with water quality trading in the Mississippi River basin. First, the sheer number of states in the basin is overwhelming – almost triple the number of states in the Chesapeake Bay. Second, only a few states in the basin have experience with water quality trading.”

Otts said that during the 2014 legislative session, Arkansas passed legislation authorizing a water quality trading program. It’s a broad authorization for a program and agencies can work to develop a regulatory program to make this happen.

“The biggest issue is there is no TMDL for the Gulf of Mexico or for a significant portion of the Mississippi River. That’s usually the policy-drive or mechanism for trading programs to come into place. That was the driver for the program in the Chesapeake Bay.

“Lastly, there is a Gulf Restoration Network lawsuit that seeks to get the EPA to issue federal water quality standards for numeric nutrient criteria for the Mississippi River basin. That case began in 2008, when a number of environmental groups filed a petition with the EPA to get the agency to establish federal numeric criteria for nutrients. The EPA denied that rule-making petition. They said the states should develop standards and didn’t think it appropriate for the federal agency to develop the standards at the time.”

However, the EPA didn’t actually make a determination about whether or not numeric criteria were necessary to achieve the goals of the Clean Water Act. Under the act’s language, states are the normally the primary authority for developing water quality standards. But the EPA can step in if they feel it necessary, said Otts.

“The Gulf Restoration network then filed suit challenging the EPA denial of its petition. The network says the EPA must make a necessity determination before denying the petition.”

The district court agreed with the environmental groups. Then, the week of April 6, the Fifth Circuit said the EPA has discretion about whether or not to make a necessity determination. “So, they can deny a rule-making petition … if they have a legitimate reason for doing so. The case was remanded back to the district court to evaluate the EPA’s reasoning for not making the determination.”

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