Water Quality Trading Toolkit, 2007, EPA
For more than a decade, the U.S. Environmental Protection Agency (EPA) has promoted and supported the concept of water quality trading as an innovative approach for achieving water quality standards with flexibility and economic efficiency. A variety of pilot programs and projects have generated useful information on how to conduct water quality trading, yet the number of actual trades that have occurred is relatively small. EPA believes that as awareness of the potential benefits of water quality trading grows, National Pollution Discharge Elimination System (NPDES) permittees will be more interested in water quality trading and request permitting authorities to incorporate trading provisions into their permits. As a result, the process for crafting water quality trading programs and requirements should involve the permitting authority staff as early as possible. This will help ensure that trading programs are effective and workable and fully consistent with the implementation and compliance framework of the permitting authority’s NPDES program.
This Water Quality Trading Toolkit for Permit Writers (Toolkit) is intended to facilitate trading by providing NPDES permitting authorities with the tools they need to facilitate trading and to authorize and incorporate trading in NPDES permits. Although the Toolkit primarily targets state, tribal and EPA NPDES permitting authorities, it might also be useful to other stakeholders interested in water quality trading and the NPDES permitting process. Users of the Toolkit should have an existing, fundamental understanding of both water quality trading concepts and the NPDES permitting process. To ensure consistency and minimize redundancy, the Toolkit refers users to existing EPA guidance on water quality trading and NPDES permit development and issuance whenever possible.
This guidance is based on EPA’s Water Quality Trading Policy (Trading Policy) published in January 2003. The Trading Policy was written on the assumption that, if a total maximum daily load (TMDL) were in place, all trading partners would be covered by the TMDL. In this case, wasteload allocations (WLAs) and load allocations (LAs) under the TMDL form the baseline for trading. In all cases, permits must be designed to meet water quality standards as required under Clean Water Act (CWA) section 301(b)(1)(C). Inclusion of trading provisions in NPDES permits should facilitate meeting this requirement.
Water quality trading programs are necessarily tailored to meet the needs of the dischargers and stakeholders in the watersheds for which they are developed. Because each watershed is unique, water quality trading programs may exist in many different forms. It would be impracticable and cumbersome to attempt to cover in this document every possible type of program that might be developed to meet an individual watershed’s needs. This Toolkit attempts to equip program developers and permit writers with an understanding of the issues involved in water quality trading and the types of program characteristics that are best suited to address them. The fact that a particular trading program design or element is not represented in the examples presented in the Toolkit does not necessarily mean that it is not appropriate or would not be supported by EPA.