In Praise of Nutrient Trading in Virginia

In mid-December Virginia Governor Terry McAuliffe, U.S. Environmental Protection Agency (EPA) Administrator Gina McCarthy and the Secretary of Agriculture all gathered in Fairfax County Virginia to applaud the expansion of the Virginia Nutrient Trading Program to meet the requirements of the U.S. EPA approved and mandated Watershed Implementation Plan. The nutrient trading program is an appealing, flexible and cost effective way to meet and maintain water quality goals. So, let’s back up and explain what is going on.

Volunteers in planting trees to reduce erosion along a stream

The Chesapeake Bay and its tidal waters have been impaired by the release of excess nitrogen, phosphorus and sediment. The EPA mandated a contamination limit called the TMDL (total maximum daily load for nutrient contamination and sediment) to restore the Chesapeake Bay and its tributaries. The TMDL sets a total Chesapeake Bay watershed limits for nitrogen, phosphorus and sediment that was about a 25% reduction from 2011 discharge levels for the six Chesapeake Bay watershed states and Washington DC. The pollution limits were then partitioned to the various states and river basins based on the Chesapeake Bay computer model and monitoring data. Each of the states and Washington DC were required to submit and have approved by the EPA a detailed plan of how they intend to achieve the pollution reduction goals assigned to them. These plans are called the Watershed Implementation Plans, WIPs. The Virginia WIP outlines a series of pollution control measures and strategies on how we are going to achieve and fund the pollution control necessary to meet the EPA mandate.

One of the key strategies was expansion of the Virginia’s successful nutrient trading program. Legislation passed in 2005 created the Chesapeake Bay Watershed Nutrient Credit Exchange Program and provides Virginia’s regulated pollution sources in the Bay watershed with the opportunity to meet required nutrient reductions through trading. The legislation also allows “point sources” like waste water treatment plants to purchase nutrient reductions from “nonpoint” sources like farms to offset new or increased nutrient discharges in excess of established load caps. Until recently the program had primarily been used by waste water treatment plants to offset the additional pollution loads from population growth. The Virginia nutrient trading program is based on the successful cap and trade program that was created to comply with the Clean Air Act’s Acid Rain Program limits for sulfur dioxide.

Virginia has managed to find other ways to utilize nutrient trading to reduce compliance costs for large point and non-point generators of nutrient contamination. The example cited by EPA Administrator McCarthy was the Virginia Department of Transportation (VDOT) who used banked pollution credits generated from farmers implementing Best Management Practices and riparian buffer stream bank plantings to off-set storm water pollution during road construction under increased Federal and State stormwater regulations that would have required building stormwater retention ponds and sediment filters for each construction section. VDOT did install permanent stormwater management infrastructure (using both traditional stormwater management and low impact strategies for the completed road, but using traded credits allowed them to avoid the wasteful building of temporary structures for the construction process yet reduce stormwater pollution on streams during construction.

Waste water treatment plants have predominately treaded among themselves. New expanded waste water treatment plans trade the excess credits that result for years after an expansion until the community “grows” into the plant, while those plants that have outgrown their facilities or need to meet more stringent standards by the credits. Some waste water treatment plants also created multi-year contracts with farmer to install nutrient reduction Best Management Practices during periods before expansion and improvement projects to meet tighter regulation or growth in the population served. There are critics of the program who oppose pollution trading because it allows polluters to buy their way out of controlling their pollution or restoring their degradation. The critics see only that entities are paying to pollute. However, with a growing population only a trading program can provide a framework to offset the inevitable additional pollution loads that come with more people.

Some critics are concerned about the potential for fraud or abuse. However, as you can see in the examples cited above this strategy allows for offsetting a short lived environmental impact without a huge and ultimately wasteful capital expenditure. There are limits to resources including capital, and a trading framework allows for cost effective temporary or longer term solutions. In the examples above in Virginia the permitted entity is required to verify and report the offset credits. Since most permitted facilities are VDOT, public waste water treatment plants and municipalities with storm water permits one hopes their veracity can be depended on to a greater extent and they have the ability to partner with Conservation Districts who have the expertise to evaluate the Best Management Practices in place.

Virginia’s Chesapeake Bay Watershed Nutrient Credit Exchange Program requires a level of Best Management Practice implementation called for in the nutrient tributary strategies to achieve nutrient reductions. You must achieve this level of nutrient reduction (known as the baseline) before you are allowed to generate and sell offsets to potential trading partners. Once the baseline level of nutrient reductions is achieved, additional reductions using approved Best Management Practices or land use conversions are eligible to generate offsets for trading. Cost share dollars can be used to implement the BMPs that achieve the baseline, which must be completed on the entire USDA Farm Services Agency tract before generating tradable credits. The program uses the incentive of earning additional dollars and cost share to further push all farmers to implement Best Management Practices on all their lands.

For a trading program to succeed there needs to be a regular and predictable demand for credits and a fairly straightforward and simple way to obtain the needed credits. Realistically the program will be limited to meeting the compliance needs of county and township stormwater permits, VDOT construction projects and if counties participate in facilitation and mandate the use then for construction projects large and small. The need for credits could be reasonably projected by county staff.

To allow for future population growth there might be a permanent demand for offsets by newer communities. The annual payments, maintenance of Best Management Practices or and use conversions and verifications could be funded by homeowner association fees. Every acre of development requires many more acres of supporting infrastructure development, schools, roads, shopping centers, churches, and public buildings. All this development increases runoff and additional nitrogen, phosphorus and sediment loads from sewer and septic systems and stormwater runoff from pavement and yards. Virginia has plans to “seed” the program to install some eligible credits in the Water Quality Improvement Fund for each watershed. In order for this to work the Conservation Districts in each watershed must have adequate funding, training and incentives. The dollars spent on these programs are the cheapest way to comply with the EPA mandate and cleanup our rivers and streams.


Full disclosure: In another part of my volunteer work I am a Director of the Prince William Soil and Water Conservation District. You should check out all that the Conservation District does at their web site.

The Waters of the United States

Coming soon to federal regulation

On March 31, the U.S. Environmental Protection Agency (EPA) and U.S. Army Corps of Engineers (Army Corps) released a proposed rule to expand protection and regulation under the Clean Water Act to streams and wetlands that are merely seasonal. The text of the rule will appear in the Federal Register in April and open a 90 day comment period.

Though the EPA news release called this action a “clarification,” it is tremendous expansion of the scope of the 1972 Clean Water Act which made it illegal to discharge of pollutants into the navigable waters of the United States unless a permit was obtained. The discharge of pollutants regulated under the Clean Water Act was from so called point sources. Point sources are discrete conveyances, such as a pipe. The regulation was intended to stop the free discharge of sewage and industrial waste into our rivers.

The proposed rule expands the definition of navigable waters to apply to include wetlands, seasonal streams and any water that might at any time during the year impact or reach the navigable waters of the United States. In this way the EPA does not see this as an expansion of the Clean Water Act jurisdiction, but it is. The proposed rule will sweep in waters previously considered isolated or exempt and that are a great distance from navigable waters.

For several years EPA has attempted to expand the reach of the Clean Water Act to all waters and discharges to include all sources. Federal authority does not extend to non-point sources, such as from run off from agricultural and urban sources not part of a storm sewer system as well as other small sources such as septic systems. The EPA has been frustrated in their attempts to address what they view as the current generation of environmental problems. These problems are subtle, much less visible to the naked eye because they are from diffuse or non-point sources and often not nearly as susceptible to a top-down, command-and-control approach.

Agriculture is reported to be one or the main non-point sources of water pollution and in studies done in the Chesapeake Bay Watershed and Sacramento River Delta and other locations the contamination from agriculture runoff has been the major source of contamination. Pesticide runoff is a large contributor of known pollutants to the watersheds and may be a significant contributor of endocrine disruptors to the freshwater supply. Both rain feed and irrigated agriculture are sources of contamination of fresh water. Now EPA is making another attempt to expand the Clean Water Act reach to all water and all sources of pollution.

EPA has overcome the challenges of regulating every source of contamination in the Chesapeake Bay Watershed by imposing the Chesapeake Bay pollution diet, the Total Maximum Daily Load (TMDL) mandated to the six Chesapeake Bay Watershed states (Virginia, Maryland, Delaware, New York, Pennsylvania and West Virginia) and the District of the Columbia. The TMDL sets a total Chesapeake Bay watershed limit for the entire region of 185.9 million pounds of nitrogen, 12.5 million pounds of phosphorus and 6.45 billion pounds of sediment per year which is a 25% reduction in nitrogen, 24% reduction in phosphorus and 20 %t reduction in sediment from the current levels. The pollution limits are then partitioned to the various jurisdictions and river basins based on the Chesapeake Bay modeling tools and monitoring data.

The US EPA has mandated these levels and allowed the states (and District of Columbia) to determine how to achieve them (with the EPA’s approval) by threatening to use what they call “back stop measures”, but are simply reductions in the allowed (permitted) releases from point source permits (waste water treatment plants, municipal separate storm sewer systems, and confined animal feed lots) to achieve the TMDL Essentially, they have said do this in a way we find acceptable or we will impose the most direct and expensive method to achieve our clean water goals.

Now, EPA wants to expand their authority to every bit of water in the US and will be able to effectively and directly regulate all sources of pollution without working through the states. If adopted as proposed, this rule will be felt throughout the U.S and in all areas of our economy and lives not previously directly touched by the EPA. It will have a profound impact on many locally regulated activities, including home building, mining, road construction, commercial property development and water infrastructure projects. The capricious application of the federal command and control regulatory scheme will directly impact all our lives.

Low Impact Development and Why it Matters

It has been called green infrastructure, conservation design, sustainable storm water design, natural stormwater management, and rain management but Low Impact Development, LID, seems to be the term that has taken hold in the United States for the site level actions and strategies. LID is a strategy of stormwater management emphasizing conservation and natural features combined with small scale stormwater controls to mimic as closely as possible the natural hydraulic properties of a site. The idea is to move water slowly through open conveyance systems and use distributed stormwater retention in open unpaved areas to allow infiltration of rain water into the earth. This reduces the quantity and velocity of stormwater as it leaves a site reducing the damage that uncontrolled stormwater runoff can cause when we change the amount of impervious surfaces a site has by building roads, sidewalks, playgrounds, and structures and compacting soil.

Traditional development practices cover large areas of the ground with impervious surfaces such as roads, driveways, sidewalks and buildings. These paved and impervious surfaces prevent rainwater from infiltrating into the ground, causing it to run off site at velocities and volumes that are much higher than would naturally occur. The collective force of such rainwater scours streams erodes stream banks resulting in large quantities of sediment and other pollutants entering streams, rivers, estuaries and bays every time it rains or snow melts. The US EPA believes that sediment and nutrient pollutions contained in runoff from urban areas is the largest source of water quality impairments to estuaries (areas near the coast where seawater mixes with freshwater) in the United States and has turned its water quality focus on these areas starting with the Chesapeake Bay Watershed and moving forward with the Gulf Coast estuaries.

Groundwater is recharged from rain and sources of surface infiltration. In many areas where development has occurred, we pump the groundwater for drinking water supplies (both public and private) and create barriers to rain infiltration by paving significant portion of the urban and suburban landscape as well as allowing if not encouraging storm water to leave a site as quickly as possible reducing the time that rainwater has to infiltrate the remaining soil and percolate into the subsurface. If we do not allow adequate rain water infiltration we will deplete the groundwater aquifers as we continue to pump water from wells. The U.S. Geological Survey’s (USGS) Groundwater Resources Program has found that the volume of groundwater stored in the earth is decreasing in many regions of the United States, and if this continues we could deplete our groundwater. We are running a groundwater deficit in many parts of our country, though we have adequate rainfall. LID can help by increasing water infiltration and reducing runoff.

In addition to the problems caused by stormwater and non point source runoff, many older cities (including many of the largest cities in the United States), have combined sewage and storm water systems which results in the storm water runoff overflowing the combined sewer system during storm events and diluted, but nonetheless raw sewage being released to rivers and estuaries. This is an ongoing problem in Baltimore and at Blue Planes in Washington DC as well as other cities throughout the nation. In the late 20th century, most cities that attempted to reduce sewer overflows did so by separating combined sewers, expanding treatment capacity, expanding storage within the sewer system, or by replacing broken or decaying pipes. San Francisco and many other cities have taken all of these steps, but still have much more that needs to be done. It is unfortunate that more of the stimulus dollars were not spent to repair expand and improve the waste water treatment facilities in our oldest cities instead of pursuing $54 billion in direct loans and loan guarantees to green energy companies. Repairs and improvements to our waste water treatment systems would have served our nation for several generations rather than been wasted on unproven technology or enriching favored entrepreneurs.

Managing rain water and snow melt is at the heart of LID. Rain water and storm water management under LID is landscape based and not particularly new. At the larger regional or watershed scale, green infrastructure is the interconnected network of preserved or restored natural lands and waters that provide essential environmental functions. Large-scale green infrastructure may include habitat corridors and water resource protection. At the community and neighborhood scale, green infrastructure incorporates planning and design approaches such as compact, mixed-use development, parking reduction strategies and urban forestry that reduces impervious surfaces and creates walkable, attractive communities.

At the site scale, green infrastructure is LID and mimics natural systems by utilizing permeable surfaces to absorb storm water back into the ground (infiltration), using trees and other natural vegetation to convert it to water vapor (evapotranspiration) and using rain barrels or cisterns to capture and reuse storm water. These natural processes manage storm water runoff in a way that maintains or restores the site’s natural hydrology, allowing groundwater to recharge. Site-level green infrastructure is LID, and can include rain gardens, porous pavements, green roofs, infiltration planters, trees and tree boxes and rainwater harvesting for non-potable uses such as toilet flushing and landscape irrigation. LID not only reduces the velocity and quantity of runoff protecting our streams, rivers, lakes and estuaries, it is essential to allow the recharge of groundwater.

The difficulty with LID is compliance and maintenance. Federal Clean Water Act requirements, such as the Combined Sewer Overflow (CSO) Control Policy and National Pollutant Discharge Elimination System (NPDES) permit program, do not allow for deviance from traditional control strategies. EPA guidance which encourages LID and green infrastructure to manage storm water is inconsistent with permit requirements under NPDES that call for more conventional methods of stormwater management.
NPDES regulations require development and implementation of a municipal separate storm sewer system (MS4) program to address post-construction runoff from newly developed and redeveloped areas. Investments in stormwater management and wastewater treatment plants are driven by compliance with regulations, which do not allow local policy makers to implement watershed-based or decentralized LID infrastructure solutions that may not yet have the data necessary to demonstrate performance and receive regulatory credit under a permit. Within the Chesapeake Bay Watershed the Chesapeake Bay Model provides credit under the Watershed Implementation Plans for LID retrofits, but not all practices are credited appropriately (both because of the amount of time needed for these practices to show long-term performance, as well as limitations in historic data collection). LID is by its nature a distributed design involving, rain gardens, porous pavements, green roofs, planters and rainwater harvesting require ongoing maintenance of the plants, replanting after severe winters or prolonged droughts, weeding, and clearing of porous pavements. There does not yet exist a method of ensuring that these features are maintained appropriately to continue functioning over time and that any repairs or replacements are done with LID in mind.

The Leviathan in the Chesapeake Clean Water Act

Each year, hundreds of millions of pounds of nitrogen, phosphorus and sediment reaches the Chesapeake Bay. The majority of this pollution comes from sewage treatment plants, large-scale animal operations, agriculture, and air pollution from vehicle exhaust and power plants and other industrial sources. Other sources of pollution include septic systems, runoff from roadways, runoff from commercial development, residential and commercial lawn fertilizers, and small scale animal and agricultural sources (the keeping of horses, poultry, and other animals and growing vegetables in predominately suburban or exurban locations. Solutions to this pollution include upgrading sewage treatment plants, proper operation of septic systems, using nitrogen removal technologies on septic systems, decreasing fertilizer applications to and agriculture, controlling suburban and exurban animal waste, and controlling storm water run off from urban, suburban and agricultural sources.

Over the past quarter century the excess nutrient and sediment contamination to the Chesapeake Bay has decreased in total, but the Bay’s waters remain seriously degraded and considerably short of attaining the 2010 water quality goals set forth in the Chesapeake 2000 agreement. During this time agricultural and industrial sources of pollution have been significantly reduced while urban runoff and suburban sources have increased significantly. As a result US EPA is developing a new federally mandated Total Maximum Daily Load (TMDL) plan to establish and apportion an allowable pollution budget among the states. However, S.1816/H.R. 3852, the Chesapeake Clean Water and Ecosystem Restoration Act (known as the Chesapeake Clean Water Act), represents a radical change in the regulatory approach and an expanse of federal power. Congress will vote on this act to control “non-point” source pollution and delegate to the federal control of every backyard in the six state area of the Chesapeake Bay basin. This legislation would take regulation down to every drop of water and every household activity, uniformly across the region.

The federal government will decide across the six state region whether you can have dogs, cats or other pets, how many if you can let them out in your yard or if you need to gather their waste. There will be regulations for maintaining a horse in hunt country, if you can fertilize your lawn, the types and quantities of plants, if you can wash your car, wash or even build a patio or deck, and acceptable materials of construction for these items. The allocation of the pollution budget will be based on the negotiating power and influence of the federally recognized “stakeholders,” which has never included the American homeowner. In addition, the legislation changes the definition of waters regulated under the Federal Water Pollution Control Act beyond navigable water of the United States down to all the waters, every storm sewer, creek and puddle in the Chesapeake Basin. This is a fundamental increase in power for the federal government.

While it is necessary to put the states on a pollution diet by mandating the TMDL, the determination of how to achieve those goals should be left to local control and homeowner within the region need to have strong representation. As it stands now homeowners are not invited to the table with the other stakeholders. EPA has determined the TMDL allocations based on models of the Chesapeake basin. These models are evolving and improving, but still are only approximations of the ecology of the watershed. EPA has found the modeled results tend to show more attainment from implementation than the monitored results, the cause of this difference has not been fully determined. While the states are insisting they have not been given full credit for agricultural mitigations called “best management practices or BMPs,” the EPA reduced the allocations by an arbitrarily applied margin of safety of about 20-25%. However, now this legislation proposes to use these models to create monetary value from installing mitigations that need to be maintained and that can be bought and sold instead of using monitoring results. This creates the possibility of large scale operations exploiting any flaw in the model to game the system for profit. When there is money involved, there will be someone to find them.

Furthermore the legislation enables the EPA to control growth through pollution allocations, pollution offsets and acceptance of methods of control. Federal power to regulate my backyard is not granted by the constitution under any interpretation of the interstate commerce clause. The federal government exists to serve the individual, and the family not rule it. The Federal government is not the highest expression of moral good and has never been granted the kinds of power assumed here.