[Federal Register: January 13, 2003 (Volume 68, Number 8)]
[Notices]
[Page 1608-1613]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr13ja03-53]
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ENVIRONMENTAL PROTECTION AGENCY
[FRL-7438-2]
Water Quality Trading Policy; Issuance of Final Policy
AGENCY: Environmental Protection Agency.
ACTION: Notice.
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SUMMARY: On May 15, 2002, the U.S. Environmental Protection Agency
(EPA) invited public comment on its proposed Water Quality Trading
Policy (``proposed policy''). Comments from the public were received
through July 15, 2002. Public comments were reviewed by EPA and
revisions were made to the proposed policy. Today's notice announces
availability of EPA's final Water Quality Trading Policy. The final
policy describes ways that water quality trading programs may be
aligned with the Clean Water Act and implementing regulations, and
describes elements of environmentally sound trading programs. Water
quality trading is a voluntary, incentive-based approach that can offer
greater efficiency in restoring or protecting water bodies. Trading
allows a source to meet its regulatory obligations by using pollutant
reductions created by another party with lower pollution control costs.
EPA's final Water Quality Trading Policy offers guidance to states and
tribes on developing and implementing water quality trading programs.
SUPPLEMENTARY INFORMATION:
I. General Information
A. How Can I Get Copies of This Document and Other Related Information?
1. Docket. EPA has established an official public docket for this
action under Docket ID Number OW-2002-0016. The official public docket
consists of the documents specifically referenced in this action, any
public comments received, and other information related to this action.
The official public docket is the collection of materials that is
available for public viewing at the Water Docket in the EPA Docket
Center, (EPA/DC) EPA West, Room B102, 1301 Constitution Ave., NW.,
Washington, DC. The EPA Docket Center Public Reading Room is open from
8:30 a.m. to 4:30 p.m., Monday through Friday, excluding legal
holidays. The telephone number for the Public Reading Room is (202)
566-1744, and the telephone number for the Water Docket is (202) 566-
2426.
2. Electronic Access. You may access this Federal Register document
electronically through the EPA Internet under the ``Federal Register''
listings at http://www.epa.gov/fedrgstr/.
An electronic version of the public docket is available through
EPA's electronic public docket and comment system, EPA Dockets. You may
use EPA Dockets at http://www.epa.gov/edocket/ to view public comments,
access the index listing of the contents of the official public docket,
and to access those documents in the public docket that are available
electronically. Although not all docket materials may be available
electronically, you may still access any of the publicly available
docket materials through the docket facility identified in A.1.
Access to the Water Quality Trading Policy is also available
electronically at EPA's trading Web site http://www.epa.gov/owow/watershed/trading.htm
.
[[Page 1609]]
B. Text of Water Quality Trading Policy
I. Background and Purpose of the Policy
The Clean Water Act (CWA) \1\ was enacted in 1972 to restore and
maintain the chemical, physical, and biological integrity of the
nation's waters. It established a national policy that called for the
discharge of pollutants to be eliminated and established interim goals
for protecting fish, wildlife and recreational uses. The CWA also
established a national policy for development and implementation of
programs so the goals of the Act could be met through controls of point
and nonpoint sources of pollution. Congress recognized and preserved
the primary responsibilities and rights of the States to prevent,
reduce and eliminate pollution.
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\1\ Federal Water Pollution Control Act (Public Law 92-500, as
amended), 33 U.S.C. Sec. 1251, et seq.
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The application of technology and water quality based requirements
through the National Pollutant Discharge Elimination System (NPDES)
permit program has achieved and remains critical to success in
controlling point source pollution and restoring the nation's waters.
Despite these accomplishments approximately 40% of the rivers, 45% of
the streams and 50% of the lakes that have been assessed still do not
support their designated uses \2\. Sources of pollution such as urban
storm water, agricultural runoff and atmospheric deposition continue to
threaten our nation's waters. Nutrient and sediment loading from
agriculture and storm water are significant contributors to water
quality problems such as hypoxia in the Gulf of Mexico and decreased
fish populations in Chesapeake Bay. Population growth and development
place increasing demands on the environment making it more difficult to
achieve and maintain water quality standards.
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\2\ About 33 percent of the nation's water have been assessed by
States and tribes pursuant to Section 305(b) of the Clean Water Act
(National Water Quality Inventory: 2000 Report, EPA). The proportion
of non-assessed water that do not meet designated uses is likely
lower since assessments tend to be focused in known problem areas.
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Finding solutions to these complex water quality problems requires
innovative approaches that are aligned with core water programs. Water
quality trading is an approach that offers greater efficiency in
achieving water quality goals on a watershed basis. It allows one
source to meet its regulatory obligations by using pollutant reductions
created by another source that has lower pollution control costs.
Trading capitalizes on economies of scale and the control cost
differentials among and between sources.
The United States Environmental Protection Agency (EPA) believes
that market-based approaches such as water quality trading provide
greater flexibility and have potential to achieve water quality and
environmental benefits greater than would otherwise be achieved under
more traditional regulatory approaches. Market-based programs can
achieve water quality goals at a substantial economic savings. EPA
estimates that in 1997 annual private point source control costs were
about $14 billion and public point source costs were about $34
billion.\3\ The National Cost to Implement Total Maximum Daily Loads
(TMDLs) Draft Report estimates that flexible approaches to improving
water quality could save $900 million dollars annually compared to the
least flexible approach. (EPA, August 2001). Nitrogen trading among
publicly owned treatment works in Connecticut that discharge into Long
Island Sound is expected to achieve the required reductions under a
TMDL while saving over $200 million dollars in control costs.
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\3\ A Retrospective Assessment of the costs of the Clean Water
Act: 1972-1977 (EPA, October, 2000).
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Market-based approaches can also create economic incentives for
innovation, emerging technology, voluntary pollution reductions and
greater efficiency in improving the quality of the nation's waters.
The purpose of this policy is to encourage states, interstate
agencies and tribes to develop and implement water quality trading
programs for nutrients, sediments and other pollutants where
opportunities exist to achieve water quality improvements at reduced
costs. More specifically, the policy is intended to encourage voluntary
trading programs that facilitate implementation of TMDLs, reduce the
costs of compliance with CWA regulations, establish incentives for
voluntary reductions and promote watershed-based initiatives. A number
of states are in various stages of developing trading programs. This
policy provides guidance for states, interstate agencies and tribes to
assist them in developing and implementing such programs.
This policy addresses issues left open by and limitations
encountered implementing projects and programs under EPA's January 1996
Effluent Trading In Watersheds Policy and May 1996 Draft Framework for
Watershed-Based Trading (``Draft Framework''). This policy should be
given precedence over any inconsistencies with the Draft Framework.
This policy draws upon lessons from a number of recent pilot
trading projects and state experiences in developing water quality
trading programs. These initiatives demonstrate how trading can occur
under the CWA and existing federal regulations. They illustrate the
importance of voluntary watershed-based partnerships, inter-agency
cooperation and public participation in implementation of trading
programs. They show that flexible market-based approaches can
facilitate states and tribes finding solutions to complex and diverse
water quality and socioeconomic issues. These efforts have also
highlighted the importance of keeping transaction and administrative
costs manageable while retaining accountability. The lessons learned
from these efforts have informed the development of this policy.
This policy describes various requirements of the CWA and
implementing regulations that are relevant to water quality trading,
including: requirements to obtain permits (Sections 402 and 404),
antibacksliding provisions (Section 303(d)(4) and Section 402(o)), the
development of water quality standards including antidegradation policy
(Section 303(c)), federal NPDES permit regulations (40 CFR Parts 122,
123 and 124), TMDLs (Section 303d(1)) and water quality management
plans (40 CFR Part 130). These CWA provisions and regulations contain
legally binding requirements. This policy does not substitute for those
provisions or requirements. In addition, this policy identifies general
elements and provisions that EPA believes are important for creating
credible water quality trading programs.
When EPA makes a decision with regard to any particular permit,
TMDL, water quality standards or water quality management plan that
includes provisions for trading to occur, it will make each decision on
a case-by-case basis guided by the applicable requirements of the CWA
and implementing regulations and the specific facts and circumstances
involved.
II. Trading Objectives
EPA supports implementation of water quality trading by states,
interstate agencies and tribes where trading:
A. Achieves early reductions and progress towards water quality
standards pending development of TMDLs for impaired waters.
[[Page 1610]]
B. Reduces the cost of implementing TMDLs through greater
efficiency and flexible approaches.
C. Establishes economic incentives for voluntary pollutant
reductions from point and nonpoint sources within a watershed.
D. Reduces the cost of compliance with water quality-based
requirements.
E. Offsets new or increased discharges resulting from growth in
order to maintain levels of water quality that support all designated
uses.
F. Achieves greater environmental benefits than those under
existing regulatory programs. EPA supports the creation of water
quality trading credits in ways that achieve ancillary environmental
benefits beyond the required reductions in specific pollutant loads,
such as the creation and restoration of wetlands, floodplains and
wildlife and/or waterfowl habitat.
G. Secures long-term improvements in water quality through the
purchase and retirement of credits by any entity.
H. Combines ecological services to achieve multiple environmental
and economic benefits, such as wetland restoration or the
implementation of management practices that improve water quality and
habitat.
III. Water Quality Trading Policy Statement
A. CWA Requirements. Water quality trading and other market-based
programs must be consistent with the CWA.
B. Trading Areas. All water quality trading should occur within a
watershed or a defined area for which a TMDL has been approved.
Establishing defined trading areas that coincide with a watershed or
TMDL boundary results in trades that affect the same water body or
stream segment and helps ensure that water quality standards are
maintained or achieved throughout the trading area and contiguous
waters.
C. Pollutants and Parameters Traded. EPA supports trading that
involves nutrients (e.g., total phosphorus and total nitrogen) or
sediment loads. In addition, EPA recognizes that trading of pollutants
other than nutrients and sediments has the potential to improve water
quality and achieve ancillary environmental benefits if trades and
trading programs are properly designed. EPA believes that such trades
may pose a higher level of risk and should receive a higher level of
scrutiny to ensure that they are consistent with water quality
standards. EPA may support trades that involve pollutants other than
nutrients and sediments on a case-by-case basis where prior approval is
provided through an NPDES permit, a TMDL or in the context of a
watershed plan or pilot trading project that is supported by a state,
tribe or EPA.
EPA also supports cross-pollutant trading for oxygen-related
pollutants where adequate information exists to establish and correlate
impacts on water quality. Reducing upstream nutrient levels to offset a
downstream biochemical oxygen demand or to improve a depressed in-
stream dissolved oxygen level are examples of cross-pollutant trading.
EPA does not currently support trading of pollutants considered by
EPA to be persistent bioaccumulative toxics (PBTs). EPA would consider
a limited number of pilot projects over the next two to three years to
obtain more information regarding trading of PBTs. EPA believes pilot
projects may be appropriate where the predominant loads do not come
from point sources, trading achieves a substantial reduction of the PBT
traded and where trading does not cause an exceedance of an aquatic
life or human health criterion. Based on the findings of these pilot
projects, EPA will consider making revisions to its policy.
Where state or tribal water quality standards allow for mixing
zones, EPA does not support any trading activity that would exceed an
acute aquatic life criteria within a mixing zone or a chronic aquatic
life or human health criteria at the edge of a mixing zone using design
flows specified in the water quality standards.
D. Baselines for Water Quality Trading. As explained below, the
baselines for generating pollution reduction credits should be derived
from and consistent with water quality standards. The term pollution
reduction credits (``credits''), as used in this policy, means
pollutant reductions greater than those required by a regulatory
requirement or established under a TMDL.
For example, where a TMDL has been approved or established by EPA,
the applicable point source waste load allocation or nonpoint source
load allocation would establish the baselines for generating credits.
For trades that occur where water quality fully supports designated
uses, or in impaired waters prior to a TMDL being established, the
baseline for point sources should be established by the applicable
water quality based effluent limitation, a quantified performance
requirement or a management practice derived from water quality
standards. In these scenarios the baseline for nonpoint sources should
be the level of pollutant load associated with existing land uses and
management practices that comply with applicable state, local or tribal
regulations.
E. When Trading May Occur
1. Trading to Maintain Water Quality Standards. Trading may be used
to maintain high water quality in waters where water quality standards
are attained, such as by compensating for new or increased discharges
of pollutants.
2. Pre-TMDL Trading In Impaired Waters. EPA supports pre-TMDL
trading in impaired waters to achieve progress towards or the
attainment of water quality standards. EPA believes this may be
accomplished by individual trades that achieve a net reduction of the
pollutant traded or by watershed-scale trading programs that reduce
loadings to a specified cap supported by baseline information on
pollutant sources and loadings.
EPA also supports pre-TMDL trading that achieves a direct
environmental benefit relevant to the conditions or causes of
impairment to achieve progress towards restoring designated uses where
reducing pollutant loads alone is not sufficient or as cost-effective.
If pre-TMDL trading does not result in the attainment of applicable
water quality standards, EPA expects a TMDL to be developed. After a
TMDL has been approved or established by EPA, the reductions made to
generate credits for pre-TMDL trading may no longer be adequate to
generate credits under the TMDL. This will depend on the remaining
level of reduction needed to achieve water quality standards and, where
applicable, the allocation of point and nonpoint source pollutant loads
established by the TMDL.
3. TMDL Trading. Trades and trading programs in impaired waters for
which a TMDL has been approved or established by EPA should be
consistent with the assumptions and requirements upon which the TMDL is
established. EPA encourages the inclusion of specific trading
provisions in the TMDL itself, in NPDES permits, in watershed plans and
the continuing planning process. EPA does not support any trading
activity that would delay implementation of a TMDL approved or
established by EPA or that would cause the combined point source and
nonpoint source loadings to exceed the cap established by a TMDL.
4. Technology-Based Trading. EPA does not support trading to comply
with existing technology-based effluent limitations except as expressly
authorized by federal regulations. Existing technology-based effluent
guidelines for the iron and steel
[[Page 1611]]
industry allow intraplant trading of conventional, nonconventional and
toxic pollutants between outfalls under certain circumstances (40 CFR
420.03).
EPA will consider including provisions for trading in the
development of new and revised technology-based effluent guidelines and
other regulations to achieve technology-based requirements, reduce
implementation costs and increase environmental benefits.
5. Pretreatment Trading. EPA supports a municipality or regional
sewerage authority developing and implementing trading programs among
industrial users that are consistent with the pretreatment regulatory
requirements at 40 CFR Part 403 and the municipality's or authority's
NPDES permit.
6. Intra-Plant Trading. EPA supports intra-plant trading that
involves the generation and use of credits between multiple outfalls
that discharge to the same receiving water from a single facility that
has been issued an NPDES permit.
F. Alignment With The CWA. Provisions for water quality trading
should be aligned with and incorporated into core water quality
programs. EPA believes this may be done by including provisions for
trading in water quality management plans, the continuing planning
process, watershed plans, water quality standards, including
antidegradation policy and, by incorporating provisions for trading
into TMDLs and NPDES permits.
When developing water quality trades and trading programs, states
and tribes should, at a minimum, take into account the following
provisions of the CWA and implementing regulations:
1. Requirements to Obtain Permits. Sources and activities that are
required to obtain a federal permit pursuant to Sections 402 or 404 of
the CWA must do so to participate in a trade or trading program.
2. Incorporating Provisions For Trading Into Permits. In some
cases, specific trades may be identified in NPDES permits, including
requirements related to the control of nonpoint sources where
appropriate. EPA also supports several flexible approaches for
incorporating provisions for trading into NPDES permits: (i) General
conditions in a permit that authorize trading and describe appropriate
conditions and restrictions for trading to occur, (ii) the use of
variable permit limits that may be adjusted up or down based on the
quantity of credits generated or used; and/or, (iii) the use of
alternate permit limits or conditions that establish restrictions on
the amount of a point source's pollution reduction obligation that may
be achieved by the use of credits if trading occurs. EPA also
encourages the use of watershed general permits, where appropriate, to
establish pollutant-specific limitations for a group of sources in the
same or similar categories to achieve net pollutant reductions or water
quality goals through trading. Watershed permits issued to point
sources should include facility specific effluent limitations or other
conditions that would apply in the event the pollutant cap established
by the watershed permit is exceeded.
3. Public Notice, Comment and Opportunity For Hearing. Notice,
comment and opportunity for hearing must be provided for all NPDES
permits (40 CFR 124). NPDES permits and fact sheets should describe how
baselines and conditions or limits for trading have been established
and how they are consistent with water quality standards. EPA does not
expect that an NPDES permit would need to be modified to incorporate an
individual trade if that permit contains authorization and provisions
for trading to occur and the public was given notice and an opportunity
to comment and/or attend a public hearing at the time the permit was
issued.
4. Consistency With Standard Methods. Where methods and procedures
(e.g., sampling protocols, monitoring frequencies) are specified by
federal regulations or in NPDES permits, they should continue to be
used where applicable for measuring compliance for point sources that
engage in trading. EPA believes this is necessary to provide clear and
consistent standards for measuring compliance and to ensure that
appropriate enforcement action can be taken.
5. Protecting Designated Uses. EPA does not support any use of
credits or trading activity that would cause an impairment of existing
or designated uses, adversely affect water quality at an intake for
drinking water supply or that would exceed a cap established under a
TMDL.
6. Antibacksliding. EPA believes that the antibacksliding
provisions of Section 303(d)(4) of the CWA will generally be satisfied
where a point source increases its discharge through the use of credits
in accordance with alternate or variable water quality based effluent
limitations contained in an NPDES permit, in a manner consistent with
provisions for trading under a TMDL, or consistent with the provisions
for pre-TMDL trading included in a watershed plan.
These antibacksliding provisions will also generally be satisfied
where a point source generates pollution reduction credits by reducing
its discharge below a water quality based effluent limitation (WQBEL)
that implements a TMDL or is otherwise established to meet water
quality standards and it later decides to discontinue generating
credits, provided that the total pollutant load to the receiving water
is not increased, or is otherwise consistent with state or tribal
antidegradation policy.
7. Antidegradation. Trading should be consistent with applicable
water quality standards, including a state's and tribe's
antidegradation policy established to maintain and protect existing
instream water uses and the level of water quality necessary to support
them, as well as high quality waters and outstanding national resource
waters (40 CFR 131.12). EPA recommends that state or tribal
antidegradation policies include provisions for trading to occur
without requiring antidegradation review for high quality waters. EPA
does not believe that trades and trading programs will result in
``lower water quality'' as that term is used in 40 CFR 131.12(a)(2), or
that antidegradation review would be required under EPA's regulations
when the trades or trading programs achieve a no net increase of the
pollutant traded and do not result in any impairment of designated
uses.
G. Common Elements of Credible Trading Programs. EPA believes that,
in addition to including provisions to be consistent with the CWA,
trading programs should include the following general elements to be
credible and successful:
1. Legal Authority and Mechanisms. Clear legal authority and
mechanisms are necessary for trading to occur. EPA believes the CWA
provides authority for EPA, states and tribes to develop a variety of
programs and activities to control pollution, including trading
programs. The CWA and federal regulations provide authority to
incorporate provisions for trading into NPDES permits issued to point
sources and for trading under TMDLs that include provisions for trading
to occur.
In addition, states and tribes should use specific legal mechanisms
to facilitate trading. Provisions for trading may be established
through various mechanisms, including: legislation, rule making,
incorporating provisions for trading into NPDES permits and
establishing provisions for trading in TMDLs or watershed plans. These
provisions may incorporate or be supplemented by private contracts
between sources or third-party contracts where the third party provides
an indemnification or enforcement function.
[[Page 1612]]
2. Units of Trade. Clearly defined units of trade are necessary for
trading to occur. Pollutant specific credits are examples of tradable
units for water quality trading. These may be expressed in rates or
mass per unit time as appropriate to be consistent with the time
periods that are used to determine compliance with NPDES permit
limitations or other regulatory requirements.
3. Creation and Duration of Credits. Credits should be generated
before or during the same period they are used to comply with a
monthly, seasonal or annual limitation or requirement specified in an
NPDES permit. Credits may be generated as long as the pollution
controls or management practices are functioning as expected.
4. Quantifying Credits and Addressing Uncertainty. Standardized
protocols are necessary to quantify pollutant loads, load reductions,
and credits. States and tribes should develop procedures to account for
the generation and use of credits in NPDES permits and discharge
monitoring reports in order to track the generation and use of credits
between sources and assess compliance.
Where trading involves nonpoint sources, states and tribes should
adopt methods to account for the greater uncertainty in estimates of
nonpoint source loads and reductions. Greater uncertainty in nonpoint
source estimates is due to several factors including but not limited to
variability in precipitation, variable performance of land management
practices, time lag between implementation of some practices and full
performance, and the effect of soils, cover and slope on pollutant load
delivery to receiving waters.
EPA supports a number of approaches to compensate for nonpoint
source uncertainty. These include monitoring to verify load reductions,
the use of greater than 1:1 trading ratios between nonpoint and point
sources, using demonstrated performance values or conservative
assumptions in estimating the effectiveness of nonpoint source
management practices, using site- or trade-specific discount factors,
and retiring a percentage of nonpoint source reductions for each
transaction or a predetermined number of credits. Where appropriate,
states and tribes may elect to establish a reserve pool of credits that
would be available to compensate for unanticipated shortfalls in the
quantity of credits that are actually generated.
The site-specific procedures and protocols used in water quality
trading programs that involve agriculture and forestry operations
should be developed by states and tribes in consultation with United
States Department of Agriculture (USDA) agencies. Those procedures
should estimate nutrient or sediment load delivery to the stream
segment, water body or watershed where trading occurs. Numerous methods
and procedures to determine nutrient and sediment load reductions
associated with conservation practices on agricultural and forest land
have been developed or used by the USDA agencies, including the Natural
Resources Conservation Service, Forest Service, Agricultural Research
Service and the Cooperative State, Research, Education and Extension
Service. Some of these methods may be applied to water quality trading.
As an example, the Revised Universal Soil Loss Equation (RUSLE) may
be used in some locations to estimate the sediment yield at the end of
a slope in agricultural settings. The sediment yield at the end of a
slope coupled with an appropriate method to estimate sediment delivery
to the receiving waters can provide a reasonable estimate of sediment
load and load reductions. Representative soil sampling to determine the
phosphorus content of soils can be used with this approach to estimate
non-soluble sediment-bound phosphorus loads and load reductions.
Different methods are appropriate to estimate soluble phosphorus and
nitrogen loads and load reductions.
EPA and the USDA are working with other agencies to evaluate
existing methods and to develop improved methods and procedures for
estimating loads from agricultural and forestry lands. More precise
estimations will be possible as technologies improve and new
technologies are developed. For storm water runoff other than
agriculture, EPA recommends monitoring or modeling to estimate
pollutant loads and load reductions. EPA believes this may be based on
local hydrology and actual data or pollutant loading factors that
relate land use patterns, percent imperviousness or percent disturbed
land and controls or management practices in a watershed to per acre or
per unit pollutant loads, where other methods are not specified in a
permit or regulation.
5. Compliance and Enforcement Provisions. Mechanisms for
determining and ensuring compliance are essential for all trades and
trading programs. These may include a combination of record keeping,
monitoring, reporting and inspections. Compliance audits should be
conducted frequently enough to ensure that a high level of compliance
is maintained across the program. States and tribes should establish
clear enforceable mechanisms consistent with NPDES regulations that
ensure legal accountability for the generation of credits that are
traded. In the event of default by another source generating credits,
an NPDES permittee using those credits is responsible for complying
with the effluent limitations that would apply if the trade had not
occurred. EPA also recommends that states and tribes consider providing
periodic accounting and reconciliation periods and establishing
appropriate enforcement provisions for failure to generate the quantity
of credits that are traded.
EPA recommends that states and tribes consider the role of
compliance history in determining source eligibility to participate in
trading.
EPA recommends that states and tribes consider including provisions
to address situations where nonpoint source controls and management
practices that are implemented to generate credits fail due to extreme
weather conditions or other circumstances that are beyond the control
of the source.
6. Public Participation And access to Information. EPA supports
public participation at the earliest stages and throughout the
development of water quality trading programs to strengthen program
effectiveness and credibility.
Easy and timely public access to information is necessary for
markets to function efficiently and for the public to monitor trading
activity. EPA encourages states and tribes to make electronically
available to the public information on the sources that trade, the
quantity of credits generated and used on a watershed basis, market
prices where available, and delineations of watershed and trading
boundaries. This information is necessary to identify potential trading
opportunities, allow easy aggregation of credits, reduce transaction
costs and establish public credibility.
7. Program Evaluations. Periodic assessments of environmental and
economic effectiveness should be conducted and program revisions made
as needed. Environmental evaluations should include ambient monitoring
to ensure impairments of designated uses (including existing uses) do
not occur and to document water quality conditions. Studies should be
performed to quantify nonpoint source load reductions, validate
nonpoint source pollutant removal efficiencies and determine whether
the anticipated water quality objectives have been achieved. Economic
evaluations should include the number and type of trades, the price
paid for pollutant reduction credits, transaction costs, the costs
[[Page 1613]]
incurred to administer the program, and where possible any net cost
savings resulting from trading.
The results of program evaluations should be made available to the
public. An opportunity for comment should also be provided on changes
to the program as necessary to ensure that water quality objectives and
economic efficiencies are achieved, and that trading does not result in
an impairment of designated uses (including existing uses).
I. EPA's Oversight Role. States and tribes are encouraged to
consult with EPA throughout development of trading programs to
facilitate alignment with the CWA. EPA has various oversight
responsibilities under the CWA, including approval or establishment of
TMDLs, approval of revisions to state or tribal water quality
standards, review of NPDES permits and provisions for reviewing and
making recommendations regarding revisions to a state's or tribe's
water quality management plans through the continuing planning process.
In general, EPA does not believe that the development and
implementation by states and tribes of trading programs consistent with
the provisions of this policy necessarily warrant a higher level of
scrutiny under these oversight authorities than is appropriate for
activities not involving trading. However, where questions or concerns
arise, EPA will use its oversight authorities to ensure that trades and
trading programs are fully consistent with the CWA and its implementing
regulations.
FOR FURTHER INFORMATION CONTACT: David Batchelor, EPA Office of Water,
202-564-5764, batchelor.david@epa.gov, or Lynda Hall Wynn, EPA Office
of Water, 202-564-0472, wynn.lynda@epa.gov; or Mahesh Podar, EPA Office
of Water, 202-564-5778, podar.mahesh@epa.gov.
Dated: January 2, 2003.
G. Tracy Mehan, III,
Assistant Administrator, Office of Water.
[FR Doc. 03-620 Filed 1-10-03; 8:45 am]
BILLING CODE 6560-50-P