On February 6, 2018, David Ross, EPA’s Assistant Administrator for the Office of Water issued a new guidance memorandum updating the Agency’s Water Quality Trading Policy.  The new guidance strongly supports and promotes trading and flexibility and clarifies EPA’s previous guidance, stating, for example, that its 2003 Water Quality Trading Policy “may be too prescriptive to be widely effective and implementable.”  The guidance announces six “Market-Based Principles” designed to encourage and promote the development and implementation of market-based pollutant reduction programs.  The six principles include:

  • States, tribes, and stakeholders should consider implementing water quality trading and other market-based programs on a watershed scale
  • The EPA encourages the use of adaptive management strategies for implementing market-based programs
  • Water quality credits and offsets may be banked for future use
  • The EPA encourages simplicity and flexibility in implementing baseline concepts
  • A single project may generate credits for multiple markets
  • Financing opportunities exist to assist with deployment of nonpoint land use practices

EPA elaborates on each principle in the memorandum and hopes that the principles provide ideas and opportunities for states, tribes, and stakeholders to consider as they develop market-based water quality improvement policies.

EPA’s memorandum is available here.

Brooks Smith, Shannon Varner, and Patrick Fanning have extensive experience in water quality trading. Please contact them with any questions regarding EPA’s new guidance.