Fighting Pollution Trading to Preserve the Clean Water Act

By Wenonah Hauter

Recently, Food & Water Watch and Friends of the Earth filed a joint lawsuit to force the Environmental Protection Agency to preserve the integrity of the Clean Water Act as it turns 40 years old this year. Represented by the Columbia Law School’s Environmental Law Clinic, we are suing for the removal of the water pollution trading provisions that are part of the 2010 plan to clean up the Chesapeake Bay watershed.

This cap-and-trade plan for water, known as the Bay total maximum daily load or TMDL, is being promoted by both the EPA and the US Department of Agriculture, both of which view the program in the Bay region as a national model that would be replicated in watersheds across the nation. But if this scheme is allowed to move forward it will allow new and increased pollution discharges into the Chesapeake Bay watershed under a complex system of market-based offsets and pollution trading that we believe is illegal under the Clean Water Act.

Pollution trading violates the fundamental concept that the Clean Water Act is built upon, which is that pollution is illegal and industries don’t have a right to poison our shared waterways. Ironically, this evisceration of the Clean Water Act is taking place as the landmark piece of legislation that was passed during the Nixon Administration is about to have its 40th anniversary. It is built on the premise that we should strive to eliminate water pollution from our lakes, rivers and bays. Water pollution trading schemes are a disastrous substitute for proven means of regulating harmful chemical discharges into our waterways.

And we should be clear that the Clean Water Act (CWA) has been an enormously successful piece of legislation. In 1972, two-thirds of our nation’s waterways were unsafe for fishing. Chemicals and wastewater were indiscriminately dumped into our waterways. Today, according to EPA about one-third of our nation’s waterways are unhealthy. Obviously there is more work to do, but why would we allow such an effective piece of legislation to be replaced by a scheme that essentially legitimizes pollution?

The water pollution trading that is being promoted in the Chesapeake Bay is based on buying and selling unverifiable pollution credits. It turns what is now illegal under the CWA into the right to pollute. It’s essentially an “entitlement” program for the financial services industry and polluters.

The federal plan for the bay that includes trading is based on the total maximum daily load of pollutants that can be discharged and still allow a water body to meet water quality standards set by the states under CWA. These pollutants come from energy facilities, factories and wastewater treatment plants and those harder to control nonpoint sources like many of the Bay’s agricultural operations.

The TMDL is, in the simplest sense, a rationing plan. It seeks to allocate pollution loads to our waterways among the many sources of pollution in the Bay. The TMDL can be an effective tool to reduce pollution, but it must be developed and implemented consistently with the goal to eliminate the biggest threats to the Bay watershed – nitrogen, phosphorus and sediment.

As a practical matter, the trading of pollution credits is fraught with problems. In this case, EPA is allowing trading without setting clear and enforceable minimum limits on trading activity, including providing safeguards to prevent fictitious or overstated pollution reductions from being used as offsets.

The “pay-to-pollute” trading program allows financial middlemen to identify and purchase nitrogen and phosphorus “credits” from industrial agriculture operations in the watershed that attest to reducing their pollution levels in the future. These unverifiable credits are then aggregated and bundled together, and sold to power plants, wastewater treatment plants and other “point source” polluters who are either unable or simply unwilling to meet their CWA permit limits.

Many states have tried to implement nutrient trading schemes around the country, but there is no documented, successful nonpoint-to-point source trading program implemented in any watershed in the United States.

And, we must look at this trading scheme in context. Rather than regulating pollution, it is part of an on-going effort spurred by the financial services industry of using the market to allocate costs to the environment, rather than using the performance-based indicator of meeting a regulated standard.

But, in the wake of the largest financial crisis in 75 years, one both created and spread by the irresponsible behavior of the financial service sector, the argument that free market-based principles should replace traditional environmental regulation is wrong minded. It represents a financialization of nature and the transferring of the stewardship of our common resources to private business interests. It makes the responsibility of caring for our natural resources secondary to the economic interests of the few.

Leaving the health of the bay to this trading scheme is reckless and it is a recipe for disaster.

Wenonah Hauter is the executive director of Food & Water Watch (foodandwater watch.org).

From The Progressive Populist, November 15, 2012