Water-Quality Trading Debated

By Todd Neeley

DTN Staff Reporter

LINCOLN, Neb. (DTN) -- Ben Grumbles is an unabashed champion of the total maximum daily load, the so-called 'pollution diet' in place to reduce runoff of agriculture nutrients into the Chesapeake Bay. But the former Environmental Protection Agency official acknowledges TMDLs may not be the right approach for all parts of the country.

Grumbles is Maryland's secretary of the department of the environment and a former assistant administrator for water at the EPA during the George W. Bush administration. He told an audience Tuesday at the National Workshop on Water Quality Markets in Lincoln, Nebraska that while he strongly supports TMDLs, he believes they aren't a universal answer to reducing nutrient runoff. Rather, a combination of regulation and development of water-quality trading markets may be the best alternative, he said.

TMDLs have been the target of legal battles mounted against what many perceive is a federal government power grab to direct states to clean up the Chesapeake Bay.

"I don't recommend the Chesapeake Bay TMDL in every region of the country," Grumbles said. "I can say this as a Maryland official -- we're very proud and very supportive of being an aggressive and supportive partner in the Chesapeake Bay and the Chesapeake Bay TMDL. It's collaborative, aggressive. It will not work in other areas of the country because it has to work through collaboration."

A common outcry in parts of the Midwest and other regions where agriculture is prevalent is a one-size-fits-all approach to nutrient reduction would be harmful to farmers and ranchers who may be required to adopt conservation measures not necessarily beneficial to the environment or their operations.

Grumbles said the Chesapeake Bay TMDL is working because many industries have come together to solve the nutrient runoff problem. It can be humbling, he said -- it requires those parties to subject themselves to scrutiny.

"The states have to voluntarily agree to be subjected to more peer pressure and EPA oversight," he said. "For me, I think a real driver for Maryland and for other states like Virginia, are the TMDL. And hopefully for other upstream states like Pennsylvania, that the TMDL will lead to more trades. And I think that's a good thing. What it also has done for us in Maryland is underscore the absolute necessity to update the science of soil fertility index and go with the more modernized index for measuring phosphorous on the Eastern shore, put in place more aggressive regulations."

DOES TRADING WORK?

Currently, water-quality trading markets are in operation or in development in 15 states. The idea is larger industries that pollute pay farmers and other landowners to put proven conservation methods in place to reduce water pollution.

A Duke University study conducted in 2014 found that allowing industries to buy, sell or trade water-quality credits could not only reduce water pollution faster, but could lower industry costs of compliance.

Though there is a national push underway to establish more local water-quality trading markets, not everyone is convinced agriculture is doing enough to make a water-quality trading system effective.

The group Food and Water Watch called on USDA and EPA to cancel the event held in Lincoln this week.

Scott Edwards, an attorney for Food and Water Watch, told DTN in an interview that the group has been studying water-quality trading programs in Pennsylvania and Ohio. Coal-fired power plants are one of the biggest industries pushing water-quality trading, as well as major municipalities with large wastewater treatment plants.

"Many of these industries don't want to upgrade their technology to meet local water-quality standards. They don't want to spend the money," Edwards said.

Food and Water Watch said industries are going to farms to buy credits instead. That allows industries to keep dumping higher levels of waste into streams or rivers, but then there is little or no accountability or evidence that farms actually reduce what they are leaching into streams or rivers.

"When you buy 1,000 pounds of pollution credits from the farm, nobody is ever monitoring that farm to see if they ever got rid of that 1,000 pounds they sold you to get that credit," Edwards said. "There is no testing or monitoring. It's just all based on models, guess and practices we have seen that are questionable."

Instead, Food and Water Watch argues, the coal plant that buys those credits can discharge higher levels of pollutants without any regulatory accountability. Edwards points to a power plant in Pennsylvania that bought 80,000 pounds of nitrogen credits, but there was no way to determine whether farms actually reduced 80,000 pounds of nitrogen applications.

"These industries just have open season on our rivers and streams. They are no longer held to any permit confinements," Edwards said. "So from our perspective, this is not about water quality but letting industries off the hook from complying with their permits, and it's relying on a mechanism that's not proven to work."

IOWA NUTRIENTS CHALLENGE

Des Moines Water Works in Iowa filed a lawsuit against 10 drainage districts in the Raccoon River Watershed, alleging those districts should be held legally responsible for high levels of nutrients found in source waters for drinking. DTN found in its reporting farmers and other stakeholders would rather find solutions outside of court.

Iowa is one of the 15 states looking at water-quality trading as a way to help clean waters.

Grumbles told workshop attendees he understands why utilities and environmental groups bring lawsuits challenging issues related to water quality.

He said it's important to bring together agriculture, wastewater and drinking utilities "in the same room to find the sweet spot, to build trust, to reduce nutrients pollution, to enhance local benefits" of water-quality trading.

"Obviously, we have a ways to go," Grumbles said. "It's not just in Iowa, it's around the country. For good reason, folks use their various tools they have under the Clean Water Act like a drinking water utility in Des Moines to say, 'hey, we're not happy with paying additional money for treatment; we think agriculture needs to do more, and maybe the state nutrient strategy is a good start, but it's not good enough.'

"Well, from our perspective, and my personal view as a Maryland official, the most inefficient way to solve a dispute is through litigation. Respect the right of citizens. Respect the right of utilities and different groups to use their legal authorities, but that should be the last resort."

Grumbles said the best way to make water-quality trading successful is through a combination of regulation and establishing markets. Continuing down a sole path of regulation doesn't work anymore, he said.

"Each of us has probably been to different conferences where we talk about all the fruits and the successes of the command-and-control regulations," Grumbles said. "It's big, and it's really important so you don't throw those out the window. But the status quo is fatal. If we don't adapt and evolve our different programs and approaches, we run into some big technical challenges. Big problems.

"When I say the status quo is fatal, if we don't evolve into watershed-based permitting on a more frequent basis and water-quality trading, if we use the same tools we've used over the last 40 years, we're not going to get the kind of results to prepare us for the new and growing challenges.

DTN Ag Policy Editor Chris Clayton contributed to this report.

Todd Neeley can be reached at todd.neeley@dtn.com

Follow him on Twitter @ToddNeeleyDTN

(AG/ES)

Copyright 2015 DTN/The Progressive Farmer. All rights reserved.