Trading and Offsets in the Chesapeake Bay Watershed
Overview
EPA expects that new or increased loadings of nitrogen, phosphorus and sediment in the Bay watershed will be offset by reductions and credits generated by other sources.
In Section 10 of the Chesapeake Bay TMDL document, EPA explains how Bay jurisdictions may accommodate new or increased loadings of nitrogen, phosphorus and sediment. The Bay jurisdictions include Delaware, Maryland, New York, Pennsylvania, Virginia, West Virginia and the District of Columbia. New or increased loadings may be accommodated either through a specific TMDL allocation or by offsetting those loadings with quantifiable and accountable reductions.
Appendix S of the Chesapeake Bay TMDL document discusses a number of definitions and common elements that EPA expects the jurisdictions to include and implement in their offset programs. EPA also anticipates using these definitions and elements in reviewing the jurisdictions' trading programs.
Beyond permitting and nonpoint source controls, water quality trading is one approach that jurisdictions may use to achieve the load reduction requirements. Water quality trading is a market-based approach providing economic incentives for voluntary pollutant reductions from point and nonpoint sources of pollution to improve and preserve water quality.
Trading can provide greater efficiency in achieving water quality goals in watersheds. Trading can allow one source to meet its regulatory obligations by using pollutant reductions created by another source with lower pollution controls.
EPA supports implementation of the Bay TMDL through water quality trading programs established and implemented in a manner consistent with the Clean Water Act, and its implementing regulations. Trading programs must also be consistent with EPA's 2003 Water Quality Trading Policy and the 2007 Water Quality Trading Toolkit for National Pollutant Discharge Elimination System Permit Writers.
EPA does not support any trading activity that would delay or weaken Bay TMDL implementation or that is inconsistent with the assumptions and requirements of the TMDL. Additionally, EPA does not support trading that would cause the combined point source and nonpoint source loadings covered by a trade to exceed the applicable TMDL loading cap.
For more information:
Technical Memoranda
To assist the Bay jurisdictions in strengthening their trading and offset programs, EPA is developing a series of technical memoranda. The memoranda will also provide EPA and the Bay jurisdictions with a framework for determining whether trading and offset program elements meet EPA expectations. The Bay jurisdictions include Dealware, Maryland, New York, Pennsylvania, Virginia, West Virginia and the District of Columbia.
Drafts of the memoranda will be shared to generate stakeholder input. Stakeholders include the Bay jurisdictions, the Trading and Offsets Workgroup, the Chesapeake Bay Program Science and Technical Advisory Committee, the US Department of Agriculture and other interested stakeholders. A schedule of all proposed technical memoranda is shown below. Final technical memoranda will be posted to this website as they become available. View the available final technical memoranda for the Chesapeake Bay Watershed.
| Technical Memorandum | Release draft to Bay States and DC | Release draft to Trading & Offsets Workgroup and Stakeholders | Target Finalized Date or Issue Date |
|---|---|---|---|
| Sector Load Growth Demonstration | December 2012 | January 2013 | June 5, 2013 |
| Accounting for Uncertainty | April 2013 | June 2013 | February 26, 2014 |
| Local Water Quality | July 2013 | November 2013 | March 21, 2014 |
| Representative Sampling | June 2013 | February 2014 | April 17, 2014 |
| Components of Credit Calculation | June 2013 | October 2013 | May 14, 2014 |
| Credit Permanence | March 2014 | May 2014 | August 27, 2014 |
| Verification/Certification Measures | August 2014 | October 2014 | July 21, 2015 |
| Baseline Demonstration | January 2015 | 2nd Quarter 2015 Calendar Year |
3rd Quarter 2015 Calendar Year |
| Net Improvement Offset | TBD | TBD | TBD |
| Compendium | 3rd Quarter 2015 Calendar Year |
3rd Quarter 2015 Calendar Year |
3rd Quarter 2015 Calendar Year |
| MS4 and Construction Mitigation | TBD | TBD | TBD |
| Interstate Trading | TBD | TBD | TBD |
*Projected dates reflected in this schedule should be considered as target dates and may shift depending upon newly identified priorities and available resources.
Jurisdiction Programs
In addition to state-specific Bay TMDL information available through EPA, the Bay jurisdictions iwth trading and/or offset programs in place have individual websites as indicated below. The Bay jurisdictions include Delaware, Maryland, New York, Pennsylvania, Virginia, West Virginia and the District of Columbia. Read EPA's assessments of the jurisdictions' trading and offset programs on the Sector-Specific EPA Oversight in the Chesapeake Bay Watershed page.
- Delaware - At this time, Delaware does not have a water quality trading-specific website. However, the Delaware Department of Natural Resources and Environmental ControlExit reports on water quality and the TMDL.
- District of Columbia - The Department of Energy and Environment is in the process of establishing an offset program. They released a 2013 Rulemaking on Stormwater Management and Soil Erosion and Sediment Control on July 19, 2013. It is available on the Department of Energy and Environment websiteExit.
- Maryland - Information on the Maryland Nutrient Trading ProgramExit can be found through the Maryland Department of Agriculture.
- New York - At this time, New York does not have a water quality trading-specific website. However, the New York Department of Environmental ConservationExit reports on water quality and the TMDL.
- Pennsylvania - Information on Pennsylvania's nutrient trading program can be found on the Pennsylvania Department of Environmental Protection websiteExit.
- Virginia - Information on Virginia's nutrient trading program can be found on the Virginia Department of Environmental Quality websiteExit. Additional information is available through the Virginia Nutrient Credit Exchange AssociationExit.
- West Virginia - At this time, West Virginia does not have a water quality trading-specific website. However, the West Virginia Department of Environmental ProtectionExit reports on water quality and the TMDL.
Additional Resources
- Water Quality Trading Assessment Handbook
- Water Quality Trading Toolkit for NPDES Permit Writers
- Web-based Water Quality Training Modules
- Water Quality Trading Evaluation
- Chesapeake Bay Program Nutrient Trading Fundamental Principles and Guidelines (PDF)Exit(87 pp, 2.1 M, About PDF)
- Water Quality Trading - World Resources InstituteExit
- Comparison Tables of State Nutrient Trading Programs in the Chesapeake Bay Watershed - World Resources InstituteExit
- Fact Sheet: How Nutrient Trading Can Help Restore the Chesapeake Bay - World Resources InstituteExit
- Water Quality Trading Programs: An International Overview - World Resources InstituteExit
- Chesapeake Bay Commission - CBC Economics of Trading Media Materials Exit
- USDA Office of the Chief Economist - Chesapeake Bay Regional Water Quality Trading ProgramExit