Reg. 37

Water Quality Trading or Pollution Scheme? 

February 2018 | Jessie Green

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     You may have heard the Arkansas Pollution Control and Ecology Commission recently approved a petition to initiate rulemaking for Regulation No. 37: Arkansas Nutrient Water Quality Trading Regulations. As the White River Waterkeeper and avid outdoorswoman, I have concerns about how it could result in legal loopholes for polluters and encourage degradation of some waterbodies for the benefit of others. If not thoughtfully developed and implemented, our rivers, streams, and lakes could face dire consequences.

     In this context, “nutrients” refer to nitrogen and phosphorus, of which human and animal wastes and fertilizers are main sources. Wastewater treatment plants collect, treat, and discharge human wastes back to our waterways – these are considered point source dischargers, the likely credit buyers. Eroding stream banks and runoff from rainwater mixed with animal wastes and fertilizers are the major sources of nonpoint source pollution – which are largely unregulated and the most difficult sources of nutrients to quantify. Despite mechanism of transport, once excess amounts of nutrients enter our waterbodies, major ecosystem shifts can be observed. Algae growth is stimulated, and as plants decompose dissolved oxygen, necessary for the survival of fish, mussels, and insects, can be depleted. Extreme cases can result in massive fish kills, but lesser effects may only harm sensitive species. Increased algal density not only alters habitat for aquatic communities, but it also impacts the recreational potential of a waterbody. Personally, swimming through large patches of filamentous algae and submerged plants is not my idea of fun. And the enjoyment of fishing is lost when reeling in large mats of algae with every cast.

     But with the public and political will not wanting to enforce best management practices to regulate nonpoint source runoff, and regulated dischargers unwilling or unable to make investments to upgrade treatment infrastructure, what is the solution? That’s where water quality trading, or pollution trading, comes into play. Credits can be generated from projects that reduce nutrient inputs from unregulated sources and sold to regulated entities that can’t meet their discharge limits. It sounds great, but for it to work, careful planning and monitoring are needed to ensure estimated reductions are truly achieved. How and where credits are bought and sold is essential to safeguarding that water quality problems aren’t shifted from one area to benefit another. Legal loopholes can result in no one being held accountable for degradation of waterbodies when credits fail to reduce pollution. For a trading program to be successful, details are essential. But proponents of Regulation No. 37 will tell you that having vague and loose requirements are designed to be more adaptable to innovative projects. And while that sounds good in theory, it also requires the agencies administering the credits are capable of confirming reductions are met. If not attempting to confirm the success of credit-generating projects, then an indicator for determining when projects have failed is needed at the very least.

     Evaluating effects of nutrient enrichment on aquatic ecosystems is complicated. An objective water quality standard for nutrients is necessary and should come before any credit exchanges. If the state is unwilling to adopt criteria for concentrations of nitrogen and phosphorus, even having criteria based on effects of nutrient enrichment (e.g., dissolved oxygen, water clarity, shifts in fish and insect communities, algae densities) would better protect the drinking water, fishing, and recreational potential of our waterbodies. For the past two years, we have heard concerns and seen pictures of algae on the Buffalo River. To date, Arkansas Department of Environmental Quality (ADEQ) has yet to agree with the anglers and paddlers that these observations are considered “objectionable.” This is important because Arkansas’s nutrient standards are based on a subjective definition of “objectionable algal densities.” If the state can’t define what amount of algae constitutes an impairment of a waterbody, then how can they determine when nutrient trading isn’t working and is resulting in adverse effects on water quality?

     Show me a person that doesn’t like the idea of creating less costly alternatives for dischargers to meet water quality standards while at the same time creating a market to incentivize voluntary practices for private landowners to reduce their nutrient contributions. But the proposed Regulation No. 37 doesn’t outline the pathway for a successful trading program. It is devoid of all pertinent details and leaves all of it up for interpretation. Speaking from the perspective of someone who has worked for ADEQ and has firsthand experience in trying to interpret poorly constructed regulations – vague, arbitrary, and subjective regulations do not work. Private interests shouldn't prevail over the best interest of the public good.

Summary of Concerns

1. Arkansas has not established appropriate water quality goals (total maximum daily loads, water quality based effluent limitations, numeric nutrient criteria, etc.) to create a market for trades.

2. The Regulation as drafted lacks sufficient substance to ensure the trading is protective of water quality and will result in actual net improvement in water quality.

   1. Does not include an enforceable provision that the actual, instream nutrient concentrations and loads be reduced or that they even be maintained at current levels;

   2. Lacks sufficient implementation procedures;

   3. Lacks a defined process to evaluate non-point source nutrient credits and generators of those credits;

   4. The standards for the decision of the ADEQ Director to approve or disapprove a Nutrient Credit Generating Project do not adequately protect our water resources

   5. There is no required-minimum trade ratio and insufficient detail regarding how credits will be incorporated as offsets into NPDES permits;

   6. The Regulation is introducing an entirely new regulatory program and provides no consideration to the impact on ADEQ resources and staff and how those costs will be covered; and

   7. The Regulation limits ADEQ’s enforcement authority and only allows inspections by the Arkansas Natural Resources Commission. This is contrary to the delegation of the NPDES program to ADEQ by the U.S. EPA.