In the midst of the furor surrounding efforts by the Oregon DEQ to ensure compliance with Oregon's water quality standards, the DEQ recently unveiled its effluent trading program. Effluent trading allows a point source of pollution to meet applicable water quality standards by purchasing and using effluent trading credits in lieu of implementing more stringent pollution controls.
Effluent trading credits are created when upstream nonpoint sources of pollution implement Best Management Practices (BMPs) that reduce nonpoint source discharges of water pollution. In a nutshell, effluent trading offers Oregon companies the opportunity to either buy effluent credits to address water quality problems or sell credits to generate income for the company.
The current road map for effluent trading in Oregon is DEQ's "Resource Guide to Watershed-Based Trading" published in October 2000. The highlights of the DEQ's Resource Guide are as follows:
Basic Guidelines for Effluent Trading
DEQ has established the following guidelines for effluent trading:
- The effluent credit must be used by a point source of pollution and generated by a nonpoint or diffuse source of pollution.
- The effluent credit must be generated and used within the same watershed and the pollution reduction must occur upstream of the point source using the credit.
- Currently, effluent trades must involve phosphorous, nitrogen, temperature or bacteria.
- The BMPs implemented by the nonpoint source cannot be funded by the government and must go above and beyond what is legally mandated by other regulatory programs.
- A point source using effluent credits must comply with all requirements of the Clean Water Act, including the technology-based requirements applicable to the source. Further, effluent credits cannot be used in a manner that results in violating water quality standards.
How to Trade
Currently, only the following three BMPs can be used to generate effluent credits:
- Grassy swales
- Vegetative buffers
- Livestock exclusion (fencing)
DEQ's Resource Guide describes in detail how to calculate the amount of available credit for each BMP and pollutant. The Guide also establishes trading ratios that are used to compute the actual number of credits that are granted to the nonpoint source for implementing the qualified BMPs.
To apply for an effluent credit, you must complete a credit application form that will be evaluated by DEQ. Effluent credits may be sold, banked, or retired. In general, credits are good for a maximum of ten calendar years after credit generation. The effluent credit will be retired after the expiration of the credit life.
Applicability
The TMDL process in Oregon will undoubtedly lead to increased interest in effluent trading from both point and nonpoint sources. DEQ is enthusiastic about effluent trading and is currently looking for volunteer pilot projects to implement the provisions of the DEQ Resource Guide. While effluent trading is not a panacea for all water quality compliance problems, it may offer at least two significant opportunities for Oregon businesses.
Property owners that have implemented BMPs that go above and beyond what is legally mandated by other regulatory programs to control discharges of phosphorus, nitrogen, temperature or bacteria into water quality limited streams should consider either banking or selling the effluent credits created by their efforts. Point sources that are considering installing expensive pollution controls to meet water quality standards for the four eligible pollutants also should evaluate whether effluent trading is a more cost effective way of ensuring compliance with Oregon water quality standards.