Trading Up: A National Model for Stormwater Pollution Trading?

This week Water Policy Report (subs. required) reported on EPA’s exercise of residual designation authority (RDA) over stormwater discharges and a pilot stormwater-reduction trading program in Massachusetts. Together, these actions have the potential to significantly reduce stormwater discharges into local waterways. If successful, this pilot trading program could be a template for similar trading programs in the Chesapeake Bay watershed and across the country.

Stormwater discharges occur when impervious surfaces such as roads, rooftops, and parking lots channel high volumes of contaminated water into a nearby waterbody. In the absence of impervious surfaces, the water would be absorbed or stored in the ground and then slowly released back into the water cycle. EPA implemented two phases of stormwater regulation in 1990 and again in 1999. Today, three categories of stormwater are regulated: certain municipal separate storm sewer systems (MS4s) that serve populations of 100,000 or more or that serve populations of less than 100,000 in certain urbanized areas; construction activities that disturb one or more acres; and certain industrial activities.

EPA may also regulate stormwater by exercising its “residual designation authority” (RDA), found in CWA sections 402(p)(2)(E) and (p)(6). These sections allow EPA or the state authority to require NPDES permits for specific stormwater discharges known to present the most significant threats to surface water but that do not fall the two categories described above. A discharge that is entirely composed of stormwater may require a NPDES permit if the EPA Administrator or state agency determines that the stormwater discharge contributes to a violation of a water quality standard or is a significant contributor of pollutants to waters of the United States. Section 402(p)(6) also directs the Administrator to designate stormwater discharges to be regulated to protect water quality. A NPDES permit writer may consider factors such as the location of the discharge, the volume of the discharge, the quantity and nature of pollutants, and other relevant factors.

While RDA is an existing tool in the CWA to manage stormwater pollution, EPA has used the tool sparingly, in Massachusetts and Maine. In the Charles River Watershed in Massachusetts, the EPA designated stormwater discharges as subject to NPDES permits if they are from two or more acres of impervious surface that are located on a single lot or two or more contiguous lots and located within the municipalities of Milford, Bellingham, or Franklin. The river experiences significant eutrophication at these municipalities. Their stormwater discharges contribute to violations of water quality standards because the excess phosphorous in stormwater accelerates the growth of nuisance algae species and cyanobacteria that impair existing and designated recreational uses of the river.

In the Charles River Watershed, the pilot trading program for stormwater discharges is driven in part by the TMDL for the discharge of phosphorous into the Lower Charles River and its tributaries. The new trading program will assist these municipalities in meeting their new permit requirements in a cost-effective manner. For example, one property may be able to implement best management practices (BMPs) for stormwater control easily due to its location or size, while another property will not because of land, wetlands, or other physical constraints. In this situation the two properties can enter into a trading agreement where the latter property pays to have additional BMPs installed on the former property.

As EPA Region 1 designs its trading program, it should ensure that the trades are enforceable by the state NPDES permitting authority; the trades are monitored to ensure actual outcomes rather than on-paper-only reductions; the trades do not cause localized impacts; and the trading program can be altered, revamped, or even stopped if unsuccessful. Because the program in Massachusetts could very well be a template for other trading programs, it is important to start out with a thoughtful and well-designed program.

And what are the implications for the Chesapeake Bay? Within the watershed, 10 percent of the total nitrogen, 31 percent of the total phosphorous, and 19 percent of the total sediment discharged into the Bay is from stormwater from suburban and urban areas in the Bay watershed. These areas contribute significant amounts of stormwater due to their high concentrations of impervious surfaces. In the Bay, impervious surface cover has increased disproportionately to the population increase: between 1990 and 2000, the human population increased by 8 percent while the impervious surface cover increased by 40 percent. By 2030, an estimated 20 million people will live in the Bay watershed, an increase of 4 million from today’s population.

To address this troubling increase in pollution from stormwater, EPA Region 3 and the Bay states could look to Massachusetts and Maine for a model in exercising RDA, a possibility last year’s Executive Order reports (haltingly) mentioned. In addition, Senator Cardin’s Chesapeake Bay reauthorization bill establishes a nutrient trading program, which itself may be a model for future trading programs across the country.

The problems in both the Charles River and Chesapeake Bay watersheds are similar: increased development of land to accommodate the population will cause increased stormwater discharge. In the Bay, stormwater is notably the only growing source of pollution. Controlling and reducing stormwater discharges will become increasingly crucial to these iconic watersheds and other water ways across the country.