Bay Journal

Rona Kobell is a former writer for the Bay Journal and Baltimore Sun.

Maryland moves toward trading, as many watch warily

  • December 28, 2015

When Larry Hogan bested Anthony Brown to become the third Republican governor of Maryland in half a century, environmentalists were concerned about who he might choose to lead the Maryland Department of the Environment. Many breathed a sigh of relief when Hogan appointed Ben Grumbles to the top job at MDE.

Grumbles, a career environmental regulator, had spent five years as assistant administrator for water at the EPA. Prior to that, Grumbles, an attorney, had a nearly two-decade career on Capitol Hill and had also served as Arizona’s top environmental official.

In Grumbles, the environmental community was getting a secretary who understood the complexity of regulation, knew the law, and could work with a Republican Administration to get the money and support needed to enforce the law.

But one issue troubled some in the environmental community. They suspected Grumbles was in favor of nutrient trading and would soon push a policy that outlined how Maryland would enter into such a market.

They had reason to believe that. Grumbles, in his work for the U.S. Water Alliance, spoke positively about nutrient trading at several conferences nationwide. He has frequently discussed it in his job as secretary. A couple of weeks ago, at a University of Maryland Agriculture Law Clinic conference, Grumbles outlined his “Top 10 Reasons to Trade” with his signature good humor. (Reason Number 10: It’s Legal Enough.) Grumbles recently unveiled the department’s nutrient trading plan, a three-pager that outlines what trading is, but is short on specifics about how it will work in Maryland. 

We will likely learn more, soon. The public is invited to the Maryland Nutrient Trading Symposium at Chesapeake College in Wye Mills on Jan. 8. The state’s departments of environment and agriculture, along with the Chesapeake Bay Foundation and the Maryland Grain Producers, are sponsoring it. (The two groups also sponsored the well-attended Phosphorus Symposium. You can register here.

Trading is a difficult topic, full of nuances. Many free-market advocates see it as a cost-effective solution to reducing pollution without more regulation. Many environmentalists support it, with caveats. The most important is that a trading program needs a verification and auditing program, so that one can be sure the trade accomplishes the reductions it promises. (One veteran environmental lawyer, who once opposed trading, told me that he was for it now, simply because he was “out of ideas” on how to reduce pollution from non-point sources, such as stormwater and agriculture. Nothing else has worked, he said. Maybe we should try it.)

At its core, trading means that polluters can “pay” to pollute by offsetting their pollution with credits they buy from others who are polluting less than they are allowed to under requirements. So, for example, a Baltimore power plant that cannot meet its emissions permits without a significant investment can instead invest a sum in, say, buffer strips on an Eastern Shore farm. It may also be that the buffer strip, or the bioreactor, or whatever the practice is, actually can reduce more pollution more cheaply than the power plant can following its permit to the letter.

Critics say that’s the problem. Such a trade is excellent news for the Eastern Shore residents who get to look at a new stand of trees and cleaner water. It’s not quite as rosy for the Baltimore children who have to breathe more dirty air.

“My objections to trading are practical, legal and moral,” said Fred Tutman, the Patuxent Riverkeeper.

On the practical side, Tutman said, trading doesn’t reduce pollution, but just moves it around. On the legal, he said, it gives polluters permission to essentially ignore the Clean Water Act — not to mention privatizing a lot of the records around the trades because they would be between private entities. And on the moral, he said, you can’t trade what you don’t own — and no one owns the right to the air and water or the right to pollute it.

Tutman acknowledges that the discussion has moved away from the question of “should we trade?” to “how can we make the trading program better?” He calls that development “very sad.”

“It stands to reason that a clean-up program driven by market incentives will confer the best values to those areas with the best and most favorable trading/market conditions,” he said. “It’s easy. Wealthy and relatively clean areas can generate the most credits (rich get richer). Poor, disenfranchised and environmental unwholesome places is exactly where the best market is for trades (the poor get more pollution). Use your imagination as to who gets the credits and who gets the trades (goldmine versus the shaft).”

Though many places have been talking about trading, and Grumbles has been touting the idea for years, it is hard to find an example of any place with a successful, robust water quality trading program, especially between point and nonpoint sources.

Rena Steinzor, a professor at the University of Maryland School of law who has known Grumbles for decades, said the new secretary is “a very bright man, an environmental professional…but I think he’s wrong on this one. I really do.”

Steinzor said she doesn’t oppose trading, but thinks Maryland is rushing into it without the proper oversight. Some environmentalists have voiced the same concerns about the Phosphorus Management Tool working group, which has included few environmentalists.

“I am very concerned that you gather a group of hand-picked people and you get behind closed doors and debate it,” she said. “We’re going to start trading in April, but we don’t know what the rules are going to be…. He needs to put out a proposal and let every member of the public have an opportunity to comment on it… It has to be done right, and I don’t have much confidence now that we’re going to be rigorous.”

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About Rona Kobell

Rona Kobell is a former writer for the Bay Journal and Baltimore Sun.

Read more articles by Rona Kobell

Comments

By submitting a comment, you are consenting to these Rules of Conduct. Thank you for your civil participation. Please note: reader comments do not represent the position of Chesapeake Media Service.

Megan Lehman on December 29, 2015:

We have built a successful, local, water quality nutrient trading program here in Lycoming County, PA, over the past 7 years. I invite the author or any of the parties interviewed in this story to come learn about it; tour a farm, tour a sewer plant, and see how this CAN work on the ground under the right conditions.


Robert Wieland on December 30, 2015:

If Ms. Kobell has gathered the primary complaints against trading here, she has done a great service. Let's take them one at a time. 1. "Trading means letting people pay to pollute." That does not describe trading very well. Trading allows pollution reduction to be undertaken by the lowest cost reducer, thereby letting more pollution reduction happen for any given pollution reduction budget. 2. "Trading will cause city kids to have to breathe dirtier air." I am not sure why we are mixing Chesapeake Bay TMDL requirements and urban air quality standards here, as both are enforced separately and independently. In any case, the clean air act and the clean water act both define conditions that are disallowed with respect to smoke stacks and drain pipes and trading will in no way trump those rules. Why pretend that it will? 3. "Trading doesn't reduce pollution, it only moves it around." Fred Tutman is right in the strictest sense of his words. Trading does not reduce pollution, rule-based caps on total pollution loads are what reduce pollution. However, without the caps there is nothing to trade, so trading and pollution caps are fairly closely intertwined. Trading is a way to ease the pain of meeting those rule-based caps and, if you have no concern about easing the pain of meeting the caps, then you do not realize that you too are a polluter. 4. "Trading will hurt the poor and help the rich." The economics of this argument are a little muddy. Do we believe that driving a city bankrupt trying to meet stormwater load reduction targets is preferable to letting them pay some farmers on the Eastern Shore to implement pollution reduction practices? I am not sure what either the waterfront set or the stock broker set will get out of trading and I am not sure why I should care, with regard to the environmental problem. If you want to liberate and redistribute their holdings, that is a different conversation. 5. "Poor, disenfranchised and environmental unwholesome places is exactly where the best market is for trades (the poor get more pollution)." If there is a practical way to achieve social justice and environmental restoration in the same policy prescription, I am all in favor. I don't know of such a policy, however, and I work on social justice issues separately from environmental issues. The buyers of pollution credits will be those who can't afford to reduce their own pollution. If they are already poor, I do not know how giving them a cheaper way to meet their pollution load reduction is bad for them. The sellers of pollution credits will be those who can reduce pollution more cheaply than buyers. If they can't then there is no benefit from trade and no trade. 6. "Maryland is rushing into this without proper oversight." Speed is a famously relative thing. For the last six years of the O'Malley administration various pieces of the underlying market infrastructure for pollution trading were being built with USDA funds and the expertise of World Resources Institute. As with any new and innovative undertaking, it seems likely that there will be glitches and last-minute problems whenever we get around to implementing pollution trading. One can either help to resolve those problems or stand on the sidelines and say, "I told you so". 7. "We don't like corporations, corporate profits, the profit motive, and freely competed markets." This last was not listed in Ms. Kobell's piece, but it seems to underlie many of the complaints against trading. There is not much one can say in opposition, except that, if you oppose trading on any of those grounds, please describe a practical alternative for achieving ecological restoration of the Chesapeake Bay, because, like the unnamed environmental lawyer who now supports trading, I don't know how we will get there without it.


Joseph sweeney on January 04, 2016:

Megan,would love to hear more. Regards. Joe Sweeney. Lancaster,Pa


Rona Kobell on January 04, 2016:

Thanks for all the comments. Megan, I would love to know more. As for Robert Wieland's comments, trading is nuanced. And complicated. This blog post outlined some of the objections. There are more voices and more objections. And there are those in favor. I look forward to learning more about it.


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