Maryland is moving ahead with plans to launch a nutrient trading program that it hopes will set the standard for a market-based and cost-effective way to reduce pollution in the Chesapeake Bay.
The state’s Environment and Agriculture departments are working together to establish a system for buying and selling nutrient pollution credits. Likely buyers include cities trying to meet state requirements that they reduce stormwater pollution running off streets and parking lots. The likely sellers would be farms willing to go beyond what’s legally required to curb runoff from their fields, feedlots and pastures.
MDE Secretary Ben Grumbles has repeatedly extolled trading’s virtues at several public forums over the last six months, including a University of Maryland agriculture law conference and a symposium at Chesapeake College on the Eastern Shore.
Grumbles announced a 32-member advisory committee that would meet monthly to give state officials feedback on how to proceed with trading. The department also introduced a bill in the General Assembly — at the request of Gov. Larry Hogan — that would let the state tap its Bay Restoration Fund to buy nutrient credits. That fund, which was created to upgrade sewage treatment plants, is financed by so-called “flush fees” paid by all utility customers and septic systems owners.
Virginia and Pennsylvania have already begun trading over the past decade, although the Environmental Protection Agency has criticized Pennsylvania’s program because it didn’t appear to be reducing pollution. The state is not actively trading nonpoint source credits.
Despite criticism of trading in Pennsylvania and elsewhere, Grumbles is an ardent cheerleader. He promoted it while a top official in the EPA’s water office and before coming to Maryland, at the nonprofit U.S. Water Alliance.
“This is an embrace, not a swat,” Grumbles said at the law conference. “We will embrace collaboration, and we will work hard with skeptics as well as cynics to find progress. There is reason to be optimistic that we can make a positive impact on the environment.”
Skeptics, though, are not impressed. The advisory panel Grumbles formed includes only four representatives from the environmental community. Two represent the Chesapeake Bay Foundation and the Alliance for the Chesapeake Bay — both of which have taken funds from the U.S. Department of Agriculture to work on trading issues. The other environmental representatives hail from the Chesapeake Bay Commission, a legislative advisory group, and the Midshore Riverkeeper. Neither of them has taken funds for trading work.
MDE spokesman Jay Apperson said the panel membership “is designed to reflect a broad range of fields and interests.” Absent from the list, though, was anyone from organizations opposed to trading, such as the Patuxent Riverkeeper and Food and Water Watch. The latter group, based in Washington, DC, filed a federal lawsuit unsuccessfully challenging the legality of pollution trading.
Patuxent Riverkeeper Fred Tutman said the panel appears to be geared toward making trading happen rather than wrestling with questions of environmental justice and equity about trades. Among the concerns Tutman has discussed over the last five years: Whether certain communities, like Baltimore City and lower-income areas along the Patuxent, will bear the brunt of increased pollution under trading while wealthy communities reap the benefits.
“Looks like a setup to me,” Tutman said of the panel. “My assumption is that trading will always be economically more advantageous than upgrading technology or compliance with a permit that has a specific limit attached to it. Literally paying to pollute is an attractive option for them.”
The Chesapeake Bay Foundation accepted a $700,000 USDA grant to look at the mechanics, consistency and practical implications of trading. It took another $491,000 to look at rotational grazing, of which nutrient trading was a small component, said CBF senior scientist Beth McGee. McGee said the nutrient trading work in Pennsylvania led to the EPA’s realizing that the state’s baselines for trading were not strict enough, and that the trades were not reducing pollution.
“We are certainly not rolling over. We are really critically looking at the trading programs in every state,” McGee said. “We’re willing to engage in the discussion. And frankly, some of the groups that really hate trading I‘m not so sure could have a constructive conversation about it.”
Trading is not supposed to allow regulated entities, such as sewage treatment plants, to buy offset credits and violate permit limits. But it may be useful in off-setting new loads, McGee said. The watershed states will continue to grow, and more people will generate more stormwater pollution and more sewage waste. They may be able to get the needed pollution reductions through trading and save money, she said.
The Alliance for the Chesapeake Bay has received about $500,000 from the USDA over the last five years to work on trading, said its executive director, Al Todd. Much of those funds went into planting trees and setting up mitigation banks. Like McGee, Todd said he has many questions about trading, and he thinks that his previous experience and funding from the USDA is an asset.
Todd said that he believes that “the expectations are higher than the practical implications.” Still, he said he thinks trading can bring in private investment to help pay for costly pollution reduction projects, such as stream and wetland restoration.
“Although they may be more expensive to implement initially, they are essentially permanent credits,” he said. “You could see an investment in restoration that would not be there normally.”
Bevin Bucheister, Maryland director of the Chesapeake Bay Commission, described its position as “nuanced.” Among her chief concern is interstate trading, because every state has a different program and verifying the trades would be costly. The Commission is also concerned about verification within Maryland.
Midshore Riverkeeper Jeff Horstman said that so far, the panel has been open and transparent. The challenge, Horstman said, will come in how trading reduces pollution.
“Nutrient trading is sort of harder than Chinese algebra,” Horstman said. “If a water body is already polluted with nutrients, how can it buy more credits to pollute more?”
Rena Steinzor, a professor at the University of Maryland School of Law specializing in environmental law, said she’s not as concerned with the panel’s makeup as she is about what’s next. The Maryland Attorney General’s office has advised the Legislature and the cabinet that they need to produce regulations in accordance with the law, she said. The general public’s views on trading ought to carry as much weight as the MDE’s advisory committee, she contended. An MDE web page explaining its program says the state plans to finalize a trading manual by the end of April. The advisory panel will help the department with that as well as “identifying other necessary actions.” But the page does not say when or if it will issue a rule.
“Ben Grumbles needs to propose a rule, say in specifics what he wants to do and allow the public to comment,” said Steinzor, who has known Grumbles since both worked as congressional staffers in DC years ago.
Steinzor added that she has doubts, herself, about how useful trading can be if done right. “Ben acts like it’s something we can afford to do, but it may be more expensive than he thinks, because it needs to be monitored,” she said.