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EPA Announces New Water Quality Trading Guide for Regulated Community

Beveridge & Diamond, P.C., August 20, 2007

On August 7, 2007, the Environmental Protection Agency (“EPA”) released a “Water Quality Trading Toolkit for Permit Writers” to promote the incorporation of water quality trading techniques and conditions into National Pollution Discharge Elimination System (“NPDES”) permits. The Toolkit will also guide the regulated community in the design and implementation of voluntary water quality trading programs consistent with EPA's 2003 “National Water Quality Trading Policy.” 

Trading is a market-based approach to improving water quality in which a discharger seeking to comply with mandatory permit limitations purchases pollution “credits” from another source that then actually provides the necessary pollution reduction. EPA’s 2003 Policy laid out a framework for water quality trading under the Clean Water Act and EPA’s 2004 “Water Quality Trading Assessment Handbook” was developed to help stakeholders determine whether trading is a viable option in a specific watershed.  The Toolkit builds upon these two earlier documents and applies the principal of “TRADE” (transparent, real (reductions), accountable, defensible, and enforceable) to five different trading scenarios:  single point source to single point source trading, multiple facility point source trading, point source credit exchange trading, point source to nonpoint source trading, and nonpoint source credit exchange trading. Real-life examples of a variety of successful trading programs are included in the Toolkit to further elaborate on EPA’s Policy. 

The Toolkit was developed in response to the request of stakeholders at the May 2006 Second National Water Quality Trading Conference, co-sponsored by EPA and USDA-NRCS, for additional guidance on the development and implementation of trading programs. While state and regional permitting authorities are the primary Toolkit audience, EPA intends that the regulated community and other stakeholders will also use this guide to increase the creation of successful water quality trading programs. With water quality standards an ever-increasing trend in NPDES permits, the new guidance is likely to influence the next round of permit renewals facing the regulated community.

The Trading Toolkit is available on the EPA Website at:
and a fact sheet describing the Trading Toolkit is available at: EPA is also accepting comments on its Trading Toolkit, which will be considered in future updates.

For more information, please contact Richard Davis at (202) 789-6025 (, Karen Hansen at (202) 789-6056 (, or Ami Grace-Tardy at (202) 789-6076 ( 




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