DIRECTOR'S CORNER
Virginia leads the nation with nutrient trading
DEQ Director David K. Paylor
Virginia’s nutrient trading program has established the Commonwealth as a national leader in addressing nutrient pollution, the most significant obstacle to restoring the health of the Chesapeake Bay and its tidal rivers.
The Department of Environmental Quality and stakeholders worked for more than a year to reach consensus on this innovative program, which has been the topic of inquires from other localities in the United States and abroad. The agreement helped make it one of the most comprehensive efforts in the country for reducing excess nutrients from wastewater treatment facilities, which are the largest contributors of nutrient pollution from point sources in Virginia.
The program will include more than 120 facilities spanning a geographic area that covers more than half the state – Virginia’s portion of the Chesapeake Bay watershed. About 95 percent of the nutrients that are discharged from wastewater plants and industries into the Bay and its tidal rivers originate at these facilities.
Under related regulations, these facilities are required to install new technology to reduce the nutrient pollution. The associated construction costs could reach about $2.1 billion. When implemented, the nutrient trading program could reduce the costs of modifying or building new facilities to achieve pollution reduction standards by about $520 million.
The General Assembly passed a bill in 2005 authorizing the development of a nutrient trading program and directing DEQ to develop a regulation and permit. After working with stakeholders and addressing public comments, DEQ proposed the final regulation in September 2006 when it was approved by the board.
The regulation establishes one general permit, under which the facilities will operate, for the nutrient trading program. This permit differs from most others issued by DEQ because it addresses the cumulative effects of discharges from multiple facilities on Virginia’s portion of the Chesapeake Bay watershed instead of the effects of a single facility on local water quality.
The nutrient trading regulation places caps on the amount of nitrogen and phosphorus that can be discharged into the five major watersheds in Virginia that empty into the Bay. Regulated facilities are required to install technology to reduce nutrient discharges to meet levels specified in their permits or acquire enough "nutrient credits" to account for any discrepancy.
When a facility reduces its nutrient discharges below the permitted limit, the extra reduction may be sold by the pound. A facility needing to purchase nutrient credits could do so through trading with other facilities within the same watershed or, as a last resort, making payments into the Virginia Water Quality Improvement Fund. The prices for nitrogen and phosphorus credits purchased through the fund have been set at about $11 and $5, respectively.
Facilities also must compensate for any additional discharge of nutrients resulting from new construction or expansion. In addition to trading with credit-generating dischargers, a new or expanding facility may acquire pounds of nutrients from landowners who have achieved reductions in non-point sources of pollution beyond what would be required by the Department of Conservation and Recreation to meet Bay goals. Runoff caused by rainwater from farms, subdivisions, construction sites and cities is considered non-point pollution because it does not come from a single point.
For every pound of nutrients to be discharged by the facility, two pounds of nutrients will have to be reduced from non-point sources. DEQ is continuing to work with DCR and stakeholders on the details of this non-point source reduction effort.
As a whole, these measures create a financial incentive for facilities to reduce nitrogen and phosphorus discharges, and ensure that funds are available to maintain and improve Virginia's water quality. It also facilitates an important partnership between point and non-point sources of nutrient pollution.
The trading program is one of the most comprehensive efforts ever conducted in Virginia to reduce excess nutrients, and ultimately it will help result in a healthy and flourishing Chesapeake Bay.