Last week, USEPA HQ's Office of Water(OW) issued a vital policy memorandum signaling OW's ongoing commitment to national nutrient reduction strategies and, importantly, signaled a push toward-- rather than a reversal from-- innovative financing to encourage market-based water quality solutions begun under the prior administration. In the self-proclaimed "2022 Nutrient Reduction Memorandum," OW outlines five governing principles and three implementation strategies in its "One-Water" approach -- but strongly signaled so much more when it comes to the development of market-based water quality trading solutions. 

The memorandum provides numerous examples and suggested ways in which OW will work with states to finance and encourage a watershed-based approach to nutrient reduction that can return value to working lands and ease the burden of costly point-source reductions alone. A few of the notables are highlighted below:

  • Initiating a rulemaking to explicitly state that NPDES permits may include conditions allowing market-based approaches, including trading, to meet applicable effluent limits;
  • Building connections between the state programs and market-based environmental services providers that can combine water quality outcomes with other commodities such as carbon sequestration credits. EPA will provide technical assistance as needed to support states’ use of CWA Section 319 funds to purchase water quality credits generated by such projects;
  • Supporting states to employ a variety of permitting approaches, including watershed-based permitting, integrated planning, adaptive management, and various market-based approaches including trading and offsets. We will encourage states to consider permitting approaches that strengthen upstream/downstream partnerships;
  • Assisting states in using water quality standard variances, targeted designated use changes, compliance schedules in NPDES permits, and other flexibilities to make progress.