State proposes rules for buying and selling pollution credits

Maryland is establishing guidelines to allow property owners who execute water quality projects that go above and beyond requirements to earn "credits" that they could sell to others.
Maryland is establishing guidelines to allow property owners who execute water quality projects that go above and beyond requirements to earn "credits" that they could sell to others. (Matt Button, Baltimore Sun Media Group files)

Maryland is setting the rules to allow property owners and others to buy and sell credits for environmental cleanup, an emerging strategy for improving the health of the Chesapeake Bay and its rivers.

The Maryland Department of the Environment has drawn up the regulations that will guide how companies, local governments and property owners that go above and beyond in water quality improvement goals can earn credits to be sold to others that are struggling to meet environmental benchmarks.


Supporters of water-quality trading say that, when done properly, the practice uses market forces to achieve environmental benefits.

"It's a very important step, and it's a necessary step," said state Environment Secretary Ben Grumbles, who added that the regulations will "jump-start the restoration economy."


Gov. Larry Hogan's administration is scaling back his ambitious plan to jumpstart a pollution credit trading program as part of the state's Chesapeake Bay cleanup efforts.

Maryland and other states in the Chesapeake Bay watershed are required by federal law to reduce pollution enough to eventually get the bay off of the list of the nation's most impaired waterways, and the state has required property owners and governments to take steps toward that goal.

The trading of water-quality credits aims to address one of the struggles of restoring the health of the bay — namely, that some cleanup projects are much more expensive than others.

Projects on farms, such as planting cover crops in the winter or adding trees along farm streams, are less expensive than, for example, upgrading a sewage treatment plant or adding stormwater controls in urban areas.

The Chesapeake Bay and its rivers are plagued by an overabundance of the nutrients nitrogen and phosphorus that flow into the bay from farms, lawns, septic systems, sewage plants and poorly managed stormwater. Those nutrients fuel the growth of algae in the water, which then use up dissolved oxygen in the water as they decompose — leaving oxygen-deprived "dead zones" where fish, crabs and oysters struggle to survive.

The proposed regulations for nutrient trading set rules for identifying who can earn credits that they can sell and where they can be sold.

Rising carbon dioxide levels are not just warming the globe, but causing oceans to become more acidic. That threatens all aquatic ecosystems, but especially estuaries like the Chesapeake Bay.

The regulations will be reviewed by a joint Senate-House of Delegates committee over the next two weeks and will be subject to a public comment period after that.

Officials with the Chesapeake Bay Foundation, a nonprofit that advocates for bay restoration, said the regulations are an important step but have some flaws they believe should be fixed.

For example, credits can be traded within three regions: the Potomac River watershed, the Patuxent River watershed and a third area that includes the rest of the Western Shore, Eastern Shore and the Susquehanna River.

Doug Myers, a senior scientist at the bay foundation, said that third region is just too big, creating the possibility that polluters in one area could buy a lot of credits from areas across the bay — and still allowing localized pollution.

Myers said the foundation is also concerned the regulations allow for credit trading between states, which he said is "way too premature."

Still, Myers said it's a positive step to set up a framework for credit trading.

"Trading isn't the silver bullet by any stretch," Myers said. "But if it's done right, it can help us make load reductions at a lower cost per pound."


Gov. Larry Hogan has been a proponent of water-quality trading and last year proposed an ambitious plan to use $10 million to start a trading program. After receiving tepid interest from environmentalists and farmers, Hogan agreed to narrow his proposal, called the Clean Water Commerce Act, into essentially a $2.5 million annual grant program to pay for certain innovative pollution-fighting practices.

Grumbles, the environment secretary, has said the Clean Water Commerce Act is giving the state a chance to try new projects and determine how much the pollution projects might be worth. He said the Clean Water Commerce Act investments, plus the new regulations, will help get trading off of the ground.

Federal enforcement remains critical to future of the nation's largest estuary.

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