Vol. 5 No. 1 Summer 1997
A Newsletter About New Jersey's Water Quality Programs

Most readers recognize that the removal of pollutants from water involves the use of very expensive equipment. So how can wastewater dischargers meet their required effluent limitations if they can't afford costly equipment upgrades? One solution, being evaluated by the Passaic Valley Sewerage Commissioners (PVSC), involves effluent trading &emdash; a regulatory method that allows dischargers achieving greater pollutant reductions than required to sell "credits" for their excess reduction to other dischargers not able to cost effectively reduce their own pollutants.

What are the benefits?

Effluent trading can:

• achieve equal or greater reduction of pollution for the same or less cost,
• create an economic incentive for dischargers to exceed minimum pollution reduction and also encourage prevention and the use of innovative technologies,
• reduce cumulative pollutant loadings, improve water quality, accommodate growth, and prevent future degradation,
• address broader environmental goals within trading areas, and reduce costs for individual sources contributing to water pollution,
• give dischargers more flexibility by allowing them to take advantage of economies of scale and varying treatment efficiencies, and
• reduce the overall cost of addressing water quality problems in a watershed.

PVSC's project &emdash; which involves USEPA, DEP, and various indirect users within the PVSC service area &emdash; is an effort to address the trading concept across indirect users (facilities that pretreat effluent before discharging to a sewer system/wastewater treatment plant). The project's goal is the development of transferable mechanisms for trading effluent discharge limits within publicly-owned treatment works (POTW) service areas. These trades may involve one-on-one agreements between facilities or more comprehensive trading arrangements among a consortium of facilities within the district. The project's immediate focus is to establish a successful trading arrangement for heavy metal discharge limits within the PVSC sewer district. To assist PVSC, an Effluent Trading Subgroup was formed to oversee the project. This group will document a series of options for pursuing trades, identify the potential benefits of trading, and outline the lessons learned from the project. A second aspect of this effort will involve exploring the potential transferability of trading mechanisms to other POTWs both within New Jersey, and, to the extent possible, POTWs in other states.

To participate in this pilot project as a "buyer" or a "seller" of effluent credits, certain criteria must be met. For example, a facility interested in selling copper credits must have instituted control measures to reduce its copper levels below the new PVSC local discharge limit so as to achieve an excess in copper reductions. The copper reduction may have originated from end-of-pipe control equipment, but not from discontinuing the process that produced the copper discharge. In addition, the use of pollution prevention techniques that lead to copper reductions may also qualify a facility as a "seller." A "buyer" is a facility currently discharging in excess of the new copper local limit that would like to meet its new requirement by purchasing a seller's excess copper reductions. The buyer's copper credit purchase would be in lieu of purchasing the equipment needed to meet the copper limit at their facility. (Note: Other effluent trading restrictions apply and are expressed in the PVSC Rules and Regulations.)

The pilot project stemmed from EPA's New Jersey Chemical Industry Project in which EPA and a stakeholder group of batch chemical producers, environmentalists, trade associations, academics, unions, POTWs, and community representatives worked to assess current environmental protection strategies and develop better compliance approaches. Effluent trading is one of four ongoing pilot projects selected from 45 regulatory issues proposed by the New Jersey Chemical Industry Project Stakeholder group. Other pilot projects include exchange of "wastes" across facilities, flexible track for good environmental performers, and compliance assistance.

The DEP is hopeful the PVSC pilot project is a positive step toward developing "common sense" solutions to water quality problems. If you would like further information regarding the effluent trading pilot project, please contact Jim Murphy, of the Bureau of Pretreatment and Residuals, at (609) 633-3823.