#3 – We affirm the superiority of the free market as an economic organizing principle but believe the economy must be made to serve humanity’s best interests, not the other way around. Big business deserves as much skepticism as big government.
I’m mindful that some so-called environmental groups may also rightly be added to that cautionary principle. Don’t get me wrong. As someone who got his start with the National Wildlife Federation, I value and respect the important work of environmental advocates. Like a two-party political system, advocates serve an important societal role, offering checks-and-balances to the human exploitive excesses and policy and market failures. Many within these organizations are passionate about what they do. But some are passionately wrong about the right solutions and, akin to “big business” in their own right, are equally deserving of our skepticism.
Which leads me to one group, in particular, Food & Water Watch, which released a report this week titled, Water Quality Trading: polluting public waterways for private gain, which strongly criticizes EPA and states for adopting market-based approaches to restoring our nation’s clean waters. This group is deceptively masterful at weaving truth with fiction to create a narrative that fits its ideological position. FWW spends millions each year pointing out problems – standing in the way of much needed reform – but falls well short on offering meaningful solutions. They embody the nemesis of the perfect being the enemy of the good. FWW has spent years waging war against public-private partnerships for water provision through the use of deceptive campaigns. Check out this site, Truth From the Tap, which seeks to expose FWW for what it is – an ideological group that is anti-capitalism, anti-markets, anti-public private partnerships, anti-GMO, and anti-Fracking among many other “anti” campaigns. More on their funding sources and “anti”-tactics here, Big Green Radicals. The only thing that FWW seems to be “pro” about is more government regulation and more money lining their coffers to perpetuate a myopic and misguided Soviet style belief system.
Over the years, I have bent over backwards to engage FWW’s leadership in good faith, but to no avail, and have come to learn that FWW is not interested in the truth. They believe they are on the side of righteousness, and anyone who disagrees, well – is simply unrighteous and wrong. It’s easy to criticize but a lot harder to solve complex problems. I put no other environmental group into the same category as FWW, who quite frankly does more harm than good and stands in the way of sustainable environmental protection. Others, like Sierra Club, NRDC, and Greenpeace, to name a few, while we may have different views on policies and tactics, are at least willing to listen and debate those with whom they disagree.
Like anything new, emerging environmental markets have experienced disappointments and failures. Learning from mistakes is a good thing, and these markets continue to evolve and improve with greater public transparency, accountability, and scientific rigor. But rather than focus on the exciting potential of trading – see this story about the community of Medford, Oregon – FWW persists in its “ours is the only solution” narrative.
A few weeks ago one of FWW’s senior staff attorneys, Zach Corrigan, penned a piece titled The Case Against Water Quality Trading, published in the Fall edition of the ABA Section of Environment, Energy and Resources’ journal. Corrigan and I are in agreement on one thing, namely that many of our nation’s waters are still impaired and we need to do more to fix them. I’ve posted previously on the impacts from excess nutrients, Trust Farmers and Water Quality Trading, and the fact that our old ways aren’t working. But Corrigan and I are in violent disagreement over what fix needs to be done. Corrigan is under the belief that the federal government can do a better job than the states and stakeholders within these communities impacted by polluted waters. Corrigan’s central thesis is that Congress, when it enacted the Clean Water Act in 1972, intended that all pollution from point source discharges be eliminated and that market-based approaches violate Congress’ intent. He is staunchly in support of traditional command-and-control approaches to protect the environment and is unable or unwilling to understand that such approaches will not achieve what he and I both agree on – a cleaner environment.
Corrigan’s primary gripe is the trading of credits between point sources (those discharges regulated by federal permit) and non-point sources, namely farmers not regulated by federal permit. Most farmers, except the large factory-farms, are not regulated by EPA. FWW previously sued EPA for its trading policy and lost and continues its MO of stoking fear and uncertainty and now has set its sights on the states who are responsible for trading programs.
But the states should not be so ebullient over water quality trading. The problem is that, notwithstanding how they are designed to align with the EPA’s  policy, trading programs simply are not permissible under, or viable to fulfill the mandates of, the CWA.
Corrigan goes on to offer several arguments against trading, most of which the premise is fundamentally flawed or simply flat wrong:
- Fear over “hotspots” – “[P]ollution trading will result in point sources increasing their discharges, thus causing spikes in pollution “hotspots” that will have negative local impacts, disproportionately harming low-income populations that fish and swim in these areas.”
- Uncertainty regarding the quantification of reducing pollution from agricultural best practices
- Reduced state resources to verify the implementation of agricultural practices
- Unregulated credit brokers who help to connect buyers and sellers of credits
- Insufficient verification of trading practices
- The purported “burden on [point sources] to monitor and enforce private contractual arrangements” with nonpoint sources.
My objection to much of what FWW promotes is their use of half-truths and perpetuation of myths. There is so much to respond to in FWW’s trading report and Corrigan’s article that it would simply take too many pages to set the record straight, so let me address the one red-herring of “hotspots,” which seems to be FWW’s biggest concern. This is a term that has long been used by opponents and skeptics of trading. I tried over the years to eliminate its use, because it is highly misleading and used by opponents to stoke fear about trading.
Let’s get a couple of things straight. First, contrary to Corrigan’s assertion, trading does not allow point sources to increase their pollution discharges. Completely untrue. That would violate the CWA in the vast majority of cases. Rather, trading simply allows the point source the option of pursuing a more flexible and cost-effective approach to achieving compliance with more stringent water quality-based effluent limits. For those who unfamiliar with the regulatory process, here’s how this plays out in real life. EPA determines that a waterbody like the Chesapeake Bay isn’t achieving water quality standards – too much nitrogen and phosphorous loading from a myriad of sources, including wastewater plants, electric power plants, farmers, streets and roads, parking lots, etc. EPA or the Bay states get together and agree on a “pollution budget” or what is referred to under the CWA as a total maximum daily load. The TMDL establishes the total amount of pollution that can be discharged to the water body and still meet “swimmable and fishable” waters, and allocates the needed reductions to point and nonpoint sources within the watershed.
What Corrigan gets wrong is that trading is limited to those additional reductions (pre or post-TMDL) beyond current permit limits that EPA or the states impose when more stringent effluent limits are needed to achieve the reductions under the TMDL. Trading does not and legally cannot allow more loadings from permitted entities. Under a trading program, point sources have the option of paying for more costly technical solutions or paying for credits generated from another’s voluntary actions to reduce pollution elsewhere in the same watershed. Therefore, the notion that all these hotspots are going to materialize under a trading program and impact low-income people is pure and unadulterated fiction. Hotspots can’t possibly happen, and FWW has never identified a single case where one has occurred. Even the DC District Court in dismissing FWW’s lawsuit against EPA dismissed FWW’s concerns.
The creation of “hotspots” by the issuance of such permits is neither actual nor imminent. There is no indication that the trading and offset programs supported by – but not required or “authorized” by – the EPA will result in the creation of “hotspots” of pollution. The plaintiffs offer no support beyond their own conclusory allegations that “hotspots” have been, or necessarily will be created by the offset and trading program. They describe “hotspots” as areas “where increased discharges of pollutants will occur resulting in water quality that is worse than other areas in the watershed.
Judge Rudolph Contreras went on to drop the following footnote:
Plaintiffs do not explain whether this term is a term of art that derives from the CWA, its implementing regulations, or the case law interpreting them. In fact, it is not clear that the creation of a “hotspot” necessarily violates the CWA.
What this all boils down to is to how best to achieve environmental protection. That is, do we achieve environmental protection through more federal regulations and government control or through a thoughtful mix of regulations and market-based approaches? Do we use only sticks to achieve environmental outcomes or a combination of sticks and carrots? The fundamental error that FWW makes is its belief that the federal government offers the best solution and that only through more government control will the environment be protected. The simple fact is that there are trillions of small and diffuse sources of water pollution, e.g., small farmers, rooftops, driveways, and parking lots, that simply do not lend themselves to EPA permits or control. EPA simply cannot regulate every source of pollution, nor should we expect it to do so. What EPA can do and has done in the context of water quality trading is allow the states to figure out the best policy solutions and most cost-effective ways to achieve environmental restoration. EPA should be applauded for allowing states and communities greater flexibility to comply with costly but important federal mandates.