AN ANALYSIS OF NUTRIENT TRADING AS A MECHANISM TO MEETING TOTAL MAXIMUM DAILY LOADS FOR NAVAL INSTALLATIONS IN THE CHESAPEAKE BAY WATERSHED

The Department of Defense is one of the largest Federal landholders in the Chesapeake Bay watershed with over 420,000 acres spread among 68 installations. Navy Installations located within the Chesapeake Bay watershed face constraints on construction, training operations and higher facility costs due to their impact on water quality. The Navy manages water quality and nutrient discharge, into the bay through a number of mitigation efforts to include upgrades to waste water treatment plants, adoption of best management practices (BMP’s) and changes to land use. Navy installations are required to meet nutrient discharge requirements established in state Watershed Implementation Plans. Nutrient trading, is a new market based tool some states are employing to meet these requirements. Nutrient trading is a form of exchange (buying & selling) of nutrient reduction credits. A nutrient market works by establishing a mandatory cap on the combined pollution loads from multiple sources while allowing users to exchange of pollution allocations between sources. This paper examines the feasibility of nutrient trading by the Navy to meet TMDL requirements. A review of current legal environmental statues and Department of Defense policies was conducted to determine the barriers, policy, and economic considerations for the Navy to participate in the Virginia Nutrient Credit Exchange. Data was collected from the Naval Surface Warfare Center Dahlgren VA, and Marine Corp Base Quantico VA, and various technical reports to assess the viability of nutrient trading both to meet total maximum daily load (TMDL) and Department of Defense (DoD) environmental requirements. The study found that legal statutes and DoD policy would permit trading between Navy facilities; however, federal statutes and policy changes would be required for the Navy to participate in the Virginia Nutrient Credit Exchange and other state nutrient markets. Additionally assuming other Federal Agencies and Departments require a similar legislative change to allow the purchase of nutrient offsets, other statutes should be considered to address this issue in a consistent manner for all Federal entities. Trading may not meet the Navy’s other environmental requirements for low impact development (LID), and employing best management practices and other regulatory controls to meet TMDL requirements creates additional environmental benefits that should be considered