7-27-99 GLTN Conference Call

Great Lakes Trading Network

Conference Call Summary

July 27, 1999

List of Participants

Welcome to Katy Chamberlain who is a student intern at URS Greiner Woodward Clyde Consultants in Oakland, CA. Katy is assisting the Regional Water Quality Control Board in its efforts to implement pollution prevention measures for the San Francisco Bay basin. Of interest to the GLTN are efforts to reduce mercury mass loadings through offset trading as part of a TMDL for the Bay. Katy’s presentation appears as an addendum to this summary.

Discharge of mercury by municipalities and industry is minimal. There is also a lack of data supporting the need to change waste load allocations. Reductions are targeted at abandoned mines because few have any identifiable owners and no funds are currently available for cleanup. POTW’s have a 10:1 dilution credit for deep water discharges. This credit may be eliminated so they will have to resort to trading.

One of the difficulties in quantifying mercury for trading is that the TMDL may call for achieving a narrative standard (concentration in fish tissue) rather than a numeric standard. Because of this difficulty, the tissue standard may be overturned. In the meantime, however, reductions may have been sufficient enough to lift the fish advisory.

Another difficulty in quantifying mercury is that it is released to water from sediments. This component will not be included in the total load and will not be considered background. Mercury in sediment will, however, be is considered a source and will be in its own category.

The 3:1 trading ratio allows for a margin of uncertainty and, given the nature of mercury, may be increased but will not be decreased. The level of uncertainty is due to the lack of available data and much of the work thus far has been based upon estimates. These estimates will be revised over time.

Trading will not take place until it is acceptable for those in the region. Trading and other pollution prevention initiatives have encountered resistance.

Mercury is one toxic substance which has potential for cross media trading because it is subject to atmospheric deposition. One suggestion is to inventory what percent of mercury is due to atmospheric loading (a current estimate is 25%), get a handle on direct industrial emissions to the air, and drive down the costs to reduce mercury emissions through trading.

A question of geographic significance is how to get the Central Valley region of the state involved in pollution prevention initiatives. (A significant amount of non-point source loading originates in this region.) The San Francisco Bay region cannot allocate NPDES loadings in this region. In addition, each will be under a separate TMDL. If trading between the two regions is implemented, however, greater reductions of loading to the bay will result.

One suggestion is to have regions set boundary conditions. In the air program this is achieved by finding loadings attributable to direct emitters in the one region and subtracting that amount from the total loading.

Define boundary conditions and design a reduction program around that value as a baseline. This provides a level of equity to the program. Long Island sound has a similar approach and is identifying “in-basin” and “out-basin” sources. This approach helps in having a more comprehensive accounting of what the total loading to the system is, identifying programs for reductions already in place, and determining the potential for trading.

As those on the network are aware, Chuck Fox expressed a willingness to meet with GLTN representatives to discuss issues related to trading. The group decided the best approach is to ask for 2 hours to give a brief background to the GLTN, discuss positive results and lessons learned for each project represented on the network, and identify policy issues which affect these projects.

One point to be made from the perspective of the network is that trading will occur in all types and sizes of watersheds. The number of factors to consider when explaining trading to a wide range of stakeholders across the country is overwhelming. A second point to be made is the importance of trading in a framework allowing for voluntary reductions in attainment waters.

Dave Batchelor will prepare a letter and attachments introducing those who will participate in the meeting and briefly summarizing the projects. Plans are to have Dave Batchelor, Bruce Johnson, Mark Kieser, Bob Moore, Bob Norwood, Ronda Sandquist, and Mark Tedesco represent their respective projects/programs. Management level staff for Minnesota and Wisconsin will be asked to attend as well.

Dave Batchelor, Bruce Henningsgaard, Cy Jones, Mark Kieser, Mahesh Podar, Ronda Sandquist, and Claire Schary, have volunteered to serve on the GLTN Conference Planning Committee.

The next conference call is scheduled for Thursday, August 26, 1999 from 1-3 p.m. Eastern time.

PRESENT STATUS of OFFSET TRADING and POLLUTION PREVENTION in SAN FRANCISCO GLTN CONFERENCE CALL

The San Francisco Bay Basin is presently listed on California State’s 303d list for mercury as well as other pollutants. The mercury watershed council was created by the Regional Water Quality Control Board to evaluate TMDL development and to examine possible options to reduce mercury mass loadings to the Bay. The council has been divided into three workgroups: one to review and offer advice for TMDL development, one to develop a virtual elimination policy and examine pollution prevention options, and one to examine and help develop a mass trading program. Within the next six months, the mercury watershed council will go before the Regional Board and propose a finalized TMDL report, attempting to include the input gathered from the interested parties. As of now, the vision for the TMDL is to create qualitative criteria for mercury discharges rather than a numeric value, because of the nature of mercury sources to the Bay.

The TMDL review workgroup is developing a list of issues they feel the council and the Regional Board need to resolve and develop as part of the TMDL. This list includes development of a reduction strategy that addresses the “real” sources, a Baywide conceptual model for mercury, clear linkage to the TMDL work being done in the Central Valley Region that drains to the Bay and identification of resource and research needs.

The pollution prevention group is working on a virtual elimination policy and identifying high priority action items, such as thermometer take back programs, fluorescent lamp recycling and reductions in mercury from dental amalgam. The workgroup is considering trying to include these kinds of programs as a mandatory part of a discharger’s NPDES permit as one means towards mercury reduction in the discharges. Implementing these P2 programs might also be a qualifying condition for the privilege of trading or simply in addition to current NPDES status.

The offset trading group is still in the stages of discussing whether an offset program is desirable or even feasible within the Basin. Presently the workgroup is examining work being done elsewhere with effluent trading to see how many of the common issues have been addressed. However, most trading programs examined are designed for nutrient trading or have not produced non-nutrient trades of a similar nature. The program is also trying to develop a set of principles that can be agreed upon by the stakeholders. The Regional Water Quality Control Board has already developed basic guidelines, which require further development to include the ideas and concerns of interested parties. The Regional Board is eager to include stakeholder input, so that the final program will attract participants rather than contention. This program would, most likely, be the first of its kind and the Regional Board wants to examine all issues thoroughly before following through on such an innovative program.

In the original offset program proposal, the Regional Board proposed that trading occur between point and non-point sources. Non-point sources consist mainly of inactive mines that have been “abandoned” within the San Francisco Bay watershed and the adjacent Central Valley Region which drains into the Bay. Mine loadings are estimated to contribute as much as 30% of mercury loadings to the Bay. Participating point source dischargers would most likely be POTWs and major industrial dischargers. It is thought that POTWs would have the largest interest in trading. This is because the load reductions from the draft TMDL hinges on the elimination of dilution credits for these discharges. POTWs are prime candidates for trading, because their loadings to the watershed are already limited. Even though point source loadings to the Bay are limited, it is thought that upon completion of the TMDL, large reductions will be required of these point source dischargers with which they will not be able to comply without investing in expensive equipment and technology. The original trading program is designed so that point source dischargers who can not meet the loading reductions required of them under the TMDL, will be able to perform remediation activities elsewhere in the watershed to offset their loadings. Credits will be generated at a ratio of 3:1 (remediated: discharged) to produce overall reductions in loadings. This 3:1 ratio also accounts for uncertainty in loading reductions produced by mine remediation. The Regional Board staff has hypothesized that mercury within the Bay, including inert chemical forms, often found in monitoring data, converts to bioavailable forms. From this it was extrapolated that trading specific bioavailable forms of mercury need not be accounted for in the guidelines. However, some stakeholders believe that this is not the case and the bioavailability of mercury needs to be considered before trades can be approved.

Discount factors and ratios are not the only problems that have been encountered in designing a trading program for the Bay. The primary issue of attention within the offset trading group is the issue of bioaccumulation. As of yet, it is unknown whether mercury loadings from point sources create “hot spots” of high mercury concentrations, regardless of the amount of pollutant discharged. Until this information is gathered, it will be difficult to develop a program that is equitable and protects the watershed. This issue is at the heart of the question of where trading will be allowed. Because the Bay is a complex watershed with many contributing factors, it may be necessary to spatially define areas within which trading can occur so as not to create large discontinuities in water quality between areas. Within this question lies the smaller question of whether trading should be allowed outside the watershed to remediate mines that discharge pollutants that drain to the Bay?

Another issue that has been examined is the issue of how to monitor and generate credits? To measure loading reductions from a nonpoint source creates quantification problems. In the present design of the program, credits are generated before remediation activities are complete. This can create uncertainty in knowing whether the amount of credits generated are the actual amounts of reductions in the waterbody. This issue is combined with the issue of who will monitor the reductions that take place and what will be the penalty if the proposed reductions are not the actual reductions.

In conclusion, the issues raised by stakeholders and the workgroups focus on environmental issues. The workgroups are attempting to resolve these issues, but need more data to assess many of the questions. Right now there are limited amounts of data and limited studies that are proposed and actually funded, thus many of the issues have yet to be addressed. The TMDL will provide a significant portion of the data required, but it is unclear whether this amount of data will be sufficient to address the issues involved with developing a trading program for a toxic such as mercury.

For more information please contact Lila Tang at the Regional Water Board at 510-622-2425 or Lwt@rb2.swrcb.ca.gov

Presented by Katy Chamberlain, student intern at URS Greined Woodward Clyde Consultants, Oakland, CA. (510-874-3229)