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EPA/OW RIN: 2040-AG02 Publication ID: Fall 2020 
Title: ●Water Quality Trading Under the National Pollutant Discharge Elimination System (NPDES) Program 

EPA is requesting comments on a proposed regulation to clarify that NPDES permitting authorities are allowed to use market-based mechanisms including water quality trading in establishing water quality-based effluent limitations in permits.

Agency: Environmental Protection Agency(EPA)  Priority: Other Significant 
RIN Status: First time published in the Unified Agenda Agenda Stage of Rulemaking: Proposed Rule Stage 
Major: No  Unfunded Mandates: No 
EO 13771 Designation: Other 
CFR Citation: 40 CFR 122   
Legal Authority: Not Yet Determined   
Legal Deadline:  None

Statement of Need:

EPA strongly supports market-based mechanisms to accomplish its mission to protect human health and the environment. Market-based mechanisms include water quality trading under the Clean Water Act (CWA), an approach that can promote water quality improvements at lower cost than more traditional regulatory approaches. The Agency has long interpreted the CWA to allow pollutant reductions from water quality trading and offsets to achieve compliance with CWA regulatory requirements including water quality-based effluent limitations (WQBELs). Neither the CWA nor the EPA's implementing regulations explicitly address water quality trading. In the absence of explicit statutory language or regulations, EPA has provided guidance for permitting authorities and stakeholders to consider when developing market-based programs, including water quality trading. (See Water Quality Trading Policy (EPA, 2003) ( and Water Quality Trading Toolkit for Permit Writers (EPA, 2009) ( However, EPA is aware that despite its efforts to support these types of programs, they have not been implemented to their fullest potential. In response, the Agency is requesting comment on a proposed regulation to clarify that NPDES permitting authorities are allowed to use water quality trading and other market-based approaches in establishing WQBELs in permits to meet applicable water quality standards.

Summary of the Legal Basis:

Trading and other market-based approaches are authorized under section 402(a)(2) and 301(b)(1)(C) of the Clean Water Act.


The Agency will analyze alternatives at the time of the proposal.

Anticipated Costs and Benefits:

This regulatory provision will reflect existing practice and authorities and will not impose additional costs.


The Agency will analyze the risks of any updates or rulemaking.

Action Date FR Cite
NPRM  01/00/2021 
Final Rule  09/00/2021 
Regulatory Flexibility Analysis Required: Undetermined  Government Levels Affected: Federal, Local, State, Tribal 
Federalism: No 
Included in the Regulatory Plan: Yes 
RIN Data Printed in the FR: No 
Agency Contact:
Kevin Weiss
Environmental Protection Agency
Office of Water
4203M, 1200 Pennsylvania Avenue NW.,
Washington, DC 20460
Phone:202 564-0742
Fax:202 564-0717