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EPA supports market-based mechanisms to accomplish its mission to protect human health and the environment especially with regard to nutrient management. Market-based mechanisms include water quality trading under the Clean Water Act (CWA), an approach that may cost less 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. 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. 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 proposing a regulation to clarify how water quality trading and other market-based approaches may be used by NPDES permitting authorities in permits to meet applicable water quality standards. In addition to this rulemaking, EPA is updating its existing policy to address water quality trading baseline” issues for nonpoint sources in watersheds with EPA established or approved Total Maximum Daily Loads (TMDLs).