Exploring Trading to Reduce Impacts of Acid Mine Drainage: Cheat River, West Virginia Evan Hansen: Downstream Strategies, LLC Paul Ziemkiewicz, Jerry Fletcher, Todd Petty: W. Va. University Gordon Hester: EPRI Martin Christ, Rick Herd

The Cheat TMDL Acid mine drainage: acidity and metals Abandoned and active coal mines 55 segments of Cheat and tributaries on 303(d) list TMDL finalized in 2001 Few steps taken toward implementation

Difficulties in implementing the Cheat TMDL Point sources Lack of agency experience writing coal NPDES permits with WQBELs Nonpoint sources Reductions often huge, difficult, expensive Funding is scarce No implementation plan

A Cheat trading framework Help implement the Cheat TMDL Reproducible for: acid mine drainage other pollution problems due to orphan sites Useful as West Virginia develops a trading program

Goals and Objectives Make TMDL implementation an effective, self-sustaining, locally-driven process Develop an approach with: clear watershed remediation objectives funds for management and remediation projects minimized friction among parties focused effort on prioritized watershed remediation needs

Remediating on a watershed basis Requires: organization, planning, and management

The Crux Poor fit between remediation and regulatory strategies Most investment toward fraction of the problem Millions for construction, pennies for management Need higher lever level of organization and management to coordinate the many funding and program opportunities Management takes professionals and they cost money

Regulation vs. remediation The cost of removing a ton of acid load from acid mine drainage increases as the discharge is cleaned up: ~90% of AMD comes from orphan sites The TMDL requires tightening of NPDES discharge limits (and reductions as orphan sites) May cost a permittee thousands of dollars to remove 1 ton of acid load The same money spent on an orphan site may remove 50 tons

Managing Investments in Watershed Improvement Investments can be fit into a single watershed plan Investments can be compared: Environmental benefits: Tons of pollutant removed Ecological benefits: Stream miles with recovered aquatic life Trading can play a role

ChallengeSolution Few permitted coal discharges remain in watershed; most already meet TMDL WLAs. Allow cross-pollutant trades. Need common currency to evaluate cross- pollutant trades. Use “ecounits” to ensure that cross- pollutant trades result in net ecological benefit. Difficult to perform ecological analyses Establish Watershed Mgt. Authority to lower transaction costs and guide trading investments toward priorities.

ChallengeSolution Hard to ensure that purchased credits resulted in real, measurable improvements Allow purchase of credits banked from public AMD remediation investments.

Proposed def’n of ecounits WV Stream Condition Index (benthic macroinvertebrates, 0-100) X Stream segment area (length x width)

How to calculate the cost of an ecounit? 1. Calculate how impaired the watershed is now (how many ecounits are recoverable) 2. Calculate cost to fully remediate AMD 3. Divide to get average cost of recovering an ecounit AVERAGE COST IS IMPORTANT

Watershed Management Authority Develop and implement the plan Coordinate public remediation investments Solicit and evaluate trades Recommend trades to state regulatory agency Build, operate, and maintain remediation projects Manage trust fund and credit bank

Funding the Process Trust fund will accept cash paid for credits Portion of trust fund available to develop and update the plan, pay staff, and for other professional services Most spent on additional remediation to generate more credits

How trading might work for the Cheat Authority develops plan for TMDL implementation: remove about 11,000 tpy acid load from lower Cheat Current public AMD remediation projects generate credits: Friends of the Cheat Army Corps Clean Water Act 319

The Albright Power Plant Thermal pollution variance may not be renewed Thermal pollution affects about one mile of the Cheat during low flow periods in late summer Without variance, the utility must close the plant, install cooling towers, or negotiate a trade Cost of cooling towers in multiple $10m

First cross-pollutant trade? In return for variance, utility would make payment Amount based on: Ensuring net ecological benefit (ecounits) Trading ratio Authority would use funds to remediate AMD and generate more credits

Summary: Key aspects of Cheat trading program Integrated into Watershed Management Authority Watershed management plan guides investments Trades are one of many types of investments Cross-pollutant trades, with net ecological benefits and appropriate ratios Credit bank, capitalized by public investments