Pollution Trading

The Sierra Club opposes use of trading. In all cases, if a program is initiated, there must be full public notice, disclosure, participation, oversight, accountability, verification, and effective enforcement, with rights of appeal for affected citizens and administrative and judicial remedies.

The following conditions must apply:

  1. that the trade produces overall gains in ambient environmental conditions;
  2. that such gains satisfy goals set forth in approved government plans;
  3. that reductions for trades are beyond current legal requirements, with indicated reductions being greater than 1:1 as a hedge against uncertainty and non-compliance;
  4. that the required reductions be new (e.g., not be taken from unused allowances);
  5. that trading should be limited to pollutants of the same kind;
  6. that no credit be granted for reductions from sources closed down prior to the proposal for the trade;
  7. that the trade occur within the same local physiographic unit (e.g., watershed or airshed), except that for the purposes of carbon dioxide, the entire atmosphere is the airshed*; 
    *However, a CO2 trade should not be allowable if air quality could be worsened locally or regionally as a result of the trade (because of associated pollutants such as NOx). [That outcome would violate various other provisions of this policy (e.g., it would like run afoul particularly of either #1, C, or D.).]
  8. that in all cases monitoring be provided by the seller, with results reported to regulators and made public, to assure that the required reductions actually occur; increased costs to the public of surveillance should be covered by permit fees;
  9. that data on these reductions is provided to the public in an easily understood format (electronically as well as in hard copy);
  10. that whoever cheats be punished by severe fines that are applied automatically and that surety bonds be provided, where appropriate, as an incentive to perform; and that buyers who rely on unwarranted credits also be subject to fines;
  11. that information on violations remain public information and not be subject to "audit privilege" or other forms of confidential business information; and that compliance records for all firms engaging in trading be made available to any member of the public (and not be subject to "audit privilege"), including records on inspections and violations;
  12. that violators will have their allowable releases reduced in the year following the violation by the amount of their excess releases; where the amount of this excess is unknown, it should be assumed to be the maximum physically possible;
  13. that the trader be competent to make the required reductions and that firms that have contributed materially to ambient problems not be eligible to engage in trading;
  14. that chronic cheaters be excluded from trading programs;
  15. that the government retain the right to further limit allowable releases, without needing to compensate the releasor. Permission to trade must not establish a right to pollute, nor any property interest in material that is released.

Under no circumstances should trading arrangements lead to the following:

  1. Violation of ambient standards, expanded pollution at grandfathered sites (i.e., from old sites granted legal exemption from meeting standards), nor significant deterioration in the quality of air and water which has been good, nor degradation of soils, ecosystems or other public values;
  2. Increased releases of any of the following categories of toxics (measured at the point of release): -- heavy metals -- neurotoxins -- known or suspected carcinogens -- known or suspected endocrine disrupters -- known or suspected mutagens, or -- persistant or bioaccumulative agents;
  3. Backsliding on pollution control obligations, nor on best management practices, nor facilitate irresponsible conduct;
  4. Build up of levels of pollution in Clean Air Act non-attainment areas, nor make conditions worse in such areas;
  5. Monopolization of pollution allowances;
  6. Trading in, and between, communities that disapprove of trades that affect them. Trading should never proceed without assessing the cumulative impact on communities subject to trading that involves multiple sources; public review and participation should be provided.
  7. That any community be disproportionately burdened by the results of the trade, especially those communities that are already disproportionately burdened by toxics, or other noxious land, water or air pollutants.

Adopted by the Board of Directors, February 20-21, 1999.