The Clean Water Act (CWA) has been in the press a lot lately, as many companies struggle to meet its demands. With the powers granted by the Act expanding in scope, investors may want to consider companies that are well positioned to benefit from its increased implementation. In this article, we’ll take a look at the CWA and its implications, as well as potential investment opportunities.
What is the Clean Water Act?
According to the Environmental Protection Agency (EPA), the Clean Water Act establishes the basic structure for regulating discharges of pollutants into U.S. waters and regulating quality standards for surface waters. These laws make it unlawful to discharge pollutants into navigable water unless a permit is obtained from the organization.
The EPA’s National Pollutant Discharge Elimination System (NPDES) permit program controls these permits that can be issued to companies and other organizations. While individual homes that use septic systems don’t require permits; industries, municipalities, and other facilities must obtain permits if their discharges go directly to surface waters.
Recently, the CWA has controversially grown to include the regulation of water itself as a pollutant, enabling the EPA to regulate the flow of water. For instance, the EPA proposed a plan to deal with sediment in the Accotink Creek aggravated by storm water runoff from Interstate 495, issuing a Total Maximum Daily Load limit to control the amount of water flowing.
Permitting & Prosecutions on the Rise
The EPA has been consistent in prosecuting companies and organizations under the Clean Water Act over the past several years. For instance, BP plc (NYSE:BP) and its partners are facing between $891 million and $3.5 billion in fines imposed under the CWA on the 810,000 barrels of oil blown out from its Macondo well that entered U.S. waters.
New regulations may also require industrial farms to obtain permits under the NPDES, which could significantly expand the CWA’s jurisdiction. A Superior Court in Hyde County, NC recently ruled that the state has the authority to require Rose Acre Farms to be regulated under the federal CWA because of pollutants released from ventilation fans in its henhouses.
These cases illustrate the CWA’s expanding jurisdiction, with prosecutions targeting increasingly larger organizations on the rise. As a result, companies are seeking out new solutions to safely and affordably dispose of waste into water supplies, or to clean wastewater before it’s released into existing water supplies.
Investing in the Clean Water Act
There are many investment opportunities to capitalize on the increasing reach of the Clean Water Act. Companies like American Water Works Company Inc. (NYSE:AWK) provide wastewater treatment services for municipalities, but those targeting environmental remediation may be better targets to capitalize on CWA regulation.
Clean Harbors Inc. (NYSE:CLH) is perhaps the best-known play in the sector, providing environmental, energy and industrial services throughout North America. Investors started taking note of the company after the BP plc (NYSE:BP) oil spill, when the company was retained to help mitigate damages and pollution-related fines.
While there are many other larger companies in the space, like US Ecology Inc. (NASDAQ:ECOL), smaller companies offer investors larger potential upside. After all, it’s easier for a $1 million company to double its market capitalization than a $1 billion company to do the same, although these companies entail additional risk that should be carefully considered.
BioLargo Offers a Promising Opportunity
BioLargo Inc. (BLGO) is focused on solving some of the world’s most important problems using Nature’s Best Solution®, free iodine. Their version of free iodine is both non-toxic & non-staining and yet is also a broad-spectrum disinfectant with no known microbial resistance. Since Iodine is also an essential nutrient, the combination of efficacy and safety makes it perfect for applications that range from wound care and household products to advanced industrial applications like managing contaminated water.
The company’s Cupridyne® technology combines micronutrients with water from any source to deliver free-iodine on demand in controlled dosages, balancing efficacy of performance with concerns of toxicity. With its new Advanced Oxidation System, iodine can be electrochemically created to eliminate dangerous contaminates, nano-sized particulates and even fully soluble contaminates for any water treatment system.
Currently, the company is testing these systems in a number of different industries, including oil and gas exploration, as a founding member of a research chair at the University of Alberta, working in cooperation with the Canadian government. Meanwhile, Vikram Rao, previously from Halliburton Company (NYSE:HAL), and Harry DeLonge, from PepsiCo Inc. (NYSE:PEP) provide the management experience necessary to bring these products to fruition.