# CHAPTER 3
Issue Category: EPA’s Economic Analysis

Pages 3- 436 – 3- 452

Response to Public Comments

Water Quality Standard Regulatory Revisions

August , 2015

40 CFR Part 131
Docket #: EPA

- HQ

- OQ

- 2010

- 0606

This document is part of a larger document.Chapter 3 – Response Essays 12.a – Econ – Gen Comments



## Essay **12.a – Econ**  **omics: General**  **Comments**

**A. General** 

The U.S. Environmental Protection Agency ( EPA ) received many general comments about the economic impacts of the final Water Quality Standards (WQS) rule. These comments expressed concern about EPA’s fulfillment of its analytical requirements pertaining to the final rule, the additional burden to

state s and authorized tribes in administering the WQS programs during funding shortfalls, the set of cost categories included in and excluded fr om EPA’s economic analysis (EA) ( including both direct costs to states and authorized tribes and potential indirect c osts to dischargers), and the types and magnitude of benefits arising from implementation. This essay responds to these comments.

With regard to the comments related to the Regulatory Flexibility Act (RFA) and the Unfunded Mandates Reform Act (UMRA) , see E PA’s response to code 13.a and sections IV.C and IV.D in the preamble to the final rule.



### B **. Regulatory I**  **mpact A**  **nalysis**

Commenters said that the rule should have at least a proportionate benefit

- cost ratio in order to justify
the additional burden on states (to avoid wasting resources for minimal gain). EPA disagrees with the commenters’ conclusion that a rule is not justified if benefits are not estimated, and on the order of the costs estimated.

Exec utive Order 12866 (September 30, 1993) states: “ Costs and benefits shall be understood to include both quantifiable measures (to the fullest extent that these can be usefully estimated) and qualitative measures of costs and benefits that are difficult to quantify, but nevertheless essential to consider. Further, in choosing among alternative regulatory approaches, agencies should select those approaches that maximize net benefits (including potential economic, environmental, public health and safety, and other advantages; distributive impacts; and equity), unless a statute requires another regulatory approach. ” Exec utive Order 13563 (Jan. 18, 2011) also states: “[E]ach agency is directed to use the best available techniques to quantify anticipated present and future benefits and costs as accurately as possible. Where appropriate and permitted by law, each agency may consider (and discuss qualitatively) values that are difficult or impossible to quantify, including equity, human dignity, fairness, and distributive impacts.”)

.

EPA meets these requirements by estimating the costs and benefits of the final rule to the fullest extent that they could be usefully estimated. EPA quantitatively estimated the burden and cost associated with the final rule to the extent they can be usefully estimated. EPA qualitatively estim ated the benefits of the final rule , which represents the fullest extent to which they could be usefully estimated. EPA’s inability to quantitatively estimate ben efits preclude s a direct numerical comparison between costs and benefits. However, as specifie d in the above Executive Orders, EPA consider ed (and discuss ed qualitatively) benefits that were difficult or impossible to quantify

. The final rule advance s the goals of
the C lean W ater A ct (CWA) by improving states’ effectiveness in restoring the chemical, physical, and biological integrity of the nation’s waters. The final rule also ensure s public transparency, improve s information provision and use, and enhance s state and tribal efficiency in administering WQS programs.
EPA believes the final rule maxim izes these benefits while minimiz ing burden and cost.Chapter 3 – Response Essays 12.a – Econ – Gen Comments



### C **. Burden**

EPA received a number of comments asserting that the rule will create substantial new burden for states and authorized tribes, and that funding levels for state and tribal governments are not sufficient to meet the new requirements. Some commenters note d that states and authorized tribes are already facing funding shortfalls in administering burdensome existing WQS programs [ including the use attainability analysis ( UAA ) process]. The commenters also stated that the rule would impose additional burden during fragile economic times, which would result in potential job losses, decrease d economic viability of coal and other industries, and decreased cap ability for industry to compete . Furt her, commenters state that the burden s associated with the rule are not justified by the potential benefits. Some commenters assert that large amounts of labor would be expended for intuitive or inconsequential findings (e.g., extensive analysis to demonst rate that ephemeral streams do not support aquatic life),
would divert limited resources away from substantive environmental issues, and that decisions would be based on technological considerations rather than on the potential benefits associated with an action. Commenters assert that state and tribal resources would be better allocated elsewhere.

EPA generally disagrees with these comments. As stated in the preamble to the final rule, the final rule
advance s the CWA goal to “restore and maintain the chemi cal, physical, and biological integrity of waters of the United States” and to “achieve, wherever attainable, an interim goal of water quality which provides for the protection and propagation of fish, shellfish, and wildlife and for recreation in
and on t he water” (CWA sections 101(a) and 101(a)(2)). The incremental data collection, analysis, and reporting requirements for state and tribal WQS programs are reasonably necessary for EPA to me et its oversight responsibility under the CWA and for the goals and requirements of the CWA to be achieved

. By helping to avoid unnecessary and preventable water quality degradation, the final rule help s states to avoid costly cleanup and restoration efforts , thus minimizing their burden (and likely the burden of dischargers) in this respect over the long

- term . The rule provide s additional clarity and efficiency for
states and authorized tribes when implementing their WQS programs, resulting in additional cost savings. EPA received and agrees with comments that agree with EPA ’ s conclusion that the cost of the
rule may be partially offset by the reduction in regulatory uncertainty and consequent increase in overall program efficiency from the rule.

EPA estimates the administrative cost associated with the rule’s requirements to be approximately $2.7 million to $5.3 million in one

- time cost ( phased

- in over time) and $5.2 million to $19.7 million annually after implementation, distributed across 96 states and authorized tribes with CWA (and in the case of tribes, EPA

- approved ) WQS programs. Because EPA made several conservative assumptions when developing the se estimates , these costs may be overstated

.
EPA does not agree with commenters ’ claim that these costs represent a substantial new burden for affected states or authorized tribes, or are likely to result in job losses, significant adverse industry impacts, or decreased industry competition. These c ommenters did not provide any data , information, or analys e s supporting such claims of job losses and decreased competition. On the other hand

, poor water quality is a substantial environmental problem , and pollution prevention is less costly and more efficient than clean up and remediation.

EPA also does not agree with commenters ’ asserti on that the rule will require states and au thorized tribes to make technology

- based or very costly WQS determinations for minimal gains in water quality. The CWA and existing WQS regulations require criteria to be based on sound science. The rule does not change this requirement . In conditions of e conomic hardship (e.g., substantial and widespread economicChapter 3 – Response Essays 12.a – Econ – Gen Comments

and social impacts), existing regulations already provide mechanisms to avoid such impacts. The additional clarity in this rule will help achieve and ensure attainment of WQS in surface waters

. As stated above, EPA d id not speculate as to potential future changes to state or authorized tribal regulatory requirements on dischargers. This is because each state and tribe is unique and dealing with different waters and circumstances, and the s tates and authorized tribes continue to maintain the WQS program flexibility they have under the existing federal regulations to meet their WQS in the most cost

- effective

manner.



### D. **Direct C**  **osts**

Several commenters stated that EPA greatly underestimate s the cost and labor needed by states and authorized tribes to implement the rule, and suggested that EPA reach out to states and authorized tribes to assist in cost estimates.

In response to comments received on the proposed rule EA , EPA solicited additional input from states and authorized tribes, and the public . For the EA of the rule , EPA used th e feedback from this process to revise labor estimates for several rule requirements. See the EA for the Final Rule and Preamble to the
Final Rule.

In addition to this ge neral comment, commenters asserted that EPA inappropriately excluded the following categories of cost t o states and authorized tribes:

Determin ing H ighest A ttainable U se through U se A ttainability A nalyses

. EPA d id not exclude this cost category. EPA estima te d the burden and cost for states and authorized tribes to determine the highest attainable use ( HAU ) in section 3.2.3 of the EA of the rule. Based on stakeholder input, EPA estimate d that as much as 30 percent additional effort may be required to identify the HAU when conducting a
UAA compared with the effort associated with conducting a UAA that does not identify the HAU. EPA estimated that 15 states and authorized tribes do not consistently identify the HAU w hen adopting new or revised WQS based on a required UAA. EPA estimate d these costs to be approximately $7,400 to $14,700 annually for these 15 states and authorized tribes.

Conducting U se A ttainability A nalyses W hen A ssigning D esignated U ses to W aters ( f or U ses N ot S pecified in 101(a)(2)). Under existing WQS regulations ( section 131.0(j)), states and authorized tribes already must perform a UAA when designating uses other than those specified in section 101(a)(2) of the CWA and/or when removing designated uses specified in CWA section 101(a)(2). As such, this is not
an incremental burden or cost associated with this final rule.

Triennial R eviews of W ater Q uality C riteria. EPA did not exclude this cost category. EPA estimated the burden and cost for states an d authorized tribes to implement the incremental triennial review requirements (specifically, to document an explanation in cases in which the state or authorized tribe chooses not to adopt new or revised criteria for any parameter for which EPA has publis hed new or updated CWA section 304(a) criteria recommendations) in section 3.2.4 of the EA of the rule. EPA estimated the annual cost for this revision to be approximately $2,200 to $11,000 for each of the 96
states and authorized tribes.

Additional Tier II A ntidegradation R eviews. EPA d id not exclude this cost category. EPA estimate d the burden and cost for states to conduct additional Tier II antidegradation reviews in section 3.2.5.1 of the
EA of the rule . Based on stakeholder input and available data on the ratio of antidegradation requests toChapter 3 – Response Essays 12.a – Econ – Gen Comments

total dischargers, EPA es timate d that states and authorized tribes will conduct an additional 258 antidegradation reviews annually at a cost of approximately $1.7 million to $4.9 million per year

.

Conducting A lternatives A nalyses for L owering H igh W ater Q uality. EPA did not exclude this cost category from the EA of the rule. The final rule requires states to evaluate a range of practicable alternatives that prevent or lessen degradation of the propo sed activity during each Tier II antidegradation review. For some states and authorized tribes, this may increase the level of effort needed to process Tier II reviews. Section 3.2.5 of the EA of the rule describes the burden and cost
associated with this provision of the rule. EPA estimated that 461 antidegradation reviews may have more extensive requirements associated with them as a result of the final rule with a total annual cost of approximately $692,000 to $2,028,000.

Developing M ethods for I mplement ing A ntidegradation P olicies. EPA did not exclude this cost category. The final rule requires states and authorized tribes to provide an opportunity for public involvement when deciding which waters will receive Tier II antidegradation protection when usin g a waterbody

- by

- waterbody approach. This requirement may represent an incremental cost for some states, and EPA described and quantified the burden and cost associated with this requirement in
section 3.2.5 of the EA of the rule. EPA estimated the total o ne

- time cost for each of 43 potentially affected states and authorized tribes to be approximately $7,400 to $14,700. Additionally, states and tribes may incur an incremental burden associated with the final rule requirement that they provide an opportunity for public involvement when developing antidegradation implementation methods. EPA estimated these costs to be approximately $700 to $1,500 annually for each of 43 potentially affected
states and authorized tribes.

Providing J ustification for the N eed for W ater Q uality S tandards V ariances, and P roviding
D ocumentation of A ctions T aken to M eet V ariance R equirements. The final rule requires states and authorized tribes to provide documentation to EPA describing the justification for a WQS variance. Estimates of the burden and cost potentially associated with WQS variances (including submission requirements) are provided in section 3.2.6 of the EA of the final rule.

Developing I nterim N umeric C riteria for a W ater Q uality S tandards V ariance

. EPA did not exclude this cost category. Estimates of the burden and cost potentially associated with WQS variances (including identifying the highest attainable condition [HAC] ) are provided in section 3.2.6 of the EA of the final
rule

.
Identifying and D ocumen ting C ost -E ffective and R easonable B est M anagement P ractices for N onpoint
S ources (when G ranting W ater Q uality S tandards V ariances). For WQS variances applicable to a water body or waterbody segment , t he final rule requires states and authorized tribes to submit documentation to EPA identifying any cost

- effective and reasonable best management practices (BMPs) for nonpoint source (NPS) controls related to the pollutant(s) or water quality parameter(s) a nd water body or waterbody segment that could be implemented to make progress towards attaining the underlying designated use and criterion. EPA did not exclude this cost from the EA of the rule, as
described in section 3.2.6 of the EA of the rule. EPA estimated these additional documentation requirements may result in an additional annual cost of $15,200 to $36,800 distributed across 96 states
and authorized tribes.Chapter 3 – Response Essays 12.a – Econ – Gen Comments

State -L evel C ost -B enefit A nalyses. Commenters d id not indicate what specific state

- level co st

- benefit analyses they envision ed themselves or EPA needing to perform. The final rule does not require such analyses. If states adopt their own cost

- benefit analysis requirements, these are supplemental state requirements that exceed federal minimum req uirements and are not an incremental burden or cost associated with this rule.



### E. **Indirect Co**  **sts**

Some commenters expressed concern that EPA has not sufficiently explained the potential impacts of the proposed rule via a meaningful regulatory impact analysi s, and that distinguishing between direct and indirect cost is arbitrary and meaningless. Commenters asserted that it is inappropriate for EPA to “screen out” indirect impacts, and that this results in artificially low estimates of the cost associated
with implementation of the rule. Other c ommenters expressed concerns that the cost of the rule will “flow downhill” to the regulated community, with disproportionate impacts to some industries, and that dismissing these costs as “indirect” is inappropriate, arbitrary, and possibly unlawful. Some commenters
asserted that the indirect com pliance costs associated with implementation of the rule may be very substantial over the life of the required improvements. A commenter stated that after 40 years of CWA implementation

, EPA should be able to estimate costs to the regulated community.

EPA disagrees with these comments.

The final rule addresses implementation of state and tribal WQS programs

. Because some states and authorized tribes currently may not be implementing their WQS programs consistent with the final rule, EPA estimated the potent ial incremental burden and cost to those states and authorized tribes that may need to modify their WQS programs. However, EPA does not speculate as to potential requirements to dischargers that could result from states or authorized tribes revising their WQS programs, such as changes in National Pollutant Discharge Elimination System ( NPDES ) permit conditions (see below for further discussion ). States and authorized tribes continue to maintain the WQS program flexibility they have under the existing federal regulations to meet WQS in the most cost

- effective manner. The rule does not change the section 101(a) and section 303(c)(2) goals of the CWA nor the WQS needed to attain them. The clarifications and specificity regarding WQS program components may even result in cost savings as suggested by some commenters through increased efficiency of some state and tribal WQS programs.

These commenters imply that the final rule will necessarily result in more stringent pollution control requirements for the regulated community. In the 43 years s ince Congress enacted the CWA in 1972, states and authorized tribes have periodically reviewed and updated their WQS. Where those WQS have become more stringent, e.g., more stringent criteria updated to reflect the latest scien ce, the regulated community may have seen their costs increase in terms of receiving more stringent effluent limits in their next NPDES permit

. But where those WQS have become less stringent, e.g., a use removal or a variance, the regulated community may h ave seen their costs decrease in terms of receiving less stringent effluent limits in their next NPDES permit

. These new regulatory requirements will not fundamentally change this framework

. For example, under the final rule, as under the existing regulati on, states do not have to adopt WQS variances, but if they do, they must comply with Title 40 of
the Code of Federal Regulations ( CFR ) section 131.14. If the state asks the regulated community to bear some responsibility , i.e., cost, in making the demonstration necessary to justify the variance, that is the state’s choice, but that is no different than the current framework that has existed since 1972, and at least since 1983 (when EPA last finalized a comprehensive revision to its WQS regulation). The same isChapter 3 – Response Essays 12.a – Econ – Gen Comments

true for designated use removals and antidegradation implementation. Any such costs borne by the regulated community are thus no t attrib utable to this final rule, as the potential for such cost

- bearing has always been the case un der the Act, subject to how the state or authorized tribe chooses to implement its WQS program. Finally , EPA does not speculate on the requirements that states and authorized tribes would require of dischargers as they implement their WQS programs due in p art , as discussed above, to the wide range of flexibilities each state and tribe will choose from in order to incorporate the new requirements into their laws in the most efficient, cost

- effective, reasonable manner possible

. EPA’s Guidelines for Preparing Economic Analyses (2010) recommends assuming full compliance with existing regulatory requirements t o ensure that provisions contained in statutes or policies preceding the regulatory action in question are appro priately addressed and measured. Thus, it

w ould be inappropriate, as the commenters have suggested, for EPA to include indirect costs to dischargers in the EA for this final rule.

C ompar ed to other regulatory actions, this rule does not promulgate specific water quality criteria, implementation pro cedures , or pollution control requirements . Instead, the final rule may, for example,
result in incremental requirements for public involvement, review, and consideration of alternatives when implementing WQS to attain the goals and requirements of the CWA. These provisions do not directly translate into any specific incremental outcomes for dischargers , but could indirectly result in dischargers doing more (i.e., supplying states with information to inform UAAs, alternatives analyses, etc.) . Als o, the costs of attaining WQS in the water bodies themselves are baseline costs to existing WQS regulatory requirements and are not attributable to this rule (i.e., states, tribes, and dischargers were already responsible for these costs under the existing regulation, whether through permits, total maximum daily loads ( TMDLs ) , or other mechanism in order to ensure that the water body attains WQS)

.
Additionally, although some commenters expressed concerns about the scale of potential indirect costs, they did not provide sufficient detail or documentation that would have enabled EPA to conduct a substantive evaluation of or respon d to their estimates of the burden. It is not sufficient to assert that industries will be financially unviable or unable to maintain profitability while protecting water quality
without substantial supporting documentation and evidence.

With regard to the comments related to the discussion of minimum elements for antidegradation implementation methods, see also EPA’s response to code 7.g.ii.



### F. **Benefits**

Some commenters assert ed that the benefits of the rule arise from indirect impacts . T hus

, EPA should either not attribute benefits to the rule because EPA does not estimate the costs of those indirect impacts, or EPA should estimate ind irect costs

.
EPA disagrees with these comments

. EPA does not quantitatively estimate the benefits of the final rule for the purpose of comparing them to costs. Instead, EPA narratively describes some of the incremental

progress the public can expect toward the CWA goals “to restore and maintain the chemical, physical, and biological integrity of the Nation’s waters,” and to achieve “wherever attainable, an interim goal of water quality which provides for the protection and propagation of fish, shellfish, and wildlife and provides for recreation in and on the water .” For example , the benefits section of the EA describes the

a dvantage of having clean drinking water sources instead of needing to treat water from polluted

sources, describes how using clean agric ultural water i s preferable to using polluted water that can harmChapter 3 – Response Essays 12.a – Econ – Gen Comments

crops, and explains how reducing sediment in surface waters is more favorable than dredging reservoirs or filtering for industrial use. The EA also describes how clean water can p rovide larg er and more robust fish populations and enhanc e property values ( although it does not quantitatively estimate them). Finally, the EA discusses the benefits of clean water by calling attention to its general importance to human health, safe recreation, and social welfare. These narrative descriptions are meant to help the public better understand how the final rule help s to achieve the stated goals and objectives of the CWA

.Chapter 3 – Response Essays 12.b – Econ – Rulemaking



## Essay **12.b – Econ**  **omics: Rulemaking**  **Activities**

**A. General** 

Several commenters expressed concern that the U.S. Environmental Protection Agency ( EPA )
underestimates the state authorized tribal rulemaking burden of this rule. One commenter noted that EPA did not provide sufficient information about the sources of labor burden estimates for the incremental requirements. Some cited state

- specific burdens and processes, asserting that EPA did not account for categories of costs that these states will incur. For example, one commenter stated that data collection in Alaska is likely to be more expensive than the costs that EPA estimated due to difficulties associated with remote locations and unique ecosystems. A commenter stated that in North Carolina the cost

- benefit analysis that the state conducts during triennial reviews accounts for numerous hours and many dollars.

EPA acknowledges these comments. In response to comments re ceived on the economic analysis (EA)
for the proposed rule, EPA solicited additional input on labor burden from states and authorized tribes and EPA staff in the regional offices who have extensive experience with state and authorized tribal water quality standards ( WQS ) programs. EPA use d the feedback from this process, together with public comments, to revise labor estimates for several rule requirements. These revisions reflect state

- specific estimates (including fro m Alaska). Because EPA ’ s estimates are based on the input from a variety of knowledgeable stakeholders, the labor estimates EPA use d in the EA of the final rule reflect a realistic range of procedures and circumstances of state and authorized tribal programs.

One commenter asserts that they are “ convinced that the proposed rule will have a significant impact on a substantial number of small entities like the District and that the proposed rule contains requirements that will significantly and/or uniquely affect small governments. ” EPA disagrees with this

commenter. The commenter provides no data or information supporting the assertion that the rule will
have a significant impact on a substantial number of small entities

.
Some commenters asserted that EPA inappropriately excluded or underestimated the costs associated with the following provisions:



### B. **Antidegradation**

Commenters a ssert that EPA u nderestimated th e burden a nd c ost associated with th e rule because E PA underestimated t he difficulty o f adoptin g antidegr adation implementation m ethod s into s tate o r t ribal rule. EPA d isagrees wi th these comments. The fin al rule d oes n ot re quire s tates a nd au thorized t ribes to adopt a ntidegradation implementation m ethods into the ir WQS regulations

. However, t he fin al rule

co uld p otentially le ad to in cremental burden an d cost as sociated with r equiring states ’ and a uthorized tribes ’ antidegradation i mplementation methods ( whether o r n ot thos e methods are adopted i nto state or tribal rule) t o b e consistent with th eir antidegrada tion p olicies a nd with section 131.12(a). Burden
and c osts c ould als o b e as sociated w ith t he r equirement fo r states an d au thorized t ribes t o p rovide an opportunity f or p ublic i nvolvement d uring the d evelopment a nd a ny s ubsequent r evisions of antidegradatio n i mplementation methods, a nd t o make t he methods a vailable to t he p ublic

.Chapter 3 – Response Essays 12.b – Econ – Rulemaking

If a state or authorized tribe adopts antidegradation implementation methods as part of its WQS or other legally binding provisions, the state ’ s or authorized tribe ’ s own public part icipation requirements and Title 40 of the Code of Federal Regulations ( CFR ) Part 25 and section 131.20(b) of the federal regulation, will satisfy this requirement and there is no incremental burden or cost . For states and authorized tribes that do not adopt antidegradation implementation methods as part of their WQS or other legally binding provisions

, there may be incremental burden and cost associated with providing an opportunity for public involvement

. States and authorized tribes can use various me chanisms to provide such opportunities, including a public hearing, a public meeting, a public workshop, and different ways of engaging the public via the Internet, such as webinars and website postings

. EPA obtained stakeholder feedback and revised the bu rden and cost estimate of the final rule ’ s antidegradation provision. EPA estimates this burden and cost in section 3.2.5 of the EA of the final rule.

Commenters also said EPA did not adequately document the economic impact of the rule because “ the

new req uirements that EPA is imposing on state anti

- degradation policies and implementation methods will require states to conduct extensive alternatives analyses when issuing NPDES permits to high quality waters. It is highly likely that the state will need perm ittees, such as SD1, to expend significant resources to collect information to support these analyses, including EPA ’ s proposed requirement to ident ify “ non

degrading ” and “ minimally deg rading practicable alternatives ” . Of particular concern is the cost of demonstrating these alternatives for storm water, which would seem to require complex monitoring, modeling and other analyses. It is also likely that such a determination will be subject to stakeholder scrutiny and potential litigation, which would result in additional costs to SD1. ” EPA disagrees with these

comments. EPA estimated the burden and cost associated with performing/evaluating more Tier 2 antidegradation reviews because more water bodies may be receiving Tier 2 protection. EPA also estimated th e burden and cost associated with performing/evaluating more extensive Tier 2 antidegradation reviews because states and authorized tribes must evaluate a range of non

- degrading and less degrading practicable alternatives and select one such alternative for implementation. See the preamble of the final rule and section of 3.2.5 of the EA of the final rule for more information.



### C. **Public P**  **rocess**

Commenters noted that the additional public scrutiny arising from the rule may also impose burden on states by ope ning them further to stakeholder scrutiny and potential litigation. EPA disagrees with the commenter that additional public scrutiny and potential litigation are a cost to states and authorized tribes associated with the final rule. To the contrary, t he ru le reduces litigation risk and associated costs by increasing transparency and public input, and ensuring states and authorized tribes address the issues of potential litigants while developing WQS . L itigation resulting from increased transparency and public input c ould arise from states and authorized tribes addressing or implementing WQS improperly, which is not a cost that is attributable to the rule. In addition, EPA estimate d the incremental costs associated with accommodating public input in rule provisions that require such input in the EA for the final rule.



### D **. Adopting R**  **evised V**  **ariance Provisions** 

A commenter assert ed that EPA excluded the cost of revising state variance provisions from the EA

. EPA d id not exclude the burden and cost associated with revising variance provisions. EPA estimate d cost and burden associated with states and authorized tribes needing to perform a WQS rulemaking for the purpose of revising laws related to the issuance of WQS variances (if the state or authorized tribe hasChapter 3 – Response Essays 12.b – Econ – Rulemaking

adopted such policies in state or tribal statute, rule, or other legally binding instrument ) in section 3.2.1 of the EA for the final rule.



### E **. Triennial R**  **eviews**

Commenters ass ert that additional triennial review requirements may require additional staff in WQS program offices and result in additional burden and costs

. E xisting WQS regulations require states and authorized tribes to conduct triennial reviews in which states and authorized tribes review all applicable WQS and, as appropriate, modify and adopt new or revised WQS. These existing requirements do not represent an y incremental cost attributable to the final rule, as states and authorized tribes must already be conducting triennial reviews pursuant to baseline requirements. The final rule does include a requirement that states and authorized tribes must provide an explanation when not adopting new or
revised water quality criteria for parameters for which EPA has published new or up dated Clean Water Act ( CWA ) section 304(a) criteria recommendations. EPA estimate d burden and cost associated with the final triennial review requirements in section 3.2.4 of the EA of the final rule.



### F **. One -T**  **ime C**  **osts**

O ne commenter stated that one

- time costs would be incurred by the states upfront rather than over
time as EPA estimates

. I mplementation of the one

- time components of the final rule is likely to vary

among states and authorized tribes. EPA does not disagree with these comments. In the EA for the final rule, EPA reasonably expressed one

- time costs on an annual basis only for comparison to other annual costs and to provide an estimate of overall annual cost of the entire rule. However, EPA estimates the final rule will require a s ingle additional state or tribal rulemaking within a single state or tribal triennial review period

. EPA does not believe a single rulemaking process with in a three year period requires
excessive state or tribal resources, and many states and tribes adopt multiple rules during a single rulemaking process and will likely take advantage of existing rulemaking processes to meet the requirements of the final rule. The final rule also requires states and authorized tribes that identify

water s for antidegradation protection on a water body

- by

- water body basis to provide an opportunity for public involvement on any decisions about whether Tier 2 antidegradation protection s will be afforded to a water body and the factors considered when making t hose decisions. EPA estimates that such a single decision

- making process requiring public involvement will occur as a single effort for all waters of the state or authorized tribe at an estimated one

- time cost $7,400 – $14,700

. EPA believes such one

- time costs are not excessive.

EPA assumes that the state or authorized tribe does not incur further incremental burden or cost associated with revising those designations because such revisions will likely occur in association with National Pollutant Discharge Elimination System ( NPDES ) permit issuance or reissuance that already involves a public process

.



### G. **Additional R**  **ulemakin g** 

A commenter expressed concern that the final rule would spur the states to conduct additional rulemaking beyond the requirements of the final rule. One commenter expressed concerns that states (e.g., Colorado) would amend regulations or initiate new rulemaking in light of EPA ’ s clarifications in the final rule beyond the requirements of the rule, leading to additional costs for discharger s. EPA disagrees that such costs would be attributable to this final rule because such r ulemakings would not be required by the final rule

.Chapter 3 – Response Essays 12.b – Econ – Rulemaking



### H. **Other Costs and B**  **urdens**

C ommenters assert ed that the rule will have potentially substantial impacts to dischargers, and that EPA inappropriately excluded these costs or erroneously stated that these costs would not occur as a result of the rule. Some commenters noted that states often pass the cost s of data collection on to dischargers when agency funding is not sufficient. Some commenters stated that the highest attainable use ( HAU ) requirement will lead to increased burden to dischargers, because it will result in more stringent criteria when states and authorized tribes issue use attainability analyses ( UAAs ) . One commenter expressed concerns that the HAU requirement would result in increased focus on sensitive aquatic life, leading to far more restrictive criteria.

EPA disagrees with these commen ts. EPA estimates the burden and costs associated with more extensive UAAs, and a greater number and more extensive antidegradation reviews. EPA cannot speculate on the extent to which a state or authorized tribe might pass those costs to dischargers.

With regard to the comments related to the Regulatory Flexibility Act (RFA) and the Unfunded Mandates Reform Act (UMRA) , see EPA ’ s response to comment topic 13.a, as well as sections IV.C and IV.D in the preamble to the final rule.

With regard to the commenter suggesting that EPA ’s EA for the proposed rule did not account for all costs to implement the proposed rule, see EPA ’ s response to comment topic 12.a, as well as section III in the preamble to the final rule and the Economic Analysis for the Water Quality Standards Regulatory Revisions (Final Rule) in the docket for this rulemaking.Chapter 3 – Response Essays 12.c – Econ – EPA’s B&C ( Burdens and Costs)



## Essay **12.c – Econ**  **omics: EPA’s Burdens and Costs** 

**A. General** 

Several comments address the U.S. Environmental Protection Agency’s ( EPA’s ) estimates of the burdens and costs associated with the final rule. These comments express concerns about burden estimates for the rule generally, the costs of existing requirements, the rationale for estimating any costs, and EPA’s consideration of potent ially more protective regulatory options. Commenters express concerns that EPA
does not adequately consider the economic b urden of the rule, and request that EPA consider independent cost estimates.

EPA disagrees with these comments. Although Executive Ord er 12866 require s a gencies to assess the

c osts and benefits of regulatory actions

, it does not require that that assessment be performed by parties outside the agency. Furthermore, the c ommenters do not provide any independent cost estimates for EPA’s cons ideration. To estimate the burden and cost to states and authorized tribes, EPA makes reasonable and often economically conservative assumptions regarding current compliance with requirements in the final rule

, the activities and level of effort required t o comply with the final rule, and the unit costs of those incremental effort s . EPA solicited and received information from states and authorized tribes and water quality standards (WQS) program staff wit h knowledge of state activities,
and use d this information to develop the estimates in the economic analysis (EA) of the final rule

. This process has resulted in a reasonable, economically conservative, and defensible estimate of the burden and cost of the final rule.

One commenter noted that the costs of “existing chaos” are inappropriately excluded from the EA

. However, the commenter does not describe nor provide any current costs or burdens its state or authorized tribe incurs under the current “existing chaos” and as such, EPA cannot respond f urther

.
The commenter also questioned why the regulations impose any costs if they are merely designed to be clarifications to existing WQS regulations. EPA agrees that there may be no costs for some states and
authorized tribes due to either portions of o r the entire final rule . However, in the interest of public transparency and being conservative, the EPA chose to be economically conservative (i.e., err on the side of overstating the potential for incremental programmatic activities)

, and use d the best a vailable information available to the Agency, including information received pursuant to its request for feedback in the proposed rule to estimate the potential for in cremental administrative burden and cost to states and authorized tribes. For example, pr ior to this rule

, the regulation at Title 40 of the Code of Federal Regulations section 131.20 already required states and authorized tribes to review applicable WQS every three years (i.e.

, triennial reviews) and submit the results of the review to EPA. T he final rule now explicitly requires states and authorized tribes to document and submit an explanation for why they may have chose n to not adopt new or revised criteria for any parameters for which EPA has published new or updated Clean Water Act ( CWA ) s ection 304(a) criteria recommendations as part of the review. Although some states and authorized tribes may already be documenting such decisions in their triennial reviews, EPA conservatively assume d in the EA of the final rule that no states or authoriz ed tribes are doing so, i.e., that all states and authorized tribes will incur an increase in burden and cost associated with such requirement for documentation and submission of this explanation

.Chapter 3 – Response Essays 12.c – Econ – EPA’s B&C ( Burdens and Costs)



### B. **W ater**  **Q uality**  **S tandards**  **Variance Provisions** 

Another comm enter noted that the WQS variance provisions of the proposed rule would necessitate revisions to the Virginia WQS variance language, and would substantially increase the effort required to establish a WQS variance. As noted by the commenter, however, the a ddition of the language would not cause an undue burden. EPA appreciates this information, and agrees that the additional WQS variance provisions will not impose undue burdens on states or authorized tribes, in part because most of the requirements are baseline practices in most states

, even if not explicitly required in EPA’s previous WQS regulation

. Nevertheless

, EPA estimate d cost and burden associated with states and authorized tribes needing to perform a WQS rulemaking for the purpose of revising laws related to the issuance of WQS variances (if the state or authorized tribe has adopted such policies in state or tribal statute, rule, o r other legally binding instrument ) in section 3.2.1 of the EA for the final rule. For discussion of EPA’s estimates of potential cost and burden related to the final WQS variance requirements, see section 3.2.6 of the EA for the final rule. See also EPA’s response to code 12.b.



### C. **Benefits of Regulation**

Finally , a commenter expressed concer n that EPA d id not consider the benefits of more protective regulations. EPA acknowledges the commenter ’ s concern, but disagrees with the comment that the Agency does not sufficiently consider a range of regulatory options before promulgating the final rul e (see the preamble s to the proposed and final rule s for description s of the regulatory options that EPA considered). Furthermore, t he commenter does not provide suggestions of more protective regulations EPA should have consider ed

. I n the process of developing the final rule, EPA considered comments and feedback from over 150 organizations and individuals, and the more than 2,500 additional letters from
individuals associated with a mass letter writing campaign. EPA held numerous meet ings with states, and responded to many concerns. The objective of the rule is to advance the CWA goals to “restore and maintain the chemical, physical, and biological integrity of waters of the United States” to “achieve, wherever attainable, an interim goal of water quality which provides for the protection and propagation of fish, shellfish, and wildlife and for recreation in and on the water” and to “ protect the public health or welfare, enhance the quality of water and serve the purposes of” the Act (C WA sections 101(a), 101(a)(2) , and 303(c)(2)(A) ). The final rule will advance these goals and improve protections of the nation’s waters by enhancing state and authorized tribal WQS program effectiveness. The rule will also ensure public transparency, improve information provision and use, and enhance state and tribal efficiency in administering WQS programs.Chapter 3 – Response Essays 12.d – Econ – Uncertaintie s



## Essay **12.d – Econ**  **omics: U ncertainties**  **in the Analysis**

One commenter noted that, despite the U.S. Environmental Protection Agency’s ( EPA’s ) statement that it would be difficult and too speculative to estimate indirect costs to dischargers, EPA has the administrative tools needed to solicit data from the regulated community regarding these costs.

EPA generally disagrees with this comment. As c ommenters have pointed out in numerous instances in their comments on the proposed rule, t he Clean Water Act (CWA) recognizes states (and authorized tribes) as having primary responsibility and authority for the activities necessary to achieve the water

qu ality standards - ( WQS

- ) related goals and requirements of the CWA. States and authorized tribes continue to maintain flexibilit ies they have historically been granted under the CWA and the federal regulations to help their dischargers (point sources and no npoint source s (NPS) , as applicable) meet
CWA limits and their waters attain WQS in the most cost

- effective manner s possible . It is difficult for
EPA to speculate as to how states and authorized tribes will cho o se to implement their WQS programs in light of the existing and final regulatory requirements because, as commenters have pointed out in numerous instances in their comments on the proposed rule, each state and authorized tribe is different, operating with distinct water body type s, discha rgers, aquatic species, human activities, climate , topography, etc. Thus

, EPA expects that the ways in which states and authorized tribes incorporate the final WQS requirements on top of the existing requirements will vary considerably, and
that each state or authorized tribe will come up with the most efficient, cost

- effective , reasonable, and targeted approach to meet CWA requirements as they apply within each state’s or authorized tribe’s jurisdiction. Furthermore the commenter does not provide any data or information to EPA that could help EPA identify requirements state and authorized trib es may enact, or their potential costs

. See also EPA’s response to code 12.a for a discussion on indirect costs.Chapter 3 – Response Essays 12.e – Econ – Benefits



## Essay **12.e – Econ**  **omics: Benefits**  **of Proposed Rule**

**A. General** 

Several commenters expressed concerns about benefits associated with the final rule, as well as the
U.S. Environmental Protection Agency’s ( EPA’s ) c haracterization of the benefits

.

Some commenters expressed concerns that EPA did not quantify and monetize the benefits of clean water arising from the rule, and others noted that accurately and adequately quantifying the water quality benefits associated with water quality standards (WQS) rules is extremely challenging. EPA agrees that such an analysis is ext remely challenging because of data and analytical limitations, and did not attempt to monetize benefits in the economic analysis (EA) of the final rule. Instead, EPA provides a narrative d escription of the benefits based on the anticipated more effective implementation of WQS

programs. See also EPA’s response to code 12.a for a discussion of estimated benefits.

One commenter questioned whether the rule is the best expenditure of resources, and whether it makes the best “environmental sense” from a benefits perspective (specifically, whether the benefits
associated wi th the rule represent the “best” benefit). EPA disagrees with the commenter’s implication
that the benefits of the final rule w ere not part of the decision

- making process when EPA developed the rule

. The preamble of the final rule describes a variety of options th at EPA considered with the goal of providing the greatest environmental benefit in the most cost

- effective manner. The EA of the final rule
indicates that the burden and cost of the final rule are relatively low compared to the anticipated benefits

. EPA concludes that the benefits of greater regulatory clarity and public transparency the final rule provides significantly o utweigh the relatively low burden and cost to states and authorized tribes

, and advance the goals of the Clean Water Act ( CWA ) in a cost

- effective manner. Finally, the commenter does not provide any regulatory or non

- regulatory alternatives that would prov ide a “better” benefit.



### B. **Comments on T**  **riennial R**  **eviews**

Another commenter stated that a requirement for a complete review of the science behind state designated beneficial uses categories as a requirement of the triennial review is a waste of limited stat e

resources , with little or no environmental benefit. However, the final rule does not incrementally require such a review. CWA section 303(c), and EPA’s implementing regulation prior to this final rule, already require s tates and authorized tribes , at lea st once every three years

, to hold a public hearing for the purpose of reviewing their applicable WQS, not just a subset of WQS that the state or authorized tribe has identified as high priority. EPA acknowledges that some states and authorized tribes may target specific WQS during an individual triennial review to balance resources and priorities. While the final rule does not affect states’ or authorized tribes’ discretion to attempt to identify such priority areas for action, states and authorized tribes must still, at a minimum, seek and consider public comment on all applicable WQS during a triennial review (i.e., a state or authorized tribe cannot ignore comments from the public on a WQS that is applicable but not within universe of WQS targeted by sta te or authorized tribe as priority area for action). The final rule clarifies that when conducting triennial reviews, states and authorized tribes must review all applicable WQS adopted into state or tribal law pursuant to sections 131.10

– 131.15 and any federally promulgated WQS for that state or authorized tribe . Applicable WQS specifically include designated uses ( section 131.10), water quality criteria ( section 131.11), antidegradation ( section 131.12), general policies ( that constitute WQS ) ( sectionChapter 3 – Response Essays 12.e – Econ – Benefits

1 31.13), WQS variances ( section 131.14), and provisions authorizing the use of schedules of compliance
for water quality

- based effluent limits ( WQBELs ) in National Pollutant Discharge Elimination System ( NPDES ) permits ( section 131.15)

. See responses to com ment category 6.b for more information.



### C. **Highest A**  **ttainable U**  **se**

A nother commenter expressed concerns about the requirement that states adopt the highest attainable use (HAU) when implementing a use attainability analysis (UAA) to change a use specified i n CWA
section 303(c)(2)( A) . The commenter stated that the burden associated with this requirement will be high

, with minimal or zero benefits, and requested that EPA modify the provision to ensure that benefits outweigh the costs. In response, EPA notes th at the final rule only requires that states must adopt the HAU when conducting a required UAA per section 131.10 (j)

. The final rule does not require a UAA when
a state removes or revises non

- 101(a)(2) uses or situations specified in section 131.10 (k).

Nevertheless, EPA disagrees that the burdens associated with the HAU provision will greatly outweigh the benefits to water quality. The concept of HAU is fundamental to the WQS program. Adopting a use that is less than the HAU could result in the adoption of uses and water quality criteria that inappropriately allow lower water quality and could adversely affect aquatic ecosystems and the health of the public recreating in and on such waters

. As noted above , the final rule provides that states and authorize d tribes are not required to conduct a UAA whenever they wish to remove or revise a non

101(a)(2) use, but must meet the requirements in section 131.10(a) (i.e., re garding their “use and value”)

. The final rule defines a non

- 101(a)(2) use at section 131.3( q) as: “any use unrelated to the protection and propagation of fish, shellfish, wildlife or recreation in or on the water.” T he final rule
revises section 131.10(a) to be explicit that where a state or authorized tribe is adopting new or revised designated uses other than the uses specified in section 101(a)(2) of the Act or sub

- categories of such

uses , or removing such designated uses, it must submit documentation justifying how its consideration of the use and value of water for those uses listed in secti on 131.10(a) appropriately supports the state’s
or authorized tribe’s action. EPA refers to this documentation as a “use and value demon stration,” not a
UAA. See the preamble of the final rule for more information on the “use and value demonstration ” and
E PA’s response to code 5.h.Chapter 3 – Response Essays 12.f – Econ – Other General



## Essay **12.f – Econ**  **omics: General**  **Comments**

A commenter suggested that the U.S. Environmental Protection Agency ( EPA ) update the Interim Economic Guidance for Water Quality Standards published March 1995 with respect to ben chmarks for the private sector.

Updating the 1995 guidance is beyond the scope of the final rule , so EPA finds that this comment does not apply to the current rulemaking. EPA appreciates this comment and will consid er it when deciding whether to supplement or rev ise the guidance in the future.