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Memo to the File SUBJECT: Water Quality Standards Regulatory Revisions Final Rule, Potential Administrative

Costs to States Covered by the Economic Analysis FROM: Wendy Hoffman, Economic and Environmental Assessment Branch,

EAD/OST/OW/EPA DATE: July 10, 2015 On July 15, 2011 the Environmental Council of the States (ECOS) submitted a pre-proposal comment to EPA as part of EPA’s Federalism consultation under Executive Order 13132. The comment asked whether EPA’s economic analysis for the proposed rule will include all relevant burdens and costs to states. Specifically, ECOS was concerned that EPA may not routinely be including certain categories of state costs that ECOS had identified in previous communications with EPA’s Office of Policy. ECOS submitted its most recent expression of these categories in a comment letter in response to EPA’s proposed utility MACT rule.1 The comment letter listed a variety of potential burdens and costs associated with implementation of EPA rules (ECOS 2011). The purpose of this memorandum is to discuss how EPA has considered ECOS’s categories of potential burdens and costs in developing the economic analysis for the Water Quality Standards Regulatory Revisions final rule. The EPA developed its economic analysis for the final rule in accordance with EPA’s guidance for conducting economic analyses (U.S. EPA 2010). Although the specific activities listed by the ECOS comment letter are not explicitly referenced in EPA's economic guidance, EPA nonetheless considered many of these activities in the economic analysis for the final rule. With regard to the final rule, the activities identified in the ECOS comment letter fall into three main categories:
1. Activities not applicable to the final rule. 2. Activities already occurring and likely to continue with or without the final rule. 3. Activities that may result from the final rule. Activities that are not applicable (category 1) or are already occurring (category 2) do not represent an incremental cost associated with the final rule and are thus not considered in EPA’s economic analysis. Many of the listed activities that may be associated with the final rule (category 3) are included in EPA’s economic analysis. How the economic analysis of the final rule incorporates these burdens and costs is discussed below. The sections of the economic analysis where these activities are considered are provided as document section numbers.

1 The ECOS letter refers to National Emission Standards for Hazardous Air Pollutants [NESHAP] from Coal and Oil-Fired Electric Utility Steam Generating Units and Standards of Performance for Fossil-Fuel-Fired Electric Utility, Industrial-Commercial- Institutional, and Small Industrial-Commercial-Institutional Steam Generating Units as the “utility MACT rule. In the Federal Register Vol. 76, Issue 85, 24975-25147. May 3, 2011.2

Obtaining Additional Delegated Authority As noted in the ECOS comment letter, administrative activities associated with obtaining additional delegated authority may include:

 Amending state law to incorporate the requirements of the new regulation.

 Issuing new regulations in accordance with the requirements of state law.

 Conducting public hearings.

 Responding to stakeholders/comments. While some states and authorized tribes may simply incorporate federal rules by reference, others must undergo a rulemaking process involving public notice, impact statements, rulemaking hearings, recordkeeping and various other steps. The final rule may result in the need for states and authorized tribes to modify their water quality standards to add specific requirements for the issuance of variances, provisions authorizing compliance schedules, and/or methods for implementing antidegradation. Thus, states and authorized tribes may need to initiate new rulemaking efforts or increase the scope of other planned regulatory changes and activities to accommodate the revised federal regulation. These additional burdens and costs are included in the EPA’s economic analysis (section 3.2.1). Because state and tribal rulemaking activities associated with the final rule will most likely occur only once, the estimated burden and costs associated with these activities are one-time costs. Designing Implementation Plan As noted in the ECOS comment letter, administrative activities related to rule implementation may include:

 Performing activities related to obtaining EPA approval for the state implementation plan.

 Meeting with stakeholders and responding to concerns.

 Developing internal guidance and procedures for implementing the new regulation.
The final rule could potentially require states and authorized tribes to perform a WQS rulemaking for the purpose of modifying antidegradation policy, revising policies related to the issuance of WQS variances (if the state or authorized tribe has adopted such policies in state or tribal statute, rule, or is otherwise legally binding), or adopting provisions authorizing the use of permit compliance schedules. Thus, states and authorized tribes may need to initiate new rulemaking efforts or increase the scope of other planned regulatory changes to comply with the updated federal regulation. These additional burdens and costs are included in the EPA’s economic analysis (section 3.2.1). The final rule could potentially lead to incremental burden and cost associated with requiring states’ and authorized tribes’ antidegradation implementation methods (whether or not those methods are adopted into state or authorized tribal rule) to be consistent with their antidegradation policies and with § 131.12(a). Burden and costs could also be associated with the requirement for states and authorized tribes to provide an opportunity for public involvement during the development and any subsequent revisions of antidegradation implementation methods, and to make the methods available to the public. Burden and costs could also be associated with the requirement that states and authorized tribes involve the public when using a3

water body-by-water body approach to identify waters receiving Tier 2 antidegradation protection. Potential activities include developing or revising antidegradation implementation policy language, adopting the implementation policies into a legally binding document according to state or tribal administrative procedures and EPA’s public participation requirements, conducting public hearings, responding to public comments, revising implementation methods as necessary, and submitting the implementation methods to EPA for review and approval. Some states and authorized tribes may also need to revise existing implementation methods, and some may need to develop new methods. These activities are included in EPA’s economic analysis (sections 3.2.1, 3.2.5.3 and 3.2.5.4). Because antidegradation implementation methods will likely need to be developed or revised no more often than once every ten years, EPA’s economic analysis appropriately accounts for the burden and cost of those activities to occur at that frequency.
Monitoring As noted by the ECOS comment letter, administrative activities related to monitoring requirements may include:

 Collecting data from monitoring on a continuous basis.

 Reviewing collected data on a regular basis.

 Recording and storing monitoring data.

 Reporting monitoring data.

 Providing notifications of monitoring requirements and schedule to regulated entities.

 Conducting other recurring activities associated with monitoring. The final rule may result in additional activities associated with performing/evaluating more Tier 2 antidegradation reviews because more water bodies may be receiving Tier 2 protection. The Tier 2 antidegradation reviews may also be more extensive because they now must evaluate a range of practicable alternatives that would prevent or lessen the degradation associated with a proposed activity and only find a lowering is necessary if one such alternative is selected for implementation. These activities may be associated with additional state and tribal water quality monitoring activities. The costs and burdens associated with these activities are included in the EPA’s economic analysis (sections 3.2.5.1 and 3.2.5.2).
The final rule establishes WQS variance requirements for information and documentation which states and authorized tribes must submit to EPA to justify the granting of a WQS variance. Submissions for a WQS variance for a water body or waterbody segment also require identification and documentation of any cost-effective and reasonable best management practices that could be implemented to make progress towards attaining the underlying designated use and criterion for nonpoint source controls related to the pollutant(s) or water quality parameter(s) and water body or water body segment(s). These activities may result in additional burdens and costs associated with state and tribal water quality monitoring. The burdens and costs associated with these additional activities are included in the EPA’s economic analysis (section 3.2.6.1).
The final rule also requires states and authorized tribes to reevaluate a WQS variance with a term longer than five years no less frequently than every five years. Some states and authorized tribes4

already grant WQS variances that expire within five years, while others grant variances with a term longer than five years or with no expiration date. In those cases, states and authorized tribes may incur incremental administrative activity because they will need to reevaluate those WQS variances. These activities may also result in additional burdens and costs associated with state and tribal water quality monitoring. These recurring burdens and costs are also included in the EPA’s economic analysis (section 3.2.6.2).
4. Other The ECOS comment letter recognizes the potential for additional burdens and costs associated with recurring activities that may not fit into any particular category. This may include the need for some states to modify current procedures for conducting a use attainability analysis (UAA) under the final rule to include identification of the highest attainable use (HAU). For states and t authorized ribes that do not already conduct UAAs which identify the HAU, the requirement to do so may involve additional administrative activity resulting in additional burdens and costs. These burdens and costs are included in EPA’s economic analysis for the final rule (section 3.2.3). The final rule also requires states and authorized tribes that choose not to adopt new or revised criteria for any parameters for which EPA has published new or updated CWA section 304(a) criteria recommendations to explain their decision when reporting the results of their triennial review to EPA under CWA section 303(c)(1) and § 131.20(c). These burdens and costs are included in EPA’s economic analysis for the final rule (section 3.2.4).

References Environmental Council of the States (ECOS). 2011. Comment letter to EPA Docket Center Re: Docket ID No. EPA-HQ-OAR-2011-0044, EPA-HQ-OAR-2009-0234, RIN 2060-AP52. http://www.ecos.org/files/4511_file_ECOS_ltr_utility_MACT_rule_final.pdf?PHPSESSID=d1b 9755088b6006f7f26e404eedd242a

. United States Environmental Protection Agency (U.S. EPA). Sept. 13, 2011. Economic Analysis for the Water Quality Standards Regulatory Clarifications (Proposed Rule). Office of Water, Standards and Health Protection Division. United States Environmental Protection Agency (U.S. EPA). July 2015. Economic Analysis for the Water Quality Standards Regulatory Revisions (Final Rule). Office of Water, Standards and Health Protection Division. United States Environmental Protection Agency (U.S. EPA). 2010. Guidelines for Preparing Economic Analyses. Office of the Administrator. EPA-240-R-10-001.