i

Economic Analysis

for the

Proposed Municipal Separate Storm Sewer System

General Permit Remand Rule

   
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Table of Contents

Contents

Executive Summary.......................................................................................................................................1

1. Introduction ..............................................................................................................................................2

1.1 Scope and purpose........................................................................................................................ 2

1.2 Regulatory background................................................................................................................. 3

1.3 Report organization ...................................................................................................................... 4

2. Baseline for the Analysis........................................................................................................................... 4

2.1 Current regulatory framework............................................................................................................ 4

2.2 Permitting authorities that establish MEP requirements in general permits..................................... 5

2.3 Permitting authorities that individually review and approve NOIs and SWMPs................................ 5

3. Description of the Proposed Rule ............................................................................................................. 6

4. Economic Impact Methodology ................................................................................................................ 7

5. Economic Impact Results........................................................................................................................ 10

References ..................................................................................................................................................11

   
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List of Acronyms

EPA – U.S. Environmental Protection Agency

MS4 – Municipal separate storm sewer system

NOI – Notice of Intent

NPDES – National Pollutant Discharge Elimination System

SWMP – Stormwater management program
1

Executive Summary

This Economic Analysis presents an analysis of the estimated incremental costs to comply with the

proposed MS4 General Permit Remand Rule (or “proposed rule”).  The EPA is proposing to change how

permitting authorities administer general permits to regulate discharges from small MS4s. The proposal

is in response to a decision by the Ninth Circuit U.S. Court of Appeals in Environmental Defense Center,

et al. v. EPA, in 344 F.3d 832 (9th Cir. 2003) (“EDC decision”), which found that the EPA regulations for

obtaining coverage under a small MS4 general permit did not provide for adequate public notice, the

opportunity to request a hearing, or permit authority review to determine whether the best

management practices selected by each MS4 in its stormwater management program meets the Clean

Water Act requirements including the requirement to “reduce pollutants to the maximum extent

practicable.”  

The preamble discusses three options for addressing the court remand:  

 Option 1 – Traditional General Permit Approach: the process for issuing small MS4 general

permits would be aligned with the process NPDES general permits are issued for other

categories of discharges.  

 Option 2 – Procedural Approach: procedural requirements are added to the existing rule

structure that requires the MS4 to inform the permitting authority via its Notice of Intent (NOI)

of the best management practices (BMPs) it will undertake through its stormwater management

program. The public would be given an opportunity to comment on the proposed BMPs and

request a hearing, and the permitting authority would have the opportunity to require changes

to the proposed BMPs before the permitting authority authorizes a discharge under the general

permit.  

 Option 3 – Hybrid Approach: the permitting authority can choose between the Traditional

General Permit Approaches or using a mix of the two approaches.

EPA assumed that all other costs accrued as a result of the existing small MS4 program would remain

the same, unless the proposed rule change would affect the baseline program costs. In doing so, EPA

focused only on incremental costs that would be imposed as a result of any of the three proposed

options. EPA used conservative assumptions about impacts to state workloads, meaning that the

estimated economic costs of the policy change are most likely lower than what is actually presented.

Because of the relatively small scale (less than $25 million in net present value) of expected economic

impacts from the proposed rulemaking, EPA chose to use a relatively simple methodology to estimate

the range of possible costs. The state permitting authorities are the only entity that are expected to be

impacted from this rule because the options focus only on the administrative manner in which general

permits are issued and/or how coverage under those permits is granted. This proposed rule, however,

does not change the stringency of the underlying requirements in the Phase II regulations to which small

MS4s are subject, nor does it subject MS4 operators to new or changed requirements.

EPA created estimates of the economic impact of the proposed rule in terms of net present value and

annualized costs for the 3 compliance paths (Options 1, 2, and 3) and taking into account 3 different

social discount rates (0%, 3%, and 7%; see table below). EPA estimates the annualized cost of the

proposed rule will be between $654,341 at a 0% discount rate and $862,818 at a 7% discount rate. This

can be thought of as the annual budgeted amounts states (collectively across 43 states) would need to
2

make available each year in order to be able to cover the increase in state efforts that would result

every 5 years. The total net present value of the compliance cost (across 43 states and 15 years) ranges

from $6.8 million at a 7% discount rate to $11.4 million at a 0% discount rate. As suggested by the

analysis, the total cost of this proposed rule, especially when considered on an annual basis, falls well

below the cost thresholds for determining whether the impact of a rule is significant.

Discount Rate Option Net Present Value

(2014$)

Annualized Cost

(2014$)

0% 1 $11,356,092 $757,073

2 $9,815,113 $654,341

3 $10,893,798 $726,253

3% 1 $9,579,921 $802,477

2 $8,279,962 $693,584

3 $9,189,933 $769,809

7% 1 $7,858,470 $862,818

2 $6,792,106 $745,737

3 $7,538,561 $827,693

TOTAL RANGE (NPV) $6,792,106 – $11,356,092

1. Introduction

1.1 Scope and purpose

This Economic Analysis presents an analysis of estimated costs resulting from the proposed MS4 General

Permit Remand Rule (or “proposed rule”). The Economic Analysis evaluates the costs for three different

rule options being considered by the proposed rule for modifying the existing Phase II MS4 regulations.

Because this rule will modify an existing set of regulations, this report limits its scope to the incremental

costs that are expected to result, rather than the total overall cost implications for the entire Phase II

MS4 rule. The Economic Analysis will be modified based on the feedback received during the public

comment period, and the rule option that is selected for the final rule.  

The purpose of the Economic Analysis is to determine the degree to which this rule has the potential to

impose significant costs on the affected state permitting authorities and regulated MS4s. As such, the

results of this Economic Analysis are compared against the different cost thresholds for determining

significance in the following statutes and Executive Orders:

 Executive Order 12866: Regulatory Planning and Review  

and Executive Order 13563: Improving Regulation and Regulatory Review

 Paperwork Reduction Act (PRA)

 Unfunded Mandates Reform Act (UMRA)

 Executive Order 13132: Federalism

The cost figures corresponding to the three proposed rule options are contained in Appendix A, Cost

Estimates of Proposed Rule Options.
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1.2 Background

EPA developed its stormwater regulations under section 402(p) in two phases, as directed by the Clean

Water Act (CWA) statute. In the first phase, under section 402(p)(4), EPA promulgated regulations

establishing application and other requirements for NPDES permits for stormwater discharges from

medium (serving populations of 100,000 to 250,000) and large (serving populations of 250,000 or more)

MS4s, and stormwater discharges associated with industrial activity. EPA published the final Phase I rule

on November 16, 1990 (55 Fed. Reg. 47990).  

In the second phase, under section 402(p)(5) and (6), EPA was required to conduct a study to identify

other stormwater discharges that needed further controls “to protect water quality,” report to Congress

on the results of the study, and to designate for regulation additional categories of stormwater

discharges not regulated in Phase I on the basis of the study and in consultation with State and local

officials. EPA promulgated the Phase II rule on December 8, 1999, designating certain small MS4s and

small construction sites (disturbing one to five acres) and requiring NPDES permits for these discharges.

64 FR 68722. A regulated small MS4 is generally defined as any MS4 that is not already covered by the

Phase I program and that is located within the urbanized area boundary as determined by the latest U.S.

Decennial Census. Separate storm sewer systems such as those serving military bases, universities, large

hospital or prison complexes, and highways are also included in the definition of “small MS4.” 40 C.F.R.

§ 122.26(b)(16).  

The Phase II rule also requires regulated small MS4s to develop and implement stormwater

management programs (SWMPs). 40 C.F.R. § 122.34(a) requires that SWMPs be designed to reduce

pollutants discharged from the MS4 “to the maximum extent practicable (MEP), to protect water

quality, and to satisfy the appropriate water quality requirements of the Clean Water Act,” and requires

that the SWMPs include a minimum of six program elements, called “minimum control measures”

(MCMs). The minimum control measures are: public education and outreach, public participation and

involvement, illicit discharge detection and elimination, construction site runoff control, post

construction runoff control, pollution prevention and good housekeeping. 40 C.F.R. § 122.34(b). Under

the Phase II rule, small MS4 may seek coverage under an available general permit or may apply for an

individual permit. To be authorized to discharge under a general permit, the rule requires submission of

a Notice of Intent (NOI) to be covered by the permit containing a description of the best management

practices (BMPs) to be implemented and the measurable goals for each of the BMPs, including timing

and frequency as appropriate. 40 C.F.R. §§ 122.33(a)(1), 122.34(d)(1).

EPA is proposing a change to its Phase II regulations governing the way by which small MS4s obtain

coverage under NPDES general permits. The proposal results from a decision by the Ninth Circuit U.S.

Court of Appeals in Environmental Defense Center, et al. v. EPA, in 344 F.3d 832 (9th Cir. 2003) (“EDC

decision”), which found that the EPA regulations for obtaining coverage under a small MS4 general

permit did not provide for adequate public notice, the opportunity to request a hearing, or permit

authority review to determine whether the best management practices selected by each MS4 in its

stormwater management program meets the Clean Water Act requirements including the requirement

to “reduce pollutants to the maximum extent practicable.”  

The preamble discusses three options for addressing the remand. One option (called the “Traditional

General Permit Approach”) would align the process for issuing small MS4 general permits with the way

NPDES general permits are issued for other categories of discharges. A second option (called the

“Procedural Approach”) would add procedural requirements to the existing rule structure that requires

the MS4 to inform the permitting authority in its Notice of Intent (NOI) to be covered by the permit of
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the best management practices (BMPs) it will undertake through its SWMP. The public would be given

an opportunity to comment on the proposed BMPs and request a hearing, and the permitting authority

would have the opportunity to require changes to the proposed BMPs before the permitting authority

authorizes a discharge under the general permit. A third option would enable the permitting authority

to choose between the Traditional General Permit and Procedural Approaches, or to implement a

combination of these approaches in issuing and authorizing coverage under a general permit.

1.3 Report organization

This economic analysis is organized as follows:  

 Section 2 – Baseline for the Analysis – describes the number of permitting authorities that issue

general permits for small MS4s, and the number of small MS4s that submit NOIs/SWMPs under

these general permits.

 Section 3 – Description of the Proposed Rule – provides a brief description of the proposed rule

and the three options considered in this economic analysis.

 Section 4 – Economic Impact Methodology – describes the methods used to estimate the

economic impact under each option.

 Section 5 – Economic Impact Results – describes the results of the economic analysis or the

three options.

2. Baseline for the Analysis

The Economic Analysis estimates the incremental costs of modifying the Phase II MS4 regulations to

address the remand. That is, EPA assumed that all other costs that are being accrued as a result of the

existing small MS4 program remain the same, unless the proposed rule change would affect the baseline

program costs. In this respect, EPA focused only on new costs that may be imposed as a result of any of

the three options being proposed for comment. Although the baseline program costs are not calculated

as part of this rulemaking, understanding the program activities that are considered part of the baseline

is important in order to avoid double counting of costs for the proposed rule. This section provides a

summary of the relevant baseline cost considerations in this Economic Analysis.

2.1   Current Phase II MS4 program

In 1987, Congress amended the CWA to require implementation, in two phases, of a comprehensive

national program for addressing stormwater discharges. The first phase of the program, commonly

referred to as ‘‘Phase I,’’ was promulgated on November 16, 1990 (55 Fed. Reg. 47990). Phase I requires

NPDES permits for stormwater discharge from a large number of priority sources including municipal

separate storm sewer systems (‘‘MS4s’’) generally serving populations of 100,000 or more and several

categories of industrial activity, including construction sites that disturb five or more acres of land.

The second phase of the program, commonly referred to as “Phase II,” was promulgated on December

8, 1999 (64 Fed. Reg. 68722), expanded the Phase I stormwater program to include discharges of

stormwater from smaller municipalities in urbanized areas and from construction sites that disturb

between one and five acres of land. The Phase II rule allowed certain sources to be excluded from the

national program based on a demonstrable lack of impact on water quality (some small construction
5

sites and industrial sites that document no exposure to stormwater) and it allowed other sources not

automatically regulated on a national basis to be designated for inclusion based on increased likelihood

for localized adverse impact on water quality.

Under Phase I, there are approximately 253 individual permits issued to large and medium MS4s

covering approximately 855 MS4s. Under Phase II, permitting authorities have largely issued general

permits to cover small MS4s. However, seven permitting authorities (listed in Section 2.2 below) issue

individual permits to all small MS4s and do not issue general permits. There are approximately 409 small

MS4s covered by individual permits, and approximately 6,380 small MS4s covered by general permits.

2.2   Permitting authorities that establish MEP requirements in general permits

Among the options being proposed is one that would clarify that the NPDES permitting authority is

required to include in its small MS4 general permit any and all requirements that are necessary “to

reduce the discharge of pollutants from the MS4 to the maximum extent practicable, to protect water

quality, and to satisfy the water quality requirements of the Clean Water Act.” See 40 C.F.R. § 122.34(a).

Several permitting authorities already issue general permits that meet this option, and several

permitting authorities only issue individual NPDES permits to small MS4s and do not issue general

permits.  

The following states are currently issuing general permits that include provisions consistent with Option

1:

 Massachusetts (EPA Region 1 is the permitting authority)

 New Hampshire (EPA Region 1 is the permitting authority)

 New Mexico (EPA Region 6 is the permitting authority)

 California

 Washington

The following seven states issue individual permits to their small MS4s and do not issue general permits

to small MS4s:

 Delaware

 North Carolina

 Michigan

 Iowa

 Alaska

 Idaho

 Oregon

Therefore, the Economic Analysis assumes that twelve (12) states will not be subject to additional

programmatic costs as a result of a rule that adopts this option because the permits in these states

already establish conditions that meet the requirements of the Phase II regulations.

2.3   Permitting authorities that individually review and approve NOIs and SWMPs

Another option that is proposed for comment would modify the regulations to require permitting

authorities to review and approve individual NOIs, and to provide the public with an opportunity to

submit comments prior on individual NOIs and to request a public hearing prior to authorizing the
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discharge. The permitting authorities in Minnesota and Texas already review individual NOIs. Therefore,

it is assumed for this Economic Analysis that these states will not absorb additional costs if this option is

adopted in the final rule. Also excluded from the analysis are states discussed in section 2.2 that do not

issue general permits to small MS4s.  

EPA identified 35 states that conduct a less than full review of NOIs. This typically involves a

“completeness review” of the NOI that ensures all the required information is included, but does not

include a full and comprehensive review of the adequacy of the information in the NOI or the associated

stormwater management program (SWMP) documents. For these states, EPA assumes that some work

is already occurring as part of the baseline, and therefore that the costs to them of complying with this

rule option will not be as great as for those states that are not currently reviewing individual NOIs. For

that matter, in eight states, EPA was not able to determine if any review of individual NOIs was being

conducted, and therefore assumes for the purposes of this analysis that these states will bear the full

costs associated with this proposed rule option.

3. Description of the Proposed Rule

As stated previously, EPA is proposing three different options for modifying its Phase II regulations to

address the court’s remand. The following is a more detailed summary of each of these options:

 Option 1 (referred to as the “Traditional General Permit Approach”) would modify the Phase II

regulations to require that each small MS4 permit establish the requirements necessary to

reduce discharges to the MS4 “to the maximum extent practicable (MEP), to protect water

quality, and to satisfy the water quality requirements of the CWA.” Under Option 1, the

minimum information required for the NOI is streamlined like it is for other NPDES general

permits since the permitting authority would now be establishing the enforceable permit

requirements, rather than allowing the permittee to decide what is required to meet MEP.1

  

 Option 2 (referred to as the “Procedural Approach”) would preserve the MS4 permittee’s ability

to identify specific actions it believes will result in achieving the standard to reduce discharges

to the MS4 “to the maximum extent practicable (MEP), to protect water quality, and to satisfy

the water quality requirements of the CWA” and maintain the existing rule’s requirement that

the NOI include the BMPs and measurable goals that the permittee will implement. However,

the regulations would be modified to add new provisions requiring the permitting authority to

review each NOI, and any relevant portions of the MS4 “stormwater management program”

(“SWMP”) document, to ensure that they meet the Phase II regulatory requirements. The

proposal would also require that the public be provided an opportunity to submit and have

considered comments, and to request a hearing on each permittee NOI/SWMP submittal. The

proposal would also include a requirement for the permitting authority to notify the permittees

and the public of the final, enforceable requirements under the permit, following consideration

of public comments and the permitting authority’s review.

                                                            

1 In other words, because the permit will now include all of the specific actions, deadlines, and other requirements

that are necessary to determine whether a permittee is in compliance, the information required to be included in

the NOI can be reduced to the minimum necessary to ascertain who the MS4 operator is, where it is located, and

the receiving water to which it discharges. See 40 C.F.R. § 122.28(b)(2)(ii).  
7

 Option 3 would allow permitting authorities to choose between using the “Traditional General

Permit Approach” or the “Procedural Approach,” or to use a mix of the two approaches.  

4. Economic Impact Methodology

4.1   Economic Analysis Methodology

Because of the relatively small scale (less than $25 million in net present value) of expected economic

impacts from the rulemaking, EPA chose to use a relatively basic and straightforward methodology to

estimate the range of possible costs. In reality, permitting authorities will respond to the eventual rule

change in a variety of ways, which is inherent in the flexibility afforded them in the Phase II regulations.

Predicting specific state behaviors in response to this rulemaking is therefore challenging. However, for

the purposes of the Economic Analysis, EPA assumes that certain permitting authority responses will be

uniform. For instance, the following assumptions are made:  

 Option 1: all affected permitting authorities take the same basic steps to develop permits that

include all of the requirements deemed necessary to achieve the Phase II requirement “to

reduce the discharge of pollutants from the MS4 to the maximum extent practicable, to protect

water quality, and to satisfy the water quality requirements of the Clean Water Act.”  

 Option 2: all affected permitting authorities will individually review and approve NOIs, and will

provide the public with an opportunity to submit (and have considered) comments on individual

NOIs and to request a hearing if necessary.

 Option 3: some affected permitting authorities establish MEP requirements in their general

permits and some individually review and approve NOIs and SWMPs

There are several key elements and assumptions that underpin the analysis for all three options. The

first of these is that state permitting authorities are the only entity that are expected to be impacted

from this rule. EPA does not attribute increases in compliance costs to any small MS4 permittees as a

result of this rule. This is because the sole focus of the options under consideration in the proposed rule

is on the administrative manner in which general permits are issued and/or coverage under those

permits is granted. This proposed rule, however, does not change the stringency of the underlying

requirements in the Phase II regulations to which small MS4s are subject, nor does it subject MS4

operators to new or changed requirements. Therefore, the only costs that are directly attributable to

the proposed rule are the increases in labor costs to state permitting authorities.  

The second component of the Economic Analysis is that to keep the analysis straightforward and simple,

EPA used a single wage rate for estimating the cost of state labor, an hourly rate of $43.56, which is

captured in 2014 dollars by the Bureau of Labor Statistics. The analysis could have used different rates

for different types of state workers and could have scaled the rate to reflect wage growth over time, but

given the small scale of the estimated impact, EPA does not see a more nuanced approach to the cost of

state labor having anything more than a marginal impact on the estimated overall costs of the different

proposed options. In addition, EPA could have used different labor rates for each state, but since nearly

all states (43 total) are impacted by this Rule, EPA determined that a national blended rate would

appropriately capture the costs.  
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As mentioned in Section 2.2, seven states are not impacted by this rule because they issue individual

NPDES permits to all small MS4s in their state. These seven states will not be required to make any

changes to their baseline program, and therefore no cost increases are assigned to them.

EPA used a 15‐year time horizon to estimate costs, since that length of time is expected to capture most

of the costs associated with implementing this rule. EPA also used the same time horizon for the impact

analysis completed for the Phase II rule in 1999. The 15‐year time horizon will account for a total of 3

permit cycles for state general permits (given the maximum 5‐year term for any CWA permit). It is

assumed that this rule will be finalized in 2016; therefore, the first year for issuing permits would be

2017. The second round or term would be 2022, and the third round would be 2027. EPA assumes for

the purposes of the Economic Analysis that all state general permits are issued in the first year of the 5‐

year cycle, even though in reality states will issue permits in a staggered schedule throughout the 5

years based on the differing expiration dates of their general permits. Therefore, all of the added

workload and economic impacts is accrued in years 2017, 2022, and 2027. EPA assumed that all permits

would expire in 2017, although recently issued permits would not need to be modified until after their

five year permit term, which could be as late as 2020 or 2021.  

For each option, EPA calculated the total cost for each proposed rule option, which yielded a single cost

total for each permit cycle. EPA then discounted those costs to present value, and then totaled those

values to yield the net present value (in 2014 dollars) of the costs for the 15‐year period. EPA used 3

different discount rates (0%, 3%, and 7%) to create a robust range and to ensure that the estimates for

each options captured both a very conservative approach (0%) and as well as an approach that values

future costs much less (7%). These 3 discount rates are those most commonly used currently in federal

policy analysis and are appropriate given the relatively small scale of estimated cost impacts. Due to the

unevenness of the costs, EPA also concluded that creating an annualized cost of the net present value

made sense to portray how much the proposed new rule would cost states if those costs were spread

out evenly each year instead of incurring all costs in the first year of the permit and no cost during years

2‐5.

It is EPA’s intent to use conservative assumptions about impacts on state workloads, meaning that the

estimated economic costs of the policy change are most likely lower than what is actually presented. For

instance, EPA did not reduce the number of hours necessary for permitting authorities to draft specific

permits pursuant to the Option 1 requirements in the second and third permit term. EPA expects that

most permitting authorities, after drafting a specific permit to address Option 1 the first time would

spend less time in subsequent rounds reissuing the same permit. In its modeling of Option 2, EPA did not

reduce the average number of hours to review each NOI in the second and third permit term, even

though EPA expects that most NOIs would address any deficiencies after the first review, therefore

resulting in less review time needed in subsequent rounds.  

EPA also believes that the cost assumptions in Option 1 are conservative because as more permitting

authorities write general permits to establish requirements consistent with the new rule, other

permitting authorities can use and build on those examples, reducing the amount of time it takes to

draft the permit requirements. EPA has issued guidance to permitting authorities on how to write better

MS4 permits (EPA 2010 and EPA 2014), and additional examples are included in the preamble to this

rule. EPA also anticipates issuing further guidance once the rule is promulgated to assist states in
9

implementing the new rule requirements, which will in turn hopefully make permit writing more

efficient.

4.2   Option 1: Permitting authorities that establish more detailed requirements in

general permits

EPA estimates the burden to issue new MS4 permits based on the number of MS4s in each state,

assuming that states with a small number of small MS4s would spend less time on the permit issuance

process than states with a large number of small MS4s. EPA developed these estimates based on

discussions with several permitting authority staff. The common tasks involved in permit issuance

include:

 Drafting the MS4 permit, including:

o Reviewing MS4 annual reports and MS4 inspection/audit findings

o Conducting public outreach (listing sessions)

o Evaluating existing TMDL information for relevant wasteload allocations

o Developing draft permit terms and conditions

 Provide for a public comment process

 Addressing comments and issuing a final permit

EPA estimated the following burden for states with “high”, “medium” and “low” numbers of small MS4s:

High Estimate (>100 small MS4s)

EPA has identified 15 states that issue small MS4 general permits to more than 100 MS4s. EPA assumes

that an average permitting authority in the high estimate category will spend 2,300 hours developing

their general permit. This estimate includes:

 Drafting MS4 permit – 2,000 hours total, which includes:

o Reviewing MS4 annual reports and MS4 inspection/audit findings – 250 hours

o Public outreach (listing sessions) – 200 hours

o Evaluating existing TMDL information – 400 hours  

o Developing draft permit – 1150 hours

 Public comment process – 100 hours

 Addressing comments and issuing a final permit – 200 hours

Medium Estimate (25‐100 small MS4s)

EPA has identified 19 states that issue small MS4 general permits to between 25 and 100 small MS4s.

EPA assumes that an average permitting authority in the medium estimate category will spend 2,000

hours developing their general permit. This estimate includes:

 Drafting MS4 permit – 1,760 hours total, which includes:

o Reviewing MS4 annual reports and MS4 inspection/audit findings – 200 hours

o Public outreach (listing sessions) – 200 hours

o Evaluating existing TMDL information – 300 hours  

o Developing draft permit – 1,060 hours
10

 Public comment process – 80 hours

 Addressing comments and issuing a final permit – 160 hours

Low Estimate (<25 small MS4s)

EPA has identified 8 states that issue small MS4 general permits to less than 25 small MS4s. EPA

assumes that an average permitting authority in the low estimate category will spend 1,800 hours

developing their general permit. This estimate includes:

 Drafting MS4 permit – 1,560 hours total, which includes:

o Reviewing MS4 annual reports and MS4 inspection/audit findings – 160 hours

o Public outreach (listing sessions) – 140 hours

o Evaluating existing TMDL information – 200 hours  

o Developing draft permit – 1,040 hours

 Public comment process – 80 hours

 Addressing comments and issuing a final permit – 160 hours

4.3 Option 2: Permitting authorities that individually review and approve NOIs and

SWMPs

EPA interviewed permitting authorities from Minnesota and Texas to determine the level of effort spent

to individually review and approve NOIs. These states estimated that it took approximately 24 hours to

fully review an average NOI. However, this included approximately 12 hours to process the NOI and

conduct a “completeness review” of the NOI.

EPA identified 35 permitting authorities that conduct a “completeness review” or equivalent review of

NOIs in their state, therefore EPA is estimating a 12‐hour level of effort per NOI to complete the full

review in these states. For the eight states that do not currently conduct a review, EPA is estimating a

level of effort of 24 hours per NOI to complete the full review.  

4.4 Option 3: Permitting authorities can choose between Options 1 and 2

In Option 3, EPA would allow permitting authorities to choose between options 1 and 2, or to use a

hybrid of both approaches. EPA believes that most states will choose to issue permits that establish

permits using the Option 1 approach, therefore EPA assumes that 70% of permitting authorities will

chose Option 1 while the remainder will chose to adopt an Option 2 approach.  

5. Economic Impact Results

The table below summarizes the cost estimates from EPA’s modeling of the 3 compliance paths (Options

1, 2, and 3) and taking into account 3 different social discount rates (0%, 3%, and 7%). The highest cost

scenarios are highlighted in red and the lowest cost impacts are in blue. The cost interval on an

annualized basis is estimated to be between $654,341 on the low end and $862,818 on the high end.

This can be thought of as the annual budgeted amounts states (collectively across 43 states) would need

to make available each year in order to be able to cover the increase in state efforts that would result

every 5 years. The total net present value of the cost impacts ranges from $6.8 million at a 7% discount
11

rate across 43 states and 15 years to $11.4 million at a 0% discount rate. As is evident by these figures,

the total cost of this proposed rule, especially when considered on an annual basis, falls well below the

cost thresholds for determining whether the impact of a rule is significant or substantial.

Discount Rate Option Net Present Value

(2014$)

Annualized Cost

(2014$)

0% 1 $11,356,092 $757,073

2 $9,815,113 $654,341

3 $10,893,798 $726,253

3% 1 $9,579,921 $802,477

2 $8,279,962 $693,584

3 $9,189,933 $769,809

7% 1 $7,858,470 $862,818

2 $6,792,106 $745,737

3 $7,538,561 $827,693

TOTAL RANGE (NPV) $6,792,106 – $11,356,092

References

EPA. 2014. Post‐Construction Performance Standards and Water Quality‐Based Requirements: A

Compendium of Permitting Approaches. EPA 833‐R‐14‐003.

http://water.epa.gov/polwaste/npdes/stormwater/upload/sw_ms4_compendium.pdf  

EPA. 2010. Guidelines for Preparing Economic Analyses. EPA 240‐R‐10‐001.

http://yosemite.epa.gov/EE%5Cepa%5Ceed.nsf/webpages/Guidelines.html

EPA. 2010. MS4 Permit Improvement Guide. EPA 833‐R‐10‐001.

http://water.epa.gov/polwaste/npdes/stormwater/upload/ms4permit_improvement_guide.pdf