## Review of the EPA’s Economic An alysis of Final Water Quality

Standards for Nutrients for Lakes and Flowing Waters in Florida

PREPUBLICATION COPY

NOT FOR PUBLIC RELEASE BEFORE

March 6, 2012

11:00 a.m. ESTPREPUBLICATION COPY 

## Review of the EPA’s Economic An alysis of Final Water Quality

Standards for Nutrients for Lakes and Flowing Waters in Florida

Committee to Review EPA's Economic Analysis of Final Water Quality Standards for Nutrients for Lakes and Flowing Waters in Florida

Water Science and Technology Board

Division on Earth and Life Studies

THE NATIONAL AC ADEMIES PRESS Washington, D.C.
www.nap.eduPREPUBLICATION COPY THE NATIONAL ACADEMIES PRE SS 500 Fifth Street, N.W. Washington, DC 20001

NOTICE: The project that is the subject of th is report was approved by the Governing Board of the National Research Council, whose member s are drawn from the councils of the National Academy of Sciences, the National Academy of Engineering, and the Institute of Medicine. The members of the panel responsible for the report were chosen for their special competences and with regard for appropriate balance.

Support for this study was provided by the U.S. E nvironmental Protection Agency under grant EP-C-09-003, task order 15. Any opinions, fi ndings, conclusions, or recommendations expressed in this publication are those of the auth or(s) and do not necessarily reflect the views of the organizations or agencies that provided support for the project.

International Standard Book Number X-XXX-XXXXX-X Library of Congress Catal og Card Number XX-XXXXX

Additional copies of this report are availabl e from the National Academies Press, 500 5 th Street, N.W., Keck 360, Washington, DC 20001; (800) 6 24-6242 or (202) 334-3313 (in the Washington metropolitan area); Internet, http://www.nap.edu.

Copyright 2012 by the National Academy of Sciences. All rights reserved.

Printed in the United States of America.PREPUBLICATION COPY The National Academy of Sciences is a private, nonprofit, se lf-perpetuating society of distinguished scholars engaged in scientific and engineering research, dedicated to the furtherance of science and technology and to their use for the general welfare. Upon the authority of the charter grante d to it by the Congress in 1863, the Academy has a mandate that requires it to advise the federal government on sc ientific and technical matters. Dr. Ralph J. Cicerone is president of the National Academy of Sciences.

The National Academy of Engineering was established in 1964, u nder the charter of the National Academy of Sciences, as a parallel or ganization of outstandi ng engineers. It is autonomous in its administration and in the selec tion of its members, sh aring with the National Academy of Sciences the responsibility for a dvising the federal government. The National Academy of Engineering also sponsors engineer ing programs aimed at meeting national needs, encourages education and research , and recognizes the superior ach ievements of engineers. Dr. Charles M. Vest is president of th e National Academy of Engineering.

The Institute of Medicine was established in 1970 by the National Academy of Sciences to secure the services of eminent members of appropriate professions in the examination of policy matters pertaining to the health of the public. The Institute acts under the responsibility given to the National Academy of Sciences by its congressi onal charter to be an adviser to the federal government and, upon its own initiative, to identi fy issues of medical care, research, and education. Dr. Harvey V. Fineberg is president of the Inst itute of Medicine.

The National Research Council was organized by the National Academy of Sciences in 1916 to associate the broad community of science and technology with the Academy’s purposes of furthering knowledge and advising the federal government. Functioning in accordance with general policies determined by the Academy, the Council has become the principal operating agency of both the National Academy of Sciences and the National Academy of Engineering in providing services to the gov ernment, the public, and the scientific and engineering communities. The Council is administered join tly by both Academies and the Institute of Medicine. Dr. Ralph J. Cicerone and Dr. Charles M. Vest are chair and vice chair, respectively, of the National Research Council.

www.national-academies.orgPREPUBLICATION COPYv PREPUBLICATION COPY COMMITTEE TO REVIEW EPA’S ECONOMIC ANALYSIS OF FINAL WATER QUALITY STA NDARDS FOR NUTRIENTS

FOR LAKES AND FLOWING WATERS IN FLORIDA

GLEN T. DAIGGER

, Chair , CH2M Hill, Englewood, Colorado

OTTO C. DOERING

, Vice Chair , Purdue University, West Lafayette, Indiana

LEONARD A. SHABMAN

, Vice Chair , Resources for the Future, Arlington, Virginia

WALTER L. BAKER , Utah Division of Water Quality, Salt Lake City

ALLEN P. DAVIS , University of Maryland, College Park

K. WILLIAM EASTER , University of Minnesota, St. Paul

WENDY D. GRAHAM , University of Florida, Gainesville

ARTURO A. KELLER , University of California, Santa Barbara

DAVID J. MULLA , University of Minnesota, St. Paul

KEVIN M. SHERMAN , Quanics, Inc., Crestwood, Kentucky

KURT STEPHENSON , Virginia Polytechnic Institute and State University, Blacksburg

MICHAEL B. TATE , Kansas Department of Hea lth and Environment, Topeka

ALAN H. VICORY , Ohio River Valley Water San itation Commission, Cincinnati, Ohio

LAJUANA S. WILCHER , English, Lucas, Priest, & Owsley, L.L.P., Bowling Green, Kentucky

NRC STAFF

LAURA J. EHLERS , Study Director

JEFFREY JACOBS , Scholar

MICHAEL J. STOEVER , Research Associate

ANITA A. HALL , Senior Program Associatevi PREPUBLICATION COPY WATER SCIENCE AND TECHNOLOGY BOARD

DONALD I SIEGEL

, Chair , Syracuse University, New York

LISA ALVAREZ-COHEN , University of California, Berkeley

EDWARD J. BOUWER , Johns Hopkins Univers ity, Baltimore, Maryland

YU-PING CHIN , Ohio State University, Columbus

OTTO C. DOERING , Purdue University, We st Lafayette, Indiana

M. SIOBHAN FENNESSY , Kenyon College, Gambier, Ohio

BEN GRUMBLES , Clean Water America Alliance, Washington, D.C.

GEORGE R. HALLBERG , The Cadmus Group, Watertown, Massachusetts

KENNETH R. HERD , Southwest Florida Water Manageme nt District, Brooks ville, Florida

GEORGE M. HORNBERGER , Vanderbilt University, Nashville, Tennessee

KIMBERLY L. JONES , Howard University, Washington, D.C.

LARRY LARSON , Association of State Floodplain Managers, Madison, Wisconsin

DAVID H. MOREAU , University of North Carolina, Chapel Hill

DENNIS D. MURPHY , University of Nevada, Reno

MARYLYNN V. YATES , University of California, Riverside

STAFF

JEFFREY JACOBS , Director

LAURA J. EHLERS , Senior Program Officer

STEPHANIE E. JOHNSON , Senior Program Officer

LAURA E. HELSABECK , Senior Program Officer M. JEANNE AQUILINO , Financial and Admini strative Associate

ANITA A. HALL , Senior Program Associate

MICHAEL J. STOEVER , Research Associate

SARAH E. BRENNAN , Senior Program Assistantvii PREPUBLICATION COPY 

## Acknowledgment of Reviewers

This report has been review ed in draft form by individu als chosen for their diverse perspectives and technical expertise, in accord ance with procedures approved by the National Research Council’s Report Review Committee. Th e purpose of this independent review is to provide candid and critical comments that will assist the institution in making its published report as sound as possible and to ensure that the report meets inst itutional standards for objectivity, evidence, and respons iveness to the study charge. Th e review comments and draft manuscript remain confidential to protect the integr ity of the deliberative pr ocess. We wish to thank the following individuals fo r their review of this report:

ROBERT K. DAVIS , University of Colorado, Boulder (emeritus)

PATRICK L. BREZONIK , University of Minnesota, Minneapolis (emeritus)

ROBIN K. CRAIG , Florida State University, Tallahassee

ANDREW FISK , Connecticut River Watershed C ouncil, Greenfield, Massachusetts

J. WALTER MILON , University of Central Florida, Orlando

PATRICIA E. NORRIS , Michigan State University, East Lansing

DAVID E. RADCLIFFE , University of Georgia, Athens

DAVID STENSEL , University of Wa shington, Seattle

ROBERT G. TRAVER , Villanova University, Villanova, Pennsylvania

MYRON F. UMAN , Science and Technology for Public Po licy LLC, West Palm Beach, Florida

Although the reviewers listed above have provided many constructive comments and suggestions, they were not asked to endorse th e conclusions or recommendations nor did they see the final draft of the report before its releas e. The review of this report was overseen by

Robert A. Frosch , Harvard University and John J. Boland , Johns Hopkins University. Appointed by the National Research Council, they were responsible for making certain that an independent examination of this report was carried out in accordance with institutional procedures and that all review comments were carefully considered . Responsibility for the final content of this report rests entirely with the authoring committee and the institution.PREPUBLICATION COPYix PREPUBLICATION COPY 

## Contents

SUMMARY 1

1 INTRODUCTION 10 Technical Challenges of Nutrient Management in Florida, 10 Impairment of Florida’s Inland Streams, Lakes, and Springs, 16 Water Quality Standards and the TMDL Process, 20 Numeric Nutrient Criteria in Florida, 23 Request for National Research Council Study, 27 References, 29

2 ASSESSMENT AND COMMENTARY ON EPA’S ANALYSIS 32 EPA Cost Analysis Methods: Overview, 32 Sector Cost Assessments, 41 Findings and Recommendations, 70 References, 74

3 A FRAMEWORK FOR INCREMENTAL COST ANALYSIS 79

OF A RULE CHANGE Introduction, 79 Comparing the Narrative and Numeric Nutrient Criteria Rules, 80 A Cost Analysis Framework, 87 Transparency and Dispute Resolution Under the Proposed Framework, 99 Findings, 101 References, 102

ACRONYMS 103

APPENDIXES

A Narrative, Numeric, and Proposed Florida Nu trient Criteria Processes 105

Illustrated B Biographical Sketches of Committee Members and Staff 112x PREPUBLICATION COPY1

PREPUBLICATION COPY 

## Summary

INTRODUCTION

Nutrients such as nitrogen and phosphorus have long been known to ca use degradation of surface waters, as manifested by harmful algal bl ooms, the loss of submersed aquatic vegetation, and fish kills in waterbodies around the country. Stemming from agricultural operations, urban landscapes, wastewater, and atmo spheric deposition, nutrients po llution often is addressed under the Clean Water Act through the use of narrative standards. Howeve r, States have recently been pushed toward numeric nutrient criteria under the assumption th at this will accelerate and

standardize the restoration of nutrient-impaired waters. In Flor ida, numeric criteria for nitrogen and phosphorus were proposed by the U.S. Environmental Protection Agency (EPA) following a 2009 lawsuit maintaining that Florida’s narrative st andard was not protectiv e of Florida’s waters. Replacing the narrative standard with numeric nutri ent criteria may result in new Florida waters being listed as impaired and the reeval uation of the Total Maximum Daily Load (TMDL) calculations for waters that are currently listed as impaired. These actions may lead to new or revised discharge permits for point sources su ch as municipal and industrial wastewater treatment plants, and/or nutrient control requirem ents for nonpoint sources of nutrients. Because of these implications, EPA was required to produce an economic anal ysis of the potential incremental implementation costs that might be incurred if numeric nut rient criteria replaced

Florida’s narrative standard for nutrients. In late 2010, EPA estimated the incremental cost to range from $135.5 to $206.1 million per year. Ot her stakeholder groups produced their own estimates of the cost of implementing the numeric nutrient criteria, with some estimating annual costs as high as $12 billion. Shortly after producing its cost estimate, EP A requested that a committee of the National Research Council review the Agency’s economic analysis of the increm ental costs of state implementation of numeric nutrient criteria for lake s and flowing waters in Florida. Specifically, the Committee was asked to review and comment on the implications of:

1. EPA’s assumption that costs should be determined only for waters that will be “newly impaired” as a result of the numeric nutrient criteria.

2. EPA’s decision to estimate the costs of only those sources of polluti on that would directly affect a “newly impaired” water—in particular the number of wastewater treatment plants, the acreage of agricultural land, the acreage of urban areas, and the number of septic systems included in the EPA analysis.2 Review of the EPA’s Economic Analysis of Final Water Quality Standards in Flor ida

PREPUBLICATION COPY 3. EPA’s assumptions about the levels of cont rol that could be used by certain point and nonpoint sources, such as wastewater treatment plants, industrial point sources, agricultural activities, and septic systems. Examples of these assumptions could include a decision to seek a regulatory exemption, implement reve rse osmosis technology, or use conventional best management practices (BMPs) rather th an more expensive water treatment options.

Item #1 is addressed primarily in Chapter 3 of this report, while Chapte r 2 addresses the second

and third items. Several constraints were placed on the Committee that were necessary in order for it to produce its report by March 2012. First, the Comm ittee was not asked to review the numeric nutrient criteria themselves. Second, the Commi ttee was not asked to ad dress the benefits of implementing the numeric nutrient criteria, such as potential improvement in water quality, nor

the indirect costs associated with implementing the criteria, such as the number of jobs lost or gained, or how certain sectors of the economy will fare under the numeric nutrient criteria. Finally, the Committee was not as ked to produce its own cost estimate. Rather, the report tackles the validity of the assumptions f ound in the EPA report (and those of various stakeholders) and provides findings and recomme ndations on the methods to be used in any future cost analyses. The Comm ittee concluded that EPA was corre ct to calculate the costs of meeting the numeric nutrient criteria on an incremental basis. However, the Committee questioned how the incremental effect of the rule was defined by EPA, as described in detail in this report. Although determining the incremen tal cost of the rule change (from narrative to numeric) was the correct analytical focus for EPA to have taken, presentations made to the Committee and

later communication from stakeholders often conf used the incremental costs of the rule change

with the total costs to meet th e designated uses of impaired waters, under any rule. Many of

Florida’s thousands of river miles and lakes an d hundreds of springs already suffer from chronic nutrient pollution because of high population growth rates and resulting demands for water, land use changes from wetlands and forests to agricultu re and urban areas, the state’s tropical climate and flat topography, the potential for soil and geologic materials to serve as sources of nutrients, and the buildup of legacy nutrients. These factor s have made and will continue to make nutrient management in Florida an important but formid able and costly challenge, regardless of the regulatory paradigm used. Indeed, the total costs to meet Florida water quality goals will exceed the reported incremental costs of the EPA analysis and also may exceed the costs of implementing the suite of practices currently used to control point and nonpoint source dischargers of nutrients. A stat ement to this effect from the FDEP could furthe r the public’s understanding of the scope of nutri ent pollution in Florid a and the challenges to its management, and overcome misunderstandings that have aris en during debate about EPA’s numeric nutrient

criteria

. Florida is in the process of trying to develop its own numeri c criteria for nutrients that would supersede EPA’s, if approved by the Fl orida Environmental Regulatory Commission, the Florida legislature, and EPA. As of the writi ng of this report, the FDEP has developed a hybrid approach that includes aspects of both the narr ative and the numeric criteria. Although it is unclear whether the newly proposed Florida rule for nutrients will be accepted, the recommendations in this report should be useful regardless of what rule is ultimately adopted.Summary 3

PREPUBLICATION COPY REVIEW OF EPA’S COST ANALYSIS

Chapter 2 provides the Committee’s assessmen t of the EPA cost analysis, focusing on the efforts made by EPA to (1) identify permitted point sources that would be incrementally affected by the numeric nutrient criteria (NNC) rule, (2) define incrementally impaired waters and their associated watersheds, and (3) estimate the cost s of reducing nutrient lo ads from those point sources and/or to those waters. Costs to comp ly with the NNC rule were estimated for the following sectors: municipal wastew ater facilities, industrial wast ewater facilities, agriculture lands, urban stormwater, and on-si te septic systems. The associated costs of governmental administration were also estimated. Key a ssumptions made by EPA include the following:

 The definition of the incremental effect of the NNC rule was defined and limited to (1)

waterbodies that would be newl y listed and determined to be stressed by nutrients and (2) municipal and industrial sources that would receive certain co ncentration limits in their discharge permits;

 EPA assessed the incremental effect of the NNC rule at a single poi nt in time, assuming no further changes would occur under the narr ative process, rather than comparing the

future outcomes of both processes over time;

 Waters currently listed as impaired based on th e narrative criteria (either with or without a TMDL) were not considered in the cost an alysis, because it was assumed that a TMDL exists or would be developed, and that this TMDL would serve as the basis for a sitespecific alternative criteria (SSAC) determination; and

 Municipal and industrial wastew ater treatment plants discharging at 3 mg/L for total nitrogen (TN) and 0.1 mg/L for total phosphorus (TP) were considered in compliance

with the NNC rule.

Incrementally Impaired Waters and Watersheds

One component of how EPA defined the incr emental effect of the NNC rule was to

estimate the number of new waterbodies that would be in noncompliance with the numeric nutrient criteria, as well as to estimate the lo cation and amount of la nd area that would need

attention in the form of runoff controls to retu rn those waterbodies to compliance. The following findings are made regarding this portion of the EPA analysis:

It is not valid to assume that the percent of unassessed waters that would be incrementally affected is zero. A more defensible approach woul d take into consideration the

characteristics of the unassessed waterbodies and their drainage areas to predict the likelihood that they would fail to meet the narrative crit eria or the numeric nut rient criteria. This conclusion has implications for the urban stormwat er, agriculture, septic system, and government sector analyses.4 Review of the EPA’s Economic Analysis of Final Water Quality Standards in Flor ida

PREPUBLICATION COPY The HUC10 delineation used to assess th e acreage of various land uses that contribute to the potential im pairment is too coarse. EPA should use the more refined HUC12 delineation to generate a more precise estimat e of the acres to consider for BMPs in the agricultural and urban stormwater sectors.

Sector Analyses

For each sector that discharges to in land waters, EPA’s method for determining the

incremental cost of the NNC rule was based on calculating the product of (1) the number of newly affected units (or area) and (2) the unit co st to “treat” the discharge in those additional units. For municipal and industrial point sour ces, EPA identified the number of point sources that would have to improve treatment in respons e to the NNC rule, made assumptions about the technological upgrades that would be necessary, and assigned a cost for the upgrades. For the stormwater and agricultural sources, EPA estim ated the corresponding acreage draining to the potential incrementally impaired waterbodies, re duced the acreage considered based on BMP programs that were already in pl ace, selected a set of BMPs deemed to be adequate and costeffective to comply with the NNC rule, and then assigned a unit cost to the resulting acreage to

estimate the total cost for the two sectors. For septic systems, EPA determined the number of systems within 500 feet of a potential incrementally impaired waterbody and multiplied this number by the unit cost to upgrade septic systems to reduce their nutrient loads. Government costs were based solely on estimates of the administrative costs of developing additional

TMDLs.

Municipal Wastewater Treatment Plants

There is significant uncertainty in the co st estimate for municipal wastewater treatment plants. First, the assumption that no plant will be required to treat to levels more stringent than 3 mg/L TN and 0.1 mg/L TP is unrealistic. Although it is uncertain what proportion of plants will be permitted to treat to 3 mg/L TN and 0.1 mg/L TP, it appears likely that at least some plants will have to treat to mo re stringent levels. Second, there is significant uncertainty in the cost estimate for municipal wastewater treatment plants because the unit treatment costs were not verified by comparison to the existing and extensive Florida advanced wastewater treatment experience. Efforts should be made to co mpare the unit costs used by EPA with cost data from Florida, and also to better estimate the percentage of plants that will be required to reach discharge limits more stringent than 3 mg/L TN and 0.1 mg/L TP by performing mass balance and dilu tion calculations for at least a representative proportion of plants, if not for all of the pl ants included in this analysis.

Industrial Plants

There is significant uncertainty about the incremental cost of the NNC rule for industrial plants fo r several reasons. EPA based its estimates on one or two selected facilities from each sector. This extrapolation led to some low-flow facilities exerting a disproportionateSummary 5

PREPUBLICATION COPY influence on the overall industrial costs. Furt hermore, the same cost model and treatment processes were used for industrial facilities as were employed for municipal plants. For facilities with highly variable flows, fl ow equalization may be a more cost-effective solution than mechanical/chemical treatment, such that EPA may have overestimated costs for these facilities. On the other hand, some industria l facilities have higher unit co sts than municipal plants. Finally, industries covered under general permits were not inves tigated, raising the question of whether there may be costs from those facilities that were not captured in EPA’s estimates.

Given the small number of industries involve d, the cost analysis should be improved by analyzing each plant rather than ex trapolating the results of one or two plants to the entire sector. As with the municipal wastewater treatment plan ts, efforts should be made to compare the unit costs used by EPA with cost data from Florida and to better estimate the percentage of plants that will be required to reach discha rge limits more stringent than 3 mg/L TN and 0.1 mg/L TP.

Urban Stormwater

For the urban stormwater sector, the costs of complying with the NNC rule in those watersheds determined by EPA to be incremen tally impaired are expected to be higher

than EPA estimates. However, high uncertainty is pr evalent throughout all aspects of this sector analysis. Published studies indicate thatmost traditional Florida urban BMPs will not be sufficient to comply with the numeric nutrient crit eria. Furthermore, the per-acre costs of such BMPs are highly variable. EPA estimates of the affected land area are highly dependent on unverified existing BMP performance and compliance with urban stormwater rules. To improve the analysis, higher-efficiency BMPs should be considered, which have higher costs than traditional BMPs. The costs of retrofitting BMPs on developed land should also be considered.

Agriculture

For the agricultural sector, the costs of complying with the NNC rule in those watersheds determined by EPA to be incrementa lly impaired are likely to be higher than

EPA estimates. The incremental land area needing treatment was likely underestimated,

individual costs for the BMPs assumed to be sufficient were underestimated, and the more effective and costly BMPs and regional treatme nt systems likely required to meet numeric

nutrient criteria were not included in the anal ysis. The need for more stringent BMPs and treatment systems has been demonstrated in many of the Basin Management Action Plans (BMAPs) developed for impaired waters in Florida. Other critical omission s that could lead to increased costs include the degree of actual BMP program participation by agricultural producers and the costs of maintaining BMPs over time.

Septic Systems

For septic systems, the costs of complyin g with the NNC rule in those waterbodies determined by EPA to be in crementally impaired are likely to be substantially higher than

EPA estimates. The exclusion of septic systems in spri ngsheds is a significant deficiency of6 Review of the EPA’s Economic Analysis of Final Water Quality Standards in Flor ida

PREPUBLICATION COPY EPA’s analysis. EPA received cost estimates from vendors of equipment capable of meeting a TN of 20 mg/L and TP of 10 mg /L, values which are much highe r than EPA’s numeric nutrient

criteria. Efforts should be made to consider se ptic systems in springsheds and a wider range of treatment systems including permeable reactive ba rriers, which are known to be more effective in removing nutrients to levels consiste nt with the numeric nutrient criteria.

Government Costs

The incremental costs for the government se ctor are expected to be higher than

EPA estimates. Unit costs were based on low-end estim ates of costs from a 2001 study that focused on a broad range of TMDL work not sp ecifically related to either Florida TMDL development or nutrient TMDL development. Efforts should be made to quantify costs for Florida-specific and/or nutrient-specific TMDL s to provide more accurate unit costs for TMDL development. Additional government costs s hould also be considered, including costs for developing or approving SSACs and variances, costs associated with downstream protective values effectively reducing upstream criteria, and consideration of additional waters becoming impaired in the future.

A FRAMEWORK FOR INCREMENTAL CO ST ANALYSIS OF A RULE CHANGE

In Chapter 2, the Committee accepted the EPA definition of the incremental effect of a rule change and provided a cr itique of the methods by which the incremental costs were estimated. Chapter 3, in contrast, proposes an alternative framework fo r cost analysis. In accordance with what is required in EPA guideline s for preparing economic analyses, the chapter first provides a comprehensive analysis of the differences between the narrative and numeric nutrient criteria rules, organized by five broad stages of water quality management. Indeed, discrepancies in the cost estimates of EPA a nd other analysts can be traced to different assumptions about how the rules would affect acti ons taken in each of thos e five stages. That discussion is followed by presentation of th e alternative framework for predicting the

incremental costs of the various rules. Use of the framewor k can highlight differences in assumptions, help to narrow differences in the cost estimates if similar assumptions can be agreed upon, and highlight how uncer tainties can be reduced analyt ically or by clarification of ambiguities in the rules.

Comparing the Narrative and Numeric Nutrient Criteria Rules

For the purposes of comparison, water quality management was divided into five stages: (1) listing waters as impaired, (2) establishing th e stressor as nutrients, (3 ) defining the level of

nutrient load reduction and cal culating the TMDL, (4) TMDL/B MAP implementation, and (5)

the determination of use attainment. Table 3- 1 summarizes the differences in how these five stages occur under the narrative ru le (which is considered the baseline), under the EPA’s NNCSummary 7

PREPUBLICATION COPY rule that was the motivation for this report, and, for completeness, under the recently proposed Florida rule. The following broad findings regarding these differences are made:

 Administrative costs for listing and TMDL development will be lower under the NNC

rule than under the narrativ e or proposed Florida rule s because there would be no biological assessment.

 Compared to the narrative and proposed Florida rules, under the NNC rule the pace of listing and the number of waters listed will increase, but the rate at which TMDLs and BMAPs are developed and implemente d will not necessarily increase.

 Municipal and industrial wastew ater dischargers may face subs tantial near-term increases

in cost under the NNC rule.

 Over time, there is significant uncertainty in nonpoint source load control costs under all

three rules because of uncertain ty about the incremental increa se in the number of listed waters, about the nutrient target levels for N or P, and about cost and effectiveness of nonpoint source load control actions.

How the Alternative Cost Analysis Works

A more comprehensive cost anal ysis requires comparing the fu ture time paths of costs at each stage of water quality management under either the NNC rule or proposed Florida rule vs. the narrative rule (the baseline). The anal ysis would be comprise d of several tasks:

Task 1 is to predict the decisions that would be made in each stage, for each rule. The predictions would be for specified time interv als, such as for five-year increments. The differences among the rules can lead to differe nt decisions at each stage of water quality management, such as which waters are impaired. Prediction of these decisions requires making assumptions about both the likelihood of any part icular decision and the relationship of that decision to others that follow in sequence.

Task 2 is to estimate the administrative and lo ad control costs under each rule and for each future time period. Chapter 2 provides a de tailed review of the EP A estimate of unit costs and lengthy discussion of the effectiveness of the load control methods. In the broader framework, there should also be at least a narrative statement of the predicted water quality outcomes at each point in time.

Task 3 is to characterize the uncertainties in Ta sks 1 and 2 to determine if the costs of uncertainty are likely to be high. If so, formal probability analysis or scenario analysis should be conducted. Scenario analysis requ ires describing different comb inations of uncertain future conditions that taken together can create different outcomes. Building scenarios can be a group activity that facilitates know ledge exchange and mutual unde rstanding of central issues important to the results of the analysis.

Task 4 is to calculate the incremental difference in total costs (costs of proposed rule minus the costs of narrative rule) and relate this to the incremental differences in water quality outcomes at each time period.8 Review of the EPA’s Economic Analysis of Final Water Quality Standards in Flor ida

PREPUBLICATION COPY All of the metrics mentioned above can be re corded in a decision-making template (such as Figure 3-1). The template can be used, for example, to describe when and how many waterbodies would be listed over a fixed time pe riod, some metric of stressor evaluation, the number of TMDL plans developed, some metric of plan implementation, and the number of waterbodies meeting the designated use. The ba sis of the metrics should be explained (i.e., derived from trend analysis of historical record s, predictive models, stat istical equations, expert judgment) and should be based on how the rule g overns these stages and the available funding. Costs are calculated by multiplying the load reducti on effort by the cost per unit of effort and are also recorded in the template. Once complete, the template will reveal the total cost difference of a rule change, which could be compared to the incremental differences in water quality outcomes and interpreted in light of the uncertainty of the cost estimates. This can be done for each time period and would provide information important to formulating annual public budgets and forecasting when water quality results might be realized.

Findings about the Alternative Cost Analysis

The incremental costs of the NNC rule are at tributable to more than an increase in waterbodies listed and a requirement that all NPDES-permitted municipal and industrial sources discharging to surface water have certain effl uent concentration limits. In computing the incremental effect, the appropriate baseline s hould have been defined as what would have occurred over time under the existing (narrative) ru le. Thus, an incrementa l cost is the difference in implementation costs between two (or more) alternative future implementation time paths.

Future cost analyses of rule changes wo uld more fully represent areas of possible costs differences if they were more explicit in describing th e differences between the rules

over time . Administrative, load contro l, and water quality opportuni ty costs could be analyzed and reported as a cash flow over time, showing wh at sectors bear the costs as nutrient load

reductions at different levels ar e pursued. Comparing the rules over time also can provide an opportunity to present a realisti c picture of how the timing of water quality improvement actions might unfold with alternative rules, by illustrating the time lags between listing and achievement of water quality standards. Most importan tly, reporting on timing would provide useful information for predicting annua l budgetary requirements.

Uncertainty is pervasive in estimating th e incremental cost of implementing the NNC rule and is inadequately represented in the EPA analysis. In future analyses, reporting the difference in the time paths for implementa tion of water quality management rules, and associated uncertainties, would provide a more tr ansparent and realistic way to compare costs of the different rules and provide more useful information about where, when, and how costs diverge.

Some Florida stakeholders viewed the EPA co st analysis as being superficial or of limited scope, leading to reduced credibility. The result was to fost er disagreement about embedded assumptions rather than using the analys is to isolate and possibly reconcile sources of disagreement. Cost analysis as outlined above can help convey cost estimates in a moreSummary 9

PREPUBLICATION COPY transparent way and thus fac ilitate learning, reduce misunders tandings among stakeholders, and increase public confidence in the results.

Conducting an alternative cost analysis , with increased attention to careful

assessment of rule differences , stakeholder engagement, and uncertainty analysis, might not have been possible with the budget a nd time EPA spent on it cost analysis. Any critique of the existing EPA cost analysis should recogniz e that some deficiencies may be traced to time and budget limitations.10

PREPUBLICATION COPY 

## Chapter 1

Introduction

Nutrients such as nitrogen and phosphorus have long been known to ca use degradation of surface waters when supplied at rates above the assimilative capacity of the waterbody. Excess nutrient loading leads to the prolif eration of algae, which are in turn degraded by bacteria that can deplete waters of their di ssolved oxygen. Nutrient enriched waters exhibit a variety of ecological symptoms, from harmful algal blooms to loss of submersed aquatic vegetation to fish kills. Waterbodies suffering from nutrient enrich ment are evident in every region of the United States, from lakes and streams in the Midwest, to the Chesapeake Bay estuary, to coastal waters of the Gulf of Mexico. Although there can be considerable debate about the relative sources of nutrients in any given location, nutrients are widely known to st em from agricultural operations, urban landscapes, municipal and some industria l wastewater, mining activ ities, and atmospheric deposition. For decades Florida has experienced its sh are of nutrient related pollution issues, highlighted by pollution in Lake Okeechobee an d the Everglades stemming principally from agriculture. Not surpri singly given its warm climate, topog raphy, intense and va ried agriculture, and rapid urbanization, hundreds of freshwater lakes and stream s in Florida are polluted by

nutrients to such an extent that natural populations of flora and fa una are out of balance. Florida has managed these waters using a narrative standa rd for nutrients. At the urging of the U.S. Environmental Protection Agency (EPA), states are moving toward the use of numeric water quality criteria for nutrients in an attempt to accelerate and standardize the restoration of nutrient-impaired waters. This report was written by a committee of the National Research Council charged with reviewing the economic imp lications of new numeri c nutrient criteria developed by EPA for Florida’s inland waters. In particular, the Committee was asked to evaluate EPA’s method for estimating the increm ental costs of implementing numeric criteria compared to the existing narrative standard. The issue has focused national attention on Florida,

which is often the case in matters of water resources.

TECHNICAL CHALLENGES OF NUTRI ENT MANAGEMENT IN FLORIDA

Florida has more than 11,000 miles of rivers and streams, over 7,700 lakes, and 27 firstmagnitude springs (stateofflorida.com; see Figur e 1-1 for the state’s major water features). Many of these waterbodies suffer from nutrient pollution due to a unique convergence of human

and environmental conditions. These includ e high population growth rates and resulting demands for water, land use changes from wetlands and forests to agriculture and urban areas, a tropical climate and flat topography, predominan tly sandy soils and transmissive geologicIntroduction 11

PREPUBLICATION COPY FIGURE 1-1 Major Florida lakes, rivers, and springs. SOURCE: USGS National Hydrography Dataset 2011. http://nhd.usgs.gov/

materials, buildup of legacy nutrients, and compe ting value systems that influence perceptions of costs and risks of water quality impairment by Florida’s diverse populatio n. Combined with the

fact that treatment tec hnologies to restore nutrie nt-impaired waters can be very expensive, these

issues have made and will conti nue to make nutrient management in Florida an important but formidable and costly challenge, rega rdless of the regulatory paradigm used.

Population Growth

Florida’s population increased from 12.9 m illion people in 1990 to 18.8 million in 2010 (BEBR, 2010). In the next 20 years, Florida’ s population is expected to increase 15 to 35 percent (Figure 1-2), or to between 21.8 a nd 26.0 million people (BEBR, 2010). Population growth has the potential to affect transport of nitrogen and phosphorus from urban and suburban areas to surface waterbodies through increased di scharge of stormwater and wastewater and loss of natural assimilative capacity.12 Review of the EPA’s Economic Analysis of Final Water Quality Standards in Flori da

PREPUBLICATION COPY FIGURE 1-2 Projected changes in Florida population between 2010 and 2030 for moderate growth

scenario. SOURCE: BEBR (2010).

Land Use Change

As Florida’s population increases, there will be secondary changes in land use (Figure 1- 3) and land management practices that will affect water qua lity. Expansion of urban and suburban land uses into former agricultural la nd will cause shifts in agricultural production, primarily in citrus, vegetable, row crop, and cow/calf operations. Expansion of urban and

suburban areas into forested la ndscapes will replace perennial ve getation on relatively permeable soils with urban landscapes that have more impervious surface area, potentially increasing nutrient exports. The specific impacts of these s econdary changes are difficult to assess, as they depend specifically on which landscapes are affected and the connectivity between these landscapes and nearby surface waterbodies. Nonethel ess, one can expect that nutrient loads to

surface waters will increase as fo rested areas are converted to urban and suburban land (USGS, 1998). As agricultural lands are converted to ur ban and suburban land, a decrease in nutrient loads can be expected, although the exact dire ction and magnitude of the impact depends on many factors, including the type of agriculture practiced before conversion and the nature of the urban land use (e.g., industrial, lo w density residential, high dens ity residential, park or golf course).Introduction 13

PREPUBLICATION COPY FIGURE 1-3 FDEP compiled Florida land cover data for 2004.

Climate and Topography

The effects of excess nutrients applied to th e land surface, whether in agricultural or urban activities, are exacerbated by the climatic a nd topographic conditions part icular to Florida. High temperatures prevail thr oughout a significant fraction of the year, oscillating from 61 o F to

well over 95 o F, and can be a powerful driver for the growth of aquatic vegetation. Florida annually receives significant amounts of precipita tion throughout the state, ranging from nearly 40 to over 60 inches (see Figure 1-4). Half of this precipitation occurs in a relatively short period from June to September in the form of hi ghly localized intense thunderstorms as well as tropical storms, although there is variation in this seasonal dist ribution from north to south. Intense rainfall can produce heavy runoff (and asso ciated pollutant loads) over short periods of time. Also, precipitation is a significant source of infiltration and groundwater recharge, which can carry excess nutrients to Flor ida’s lakes, springs, and rivers.14 Review of the EPA’s Economic Analysis of Final Water Quality Standards in Flori da

PREPUBLICATION COPY FIGURE 1-4 Annual Rainfall Distribution in Florida. Legend units are in inches. SOURCE: ERD (2007).

Florida has relatively low-ly ing, flat topography (Figure 1-5) , with a mean elevation of 100 feet. Heavy rainfall and a shallow water tabl e are responsible for la rge areas of the state being covered historically by sh allow swamps, wetlands, and marshe s. In order to use the land for agriculture, many of these areas have been hy drologically altered such that excess nutrients are transported to surface waters through tile drai ns or drainage ditches and are no longer stored or processed in-situ. Thus, water quality manage ment strategies in Florida often take on the challenging and expensive task of restoring drained swamps, we tlands, and marshes to regain their nutrient assimilation capabilities.Introduction 15

PREPUBLICATION COPY FIGURE 1-5 Florida elevation patterns. SOURCE: USGS Digital Elevation Map Resources. http://data.geocomm.com/dem/demdownload.html

Soil and Geology

Florida water quality is strongly affected by natural vari ability in soil and geologic materials, as manifested in clear differen ces in lake physical, chemical, and biological

characteristics across Florida’s 47 Lake Ecoregions (Griffith et al., 1997). Florida’s geology has been influenced by fluctuations in sea level. Because low-lying Florida was covered by oceans for millions of years, bedrock is composed mainly of carbonate rocks overlain by beach or dune

sand. There are extensive localized deposits of phosphate rock that fo rmed in ancient coral reefs.

Lakes and rivers in these areas typically have elevated natu ral background levels of total phosphorus. Carbonate rocks have weathered to produce karst landscapes with many sinkholes and springs across wide regions of Florida. The majority of Florid a lakes were formed in basins affected by dissolution of carbonate rock (Schiffer, 1998). Most of the inflow to these lakes arises from groundwater discharg e rather than surface runoff. Soils in Florida are primarily spodosols or en tisols, with a smaller portion being histosols and ultisols (Collins, 1985). Spodosols are coarse textured soils with an amorphous mixture of organic matter and aluminum, underlain by a gr ay eluvial (leached) layer where water has removed most of the organic matter. These soil s are often used for production of citrus, and in16 Review of the EPA’s Economic Analysis of Final Water Quality Standards in Flori da

PREPUBLICATION COPY the wet season are artificially drained to lower the water table. Entisols are poorly developed sandy soils without horizons. They have rapid inf iltration and are often ir rigated. Both soil and geologic conditions can produce high background levels of nutrients in Florida waterbodies that make meeting numeric water quality criteria a cha llenge (as discussed in a subsequent section).

Legacy Nutrients

Legacy nutrients, primarily stemming from agri culture, exist in large quantities in many Florida soils, wetlands, lakes, streams, and aqui fers. These legacy nutri ents are the result of many decades of phosphorus transport from upland contributing areas in the case of lakes and wetlands, or many decades of nitrate leaching to aquifers, which has resulted in a significant impact on spring water quality. Legacy nutrient flows can dominate a wa tershed’s nutrient flows

decades after nutrient additions have been curta iled. For example, Reddy et al. (2010) estimated total phosphorus (TP) storage in upland and wetl and soils in the Lake Okeechobee basin to be 215,000 metric tons. Approximately 80 percen t of the stored phosphorus (or 169,800 metric tons) was estimated to be located in soils and str eam sediments, with the remainder stored in lake sediments in the Upper Chain of Lakes, Lake Istokpoga, and Lake Okeechobee. Reddy et al. (2010) evaluated the potential long-term role of this legacy phosphorus on loading to Lake

Okeechobee. Based on conservative estimates of phosphorus leaching rates and the amount of stored reactive phosphorus in th e watershed, the authors predicte d that legacy phosphorus could maintain a phosphorus load to Lake Okeechobee of 500 metric tons per year for the next 22 to 55 years. This loading rate consid ers only legacy phosphorus stored in the soils and sediments and does not take into account new phos phorus additions in the basin.

Internal nutrient loads from sediments in La ke Okeechobee to the water column are also significant. Based on several earlie r research reports, Reddy et al . (2010) estimated the internal

flux from mud sediments to the water column to be 112 metric tons of phosphorus per year continuing for 12 to 31 years. Waterbodies suffering from legacy nutrients ge nerally require very stringent and costly BMPs in order to meet water quality goals similar to the numeric nutrient criteria. Examples of this situation, highlighting the more expensive actions required, are pres ented in Box 2-1 for Lake Okeechobee and for the Everglades Agricultural Area.

IMPAIRMENT OF FLORIDA’S INLAND STREAMS, LAKES, AND SPRINGS

Given the conditions described above, it is not surprising that impairment of Florida waters caused by nutrient overenrichment is widesp read and mostly growing. Determinations of waterbody impairment for each State are require d by the Clean Water Act Section 305b every two years. For the Florida 2008 305b report, there were sufficient data to evaluate (by area or length) 53 percent of the state’s rivers and st reams and 81 percent of its lakes (FDEP, 2008); poor water quality (for all causes except merc ury) was found in 28 percent of the river and stream miles and 25 percent of the lake acres . Approximately 2,565 total maximum daily load (TMDL) calculations will be re quired for 1,688 Florida waters. The 2008 report revealed that nutrients are the most prevalent pollutant in lakes, accounting for 349,248 impaired lake acres (157 lakes). For rivers and streams, nutrients are preceded by dissolved oxygen deficits (whichIntroduction 17

PREPUBLICATION COPY can be driven by nutrients), mercury, and fecal coli form bacteria as major pollutants. At least 128 rivers and streams, accounting for 1,049 stream m iles, violate the narrat ive nutrient standard. Median phosphorus in monitored Florida waters is around 0.05 mg/L, after having risen steadily

in the 20 th century until the mid-1980s when the stat e adopted its Stormwater Rule (FDEP, 2011). Water quality in many springs has also dec lined steadily since the 1970s. Thirty six (36) springs that have been monitored over the last 30 years have had increasing levels of nitrate-N, such that the combined median value has doubled (and ranges from 1 to 5 mg/L). Regarding the number of waterbodies requi ring a TMDL because of nutrients, EPA (2010) states that there are approxim ately 168 waterbodies (denoted WBIDs 1 in Florida) covered under nutrient TMDLs in Florida, 117 of which ar e for lakes and flowing waters. An accounting of those waterbodies in the EPA report reveal s 89 TMDLs because most TMDLs cover more than one WBID (see Exhibit 2-8 in EPA, 2010). A nother 497 waterbodies in Florida are listed as impaired and await nutrient TMDL developmen t (EPA, 2010, Exhibit 2-7). Higher values are reported by the Florida Department of Environm ental Protection (FDEP). FDEP considers 720 WBIDs as impaired and in need of a TMDL; mo st have been listed as impaired based on a nutrient assessment, but others are impaired based on violations of the di ssolved oxygen standard (personal communication, Frank Nearhoof, FDEP, 2011). There are 122 WBIDs for which a TMDL has already been developed (pers onal communication, Fra nk Nearhoof, FDEP, 2011). As shown in Figure 1-6, the state has a dopted nine Basin Management Action Plans (BMAPs) to implement dozens of TM DLs across the state (not just fo r nutrient-impaired waters). This process requires that pollu tant loads be allocated among va rious sectors, including point

sources like industrial and wastewater treatment plants, as well as more diffuse sources such as agriculture, stormwater from urba n areas, and septic systems. The contributions of nitrogen and phosphorus vary substantially by se ctor and by basin; examples ar e given in Figures 1-7 and 1-8 of nutrient loadings to the Wekiva River and th e lower St. Johns River. Furthermore, each polluting sector operates under di fferent legal and regulatory re quirements, as described in greater detail in Chapter 2.

1 WBID refers to a Water Body Identification Number, but it includes more than just a waterbody. For a multitude of water resource purposes, Florida was divided up into polygons that roughly delineate the drainage basins surrounding individual waterbody assessment units, and each polygon was assigned a unique Water Body

Identification Number. The assessment units are lakes or portions of lakes, springs, rivers and streams, segments of rivers and streams, and coastal, bay and estuarine waters in Florida. Thus, each WBID contains both water and the surrounding drainage basin. Note that many FDEP documents use the term WBID when discussing impaired waters; this use of the term should not be confused to mean that a WBID is only the waterbody.18 Review of the EPA’s Economic Analysis of Final Water Quality Standards in Flori da

PREPUBLICATION COPY FIGURE 1-6 TMDL Project implementati on via Basins Management Action Plans. SOURCE: Florida Department of Environmental Protection (2011).Introduction 19

PREPUBLICATION COPY FIGURE 1-7 Relative Contribution of the Nitrogen Loa d by Sector to the Wekiva River in the middle St. Johns basin. OSTDS = on-site sewage treatment and di sposal system (septic system). Legacy nutrients were not specified in this analysis. SOURCE: MACTEC (2010).

FIGURE 1-8 Relative Contribution of the Nitrogen Load and Phosphorus Load by Sector to the Lower St. Johns River. Legacy nutrients were not specified in this analysis. SOURCE: Hendrickson et al. (2002). Natural
Nonpoint

34%

Agricultur

al
Nonpoint

8% Urban
Nonpoint

13% Other
Nonpoint

0% Point

Source

45% Lower St Johns River Total N Loads (Estimated 1995

‐ 1999 ave)

Natural
Nonpoint

14% Agricultur

al
Nonpoint

12%

Urban
Nonpoint

17%

Other

Nonpoint

0% Point

Source

57% Lower St Johns River Total P Loads (Estimated 1995

‐ 1999 ave)20 Review of the EPA’s Economic Analysis of Final Water Quality Standards in Flori da

PREPUBLICATION COPY WATER QUALITY STANDARDS AND THE TMDL PROCESS

The Clean Water Act (CWA) addresses the pr otection and restoration of the nation’s waters through four major programs—water quality standards, point source permitting of wastewater dischargers via the national pollutant discharge elimination system (NPDES), total maximum daily loads (TMDLs), and the implementa tion of best management practices to control nonpoint sources of pollution. In th eir water quality standards, Stat es establish th e objectives for how waters are used (i.e., desi gnated beneficial uses), along w ith the chemical, physical, and biological qualities of those same waters that would protect their desi gnated uses. Designated uses include aquatic life support, recreation, drinking water supply, etc. The chemical, physical, and biological qualities of waters are collectively referred to as criteria. The criteria can be narrative, i.e., a description of th e desired condition, or they can be specific numeric values. The CWA specifies that individual states set their ow n water quality standards, with those standards subject to approval by EPA. EPA can promulgate water quality standard s for states if EPA

determines that state standards are insuffici ent to meet the requirements of the CWA.

When waterbodies fail to meet their standa rds, the TMDL program is implemented, the objective of which is attainment of water qual ity criteria by controlling both NPDES-permitted point sources and nonpoint sources of polluti on. Nonpoint sources pr imarily consist of agricultural runoff, unregulated urban runoff, and atmospheric deposition of pollutants. A TMDL establishes the total pollutant load for both point and nonpoint so urces. Load reductions for point sources are referred to as waste load allocations (WLA) while load reductions for nonpoint sources are referred to as load allocations (LA). Due to the uncertainty in the response of the waterbody to loading reductio ns, a margin of safety (MOS) is also included in the TMDL calculation. The pollutant load reduction required to meet the TMDL is the difference between the existing watershed loads and th e loads specified by the TMDL. Load reductions for point and nonpoint source s are spelled out in TMDL implementation plans. In Florida, the Department of Envir onmental Protection develops comprehensive TMDL implementation strategies through BMAPs. BMAPs define permit limits for wastewater facilities to address the WLA portion of the TMDL as well as identifying urban, suburban, and agricultural best management practices and region al treatment systems required to meet the LA established by the TMDL. BMAP s are developed in conjunction with local stakeholders and seek to equitably allocate load reductions nece ssary to meet the TMDL. BMAPs rely on local involvement for successful implementation and once developed are adopted as enforceable documents by the FDEP Secretary.

Because the CWA authorizes states to de velop and implement water quality programs, each state implements those authori ties subject to its own state laws and regulations. In general, however, Figure 1-9 provides a simplified diagram illustrating the general interaction of water quality standards, NPDES permitting, and TMDLs a pplicable to all states. Box 1-1 contains definitions of important water quality management terms.Introduction 21

PREPUBLICATION COPY State Places Impaired Waters on

the Impaired Waters (303d) List State Develops Water Quality

Standards (WQS)

State Develops Wastewater
(NPDES) Permits Based on Approved WQS

State Develops Total Maximum

Daily Load for Impaired Waters State Monitors and Assesses

Waters for Compliance w/WQS

EPA Approves/Disapproves State’s

303d List

EPA Approves/Disapproves State’s

Total Maximum Daily Load

State Develops Implementation

Plan for Total Maximum Daily

Load EPA Approves/Disapproves State’s

WQS

FIGURE 1-9 General Overview of the Clean Water Act WQS and TMDL Process.22 Review of the EPA’s Economic Analysis of Final Water Quality Standards in Flori da

PREPUBLICATION COPY Box 1-1 Definitions of Selected Water Quality Management Terms

1. Water Quality Standards— State or Federal regulatory requirements for surface and ground waters falling under the jurisdiction of the Clean Water Act. The standards consist of three parts - a designated use or uses, water quality criteria based upon on designated uses, and an antidegradation policy.

2. Criteria— Elements of State water quality standards, expressed as constituent concentrations, levels, or narrative statements, representing a quality of water that supports a particular designated use.

3. Designated Uses— Elements of State water quality standards that specify the uses for each water body whether or not a specific use is currently being attained. Mandatory Clean Water Act uses include aquatic life and recreation support. Other common uses are drinking water, irrigation, and industrial water supply support.

4. Numeric Nutrient Criteria— Criteria that define the maximum nitrogen and/or phosphorus concentration in a water body that will maintain its designated use.

5. Narrative Criteria— Narrative statements that define a desired condition of a water. For nutrients, in Florida the narrative criterion has been “no imbalance of flora or fauna" which can be determined by measuring biota, changes in dissolved oxygen, changes in pH, or other indicators related to nutrient pollution.

6. Biological Criteria or Biocriteria— Numeric values or narrative expressions of the desired biological condition of aquatic communities in a waterbody.

7. Independent Applicability— A concept put forth in EPA policy that states an exceedance of either chemical

or biological water quality criteria provides irrefutable evidence of nonattainment of water quality standards regardless of the results of other types of assessments.

8. Target— Generally, a non-regulatory narrative or numeric goal established to achieve or maintain a water’s designated uses.

9. Nutrient Threshold— A concentration of nutrients against which ambient nutrient concentrations are compared to assess impairment of a water’s designated uses. In Florida’s proposed rules, nutrient thresholds only apply to streams.

10. Water Body Identification Number (WBID)— Florida was divided up into polygons that roughly delineate the drainage basins surrounding individual waterbody assessment units, and each polygon was assigned a unique Water Body Identification Number. The assessment units are lakes or portions of lakes, springs, rivers and streams, segments of rivers and streams, and coastal, bay, and estuarine waters in Florida. Thus, each WBID contains both water and the surrounding drainage basin. Note that many FDEP documents use the term WBID when discussing impaired waters; this use of the term should not be misinterpreted to mean that a WBID is only the waterbody.

11. Total Maximum Daily Load (TMDL) —the maximum pollutant load that a waterbody can receive and not violate its water quality standard. The TMDL also specifies how the load will be allocated among point and nonpoint source dischargers to that waterbody.

12. Basin Management Action Plan (BMAP) —A plan that outlines how a TMDL will be implemented. BMAPs can include revised permit limits for point sources as well as new pollutant control requirements for nonpoint sources.

13. Site-Specific Alternative Criteria (SSAC)— If the characteristics of a receiving water allow attainment of designated uses with nutrient concentrations higher than EPA’s numeric nutrient criteria, site specific alternative criteria may be developed that could result in less stringent effluent limitations. Because dischargers may be required to obtain additional data to assess the appropriateness of SSAC, the extent to which dischargers use this mechanism to obtain regulatory relief is uncertain.Introduction 23

PREPUBLICATION COPY NUMERIC NUTRIENT CRITERIA IN FLORIDA

Like most other states, Florida currently uses a narrative criterion to protect its waters from nutrient pollution, which states that “[in] no case shall nutri ent concentrations of a body of

water be altered so as to cause an imbalance in natural populations of aquatic flora and fauna.” Implementing this standard entails detailed biol ogical assessments for individual waterbodies. Thus, this criterion has been implemented on a case -by-case and site-by-site basis for identifying and listing impaired waters, esta blishing TMDLs, and deriving appropriate NPDES permit limits for point sources. In 2009 EPA determined that numeric, rather than narrative, nutrient criteria would be necessary in Florida to meet the requirements of the CWA (EPA, 2009). This determination

stemmed from a Consent Decree between EPA and several envir onmental organizations (the Florida Wildlife Federation, the Conservancy of Southwest Florida, the Environmental

Confederation of Southwest Florid a, St. John’s Riverkeeper, and th e Sierra Club) that had sued EPA, maintaining that Florida’s narrative nutrie nt criteria were not protective of Florida’s waters. Their argument was that the narrative, si te-by-site approach to address nutrient pollution problems in Florida was taking too much time a nd too many resources to allow the state to effectively and expeditiously addres s its thousands of stream miles and lake acres that violate the narrative nutrient standard. The environmental groups cited EPA’s 1998 National Strategy for the Development of Regional Nutrient Criteria calling for states to develop numeric nutrient criteria by 2003 as the rationale for requiring such criteria for Florida’s waters. Furthermore, they cited section 303 of the CW A, which requires EPA to “promptly prepare and publish” new or revised water quality standard s “in any case where the Administra tor determines that a revised or new standard is necessary to meet the requi rements of this Act [the Clean Water Act].”

The main fundamental difference between the narrative and numeric nutrient standards is

that under the narrative standard wa ters are listed as impaired b ecause of an imbalance of flora and fauna, which is based on biolog ical condition assessment. On ly subsequently are nutrients investigated as the cause of unacceptable biological conditions, a nd, if that determination is made, the state creates targets for N or P or both either in terms of allowable loads or

concentrations. Under the numeric nutrient standard, simple chemical monitoring of a waterbody when compared to the numeric standards can lead to a water being listed as impaired, regardless of the associated biological condition of the water. (The reader is referred to the beginning of Chapter 3 for a more in-depth expl anation of the differences between the narrative and numeric nutrient criteria.) The numeric nut rient standards establis hed for Florida by EPA on November 14, 2010, are for nitrogen and phosphorus in lakes and flowing waters for different regions of the state, as shown in Table 1- 1 (Federal Register, D ecember 6, 2010, 75 FR 75762). This report does not evaluate the underlying scientific basis of the numeric nutrient

criteria found in Table 1-1. Nonethel ess, it is useful to consider the overall feasib ility of meeting the given numeric nutrient crite ria in Florida’s inland lakes under current conditions. As discussed in Box 1-2, a cursory analysis of lake data suggests that the num eric nutrient criteria will be difficult to attain in some (but not all) ecoregions due to differences in natural geology, soil, landscape, and hydrologic factors. Whethe r these results apply to streams as well is uncertain. Interestingly, a comparison of the numer ic nutrient criteria with typical TMDL targets in impaired streams and lakes suggests that the nu meric criteria are usually less stringent than the TMDL targets that have been developed under th e narrative process, ex cept for lakes with phosphorus pollution (see Box 3-1 in Chapter 3).24 Review of the EPA’s Economic Analysis of Final Water Quality Standards in Flori da

PREPUBLICATION COPY TABLE 1-1 Numeric Nutrient Criteria fo r Lakes and Flowing Waters in Florida Region/ Type of Water Chlorophyll- a (mg/L) TN Criteria (mg/L) TP Criteria (mg/L) Nitrate + Nitrite Criteria (mg/L)

Colored Lakes 1 0.020 1.27 0.050 NA Clear Lakes (high alkalinity) 2 0.020 1.05 0.031 NA

Clear Lakes (low alkalinity) 3 0.006 0.50 0.011 NA

Panhandle East Flowing Waters NA 1.03 0.18 NA

Panhandle West Flowing Waters NA 0.67 0.06 NA

North Central Flowing Waters NA 1.87 0.30 NA

West Central Flowing Waters NA 1.65 0.49 NA

Peninsula Flowing

Waters NA 1.54 0.12 NA

Springs NA NA NA 0.35 NA = not applicable

1 Long-term Color > 40 Pt-Co

2 Long-term Color ≤ 40 Pt-Co and Alkalinity > 20 mg/L CaCO

3 .

3 Long-term Color ≤ 40 Pt-Co and Alkalinity ≤ 20 mg/L CaCO

3 . SOURCE: EPA (2010).

It should be noted that Florida is still in the process of trying to develop its own numeric

criteria for nutrients that woul d supersede Table 1-1 if approv ed by the Florida Environmental Regulatory Commission (which oc curred December 8, 2011), the Florida legislature, and EPA. As of the writing of this report, FDEP has deve loped a hybrid criteria approach that includes aspects of both the current Flor ida narrative criteria and the EP A numeric criteria. The FDEP proposal would establish generally applicable numeric nutrient “thresholds” as an additional interpretation of the Florida narrative criteria for streams, but woul d only use the threshold values to make impairment decisions if th ere is concurrent conf irmation of biological impairment. In addition, if a site-specific “numeric nutrient interpretation” exists, such as a sitespecific numeric criterion or an approved numeric TMDL target, the site-specific interpretation is used in lieu of the applicable numeric nutr ient threshold. Compared to the EPA’s numeric nutrient criteria, this hybrid approach has more flexibility for dealing with natural background nutrient sources and variability in site -specific conditions at finer scales. The newly proposed FDEP criteria would al so include a new antidegradation-type provision for assessing impairment. This provisi on would place waters on the State’s impaired waters planning list if they show an adverse or worsening trend in biolog ical response variables or dissolved oxygen (DO)—even if waters did not fail any of the biological indicators. The listing of waters based on adverse nutrient res ponse trends would provi de FDEP the opportunity to proactively address worsening nutrient conditi ons prior to observing an actual impairment of waters’ designated uses. The incremental co sts of implementing Florida’s hybrid criteria approach are being evaluated by Florida State Univ ersity—an effort for which the results of this report should be useful.Introduction 25

PREPUBLICATION COPY Box 1-2 Challenges in Meeting the Numeric Nutrient Criteria in Lakes

The Committee conducted a cursory analysis of la ke data (which incidentally were not used by EPA in its economic analysis) to determine what perc entage of Florida lakes wo uld likely violate the numeric nutrient criteria (NNC). Note that this analysis was approximate because the lake data did not necessarily use the same threshold values as the NNC . Nonetheless, the analysis suggests that it will be challenging to meet the NNC in many Florida lakes. Florida has over 7,700 lakes (Griffith et al., 1997). The aquatic ecoregion framework developed nationally by Omernik (1987) has pr oven useful for lake water quality assessment and management in Minnesota (Heiskary and Walker, 1988; Hatch et al., 2001; Birr and Mulla, 2002) and Ohio (Fulmer and Cooke, 1990). Griffith et al. (1997) divided Florida in to 47 level IV aquatic ecoregions to describe regional

variations in Florida lake water quality characteristics. For each ecoregion, lake water quality

characteristics were summarized.

For colored lakes the numeric nut rient criteria proposed by EPA (2010) are 0.050 mg/L TP and 1.27 mg/L TN. Using data compiled by Griffith et al . (1997) these standards can be met by most lakes in ten of thirteen of Florida’s level IV aquatic ecoregio ns having colored lakes. The greatest difficulty will be in the Southwestern Flatlands ecoregion, where 75% of the lakes exceed 0.075 mg/L TP and 1.25 mg/L

TN. This is a coastal lowland r egion, with citrus, pasture and urba n development. Numeric criteria will
also be difficult to attain in the Northern Peninsul a Karst Plains ecoregion, where 50% of the lakes exceed 0.074 mg/L TP. There are widespread phosphatic sand deposits in this region. In the Central Valley ecoregion 50% of lakes exceed 1.4 mg/L TN, so the numeric criteria for TN will be widely violated. This is a region of large, shallow eutrophic lakes with nutrient enriched soils.

For clear alkaline lakes the numeric nutrient criteria proposed by EPA are 0.031 mg/L TP and 1.05 mg/L TN. There are eight level IV aquatic ecoregi ons with these types of lakes in Florida. Numeric criteria can likely be met in six of these ecoregion s. The remaining ecoregions are characterized by extensive geologic deposits of phosphatic sands or cl ays, where attaining numeric nutrient criteria is probably difficult. In the Lakeland/Bone Valley ecoreg ion, for example, there is extensive mining for phosphate deposits. The vast majority of lakes in this ecoregion exceed 0.12 mg/L TP and 1.7 mg/L TN. In the Orlando Ridge ecoregion half of the lakes exceed 0.031 mg/L TP.

For clear non-alkaline lakes the numeric nutrient criteria proposed by EPA are 0.011 mg/L TP and 0.5 mg/L TN. There are thirteen Level IV aquatic ecoregions in Florida with these types of lakes. The numeric nutrient criteria can likely be met in six of t hese ecoregions. Attaining these criteria in the other seven ecoregions will be challenging, if feasible at all. For example, 75% of lakes in the North Brooksville Ridge ecoregion exceed 0.008 mg/L TP and 0.57 mg/L TN . This area is characterized by thick sands underlain by phosphatic deposits. In the Weeki Wa chee Hills ecoregion, 75% of the lakes exceed 0.009 mg/L TP and 0.63 mg/L TN. The results of this analysis suggest that meeti ng the NNC in lakes of Florida will be challenging,

because TP concentrations in some lakes are cont rolled by natural geologic, soil and hydrologic factors (Bachmann et al., 2010) in addition to anthropogenic factor s. It will be especially challenging to meet the NNC for TP in lakes within ecoregions where phosp hatic deposits occur (e.g., North Peninsula Karst Plains, Lakeland/Bone Valley, and North Brooksville Ridge). It should be noted that FDEP rules allow for exceptions to meeting numeric st andards given natural background co nditions, using the site-specific alternative criteria (SSAC) process.26 Review of the EPA’s Economic Analysis of Final Water Quality Standards in Flori da

PREPUBLICATION COPY Estimates of the Incremental Cost to Implement the Numeric Nutrient Criteria

EPA’s numeric nutrient criteria for Florida may result in new impaired waters listings

and reevaluation of the TMDLs for the waters that are currently listed as impaired. These actions may lead to new or revised NPDES pe rmit conditions for point source dischargers, and/or nutrient control require ments or best management practice (BMP) guidance on other pollutant sources, although the numeric nutrie nt criteria rule itself does not establish requirements directly applicable to such entities. Therefore, EPA was required to produce an economic analysis of the potential incremental co sts and benefits that may be associated with implementation of the numeric nutrient criteria rule, taking into account existing federal and Florida regulations. EPA’s economic analysis (EPA, 2010) is an a ssessment of the potential incremental cost of implementing the numeric nutr ient criteria, taking into ac count technologies and other controls that may be used to meet the criteria in waters newly identified as impaired as a result of the new criteria. The analysis assumes that affect ed parties will make use of various site-specific criteria adjustment processes and Florida’s ab ility to re-designate beneficial uses, grant variances, and establish lo ad allocations in TMDLs. EPA’s stated annual combined incremental cost estimates range from $135.5 to $206.1 million per year, which is a total of $1.4 to $2.2 billion over a 20-year period (EPA, 2010). Other stakeholder groups have produced their own estimates of the cost of implementing the numeric nutrient criteria, with some having es timated costs as high as to $12 billion (FDEP, 2010). Like the EPA report, reports from FDEP (2010) and Car dno ENTRIX (2010a,b) on behalf of the Florida Water Quality Coalition cove r all pollutant sectors. Other groups targeted specific portions of the EPA economic analys is, including reports from the Florida Water Environment Association Utility Council (municipal point sources; Carollo Engineers, 2010), the Florida Department of Agriculture and Consumer Services (agriculture; Budell et al., 2010), the Florida Pulp and Paper and the Florida Phospha te reports (industrial point sources; AWARE Environmental Inc. and AquAeTer In c., 2010, and ENVIRON, 2010, respectively). The discrepancies between the EPA and othe r analyses arise from many factors (as discussed in greater detail in Chapter 2). Firs t, EPA considers only those additional waters that that are newly identified as impaired based on th e numeric nutrient criteri a and does not consider waters that Florida has already determined to be impaired based on existing FDEP assessment methodologies. Second, EPA and ot her stakeholders made differe nt assumptions about which point and nonpoint source activitie s to include in their cost anal yses. Third, there are differing opinions about the level of technolo gy that will be needed and thus the cost necessary to meet the numeric criteria. The EPA economic analysis assu mes that available regulatory exemptions will be sought, while other analyses assume that more expensive technologies will be required. The cost discrepancies between the EPA analysis and others are pres ented in Table 1-2. Part of the controversy in Florida has been that the media, the public, and also perhaps decision makers have been misinterpreting the EPA incremental cost estimate as the total cost
needed to reduce nutrient loads to levels that would meet designated uses within impaired waterbodies. Indeed, several of the competing stakeholder analys es that approach the billion dollar annual level (s ee Table 1-2) are clearly a reflection of attempts to estimate the total cost,

not the incremental cost. A sec ond point of controversy is that EPA implicitly assumes that the implementation activities included in its cost an alysis would be adequate to meet the numeric nutrient criteria in both the incrementally impaired waters and in those al ready be identified asIntroduction 27

PREPUBLICATION COPY TABLE 1-2 Cost Discrepancies between the EPA Economic Analysis and other reports.

Nutrient Source Stakeholder

Estimates EPA (2010) Cardno ENTRIX (2011b)
Municipal WWTPs $2–4.6 billion/yr (Carollo, 2010) $22.3–38.1 million/yr $41–395 million/yr

Industrial Facilities $2.1 billion/yr 1

(FDEP, 2010) $25.4 million/yr $270–1,973 million/yr

Urban Stormwater $2.0 billion/yr (FDEP, 2010) $60.5–108 million/yr $61–629 million/yr

Agriculture $0.9–1.6 billion/yr (Budell et al., 2010) $19.9–23 million/yr $33–969 million/yr

Septic Systems $0.9–2.9 billion/yr (FDEP, 2010) $6.6–10.7 million/yr $8–65 million/yr

Government Expenditures $0.9 million/yr $1–11 million/yr 2

1 This does not include the costs determined by the Pulp and Paper Industry and the Phosphate Industry found in AWARE Environmental Inc. and AquAeTer Inc. , 2010, and ENVIRON, 2010, respectively.

2 These numbers came from a spreadsheet Car dno ENTRIX made available at their ftp site. The range is the low end of their "BMP/LOT" analysis and the high end of their "End of Pipe" analysis.

nutrient stressed under the na rrative process. That is, the EPA cost analysis fails to acknowledge the possibility that what Florida historically requi red will be insufficient to achieve the numeric nutrient criteria. Chapter 2 makes it clear that wh at has been implemented in the past has made some water quality improvements in some sectors, but in general has not led to attainment of designated uses. This is not meant to sugge st that the EPA analysis was wrong in focusing on the incremental costs; indeed, this was the most a ppropriate approach to take (although EPA was not comprehensive—see Chapter 3). Nonetheless, subsequent to EPA releasing its economic analysis a period of confusion ensued, during whic h stakeholders argued pr imarily about the total

cost and confused incremental cost with total cost. It is certain that the total costs of attaining water quality standards in Florida waters impa ired by nutrients will be enormous, not only because of ongoing polluting activities and the cu rrent state of water quality impairment in Florida but because of natural background sources of nutrients, legacy sources that are unlikely to be remediated by common nonpoint source BMPs, and ongoing changes in population, land use, and the economy. These total long-term cost s of restoring impaired surface waterbodies are going to be much higher than either the incremen tal costs of the EPA’s numeric nutrient criteria or the historic costs already incurred for TMDL s and BMAPs in waters impaired under Florida’s narrative criteria, regardless of the future regulat ory framework. If FDEP made a statement to that effect, it would further the public’s unders tanding of the scope of nutrient pollution in Florida and the challenges to its management, a nd overcome misunderstandings that have arisen during debate about EPA’s numeric nutrient criteria.

REQUEST FOR NATIONAL RESEARCH COUNCIL STUDY

Resolution of the discrepancies between various stakeholders describe d above is critical to moving forward with implementation of the nu meric nutrient criteria. Thus, EPA requested28 Review of the EPA’s Economic Analysis of Final Water Quality Standards in Flori da

PREPUBLICATION COPY that the National Research Council (NRC) conduct a review of the Agency’s economic analysis of the incremental costs of state implementation of final numeric nutrient criteria for lakes and flowing waters in Florida. In response to this request, the NRC formed a committee to evaluate the cost estimates of implementing the numeric criteria, including the re levance and validity of certain assumptions and methodologies used in the economic analysis. The Committee’s

statement of task is found in Box 1-3. There were a number of constraints placed on the Committee that were necessary in order for it to produce a report by th e March 2012 deadline imposed by EPA. First, it should be noted

that the Committee was not asked to do an assessme nt of the rule per se. This is important

because the actual numeric values have been the source of considerable controversy in Florida for the last few years, and at one point the Stat e of Florida requested th e NRC’s involvement in determining what the numbers should be (although th is request was never fully realized). For the purposes of this study, the numeric criteria in Table 1-1 were assumed to be unmovable. An EPA Science Advisory Board panel has issued a report evaluating the scientific merit of the proposed numeric standards (EPA, 2011). Second, the Committee was not asked to addr ess the benefits of implementing the numeric nutrient criteria, despit e the existence of a chapter in the EPA report devoted to a

consideration of benefits and considerable interest from so me stakeholders. Nor does the Committee address the important bu t indirect costs associated with implementing the numeric criteria, such as the number of jobs lost or gained, how certain relate d sectors of the economy

will fare under the numeric criteria like real esta te and tourism, etc. The committee considered all of these topics beyond the sc ope of the study given the statemen t of task and the very short time frame in which it was operating. Finally, the Committee was not as ked to do its own cost estimate; i.e., there is no new calculation of the estimated costs of implementing th e criteria in this report. Rather, the report focuses on the methods to be used in any futu re analyses, and it evaluates the validity of assumptions found in the EPA report and the reports of various stakeholders. The Committee made use of a wide variety of sources, most importantly the economic analyses produced by EPA and other stakeh older groups. The Committee held two open meetings, one in Orlando, Florida, in July 2011, and one in Washington, DC, in October 2011, to hear from these groups, including open-micr ophone sessions to take comments from the interested public at both meetings. The th ird committee meeting held in December 2011 was entirely in closed session. Additional background materials were also gathered from the Florida Department of Environmental Protection, the main agency responsib le for water quality management in Florida, and from the EPA Office of Science and Technology. Given the detailed technical and regulatory nature of the subject, the primar y audience for this report is EPA, FDEP, and the stakeholder groups mentioned above. Chapter 2, which addresses the second and third items in the statement of task, comprehensively discusses the EPA’s and others’ assumptions and incremental cost estimates for five pollutant sectors, incl uding municipal and industrial wa stewater treatment plants, agriculture, urban stormwater, a nd septic systems. The incremental costs to government of implementing the NNC rule are also considered. Chapter 3 tackles the first item in the statement of task by providing an alternative framework for th e cost analysis that could be used by EPA for

future work in Florida and elsewhere. The conc eptual framework provides an alternative way to (1) more accurately characterize baselines and cons equently the incremental effect of the NNC Rule and (2) address the timing and uncertainty of costs of a proposed rule change. Taking intoIntroduction 29

PREPUBLICATION COPY Box 1-3
NRC Committee Statement of Task

In response to a request from the U.S. Envir onmental Protection Agency, this study undertaken by a special committee organized and overseen by the NRC’s Water Science and Technology Board is reviewing EPA’s analysis of the costs of state implement ation of final numeric nutrient criteria for lakes and flowing waters in Florida. Because the numeric nutr ient criteria rule is scheduled to take effect March 6, 2012, the EPA needs input quickly on a number of important issues. The committee will evaluate the cost estimates of implementing the numeric criteria , including the relevance and validity of certain assumptions and methods used in the economic analysis. The evaluation will give special attention to those assumptions that may acc ount for discrepancies between EPA’ s analysis and those of several stakeholder groups. Specifically, the committee w ill review and comment on the implications of:

1. EPA’s assumption that costs s hould only be determined for waters that will be “newly impaired” as a
result of the numeric nutrient criteria.

2. EPA’s decision to estimate the costs of only thos e sources of pollution that would directly affect a “newly impaired” water—in particular the number of wastewater treatment plants, the acreage of agricultural land, the acre age of urban areas, and the number of septic sy stems included in the EPA analysis.

3. EPA’s assumptions about the levels of control t hat could be used by certain point and nonpoint sources, such as wastewater treatment plants, indust rial point sources, agricultural activities, and septic systems. Examples of these assumptions could incl ude a decision to seek a regulatory exemption, whether to implement reverse osmosis technology, or to use conventional best management practices rather than more expensive water treatment options.

consideration the narrative process, the numeric nutrient criteria, and the proposed FDEP hybrid approach, the chapter highlights the importance of evaluating the key differences in the three processes and the resulting impli cations for overall cost, including the critical issue of timing. The findings and recommendations in this report should be useful regardless of whether the EPA’s NNC rule or the proposed FD EP rule is ultimately adopted.

REFERENCES

AWARE Environmental Inc. and AquAeTer Inc. 2010. Treatment Technologies Assessment for Removal of Nitrogen and Phosphorus in Pu lp and Paper Wastewater. Prepared for the Florida Pulp and Paper Association. April 2010. Bachmann, R. W., M. V. Hoyer and D. E. Canfiel d, Jr. 2010. Draft altern ative nutrie nt criteria

for Florida lakes. Florida LAKEWATCH whitepaper. Univ. Florida. Gainesville, Fl. Birr, A. S., and D. J. Mulla. 2002. Relationshi p between lake and groun d water quality patterns and Minnesota agroecoregions. Hydr ological Sci. Tech. 18(1-4):31-41. Budell, R., et al., A. W. Hodges et al., a nd D. Bottcher. 2010. Economic Impacts and Compliance Costs of Proposed EPA Water Qual ity Standards for the State of Florida’s Lakes and Flowing Waters. April 27, 2010.30 Review of the EPA’s Economic Analysis of Final Water Quality Standards in Flori da

PREPUBLICATION COPY Bureau of Economic and Business Research (BEBR). 2010. Population studies. http://www.bebr.ufl.edu/ Univ. FL. Gainesville, FL. Cardno ENTRIX. 2011a. Economic Analysis of the Proposed Federal Numeric Nutrient Criteria for Florida. Prepared for the FL Water Quality Coalition by Cardno ENTRIX,

June 2011.

Cardno ENTRIX. 2011b. Addendum to the Economic Analysis of the Federal Numeric Nutrient Criteria for Florida. Prepared for the Florida Water Quality Coalition by Cardno ENTRIX, July, 2011. Carollo Engineers. 2010. Costs for Utilities and Their Ratepayers to Comply With EPA

Numeric Nutrient Criteria for Freshwater Dischargers. Prepared for the Florida Water Environment Association Utility Council. November 2010. Collins, M. E. 1985. Key to Soil Orders in Florid a. Gainesville, FL: University of Florida.

ENVIRON. 2010. Assessment of Financial Impact on Phosphate Mining and Mineral Processing: Complying with EPA’s Proposed Nutrient Water Quality Standards for Florida. Prepared for the Florida Phosphate Industry. April 2010. Environmental Research & Design, Inc. 2007. Evaluation of Current Stormwater Design

Criteria within the State of Florida. Final Report prepared for Florida Department of Environmental Protection, Orlando, FL. http://www.dep.state.fl.us /water/nonpoint/docs/nonpoin t/SW_TreatmentReportFinal_719 07.pdf Florida Department of Environmental Protec tion (FDEP). 2008. Integrated Water Quality Assessment for Florida: 2008 305(b) Report and 303(d) List U pdate, October 2008. FDEP. 2010. Review of EPA’s “Preliminary Estimate of Potential Compliance Costs and Benefits Associated with EPA’s Proposed Nume ric Nutrient Criteria for Florida.” April
28, 2010. FDEP. 2011. An Overview of Nutrient Manage ment in Florida, Working Draft – April 2011. Fulmer, D. G., and G. D. Cooke. 1990. Eval uating the restoration potential of 19 Ohio reservoirs. Lake Reserv. Manage. 6:197-206. Griffith, G. E., D. E. Canfield, Jr., C. A. Ho rsburgh, and J. M. Omernik. 1997. Lake regions of

Florida. EPA/R-97/127. US EPA. NHRE EL. Western Ecology Division. Corvallis,

OR. Hatch, L. K., A. P. Mallawatantri, D. Wheeler, A. Gleason, D. J. Mulla, J. A. Perry, K. W. Easter, P. Brezonik, R. Smith, and L. Gerl ach. 2001. Land management at the major watershed - agroecoregion intersection. J. Soil Wa ter Conservation 56:44-51. Heiskary, S., and W. W. Walker , Jr. 1988. Developing phosphorus cr iteria for Minnesota lakes. Lake Reserv. Manage. 4:1-9. Hendrickson, J., N. Trahan, E. Stecker, and Y. Ouyang. 2002. Estimation and assessment of the

current and historic external load of nitrogen, phosphorus and organic carbon to the

Lower St. Johns River for the fulfillment of TMDL and PLRG objectives. Palatka,

Florida: St. Johns River Wate r Management District, Depa rtment of Water Resources MACTEC. 2010. Final Report Wekiva River Basi n Nitrate Sourcing Study. Prepared for the

SJRWMD and FDEP. March 2010. Omernik, J. M. 1987. Ecoregions of the conter minous United States. Annals Assoc. Am. Geog.

77:118-125.Introduction 31

PREPUBLICATION COPY Reddy, K. E., S. Newman, T. Z. Osborne, J. R. White, and C. Fitz. 2010. Legacy phosphorus in the Everglades ecosystem: Implications to ma nagement and restorat ion. Critical Reviews in Environmental Science Technology (in review). Schiffer, D. 1998. Hydrology of Central Florid a lakes-A primer. U.S. Geological Survey circular 1137. Denver, CO. U.S. Govt. Printing Office. U.S. Environmental Protection Agency (EPA ). 2009. Letter from Benjamin Grumbles, Assistant Administrator, Office of Water to Michael Sole, Secretary, Florida Department of Environmental Protection. January 14. http://www.epa.gov/waterscience/standa rds/rules/fl-determination20090114.pdf. U.S. EPA. 2010. Economic Analysis of Final Wa ter Quality Standards for Nutrients in Lakes and Flowing Waters in Florida. Envi ronmental Protection Agency; November, 2010. U.S. EPA. 2011. Methods and Approach es for Deriving Numeric Criteria for Nitrogen/Phosphorus Pollution in Florida’s Es tuaries, Coastal Waters, and Southern Inland Flowing Waters. US EPA. Washington, DC. http://yosemite.epa.gov/sab/sabproduct.ns f/fedrgstr_activiti es/DCC3488B67473BDA852 578D20058F3C9/$File/EPA-S AB-11-010-unsigned.pdf. USGS. 1998. Water Quality in the Georgia-Fl orida Coastal Plain, Ge orgia and Florida, 1992- 96. By Marian P. Berndt, Hilda H. Hatzell, Christy A. Crandall, Michael Turtora, John R. Pittman, and Edward T. Oaksford. U. S. Geological Survey Circular 1151.32

PREPUBLICATION COPY 

## Chapter 2

Assessment and Commentary on EPA’s Analysis

As indicated in Chapter 1, the intent of the U.S. Environmental Protection Agency’s (EPA) analysis was to assess the differential co sts of nutrient load re duction under the numeric nutrient criteria (NNC) rule vs. Florida’s narra tive rule. This chapter accepts the EPA definition

of the incremental effect of the NNC rule and focuses on the way EPA estimated that effect and

the costs for different sectors in cluding municipal wast ewater facilities, in dustrial facilities, agriculture lands, urban stormwater , and septic systems. The associated costs of governmental administration are also discussed. This chapter also includes some initial descriptions of the current regulatory requirements for each sector and how regulatory uncertainties can lead to different assumptions about the e ffect of the NNC rule on the leve l and timing of costs. Chapter 3 provides an expanded discussion of the incremen tal effect of the rule and how uncertainty about the rule change can affect incremental costs.

EPA COST ANALYSIS METHODS: OVERVIEW

The first part of EPA’s analysis was c onducted for point sources, identifying the number of point sources that would have to improve tr eatment in response to the NNC rule, the likely technological upgrades that woul d be implemented, and the cost of upgrades based on unit costs multiplied by the actual flow rate of each point s ource. The next step in the EPA analysis was to determine the potential incrementally impaired wa terbodies—that is, an estimate of those waters that may be expected to be in noncompliance wi th the numeric nutrient cr iteria, but that would not be impaired under the narra tive rule. Once this set of waters was defined, the analysis proceeded to estimate the location and amount of land area that would require load controls to

meet the numeric nutrient criteria in the waterbody. For the stormwater and agricultural sources, EPA identified the corresponding acreage draining to the potential incr ementally impaired waterbodies, reduced the acreage considered ba sed on best management programs that were already in place, selected a set of BMPs that EP A staff deemed adequate and cost-effective, and then applied a unit cost to the resulting acreage to estimate the total cost for the two sectors. For septic systems EPA determined the number of systems within 500 feet of a potential incrementally impaired waterbody and multiplied this number by unit cost to upgrade septic systems to reduce their nutrient loads. Several key regulatory assumptions were made by EPA and are discussed in the subsequent sector analyses onl y if the Committee took issue w ith them. These assumptions

include:Assessment and Commentary on EPA’s Analysis 33

PREPUBLICATION COPY  Impaired waterbodies where a total maximu m daily load (TMDL) has already been developed based on the narrative criteria were not considered, assuming that the

TMDLs would serve as the basis for site-s pecific alternative criteria (SSAC), if needed;

 Waters that are currently listed as impaired based on the narrative criteria were also not considered, because it was assumed that a TMDL for nitrogen (N) and/or phosphorus (P) would be devel oped and that this TMDL would serve as the basis for an SSAC determination;

 Municipal and industrial plants discharging at 3 mg/L for total nitrogen (TN) and 0.1 mg/L for total phosphorus (TP) were considered “in compliance”; and

 The cost of actions to reduce pollutant lo ads associated with implementation of the statewide Stormwater Rule, the Urban Turf Fe rtilizer Rule, the Florida Department of Environmental Protection (FDEP) Dairy Ru le, and Concentrated Animal Feeding Operation (CAFO) Requirements would not necessarily be accruable to the NNC rule, since these programs are already in place.

Three analytical assumptions of the EPA anal ysis were accepted for this chapter (and are returned to in Chapter 3):

 The definition of the incremental effect of the NNC rule was defined and limited to (1) waters that would be ne wly listed and determined to be stressed by nutrients and (2) National Pollutant Discharge Elimination System (NPDES) municipal and

industrial sources that would receive certain concentration limits in their discharge permits;

 EPA assessed the incremental effect of the NNC rule at a single point in time, assuming no further changes would occur unde r the narrative proc ess (which was the baseline), instead of compar ing the future outcomes of both processes over time; and

 The analysis assumed constant temporal cond itions in such factor s as population, land use, crop types, management practices, industrial activities, and climate were assumed, even though the analysis acknowle dged that the effects would occur over time (for example, there was a 20-year horizon for amortizing capital costs).

Determination of Incrementally Impaired Waters

EPA defined one incremental effect of the NNC rule as the number of waterbodies that would be listed as impaired unde r the numeric nutrien t criteria but not under the narrative criteria. Had monitoring data for N and P concen trations been available for all waterbodies, this would be a simple exercise. However, out of a total of 3,765 freshwater stream segments in Florida, a very large fraction ( 84 to 89 percent) lacks suffici ent monitoring data on N and P concentrations to make an assessment, based on the application of Flor ida’s Impaired Waters Rule (IWR) (FDEP, 2011). For the 1,444 lake se gments in Florida, 59 to 78 percent lack

sufficient information to be assess ed (FDEP, 2011), which covers a substantial area of the state, particularly in the north and nor thwest (see Figure 2-1). Thus, of the 5,209 freshwater WBIDs in Florida (see Chapter 1 for the definition of a WBID), approxi mately 77 to 86 percent cannot34 Review of the EPA’s Economic Analysis of Final Water Quality Standards in Flori da

PREPUBLICATION COPY currently be assessed. 1 Despite a long record of water qu ality monitoring in Florida, the vast majority of the waterbodies have insufficient information to determine whether action is needed.

FIGURE 2-1 WBIDS with insufficient data to assess impairment. SOURCE: Karen Milam, EPA.

1 The range in unassessed segments reflects the difference in the amount of information required to assess under the current narrative criteria (one year of data) compared to the NNC (three years), as well as differences in the quality of the data that EPA and FDEP considered necessary to determine whether a WBID can be assessed. Furthermore, the sentence is not implying that 77 to 86 percent of Florida waters have no monitoring data, just that there is not enough data to make a determination of impairment based on the requirements of the IWR.Assessment and Commentary on EPA’s Analysis 35

PREPUBLICATION COPY Streams and Lakes 2

Faced with this limitation, EPA opted for the following approach to estimate the number of incrementally impaired streams and lakes. Using the FDEP database of WBIDs and monitoring data for the past five years from IW R Run 40 (a subset of Florida’s water quality data), EPA first identified potentially impaired waterbodies by comparing their monitoring data

to the numeric nutrient criteria. WBIDs wher e a nutrient-related TMDL had already been established were excluded, base d on the assumption that FDEP would seek SSACs for those

WBIDs and/or that “controls to reduce nutrients already required in the absence of EPA’s rule would be sufficient”. In addition, EPA identifie d WBIDs adjacent to lakes to which downstream protective values could apply 3 . Finally, all of the unassessed wa ters were excluded by EPA from consideration as potentially impaired due to the new rule by assuming that unassessed waterbodies are likely to be unimpaired, given Florida’s focus on monitoring the most polluted streams and lakes. In other words, EPA assumed that if a waterbody were likely to be impaired, Florida would have already known about it a nd monitored it under the existing program of narrative criteria. Using these assumptions, EP A determined that only 325 WBIDs potentially exceed the numeric nutrient criteria [see Exhi bit ES-4 in EPA (2010)]. Given EPA’s assumptions, the Committee considers the EPA es timate to be a lower bound on the number of incrementally impaired waters that would be listed due to the new rule 4

. FDEP used a different approach for estimati ng the number of potentially impaired waters

that would be listed due to the new rule a nd determined that there are between 424 and 546 incrementally impaired WBIDs under the NNC rule (FDEP, 2011). The FDEP approach was based on a statistical analysis, using the failure rate of assessed wate rbodies under the current narrative criteria to predict the number of una ssessed waterbodies that would fail under the

numeric nutrient criteria. FDEP developed different statistics fo r the various “nutrient watershed regions” identified by EPA in the new rule (see Ta ble 1-1). While using regionalized statistics acknowledges biogeographic and climate differen ces, no other consideration was given to the characteristics of a watershed that may result in impairment. It is unknown whether prior information from the currently listed WBIDs is a good predictor of the status of the unassessed WBIDs. The size and land use composition of WBID s varies substantially, which can lead to a significant over- or underestimate of the impaired acreage. Thus, it is not possible to determine whether this approach repres ents an upper bound on the incremental number of potentially impaired waters due to the new rule. A more defensible approach than either of the previous ones would take into

consideration the charact eristics of the various WBIDs to pr edict the likelihood that they would

fail to meet the narrative criteria or the numeric nutrient criteria. For example, using the land use data and land use management statistics of the assessed WBIDs, one could establish a relationship between the likelihood of impairment and the level of urbanization, number of septic systems, loading from NPDES-permitted sources , agricultural production, the level of adoption

2 In this section, WBID and waterbody are interchangeable. WBID is used when citing data on the number and

status of impaired waterbodies from the EPA and FDEP documents. Also, TMDLs are developed for individual or

groups of WBIDs, so this term is also used when discussing the TMDL process.

3 The NNC rule requires the application of a downstream protective value when choosing the criterion for a stream

segment that enters directly into a lake. That is, if a stream directly enters a lake and the lake criterion is more stringent, then the lake criterion would apply to the stream.

4 Assuming EPA’s definition of incrementally impaired.36 Review of the EPA’s Economic Analysis of Final Water Quality Standards in Flori da

PREPUBLICATION COPY of agricultural and stormwater BMPs in a give n WBID, etc. The land use information for such an analysis is readily available in GIS format. FDEP has a database of septic systems in each WBID. Land management information could be obtained from FDACS (f or agricultural BMPs implemented) or from MS4 permittees (for stor mwater BMP adoption). While this approach also entails a certain level of uncertainty, the uncertainty should be easier to estimate and report. In addition, since the pot ential incrementally impaired WBIDs can be identified, their specific acreage can be considered for the analysis , reducing this source of uncertainty.

Springs

EPA identified springs with any monthly geom etric mean nitrate-nitrite concentration greater than the numeric nutrient criterion as impaired. As with streams and lakes, EPA removed from the resulting list of springs those that are currently on Fl orida’s 303(d) list of impaired waters. This analysis resulted in 24 incrementa lly impaired springs (see Exhibit ES-4 in EPA, 2010a). Waters with insufficient data to determine compliance were assumed to be unimpaired

under the numeric nutrient criteria. Thus, the same issues that were discussed above for lakes and streams regarding unassessed waters also potentially hold for springs (in terms of the EPA number being a lower bound).

Acreage of Land Draining to Incre mentally Impaired Watersheds

After estimating the incrementally impaired WBIDs, the next step was to determine the acreage of various land uses that contribute to the potential impa irment. EPA used a relatively coarse “grid”, by considering th e 10-digit hydrologic units code (HUC10) watersheds, as defined by the USGS. Because WBIDs may not fall within a single HUC10, to estimate the incremental acreage EPA considered all the HUC10 watersheds containing at least 10 percent of an incrementally impaired lake or stream, which may lead to a significant overestimate of the incremental acreage (EPA, 2010a). On the ot her hand, EPA excluded all of those HUC10 watersheds that contain at least 10 percent of a lake or stream that ar e currently impaired or

under a TMDL. This could lead to an undere stimate of the incremental acreage. The Committee’s evaluation of maps showing the incrementally impaired WBIDs and their

associated HUC10s did not lead to an obvious conclusion that the HUC10 units are an over- or under-estimate of the acreage. The HUC10 watersheds are generally too coar se for TMDL analysis, which is typically

done with a delineation closer to the USGS HUC12 subwatershed level. Figure 2-2 provides an example of the resolution of the WBIDs for the Sa nta Fe River in Central Florida. As can be seen, there are dozens of WBIDs within this single basin, of varying sizes. Figure 2-3 presents the HUC10s for this same region. There are only seven large HUC10s within this basin. Figure 2-4 presents the HUC12 delineation for the region . Although there is no direct correspondence between the HUC12s and Florida’s WBIDs, the size of the WBIDs is generally much closer to the HUC12s. Thus, a more precise estimate of th e potential incrementally affected acreage due to the new rule could have been performed using the same assumptions but with the HUC12

delineation of the areas contributin g to the various WBIDs. Alte rnatively, EPA could have used the area for each specific WBID for their analysis.Assessment and Commentary on EPA’s Analysis 37

PREPUBLICATION COPY FIGURE 2-2 WBIDs in t he Santa Fe River. SOURCE: McKee (2011).38 Review of the EPA’s Economic Analysis of Final Water Quality Standards in Flori da

PREPUBLICATION COPY FIGURE 2-3 HUC 10 delineation for the S anta Fe river in Central Florida. SOURCE: McKee (2011).Assessment and Commentary on EPA’s Analysis 39

PREPUBLICATION COPY FIGURE 2-4 Comparable HUC 12 delin eation for the Santa Fe river in Central Florida. SOURCE: McKee (2011).

In addition to considering a re latively coarse grid for the analysis, EPA considered that every acre of agricultural and urban land in a HUC10 contributes equally to in-stream loading. While it is likely that the characteristics of Flor ida’s WBIDs in some regions, such as artificial drainage and highly transmissive soils, may lead to contributions from fields further away from the WBID than in other regions around the United States, the coarseness of the grid makes this assumption much less valid. While a robust anal ysis would require a full fate-and-transport calculation, an intermediate appr oach would have considered a distance/travel time weighting factor between the contributing croplands and the WBIDs. Using the more refined HUC12

delineation of subwatersheds would also reduce th e error in these estimates of land areas that

contribute to water quality degradation. To estimate the urban areas, agricultural land, an d septic systems that may need controls

to attain the numeric nutrient criteria for springs, EPA obtained GIS data on land areas where groundwater aquifers supply water to springs (spring recharge areas or springsheds) from FDEP’s Florida Geological Survey. EPA identif ied incrementally impaired spring recharge

areas as those vulnerable to surface sources of contamination by the Florida Geological Survey Florida Aquifer Vulnerability Assessment (Arthur et al., 2007). The Committee has no concerns with this approach.40 Review of the EPA’s Economic Analysis of Final Water Quality Standards in Flori da

PREPUBLICATION COPY Determination of Incre mentally Affected NPDES-Permitted Municipal and Industrial Sources

EPA made the conservative assumption that municipal and industrial wastewater point sources would be potentially affected by the NNC ru le regardless of the impairment status of the WBID in which they are located. To determine the incremental effect of the NNC rule on these sources, EPA assumed that wastewater treatment pl ants (WWTPs) would be considered to be in compliance with the NNC rule if they could treat their discharges with advanced wastewater treatment (AWT) to reach 3 mg/L for TN and 0.1 mg /L for TP as annual averages. This level of performance was selected based on a judgment re garding demonstrated technology that has been used at sufficient scale and can be reasonably ap plied in Florida (see discussion below under the

subsection entitled “Effectivene ss of Control Methods”). Thes e targets for WQBELs for all WWTP permittees assume some dilution and assimilation within the receiving waters to meet the numeric nutrient criteria at the point of compliance. Whether more stringent effluent limits will be required, approaching or in f act equaling the appropriate numeri c nutrient criterion, is a matter of dispute and is discussed further in this chapter and in Chapter 3. From the Committee’s reading of EPA ( 2010), it appears that only municipal and industrial point sources that disc harge to freshwater lakes and st reams were considered in the analysis. Municipal and industria l point sources that discharge to groundwater via effluent spray fields or rapid infiltration basins were not cons idered, although they have the potential to lead to nitrate impairment in springs. For example, bot h Ichetucknee and Wakulla springs are suspected to be impacted by municipal wastewater effluent sp ray fields. Lake City’s spray field disposes 3

MGD of wastewater effluent in the Ichetucknee springshed. The City of Tallahassee’s municipal effluent sprayfield disposes of about 20 MGD in the Wakulla sp ringshed. A more conservative analysis would have identified all municipal and industrial facilities with effl uent sprayfields and rapid infiltration basins in incrementally impair ed springsheds and assumed that some level of additional treatment might be required before di sposal of their wastewat er. Discussions with EPA indicated that they were awar e of this possibility, but that available data did not allow them to unambiguously identify all relevant municipal dischargers that would affect springs (although the data suggested that the number of such discha rgers and their capacity was relatively small). Thus, EPA judged that exclusion of these dischargers from the cost analysis would not materially affect the total cost estimate. The quantitative assessment on which this assumption was based was not presented by EPA, making it difficu lt to determine whether the assumption was reasonable, especially from a water quali ty (as opposed to a cost) standpoint. A potential additional industria l cost could exist due to the large number of general permits utilized by Florida. A footnote on Page 2-15 of the EPA analysis states there are 34,508 dischargers covered under general permits in Florida and that EPA did not include those dischargers in the analysis. General permits are used to cover a common cl ass of dischargers in a streamlined fashion with minimal cost to the pe rmitting authority and the permittee. There is no further information regarding the classes of dischargers covered by the general permits. However, if any of those general permits relate to industrial facilities disc harging nutrients, those facilities could potentially lose general permit coverage and be require d to obtain individual permits. Compliance costs for holders of individu al permits are generally higher than for general permits. A related uncertainty of this type arises with stormwater sources. At present, most of

these sources are deemed to be outside the NPDES-regulated process where WQBELs apply. However, if this changes due to regulation or third party lawsuits and if the discharge limits thatAssessment and Commentary on EPA’s Analysis 41

PREPUBLICATION COPY would result are more stringent under the NNC rule than under the narrati ve rule, then these sources could realize greater costs.

What is assumed about all thes e regulatory uncertainties has a direct influence on the cost estimates reported by EPA and others. Chapter 3 provides a discussion of the regulatory setting, and how to best incorporate regul atory and other uncertainties in a cost analysis. The sections that follow here focus on uncertainty related to unit costs and effectivenes s of controls by sector.

SECTOR COST ASSESSMENTS

This review of the EPA economic analysis considered the following issues for each sector. First, the overall methods to determine costs were analyzed, focusing on the number of affected units and the per unit cost of treatment. For example, for the agricultural sector the

review considers whether EPA estimated the affect ed agricultural acreage correctly and the costs of BMPs that would be needed for that acreage. Each section discusses the effectiveness of the proposed control methods, where appropriate. In doing so, the Committee used the numeric

nutrient criteria as a threshold fo r to evaluating the efficacy of BM Ps, in the absence of any other logical benchmark. Each secti on describes the relevant sources of uncertainty in the cost estimate, including variability in per unit costs, uncertainty in BMP performance, and regulatory

behaviors. It should be noted that some of the uncertainti es discussed are not unique to using numeric nutrient criteria (a s opposed to narrative crit eria); nonetheless, th ey are discussed here because of their potential effect on the cost estim ate for a given sector. Finally, the results of other competing cost analyses are gi ven and compared to those of EPA.

Municipal Wastewater Discharges

EPA estimated that $22.3 to $38.1 million/ye ar would be the cost to municipal wastewater sources to comply with the proposed NNC rule in Florida. The EPA analysis assumed that municipal wastewat er dischargers would be in co mpliance with the NNC rule if they could meet the definition of AWT as presented above (disch arge limits of 3 mg/L for TN and 0.1 mg/L for TP as annual averages). It is important to note the use of an annual averaging period for TN and TP in EPA’s cost estimate. Annual averaging means that seasonal variability in wastewater discharge pollutant concentrations is averaged out over the c ourse of a year. There

has been some effort at EPA to enforce av erage monthly and weekly permit limits based on interpretation of 40 CFR 122.45(d) requiring av erage monthly and weekly permit limits if “practicable”. Monthly a nd weekly limits are not as applicable for pollutants such as TN and TP, which do not exhibit toxic effects, as they are for other pollutants typically regulated by NPDES permits and which exert their impacts over shorte r timeframes than do TN and TP. However, if monthly and/or weekly permits were required for TN and TP, the cost of compliance would

increase due to the need to build increased reliability into treatment plant design.42 Review of the EPA’s Economic Analysis of Final Water Quality Standards in Flori da

PREPUBLICATION COPY Methods to Determine Costs

EPA considered that every municipal WWTP had “reasonable potential” under the NNC rule, meaning that they might discharge polluta nts at levels that would prevent associated receiving waters from achieving the numeric nutri ent criteria. Thus, their analysis focused on determining whether existing plan ts had already installed remova l technologies that could meet the targets of 3 mg/L for TN and 0.1 mg/L for TP as annual averages. When both TN and TP removal technologies were already installed at a particular WWTP, it was assumed that

additional modifications were unnece ssary and that no cost was associ ated with these facilities to comply with NNC rule. Likewise, when either TN or TP removal technology was installed, only the cost to install and operate technology to remo ve the alternate nutrient was attributed to these facilities. This approach is reasonable, as co sts for nutrient removal cap abilities already in place

can be attributed to existi ng nutrient control requirements , not the proposed NNC rule.

Effectiveness of Control Measures

AWT technology, as defined by EPA, is an eff ective and proven approach to achieve the specified level of performance, 3 mg/L TN and 0.1 mg/L TP on an annual average basis.

Effluent TP can be further lowered with si milar chemical treatm ent technology, although at increasing cost. TN removal is limited for existing biological treatment technology by the presence of soluble, non-biodegradable organic nitrogen which remains in biological treatment effluents and is not removable using treatment approaches conventionally applied at municipal

WWTPs. Soluble non-bi odegradable organic nitrogen represen ts one component of the effluent TN and is present at a concentra tion which is generally in the 1 to 2 mg/L as N range, which is sufficiently high to prevent reliable co mpliance with TN effluent limits below about 3 mg/L. Removal technologies such as RO and activated carbon either with or without advanced oxidation are available but are in various stages of development and have not been generally applied for this purpose in municipal applicatio ns. Microfiltration (MF) followed by RO has been proposed by some and has been implemente d for potable quality reuse applications in Orange County, California, and other locations overseas. In situations where treatment beyond AWT standards might be required, it is also possible that reuse of various type s might be an attractive alternativ e. In fact, reuse is widely practiced in Florida to both augment water supplie s and to limit direct su rface water discharges (although reuse for irrigation can infiltrate surf icial groundwater and indi rectly discharge to lakes, streams, and springs). These possibilities suggest that simply assumi ng that MF/RO will have to be applied to all municipal dischargers affected by the NNC ru le, which is the position taken by the Florida Water Environment Association Utility Council (Carollo Engineers, 2010), is also not a reasonable assumption. In circumstances such as these, costs to municipal dischargers are often limited to established affordability criteria, wh ich would represent one approach to estimate upper bound costs for this class of dischargers.

The footnotes to EPA’s Exhibit 4-3 i ndicate that WWTPs with the MLE, A 2 /O, or modified UCT processes 5 , and oxidation ditches were considered to be able to comply with the 3

5 MLE = Modified Ludzack-Ettinger; A 2 /O = anaerobic-anoxic oxidation; an d UCT = University of Cape Town.Assessment and Commentary on EPA’s Analysis 43

PREPUBLICATION COPY mg/L TN limit; consequently, no costs for TN removal were attributed to them. However, evidence exists that MLE, A 2 /O, and modified UCT processes ar e not able to reliably comply with a 3 mg/L TN effluent limit (Grady et al., 2011; WEF, 2009), such that further upgrade would likely be required for these facilities. Subsequent discussions with EP A made it clear that the footnotes were inaccurate, and that in all ca ses it was assumed that the four-stage or fivestage Bardenpho process was required to comply with the 3 mg/L TN limit.

Range of Unit Costs

Unit costs were applied to those NPDES-perm itted facilities that were identified by EPA as needing upgrades to comply with AWT di scharge requirements (see EPA, 2010a, Appendix C). EPA estimated the costs for a variety of nut rient control upgrades to existing WWTPs using a computerized cost estimating program ca lled CAPDETWorks. Capital, operation and maintenance (O&M), and annual costs were de termined and expressed on a unit cost basis ($/gpd of capacity). The detailed basis for thei r unit cost development is not presented in the economic analysis, but the results ca n be evaluated as outlined below. A variety of upgrade approaches was assume d for the three types of required upgrades, including TN only, TP only, and TN and TP, as summarized in EPA’s Exhibit 4-4. A reasonable range of technologies appears to have been assumed for the TP-only and TN-and-TP upgrade scenarios. The range of approaches was used to establish a range of upgrade costs for each category of reduction needed and are summarized in EPA’s Exhibit 4-5. As noted by EPA, numerous AWT facilities exis t in the state of Florida. Logically the

costs associated with these Flor ida-specific upgrades would provide the primary source of data to

establish unit costs. Conversations with EPA i ndicated that efforts were made to compare their CAPDETWorks results with Florida-specific data, and this limited effort indicated that the

CAPDETWorks data were consistent with Flor ida experience. As noted by EPA in these discussions, the costs specifically associated w ith nutrient upgrades must be segregated from other project costs when analyzing actual cost da ta. Alternate data were supplied by the Florida Water Environment Association Utility Counc il suggesting significan tly higher AWT upgrade

unit costs. This Committee is not in a position to determine which set of unit costs are correct, although as noted by EPA such da ta must segregate nutrient upgr ade-related costs from other costs included in the subject proj ects. It does suggest, however, that direct examination of actual state of Florida AWT upgrade unit costs could re solve this matter. Collaboration between EPA

and the Florida Water Environment Association U tility Council seems a prudent step forward.

Sources of Uncertainty

Two sources of uncertainty are po tentially significant for this sector. The first relates to the unit treatment costs. Significant and releva nt experience exists in the State of Florida concerning the costs required to upgrade muni cipal WWTPs to comply with AWT treatment requirements of 3 mg/L TN and 0.1 mg/L TP. Th is information could have been compared to the unit costs estimated using CAPDETWorks to determine whether the estimates developed using CAPDETWorks were of the proper order of magnitude. Data provided by the Florida44 Review of the EPA’s Economic Analysis of Final Water Quality Standards in Flori da

PREPUBLICATION COPY Water Environment Association Utility Council s uggests that Florida-spec ific unit costs may be significantly greater th an those based on CAPDETWorks and used by EPA in their analysis. The second significant source of uncertainty is regulatory, sp ecifically the proportion of WWTPs that would be required to treat to levels more stringent than 3 mg/L TN and 0.1 mg/L TP, perhaps approaching numeric nut rient criteria values in their discharge. EPA assumed that no WWTP would be required to treat to levels more stringent than AWT. While this assumption makes the analysis simpler to complete, it has been challenged by others, and the basis for those critiques is explained as follows (a nd explored further in Chapter 3). Past experiences suggest that the “default” expectation for municipal WWTPs that are discharging to waters not meeting established ambi ent water quality criteria is for them to treat their effluent to levels equal to the established ambient water quality crite ria. There is no reason to suppose this expectation to be different if numeric nutrient crit eria are established. Nonetheless, EPA assumed that SSACs, varian ces, or use designation modification would be pursued and obtained. (Variances are a regulatory tool to tempor arily waive the numeric nutrient criteria and they are typically used to relax point source permit limits while the point source accrues capital to make treatment upgrades.) Ho wever, even if approved, these decisions are subject to third-party law suits. Thus, it is reasonable to think th at, in at least some instances, treatment to levels beyond the specified AW T performance standards would be required, resulting in greater cost. As noted above, treatment technologies to achieve end-of-pipe compliance with the

numeric nutrient criteria are not well developed and demonstrate d, suggesting that significant advances in technology would be required before this becomes an option for municipal dischargers to reliably pursue. Also, past experience suggests th at pursuing SSAC, variances, and use designation modifications can be a long and expensive process with little certainty of a successful outcome. Developing alternate effluent management options such as reuse has been successfully pursued in Florida, but this requires time as they must achieve public acceptance and must be integrated into an overall water supply and management strategy for the community. Furthermore, one must consider the possible indi rect movement of enriched reuse water through the subsurface to receiving waterbodies.

Other Analyses

An alternate analysis of the costs associat ed with municipal wastewater discharges complying with the NNC rule was developed fo r the Florida Water Environment Association Utility Council (FWEAUC) by Carollo Engineers (2010). Carollo’s estimate was significantly higher than EPA’s for several reasons:

 85 municipal WWTPs were included in the EP A analysis, while 110 were included in the Carollo analysis.

 The unit costs for upgrading WWTPs to AWT used by Carollo were significantly higher than those used by EPA.

 Carollo assumed that municipa l WWTPs would need to meet the numeric nutrient criteria at the “end-of-pipe” and thus assumed that microfiltration and reverse osmosis (MF/RO) along with brine processing would be needed for all municipal WWTPs. In contrast, EPA assumed that municipal WWTPs would not need to meet numeric nutrient criteria at the “end of pipe,” but rather the targets of 3 mg/L for TN and 0.1 mg/L for TP as annualAssessment and Commentary on EPA’s Analysis 45

PREPUBLICATION COPY averages. Clearly a more thorough analysis than either of these would indicate that some, but not all, plants included in this evalua tion would be required to upgrade to effluent limits more stringent than 3 mg/L for TN and 0.1 mg/L for TP. Efforts could, and should, have been made by both parties to estim ate the proportion of plants for which this

would be the case.

 Because of their assumption about the need ed technology, and in some cases the unit costs, the overall costs estimated by Carollo we re significantly higher than those of EPA.

Industrial Facilities

EPA estimated that $25.4 million/year would be the cost to industrial wastewater sources to comply with the proposed NNC rule in Flor ida. The agency iden tified 108 industrial dischargers that would have the potential to be aff ected by the NNC rule by assuming that any dischargers with a Standard Indus trial Classification (SIC) that matched those of another plant with either existing numeric effluents limits for nutrients or a monitoring requirement for

nutrients would have similar potential. The potentially a ffected industrial dischargers represented six major industrial categories and 29 different SIC codes. The 108 was winnowed down by eliminating 38 plants that have a Wa ste Load Allocation (W LA) under the existing TMDL program. As with municipal WWTPs, EPA a ssumed that site-specific alternative criteria would be granted to those discha rgers. EPA also found that 14 of the 108 plants discharge to waters already deemed impaired, and thus did not include these plants in their analysis, resulting in 56 remaining plants.

Methods to Determine Costs

For the 56 industrial plants, EPA estimated implementation costs by reviewing design and performance data from 12 “representative” plants gleaned from the permit compliance system. For each industrial category, EPA calcu lated the average treatment unit cost per MGD of flow treated by dividing the tota l cost for the representative fac ility by the total flow of that facility. EPA then multiplied the average unit cost by the total flow reported in the permit compliance system for each of the potentially aff ected facilities in the applicable category. For example, ten mining industrial discharges were evaluated. Two of the ten were sampled to develop a cost per MGD of treated discharge, and these numbers were then multiplied by the total flow of all ten plants to determine the total cost to this i ndustrial category (about $16 million). The average unit cost, in $/MGD/year, depended on (1) the nutrient concentration in the discharge of the representativ e plant and how those concentrati ons compared to the targets of 3 mg/L N and 0.1 mg/L P, (2) the combined flow s within the sampled industrial category, and (3) the annualized cost of the technology chosen to treat those discharges. For example, the Packaging Corporation of America was chosen as the representative plant for the pulp and paper category. That plant was determined to only need P reductions to meet the targets, and chemical addition and filtration were the chosen technologies. Limiting the total industry sample size to 12 re stricted the primary data (principally flow)

from which EPA established unit costs and overall industrial point source cost estimates. Given the diversity of industries and the variability of their operations and discharges, use of the46 Review of the EPA’s Economic Analysis of Final Water Quality Standards in Flori da

PREPUBLICATION COPY broader resource database that is available under the permit comp liance system would have been useful for establishing more accurate cost estimates for the individual industries. It is not clear why EPA did not conduct the anal ysis for all 56 plants. Note that in many cases Basin Management Action Plans (BMAP) for existing TMDLs may also provide a broad resource for

nutrient control cost estimates fo r both point a nd nonpoint sources. Additional effort should be put into estima ting the costs and impacts of the significant dischargers. There are 29 phosphate rock major dischargers (SIC 1475) and 13 phosphate fertilizer majors and 17 minors (SIC 2874)

, as per Exhibit 2-3 of EPA’s economic analysis
report. Excluding wastewater treatment pl ants, this is half of the major facilities determined by

EPA to have nutrient effluent limits or havi ng nutrient monitoring requirements and, according to Exhibit 5-3, constitutes 65 pe rcent of the total i ndustrial cost and 8.5 percent of the total affected flow. However, a single facility (Mosaic Fertilizer) was used for the entire cost estimate for this industrial category with an average flow of 5.24 MGD. Ultimately Mosaic Fertilizer, with a flow contribution of less than 0.44 percen t of the total industrial flow, exerted a hugely disproportionate bearing on the fi nal industrial cost figure. In the industrial analysis (A ppendix D of EPA, 2010a), it wa s suggested that end-of-pipe

effluent limits should be based on the assimilative capacity of the receiving stream (see examples for Pilgrim’s Pride, the Packaging Corporation of America, and St. Mark’s Powder). It is

unclear if or how assimilative capacity was accounted for in the unit cost development; it should only be considered on a site-speci fic basis and not toward broad i ndustrial sector cost estimation.

Effectiveness of Control Measures

The issues discussed previously for the muni cipal wastewater discharges also apply to industrial wastewater discharges.

Range of Unit Costs

EPA used the same nutrient control unit cost data established for municipal wastewater

treatment to estimate industrial treatment costs (Exhibit 4-4). The principal problem with applying the Exhibit 4-4 data to industrial wastewater treatment costs is the 10 MGD flow basis

used to establish the unit costs. Industrial wastewater flow rates tend to be much less than 10 MGD, generally in the 1 MGD or smaller range, such that unit costs tend to be higher and highly variable. For example, in Utah’s 2009 nutri ent cost study (CH2M Hill, 2010), unit costs to upgrade 1 MGD plants for P removal only to an effluent concentration of 0.1 mg/L had an average unit cost of about $3.50 per gallon per day design capac ity with a range of about $0.50 to $4 per gallon per day design capacity. Above 10 MGD, the average unit cost was about $2 per gallon per day design capacity and the rang e narrowed to about $1.50 to $2.50 per gallon per day design capacity. EPA’s unit costs for treatm ent were generally about $1 per gallon per day design capacity, significantly lower than the unit cost in the Utah study. EPA’s cost estimate to add chemical addition and filters for the 55 MGD Packaging Corporation of America was $17.7 million, which is low compared to the Utah nutrient cost study (CH2M Hill, 2010), where costs to implem ent similar improvements at five municipal facilities of comparable si ze ranged from $55 to $110 million.Assessment and Commentary on EPA’s Analysis 47

PREPUBLICATION COPY Sources of Uncertainty 6

Industrial wastewater treatment cost estimates did not take into account nutrient loadings, which can be considerably more variable and dynam ic in industrial treatment facilities than in municipal wastewater treatment facilities. Diffe rences in nutrient lo ading, even within an industrial category, are extremely di fficult to characterize at this le vel of analysis. One simple way of establishing a safety factor to account for industrial discharger load variations would be to estimate the requirements for flow attenuati on via equalization and include this in the cost model. EPA recognized that re presentative discharger Mosaic Fertilizer (Appendix D) had highly variable flows, but it specifically exclude d equalization costs from the cost estimate for this industry. As suggested above, there is considerable uncertainty in sampling only a subset of the

industries that would be affected by the NNC rule and using it to derive the cost estimate. For the Chemical and Allied Products category, Mosaic Fertilizer’s flow contribution towards the total flow of the two samples in that s ector was 95 percent [13.9 MGD/14.69 MGD] but no

nutrient removal cost was determined to be necessa ry at that facility; only for St. Marks Powder, Inc. ($206,800/year). Yet the latter’s flow c ontribution was only 0.79 MGD. Thus the average

unit cost for that sector was estima ted to be $14,077 [($206,800 + $0)/(0.79 MGD + 13.9 MGD)]. This figure is skewed considerably lower due to using the cost figure from St. Marks

Powder but the combined flow from both faciliti es. Had the average unit cost been determined using solely the cost and flow elements from St. Marks Powder, the average unit cost for that sector would have increased nearly tw enty fold to $261,772 [$206,800/0.79 MGD] and the resulting total annual sector cost woul d have been approximately $20,760,000, not $1,116,800. On the other hand, some 34 percent of industria l dischargers reported no flows in the permit compliance system. Averaging within the cate gory and discharge type was conducted, which tended to bias the costs high, particularly for the major discharger type. EPA should more carefully consider how the total annual sector co sts may be skewed either higher or lower due to

cost or flow elements of a small nu mber of individual sector facilities. In its random selection of “representative” dischargers, the Anguila Fish Farm was not included by EPA. The flows from this fish farm constitute one-third of the food sector’s flows.

It is not unreasonable to assume that a fish farm may need to remove significant amounts of phosphorus and nitrogen to achieve the numeric nutri ent criteria. Thus, not including this single facility in the sector sample may have significa ntly underestimated the total annual cost for the

food sector.

Other Analyses

Several alternate cost analyses, of varying detail, were performed to estimate industry

costs to meet EPA’s numeric nutrient criteria including Environ Internat ional Corp. (EIC), on behalf of the Florida Phosphate Industry; Ca rdno ENTRIX, on behalf of the Florida Water Quality Coalition; and FDEP. These cost estimates were significantly higher than EPA’s estimate of $25.4 million/year because EPA underest imated both the capital and O&M costs to meet the numeric nutrient criteria, while the other stakeholders overe stimated the costs by

6 The same NPDES regulatory uncertainty that was described for the municipal sources applies here as well.48 Review of the EPA’s Economic Analysis of Final Water Quality Standards in Flori da

PREPUBLICATION COPY making very conservative assumptions about the technology that would need to be employed and the number of facilities that would need to be upgraded. EIC’s analysis was limited to the phosphate industry. Its analysis considered treatment endpoints of 1.479 mg/l for TN and 0.359 mg/l for TP and included the cost of treatment for both
process water and stormwater. On the other hand, EP A considered treatment endpoints of 3.0 mg/l for TN and 0.1 mg/l for TP and evaluated only industries which have either numeric effluent limits and/or monitoring requirements for TN and TP. EIC’s cost estimate was $1.6 billion in capital costs and $59 million/year for O&M which, when combined, equates to an annualized cost of $163.1 million/year (this figure wa s not presented in its report but rather was calculated, for comparison purposes, assuming a 30-year payment period and 5% PVDR). In the Cardno ENTRIX cost estimate, mean annual costs for industrial discharges were
calculated to be $1.97 billion to meet EPA’s numeric nutrient criteria at the “end-of-pipe,” or just $270 million/year for those plants in newly impair ed areas to reach the less stringent goal of “limits of technology” treatment. Cardno ENTRIX applied a 25 percent contingency factor to its estimated cost of compliance, which inflated the results. FDEP’s cost analysis assumed reverse osmosis, a costly treatment alternative, rather than biological nutrient removal and chemical pr ecipitation. A second difference is that EPA assumed a 20-year payment period and FDEP assumed a 30-year payment period. Thus, FDEP estimated the cost of implementing EPA’s numeric nutrient criteria for industrial plants to be $2.1 billion/year.

Urban Stormwater

In the EPA analysis of costs, the urban st ormwater sector was the most expensive, accounting for approximately 50 percent of the to tal costs (EPA, 2010a, p. 11-1). To calculate this cost, EPA determined the land areas though t to be incrementally impaired under the NNC rule and then, based on GIS data, estimated the acreage of urban la nd that would co ntribute to a potential impairment.

Methods to Determine Costs

Some of the challenges to estimating urban stormwater costs for compliance with the

NNC rule are related to the amount of urban land that drains to incrementally impaired waters, the type of urban development, and the historic al timeline of that development. First, EPA considered that any area urbanized after 1982 wo uld comply 100 percent with FDEP’s existing Stormwater Rule (Florida Administrative Code Chapter 62-40.432). This Rule states that stormwater management systems must “achieve at least 80 percent reduction of the annual average load of pollutants that would cause or contribute to vi olations of state water quality standards;” the requirement for “O utstanding Florida Waters” is 95 percent. Any pollutant that can cause impairment to state waters, including N and P, falls under this standard (EPA, 2010a). Thus, EPA excluded from its analysis all land developed after 1982, whic h comprised 28 percent

of the urban areas in Florida. In doing so, they assumed that stormwater control measures (SCMs) designed according to the required state criteria are in compliance with the 80 percent

reduction standard.Assessment and Commentary on EPA’s Analysis 49

PREPUBLICATION COPY Second, EPA assumed that all low-density resi dential areas would fu lly comply with the existing Urban Turf Fertilizer Rule, and thus shou ld be excluded from the analysis. Because low density residential areas repres ent 58 percent of Phas e II MS4 urban areas and 65 percent of nonMS4 urban land, another significant fraction of th e acreage was taken out of consideration. Scientifically, it is not possible to know the impa ct of this Rule on meeting the numeric nutrient criteria. Nutrient prevention programs are notoriously difficult to quantify, especially when

stormwater nutrient concentrations rath er than load reduc tions are sought. The Phase I MS4 permitting program requires municipalities of greater than 100,000 to reduce their stormwater discharges to the maximu m extent practicable by a variety of measures (NRC, 2009). Given the qualitative nature of the Phase I MS4 permitting program, EPA was unsure about whether the acreage covered under that program should be considered to be already complying with the NNC rule. To address this uncertainty, EPA used a range in affected land area from the assumption of no Phase I MS4 areas to the assumption all Phase I MS4s, and this range was propagated through the entire cost analysis. While it is true that if these existing stat e rules were fully implemented the nutrient

contributions from these areas would be much lower, possibly leading to attainment of the

numeric nutrient criteria in th e corresponding waters, a more r obust analysis would assume a certain level of non-compliance. The urban area s that may require additional expenditures to meet the numeric nutrient criteria may thus be significantly greater than the 23 to 41 percent estimated by EPA. On the other hand, it is al so unlikely that 100 percen t of urban areas would be affected due to the new NNC rule, in part be cause stormwater control measures (SCMs) have already been implemented in many urban areas (e specially Phase 1 MS4s), and in part because

not all urban areas contribute e qually to the loading of nutrien ts to potential incrementally impaired waters. The use of the more refi ned HUC12 delineation of sub watersheds would improve the estimates of the contributing areas. Although EPA acknowledges that urban runoff can be a significant source of nutrient pollution to Florida springs, they assume that “ef ficient land application of nitrogen” will be an effective means of addressing nutrients from ur ban runoff and cite the Urban Turf Fertilizer Rule, city- or county-wide ferti lizer ordinances, and public outrea ch and education campaigns as good examples of such nutrient source control e fforts. Thus, EPA assu med that implementation of existing requirements would be sufficient to reduce nitrate-nitrite loads to springs from urban stormwater enough to achieve compliance with the 0.35 mg/L NO 3 -N criteria. Unfortunately, there is little empirical eviden ce that the nutrient source control efforts cited above will reduce nitrate from urban runoff/infiltration in springs heds to levels which (when combined with nonpoint source nitrate from agricu ltural land uses in the springs hed) will achieve less than 0.35 mg/L in springs.

Effectiveness of Control Measures

The efficiencies of SCMs vary widely depending on their type, design, placement, and age. Correspondingly, the costs of implementing SCMs to manage urban areas in Florida will vary widely on a per-acre basis. Whether the SCMs proposed in EPA (2010) will be sufficient to comply with the NNC rule is evaluated by consid ering the quality of urba n stormwater and what

is known about the effectiven ess of SCMs in Florida.50 Review of the EPA’s Economic Analysis of Final Water Quality Standards in Flori da

PREPUBLICATION COPY Florida Urban Water Quality. A detailed report on urban stormwater in Florida was completed in 2007 for the FDEP (ERD, 2007). This document provides a w ealth of information relevant to Florida stormwater quality and treatment. Detailed evaluation of water quality for N and P was presented for six types of urban la nd use (along with other land uses). Urban stormwater pollutant concentrations typically va ry by more than an order of magnitude from storm to storm and tend to be log-distributed (NRC, 2009). Average concentrations of N and P runoff discharge in Florida from urban land uses are presented in Table 2-1.

All nutrient concentrations listed in Table 2-1 are means, taken from various Florida research studies. The variability in these concen trations, presented as th e standard deviation, was calculated from the mean for each individual study evaluated in the report, and is relatively high, on the order of 50 percent of the mean value. Although unlikel y, it is possible that all land use sectors would be required to dir ectly meet the numeric nutrient cr iteria in their discharges (see subsequent section on agriculture). The propos ed numeric nutrient crite ria range from 0.5 to 1.87 mg/L TN and from 0.01 to 0.49 mg/L TP, de pending upon waterbody type and region. As demonstrated in Table 2-1, the urban runoff means for TN ranges from about equal to several times higher than the numeric nutrient criteria. Fo r P, the runoff is generally about 3 to 16 times greater than the proposed nu meric nutrient criteria.

Stormwater Control Measures. The science and engineer ing of understanding SCM performances is still in its infancy. Specific performance of SCMs for pollutant removals are notoriously difficult to quantify due to variations in design, confi guration, drainage area land use, climate and weather, and surrounding hydrogeology. As a result, from a regulatory perspective,

urban stormwater control technol ogies have long been used and operated in a “narrative” mode with performance inferred based only on complian ce to designing technologies based on specific requirements. Most states do th is, including Florida. Jurisdicti onal legislation re quires a percent

TABLE 2-1 Average ± Standard Deviation Nitro gen and Phosphorus Concentrations in Runoff from

Various Land Uses in Florida

Urban Land Use Category Mean Runoff Concentration (mg/L)

Total N 80% N

Reduction 25% N

Reduction Total P 80% P

Reduction 65% P

Reduction

Single-Family 2.07±1.02 0.41 1.55 0.327±0.126 0.065 0.114

Multi-Family 2.32±1.24 0.46 1. 74 0.520±0.017 0.104 0.182

Low Intensity

Commercial 1.13±0.045 0.24 0.89 0.188±0.064 0.036 0.063

High Intensity

Commercial 2.40±1.03 0.48 1.80 0.345±0.329 0.069 0.121

Light Industrial 1.20±0.015 0.24 0.90 0.260±0.178 0.052 0.091

Highway 1.64±0.85 0.33 1.23 0.220±0.146 0.044 0.077
SOURCE: ERD (2007, pg 4-12, 4-15, 4-16, 4-17, 4-18, 4-19). Standard Deviations calculated from data in ERD (2007).Assessment and Commentary on EPA’s Analysis 51

PREPUBLICATION COPY reduction of a specific pollutant (e.g., 80 percent removal), but does not specify required numeric pollutant concentrations. Because of the variab ility of natural wet weather events, the use of percent removal to describe SCM performance is scientifically weak, and performance summaries based on percent removal exhibit high va riability. Use of percent removal, however, is prevalent and the science to move to another metric is not yet mature.

Both national and local databases have been created for quantitative monitoring studies of urban SCMs. In many cases, the data sets remain small. In all cases, the data are highly

variable. Different rainfall events will have vari able stormwater runoff wa ter quality due to land activities, climate, antecedent dry period, and other parameters that remain poorly understood. Small, short duration storms may be treated effectively and discharge low pollutant concentrations, or even produce no discharge at all. However, large events will result in short

effective treatment times and resulting poor performance. In Florida, variability in urban runoff quality and SCM performance is expected geographically throughout the stat e (ERD, 2007). Most of this is due to variability in annual rainfall (Figure 1-4), which averages from a bout 38 to 66 inches per year. Higher areas of rainfall require more expensive treatment, or treatment will be less effective. More runoff is expected in the panhandle than in other parts of the state because of the higher annual rainfall, requiring greater investment in treatment. Note from EPA Exhibit 3-2 that this region has the most stringent numeric nutrient criteria.

Feasibility of Achieving the Numeric Criteria. Table 2-1 indicates that a reduction of 80 percent in the N concentration, which is re quired by the Florida stormwater regulations,

would on average reduce the N concentration below the pr oposed numeric nutrient criteria. An 80 percent reduction of the average P concentrati on would not comply with the numeric nutrient criteria for all regions. (While th is simple analysis has disputed sc ientific support, it is currently the best tool available for an analysis such as this.) Because of the log-distribution of runoff concentrations and treated SCM discharges, mee ting specific concentrat ion criteria for urban

stormwater runoff would need to be eval uated on the basis on probability and exceedence

distributions. A large amount of evidence is available to s uggest that 80 percent re moval of pollutants, including P, is difficult to meet with curre nt SCM technology. EPA (2010) acknowledges the wide range of pollutant removal efficiencies expected for SCMs (5 to 85 percent, p.7-2). The EPA report assumes that 50 percent N and P re duction would result in nutrient reduction necessary to meet proposed numeric nutrient criteria, but Table 2-1 suggests that this is not the case. The recent FDEP evaluation of commonly used Florida SCMs (ERD , 2007) suggests that wet ponds can accomplish a 65 percent annual mass removal for total P and 25 percent removal of TN. A recent NRC report on urban stormwater indicates 45 percent removal for TP and 20 percent removal for TN for wet ponds and wetla nds (NRC, 2009). For dry retention, Florida estimates about 53-63 percent P removal; NRC re ports 10-20 percent P removal for dry ponds. The differences in dry retenti on pond performances are primar ily due to expected greater

infiltration in Florida soils. Table 2-1 shows that these treatment e fficiencies are mostly inadequate for reaching the propos ed numeric nutrient criteria. A removal performance of greater than 93 pe rcent for TP and from 58 to 80 percent for TN would be necessary to meet the most st ringent numeric nutrient criteria. Traditional technologies may not be available to consistently meet these crit eria. Greater probability of meeting these higher treatment efficiencies could likely be obtained through the use of more52 Review of the EPA’s Economic Analysis of Final Water Quality Standards in Flori da

PREPUBLICATION COPY advanced SCMs, such as bioretention (up to 80 percent removal of TN and 85 percent removal of TP in high-infiltration soils) or other vege tated infiltration practices (NRC, 2009), which may be more costly than the per-acre cost s populating the existing FDEP database.

Range of Unit Costs

The range of costs for stormwater SCMs varies greatly because of the differing value of urban lands, the difficulties of construction in (sub)urban areas, and different technologies employed as the SCM. Currently, SCMs used in Florida are predominantly detention and retention ponds (personal communicati on, Eric Livingston, FDEP; ERD, 2007).

A small but valuable database on costs for st ormwater control is held by FDEP and was used in the EPA analysis. Costs for 40 projects were evaluated; more than half were wet detention ponds, followed by dry ponds. The me an is $12,570 per acre, with a standard deviation of $14,509 per acre. The median is $6,836 per acre, which is the fixed value used in the EPA analysis. (The 10 and 90 percentiles are $863 and $34,350 per acre, demonstrating the large variability in unit costs.) Traditional SCMs like detention and retention po nds may not be able to meet the numeric nutrient criteria themselves, such that urban retrofit of other technologies may be necessary. New and evolving technologies may be able to pr ovide better performance for N and P removal.

Such filtration and infiltration SCMs can have si gnificantly greater per-area costs than traditional pond and storage systems (Weiss et al., 2007). A recent article has quoted costs between $125,000 and $200,000 per impervious acre for urban retr ofit in the Washington, DC suburbs in attempts to meet more stringent Chesapeake Bay water quality criteria (Medina and Curtis, 2011). In retrofit situations, costs for land acqui sition must also be included and could be significant in urban areas.

Sources of Uncertainty

The focus of uncertainty in the EPA re port was entirely base d on the area of land impacted. While this uncertainty is real, it may not be the only or largest uncertainty in the stormwater analysis, especially when one cons iders the inherent vari ability of rainfall and pollutant accumulations on the landscape, in conjunction with variable SCM treatment performance. There are severa l sources of uncertainty other than the one EPA addressed. With respect to the land area considered, EP A appropriately consid ered the urban land area developed prior to the 1982 stormwater regula tions separately from land developed later. An uncertainty, however, is the extent to which land developed after 1982 is actually complying with the required 80 percent reduction of N and P; as discussed already, recent studies indicate that much poorer performance has been measured (a long with a significant degr ee of variability). In addition, new stormwater regulati ons are anticipated in the next few years that are expected to provide greater environmental protection. Gath ering information on regu latory compliance and SCM longevity and maintenance [all of which can be poor (NRC, 2009)] would provide another layer of detail to the cost analysis. As noted earlier, the unit area costs for urba n SCMs have a very large range. The EPA analysis selected only the median value from the FDEP database. Unit costs will vary widely depending on the technology selected, on the cost of the land being used for the SCM, and otherAssessment and Commentary on EPA’s Analysis 53

PREPUBLICATION COPY factors. This cost category is expected to be the greatest uncertainty in the stormwater analysis. Interestingly, the EPA analysis used unit cost va riability as a prime uncertainty metric for other sectors, such as agriculture, but did not carry this methodology to the urba n sector. In analyzing the other sectors, the land area or unit was alwa ys fixed by EPA and the variability was captured

in the unit cost. Finally, refining the cost anal ysis geographically (by consid ering rainfall distributions), based on the type of urban development and by re gional numeric nutrient criteria, would reduce uncertainty.

Other Analyses

Two stakeholder reports with co st estimates for urban stormwat er were made available to the Committee, one by the Florida Department of Environmental Protection and the other by Cardno ENTRIX (which included a 2011 Addendum) . A simple summary of the differences among the reports is provided in Table 2-2. The large difference between costs results from the land area assumed to require stormwater manage ment. The land areas used by FDEP and the

Cardno ENTRIX EOP scenario inco rrectly include all urban area developed before 1982. These two analyses do not limit their focus to increm entally affected areas . The Cardno ENTRIX BMP/LOT scenario and EPA appropr iately used estimates of the incrementally affected urban area only.

TABLE 2-2 Comparison of Ur ban Stormwater Costs for the EPA Analysis and Two Others.

Cost Analysis Approximate

Affected

Acres (thousands) Approximate Cost per

Affected

Acre Approximate Total Capital

Costs (M) Estimated

O&M Approximate Annual Cost (M)

EPA 61.3–109.4 $6,800 $419–$748 5% $61–$108

Cardno

ENTRIX

BMP/LOT

scenario 180 $5,120 $922 5% $61

Cardno

ENTRIX

EOP scenario 1,878 $5,120 $9,620 5% $630

FDEP 2,344 $7,295 $17,100 5% $1,967

BMP/LOT scenario entails Best Management Practices for diffuse sources and the Limits of Technology for point sources. EOP scenario assumes that both point and diffuse sources would be r equired to meet the numeric nutrient criteria at the end-of-pipe or edge-of-field.54 Review of the EPA’s Economic Analysis of Final Water Quality Standards in Flori da

PREPUBLICATION COPY Agriculture

Agricultural nonpoint sources known to cause nu trient pollution to nearby waterways (as

identified in Florida TMDL studi es) include animal livestock (d airy, cow/calf pastures, poultry), citrus, vegetable, and sod farms. For years, BMPs have been developed and implemented for agricultural activit ies to reduce nutrient discharges to ne arby waterbodies. A BMP is defined as a practice or combination of practices that is technologically and econom ically effective in reducing pollutant loads generate d by nonpoint sources to a level that meets water quality goals (Mulla et al., 2008) 7 . Typically, a BMP reduces pollutant loads while maintaining agricultural productivity and being economically feasible to adopt. Adoption of agricultural BMPs is voluntary in Florida. Agricultural BMPs ha ve been adopted on over 3 million acres of agricultural land in Florida (FDAC S Office of Water Policy, 2011a).

Methods to Determine Costs

In addressing agriculture, EP A (2010) acknowledges that Florida’s implementation of the NNC rule may result in additional BMP require ments to control agricu ltural nonpoint nutrient sources. A primary assumption made by EPA is th at the BMPs for agricultural nutrients detailed in the Florida Department of Agriculture a nd Consumer Services’ (FDACS) BMP manuals will reduce agriculture’s contribution to the problem sufficiently to meet the NNC rule when combined with other source control strategies. EPA estimated the incremental cost of new agricultural BMPs only for those agricultural lands in “incrementally impaired watersheds”— some 805,793 acres (as estimated by EPA) of the 13+ million acres in agriculture throughout the st ate (EPA, 2010a, p. 8-1). EPA also estimated

that there is an additional 1.1 millio n acres of crop or specialty ag riculture that would be required to adopt nutrient management BMPs to attain EPA’s numeric nutrient criteria for springs. In terms of the per acre costs, EPA recognized thre e levels of activities that agricultural producers might undertake to make nutrient reductions: the “owner” program which would likely be adopted without compensation, th e “typical” program which woul d include government or NGO incentives or cost sharing, and the “alternative” program which would be more aggressive and costly (and also involve cost sharing). In their analysis EPA assumed that implementing “owner” and “typical” BMPs on all agricultural ac res in the incrementally impaired watersheds and springsheds would be sufficient. The BMP cost estimates of “owner” and “typical” BMPs were taken from SWET (2008a).

7 Florida defines BMPs as cost-effective and practicable manageme nt actions for improving water quality and water conservation, developed through research, field testing, and expert review. They can be structural (e.g., fencing, stormwater ponds) or nonstructural (e.g ., managing fertilization and irrigation rates), and may be developed for both urban and agricultural use. Agricultural BMPs focus on ma naging inputs (fertilizer, water, pesticides, herbicides) to provide for economic, environmental and agronomic efficiency in production agriculture. SOURCE: FDACS (2011b).Assessment and Commentary on EPA’s Analysis 55

PREPUBLICATION COPY Effectiveness of Control Measures

BMP effectiveness can be evaluated through a variety of techniques, including water quality trend monitoring and anal ysis, plot or farm-scale evalua tions, paired watershed studies, or watershed modeling (Mulla et al., 2008). Each of these approaches has strengths and weaknesses. Many farm-scale BMP field studies suffe r from (1) a lack of replication; (2) spatial heterogeneity in crop management, crop productivit y, soils and aquifer properties; (3) year-toyear climate variability; and (4 ) budget constraints that limit th e spatial extent and temporal duration of sampling and thus c onfound rigorous statistical analysis . Nevertheless these studies can provide representative ex amples of surface and groundwater nutrient concentrations

measured on farms. Table 2-3 summarizes some representative wa ter quality measurements from farm-scale BMP studies in Florida. In general these meas urements represent on-farm measured or modeled water quality after BMP implementation. In almost all cas es the studies indicate that on-farm surface and groundwater samples significantly exceed the EPA numeric nutrient criteria. (As a point of reference in reviewing Table 2-3, the numeric nutrient criteria range from 0.5-1.27 mg/l TN and 0.011-0.050 mg/l TP for lakes, 0.67-1.87 mg/l TN and 0.06-0.49 mg/l TP for flowing waters, and 0.35 mg/l NO 3 +NO 2 -N for springs.) These data, along with experience in ongoing

efforts to reduce nutrient load s to the Everglades and Lake Okeechobee (see Box 2-1), Lake Apopka (Bachmann et al., 1999), and the Lower St . Johns River Basin (FDEP, 2008a), do not support the EPA’s assumption that typical “owner ” implemented on-farm BMPs will achieve the proposed numeric nutrient criteria. Rather, Ta ble 2-3 suggests that treatment measures beyond typical on-farm BMPs will be requi red to achieve the proposed numeri c nutrient criteria. This is further supported by a recent as sessment of BMP costs and impacts on water quality in the

Caloosahatchee River and St. Lucie River waters heds in Florida (SWET, 2008a). Discussed extensively in the next section with regard to costs, information on BMP effectiveness in SWET (2008a) suggests that the percen t reduction in nutrient concentr ation typically required in a Florida TMDL could not be achieved by the implementation of “owner,” “typical,” or “alternative” BMPs (see Table 2-4).56 Review of the EPA’s Economic Analysis of Final Water Quality Standards in Flori da

PREPUBLICATION COPY TABLE 2-3 Representative Water Quality Measurements and Model Predictions from Farm-Scale BMP

studies in Florida.

Crop Range of measured [N] (mg/l) Range of measured [P] (mg/l) Situation Reference

Central Florida Ridge Citrus (Groundwater) 4.6-14.0 mg/l

NO 3 -N NA Measured Post-Nutrient and Irrigation Management BMPs Lamb et al., 1999

Central Florida Ridge Citrus (Groundwater) 3-8 mg/l NO 3 -N NA Modeled Post-Nutrient and Irrigation Management BMPs Harrison et al.,

1999

Central Florida

Flatwoods Citrus (Groundwater) 0.01-0.07 mg/l

NO 3 -N NA Measured Post-Nutrient and Irrigation Management BMPs Lamb et al., 1999

Okeechobee Basin Cow-Calf (SW) 2.39-4.26 mg/l TN 0.94-2.25 mg/l TP Measured Post-ditch fencing and wetland

water retention BMPs Shukla et al., 2011a,b

Okeechobee Basin

Cow-Calf Improved Summer Pastures (SW) 3.35-3.9 mg/l TKN 0.58-0.69 mg/l TP Measured over range of stocking densities Capece et al., 2007

Okeechobee Basin

Cow-Calf semiimproved winter Pastures (SW) 3.16-3.88 mg/l TKN 0.11-0.19 mg/l TP Measured over range of stocking densities Capece et al., 2007

Suwannee River Basin Row Crops (Groundwater) 23.2-26.5 mg/l

NO 3 -N NA Measured Post-Nutrient and Irrigation Management BMPs Graetz et al., 2008

Suwannee River Basin Dairy (Groundwater) 0.8-159.5 mg/l

NO 3 -N 0.01-81.44 mg/l

NH 4 -N 0.04-8.45   g/l

SRP Measured over range of land uses with Dairy

Farm Graetz et al., 2008

Suwannee River Basin Poultry (Groundwater) 1.6-19.2 mg/l

NO 3 -N 0.01-0.09 mg/l

NH 4 -N 0.01-0.09  g/l SRP Measured over range of land uses with Poultry

Farm Graetz et al., 2008

Sugarcane Everglades Agricultural Area (SW) NA 0.044-0.170 mg/l TP Measured Post-Nutrient and Water Management

BMPs Daroub et al., 2011

Mixed Sugarcane and vegetablesEverglades Agricultural Area (SW) NA 0.101-0.165 mg/l TP Measured Post-Nutrient and Water Management

BMPs Daroub et al., 2011

TriCounty Agricultural Area Row Crops Lower

St Johns River Basin. (SW) 1-30 mg/l TN 1-14 mg/l TP Measured Post-Nutrient and Water Management

BMPs Livingston-Way et al., 2001

TriCounty Agricultural Area Row Crops, Lower

St. Johns River Basin (SW) 4-15 mg/l TN 0.36-0.99 mg/l TP Modeled Post-Nutrient and Water Management

BMPs Livingston-Way et al., 2001

NA = not applicable; SW = surface wate r; SRP = soluble reactive phosphorusAssessment and Commentary on EPA’s Analysis 57

PREPUBLICATION COPY Box 2-1

Case Studies of Water Quality Improvements Resulting from Implementation of Agricultural BMPs in Florida

In 1987, the Surface Water Improvement and M anagement (SWIM) Act was passed by the Florida Legislature as a framework for protecting and re storing Florida waters. Its primary focus at the
time was the restoration of Lake Ok eechobee, which is upstream of the Everglades National Park. On the northern side of Lake Okeechobee, the primary sour ce of TP to the lake at that time was dairy operations (Bottcher et al., 1995). The primary BMPs for controlling this source of pollution are (1) collection, pumping, and treatment of drainage waters from High Intensity Areas of grazing to adjacent cropland (60-95% reduction in TP concentrations at a cost of $15 to $40/lb of P; SWET, 2008b), and (2) collection and land application of barnyard manure on adjacent cropland based on soil testing (10-90% reduction in TP). Implementation of diary BMPs on half the land in Taylor Creek, a tributary to Lake Okeechobee, was started in 1981. By 1991, t hese BMPs produced an 84% reduction in TP

concentrations and a 40% reduction in TP loads di scharged to Lake Okeechobee from this tributary (Anderson and Flaig, 1995). Additional measures required to further reduce TP loads included construction of a 30,000 ac-ft. reserv oir to intercept and treat dischar ge from Taylor Creek (EPA, 2008).
South of Lake Okeechobee is t he 700,000 ac Everglades Agricultural Area (EAA). An extensive series of agricultural BMPs were installed for s ugar cane and vegetable production in this region from 1991 through the present (Wan et al., 2001), including both water and nutrient management BMPs. Water management BMPs included spatial and temporal water table level controls to reduce drainage losses from EAA farms. Nutrient management BMPs included reductions in rate of phosphorus application and adjustments in placement and timing of application. Tens of thousands of acres have
constructed to be Stormwater Treatment Areas. As a result of these actions, TP concentrations declined from 173 ppb in the period from 1980-1991 to 69 ppb in Water Year 2004 (Daroub et al., 2005). This corresponds to a 64% reduction in TP loads from the EAA. Despite t hese improvements in water quality, the U.S. Sugar Corp. entered an agreement in 2010 to se ll the State of Florida 73,000 ac (10%) of sugar cane and citrus land in the EAA at a cost of $536 m illion ($7,400/ac). These lands are to be used for wetland restoration and water storage and treatment prac tices that will further improve water quality in the

EAA.

TABLE 2-4 Comparison between % reductions in TN or TP required by TMDL studies for Florida lakes or rivers and % reductions potentially achievable with implementation of Owner, Typical or Alternative agricultural BMPs.
TMDL Study Percent Reduction in TN Percent Reduction in TP

Lake TMDL Reductions 24-80 10-85

River TMDL Reductions 8-45 11-90

BMP Scenario

Owner 10-20 9-40 Typical 5-40 5-29

Alternative 30-52 25-52 SOURCE: SWET (2008a). The numbers in the column s are the nutrient reduction percentages actually achieved by different types of BMPs (bottom thre e rows) as compared to that percentage reduction required by the TMDL (top two rows).58 Review of the EPA’s Economic Analysis of Final Water Quality Standards in Flori da

PREPUBLICATION COPY Range of Unit Costs

EPA estimated only the costs associated with the “owner” and “typical” BMPs currently practiced in Florida that were a ssumed to be required in the incrementally impaired watersheds and springsheds. A more complete analysis would have also considered the costs for downstream regional treatment efforts that may be required to further reduce nutrient levels and are often much more expensive. In additi on, agricultural land acquisition to limit nutrient intensive activities may be a part of a nut rient reduction strategy and, depending on the crop produced on the land being restored, that can be ve ry expensive. For example, evidence from the Everglades Agricultural Area, Lake Okeechobee, and Lake Apopka restoration programs indicates the need to acquire and convert signi ficant areas of agricu ltural production land into regional treatment systems at land cost s ranging from $5,575/ac to $7,400/ac. The basis for EPA’s unit costs was SWET (2008 a), a recent assessment of BMP costs and impacts on water quality in the Cal oosahatchee River and St. Lucie Ri ver watersheds in Florida.

The dominant land uses in these watersheds are pasture and citrus in the west and urban and residential areas in the east. Unfortunately, th ese watersheds are not necessarily representative of the soils, geology, and land uses in large portions of Florida, including the Panhandle, North and West Central, and West Central Regions. According to SWET (2008a), “BMP implemen tation costs were ty pically not provided

with the research studie s and therefore had to be developed by SWET, Inc. Cost estimates took into account the following factors: saved fert ilizer, equipment and construction, operation and maintenance, energy/fuel, crop yield reduction, crop displacement, and land purchases. In agriculture, when a BMP requires additional land, such as for retention/detention systems, the area is typically carved out of ex isting land holdings such that ther e are costs are associated with lost crop production (displacement).” Based on these statements it is apparent that SWET (2008a) estimated costs contain cons iderable uncertainty, es pecially if they ar e extrapolated from

southern Florida to th e rest of the state. As mentioned above, there are three s cenarios for BMP implementation: owner implemented, typical cost share incentives, and alternative BMPs includ ing regional treatment systems and other practices that take crop la nd out of production. Cost and effectiveness information on all three strategies is given in Ta bles 2-5 and 2-6 for N and P. “Owner” initiated BMPs are the least costly, but result in the sm allest water quality be nefits. “Typical” BMP programs are more costly, but should result in la rger water quality benefits. “Alternative” BMP programs are more costly than the “typical” in centive-based BMPs, but would also result in larger water quality benefits. There are many limitations of the approach taken by EPA (2010) to estimate costs of BMP implementation in agricultural areas incremen tally affected by numerical nutrient criteria. First is that the costs of implementing BMPs for water quality benefits are likely to vary considerably in different regions of Florida. The SWET (2008a) estimates are based primarily on experience with BMPs in the Lake Okeechobee region of southern Florida. Second, is that EPA (2010) assumed that BMPs described in th e SWET (2008a) owner or typical incentive BMP scenarios would be sufficient (in combination with nutrient reduction effort s from other sectors) to attain numerical nutrient water quality goals. BMP practices in the alternative BMP scenario described by SWET (2008a) will almost certainly be needed in many locations in order to attain the numeric nutrient criteria. Thus, it is like ly that the actual annua l per acre costs ofAssessment and Commentary on EPA’s Analysis59PREPUBLICATION COPYTABLE 2-5 Percent Reductions inNitrogenand BMP Costs for Three Levels of BMP Implementation in Different Crop and Animal ProductionSystemsOwner Initiated BMPs Typical Incentivized BMPs Alternative BMPsProductionSystem% Reductions Cost ($/ac) EstablishmentCosts ($/ac)% Reductions Cost ($/ac) EstablishmentCosts ($/ac)% Reductions Cost ($/ac) EstablishmentCosts ($/ac)Cow/Calf ProductionImprovedPastures17 4 11 10 12 38.5 30 35 110UnimprovedPastures11 1 2.2 8 4 11 43 18 55Row Crops 30 3.5 11 30 66.9 209 50 141 440Sugar Cane 10 1 3 23 34 108 52 88 275Citrus 10 6.4 20 5 150.4 470 52 77 242DairyProduction20 0.7 2.2 40 334 1043 48 240 750HayProduction15 4 11 25 15 47 36 35 110SOURCE: SWET (2008a).TABLE 2-6 Percent Reductions inPhosphorusand BMP Costs for Three Levels of BMP Implementation in Different Crop and Animal ProductionSystemsOwner Initiated BMPs Typical Incentivized BMPs Alternative BMPsProductionSystem% Reductions Cost ($/ac) EstablishmentCosts ($/ac)% Reductions Cost ($/ac) EstablishmentCosts ($/ac)% Reductions Cost ($/ac) EstablishmentCosts ($/ac)Cow/Calf ProductionImprovedPastures11 4 11 19 12 38 38 35 110UnimprovedPastures11 1 2.2 29 4 11 43 18 55Row Crops 30 3.5 11 30 66.9 209 50 141 440Sugar Cane 10 0 2.2 23 34 108 52 88 275Citrus 12 0 5.5 5 24.6 77 52 77 242DairyProduction9 2 2.2 28 334 1043 48 176 550HayProduction40 15.8 50 15 4 11 25 12 39SOURCE: SWET (2008a).60 Review of the EPA’s Economic Analysis of Final Water Quality Standards in Flori da

PREPUBLICATION COPY implementing BMPs on agricultural land to meet EP A’s proposed numerical nut rient criteria will be much larger than their estimates.

Sources of Uncertainty

An underlying assumption by EPA is that th e agricultural lands that would require TMDLs and BMAPs under existing state narrative standards would require the same controls to meet the proposed numeric nutrient criteria. Ther e is uncertainty as to whether more restrictive (or less restrictive) controls would have to be im plemented in order to meet the numeric criteria. Indeed, one could ask whether the application of “owner” and “typical” BMPs to agricultural lands in Florida would actually be sufficient to allow lakes and flowing waters to meet either the

narrative or numeric standards. If “alternativ e” measures are required to meet the numeric nutrient criteria, the costs and complexities of such efforts increase dramatically. Such measures would likely include off-site treatment and the retir ing of agricultural lands, as was necessary in some of the examples referred to above. A second source of uncertainty relates to th e effectiveness of th e FDACS BMP program. Producers who implement and maintain FDACS- adopted BMPs receive a presumption of compliance with state water quality standards. The FDACS Office of Agricultural Water Policy employs a small staff to follow up with producers to confirm that they are conducting the BMPs applicable to their operations. However, enforcem ent is difficult, and it is not yet possible to get

an accurate assessment of whether the BMPs selected by the producers are being properly implemented and effectively maintained, and to what degree they are improving water quality. Other reasons for limited effectiveness include the fact that system complexity and implementation costs can be high, labor and espe cially management requirements are usually underestimated, planning horizons tend to be shor t, and the availability and accessibility of supporting resources is limited (Nowak, 1992). Critical to e ffectiveness are successful implementation and then long-term maintenance fo r the practice or technology. While a farm in Florida in an impaired watershed is required to adopt BMPs, which BMPs the grower must implement are not specified. There is a substant ial gap between what may be required, what may be economically feasible, and what may be sufficien t to meet the NNC rule that may not be filled by voluntary action.

Other Analyses

The EPA analysis estimated significantly lowe r costs for the agriculture sector than the analyses of Cardno ENTRIX and FDACS. EP A grouped its agriculture land uses somewhat differently: (1) EPA had three classes of co w calf production compared to one for Cardno ENTRIX and (2) EPA classified what Cardno ENTR IX calls sugarcane land use as cropland and pasture land. This is a fairly important differe nce because the cost for sugarcane BMPs is about twice as much as that for cropland and pasture. Furthermore, the sugarcane land use accounts for 30 percent of Cardno ENTRIX’s co sts of meeting the NNC rule. Citrus and hay are the other two large contributors to the cost (about 50 percent), and they were treated quite differently by EPA a nd Cardno ENTRIX. Hay is important because it covers a large number of acres, a nd citrus is important because of the relative high assumed costsAssessment and Commentary on EPA’s Analysis 61

PREPUBLICATION COPY per acre for BMPs. In Cardno ENTRIX’s BM P/LOT scenario, their high estimate was that 937,513 acres of hay land would be affected by the NNC rule compared with 284,378 acres estimated by EPA. For citrus, Cardno ENTRIX ’s high estimate was 90,142 acres as compared with EPA’s 27,343. This discrepancy resulted from Cardno ENTRIX incl uding additional acres draining to waters that were “ unassessed” and thus not included by EPA. Repeating this across all agricultural land use categories resulted in a total difference of about 1.8 million acres

between the EPA land estimate and that of Car dno ENTRIX. The differences in per acre BMP costs cited by EPA and Cardno ENTRIX are large for two reasons: (1) different cost estimates for the same BMPs and (2) because of which BMPs were considered necessary to meet the nutrient criteria. Furthermore, it is not clear wh ether the EPA costs included the same extent of maintenance and other cost components as Card no ENTRIX did. While EPA almost surely underestimated costs by choosing low-cost BMPs , Cardno ENTRIX’s “end-of-pipe” scenario is beyond what would likely be required to meet the NNC rule and represents an overestimation of BMP costs (and acres to be treated). Both the number of acres requiring BMPs a nd the cost per acre for BMPs are clearly highly uncertain. It is always difficult to predict which BMPs farmers will elect to adopt and how well they will maintain them even when they are mandated by regulatory programs.

Furthermore it is uncertain whet her Florida can effectively enforce the adoption and maintenance of agricultural BMPs. Both the need for farmer cost-share incentives and the need for effective

state enforcement will result in transaction costs that neithe r EPA nor Cardno ENTRIX have adequately considered. How much these transaction costs will add to total costs is unclear, but it could be as high as an additional 25 to 35 percent (McCann and Easter, 2000).

On-site Septic Systems

Onsite Sewage Treatment and Disposal Syst ems (OSTDS) refer to conventional septic tank soil absorption systems and include more complex technologies called Performance-Based Treatment Systems. Regardless of their co mplexity, OSTDS have the following fundamental distinguishing feature: they treat and return wastewater to the hydr ologic cycle clos e to the point where the wastewater was generated (Crite s and Tchobanoglous, 1998. pg 2). This commonality was schematically represented by Bouma (1979) a nd is reproduced below as Figure 2-5. The figure has been modified to represent septic ta nk requirements in Florida and to demonstrate a septic-tank soil absorption system adjacent to a flowing stream. As shown in Figure 2-5, renovated septic ta nk effluent (percolate) rejoins groundwater immediately below the soil absorption area. Du e to the slight groundwat er table gradients found in Florida, a plume of sep tic-influenced groundwater moves very slowly away from the discharge point. The average home in Florida on an OSTD S discharges approximately 11 pounds of nitrogen per person per year (FDOH, 2010a), and approximately 4 pounds of phosphorus per person per year (Lowe et al., 2009). As perc olate from an OSTDS moves down gradient, microbiological and chemical r eactions convert nearly all th e nitrogen to nitrate while phosphorus is held back in the effluent plum e due to adsorption and precipitation reactions (Wilhelm et al., 1994).62 Review of the EPA’s Economic Analysis of Final Water Quality Standards in Flori da

PREPUBLICATION COPY FIGURE 2-5 Idealized Individual On-Site Sewage Tr eatment and Disposal System Flow Diagram. SOURCE: Bouma (1979).

Methods for Determining Costs

To determine the costs of implementing the NNC Rule for septic systems, EPA considered the 793,697 active septic systems in th e FDEP database, and then determined which of those systems lie within th e potential incrementally impair ed WBIDs. Acknowledging that septic systems contribute differentially depe nding on subsurface transport distance to the waterbody, EPA considered only thos e septic systems that are w ithin 500 feet of a potential incrementally impaired waterbody. This reduced the number of septic systems considered for the EPA cost analysis to 8, 224, or just over 1 percent of all the systems in the state of Florida. For the 8,224 OSTDS, EPA assumed that they would require upgrades for nitrogen and phosphorus removal to comply with the NNC rule. Although necessary to facilitate their analysis, choos ing 500 feet as the cutoff distance for OSTDS nitrogen and phosphorus impacts is a critic al and as-yet unsubstantiated assumption in EPA’s analysis. A greater distance (e.g., 1000 ft) would take into consideration the specific hydrogeologic conditions in Florida. For example, in areas within the Biscayne Aquifer or in karst geologies, groundwater velo cities are so rapid that a 500- ft setback distance could be traversed in just a few days. However, for the va st majority of the state 500 feet is a realistic starting point. That is, it would require months for nutrients di scharged 500 ft from a stream or lake to reach the waterbody and in that interv ening time, both dilution and removal (adsorption of P, denitrification of N) would likely reduce the ultimate concentration discharged.

EPA assumed that no additional controls would be needed for septic systems to attain the nitrate-nitrite criterion for spring s, claiming that the contribution of nitrogen from septic systems is highly uncertain and likely site specific. They cited Brown et al. (2008) as indicating that the preponderance of nitrogen pollution in Florida spri ngs appears to be from fertilizer sources, not septic tanks and wastewater sprayfields. A lthough Brown et al. (2008) do state that the preponderance of N pollution appears to be from fe rtilizer sources, they also explain that there are several reasons to treat this finding as an over-generalization, and point out that there remains significant uncertainty about the in terpretation of bulk stable isotope measurements (that are used to distinguish nitrate from minera l sources versus municipal efflue nt or septic tanks) in complex karst hydrologic systems. A more conservative assumption would have been for EPA to assumeAssessment and Commentary on EPA’s Analysis 63

PREPUBLICATION COPY that all septic tanks in incrementally impaired springsheds would requ ire upgrade to advance nutrient removal systems.

Effectiveness of Control Measures

EPA recommended the use of advanced nutrient removal systems for the 8,224 OSTDS that would require upgrades to co mply with the proposed NNC rule. The effluent standards for this designation were not given and EPA said it was unclear whether retr ofit technologies could be used. The Performance-Based Treatment Sy stems technologies mentioned in EPA’s report are capable of meeting advanced secondary efflue nt standards of 20 mg/L TN and 10 mg/L TP. Although further reduction in both parameters ar e likely in soil absorption and transport,

achievement of the actual numeric nutrient criter ia is not guaranteed before an OSTDS plume reaches the property line. EPA did not consider the use of permeable reactive barriers, which were found to be low cost in the Chesapeake Bay watershed and able to achieve a nitrate discharge of 5 mg/L (EPA, 2010b). They are the only known technology likely to be able to approach the proposed numeric

nutrient criteria in their disc harge. However, permeable re active barriers have their own limitations, since they have to be replaced on a ti med schedule and the longevity of the media is not well understood (Robertson and Cherry, 1995). In the Florida Keys a layer of phosphorusabsorbing media 24 inches thick was used direc tly beneath the soil absorption area to achieve phosphorus removal to less than 1 mg/L (Ayres Associates, 2000); it was predicted to have a lifespan of 10 years. Unfort unately, no media performs both nitrogen and phosphorus removal simultaneously.

Range of Unit Costs

Using interviews with manufacturers and published cost data, EPA estimated the annualized capital cost of upgrades, assuming 7 pe rcent interest over 20 years, to be between $800 and $1,300 per OSTDS. It is not clear that this simple analysis took in account a number of important factors that should be included in estimating the costs of OSTDS upgrades. Under Florida law, all such upgrades would be considered Performa nce-Based Treatment Systems, which must be designed by a Flor ida Licensed Professional Engineer . Typical design fees range from $1,000 to $2,000. Permit fees for Performance-Based Treatment Systems are $125 for the initial application and $100 fo r a biennial operating permit. Performance monitoring of Performance-Based Treatment Systems, including la boratory analysis, can be expected to range from $400 to $800 per year. In the Florida Keys, which has the highest proportion of Performance-Based Treatment Systems in the st ate, total annual construction and operational costs for nitrogen and phosphorus reducing sy stems were estimated at between $1,730 and $2,841 (Ayres Associates, 2000). In order to install a permeable react ive barrier a hydrologic survey including determination of groundwater elevations would be necessary. Typical fees for such services range from $500 to $1500. In the Chesapeake Bay watershed (EPA, 2010b) anticipated installation costs of permeab le reactive barriers ranged from $5,000 to $15,000 per home.64 Review of the EPA’s Economic Analysis of Final Water Quality Standards in Flori da

PREPUBLICATION COPY Sources of Uncertainty

Of the two metrics that need to be estimated to determine the range of costs for septic systems to implement the NNC rule, the number of units affected is the more uncertain than the per unit cost because springs areas were excluded from the analysis. There is also regulatory uncertainty. Unlike for the other sectors, impl ementation of the NNC rule for septic systems could not occur as quickly and unilaterally b ecause the FDEP must work through the Florida Department of Health (FDOH), which has responsi bility for regulating OS TDS in the state of Florida. The two agencies interact form ally through an interagency Memorandum of Understanding (MOU) and meet monthly to discuss issues of mutual interest. FDOH rulemaking involves the in-depth participat ion of a stakeholder group called the Technical Review Advisory Panel (TRAP). All meetings of the TRAP are conducted in accordance wi th Florida’s Sunshine Law. Any person can bring forward proposed ru le revisions for consideration by the FDOH and discussion by the TRAP. Florida’s OSTDS rule (64E-6, Florida Administrative Code) has been revised approximately once every two to four years over the last decade.

Other Analyses

In responding to EPA (2010), FDEP made seve ral extreme assumptions regarding actions needed to make septic systems compliant with th e NNC rule. First, it as sumed that conventional septic systems on lots larger than three acres would automatically comply with the NNC rule, and thus assumed no additional costs on three-acre or larger lots. A review of the FDOH permitting databases indicates that approximately 83 percent of new septic systems and approximately 90 percent of older systems were on lots less than 3 acres. FDEP chose an overall estimate that 85 percent of septic syst ems were on lots less than three acres. Rather than assume a specifi c cutoff distance from an incr ementally impaired waterbody, FDEP assumed that 75 percent of all septic sy stems discharge to groundwater that eventually becomes surface water. Thus, the number of septic systems in Florida that they included in the cost estimate was 1,687,500 (as opposed to EPA’s estimate of 8,224) (FDOH, 2010b). Although EPA’s assumption of a 500-ft setback can be critic ized as an arbitrarily low cut-off for septic systems that might contribute nutrients (given the prevalent and highly transmissive soils and karst geology), FDEP’s assumption that nutrien t contributions from throughout the state will impact flowing waters in Florida equally is also questionable. FDEP assumed that all affected septic system s would be upgraded in the first year (called instant replacement), which is extremely expensiv e. Even assuming a more reasonable 5 percent per year replacement over 20 years, FDEP’s annua l cost estimates ranged from $0.9 to 2.9 billion because of the larger number of systems considered. Cardno ENTRIX revised their economic analys is in July 2011 and made major changes in their analysis regarding septic systems to take into account additional ge ospatial data on septic tanks and new FDOH information on the likely incremental compliance costs associated with septic systems. Cardno ENTRIX accepted a 500 -ft setback in refining the number of septic systems affected. Their overall estimate of annual compliance costs for septic systems was between $2 to $18 million dollars, with a mean estim ated annual cost of $8 million dollars. This

estimate is much closer to the $1.3 to $2.2 million estimated by EPA.Assessment and Commentary on EPA’s Analysis 65

PREPUBLICATION COPY Government Costs

EPA (2010) assumed all incremental cost s to government associated with the promulgation of the NNC rule would accrue excl usively in the development of total maximum daily loads (TMDLs). EPA reviewed potential incremental costs associated with developing site-specific alternative criter ia and ambient monitoring, but determined these costs were insignificant. The incremental cost of TMDL development was reduced to a function of the numbers of incrementally impaired waters re quiring TMDLs and the estimated cost of TMDL development. As noted previousl y, the key cost variable is likely to be the number of impaired waters. The potential number of incrementally impaired waters varies widely depending on the assumptions used to identify impairment. T hus, the number of impaired water/pollutant combinations significantly affect the government cost component as well as have a cascading

effect on the overall cost estimate.

Methods for Determining Costs

The methodology for determining government costs is found in Chapter 10 of EPA’s economic analysis performed in support of prom ulgation of numeric nutri ent criteria for Florida (EPA, 2010a). Since the primary va riable in the cost analysis is the number of incrementally impaired waters, Chapter 10 ties back directly to Chapter 6 where the estimate of incrementally impaired waters requiring TMDLs can be found. E xhibit 6-1 of the EPA analysis presents data in a tabular format summarizing EPA’s analysis of incrementally impaired waters and arrives at

a total of 325 waters that include streams, lakes, and springs. EPA further assumed that multiple waters would be included in a single TMDL document. Based on the average of previous Florida TMDLs, EPA estimated two waterbodies would be incorporated into each TMDL bringing the number of new TMDL s associated with the NNC rule incremental impairment to

163. Several assumptions are used to estimate the number of incrementally impaired waters, including two key assumptions that eliminate certain groups of waters. Those key groups include waters with existing or proposed TMDLs fo r nutrients and those waters with insufficient data. If EPA accepts all existing nutrient TMDL s as a means for reaching endpoints compatible with the NNC rule, then the assumption that no additional TMDL work will be required for those waters with preexisting TMDLs is valid. If any of those exis ting TMDLs are challenged as not reaching suitable endpoints, then there will be added cost for modifying those TMDLs. The larger uncertainty lies with the elimin ation of waters determined by EPA to lack

sufficient nutrient data. As re ported in EPA’s Exhibit 6-1, only 34 percent of the waters without existing or pending TMDLs were thought to have sufficient data. Thus, 66 percent or 3,169

waters were eliminated for lack of sufficient da ta. As described earlier in this chapter, FDEP later tried to determine which of the 3,169 waters with insufficient data would potentially be identified as impaired using EPA’s numeric nutrient criteria and concluded that 1,018 of the 3,169 currently un-assessed waters would potentially be listed as impaired and require TMDLs when assessed against the numeric nutrient crit eria. Using EPA’s estimate of two waters per TMDL, an additional 509 TMDLs would potentially need to be developed, more than tripling the

current EPA cost estimate. This Committee advocat es for an alternate approach to determining66 Review of the EPA’s Economic Analysis of Final Water Quality Standards in Flori da

PREPUBLICATION COPY the number of unassessed waters likely to be out of compliance with the numeric nutrient criteria, which takes into consideration th e characteristics of the various WBIDs.

Range of Unit Costs

The cost estimate for completing a TMDL was estimated based on a draft EPA document evaluating TMDL program costs (EPA, 2001a). EPA utilized an average cost per impairment of $28,000 based on a range of $6,000 to $154,000 per impairment. Those costs represent an aggregate of costs for all pollutants with no i ndication as to whether nutrient TMDLs would be more or less costly than othe r pollutants. EPA further assu med that each TMDL would be written for two impairments, TN and TP. This is a reasonable assumption because most of the incrementally impaired waters would be impaired for both TN and TP. The cost of the second impairment was discounted because much of the background information would have been collected for the first impairment. The second impairment was estimated to cost $6,000 (the low end from the 2001 EPA document). The costs of the two impairments were added and the total was brought forward to 2010 dollars resul ting in a unit cost of $47,000 per TMDL. The EPA (2001a) document included multiple cost ranges for developing TMDLs: the cost for single impairments; the cost for waterbodies with single to multiple impairments; and the cost per state submission which included multiple TMDLs for clustered waters. Interestingly, in

the Executive Summary of the 2001 document, EPA references only the waterbody cost estimates in approximating aggregate nationa l TMDL unit costs. Those unit costs utilized for the national estimate range from $26,000 to $500,000 per TMDL with an average of $52,000 dollars. Inflating that average cost to 2010 dollars usi ng EPA’s multiplier yields an average cost of $72,000, or 1.5 times the cost used in EPA’s an alysis. It is not clear why the 2010 EPA economic analysis did not use the $52K cost, as the 2001 document is frequently cited, which implies that $52K is the best overall nationwide estimate of TMDL development costs. Perhaps

there was a sound reason for the selection of a lower unit cost, however no reason was stated. The 2010 cost analysis also notes that the addi tional costs for monitoring needed to develop

TMDLs were not included in the cost estimates. Although not cited in the EPA analysis, th e support document for the TMDL program costs (EPA, 2001b) provided addi tional detail on the methodology used to compute costs. A matrix of costs was developed based on the degree of complexity of a TMDL and the efficiencies realized by performing TMDLs for multiple poll utants and/or waterbodies versus single pollutants. The data indicate the cost for a single pollutant, singl e waterbody TMDL ranged from $36,284 for a simple TMDL to $69,924 for a moderately complex TMDL to $123,476 for a complex TMDL. All costs are in 2000 dollars. Those costs infl ated to 2010 dollars are $50,240; $96,500; and $170,400, respectively. Costs for a sec ond parameter at each of the complexity levels are estimated to be $11,978; $28,779; and $56,741 in 2000 dollars, respectively. Inflating those costs to 2010 dollars and adding them to th e costs for the original parameters yields the total costs for two parameter TMDLs on single waterbodies as $66,800 for a simple TMDL, $136,200 for a moderately complex TMDL, and $249,000 for a complex TMDL. These estimates range from 1.4 to 5.3 times higher than the analysis used in EPA (2010). Regardless of the unit cost selected, the TM DL cost data discussed above are over a decade old. Bringing the cost of the original esti mates up to current dollars may be acceptable as an estimate. However, use of contemporary or Florida-specific data may have provided a moreAssessment and Commentary on EPA’s Analysis 67

PREPUBLICATION COPY accurate estimate of actual TMDL costs. The FDEP Office of Inspector General (FDEP, 2008b) produced a report detailing FDEP TMDL program costs, including operations funding, for the program through 2007. Based on operations funding and the numbers of TMDLs completed, it appears a Florida-specific cost estimate for TMDL development could have been developed. To develop a crude but rapid understanding of what the number would have been, the following calculations are provided:

 Operations costs from FY02-06 were 21.51% of the total TMDL program costs. Operations costs included “...expenditures su ch as staff salary, travel, monitoring, contractor services, TMDL development and BMAP implementation.” The BMAP implementation and follow up monitoring w ould go beyond TMDL development costs, but the numbers provided in the report did not go into additional detail.

 Total TMDL costs through FY08 totaled $156.5M. So the estimate of operating costs = $156.5M X 0.2151 = $ 33,663,150.00

 As of the 2008 OIG report, there are 156 TMDL s adopted, 100 TMDLs in the process of being adopted, and 83 TMDLs being devel oped. So one could estimate 256–339 TMDLs developed. Thus, the range of averag e cost = $33.6M/339 to $33.6M/256 or $99,000 - $131,000/TMDL.

In terms of more contemporary data, EPA ha s contracted with various consultants for TMDL development throughout the country. It is likely contemporary cost estimates for TMDL development could be calculated based on those contractual arra ngements. It may also be possible to parse out the specifi c cost of developing nutrient TMDLs from those data. At a minimum, the value of the contracts could be used to gauge the general accuracy of the 2000 cost

estimates.

Other Cost Considerations

Other costs associated with complying with the NNC rule could have potential fiscal impacts to government bodies other than TMDL development. This document will not attempt to quantify those costs, only to identify the po ssible additional costs to government. In addition to the potential costs mentioned below, ther e could conceivably be new administrative, monitoring, and enforcement costs if FDEP ra mps up its efforts to address waters newly impaired under the numeric nutrient criter ia, but these are not discussed further.

SSAC Development Costs. In the section on municipal and industrial wastewater treatment plants, the EPA analysis assumed ther e would be liberal acceptance of variances or SSACs to replace the promulgated numeric nutrien t criteria on a case-specific basis. SSAC development costs could be borne by government s ector or the private sect or, but the possibility of the former was not factored into the government sector analysis done by EPA. Regardless of who develops the SSAC, government time and resources would have to be spent evaluating and ruling on the acceptance or denial of the SSAC, and on evaluating variance requests, but these costs were not considered in the EPA analysis. The history of using SSACs and variances for68 Review of the EPA’s Economic Analysis of Final Water Quality Standards in Flori da

PREPUBLICATION COPY nutrient issues is virtually unwr itten on a national level. Thus, their use in Florida would be breaking new ground.

Second round and later costs for TMDLs . EPA assumes all TMDL costs occur over a nine-year period and then end. In reality, ma ny adaptively managed TMDLs will have to be evaluated after the nine-year period and adjustments made to the TMDL to further reduce nutrients. While not as costly as the original TMDL development, there are costs involved in the

re-evaluation of those TMDLs.

Potentially Lower Stream Criteria Ba sed on Downstream Protective Values . Once EPA promulgates numeric nutrient cr iteria for estuaries, those crit eria could force lower nutrient

concentrations in streams in order to meet the estuary criteria. Lower mandatory stream

concentrations could result in a dditional waters being assessed as impaired, thus increasing the number and complexity of the TMDLs which must be developed.

Sources of Uncertainty

Government costs as analyzed by EPA are ti ed exclusively to TMDL development. Thus, a significant uncerta inty for the government sector is the number of waterbodies that may be impaired and require a TMDL. Different estimates put that number between 325 and 1,018. While there is also a large pe rcentage difference in the unit cost of each TMDL estimated by EPA as compared to others, the gross cost per TMDL is small in comparison to implementation

costs in other sectors. Another significant unknown is that FDEP maintains they will be unable to develop TMDLs and BMAPs for waters deemed impaired according to the EPA numeric nutrient criteria due to Florida state law prohi bitions on the use of criteria not contained in state rule (FDEP, 2010). If that is the case, EPA will be forced to take the l ead in both identifying nutrient impaired waters and developing TMDLs and BM APs. Since EPA has no track record of developing nutrient TMDLs, it is unclear what an EPA TMDL would look like, how it would be implemented, and what it would cost. All of EPA cost estimates assume the State of Florida will implement the numeric nutrient criter ia. It is anticipated that co sts could be signi ficantly higher if EPA were responsible for a nutrient TMDL pr ogram because EPA would have initial start up costs in establishing an infrastr ucture capable of assessing Florid a’s waters, developing TMDLs, and following up on BMAP implementation.

Other Analyses

Cardno ENTRIX (2011) performed an analysis of government cost as a part of their

overall review of EPA’s cost anal ysis. Their Monte Carlo analysis of the data led to a prediction

of 902 additional waters would be listed as impaired under the num eric nutrient criteria. The analysis also estimated a higher unit cost fo r each TMDL using EPA’s minimum and maximum unit costs as model inputs. Based on the analys is, Cardno ENTRIX estimated a TMDL unit cost of $64,000 as opposed to the EPA estimate of $47,000.Assessment and Commentary on EPA’s Analysis 69

PREPUBLICATION COPY To determine the total government costs, Ca rdno ENTRIX consider ed two scenarios—(1) Best Management Practices for diffuse source s and the Limit of Technology for point sources (BMP/LOT) and (2) End-of-Pipe (EOP) assumption that both point and diffu se sources would be required to meet the numeric nutri ent criteria at the end-of-pipe or edge-of-field. The results of the Monte Carlo simulation, which provide a range of cost from low to high, are given in Table 2-7 and range from $1 million to $11 million with a mean of $6 million. The EPA cost estimate
of $0.9 million is near the low- end Cardno ENTRIX estimate.
While the difference between $0.9 million and $6 million is very significant in terms of state government budgeting, the government costs ar e a small fraction of the overall cost of implementation—less than 1 percent. Therefore, the government cost s play an insi gnificant role in terms of the total costs for implementing numeric nutrient criteria.

TABLE 2-7 Cardno ENTRIX Total Government Cost Analysis

Millions $

Estimated Annualized Cost Estimated Present Value Cost:

2011

‐ 2040

Assumption 5th

Percentile 95th

Percentile Mean 5th

Percentile 95th

Percentile Mean Monte Carlo
Output

BMP & LOT $1 $4 $2 $11 $65 $32 $29

End of Pipe

Criteria $3 $11 $6 $43 $175 $93 $8570 Review of the EPA’s Economic Analysis of Final Water Quality Standards in Flori da

PREPUBLICATION COPY FINDINGS AND RECOMMENDATIONS

The first set of findings and recommendations pertain to the determination of the number of incrementally impaired waters, and as such have repercussions for several of the sector analyses. A second set of findings and recommen dations are provided that are specific to each sector, preceded by a summary table. All of these findings and recomm endations are based on the assumption that EPA would use the same basic method for any future economic analyses, with the intent of making sugge stions for improvements.

Incrementally Impaired Waters and Watersheds

FINDING: The HUC10 delineation used to assess the acreage of various land uses that contribute to the potential im pairment is too coarse.

RECOMMENDATION: EPA should use the more refined HUC12 delineation to generate a more precise estimate of the acres to cons ider for the BMPs in the various land uses.

FINDING: It is not valid to assume that th e percent of unassessed waters that would be incrementally affected is zero. A more defensib le approach would take into consideration the characteristics of the various WBIDs to predict the likelihood that they would fail to meet the

narrative criteria or the numeric nutrient criteria.

Sector Analyses

Table 2-8 summarizes the Committee’s asse ssment of EPA’s economic analysis by sector. The color coding of Table 2-8 entrie s reflects the Committee consensus of the accuracy

of the EPA evaluation. Green indicates a sati sfactory job in addressi ng the issue, yellow indicates only moderate agreement, and pink indicates unsatis factory assessment.

The table is based on the cost method used in the EPA analysis, in which the total sector cost was calculated as the product of the number of affected units (or area) and the unit cost. The

second column refers to how well EPA determin ed the number of affected units, including judgments on assumptions used for the number of point discharges that will require treatment upgrades and land areas that will need to have new BMP technologies implemented. The third column deals with the accuracy of unit costs assessments. The fourth column considers whether the numeric nutrient criteria could be met by existing technologies at the “end-of-pipe” or “edge -of-field” for each sector. The EPA analysis assumes that in every case assimilative capac ity exists somewhere in the watershed or waterbody, or that administrati ve relief is available, su ch that the each sector does not have to

meet the numeric nutrient criteria at the end-of -pipe or edge-of-field. Yet the EPA has not employed watershed modeling to determine if implementing all assumed technologies would

allow the numeric nutrient criteri a to, in fact, be met. From the regulatory standpoint, if a waterbody violates the numeric nutri ent criteria, its assimilative cap acity is considered to already be exceeded. Thus, the numeric nutrient criteria we re used in this column because no otherAssessment and Commentary on EPA’s Analysis 71

PREPUBLICATION COPY TABLE 2-8 Summary of Key Findings by Sector

EPA estimate of

the area affected

or number of units EPA estimate of the

unit cost of BMPs Can chosen tech

‐ nologies/BMPs

meet the NNC? Strategies to improve the
analysis

Municipal

Plants All WWTPs

included due to

“reasonable potential”
provisions of
regulations CAPDET Works cost

estimates not

verified using

Florida

‐ specific
experience Assumed that

WWTPs would
only be required

to treat to 3 mg/L

TN and 0.1 mg/LTP and none
will treat to NNC

at end of pipe 1. Ground truth unit costs

based on significant existing

Florida experience.

2. More realistically reflection

of the proportion of WWTPs
receiving administrative relief

to avoid treating beyond 3 mg/L TN and 0.1 mg/L TP.

Industrial

Plants Established by
averaging flows

from only a limited

number of facilities

and extrapolating

to others. CAPDET Works

program (used for
municipal facilities)

was misapplied to

industries. Same as for
municipal WWTPs Should not have investigated only 1 or 2 plants per SIC but

rather analyzed each plant

Agriculture EPA likely under

estimated the area
of incrementally
impaired

watersheds as well

as the number of
springs affected Costs from SWET

report not representative;

need more site

‐ specific cost

estimates No. Alternative

BMPs will likely

be required along

with land

retirement Use existing TMDLs and

restoration plans to identify

the BMPs and regional

treatment needed to meet

the criteria

Urban

Stormwater Assumed Urban

Turf Rule would

insure compliance

on all low

‐ density

residential land and

that all land after

1982 is already in compliance. EPA used low end

of a very wide

range of unit costs Assumed

traditional BMPs

would meet NNC

and assumed

100% compliance

and functionality

for urban BMP implementation.

NNC may

necessitate more
advanced BMPs. Consider advanced BMP implementation throughout

most developed land area.

Septic
Systems Excluded systems beyond 500 ft and
springs areas Reasonable for
technologies

evaluated. Not necessarily,

but other
technologies may. Consider wider range of

systems and updated per unit

costs.

Government

Costs Did not consider

other government

costs like SSAC approval, variances,

etc. Used old TMDL cost

data not specific to

FL NA 1. Use contemporary, Florida

and nutrient

‐ specific TMDL development costs.

2. Consider costs of SSACs,

TMDL revision, etc.

logical benchmark is available with which to compare the pe rformance of technologies and

BMPs. An important consideration not well captured in this summary table (but returned to in
Chapter 3) is the degree of uncertain ty and variability expected in ea ch of the sector categories.72 Review of the EPA’s Economic Analysis of Final Water Quality Standards in Flori da

PREPUBLICATION COPY In many cases, uncertainty is expected to be exceedingly high. While some uncertainty is captured in the EPA analysis, it is not considered to be adequate to describe the vast complexity inherent in many of the parameters critical to the economic analysis. In some of the sectors, especially with agricu lture and with urban stormwater, t echnology and implementation unit costs can vary by factors approaching two orders of magnitude. Placing the assessment accuracy

results summarized in Table 2-8 in the context of the high uncertainty and variability of many of the categories leads to ev en greater concern with the EPA economic analysis.

Municipal Wastewater Treatment Plants

FINDING: There is significant uncertainty in the cost estimate for municipal wastewater treatment plants because (1) the unit treatment costs were not verified by comparison to the existing and extensive Florida AWT treatment ex perience and (2) the assumption that no plant will be required to treat to levels more stringent than 3 mg/L TN and 0.1 mg/L TP is unrealistic. While the proportion that will be able to avoid trea ting to levels more stringent than 3 mg/L TN and 0.1 mg/L TP is uncertain, there is a real possi bility that at least so me WWTPs will have to treat to more stringent levels.

RECOMMENDATION: Efforts should be made to compare the unit costs of CAPDETWorks

with cost data from Florida. Efforts should also be made to better estimate the percentage of plants that will be required to reach discharg e limits more stringent than 3 mg/L TN and 0.1 mg/L TP by performing mass balance and dilutio n calculations for at least a representative proportion of plants, if not for all of the plants included in this analysis.

Industrial Plants

FINDING: There is significant uncertainty about th e incremental cost of the NNC rule for industrial plants for several reas ons. EPA based its estimates on one or two selected facilities from each sector and ignored the diversity of in dustrial facilities within a sector. This extrapolation led to some low-flow facilities exerting a disproportionate influence on the overall industrial costs. Furthermore, the same cost model and treatment processes were used for industrial facilities as was empl oyed for municipal WWTPs. For f acilities with hi ghly variable flows, flow equalization may be a more cost-e ffective solution than mechanical/ chemical treatment, such that EPA may have overestimated costs for these facilities. On the other hand, some industrial facilities have higher unit cost s than municipal WWTPs. Finally, industries covered under general permits were not investig ated, raising the question of whether there may

be costs to remove nutrients from those faciliti es that were not captured in EPA’s estimates.

RECOMMENDATION: Given the small number of i ndustries involved, the cost analysis should be improved by analyzing each plant rather than extr apolating the results of one or two plants to the entire sector. As with the municipal wastew ater treatment plants, e fforts should be made to compare the unit costs of CAPDETWorks with cost data from Florida and to better estimate the percentage of plants that will be required to r each discharge limits more stringent than 3 mg/L TN and 0.1 mg/L TP.Assessment and Commentary on EPA’s Analysis 73

PREPUBLICATION COPY Urban Stormwater

FINDING: For the urban stormwater sector, the costs of complying with the NNC rule in those watersheds determined by EPA to be incrementally impaired are expected to be higher than EPA estimates. However, high uncertainty and variabili ty is prevalent throughout all aspects of this sector analysis, which would lead to a wide cost range and co sts that are highly dependent on several critical assumptions. Most traditional Florida urban SCMs will not likely be able to comply with stringent numeric nutrient criteri a, but newer, novel (and more expensive) technologies may. Per acre costs for traditional Florida SCMs are highly variable; broadening the SCM options increases the cost range even more. Many simplifying assumptions are employed to estimate urban land area incrementally affected by the NNC rule. Actual affected land area estimates are highly dependent on unverified existing SCM performance and compliance with urban stormwater rules and regulations.

RECOMMENDATION: To improve the cost an alysis, higher-effici ency SCMs should be considered, which have costs higher than trad itional SCMs. Costs of retrofitting SCMs into already-developed land should be considered.

Agriculture

FINDING: For the agricultural sector, the costs of complying with the NNC rule in those watersheds determined by EPA to be incrementally impaired are likely to be higher than EPA estimates. The incremental land area needing treatment was likely underestimated, individual

costs for the BMPs assumed to be sufficient we re underestimated, and the more effective and costly BMPs and regional treatment systems likel y required to meet numer ic nutrient criteria were not included in the analysis . The need for more stringent BMPs and treatment systems has been demonstrated in many of the BMAPs deve loped for impaired waters in Florida. Furthermore, there were some critical omissions that could well lead to increased costs, including the degree of actua l participation by agricultural producers and the costs of maintaining BMPs over time.

RECOMMENDATION: To improve the cost analys is, actual experience from existing TMDLs should be used to identify the BMPs and region al treatment systems that were sufficient or

insufficient to meet certa in numeric targets.

Septic Systems

FINDING: For septic systems, the costs of complyi ng with the NNC rule in those waterbodies determined by EPA to be incrementally impaired ar e likely to be substan tially higher than EPA

estimates. The Committee was comfortable with the 500-ft threshold assumption made by EPA; however, the exclusion of septic systems in springsheds is a significant deficiency of EPA’s analysis. EPA received cost estimates from vendors of equipment capable of meeting a total nitrogen target of 20 mg/l and a total phosphorus target of 10 mg/L, values which are much higher than EPA’s numeri c nutrient criteria.74 Review of the EPA’s Economic Analysis of Final Water Quality Standards in Flori da

PREPUBLICATION COPY RECOMMENDATION: Efforts should be made to cons ider septic systems in springsheds and a wider range of systems including permeable react ive barriers, which are known to be more effective in removing nutrients to levels consistent with the numeric nutrient criteria.

Government Costs

FINDING: The incremental costs for the government sector are e xpected to be higher than EPA estimates. The key factors in determining gove rnment cost are the number of incrementally affected units (WBIDs requiring a TMDL) and the unit cost of a TMDL. In the EPA analysis, WBIDs with insufficient data were not used, t hus potentially underest imating the number of incrementally impaired waters requiring TMDLs. Unit costs were based on low-end estimates of costs from a 2001 study that focused on a broad range of TMDL work not specifically related to either Florida TMDL development or nutrient TM DL development. The unit cost selected was

less than the national unit cost referenced in the 2001 report.

RECOMMENDATION: Effort should be made to qua ntify costs for Florida-specific and/or nutrient-specific TMDLs to provide more accu rate unit costs for TMDL development. Additional government costs should also be c onsidered, including costs for developing or approving SSACs and variances, costs associated with downstream protectiv e values effectively reducing upstream criteria, futu re costs of adaptively managed TMDLs, and consideration of additional waters becoming impaired in the future.

REFERENCES

Anderson, D. L., and E. G. Flaig. 1995. Agricu ltural Best Management Practices and surface water improvement and management. J. Wat. Sci. Tech. 31:109-121. Arthur, J. D., H. A. R. Wood, A. E. Baker, J. R. Cichon, and G. L. Raines. 2007. Development and Implementation of a Bayesian-based Aqui fer Vulnerability Assessment in Florida. Natural Resources Research 16(2):93-107. Ayres Associates. 2000. Florida Keys Ons ite Wastewater Nutrient Reduction System Demonstration Project, Phase II Addendum. Bureau of Onsite Sewage Programs, Tallahassee, FL, 28 pp. Retrieved September 6, 2011 from http://www.myfloridaeh.com/ostds /zip/keysnutrientdemoph2.zip Bachmann, R. W., B. L. Jones, D. D. Fox, M. V. H oyer, L. A. Bull, and D. E. Canfield, Jr. 1996. Relations between trophic state indicators and fi sh in Florida (U.S.A.) lakes. Can. J. Fish Aquat. Sci. 53:842-855. Bachmann, R. W., M. V. Hoyer and D. E. Canfie ld, Jr. 1999. The restoration of Apopka Lake

in relation to alternative stab le states. Hydrobiol. 394:219-232. Bachmann, R. W., M. V. Hoyer and D. E. Canfiel d, Jr. 2010. Draft altern ative nutrie nt criteria

for Florida lakes. Florida LAKEWATCH white paper. Gainesville, FL: University of

Florida.Assessment and Commentary on EPA’s Analysis 75

PREPUBLICATION COPY Bachmann, R. W., M. V. Hoyer, and D. E. Canfiel d, Jr. 2003. Predicting th e frequencies of high chlorophyll levels in Florida lakes from av erage chlorophyll or nutrient data. Lake Reservoir Manage. 19:222-241. Birr, A. S., and D. J. Mulla. 2002. Relationshi p between lake and groun d water quality patterns and Minnesota agroecoregions. Hydrol ogical Sci. Tech. 18(1-4):31-41. Bottcher, A. B., T. K. Cremwell, and K. L. Campbell. 1995. Best Management Practices for water quality improvement in the Lake Ok eechobee watershed. Ecol. Engin. 5:341-356. Bouma, J. 1979. Subsurface applications of sewage effluent. Planning the Uses and Management of Land. Madison, WI: ASA-CSSA-SSSA. 665–703. Brown, C. D., M. V. Hoyer, R. W. Bachmann and D. E. Canfield, Jr. 2000. Nutrientchlorophyll relationships: an evaluation of empirical nutri ent-chlorophyll models using Florida and north-temperate lake data. Can. J. Fish Aquat. Sci. 57:1574-1583. Capece, J. C., et al. 2007. Soil Phosphorus, Cattle Stocking Rates and Water Quality in subtropical Pastures in Fl orida, USA. Rangeland Ecol ogy and Management 60(1):19-3.

Cardno ENTRIX. 2011. Addendum to the Economic Analysis of the Federal Numeric Nutrient Criteria for Florida. July 2011. Carollo Engineers. 2010. Costs for Utilities and Their Ratepayers to Comply With EPA

Numeric Nutrient Criteria fo r Freshwater Dischargers. Prepared for the FL Water Environment Association Utility Council. November 2010.

CH2M Hill. 2010. Statewide Nutrient Removal Cost Impact Study. Prepared for the Utah Division of Water Quality, Salt La ke City, Utah. October 2010. Chebud, Y., G. M. Naja, and R. Rivero. 2011. Phosphorus run-off assessment in a watershed.

J. Environ. Monit. 13:66–73. Crites, R., and G. Tchobanoglous. 1998. Small and Decentralized Wastewater Management Systems

. McGraw-Hill Series in Water Resour ces and Environmental Engineering, Boston, MA, 1084 pp. Daroub, S. H., T. A. Lang, O. A. Diaz, M. Chen, and J. D. Stuck. 2005. Everglades agricultural area BMPs for reducing particulate phosphorus transport. Everglades Agricultural Research and Education Center, Univ. Fl. Daroub, S., et al. 2011. Best Ma nagement Practice and Long-Term Water Quality Trends in the Everglades Agricultural Ar ea. Critical Reviews in Environmental Science and Technology 41(S1):608-632. ERD (Environmental Research & Design, Inc.) 2007. Evaluation of Current Stormwater Design

Criteria within the State of Florida. Fina l Report prepared for Florida Department of Environmental Protection, Orlando, FL. http://www.dep.state.fl.us /water/nonpoint/docs/nonpoin t/SW_TreatmentReportFinal_719 07.pdf Florida Department of Agriculture and Consum er Services (FDACS) Office of Water Policy. 2011a. NSPM Annual Report. FDACS. 2011b. Fact: Sheet “Protecting Florid a’s Water Resources with Agricultural Best Management Practices – What, Why, and How.” Florida Department of Environmental Protec tion. 2008a. Lower St. Johns River Basin Management Action Plan. Tallahassee, FL: Florida DEP. http://www.dep.state.fl.us /Water/watersheds/docs/bmap/adopted-lsjr-bmap.pdf FDEP Office of Inspector General (OIG). 2008b. Total Maximum Daily Load Program Review,

Division of Environmental Assessment a nd Restoration. Report # IA-03-14-2008-52.76 Review of the EPA’s Economic Analysis of Final Water Quality Standards in Flori da

PREPUBLICATION COPY FDEP. 2010. Memorandum - Department Comments on the Environmental Protection Agency’s (EPA) Proposed Numeric Nutrient Criteria for Florida Lakes and Flowing Waters, January 26, 2010. Florida DEP, Tallahassee, FL. http://waterwebprod.dep.state.f l.us/nutrients/dep-comments/fdep_cover_letter.pdf

FDEP. 2011. Estimation of the Increase of Water Segment Impairments under the U.S. Environmental Protection Agency’s Numeric Nutrie nt Criteria. Florida Department of Health (FDOH). 2010a. Final Study and Re port on phase 1 of the Florida Onsite Sewage Nitrogen Reducti on Strategies Study (2008-2010). Bureau of Onsite Sewage Programs, Tallahassee, FL, 40 pp. Retrieved August 5, 2011 from http://www.myfloridaeh.com/ostds/pdfile s/forms/NitrogenReductionReport.pdf Florida Department of Health (FDOH). 2010b. Bureau of Onsite Sewage GIS Data Files. http://www.doh.state.fl.us/Environment/p rograms/EhGis/EhGisDownload.htm. Fulmer, D. G., and G. D. Cooke. 1990. Eval uating the restoration potential of 19 Ohio

reservoirs. Lake Rese rv. Manage. 6:197-206. Grady, C. P. L., Jr., G. T. Daigger, N. G. Love, and C. D. M Felipe. 2011. Biological Wastewater Treatment, 3 rd Edition. Boca Raton, FL: CRC Press. Graetz, D., et al. 2008. Evalua ting Effectiveness of Best Mana gement Practices For Animal Waste and Fertilizer Management to Reduce Nutrient Inputs into Ground Water in the Suwannee River Basin Section 319 Nonpoint Source Pollution Control Program Education/Training Demonstration Pr oject Final Repor t, January 2008. Griffith, G. E., D. E. Canfield, Jr., C. A. Ho rsburgh, and J. M. Omernik. 1997. Lake regions of Florida. EPA/R-97/127. Corvallis, OR : EPA NHREEL Western Ecology Division. Harrison, C. B., W. D. Graham, and S. T. Lam b. 1999. Evaluating the Im pact of Alternative Nitrogen Management Practices on Groundwater beneath Central Florida Citrus Groves, 2. Computer Modeling. Transacti ons of the ASAE 42(6):1669-1678. Hatch, L. K., A. P. Mallawatantri, D. Wheeler, A. Gleason, D. J. Mulla, J. A. Perry, K. W. Easter, P. Brezonik, R. Smith, and L. Gerl ach. 2001. Land management at the major watershed - agroecoregion intersection. J. Soil Wa ter Conservation 56:44-51. Heiskary, S., and W. W. Walker , Jr. 1988. Developing phosphorus cr iteria for Minnesota lakes. Lake Reserv. Manage. 4:1-9. Lamb S. T., W. D. Graham, a nd C. B. Harrison. 1999. Evalua ting the Impact of Alternative Nitrogen Management Practices on Groundwater beneath Central Florida Citrus Groves, 1. Monitoring Data, Transactions of the ASAE 42(6):1653-1668. Livingston-Way, P. 2001. Water Quality Mon itoring and Assessment of Agricultural Best Management Practices in the Tri-County Ag ricultural Area Phase II Final Report, submitted to the Florida Department of Environmental Protection in fulfillment of

Contract No. WM602. Lowe, K. S., M. B. Tucholke, J. M. Tomares, K. Conn, C. Hoppe, J. E. Drewes, J. E. McCray,

and J. Munkata-Marr. 2009. Influent cons tituent characteristics of the modern waste stream from single sources. Water E nvironment Research Foundation 04-DEC-1. Retrieved August 8, 2001 from http://www .decentralizedwater.org/documents/04-DEC1/04DEC01web.pdf McCann, L., and K. W. Easter. 2000. Estimates of Public Sector Transaction Costs in NRCS Programs. Journal of Agricultural and Applied Economics 32(3): 555-63. McKee, K. 2011. National Hydrography Datase t Basin 311. University of Florida Water

Institute.Assessment and Commentary on EPA’s Analysis 77

PREPUBLICATION COPY Medina, D., and S. Curtis. 2011. Comparing LID and Stream Restoration. Stormwater 12(6):10-23. Mulla, D. J., A. S. Birr, N. R. Kitchen, and M. B. David. 2008. Limitations of evaluating the effectiveness of agricultural management prac tices at reducing nutrient losses to surface waters. Pp. 189-212. In: (J. L. Baker, ed.) , Final Report Gulf Hypoxia and Local Water Quality Concerns Workshop. Upper Missi ssippi River Sub-Basin Nutrient Hypoxia Committee (UMRSHNC). Am. Soc. Ag. Biol. Eng., St. Joseph, MI. Nowak, P. 1992. Why Farmers Adopt Production Technology. Journal of Soil and Water Conservation, Jan-Feb 1992 47(1):14-16. Omernik, J. M. 1987. Ecoregions of the conter minous United States. Annals Assoc. Am. Geog.

77:118-125. Robertson, W. D., and J. A. Cherry. 1995. In situ denitrification of septic-system nitrate using reactive porous media barriers: field trials. Ground Wa ter 33(1):99-111. Shukla, S., D. Goswami, W. D. Graham, A. W. Hodges, M. C. Christman, and J. M. Knowles. 2011a. Water Quality Effectiveness of Ditch Fencing and Culvert Crossing in the Lake Okeechobee Basin, Southern Florida. Ecological Engineering, doi:10.1016/j.ecoleng.2011.02.013. Shukla, S., W. Graham, D. Goswami, J. Knowles, A. Hodges, V. Nair, M. Christman, C. Wu. 2011b. Evaluation of Cow-Calf Best Manageme nt Practices with Regards to Nutrient Discharges in the Lake Okeechobee Basi n. Final Report submitted to: Florida Department of Agricultural and Consumer Se rvices & South Florida Water Management

District. Soil and Water Engineering Technology, Inc. 2008a. Tasks 1, 2 and 3: Nutrient loading rates, reduction factors and implementation costs as sociated with BMPs and technologies. Final Report for South Florida Water Mana gement District. Gainesville, Fl. Soil and Water Engineering Technology, Inc. 2008b. Task 4: Nutrient loading rates, reduction factors and implementation costs associated with BMPs and technologies. Final Report for South Florida Water Management District. Gainesville, Fl. U.S. Environmental Protection Agency (EPA). 2001a. The National Costs of the Total Maximum Daily Load Program (D raft Report). EPA-841-D-01-003.

U.S. EPA. 2001b. The National Costs of th e Total Maximum Daily Load Program (Draft Report): Support Document #1. EPA-841-D-01-004. U.S. EPA. n.d. National Water Quality A ssessment Report (n.d.). Retrieved from http://www.epa.gov/waters/ir/attains_q_and_a.html#content

U.S. EPA. 2008. Final Total Maximum Daily Load (TMDL) for Biochemical Oxygen Demand, Dissolved Oxygen, and Nutrients in the Lake Okeechobee Tributaries. Atlanta, GA: EPA Region 4. U.S. EPA. 2010a. Economic analysis of final wa ter quality standards for nutrients for lakes and flowing waters in Florida. Wash ington, DC: EPA Office of Water.

U.S. EPA. 2010b. Guidance for Federal Land Mana gement in the Chesapeake Bay Watershed. Chapter 6—Decentralized Wast ewater Treatment Systems. Washington, DC. EPA 841- R-10-002, May 12, 2010. Retrieved August 12, 2011 from http://www.epa.gov/owow_keep/NPS/ch esbay502/pdf/chesbay_chap06.pdf Wan, Y., M. Voich, and S. Trost. 2001. Eff ectiveness of Best Management Practices. Everglades Consolidated Report.78 Review of the EPA’s Economic Analysis of Final Water Quality Standards in Flori da

PREPUBLICATION COPY Water Environment Federation (WEF). 2009. Design of Municipal Wastewater Treatment Plants, 5 th Edition, Manual of Practice No. 8, Alexandria, VA. Weiss, P. T., Gulliver, J. S. and Erickson, A. J. 2007. Cost and Pollutant Removal of StormWater Treatment Practices. J. Wa t. Res. Plan. Mgmt. 133(3):218-229. Wilhelm, S. R., Schiff, S. L. and Robertson, W. D. 1994. Chemical Fate and Transport in a domestic septic system: unsaturated and sa turated zone geochemistry. Environmental Toxicology and Chemistry 13(2):193–203.79

PREPUBLICATION COPY 

## Chapter 3

A Framework for Incremental Cost Analysis of a Rule Change

INTRODUCTION

EPA’s estimate of the incremental cost from implementing numeric nutrient criteria in Florida was reviewed in Chapter 2. The EPA an alysis first estimated which waters would be listed as impaired under the numeric nutrient crit eria (NNC), but were not yet listed under the existing narrative rule. That estimation assumed th at these waters would not have been listed as impaired under the narrative rule. The corr esponding watersheds for these incrementally affected waters were then delineated, and their la nd uses were determined in order to predict the

additional nutrient control actions various source sectors in that wa tershed would need to take for

the numeric nutrient criteria to be met. In addition, EPA estimated how many National Pollutant Discharge Elimination System (NPDES)-permitt ed municipal and industrial sources that discharge to inland surface waters anywhere in th e state would have revised concentration limits for nitrogen (N) and phosphorus (P ) in their discharge permits. These two changes were how

EPA defined the incremental effect of the NNC rule. In writing its review in Chapter 2, the Committee accepted the EPA definition of the incremental effect and provided a critique of th e methods by which that incremental effect was empirically developed. Chapter 2 reviewed the EPA estimates of the unit costs and effectiveness of EPA’s chosen load reduction methods, concludi ng that there was much uncertainty about both

the costs and effectiveness of the methods. Of course, that uncertainty would be present under any rule. This chapter proposes an alternative framewor k for conducting a cost analysis, with an emphasis on defining the implementation time path s of the various rules and consideration of uncertainty. The chapter begins by describing th e difference in the rules according to what is required in EPA’s 2010 Guidelines for Preparing Economic Analysis (EPA, 2010a). Those guidelines call for first establishi ng a baseline “defined as the best assessment of the world absent the proposed regulation” , including identifying starting and ending points over time for the baseline scenario (EPA, 2010a, p. 5-1, 5-2). To develop such a baseline for this chapter, the water quality management process is divided into five broad stages , and a description is provided of how the narrative rule, the NNC rule, and the proposed Florida rule would affect each stage over time. By comparing the three implementa tion time paths, with the narrative rule as a baseline, one can isolate the differences in the ru les in order to determine how these differences might affect costs. In fact, many of the differe nces in cost estimates made by EPA and others can be traced to different assumptions made abou t how the rules would af fect actions taken in each of the stages.80 Review of the EPA’s Economic Analysis of Final Water Quality Standards in Florida

PREPUBLICATION COPY That discussion is followed by presentation of a framework for predicting incremental

costs of the various rules. In describing the logic of the fram ework and graphically illustrating its application, the text demonstrates that predictions of costs over time depend on many assumptions about (1) current and future regulato ry agency behavior, (2 ) future political and legal decisions and interpretations, (3) waterbody response to load reduc tions, (4) unit costs of current load reduction activities, (5) changes in cost and effectiveness of load reduction activities, and (6) socioeconomic , demographic, and land use cha nge. Indeed, what was assumed about these various factors explai ns the differences in the EPA a nd stakeholder estimates of the

cost of the NNC rule. Use of this framework can highlight differences in assumptions, help to

narrow differences in the cost estimates if sim ilar assumptions can be agreed to, and highlight how uncertainties can be reduced analytically or by clarification of ambiguities in the rules. What the framework also suggests is that the results of all cost analyses are contingent on the assumptions made by the analysts and that it is an unrealistic expectation of any analysis to produce a single, agreed upon cost estimate.

COMPARING THE NARRATIVE AND NUM ERIC NUTRIENT CRITERIA RULES

For the purposes of this comparison, the wa ter quality management process shown in Figure 1-8 was divided into five stages. This section summarize s the actions taken during those five stages under the narrative rule (which is considered the baseline), under the NNC rule that was the motivation for this report, and under the recently proposed Florida rule which EPA has agreed to consider as an acceptable replacement fo r the NNC rule. The following descriptions of

the rules were derived from detailed flow char ts created by the Committee for each rule (see Appendix A).

Description of the Rules

The five stages begin with the identificat ion of impaired waters and end with an evaluation to ascertain when the designated use is met. The stages are shown as row headings in

Table 3-1. The cells in the table are abbrev iated descriptions of the rules’ content.

Stage 1: List Waters as Impaired

Stage 1 establishes whether a wa terbody is going to be listed as impaired. The narrative rule uses various biological condition indices (dep ending on the type of water body) as criteria to serve as a proxy measure for the designated use. The water is listed when evidence that the biological condition is unacceptable becomes comp elling. To be deemed compelling, the data must be adequate in quantity and quality. If the monitoring data are deemed inadequate, the water is placed on a planning lis t for further evaluation, before it can be placed on the verified list of impaired waters. The proposed Florida rule also requires viol ation of biological cr iteria for placement on the verified list, but streams will be placed on the planning list if nutrient concentrations exceed a threshold value. To move a waterbody from the planning list to the verified list requiresA Framework for Incremental Cost Analysis of a Rule Change 81

PREPUBLICATION COPY confirmation of biological impairment. In ad dition, the proposed Fl orida rule includes a provision to place waters on the planning (not veri fied) list if they show an adverse trend in biological response variables or dissolved oxygen (DO), even if wa ters did not fail any of the biological indicators.

The NNC rule measures ambient concentrations of nutrients (N and P) in the water and compares those to ambient concentration criteria that were established for reference water bodies in the region, according to water body type. If the monitored concentration exceeds either criterion then the water is deemed to be impaired, even though there may be no measured biological impairment. Because the NNC rule offers explicit limits for ambient nutrient concentrations, listing proceeds at a faster pace than under the narrative or the proposed Florida rule due to the more complex evaluation that is required under that la tter two for biological assessments. However, the proposed Florida rule will place streams on a pl anning list if they exceed a nutrient threshold

or show adverse trends in measurements of di ssolved oxygen or biologic al condition. Thus, the proposed Florida rule could expedi te the identification of waters that are likely to be impaired due to nutrients as well as the developmen t of TMDLs and Basin Management Action Plans (BMAPs) for those waters, relative to the narrative (but not the NNC) rule.

Stage 2: Establish Stressor

Stage 2 in the narrative rule determines whether nutrients are the stressor causing the impairment. This determination is based on analytical procedur es (stressor–response relationships) to establish whether N, P, or bot h are causing the impairment and at what levels might they be creating unacceptable biological c onditions. The FDEP may also presume that

nutrients are one stressor if the level of N or P is above a thre shold concentration in reference

waters. If the narrative rule determines that one or both nutrients are the cause of unacceptable biological conditions, nutrient targets as loads or concentrations ar e established as an outcome of the TMDL process during Stage 3. The proposed Florida rule is essentially the same as the narrative rule for this stage. Stage 2 under the NNC Rule is less explic it because during Stage 1 the NNC Rule has already listed a water as impaired based on the presence and level of nutrients. However, the NNC Rule does recognize the possibility that ther e may be site-specific conditions that warrant different criteria and it allows for any entity to petition EPA for a pproval of site-specific alternative criteria (SSAC) for a specific loca tion (http://www.epa.gov/re gion4/water/wqs/). The petition could result in a change in the nutrients to be controlled (to either N or P, as opposed to both) and/or changes to the ambient concentrations of either nutrient. This petition can be filed with EPA at Stage 2 (or at any othe r stage) after a water is listed as violating the numeric nutrient criteria. According to draft EPA guidelines (EPA, 2011), the FDEP can submit any waterbody with an existing TMDL-derived target (if expresse d as a concentration) for approval as an SSAC. It is uncertain whether the TMDL targets will be accepted as SSACs, although EPA cites a memo that says targets can be SSACs for th e interim purpose of setting NPDES permit limits.82 Reviewof the EPA’s Economic Analysis of FinalWater Quality Standards in FloridaPREPUBLICATION COPYTABLE 3-1 Comparison of Narrative, Numeric, and Newly Proposed Florida Rule For Nutrients.Stage Narrative Rule Numeric NutrientCriteria Rule Proposed Florida Rule1. List Waters asImpairedBased on biological impairment forstreams, lakes, and springsN and P assumed to cause impairment ifcriteria are exceeded and water automatically placed on verified 303(d) list.Streams and Lakes:N and/or P exceeding criteriaPoint sources subject to permitscontaining N and/or P limitsSprings:Nitrate exceeding criterionStreams and Lakes:Based on 1) biological impairment; 2) exceedingnutrient thresholds coupled with biologicalimpairment, or 3) adverse nutrient trendSprings:Nitrate exceeding threshold2. Establish StressorDetermine if N and/or P are stressor(s)causing biological impairmentPetitioners have opportunity to seekEPA approval of site specific alternativecriteria (SSAC) to replace the NNC forP, N or both.Streams and Lakes:Determine if N and/or P arestressor(s) causing biological impairmentIf stressor identified, water placed on verified303(d) list for TMDL development; otherwiseadditional study requiredIf adverse nutrient trend is predicted to impair awater w/in 10 years,place water on 303(d)study listIf adverse nutrient trend predicted to impair awater w/in 5 years, place water on verified303(d) listSprings:No stressor analysis if nitrate thresholdexceeded3. Define Level ofNutrientReduction/WriteTMDLModel water quality conditions torelate desired biological condition to Nand/or P loads; Determine N and or PtargetsModel water quality to determine loadsof N and P that result in ambient N andP numeric criteria concentrationsStreams and Lakes:Model water quality conditionsto relate desired biological condition to N and/or Plevels; Determine N and or P targets.Springs:Load reductions based on meeting nitratethreshold4. Develop TMDL/BMAP ImplementationBMAP process seeks WLA/LA loadreduction balance across sourcesWLA set by NPDES permitting process/LA the remainder for non-point source.BMAP process seeks WLA/LA load reductionbalance across sources5. Determine UseAttainmentBiological condition attained; N and Ptargets revised to be consistent withmeeting required biological condition.N and/or P ambient concentration ofNNC or SSAC must be met. Biologymay or may not remain impaired.Biological condition attained; N and P targetsrevised to be consistent with meeting requiredbiological condition.A Framework for Incremental Cost Analysis of a Rule Change 83

PREPUBLICATION COPY Stage 3: Define Level of Nu trient Reduction/Write TMDL

At Stage 3, a narrative-rule-driven TMDL will es tablish concentration or load targets that are predicted to secure an appropriate biological index. The targets may be for N or P, but not necessarily both. It is also at this stage that the waste load allocation and load allocation are

established. This division be tween the waste load allocation and load allocation is based on Florida policy (FDEP, 2001). Stage 3 occurs similarly under the proposed Florida rule. As currently written, the proposed Florida rule affirms that a numeric TMDL target approved by EPA under the current

narrative rule would be the numeric nutrient target for that waterbody. This is not a change from the narrative rule, but under the NNC rule the waters that already had a TMDL and a nutrient target would have still been required to define that target as a concentration (if it was only a load limit in the TMDL), relate th e concentration to biological response, and submit that concentration as a proposed site-specific alternative criteria (SSAC) to EPA. The TMDL analysis under both the narrative rule and the prop osed Florida rule requires models that relate loads to ambient chemistry a nd then to the biological conditions. These will be more complex than the models required for an NNC-derived TMDL. The difference in TMDL model complexity and the different ways that the waste load allocation is defined between the NNC and the narrative rule may allow for the development of a TMDL more quickly under the NNC rule. Also, the NNC ru le may accelerate the reduction of loads from NPDES-permitted municipal and industrial sources because a water quality-based effluent limit (WQBEL) may be set for those discharges independent of and prior to the TMDL. The NNC-based TMDL will be established using models that relate nutrient loads to the ambient concentrations, as defined by the crite ria. The NNC rule will establish a TMDL to

assure that concentrations are met for both N and P, unless there is approval of a SSAC. These WQBELs may define the WLA with the residual load allocation being given to the non-NPDES permitted sources.

Stage 4: TMDL Development/BMAP Implementation

At Stage 4, the narrative rule and the proposed Florida rule implement load reductions by writing NPDES permit limits as a part of the BMAP to implement the TMDL. As the NPDES permits are issued to secure the waste load a llocation, the plans for the non-NPDES sectors are prepared and implementation begins, employing the various tools available, to meet the load

allocation. Under the NNC rule, it is possibl e that permit limits for point sources may be established as early as Stage 1, thus focusing the TMDL on de fining the load allocation. A key difference of opinion about the requirements in Stage 4 hinges on what is assumed about the way the NNC rule affects the NPDES permit limits and when th at effect occurs. Otherwise the pace of development for the implementation plans is the same for all three rules.84 Review of the EPA’s Economic Analysis of Final Water Quality Standards in Florida

PREPUBLICATION COPY Stage 5: Determine Use Attainment

Stage 5 tracks implementation and con tinues monitoring of ambient waterbody

conditions. If the criteria are me t then a determination is made that the designated use has been attained. However, monitoring does not stop and load s limits must continue to be maintained in the face of population and economic growth to assure that the water does not become impaired at a future date. The narrative rule and the propos ed Florida rule focus their determination of attainment on ongoing bioassessment along with meas urement of all stressors. If the TMDL target concentration is met, but biological conditions are not , the TMDL and implementation plan are revised to require further reductions in load, unless a Use Attainability Analysis is submitted and approved. If the biological criteria are met before the nutrient targets are met, the TMDL and implementation plan may be revise d and further load reductions would not be required. Under the NNC rule, monitoring for nutrient concentrations and load reductions will

continue until the numeric nutrient criteria are met. There is al ways the opportunity to petition

EPA for an SSAC to shows that reductions are no longer needed to meet the designated use.

Key Differences Among the Rules

Listing and Stressor Assessment

The selection of the biological criteria that best repres ent the designated use and the determination of “data sufficiency” to determin e impairment are central to the execution of the

narrative rule. If the crit eria are acceptable proxies for the designated use 1 , the determination of whether the data are sufficient to establish impair ment is, in effect, a decision on acceptable error when making a listing and stressor assessment. The narrative rule makes an impairment dete rmination based on biol ogical conditions and then moves to further analysis to determine if that the impairment is attrib utable to nutrients (N or P or both) and at what leve ls. This further analysis defi nes targets for N and P that are predicted to protect the de signated use. A listing base d on numeric nutrient criteria simultaneously concludes that e ither or both nutrients N and P (depending on ambient nutrient concentrations) are the cause of failu re to meet the designated use. In the language of statistics, th e null hypothesis is that the wate r is not impaired. A type I error is concluding that the water is impaired when it is not. A type II er ror is concluding that the water is not impaired when it is. The likelihood of error is not of interest in itself; what is of interest is the cost of making that error. Th e cost of a type I erro r is making load control expenditures from a limited budget that were not necessary to meet the designated use of one or

more waterbodies—called the cost of over-control. The cost of t ype II error is the water quality benefits that are lost when a waterbody is not list ed as impaired when it is impaired and so load controls are inadequate—calle d the cost of under-control.

1 The extent to which the biological criteria are adequate in representing the designated use is one concern of critics of the narrative rule; that is, if the criteria are inadequate then the criteria may be met, but the designated uses will not be. The result will be that water quality benefits will be forgone, even as the criteria are met.A Framework for Incremental Cost Analysis of a Rule Change 85

PREPUBLICATION COPY While it is not possible to clearly conclude wh ich rule is more prone to which type of error, there are some general obs ervations that can be made. The advocates for the narrative rule want to avoid making a type I error (that is, th ey want to avoid over-con trol). The proposed

Florida rule continues this focu s on avoiding type I error, but in an effort to recognize and accommodate the type II error it includes the modifi cation to Stage 1 and 2, described earlier, in

which waters with downward trends in chemical condition are put on a pl anning list. The NNC rule advocates want to avoid type II error (i.e., under-control), a nd in an effort to recognize and accommodate the possibility of a type I error, it includes the SSAC rule.

Table 3-2 further describes the di fferences in the rules as respons es to the cost of error. Case 2 suggests that if the SSAC rule is not employed, the NNC-listed waters may be listed incorrectly for N, P, or both, leading to a mi sallocation of TMDL planning and load reduction efforts and costs. Cases 2, 3, or 4 suggest that the NNC rule can be too limiting, or not limiting enough, on discharges of P, N, or both. If the NNC rule were to replace the narrative rule, and if the SSAC option was not employed, there could be cases of both over contro l and under control,

with the associated costs of each error. Th ese are not hypothetical possibilities; rather a comparison of TMDL nutrient targets with the numeric nutrient cr iteria sugge sts these differences are real possibilities (see Box 3-1). All of this sugges ts that the SSAC rule, including its likely use and cost, is very important when describing the differences in the rules. According to the draft guidelines (EPA, 2011), the SSAC rule would be based on analytical approaches that provide evidence, satisf actory to the EPA, that alternative levels of N, P, or both will protect the biological designate d uses for both the waterbody and any downstream

waters. It is reasonable to conclude from the dr aft guidelines that the anal ytical approaches that might be used to support a request for an SSAC are similar to those analyses already in use in the narrative rule. For example, a pl ace-based stressor response analys is might be prepared for the SSAC application to demonstrate that a concentration of nutrien ts different from the numeric nutrient criteria would support the designated use. In the narrat ive rule, a similar place-based stressor response analysis is often used to iden tify what nutrient levels could exist and still be supportive of the designed uses (Stage 2).

TABLE 3-2 Narrative and Numeric Nutrient Criteria Rules Differences for a given waterbody.

NNC not Exceeded NNC Exceeded

Biological Condition Acceptable in WBID

and downstream Case 1. Neither rule would list the waterbody as impaired. Case 2. Numeric rule would list the waterbody as impaired for N, P or both; some entity could petition

EPA for a SSAC. Narrative rule would not list the water as impaired.

Biological Condition Not Acceptable in

WBID and

downstream Case 3. NNC rule would not list the water as impaired. Narrative rule would list the waterbody, then

ascertain if the stressor was nutrients and if so it would set nutrient targets. Case 4. Both rules would list the waterbody. Narrative rule would develop targets that could be greater, equal to, or lower than

NNC.86 Review of the EPA’s Economic Analysis of Final Water Quality Standards in Florida

PREPUBLICATION COPY Box 3-1 Do Numeric Nutrient Criteria Differ Significantly From Nutrient TMDL Targets Developed Under Narrative Criteria?

Data were provided in Appendix H (Exhibit 2- 8) by EPA (EPA, 2010b) for waters that have been through Stage 3 of the narrative process and already have nutrient targets assigned by the FDEP. These data were examined to draw a preliminary conclusi on about whether the numeric nutrient criteria would differ from the nutrient targets. However, these conclusions cannot be extended to waters that have not been through Stage 3 of the narrative process because the results are not based on a random sample of impaired waters but rather are based on data from t hose waters that are already have targets. The narrative rule will put a priority on the places where the impairments ar e most obvious and so the existing narrative targets may not be representative of the tar gets that would be established for other waters in the future. Within this limitation, the results showed the following:

 Narrative TMDL targets for river nitrogen are generally lower (i.e., more stringent) than numeric

criteria

 Narrative TMDL targets for river phosphorus are lower than numeric criteria

 Narrative TMDL targets for lake nitrogen are generally lower than numeric criteria

 Narrative TMDL targets for lake phosphorus are generally higher than numeric criteria

In general, additional load reductions will be require d for lakes determined to be impaired for phosphorus under the NNC rule compared to the narrative rule. Howe ver, in the case of impairments for river nitrogen or phosphorus, or for lake nitrogen, lesser load redu ctions would be required by the NNC rule than with the narrative target.

There are other key differences between the rules at Stage 2, if not in the analyses

themselves. The SSAC occurs after a waterbody is listed as imp aired for nutrients and is only completed at the discretion of a petitioner (suc h as a state agency, discharge source, or a nongovernmental organization, NGO) who would seek an alternative to the numeric nutrient criteria. Therefore, even though the SSAC opportuni ty exists, it may not be taken and so there may be no costs for the SSAC. In addition, under the NNC rule, waters that have an established nutrient TMDL target that is less stringent than th e numeric nutrient criteria with respect to N or P loads would need to be submitted to EPA for approval as SSAC.

NPDES Permitting and BMAP Differences

The EPA economic analysis assumed that there would be no differences in NPDES permit concentration limits or when the limits w ould be established if the narrative criterion was replaced by the numeric nutrient cr iteria. Under the CWA, the pres ence of a numeric limit for an ambient concentration of a pollutant (in this case N and P) may replace the best-availabletechnology requirement in setting an NPDES permitted source effluent limit with a water quality based effluent limit (WQBEL). The WQBEL may come into effect as soon as a water is listed as impaired by the NNC rule (Stage 1), even if a TMDL has not been written and a BMAP put in place. Also the NNC rule creates the possibility that the ambient numeric nutrient criteria becomes an end-of-pipe concentrat ion limit, or a limit that must be met at the edge of a defined mixing zone, if a mixing zone is allowed. For these reasons, it is re asonable for point sourceA Framework for Incremental Cost Analysis of a Rule Change 87

PREPUBLICATION COPY dischargers to assume that the numeric nutri ent criteria, de rived from outside a TMDL, eventually must become NPDES effluent concen tration limits, although temporary variances are possible. This temporary relief may be extended if the source seeks and gains approval for a use attainability analysis or SSAC. Conversely, in the narrative rule the effluent limit for a point source is developed integral with the TMDL pro cess, so until the TMDL is in place, the NPDES permit is based on the best available technology. The TMDL process, once completed, assigns a waste load allocation to the NPDESregulated sources; the waste load allocation may or may not result in effluent concentration limits equivalent to the numeric nutrient criteria, even for waters where the ambient target is more stringent than the numeric nutrient criteria, under the FDEP allocation (FDEP, date ). At this point the TMDL and follow-on BMAP can a llocate responsibility for load reduction to nonNPDES sources that might otherwise have been assigned to the NPDES sources under the NNC

rule.

A COST ANALYSIS FRAMEWORK

The various cost estimations of EPA and ot her stakeholders differed according to the assumptions made about how the different rules are implemented. Conceptually, the incremental costs of adopting the NNC rule or the proposed Fl orida rule is the change in costs over what

would have occurred under the existing narrat ive rule during all five stages of water quality management. Defining the baseline involves iden tifying both current and future conditions that would exist without the regulat ory change over the period of analysis (EPA, 2010a). This requires making assumptions about the magnitude and timing of outcomes and costs for three alternative futures: one guided by the narrative rule, one under the NNC rule, and one under the proposed Florida rule.

Costs Defined

For the purposes of the new framework proposed in this section, th ree costs are defined

as follows.

 Nutrient load control costs are the capital, operation, main tenance, and replacement costs incurred by dischargers to impl ement any action to reduce the discharge of N or P into a waterbody. These were the principal co sts considered in the EPA analysis.

 Administrative costs are borne by public or private entities for ambient monitoring, assessment, developing plans (e.g., SSAC app lication and review, TMDL development, establishing a BMAP), permit issuance, pe rmit compliance reporting and monitoring, negotiating and gaining agreement by landowners to implement BMPs, engaging in legal rules and challenges, etc.

 Water quality opportunity costs are the forgone benefits from not improving water quality to some particular level (see Box 3-2).88 Review of the EPA’s Economic Analysis of Final Water Quality Standards in Florida

PREPUBLICATION COPY Box 3-2 Water Quality Benefits

The committee was asked to review those analyses th at reported on the cost s of possible nutrient

load reduction action s. Other parts of the EPA (2010) re port, not included in the committee task statement, included estimates of the water quality benefit s from adoption of the NNC rule. By implication, the broader analysis implies that failure to adopt the NNC rule would result in water quality benefits being forgone; these forgone benefits being a “water qualit y opportunity cost” of cont inuing with the narrative rule. This opportunity cost argument was made to th e Committee in several letters and presentations by Florida-based and national NGOs. They asserted that it was inappropriate and perhaps misleading to review only incremental load reduction and administr ative costs. The Committee did not review the EPA
described benefits of the NNC rule. The continuing interest in this topic warranted the presentation in this chapter of the way to frame future analyses to accommodate these concerns. Howe ver, this is not a call for detailed water quality modeling for large and complex systems, followed by quantification of benefit s (as was do ne in the EPA analysis). It is, rather, a recognition that a cost analysis will also need to report on assumptions about

how different actions taken at different times are mo re or less likely to protect designated uses, with considerations to response lag times, legacy loads, and demographic and economic growth and change.

Timing and Cost Uncertainty

As discussed in the first section of this chap ter, the three rules di fferentially affect the timing of the five stages of water quality manage ment, and as a result, al so the realization of

administrative and load control costs and wate r quality outcomes. However, timing was not considered in the EPA and other reports. The EPA estimates the incremental cost of the NNC rule as the annualized pres ent value of nutrient cont rol costs to fully meet the numeric criteria for the incrementally impaired waters and for the incr ementally affected point sources. No date is given when this level of implementation would be achieved, but the impre ssion that is given is

that these costs would be f aced soon after implementation. 2
In fact, timing was not considered even though the proposed NNC rule was explicitly described by EPA as a way to “increase the pace of listing,” with the implic ation that this would

then accelerate the TMDL and implementation stages (King, 2011) 3 , and despite the well understood reality that implementa tion under either narrative or num eric rules is constrained by the time required to conduct the necessary studi es and by limited budgets and staff. Articulating

when costs would be incurred a nd what level of implementati on across the two rules can be expected would provide a more r ealistic and transparent means to compare the two rules in order to estimate the incremental costs and water quality outcomes. Furthermore, a more explicit and quantitative consideration of timing in the cost analyses w ould acknowledge that predictions of

future conditions under various rules have to be made and that any such predictions is accompanied by substantial uncertainty.

2 Note that EPA’s guidance on conducting economic analysis (EPA, 2010a) discusses the need to identify both a start and end point for comparing base line and alternative policy scenarios.

3 The environmental NGO community has made a similar argument in letters to the Committee and in other public

statements.A Framework for Incremental Cost Analysis of a Rule Change 89

PREPUBLICATION COPY In general, predictions of administrative and load control costs over time, and the resulting water quality outcomes, depend on many assumptions including (1 ) regulatory agency behavior, (2) future political a nd legal decisions/inter pretations, (3) waters hed response to load reductions, (4) unit costs of currently known load reduction activities, (5) changes in cost and

effectiveness of control technol ogies, and (6) socioeconomic, demographic and land use change. Uncertainty can be attributed to a lack of knowledge about th e cost of relatively untried technologies or the level of impl ementation required to meet wate r quality criteria. Uncertainty

can also arise because of unknown future econom ic conditions and how behavior may change when program rules and incentives change. For instance, substantial uncertainty exists on how the implementation of the numeric nutrient criteria wi ll be translated into effluent limits for point sources. Many of these key uncertainties cannot be eliminated by more data collection or analysis. Of course, uncertainty does not need to be taken into account when making a water quality management decision if the future costs of being wrong are trivial. It is only when the future costs of a wrong decision are significant that uncertainty takes on relevance when making the initial decision, and demands that an analysis characterize and communicate those uncertainties. Analysts can characterize and co mmunicate these decision relevant uncertainties (i.e. uncertainties that affect cost s) in different ways. EPA’s an alysis included some discussion of uncertainty about the assumptions used in its analysis. Cardno ENTRIX performed an uncertainty analysis on the leve l of treatment and unit costs, relying on a data-limited MonteCarlo simulation. A cost analysis framework that fully recognizes and incorporates timing and uncertainty is presented next.

The Framework Description

A cost analysis requires comparing the fu ture time paths of costs at each stage under either the NNC rule or proposed Florida Rule to the narrative rule (the baseline). This means predicting of the level of activities at each stage fo r a series of future dates, under each rule, and in turn the timing of future costs. The an alysis would be comprised of several tasks.

Task 1 . Predict the decisions that would be made in each stage, for each rule. The predictions would be for specified time interval s, such as for five-year increments. This prediction requires a clear understa nding of the differences in th e rules, as described in the beginning of this chapter. The differences among the three rules can lead to different decisions at each stage of water quality management incl uding which waters are impaired; which waters are stressed by nutrients, and which nutrients ar e the stressors; at what level do the nutrients become a stressor and how this level gets reflected in the TMDL; what are the implementation actions for load reduction, when ar e the actions required, and what sectors bear the responsibility and costs for those actions; and when has the designa ted use been attained so that additional load

controls are not needed. Pred iction of these decisions requir es making assumptions about both the likelihood of any particular decision, and the relationship of that decision to others that follow in sequence. These different assumptions about both the ways the rules will work in practice, as well as about the cost estimates for certain load control prac tices, are the source of the very different cost estimates found in the EP A report compared to the competing analyses. In addition, these same differences of view l ead the environmental NGO community to assert90 Review of the EPA’s Economic Analysis of Final Water Quality Standards in Florida

PREPUBLICATION COPY that the narrative rule and the propos ed Florida rule will result in significant loss of water quality

benefits.

Task 2. Estimate administrative and load c ontrol costs under each rule and for each future time period. Chapter 2 provides a detailed review of the EPA estimate of unit costs and lengthy discussion of the effectiveness of the lo ad control methods. In the broader framework,

there should be at least a na rrative statement of the predicte d water quality outcomes at each point in time.

Task 3. Characterize uncertainties in Tasks 1 and 2. Determine if the costs of uncertainty are likely to be high. If so, determine whether it is possible to assign pr obabilities to outcomes and compute expected values (and other moments of the cost distribution) or whether to conduct scenario analysis. Scenario analysis is a me thod for considering the importance of the most uncertain future conditions affecting an analy tical outcome. Unlike single factor sensitivity analysis, scenario analysis requires describi ng different combinations of uncertain future conditions that taken together can create different outcomes. Building scenarios can help to isolate those combinations of possible future co nditions that are most lik ely to have significant effects on (in this case) costs. Building scen arios can be a group activ ity that facilitates knowledge exchange and mutual understanding of cen tral issues important to the results of the analysis.

Task 4 . Calculate the incremental difference in total costs (costs of the proposed NNC rule less costs of narrative rule) and relate this to the incremental differences in water quality outcomes at each time period. The costs for th e existing narrative rule would serve as the baseline for any comparisons.

Task 5 . Record each result in a decision-maki ng display. Figure 3-1 illustrates a template for a single set of assumptions. The rows in grey are decisions and actions at each stage

in a rule and are identical to the rows in Tabl e 3-1. There would be templates created for each set of assumptions for the narrative rule (the ba seline) and then one for each set of assumptions

under the alternative ru le (here the NNC). The content of the grey shaded cells is a de scription of the level of administrative and load control effort and when the effort is pred icted to occur. For ex ample, the cells in each figure can be used to describe when and how ma ny waterbodies would be listed (Stage 1) over a fixed time period. The metrics used for each stag e [e.g., the number of waterbodies assessed and listed as impaired (Stage 1), metrics of the stre ssor evaluation (Stage 2) , the number of TMDL plans developed (Stage 3), metrics of the implem entation of plans (Stage 4), and the number of waterbodies meeting the designated use (Stage 5)] should be predicted and the prediction explained, based on how the rule governs these stages and the available funding. Costs are calculated by multiplying the load reduction effort (grey cells) by the cost per unit of effort. This is how the EPA analysis was completed, but unl ike the EPA analysis, this framework would make explicit that costs will occur at different times under the two rules.A Framework for Incremental Cost Analysis of a Rule Change 91

PREPUBLICATION COPY FIGURE 3-1 Timeline of Stages and Related Costs for a RuleYear 0Year 5Year 10Year 15Year 20Year 25Year n

Stage 1 List Waters as Impaired

Stage 2 Establish Stressor

Stage 3 Define Level of Nutrient

Reduction/Write TMDL Stage 4 Develop TMDL/BMAP Implementation Stage 5 Determine Use Attainment

Administrative Costs $___ $___ $___ $___ $___ $___ $__

Load Control Costs $___ $___ $___ $___ $___ $___ $__

Administrative plus Load Control Costs $___ $___ $___ $___ $___ $___ $__

Water quality outcomes

The content of the cells, as well as the costs and outcomes, can be based on trend analysis of historical records, predictive models, stat istical equations, and e xpert judgment. Once complete, the costs of the narrative process could be subtracted from the numeric process to get a total cost difference, which could be compared to the incremental differences in water quality outcomes and interpreted in light of the uncertainty of the total cost estimates of each process. This can be done for each time period and woul d provide information on the implication for annual public budgets and when water quality results might be realized. Of course the total cost

of either rule can still be calcu lated as the difference in the pres ent value of the annual total cost

between the two rules. 4
If uncertainty was not going to be considered in the analysis, then the grey cells simply would record what assumptions were made to wa rrant the costs shown. However, if there are different assumptions made, then the analysis described above woul d be repeated for each set of assumptions and cost estimates and water quality outcomes for the narrative process, and then for the NNC process and the array of different outcomes described. These different outcomes might be assigned a probability of occurrence and an expected valu e, or they may be left as

individual scenarios (see Task 3). Most importantly, the framework encourages decision participants and analysts to explicitly discuss and test assump tions and transparently articulate the differences in costs that might result from these assumptions. For in stance, the number of permits modified and stringency of controls within the permits over th e period of analysis can be compared with and without the NNC rule. Such a comparison woul d clearly define what might occur under the

4 Also other outcomes of interest such as effects on employment could be made and reported in the same format.92 Review of the EPA’s Economic Analysis of Final Water Quality Standards in Florida

PREPUBLICATION COPY baseline condition and transparently illustrate ho w the level and pace of activities would differ under an alternative rule and alternative assumptions.

How to Use the Cost Estimation Framework

This section offers illustrative examples of how an analyst might fill out the rows in the general framework described by Figure 3-1, for both the narrative (baseline) and the NNC rules. Because differences in the assumptions underlying how this might be done are often the source of disagreement, discussing how these tables are filled out can be an important means to clarify issues and create transpar ency in the evaluation of the vari ous options. For exposition purposes, the proposed Florida rule is not included in this illustration.

Illustration 1: The Incremental Difference in Nutrient-Stressed Waters

This discussion illustrates how the incremental differences of the NNC rule at the end of Stage 3 can be described. Under the NNC rule EPA estimates that new waters would be listed (EPA, 2010b, p. 6-3) as nutrient impaired presum ably almost immediately after the numeric nutrient criteria rule is adopted. However, it also is reasonable to assume that additional waters would be listed as nutrient impair ed under the NNC rule in future ye ars, since more than half of

all waters could not be assessed due to insuffi cient data (note that EPA assumed no additional waters would be listed under the NNC rule beyo nd the initial assessment) . An example of the time path of the number of nutrient-impaired waters listed (at the end of Stage 2) under the NNC rule is shown graphically by the blue line in Fi gure 3-2. The dashed lines indicate uncertainty

bands on the estimate of new waters listed under the NNC rule. Absent the implementation of the NNC rule, additional waters would also have been listed as biologically impaired under the narrativ e rule (in Stage 1), deemed to be stressed by nutrients (in Stage 2) and then assigned nutrien t targets (in Stage 3). The total number of new waters deemed stressed by nutrients in the future under the narrative rule can also be estimated, as shown by the black line in Fi gure 3-2 (with associated uncertainty bars). The black line shows

that a number of waters assessed an d identified as stressed by nutri ents will steadily be added to the impaired waters list under the narrative standard. FDEP conducts a number of WBID assessments each year and adds biologically impair ed waters that are deemed nutrient stressed to its 303(d) impaired waters listed annually. Projec ting this historical pace into the future, the number of new waterbodies assessed, listed, and id entified as nutrient stressed under the existing

Florida narrative rule could be estimated.

The incremental effect of the NNC rule on St ages 1-3 is the difference between the blue and black lines over time (see Figure 3-2). Because EPA’s analysis did not evaluate an implementation time path, EPA effectively assume d that the only incremental change was the initial new listing of waters (the difference betwee n the blue line and black lines at a single point in time).A Framework for Incremental Cost Analysis of a Rule Change 93

PREPUBLICATION COPY FIGURE 3-2 Illustration of Incrementally Listed Waters

A more complete analysis also would recognize that the narr ative rule may list different waterbodies than the NNC rule and ultimately th e narrative may require di fferent nutrient targets than the numeric nutrient criteria. Conceptually more waters could be deemed nutrient stressed

under the narrative rule at the end of the evaluatio n period if the NNC rule misses waters that are biologically impaired. Conversely, the NNC rule may deem more wa ters as nutrient stressed at the end of the evaluation period if the NNC rule includes waters that are not biologically impaired, or if the resource intensive, but budge t constrained, narrative rule moves at a slow pace. These and other possibilities are the basis for creating the uncertainty bands. Assumptions and analysis regarding the differe nt possible outcomes produced by the two rules will ultimately have consequences on estimates of nutrien t control costs that will be incurred.

Illustration 2: Administrative Costs for Listing and Stressor Assessment

As described above, the two rules entail a number of activities, each requiring a resource commitment to assess and perhaps re-assess wa ters for possible nutrient impairments. These costs were not estimated in the EPA analysis , but as described above represent important

differences between the two rules. These di fferences in turn, will generate incremental

administrative cost differences between the narrative rule and pr oposed alternatives. An illustrative example of the possible relative magnitude and time path of some administrative costs incurred by the narrative an d NNC rules is shown in Figure 3-3. Two administrative costs are shown, one representing th e cost of listing waters as impaired and the possible administrative costs of an SSAC rule. In each illustrative graph, the time path of annual

administrative costs under the narrative rule is sh ow in black while the ti me path of costs under Incrementally

stressed

WBIDs

time in years # WBIDs stressed by

nutrients

NNC

Narrative94 Review of the EPA’s Economic Analysis of Final Water Quality Standards in Florida

PREPUBLICATION COPY A B

FIGURE 3-3 Illustration of Se lect Administrative Costs.

the NNC rule is shown in blue (the difference be tween the two represents the incremental cost of the proposed NNC rule). Figure 3-3(A) shows the timing and uncertainty of possible future listing administrative

costs under the narrative rule and NNC rule. The narrative rule requires a substantial commitment of staff and monitoring resources to identify waters of potential concern, biological monitoring, and stressor-response anal ysis to identify the cause of the biological impairment. Over time, the annual cost of listi ng activities may be fairly stable , but could increase or decrease over time (as shown by the uncertainty bands). The NNC rule avoids many of these costs and

accelerates the determination of wh ether a waterbody is to be listed as nutrient impaired. The cost of making that determination is limited to the cost of chemical water quality monitoring and determined through a predefined sampling proced ure. While the magnitude and direction of these listing costs under the NNC rule is uncertain, the relevant point is that it is reasonable to conclude that the NNC rule would produce a net in cremental cost savings in the administrative costs associated with the listing (di fference between two cost time paths).

The NNC rule allows numeric criteria to be ad justed to take site-specific conditions into account through an SSAC rule. Public and privat e costs, including admini strative, analytical, and legal costs, would be incurred for the SSAC a nd need to be considered as a part of a cost analysis of the NNC rule. The SSAC cost woul d represent a potentiall y significant, but highly uncertain, new cost borne by those who would be expected to petition for an SSAC. Figure 3- 3(B) illustrates what SSAC costs could be under the assumption that petitioners will challenge a portion of a large increase in ne wly listed waters under the NNC ru le (solid blue line). SSAC administrative costs could then gradually decrea se as the number of cases declines. By comparison, SSAC costs are modest under the narrative rule (black line). Also, as has been noted elsewhere, SSAC costs may also be incurred for waters already listed as impaired under time in years time in years Narrative $ Nutrient Listing Costs

NNC Narrative NNC SSAC Administra tive Costs

$A Framework for Incremental Cost Analysis of a Rule Change 95

PREPUBLICATION COPY the narrative standard. Possibl e legal challenges for the existi ng TMDLs could also potentially

escalate SSAC administrative costs further. The uncertainty bands surrounding SSAC costs under the NNC process are shown as large (especially the upper bound) because of high er type I (over-control ) error rates under the NNC and the highly contentious natu re of water policy in Florida, which might inflate legal and administrative costs of conducting SSACs. 5 On the other hand, the administrative costs incurred in the SSAC rule might be low because either type I errors are low or the barriers to SSAC participation are so high that peti tioners avoid the rule entirely. 6 Regardless, this discussion illustrates that the NNC rule potentially creat es significant new SSAC-related administrative

costs. EPA did not include costs for the SSAC process in its analysis, because it asserted that the SSAC-like costs associated with site-speci fic biological assessments are similar to those

undertaken under the narrative rule [in other words, the higher cost s in Figure 3-3(B) offset the lower costs in Figure 3-3(A)]. However, there ar e various legitimate reasons to believe this will

not be the case. Given the untes ted nature of the SSAC rule, it is not clear that the total SSAC and administrative listing co sts would ever be the same, yet it is certain that the party that would

bear the costs is different.

Illustration 3: Timing of Muni cipal and Industrial Permits and Nutrient Control Costs

Chapter 2 reviewed the estimation of nutrient control costs and uncertainties for municipal and industrial wastewat er plants with NPDES permits. This analysis builds on the previous chapter by highlighting the substantial cost differences between the na rrative and NNC rule related to the timing of point source contro l costs. The general pattern of the timing of permit modification and future compliance costs under the NNC and narrative rules is shown in Figure 3-4. According to EPA’s assumptions, all industrial and municipal point without sufficiently stringent nutrient limits would face ne w nutrient effluent limits in their permits under the NNC rule. Presumably, these permits would be modified within five years of adopting the NNC rule and implemented independently of a TMDL. Thus, the point source control costs

would also be incurred soon after the NNC rule is adopted, with a WQBE L being set possibly at

the level of the numeric nutrient criteria. Unde r the narrative rule, some point source permits would also be incrementally tightened, but th is would occur gradually as TMDL plans are developed and implemented in watersheds with these point sources. The number of future permit modifications under the na rrative rule could be estimat ed by obtaining the historical pattern of permit modifications. Figure 3-4(A) suggest s that point sources would likely bear the

brunt of cost increases in the initial stages of NNC Rule implementation. The difference in point source control costs between the narrative and NNC rules is a function of the rate of permit modifications and di fferences in unit costs. Cost differences are magnified further when considering that the tw o rules will likely produce different levels of

5 Similarly, administrative SS AC costs could be higher if the N or P targets in the existing TMDLs are not accepted as SSACs. If the TMDLs are not accept ed as SSACs then there will be add itional administrative and control costs by either conducting a new SSAC or due to additional nutrient targets imposed by the NNC.

6 Given high administrative barriers and high type 1 errors, the NNC process could potentially increase the control costs faced by the different source sectors (see below) by increasing the amount of area covered by a TMDL.96 Review of the EPA’s Economic Analysis of Final Water Quality Standards in Florida

PREPUBLICATION COPY A B

FIGURE 3-4: Illustration of the Timing and Uncertainty of Point Source Costs

control requirements; that is, at Stages 4 and 5 there might be significant differences in which nutrients have targets for a given waterbody and by how the targets differ from the numeric nutrient criteria. As Chapter 2 highlights, the upper bound estimates of costs to meet the numeric nutrient criteria themselves in plant discharg es could be very high [see upper bound dashed blue line on Figure 3-4(B)]. Point source costs woul d increase more slowly under the narrative standard both because permit requirements are pha sed in over time and effluent limits would be

established under Florida TMDL a nd BMAP rules (which historical ly has not required end-ofpipe level controls). Arguably there is less co st uncertainty under the narrative rule than the proposed NNC rule.

Illustration 4: Control Co sts for Nonpoint Sources

A stated objective of the NNC rule is to accelerate the implementation of nutrient controls (King, 2010). Assuming that sources ou tside the NPDES program dominate loadings, under either the narrative or numeric process th e majority of nutrient control efforts will be initiated via TMDL development and BMAP im plementation (Stage 4 in Figure 3-1). EPA estimated the incremental costs of developi ng TMDLs and BMAPs that would occur under the NNC rule with no implementation time frame gi ven and with no consideration to what would have occurred in the absence of the proposed rule.

If one considers the difference in costs across time, it is clear that the NNC process would create a larger number of listed waters immedi ately. However, conducting a TMDL analysis and developing a TMDL/BMAP plan are resource- and time-intensive, with the rate of implementation linked to the level of public co st share support for staff resources and the adoption of control practices. Fa ced with limited budgets, there alr eady exists a backlog of listed Narrative #

time in yrs # NPDES Permits Modified to

Control for Nutrients

NNC

Narrative Annual Point Source Nutrient

Control Costs $

NNC

time in yrsA Framework for Incremental Cost Analysis of a Rule Change 97

PREPUBLICATION COPY waters without an implementation plan. Curren tly, only a relatively small portion of all waters listed as nutrient impaired have completed a TMDL and even fewer are under an active BMAP (EPA, 2010b, p. 2-23). Based on past rates of imp lementation, waters that might be listed immediately under a numeric rule may require y ears to develop TMDLs and BMAPs. Thus, the pace of TMDL/BMAP development unde r both rules is expected to be similar and to gradually increase over time [see the black and blue lines in Figure 3-5(A)]. The time path of plan development is shown as slightly lower under the narrative process because TMDLs may be more analytically challenging due to having biological endpoints. Nonetheless, the relevant point is that the incremental difference between the two rules in term s of when and how many

waters will be under an active BM AP plan is predicted to be re latively small due to the existing implementation bottleneck [difference between the blue and black li nes in Figure 3-5(A)]

. The cost implication of these constr aints and limitations on the TMDL/BMAP implementation process is that the cost differe nces between the NNC a nd the narrative rules could be small. Figure 3-5(B) shows the differences in nonpoint s ource control costs of implementing actions to meet the numeric nutrien t criteria relative to meeting the narrative targets. Under both rules, nonpoint source contro l costs will be incurred and these costs will likely increase over time as more expensive e fforts are pursued to achieve the water quality criteria. Yet, the difference between the NNC and narrative nonpoint source control curves, which is the incremental cost of the proposed rule, is small, assuming the funding and staffing constraints will be similar across processes. Figure 3-5(B) also illustrates the substantial uncertainty associated with nonpoint source

administrative and load control cost under either rule. Chapter 2 discussed the uncertainty surrounding nonpoint unit control costs for both agri cultural and urban sour ces, as well as the level of application (number, type and effectiveness of BMPs ) needed to achieve nutrient targets/criteria. However, these uncertainties exist under either future process and are arguably substantial. On the other hand, there are possi ble differences among rules that may lead to different costs for nonpoint sources. For exampl e, the NNC rule requir es the achievement of both nitrogen and phosphorus targets in a TMDL plan while the narrative standard may only target one nutrient. Achieving two targets will be more costly than achieving just one, thus increasing the incremental cost of the NNC rule (holding other factors constant). However, the stringency of the final nutrient limits that emerge in the TMDL process under the narrative process is itself uncertain. It is possible that more stringent nutrient requirements would be necessary to achieve biological criteria under the narrative rule (see B ox 3-1), increasing the potential costs under the narrative and reducing or eliminating the cost differences between the two processes. What this suggests, and wh at is shown in Figure 3-5(B), is that the incremental increase in nonpoint contro l costs is highly uncertain. Finally, such an analysis also clearly disti nguishes between the incremental and the total cost of achieving nutrient standards. While th e difference between nonpoint source control costs under the two rules can be analyzed and debate d, it should be clear that the costs to reduce nonpoint source discharges to meet water quality standards under either rule are going to be high and the costs are only likely to increase over tim e if water quality criteria are to be achieved.98 Review of the EPA’s Economic Analysis of Final Water Quality Standards in Florida

PREPUBLICATION COPY A B

FIGURE 3-5: Illustration of the TMDL and NPS Control Costs Time Paths

Illustration 5: Ambient Water Quality Outcomes

A final illustration is provided regarding the pace of water quality outcomes under the narrative vs. the numeric process. In seek ing to reduce the like lihood of type II error (undercontrol), the NNC rule acc elerates both the pace of listi ng and the imposition of controls and costs for point sources. It is possible that reducing the delay in getting to the implementation stage under the NNC rule will reduce the risk of a loss of water quality benefits over the short or long term. That is, the NNC rule might be expected under some assumptions to result in incremental improvement in water quality outco mes and in more waterbodies meeting their designated uses at certain points in the future (see Figure 3-6). On the other hand, the discussion above indi cates that because th e NNC rule does not alter the regulatory and budgetary constraints on nonpoint source controls, the acceleration of water quality improvements that occurs over time c ould be modest. Furthermore, as Chapter 2 points out, considerable uncertainty exists as to the extent and intensity of controls that will be necessary to achieve designated uses in impaired waters. This uncertainty has the potential to push achievement of water quality objectives furthe r out into the future, such that the differences between the rates at which waters meet designate d uses under the two rules might be modest or even nonexistent (see Figure 3-6). Narrative NNC Narrative #

Time in yrs # BMAP Plans Developed

Time in yrs Annual BMAP Implementation Costs

$ NNCA Framework for Incremental Cost Analysis of a Rule Change 99

PREPUBLICATION COPY FIGURE 3-6: Progress toward Me eting the Designated Uses

TRANSPARENCY AND DISP UTE RESOLUTION

UNDER THE PROPOSED FRAMEWORK

As has been emphasized, it is only when the future costs of a wrong decision are significant that analytical uncerta inty is relevant to making a decision. In the water quality management context, one possible cost conseque nce of analytical error is that assessment decisions and subsequent control actions may l ead to control of nutrients in places where

nutrients were not the stressor or at levels that exceed those required to meet the designated use.

If this was the result there would have been unnecessary load control costs placed on limited public budgets and on the financial viability of businesses. On the other hand, the argument offered by the environmental NGOs and supported by the EPA is that the narrative rule, in minimizing the possible error of over control of nutrients, makes water quality management too slow and inadequate in protecti ng designated uses. The dispute over the EPA cost analysis that

was the reason for the formation of this Co mmittee can be understood as a difference of viewpoints among agencies and stakeholders about the likelihood that differ ent rules will lead to

errors of over control or under c ontrol of nutrients a nd the cost consequences of those errors. The cost analysis framework presented in the previous section can help to narrow disagreements over the assumptions that might be made to accommodate uncertainty over unit costs, effectiveness of load c ontrol, water quality response, and rule design. Thus, a report to decision makers organized around the likelihood and co sts of analytical erro r serves a different purpose than the role often played by a traditional benefit–cost analysis, as represented by the EPA report. In the EPA analysis the rule was written and proposed and then a benefit–cost analysis was conducted to determine the justification for the rule as written. This is a standard application of benefit–cost analys is that proposes to answer a singl e question: “Is the rule change justified, or is it not?” To answer this ques tion, different analyses had to make different assumptions (implicit or explicit) about how th e rule would be implemented over time. The uncertainties in those assumpti ons could be reported in some fashion, as EPA and Cardno ENTRIX attempted to do in different ways. Howe ver, simply reporting uncertainty over benefits and costs, when the question is framed only as whet her a predefined rule ch ange is justified, does not contribute to stakeholders’ appreciation of uncertainty nor does it help develop water quality time in years Index of WQ improvements

NNC

Narrative100 Review of the EPA’s Economic Analysis of Final Water Quality Standards in Florid a

PREPUBLICATION COPY management processes to minimize the like lihood of both under-control and over-control of

nutrients. The analytical framework proposed in this chap ter could be used in support of rule design and could then be transformed to provide an analys is of the justification of any given design. In fact, Florida’s newly proposed alternative to the NNC rule re mains focused on minimizing the possibility of load control cost error, although it seeks to address the criticism that the state has ignored the possibility of t oo little control on nutrients by having new listing and stressor assessment components during Stages 1 and 2. However, whether these modifications will achieve the desired result is unanalyzed, with th e result that environmen tal NGOs are likely to oppose the new Florida rule. This is not to suggest that had EPA (and FDEP) followed the framework presented in this chap ter that there would have been no opposition; however, it is the case that the analyses done to date have done little to bridge gaps that exist between stakeholders. Indeed, EPA conducted its cost analysis in a manner that led some Florida stakeholders to have concerns over its salience, legitimacy, and credibility (Jordan et al., 2011; Maguire, 2003). The following are examples of different ways that reaching agreement on how the water quality management process would change under the various rules might have reduced differences in assumptions and narro wed the estimated cost differences:

 Increases in administrative budgets for a ssessment and monitoring could reduce the expected size of, and concern over, the cost s of both type I an d II errors (Shabman and Smith, 2003; NRC, 2001).

 The uncertainty about the SSAC guidelines led to wholly different assumptions by different stakeholder groups. Greater clarity and understand ing about the SSAC process, which is central to the NNC ru le, might lead to less divergence in assumptions about the cost of appl ying for SSAC and the likelihood of SSAC approval.

 There were different assu mptions made regarding wh ether the numeric nutrient criteria would become WQBELs for NPDE S permitted sources, with the EPA cost analysis assuming less stringent levels of c ontrol and being silent on when they would be imposed on NPDES regulated sources. Greater clarity and understanding of the way in which the NNC rule would affect NPDES permit limits might lead to less divergence in assumptions made about the resulting WQBELs.

 The implied assumptions in all analyses we re that the TMDL and BMAP once set in motion by the NNC rule could not be altered by new information on costs, effectiveness, and water quality response. A more explicit inclusion of principles of adaptive implementation, and an associated budget commitment, may have lessened

concerns about the costs t ype I and II errors (NRC, 2001; Shabman et al., 2007).

In the end, the “cost” of error depends on what a decision maker believes about the likelihood of an effect of the rule change and thei r own judgment about the future severity of the adverse consequences. Analysis can narrow, but not eliminate, differences of view about the uncertainty surrounding these two determinants of costs. Some stakeholders will have preferences that make them unwilling to accept th e possibility of costs of over-control, while others will not accept a rule that they believe w ill bring about a possible loss of water quality benefits. Analysis cannot bridge such gaps in preferences.A Framework for Incremental Cost Analysis of a Rule Change 101

PREPUBLICATION COPY FINDINGS

FINDING: The incremental costs of the NNC rule ar e attributable to more than an increase in waterbodies listed and a requirement that all NPDES-permitted municipal and industrial sources discharging to surface water have certain effl uent concentration limits. In computing the incremental effect, the appropriate baseline s hould have been defined as what would have

occurred over time under the existing (narrative) rule. Thus , an incremental cost is the difference in implementation costs between two (or more) alternative future implementation time paths. Future cost analyses of rule changes woul d more fully represent areas of possible costs differences (administration, load control, and wate r quality opportunity cost s) if they were more explicit in describing the differences between the rules over time . This could be done by analyzing and reporting costs as a cash flow over time, showing wh at sectors bear the costs as

nutrient load reductions at differe nt levels are pursued. Compari ng the rules over time also can provide an opportunity to present a realisti c picture of how the timing of water quality improvement actions might unfold with alternative rules, by illu strating the time lags between listing and achievement of water quality standards. Most importantly, reporting on timing would provide useful information for predic ting annual budgetary requirements.

FINDING: Uncertainty is pervasive in estimating the incremental cost of implementing the NNC rule and is inadequately represented in the EP A analysis. In future analyses, reporting the difference in the time paths for implementa tion of water quality management rules, and associated uncertainties, would provide a more tr ansparent and realistic way to compare costs of the different rules and provide more useful information about where, when, and how costs diverge.

FINDING: Some stakeholders viewed the EPA cost analysis as being superficial or of limited scope, leading to reduced credibility. The resu lt was to foster disa greement about embedded assumptions rather than use the analysis to isolate and possibly reconcile sources of disagreement. Cost analysis as outlined in this chapter can help convey cost estimates in a more transparent way and thus fac ilitate learning, reduce misunders tandings among stakeholders, and increase public confidence in the results.

FINDING: Based on the conceptual reviews in this chapter and on the content of Chapter 2, the following broad findings are made about the diffe rences between the NNC and narrative rules:

 Administrative costs for listing and TMDL development for FDEP will be lower under

the NNC rule because there would be no bi ological assessment (unless FDEP is the SSAC petitioner). In part, this administrati ve cost reduction is made possible by the NNC rule shifting the responsibility for SSAC-like analyses to SSAC petitioners and away from the FDEP.

 Compared to the narrative rule, under the NNC rule the pace of lis ting and the number of waters listed will increase, but the rate at which TMDLs and BMAPs are developed and load controls implemented to meet the designated use will not necessarily increase.

 Municipal and industrial wastew ater dischargers may face subs tantial near-term increases

in cost under the NNC rule.

 Over time, there is significant uncertainty in nonpoint source load control costs under either rule because of uncertainty about the incremental increase in the number of listed102 Review of the EPA’s Economic Analysis of Final Water Quality Standards in Florid a

PREPUBLICATION COPY waters, about the nutrient target levels for N or P, and about cost and effectiveness of nonpoint source load control actions.

FINDING: Conducting the cost analysis as outlined in this chapter, with increased attention to careful assessment of rule differences, stakehol der engagement, and uncertainty analysis, might not have been possible with the budget and time EP A spent on its cost analysis. Any critique of the existing EPA cost analysis should recognize that some deficiencies may be traced to time and budget limitations.

REFERENCES

FDEP. 2001. A Report to the Governor and the Legislature on the Allocation of Total Maximum Daily Loads in Florida. Jordan, N. R., C. Shively Slotterback, K. V. Cadieux, D. J. Mulla, D. G. Pitt, L. Schmitt Olabisi, J. Kim. 2011. TMDL implementation in ag ricultural landscapes: A communicative and systemic approach. Environ. Management. 48(1):1-12. King, E. 2011. Presentation to the N RC Committee. July 25, 2011 Orlando, FL. Maguire, L. A. 2003. Interplay of Science a nd Stakeholder Values in Neuse River Total Maximum Daily Load Process. Journal of Water Resources Planning and Management 129(4):261-270. National Research Council (NRC). 2001. Asse ssing the TMDL Approach to Water Quality Management. Washington, DC: National Academies Press. Shabman, L., and E. Smith. 2003. Implications of Applying Statistically Based Procedures for Water Quality Assessment. Journal of Water Resources Planning and Management 129(4):330-336. Shabman, et al. 2007. Adaptive Implementatio n of Water Quality Improvement Plans: Opportunities and Challenges. Durham, NC: Duke University Nicholas School of the

Environment and Earth Sciences. U.S. Environmental Protection Agency (EPA). 2010a. Guidelines for Preparing Economic Analyses. Washington, DC: EPA National Ce nter for Environmental Economics, Office of Policy. U.S. EPA. 2010b. Economic Analys is of Final Water Quality Standards for Nutrients in Lakes and Flowing Waters in Florida. Envi ronmental Protection Agency; November, 2010.

U.S. EPA. 2011. Technical Assistance for De veloping Nutrient Site-Specific Alternative

Criteria in Florida. J une 2011. Interim Draft.103

PREPUBLICATION COPY 

## Acronyms

AWT advanced wastewater treatment BMAP Basin Management Action Plan BMP best management practice CAFO concentrated animal feeding operation

CWA Clean Water Act DO dissolved oxygen DPV downstream protection value EPA Environmental Protection Agency FDACS Florida Department of Ag riculture and Consumer Services FDEP Florida Department of Environmental Protection FDOH Florida Department of Health

FWEAUC Florida Water Envir onment Association Utility Council

FWRA Florida Watershed Restoration Act GIS geographic information system HUC hydrologic unit code IWR Impaired Waters Rule

LA load allocation

MF microfiltration MGD million gallons per day MLE Modified Ludzack-Ettinger MOS margin of safety MOU memorandum of understanding NGO nongovernmental organization

NNC numeric nutrient criteria

NOI notice of intent NPDES National Pollutant Discharge Elimination System

NRCS Natural Resources Conservation Service OIG Office of Inspector General O&M operation and maintenance OSTDS onsite sewage treatment and disposal systems PRB permeable reactive barrier

RO reverse osmosis

SCM stormwater control measure

SIC Standard Industrial Classification SSAC site specific alternative criteria104 Review of the EPA’s Economic Analysis of Final Water Quality Standards in Florida

PREPUBLICATION COPY SW surface water SWIM Surface Water Improvement and Management Act TMDL Total Maximum Daily Load TN total nitrogen TP total phosphorus TRAP Technical Review Advisory Panel UCT University of Cape Town USDA U.S. Department of Agriculture WBID Waterbody Identification Number 1

WLA waste load allocation WQBEL water quality-based effluent limit WWTP wastewater treatment plants

1 WBID is used colloquially to refer to certain impair ed waters, but technically the term also includes the surrounding drainage basin.105

PREPUBLICATION COPY 

## Appendix A

Narrative, Numeric, and Proposed Florida

Nutrient Criteria Pr ocesses Illustrated

Figures A-1, A-2, and A-3 at the end of th is Appendix describe the narrative, numeric, and proposed Florida nutrient criteria processes, respectively. The Committee was unable to find similar flow diagrams developed by either EP A or FDEP, so the diagrams were developed internally as a means to better understand the di fferences in the processes. The Committee does not contend that these diagrams precisely illu strate the manner in which EPA or FDEP would implement any of the three processes. Rather, th e diagrams were developed at a level of detail sufficient to compare key steps in the pro cesses and understand the sequence and timing of events necessary to implemen t nutrient criteria under each. In each of the figures, common flow charting symbols are used. Rectangles represent proc esses, diamonds represent binary decision points (yes or no), while ovals represent terminal points in the process – a beginning or an ending. Circles and pentagons transfer the reader to other point s in the processes where the next sequential step occurs if it does not directly follow the previous step in the overall process. Figures A-1, A-2, and A-3 all reflect the continuing assessment process expected under the Clean Water Act (CWA). They begin with th e identification and assessment of a waterbody. If that water is listed as impaired, steps follo w leading to the development of a TMDL for the stressor; implementation of actions to reduce the pollutant loading (the basin management action plan or BMAP as required under Florida law); and finally a process to ascertain when the designated use is met (delisting in the CWA proce ss). Beyond this general similarity, however, there are significant differences in the sequence of actions that occur in the three processes and

what is assumed about the activities and the decisi ons encountered in each. These differences in assumptions can lead to differences in cost estimates. In the current Florida narrative process (Fi gure A-1), it is apparent the process has additional steps for determining impairment co mpared to the EPA numeric nutrient criteria process (Figure A-2). First, the narrative process requires impairment identification for the

narrative nutrient criteria – an imbalance of flora and fauna as determined by surrogate indicators. Once a determination is made regard ing whether sufficient data exist and whether the data point to nutrients as a stressor, then the wa ter is listed as impaired, a TMDL developed, and load reduction implemented thr ough a BMAP. By contrast, the EPA numeric process (Figure A2) simply determines impairment based on whethe r the N and P criteria are exceeded in ambient waters. If so, and if site-specific alternative cr iteria (SSAC) have not be en developed, the water is listed as impaired and a TM DL developed and implemented.106 Review of the EPA’s Economic Analysis of Final Water Quality Standards in Florid a

PREPUBLICATION COPY In both processes, waters are determined to return to compliance and removed from the impaired waters list if the ambient water quality criteria are met. In the case of the narrative process, the water is removed once the water supp orts its biological use, while in the numeric process the waters are removed if the N and P crit eria are met. The processes then begin another iteration of evaluating the waters for compliance w ith either the narrative or numeric criteria. The proposed Florida process (Figure A-3) is significantly more complex than either the

current narrative or EPA numeric nutrient criter ia processes. The proposed process first ascertains if SSACs or TMDLs have been appr oved for a given waterbody. If a TMDL has already been developed, the process jumps fo rward to TMDL implementation or the BMAP process. If a TMDL has not been developed, but an SSAC has been approved, the waterbody is assessed against the SSAC. If an SSAC has not been approved, the waterbody is evaluated against “numeric interpretations of narrative nutrient criteria” (interpretations) and numeric

nutrient thresholds. The thresholds are similar to numeric nutrient criteria in that numeric values

are established for N and P. The main difference is that a failure of a threshold begins a process of additional study to see if biological impairment s are manifested in the waterbody. If not, the waterbody is not deemed as impaired. If there is a biological impairment signal, the water is listed as impaired, a TMDL developed, and a BMAP developed and implemented. Additionally, waters can be identi fied as impaired if there is an adverse trend in nutrients or nutrient indicators. In other words, if l ong-term data show a decl ine in water quality as evidenced by an adverse trend in either nutrient or nutrient indicator mon itoring data, the water is studied further. If modeling indicates the a dverse trend will result in a waterbody impairment within five years, the water is listed as im paired, a TMDL developed, and a BMAP developed and implemented. Once a TMDL is triggered in the proposed proce ss, the steps taken from that point on are essentially the same as the current narrative process. A TMDL will be developed and plan to implement the TMDL will be developed through the BMAP process. As described in Chapter 3 of the report , both the narrative pro cess and the proposed Florida process opt to minimize Type I error – li sting a waterbody as impaired that is not truly impaired. Therefore, more study is required to identify biological impairments and to identify nutrients as stressors for the impairment. This additional study necessarily results in added time required to reach the TMDL stage in the overall process. The EPA numeric process opts to minimize Type II error – not listing a waterbody as impaired that is truly impaired. That practice moves more quickly to the TMDL stage of the pr ocess, but there is no apparent increase in the speed at which TMDLs will be developed and implemented. Links to additional information on the three processes can be found as follow:

I. The current Florida narra tive nutrient criteria process

A. General historical information http://www.dep.state.fl.us/water/wqssp/nutrients/ B. Rule 62-302 – Surface Water Quality Standards http://www.dep.state.fl.us/lega l/Rules/shared/62-302/62-302.pdf C. Rule 62-303 - Identification of Impaired Surface Waters http://www.dep.state.fl.us/lega l/Rules/shared/62-303/62-303.pdf II. The EPA numeric nutrient criteria process

A. General historical information http://edocket.acc ess.gpo.gov/2010/2010-29943.htm B. EPA final rule adopting the Florida numeric nutrient criteriaAppendix A 107

PREPUBLICATION COPY http://water.epa.gov/lawsregs/r ulesregs/florida_index.cfm III. The proposed Florida nutrient criteria process

A. General historical information http://www.dep.state.fl.us/water/wqssp/nutrients/ B. Proposed Rule 62-302 – Surface Water Quality Standards http://www.dep.state.fl.us /water/wqssp/nut rients/docs/meetings/62_302_final.pdf C. Proposed Rule 62-303 - Identifica tion of Impaired Surface Waters http://www.dep.state.fl.us /water/wqssp/nut rients/docs/meetings/62_303_final.pdf108 Review of the EPA’s Economic Analysis of Final Water Quality Standards in Florid a

PREPUBLICATION COPY Assess Imbalanced Flora and Fauna by Biological Condition Indices (BCI) Lakes - TSI (Trophic State Index) Streams - Chlorophyll-a, or algal mat presence Springs - Nuisance algae

2

Ambient BCI

Attained?

4

Water is not

impaired

15 Water Body, Region, and Type

1

No

303d Verified

List

5

Establish TMDL Targets for N

and/or P

10

Implement

N and/or P

reductions

13

TMDL Target Met?

14

Yes 303d Planning

List

3a

No

No Initiate TMDL Development

6 Sufficient Data?

3

No

N and/or P a

Stressor?

9 Yes ID Stressor

7

Stressor ID’d?

8

Yes

Establish

TMDL for the

ID’s Stressor

10a

Implement

stressor

reductions

12a

TMDL Target Met?

13a

Yes No No Acquire Sufficient

Data

3b

Yes

Yes

Develop Basin Management

Action Plan (BMAP) 11a Develop NPS Implementation Based

LA

12b Develop N and/or P

NPDES Permit

Limits Based on

WLA

12a Develop Basin Management

Action Plan (BMAP) 11aAppendix A 109

PREPUBLICATION COPY Determine NNC

(reference method)

2

Assess Ambient

Nutrient Stream

Concn

5

Ambient Concn>

Crit?

6

Water is not impaired

10 Water Body, Region, and Type

1

Establish

TMDL for N

and/or P

9

De-list

9e SSAC?

7 Yes No

Yes

SSAC Approved?

7b No

Develop and

Submit SSAC

Proposal

7a

Assess Ambient

Nutrient Stream

Concn.

7c

Ambient Concn

< SSAC?

7d Determine DPV

2a

Select Most Stringent

3

Yes

Yes No

No 303d Listed

for N and/or P

8

Develop TMDL Implementation

Plan for N and/or

P

9a

Implement

N and/or P

reductions

9b

Ambient Concn<

Crit?

9d No

Yes Assess Ambient

Nutrient Stream

Concn.

9c 1

SSAC?

9f No 1

Yes 1 = Reference to a process elsewhere on the page Develop

NPDES Permt

w/N & P Limits

4110Review of the EPA’s Economic Analysisof Final Water Quality Standards in FloridaPREPUBLICATION COPYPlace onPlanning List5Fail Biological HealthAssessment (BHA) or NutrientImpairment (NI) Thresholds?4Place onStudy List5aEvidence of WQSNonattainment, But InsufficientInformation on CausativePollutant?4aYesNoWater Body is Confirmed tobe Biologically Impaired?6YesNutrient is CausativePollutant?7YesNoNoNoYesNutrient is CausativePollutant?6aIncreasing PollutantTrend w/ImpairmentExpected w/in 10 yr?4bYesEvidence of IncreasingPollutant Trend Leading toImpairment in 5 yr?7aNoNoYesYesGo to TMDLDevelopment9Assess Biological Health,Nutrient Impairment Thresholds,SSAC and Nutrient Trend*3Water Body, Region, and Type1NoYesTMDL Loads orConcns. Developed?2bNoNoSSACDeveloped?2YesDevelop SSAC?2aYesNoNoGo to BMAPDevelopment2cPage 1 of 2* See notes on page 2Place onVerified List8Appendix A111PREPUBLICATION COPYEstablish TMDLTargets for Nand/or P12ImplementN and/or Preductions15TMDL Target Met?16YesInitiate TMDLDevelopment11Develop NPSImplementation BasedLA14bDevelop N and/or PNPDES PermitLimits Based onWLA14aFrom Page1, Step 910Develop BasinManagementAction Plan(BMAP) 13To Step 1,Pg. 117NoNotes: Biological Health Assessments/NumericInterpretation ofNarrative CriteriaI.Biological Health Assessment= Stream Condition Index (SCI),Lake Vegetation Index (LVI), or Shannon-Weaver DiversityIndex.II.Numeric Interpretations of Narrative Nutrient Criteria.A. Lakes = chlorophyll aB. Spring Vents = 0.35 mg/L of nitrate-nitrite (NO3 + NO2)C. Streams = chlorophyll a levels, algal mats or blooms,nuisance macrophyte growth, or changes in algal speciescomposition indicating imbalances in flora or fauna, andeither:1. SCI exceeded2. Nutrient thresholds exceededD. Estuary = site-specific numeric interpretationsPage 2 of 2BMAP Developed?11aNoYesFrom Page1, Step 2c10a112

PREPUBLICATION COPY 

## Appendix B

Biographical Sketches of Committee Members and Staff

Glen T. Daigger (National Academy of Engineering), Chair

, is senior vice president with CH2M HILL in Englewood, Colorado. He serves as Chief Wastewater Proc ess Engineer and is responsible for wastewater pro cess engineering on both munici pal and industrial wastewater treatment projects on a firmwide basis. Dr. Daigge r is the first Technical Fellow for the firm, an honor which recognizes the leadership he provi des for CH2M HILL and for the profession in development and implementation of new wastewater treatment technology. He is also the Chief Technology Officer for the firm’s Civil Infrastr ucture Client Group, which includes the firm’s water, transportation, and operations busine sses. F rom 1994-1996, Dr. Daigger served as Professor and Chair of the Department of E nvironmental Systems Engineering at Clemson University. Dr. Daigger is a re gistered professional engineer in the states of Indiana and Arizona, and a board certified envi ronmental engineer. Dr. Daigger received his B.Sc.E. degree, his M.S.C.E. degree, and his Ph.D. degree, a ll in environmental engineering, from Purdue University.

Otto C. Doering, Vice Chair

, is a professor in the departme nt of agricultural economics at Purdue University. He is a public policy spec ialist and has served the U.S. Department of Agriculture working on the 1977 and 1990 Farm Bills. In 1997, he was the Principal Advisor to

USDA’s Natural Resources Conservation Servic e for implementing the 1996 Farm Bill. In 1999, he was team leader for the economic anal ysis of the White House’s National Hypoxia Assessment. Dr. Doering has overseas experien ce with the Ford Foundation and the National Academy of Sciences, primarily in Southeast Asia . He has been a Director of the American Agricultural Economics Association and Chairm an of the National Public Policy Education

Committee. He twice has received the AAEA’ s Distinguished Policy Contribution Award, as well as its Extension Economics Teaching Awar d. His recent publications have focused on economic linkages driving the responses to nitr ogen over-enrichment, rationale of U. S. agricultural policy, and integrati ng biomass energy into existing energy systems. He served on the NRC Committee on the Mississippi River and the Clean Water Act. Dr. Doering received his M.S. degree in economics from the London School of Economics and his Ph.D. degree from Cornell University.

Leonard A. Shabman, Vice Chair

, joined Resources for the Future in 2002 as a resident scholar after three decades on the faculty at Virginia Te ch. His research and communications efforts are focused on programs and responsibilities for flood and coastal storm risk management, design of payment for ecosystem services programs, a nd development of evaluation protocols for ecosystem restoration and management projects, with special focus on the Everglades, CoastalAppendix B 113

PREPUBLICATION COPY Louisiana and Chesapeake Bay. Among the specific topics relate d to these broader themes is applied research on permitting under Section 404 of the Clean Water Act, creating market-based incentives for water quality management and provision of ecosystem services, and design of collaborative water management institutions. He served for eight years on the National Research Council's Water Science and Technology Board, has chaired or been a member of several NRC committees and has been recognized as an Asso ciate of the National Ac ademy of Sciences.

Walter L. Baker is the director of the Division of Water Quality (DWQ) for the State of Utah, where he has worked for the past 26 years. He currently serves as the Vice-President of the

Association of State and Interstate Water Pollution Control Administrators; as Chair of the Water Quality Committee of the Western States Wate r Council; as a member of the Utah Lake Commission; as a member of the Utah Soil C onservation Commission; and as the Executive Secretary of the Utah Water Quality Board. Mr. Baker is a licensed prof essional engineer and a graduate of Utah State University.

Allen P. Davis is a professor in the Department of Ci vil and Environmental Engineering at the University of Maryland. Dr. Davis' research in terests are in aquatic environmental chemistry. He has been working on various issues related to urban storm water qua lity and the concept of low impact development (LID). Dr. Davis received the 2010 A. James Clark School of Engineering Faculty Outstanding Research Award, recognizing influential research accomplishments related to urban storm water qu ality, its management, and the LID concept. From 2001-2010, Dr. Davis served as the director of the Maryland Water Resources Research

Center. He also has served as associate ed itor of Chemosphere, Science for Environmental Technology (2004-2010). Dr. Davis is a recipi ent of the National Science Foundation Young Investigator Award. He teaches courses in en gineering sustainability, environmental process dynamics, and environmental engineering unit oper ations. He received his B.S. degree, his M.C.E. degree, and his Ph.D. degree from the University of Delaware.

K. William Easter is a professor of applied economics and has been on the faculty of the University of Minnesota since 1970. One of his positions at Minnesota wa s serving as Director of the Center for International Food and Agricult ural Policy (1999-2003). His research interests include resource economics, economic developmen t and environmental economics, with a focus on water and land problems and resource pricing issu es. Dr. Easter received his B.S. and M.S. degrees from the University of California-D avis and his Ph.D. degree at Michigan State University.

Wendy D. Graham is the Carl S. Swisher Eminent Scholar in Water Resources in the Department of Agricultural and Biological Engineer ing at the University of Florida and director of the University of Florida Water Institute. Her research is focused on coupled hydrologicwater quality-ecosystem modeling; water resources evaluation and remediation; evaluation of impacts of agricultural production on surface- and groundwater quality; and development of hydrologic indicators of ecosystem status. She has previous NRC committee experience, having served on the Committee on Seeing Into th e Earth: Non-Invasive Techniques for

Characterization of the Shallow Subsurface for E nvironmental Engineering Applications, and as

a member of the third Committee on Independent Scientific Review of Everglades Restoration Progress. Dr. Graham received her B.S.E. de gree in environmental engineering from the114 Review of the EPA’s Economic Analysis of Final Water Quality Standards in Florid a

PREPUBLICATION COPY University of Florida and her Ph.D. degree in ci vil engineering from the Massachusetts Institute of Technology.

Arturo A. Keller is professor of biogeochemistry at the Bren School at the University of California, Santa Barbara. He holds a joint appointment in Mechanical and Environmental Engineering at UCSB. His research and teachin g interests focus on water quality management and the fate and transport of pollutants in the envi ronment. Dr. Keller also was the facilitator for the award-winning Nitrogen TMDL process for the Santa Clara River. He is also well-known for his expertise in the fate a nd transport of pollutants, includi ng nanoparticles, organic liquids (NAPLs), and persistent organic po llutants associated with clay particles. Dr. Keller received a B.A. degree in chemistry and a B.S. degree in ch emical engineering from Cornell University, an M.S. degree in civil engineering from Stanfo rd University, and a Ph.D. degree in civil engineering from St anford University.

David J. Mulla is professor and the W. E. Larson Ch air for Soil and Water Resources in the Department of Soil, Water, and Climate at the Univ ersity of Minnesota. He is also the director of the university’s Precision Agriculture Center. Dr. Mulla’s research cove rs a wide variety of topics regarding agriculture, soil erosion, and water qualit y, including: (1) nonpoint source surface water pollution and watershe d management, (2) transport and modeling of water, solutes, trace metals, and organic chemicals in soil, su rface and groundwater, (3) impacts of biofuel and alternative crop production systems, (4) measurement, modeling, and management of soil erosion, (5) phosphorus and nitroge n transport in soils, (6) agri cultural best management practices, (7) soil, landscape, a nd terrain modeling for precision c onservation, and (8) field-scale variability for precision farming. In 2007 he wa s appointed a Founding Fellow in the University

of Minnesota’s Institute on Environment. Dr. Mulla received his B.S. degree in Earth Sciences (with emphasis in geophysics) from the University of California at Riverside, and his M.S. and Ph.D. degrees in agronomy (emphasis in soil ch emistry and physics) from Purdue University.

Kevin M. Sherman is the Director of Engineering at Qu anics, Inc. in Campellsburg, Kentucky. Dr. Sherman has 24 years experience working as a researcher, regulator, educator, and designer

in the onsite wastewater treatmen t industry. Dr. Sherman is a former president of the National Onsite Wastewater Recycling Association (NOWRA). From 1985-1999, he was a member of the staff at the Florida Department of Health and Rehabilitative Services, working in several capacities in the epidemiology and e nvironmental health sections. He also served as a former president of the Florida Onsite Wastewater Association. Dr. Sher man received his B.S. degree in biology from the State Universi ty of New York at Stony Bro ok, another B.S. degree (civil engineering) from Florida State University, his M.S. degree in biology from the University of South Carolina, and his Ph.D. degree in o ceanography from Florid a State University.

Kurt Stephenson is an associate professor of environm ental and natural resource economics in the Department of Agricultural and Applied Economics at the Virginia Polytechnic Institute and State University. His professional objective is to better integrate ec onomic perspectives and analysis into decision-making rela ted to water resource issues. Dr. Stephenson is particularly interested in application of economic analysis to interdisciplin ary research of policy issues. The design and implementation of market-based policie s to secure environmental objectives is a primary area of study within this context. He is currently involved in determining effectiveAppendix B 115

PREPUBLICATION COPY strategies for reducing nutrient loads in the Op equon Watershed in Virginia and West Virginia, including evaluating the cost e ffectiveness and feasibility of using urban nonpoint source controls (including stormwater management) as an offset to growth in point source loads. Dr. Stephenson received his B.S. degree in economics from Radford University, his M.S. degree in agricultural economics from Virginia Tech, a nd his Ph.D. degree in economics from the University of Nebraska.

Michael B. Tate is the Chief of Technical Services at the Kansas Department of Health and Environment. Mr. Tate is a licensed professiona l engineer with 20+ years experience in the environmental field. His technical expertise is in water quality and wa stewater permitting, with additional experience in drinking wa ter, solid waste, and hazardous waste. He manages a section responsible for establishing and enforcing water quality standards, and wastewater permitting in Kansas. Mr. Tate received his B.S. degree in ci vil engineering and his M. S. in bioenvironmental engineering, both from Ok lahoma State University.

Alan H. Vicory serves as executive direct or and Chief Engineer for the Ohio River Valley Water Sanitation Commission (ORSANCO). His previo us responsibilities were with the Commission staff as environmental engineer and manager of technical servi ces which included establishment of regulatory requirements for discharges, wate r quality and biologica l monitoring systems, detection and response to spills, applied research, coordination of states and federal programs and public education and involvement. He is a Registered Professiona l Engineer and Board Certified in environmental engi neering (water and wastewate r) by the American Academy of Environmental Engineers. He is Past Chai rman of the Board of the Water Environment Research Foundation (WERF) and former Chairman of the Internationa l Water Association’s (IWA) Watershed and River Basin Management Speci alist Group. He also is a Past President of the American Academy of Environmental Engine ers (AAEE) and the Association of State and Interstate Water Pollution Control Administrators (ASIWPCA). Mr. Vicory received a B.S. degree in Civil Engineering from Virginia Military Institute.

LaJuana S. Wilcher is a Partner with the law firm Eng lish, Lucas, Priest & Owsley, L.L.P. in Bowling Green, Kentucky. Her previous positions included work with two international law firms in Washington, D.C.—Winston & Strawn (1993-1996) and LeBoeuf, Lamb, Greene & Mac Rae, L.L.P. (1996-2002). Ms. Wilcher served as the Assistant Admini strator of Water for the United States Environmental Protection Agen cy from 1989 to 1993. While at the Office of Water (1989-1993), the agency promulgated new regulations addressing storm water, drinking water, biosolids (sewage sludge) and water quality standards for toxics, among other things. Ms. Wilcher helped lead EPA’s watershed protec tion approach and Clean Water Act section 319 nonpoint source grant program. She also led EP A’s involvement in the Exxon Valdez oil spill litigation negotiations. She r eceived her B.S. degree in biology from Western Kentucky University, and her J.D. degree from Salmon P. Chase College of Law, Northern Kentucky University.116 Review of the EPA’s Economic Analysis of Final Water Quality Standards in Florid a

PREPUBLICATION COPY STAFF

Laura J. Ehlers is a senior staff officer for the Wa ter Science and Technology Board of the

National Research Council. Sin ce joining the NRC in 1997, she has served as the study director for 16 committees, including the Committee to Review the New York City Watershed Management Strategy, the Committee on Bioavailabil ity of Contaminants in Soils and Sediment,

the Committee on Assessment of Water Resour ces Research, and the Committee on Reducing Stormwater Discharge Contributions to Water Po llution. Ehlers has peri odically consulted for EPA’s Office of Research Development regarding their water quality rese arch programs. She

received her B.S. from the California Inst itute of Technology, ma joring in biology and engineering and applied science. She earned both an M.S.E. and a Ph.D. in environmental engineering at the Johns Hopkins University.