Document ID: EPA-HQ-OW-2002-0030-0023
Agency: epa
Document Type: Supporting & Related Material
Title: 
Posted Date: 2002-06-24T04:00Z

Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
CHAPTER
SIX
INITIAL
REGULATORY
FLEXIBILITY
ANALYSIS
6.1
INTRODUCTION
TO
THE
INITIAL
REGULATORY
FLEXIBILITY
ANALYSIS
This
section
considers
the
effects
that
the
proposed
C&
D
regulations
would
have
on
small
entities
in
accordance
with
the
Regulatory
Flexibility
Act
(
RFA,
5
U.
S.
C
et
seq.
,
Public
Law
96­
354)
as
amended
by
the
Small
Business
Regulatory
Enforcement
Fairness
Act
of
1996
(
SBREFA)
.
The
purpose
of
the
RFA
is
to
establish
as
a
principle
of
regulation
that
agencies
should
tailor
regulatory
and
informational
requirements
to
the
size
of
entities,
consistent
with
the
objectives
of
a
particular
regulation
and
applicable
statutes.
The
RFA
generally
requires
an
agency
to
prepare
an
initial
regulatory
flexibility
analysis
(
IRFA)
of
any
rule
subject
to
notice­
and­
comment
rulemaking
requirements
under
the
Administrative
Procedure
Act
or
any
other
statute
unless
the
agency
certifies
that
the
rule
will
not
have
a
 
significant
impact
on
a
substantial
number
of
small
entities.
 
1
Small
entities
include
small
businesses,

small
organizations,
and
governmental
jurisdictions.

For
this
proposed
rulemaking,
EPA
conducted
outreach
to
small
businesses,
convened
a
Small
Business
Advocacy
Review
(
SBAR)
panel,
and
prepared
an
IRFA.
2
The
IRFA
is
detailed
in
this
section
and
represents
EPA
 
s
assessment
of
the
impacts
of
the
proposed
regulations
on
small
businesses
in
the
C&
D
industries.
The
analysis
is
presented
as
follows:

C
Section
6.2
outlines
EPA
 
s
initial
assessment
of
small
businesses
in
the
industries
affected
by
the
proposed
regulations.

C
Section
6.3
presents
EPA
 
s
analysis
(
i.
e.
,
IRFA)
and
summarizes
the
steps
taken
by
EPA
to
comply
with
the
RFA.

1
The
preparation
of
an
IRFA
for
a
proposed
rule
does
not
legally
foreclose
certifying
no
significant
impact
for
the
final
rule
(
USEPA,
1999)
.

2
This
analysis
or
a
summary
of
the
analysis
must
be
published
in
the
Federal
Register
at
the
time
of
publication
of
a
proposal.

6­
1
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
C
Section
6.4
presents
the
data,
methodology,
and
results
of
EPA
 
s
analysis
of
impacts
to
small
businesses
for
this
rulemaking.

6.2
INITIAL
ASSESSMENT
EPA
has
determined
that
the
proposed
C&
D
regulations
are
subject
to
notice­
and­
comment
rulemaking
requirements.
EPA
has
developed
a
profile
of
the
C&
D
industry
that
includes
all
potentially
affected
operations
as
well
as
small
businesses.
This
information
is
provided
in
Chapter
Two
and
also
in
Chapters
Four
and
Five
of
this
EA.
Much
of
the
profile
information
covered
in
these
sections
applies
to
small
businesses.
Additional
information
on
small
businesses
in
the
C&
D
industry
is
provided
in
Sections
6.2
and
6.3
of
this
chapter.
EPA
 
s
assessment
concludes
that
the
proposed
rule
may
affect
small
entities
and
the
proposed
rule
would
have
an
adverse
economic
impact
on
small
entities.

Section
6.2.1
reviews
the
SBA
definitions
of
small
entities
in
the
C&
D
industry.
Section
6.2.2
then
uses
the
definitions
of
small
entities
laid
out
in
Section
6.2.1
to
estimate
the
number
of
operations
that
meet
this
small
business
definition.

6.2.1
Definition
of
Affected
Small
Entities
The
RFA
defines
a
 
small
entity
 
as
a
small
not­
­
for­
profit
organization,
small
governmental
jurisdiction,
or
small
business.
EPA
expects
that
the
principal
impact
of
the
C&
D
regulations
on
small
entities
will
fall
on
(
1)
small
businesses
that
undertake
C&
D
activities
and
(
2)
small
governmental
units
involved
in
permitting
C&
D
activities.
With
respect
to
the
first
of
these
categories,
the
majority
of
C&
D
activity
in
the
United
States
is
undertaken
by
private
businesses,
hence
the
small
entity
analysis
will
focus
on
small
businesses
engaged
in
C&
D
activities.
3
With
respect
to
the
second
category
of
impact,

permitting
activity
is
undertaken
exclusively
by
governmental
units
(
at
various
levels
of
government)
,

hence
this
part
of
the
analysis
will
focus
on
the
impacts
on
small
government
units.

3
While
some
governmental
and
nonprofit
entities
may
engage
directly
in
C&
D
activities
(
i.
e.
,
undertake
C&
D
work
of
their
own
accord)
,
complete
information
is
not
available
to
warrant
inclusion
of
governmental
or
nonprofit
entities
in
this
analysis.
For
this
reason,
this
analysis
focuses
only
on
small
businesses.

6­
2
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
The
RFA
requires
(
with
some
exception)
that
EPA
define
 
small
 
businesses
according
to
the
size
standards
established
by
the
Small
Business
Administration
(
SBA)
.
SBA
establishes
criteria
for
identifying
small
businesses
based
on
either
the
number
of
employees
or
annual
revenues
(
13
CFR
121)
.
4
These
size
standards
vary
by
NAICS
(
North
American
Industrial
Classification
System)
code,
and
previously
by
Standard
Industrial
Classification
(
SIC)
codes.
Qualifying
revenue
levels
differ
among
NAICS
industries,
and
within
the
C&
D
industries
there
is
a
range
of
qualifying
revenue
levels,
from
$
5.0
million
for
NAICS
23311
(
Land
subdivision
and
development)
to
$
27.5
million
for
the
majority
of
industries
within
NAICS
233
and
234.
For
businesses
in
the
special
trades
industries,
the
small
business
size
threshold
is
$
11.5
million
in
revenues.
Table
6­
1
summarizes
the
SBA
revenue
thresholds
for
small
businesses
in
each
of
the
C&
D
industries.

4
Employees
counted
in
determining
size
includes
all
individuals
employed
on
a
full­
time,
part­
time,
temporary
or
other
basis.
Employment
is
measured
as
the
average
number
of
employees
for
each
pay
period
over
the
previous
12
months.
For
standards
based
on
revenues,
SBA
uses
the
average
revenues
over
the
last
three
completed
fiscal
years.

6­
3
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
Table
6­
1.
SBA
Small
Business
Definitions
for
the
Construction
and
Development
Industry
NAICS
Code
Description
SBA
Revenue
Size
Cutoff
(
Millions)

233110
Land
subdivision
and
land
development
$
5.0
233210
Single­
family
housing
construction
$
27.5
233220
Multifamily
housing
construction
$
27.5
233310
Manufacturing
and
industrial
building
construction
$
27.5
233320
Commercial
and
institutional
building
construction
$
27.5
234110
Highway
and
street
construction
$
27.5
234120
Bridge
and
tunnel
construction
$
27.5
234910
Water,
sewer,
and
pipeline
construction
$
27.5
234920
Power
and
communication
transmission
line
construction
$
27.5
234930
Industrial
nonbuilding
structure
construction
$
27.5
234990
All
other
heavy
construction
$
27.5
235930
Excavation
contractors
$
11.5
235940
Wrecking
and
demolition
contractors
$
11.5
Source(
s)
:
13
CFR
121
(
Small
Business
Size
Regulations;
Size
Standards
and
the
North
American
Industry
Classification
System;
Correction)
;
Small
Business
Administration
1998:
Firm
Size
Data
(
see
http:
/
/
www.
sba.
gov/
advo/
stats/
data.
html)

6.2.2
Number
of
Small
Businesses
Affected
The
number
of
small
businesses
affected
by
the
proposed
rule
was
estimated
through
a
series
of
steps.
First,
EPA
estimated
the
number
of
establishments
in
the
affected
industries.
From
the
number
of
establishments,
EPA
then
estimated
the
number
of
businesses
(
or
firms)
affected.
Finally,
EPA
estimated
the
number
of
small
businesses
affected.

6­
4
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
6.2.2.1
Number
of
Establishments
Affected
The
first
step
in
the
small
entity
analysis
is
to
determine
the
number
of
establishments
affected.

EPA
developed
estimates
of
the
number
of
potentially
affected
establishments
in
Chapter
Two
(
see
Table
2­
14.
)
The
estimate
of
148,553
potentially
affected
businesses
was
obtained
after
subtracting
62,400
establishments
judged
to
be
primarily
engaged
in
remodeling
activities,
and
50,661
homebuilding
establishments
that
construct
fewer
than
four
homes
per
year
and
who
were
judged
unlikely
to
disturb
more
than
one
acre
of
land
on
a
regular
basis.
Table
2­
14
also
reflects
the
fact
that
EPA
distributed
establishments
in
the
land
development
industry
(
NAICS
2331)
among
the
four
building
construction
industries
(
NAICS
23321,
23322,
23331,
and
23332)
due
to
data
limitations
for
the
land
development
industry.

For
the
small
entity
analysis,
EPA
was
unable
to
include
all
of
the
establishments
potentially
affected
as
shown
in
Table
2­
14.
In
particular,
EPA
has
not
included
special
trades
(
NAICS
235)
in
its
small
entity
analysis
because
the
financial
data
upon
which
the
small
entity
analysis
is
based
is
not
available
for
these
industries.
EPA
does
not
believe,
however,
that
a
substantial
number
of
entities
in
these
industries
are
NPDES
storm
water
permittees
or
co­
permittees
and
would
therefore
not
be
subject
to
the
proposed
rule
requirements.

The
final
distribution
of
potentially
affected
establishments
used
in
the
small
entity
analysis
is
shown
in
Table
6­
2.
The
total
number
of
establishments
potentially
affected
by
the
proposed
rule
is
128,782
under
Option
1.
This
is
the
figure
upon
which
the
small
business
analysis
is
based.

6­
5
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
Table
6­
2.
Number
of
Affected
Establishments
in
the
Construction
and
Development
Industry
NAICS
Industry
Option
1
Option
2
Number
Percent
of
Total
Number
Percent
of
Total
23321
Single­
family
residential
building
construction
34,070
26.5%
21,362
18.7%

23322
Multi­
family
residential
building
construction
4,603
3.6%
2,699
2.4%

23331
Manufacturing
and
industrial
building
construction
7,742
6.0%
7,742
6.8%

23332
Commercial
and
institutional
building
construction
39,810
30.9%
39,810
34.9%

23411
Heavy
construction
42,557
33.0%
42,557
37.3%

Potentially
affected
establishments
128,782
67.0%
114,170
100.0%

Totals
may
not
add
due
to
rounding.
Source:
U.
S.
Census
Bureau
(
2000a)
and
EPA
estimates.
See
also
Chapter
Two,
Table
2­
14.

6.2.2.2
Number
of
Businesses
Affected
In
order
to
estimate
the
number
of
businesses
affected
by
the
proposed
rule,
EPA
first
examined
the
ratio
of
businesses
to
establishments
from
SBA
(
1998)
data.
5
Table
6­
3
shows
these
ratios.

5
For
clarification,
an
establishment
is
defined
as
 
a
relatively
permanent
office
or
other
place
of
business
where
the
usual
business
activities
related
to
construction
are
conducted
 
(
(
Census
2000)
.
A
business
(
or
firm)
refers
to
the
aggregation
of
all
establishments
owned
by
one
company;
therefore
one
business
may
consist
of
several
establishments.

6­
6
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
Table
6­
3.
Ratio
of
Businesses
to
Establishments
by
Employment
Size
Class
Employment
Class
23321
Single­
Family
Housing
Construction
23322
Multifamily
Housing
Construction
23331
Manufacturing
and
Industrial
Building
Construction
23332
Commercial
and
Institutional
Building
Construction
23411
Heavy
Construction
1
to
4
1.000
1.000
1.000
1.000
0.999
5
to
9
1.000
0.999
1.000
1.000
0.999
10
to
19
0.999
1.000
0.999
0.998
0.997
20
to
99
0.993
0.994
0.997
0.991
0.991
100
to
499
0.661
0.884
0.973
0.821
0.860
500+
0.203
0.540
0.558
0.327
0.215
Source:
SBA
(
1998)
.

As
seen,
the
ratio
of
businesses
to
establishments
is
almost
one­
to­
one
for
all
establishments
with
fewer
than
100
employees.
With
the
exception
of
NAICS
23331
(
manufacturing
and
industrial
construction)
,
the
ratio
of
businesses
to
establishments
is
significantly
lower
for
establishments
employing
100
or
more
workers.
Table
6­
4
applies
these
percentages
to
the
total
number
of
establishments
in
the
four
industries
to
estimate
the
number
of
businesses.
6
The
overall
ratio
of
businesses
to
establishments
for
each
industry
was
then
applied
to
the
number
of
potentially
affected
establishments
within
each
industry.
To
illustrate,
for
the
single­
family
residential
construction
industry,

the
estimate
of
potentially
affected
businesses
is
based
on
the
following
calculation:

(
adjusted
no.
of
affected
establishments)
*
(
total
businesses/
total
establishments)
=
affected
businesses
(
34,070)
*
(
138,732/
138,850)
=
34,041
potentially
affected
businesses
The
number
of
potentially
affected
businesses
was
calculated
in
the
same
manner
for
the
remaining
industries.

6
The
table
also
shows
average
revenues
per
establishment.
These
results
are
used
in
the
next
step
to
determine
the
number
of
small
businesses
affected.

6­
7
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
Table
6­
4.
Estimated
Number
of
Businesses
by
Employment
Class,
and
Revenues
per
Establishment
Employment
Class
Number
of
Establishments
Ratio
of
Businesses
to
Establishments
Estimated
Number
of
Businesses
Estimated
Number
of
Establishments
Owned
by
Multifacility
Businesses
Revenues
per
Establishment
(
x
$
1,000)

Single­
Family
Housing
Construction
(
NAICS
23321)

1
to
4
106,985
1.000
106,985
0
$
412
5
to
9
21,377
1.000
21,372
5
$
1,299
10
to
19
7,234
0.999
7,227
7
$
2,991
20
to
99
1
3,022
0.993
2,999
23
$
12,073
100
to
499
2
222
0.661
147
75
$
75,923
500+
3
10
0.203
2
8
$
174,764
Subtotal
138,850
0.999
138,732
118
$
1,760
Multifamily
Housing
Construction
(
NAICS
23322)

1
to
4
4,725
1.000
4,725
0
$
383
5
to
9
1,456
0.999
1,455
1
$
1,474
10
to
19
782
1.000
782
0
$
3,612
20
to
99
1
532
0.994
529
3
$
10,692
100
to
499
2
46
0.884
41
5
$
40,855
500+
3
3
0.540
2
1
$
122,949
Subtotal
7,544
0.999
7,534
10
$
1,070
Manufacturing
and
Industrial
Building
Construction
(
NAICS
23331)

1
to
4
3,136
1.000
3,136
0
$
459
5
to
9
1,666
1.000
1,666
0
$
1,529
10
to
19
1,261
0.999
1,260
1
$
2,926
20
to
99
1
991
0.997
988
3
$
10,891
100
to
499
2
195
0.973
190
5
$
46,414
500+
3
30
0.558
17
13
$
217,247
Subtotal
7,279
0.997
7,257
22
$
4,682
Commercial
and
Institutional
Building
Construction
(
NAICS
23332)

1
to
4
17,722
1.000
17,718
4
$
467
5
to
9
7,644
1.000
7,643
1
$
1,490
10
to
19
5,861
0.998
5,850
11
$
3,434
20
to
99
1
5,518
0.991
5,470
48
$
12,663
100
to
499
2
637
0.821
523
114
$
77,162
500+
3
48
0.327
16
32
$
342,102
Subtotal
37,430
0.994
37,220
210
$
437,317
Heavy
Construction
(
NAICS
23411)

1
to
4
4,154
0.9997
4,153
1
$
281
5
to
9
1,987
0.
.
9995
1,986
1
$
939
10
to
19
1,876
0.9966
1,870
6
$
1,998
20
to
99
1
2,683
0.9907
2,658
25
$
7,124
100
to
499
2
544
0.8601
468
76
$
35,823
500+
3
26
0.2153
6
20
$
118,810
Subtotal
11,270
0.9886
11,141
129
$
4,301
Source:
Census
(
2000)
;
SBA
(
1998)
.
1
Combined
data
from
Census
20
to
49
and
50
to
99
employment
classes.
2
Combined
data
from
Census
100
to
249
and
250
to
499
employment
classes.
3
Combined
data
from
all
Census
employment
classes
of
more
than
500
employees.

6­
8
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
6.2.2.3
Number
of
Small
Businesses
Affected
To
determine
the
number
of
potentially
affected
small
businesses,
the
number
of
potentially
affected
businesses
was
multiplied
by
the
ratio
of
small
businesses
to
total
businesses.
To
estimate
the
number
of
small
businesses,
EPA
examined
the
distribution
of
revenues
per
establishment
by
size
of
establishment
(
see
last
column
of
Table
6­
4)
.
This
review
concluded
that
average
revenues
for
establishments
below
100
employees
in
size
are
consistently
below
the
SBA
small
business
size
threshold
(
$
27.5
million
per
year)
while
average
revenues
for
establishments
above
100
employees
consistently
exceed
the
SBA
threshold.
7
EPA
thus
concluded
that
the
number
of
businesses
with
100
or
fewer
employees
would
be
a
good
proxy
for
the
number
of
businesses
that
fall
below
the
SBA
revenue
size
threshold.
Table
6­
5
shows
the
results
of
this
review.
EPA
estimates
there
are
95,753
potentially
affected
businesses
(
representing
98.6
percent
of
all
potentially
affected
businesses)
that
fall
below
the
SBA­
defined
revenue
threshold
and
that
therefore
may
be
considered
 
small
 
businesses.
.

7
EPA
notes
that
while
the
SBA
threshold
applies
to
businesses
not
establishments,
there
are
very
few
multi­
establishment
businesses
in
the
below
100­
employee
size
classes,
therefore
the
use
of
average
establishment
revenues
is
appropriate.

6­
9
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
Table
6­
5.
Estimated
Number
of
Small
Businesses
Potentially
Affected
by
the
Proposed
Rule.

NAICS
Potentially
Affected
Establishments
Potentially
Affected
Businesses
Potentially
Affected
Small
Businesses
Small
Businesses
as
a
Percent
of
Total
for
Individual
Industry
Number
Percent
of
total
233210:
Single­
family
housing
construction
34,070
34,041
34,004
35.5%
99.9%

233220:
Multifamily
housing
construction
4,603
4,597
4,571
4.8%
99.4%

233310:
Manufacturing
and
industrial
building
construction
7,742
7,719
7,498
7.8%
97.1%

233320:
Commercial
and
institutional
building
construction
39,810
39,587
39,013
40.7%
98.6%

23411
Heavy
construction
11,270
11,141
10,667
11.1%
95.7%

Total
97,495
97,085
95,753
100.0%
98.6%

Source:
EPA
estimates
based
on
methodologies
presented
in
this
chapter
and
in
Chapter
Four.

6.3
EPA
COMPLIANCE
WITH
RFA
REQUIREMENTS
6.3.1
Outreach
and
Small
Business
Advocacy
Review
In
accordance
with
section
609(
b)
of
the
RFA,
as
amended
by
SBREFA,
EPA
convened
a
Small
Business
Advocacy
Review
(
SBAR)
Panel
for
the
proposed
rule.
The
Panel
was
convened
on
July
16,

2001.
Panel
participants
included
representatives
from
EPA,
the
Office
of
Information
and
Regulatory
Affairs
within
the
Office
of
Management
and
Budget
(
OMB)
,
and
the
Office
of
Advocacy
of
the
Small
Business
Administration
(
SBA)
.
 
Small
Entity
Representatives
 
(
(
SERs)
,
who
advised
the
Panel,

included
small
homebuilders
and
commercial
builders.
Throughout
the
development
of
these
regulations,
EPA
conducted
outreach
to
small
businesses
in
the
C&
D
industries.
EPA
held
several
informational
public
meetings
in
1999
and
again
in
2001
to
provide
the
public
and
those
in
potentially
affected
C&
D
industries
to
learn
more
about
the
proposed
rule
and
to
voice
their
questions
and
concerns.

6­
10
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
In
addition,
several
half­
day
focus
group
sessions
were
conducted
with
members
of
the
National
Association
of
Home
Builders
(
NAHB)
in
early
2001.

Consistent
with
the
RFA/
SBREFA,
the
Panel
evaluated
the
assembled
materials
and
small
entity
comments
on
issues
related
to
the
elements
of
the
IRFA.
The
Panel
 
s
activities
and
recommendations
are
summarized
in
the
Final
Report
of
the
Small
Business
Advocacy
Review
Panel
on
EPA
 
s
Planned
Proposed
Rule
on
National
Pollutant
Discharge
Elimination
System
(
NPDES)
and
Effluent
Limitations
Guideline
(
ELG)
Regulations
for
Construction
and
Development
Activities
(
USEPA,
2001)
,
or
 
Panel
Report.
 
This
document
is
included
in
the
public
record.

6.3.2
EPA
 
s
Initial
Regulatory
Flexibility
Analysis
As
required
by
Section
603
of
the
RFA,
as
amended
by
SBREFA,
EPA
has
conducted
an
initial
regulatory
flexibility
analysis.
The
IRFA
includes
a
discussion
of
the
problems
the
proposed
rule
will
solve,
as
well
as
the
objectives
and
legal
basis
for
the
proposal.
The
IRFA
also
includes
a
description
and
estimate
of
the
following:

C
Number
of
small
businesses
that
will
be
affected;

C
The
reporting,
recordkeeping,
and
other
compliance
requirements
of
the
proposed
rule;

C
Any
Federal
rules
that
may
duplicate,
overlap,
or
conflict
with
the
proposed
rule;

C
Any
significant
regulatory
alternatives
to
the
rule
that
would
accomplish
the
stated
objectives
of
the
applicable
statutes
and
minimize
impacts
to
small
businesses.

This
section
addresses
each
of
these
requirements
of
the
IRFA
that
EPA
has
prepared
to
support
the
proposed
C&
D
regulations.

Section
607
of
the
RFA
further
notes
that
the
Agency
is
to
 
provide
either
a
quantifiable
or
numerical
description
of
the
effects
of
a
proposed
rule
or
alternatives
to
the
proposed
rule,
or
more
general
descriptive
statements
if
quantification
is
not
practicable
or
reliable.
 
For
this
rulemaking,
EPA
has
prepared
an
economic
analysis
of
the
impacts
to
small
C&
D
businesses.
This
analysis
is
provided
in
6­
11
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
Section
6.4.
Additional
information
and
the
detailed
results
of
this
analysis
are
presented
in
Section
6.4.2.

6.3.2.1
Reasons
EPA
is
Considering
the
Proposed
Rule
EPA
is
proposing
effluent
limitation
guidelines
(
ELG)
for
the
C&
D
industry
under
a
settlement
agreement
with
the
Natural
Resources
Defense
Council
(
NRDC)
.
The
ELG
is
an
effort
to
establish
performance
standards
for
construction
and
development
projects
during
active
and
post­
construction
phases.
This
rulemaking
is
being
proposed
under
Title
III
of
the
Clean
Water
Act
(
CWA)
,
and
was
outlined
in
the
Phase
II
NPDES
storm
water
Final
Rule
(
64
FR
68741)
as
the
next
step
in
the
development
of
the
framework
of
the
storm
water
program.
While
construction
activities
disturbing
five
acres
or
more
land
are
already
subject
to
NPDES
permits
and
the
requirements
set
forth
in
EPA
 
s
construction
general
permit
(
CGP)
,
these
permits
do
not
generally
contain
technology­
based
requirements
for
design,
inspection,
or
maintenance
of
erosion
and
sediment
control
(
ESC)
best
management
practices
(
BMPs)
.
The
current
regulations
require
permittees
to
develop
a
storm
water
pollution
prevention
plan
(
SWPPP)
and
in
that
plan
to
describe
any
ESCs
they
will
use.
The
existing
regulations
do
not
require
that
permittees
use
particular
ESCs;
actual
ESC
selection
and
design
is
the
responsibility
of
the
permittee
in
conformance
with
any
existing
state
and
local
requirements.
State
and
local
requirements
for
ESC
design,
inspection,
and
maintenance
criteria,
if
present,
vary
widely.
The
purpose
of
this
rule
is
 
to
establish
nation­
wide
criteria
to
support
builders
and
local
jurisdictions
in
appropriate
BMP
selection
 
(
64
FR
68741)
.

6.3.2.2
Objectives
and
Legal
Basis
for
the
Proposed
Rule
Construction
and
development
(
C&
D)
activity
affecting
water
quality
typically
involves
site
selection
and
planning,
and
land­
disturbing
tasks
during
construction
such
as
clearing,
excavating
and
grading.
Disturbed
soil,
if
not
managed
properly,
can
be
easily
washed
off­
site
during
storm
events.

Storm
water
discharges
generated
during
construction
activities
can
cause
an
array
of
physical,
chemical
and
biological
impacts.
Water
quality
impairment
may
result,
in
part,
because
a
number
of
pollutants
are
6­
12
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
preferentially
absorbed
onto
mineral
or
organic
particles
found
in
fine
sediment.
The
interconnected
process
of
erosion
(
detachment
of
the
soil
particles)
,
sediment
transport,
and
delivery
is
the
primary
pathway
for
introducing
pollutants
from
construction
sites
into
aquatic
systems.
A
primary
concern
at
most
construction
sites
is
the
erosion
and
transport
process
related
to
fine
sediment
because
rain
splash,

rills
(
small
channels
typically
less
than
one
foot
deep)
and
sheetwash
(
thin
sheets
of
water
flowing
across
a
surface)
encourage
the
detachment
and
transport
of
this
material
to
water
bodies.
Although
streams
and
rivers
naturally
carry
sediment
loads,
erosion
from
construction
sites
and
runoff
from
developed
areas
can
elevate
these
loads
to
levels
above
those
in
undisturbed
watersheds.

Existing
national
storm
water
regulations
require
construction
site
operators
to
outline
controls
to
manage
construction
site
runoff,
but
do
not
require
any
specific
level
of
control.
One
of
the
options
being
proposed
(
Option
2)
would
establish
effluent
limitation
guidelines
in
the
form
of
minimum
standards
for
design
and
implementation
of
erosion
and
sediment
controls
used
during
the
active
phase
of
construction.
This
approach
would
cover
sites
with
five
or
more
acres
of
disturbed
land,
and
would
establish
minimum
requirements
for
conducting
site
inspections
and
providing
certification
as
to
the
design
and
completion
of
various
aspects
of
those
controls.

EPA
acknowledges
that
many
State
and
local
governments
have
existing
standards
for
temporary
controls.
The
proposed
rule
is
intended
to
work
in
concert
with
existing
requirements
where
equivalent,

and
would
not
supercede
more
stringent
requirements.
In
addition,
EPA
is
proposing
two
alternatives
that
would
not
set
national
standards
for
control
of
storm
water
discharges
from
construction
sites
subject
to
permit
requirements
under
section
402
of
the
CWA.
Both
of
these
approaches
would
rely
instead
on
a
combination
of
existing
State
and
local
requirements
and
additional
requirements
based
on
the
best
professional
judgement
(
BPJ)
of
the
permitting
authority.
Under
one
of
these
alternatives
(
Option
1)
,
the
proposal
would
establish
minimum
requirements
for
conducting
site
inspections
and
providing
certification
as
to
design
and
completion
of
controls
required
by
the
permit
authority
in
its
NPDES
permit.
These
requirements
are
similar
to
the
inspection
and
certification
requirements
in
Option
2.

Existing
compliance
determination
practices
for
construction
site
storm
water
controls
rely
principally
on
site
inspections
by
local
governments,
however,
enforcement
efforts
are
reported
to
be
uneven
nationwide,
largely
due
to
limited
enforcement
resources
at
the
Federal,
State
and
local
levels.
The
6­
13
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
inspection
and
certification
requirements
in
today'
s
proposed
rule
could
strengthen
the
current
permit
program.

Under
another
alternative
(
Option
3)
,
no
new
requirements
would
be
established
under
this
option.
Both
the
control
requirements
and
the
certification
requirements
would
be
left
to
the
best
professional
judgement
of
the
permitting
authority
in
order
to
allow
them
to
be
better
tailored
to
local
conditions.
These
proposed
options
are
discussed
in
more
detail
in
sections
IX
and
X
of
today'
s
notice.

At
this
time,
EPA
is
co­
proposing
all
three
options
because
it
sees
advantages
to
each.

This
rulemaking
is
being
proposed
under
Title
III
of
the
Clean
Water
Act
(
CWA)
,
specifically
under
the
authorities
of
sections
301,
304,
306,
307,
308,
402
and
501
of
the
Clean
Water
Act.
Further
legal
basis
for
this
proposed
rule
may
be
found
in
33
U.
S.
C.
sections
1311,
1314,
1316,
1317,
1318,

1342
and
1361
and
under
authority
of
the
Pollution
Prevention
Act
of
1990,
42
U.
S.
C.
13101
et
seq.
,
Pub
L.
101­
508,
November
5,
1990.
Chapter
One
of
this
report
and
the
preamble
to
the
proposed
rule
contain
more
detailed
information
on
the
objectives
and
basis
for
this
proposed
rule.

6.3.2.3
Description
and
Estimate
of
Number
of
Small
Entities
Affected
As
presented
in
Table
6­
5,
EPA
estimates
that
there
are
about
97,085
potentially
affected
C&
D
businesses
nationwide
in
the
four
industries
discussed
in
this
chapter,
of
which
95,753
(
98.6
percent)
are
small
businesses.
8
Approximately
40
percent
of
the
small
businesses
are
in
the
commercial
and
institutional
building
construction
industry
and
35
percent
are
in
the
single­
family
residential
construction
industry.
Heavy
construction
accounts
for
11
percent
of
small
C&
D
businesses,

manufacturing
and
industrial
building
construction
accounts
for
8
percent,
and
multifamily
residential
construction
accounts
for
5
percent.

8
The
businesses
shown
in
Table
6­
5
excludes
those
representing
19,771
establishments
in
Special
Trades
Contracting
(
NAICS
235)
that
are
potentially
affected
by
the
proposed
rule
(
see
Table
2­
14)
,
but
were
not
analyzed
in
this
chapter
because
the
financial
data
upon
which
the
small
entity
analysis
is
based
is
not
available
for
these
industries.
EPA
does
not
believe,
however,
that
a
substantial
number
of
entities
in
these
industries
are
NPDES
storm
water
permittees
or
co­
permittees,
and
would
therefore
generally
not
be
subject
to
the
proposed
rule
requirements.

6­
14
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
6.3.2.4
Description
of
Proposed
Recordkeeping,
Reporting,
and
Other
Requirements
The
proposed
C&
D
regulations
contain
recordkeeping
and
reporting
requirements
for
entities
in
the
C&
D
industry.
In
Chapter
Five,
EPA
estimated
the
costs
associated
with
the
additional
requirements
imposed
on
C&
D
establishments
as
a
result
of
the
proposed
rule.
This
section
focuses
specifically
on
the
costs
and
burden
associated
with
recordkeeping,
reporting
and
related
requirements.

For
the
purpose
of
this
analysis,
 
burden
 
means
the
total
time,
,
effort,
or
financial
resources
expended
by
persons
to
generate,
maintain,
retain,
or
disclose
or
provide
information
to
or
for
a
federal
agency.
This
includes
the
time
needed
to
review
instructions;
develop,
acquire,
install,
and
utilize
technology
and
systems
for
the
purposes
of
collecting,
validating,
and
verifying
information,
processing
and
maintaining
information,
and
disclosing
and
providing
information;
adjust
existing
procedures
to
comply
with
any
previously
applicable
instructions
and
requirements;
train
personnel
to
be
able
to
respond
to
a
collection
of
information
request;
search
data
sources;
complete
and
review
the
collection
of
information;
and
transmit
or
otherwise
disclose
the
information.

EPA
estimated
that
states
would
incur
some
costs
related
to
implementation
of
the
proposed
rule.

Specifically,
general
permit
development
and
implementation
of
the
inspection
and
certification
provisions
are
estimated
to
require
approximately
200
labor
hours
per
state
during
the
first
three
years
of
program
implementation.
See
Chapter
Five,
Section
5.8
for
full
details.

EPA
analyzed
costs
to
government
units
under
the
assumption
that
the
majority
of
Phase
I
and
Phase
II
storm
water
NPDES
permit
programs
are
fully
implemented.
Any
new
regulatory
requirements
will
be
incremental
to
the
costs
of
these
programs.
The
analysis
in
Chapter
Five
concluded
that
once
Phase
I
and
Phase
II
are
fully
implemented
by
communities,
the
proposed
rule
will
not
add
any
additional
burden
to
government
units.

The
current
NPDES
storm
water
permitting
authority
defaults
to
the
state
level
except
where
places
are
large
enough
to
qualify
as
Phase
I
(
medium
and
large
MS4)
or
Phase
II
(
small
MS4)

communities.
Since
permitting
authority,
and
thus
permitting
costs,
will
affect
only
Phase
II
or
larger
6­
15
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
communities,
and
since
EPA
 
s
analysis
indicates
no
incremental
impacts
to
Phase
II
or
larger
communities,
EPA
does
not
expect
smaller
government
units
to
be
adversely
impacted
by
the
proposed
rule.
Therefore
no
additional
analysis
was
conducted
to
assess
the
impacts
of
the
proposed
rule
on
small
government
entities.

A
significant
new
requirement
for
construction
firms
contained
in
both
Option
1
and
Option
2
would
be
maintenance
of
a
site
log
book.
The
site
log
will
record
the
date
of
initial
groundbreaking
and
any
inspection
or
maintenance
activities
related
to
erosion
and
sediment
control.
The
availability
of
the
log
must
be
posted
on
the
site
and
the
log
must
be
made
available
to
government
inspectors
and
the
public.
This
is
a
record­
keeping
requirement
only
and
no
information
will
be
collected.
EPA
estimates
that
site
log
will
require
8.7
hours
per
year
for
each
construction
firm
respondent.
EPA
further
assumes
that
all
recordkeeping
tasks
will
be
performed
by
an
engineering
assistant.
The
fully
loaded
hourly
wage
for
the
engineering
assistant
labor
category
in
the
construction
industry,
based
on
data
from
the
U.
S.

Department
of
Labor,
Bureau
of
Labor
Statistics,
is
$
38.47
per
hour.
Thus,
the
8.7
hours
per
year
burden
implies
an
average
annual
cost
of
$
335
for
each
firm.
Since
there
are
an
estimated
95,753
small
firms
subject
to
Option
1,
the
annual
cost
of
the
site
log
requirement
is
$
32.07
million.
This
is
the
largest
portion
of
the
inspection
costs
discussed
in
Chapter
Five.
Since
Option
2
excludes
firms
disturbing
less
than
five
acres
each
year
from
the
site
log
requirement,
the
total
costs
of
this
requirement
to
small
business
will
be
reduced.

6.3.2.5
Identification
of
Relevant
Federal
Rules
That
May
Duplicate,
Overlap,
or
Conflict
with
the
Proposed
Regulations
EPA
has
analyzed
the
potential
impacts
of
the
proposed
rule
under
the
baseline
assumption
that
all
C&
D
activities
are
in
compliance
with
existing
federal
and
state
regulations
affecting
C&
D
operations,
including
Phase
I
and
future
Phase
II
NPDES
storm
water
regulations.
Neither
EPA
nor
the
Small
Business
Advocacy
Review
Panel
identified
any
federal
rules
that
duplicate
or
interfere
with
the
requirements
of
the
proposed
rule
(
USEPA,
2001)
.

6­
16
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
6.3.2.6
Significant
Regulatory
Alternatives
The
proposed
rule
retains
the
coverage
of
the
Phase
II
NPDES
storm
water
permitting
program,

which
excludes
construction
activities
that
disturb
less
than
one
acre
of
land.
EPA
believes
that
this
exclusion
alleviates
the
potential
compliance
burden
for
small­
scale
builders
who
operate
independently
and
who
work
on
very
few
(
and
relatively
small)
projects
in
a
given
year.
9
EPA
believes
that
larger
plans
of
development
and
individual
construction
projects
that
disturb
a
total
of
more
than
one
acre
are
more
likely
to
contribute
to
increased
storm
water
runoff
and
erosion
problems
than
activities
disturbing
less
than
one
acre.
In
addition,
activities
disturbing
less
than
one
acre
are
more
likely
to
be
dispersed,
thus
decreasing
the
concentration
of
adverse
effects.

Additionally,
under
Option
2
of
the
proposed
rule
construction
sites
disturbing
less
than
5
acres
would
be
excluded.
EPA
believes
that
a
substantial
share
of
activity
on
sites
between
one
and
five
acres
in
size
may
also
be
undertaken
by
small­
scale
builders.
This
broader
exclusion,
therefore,
would
potentially
reduce
compliance
burdens
for
more
small­
scale
builders
by
exempting
them
from
additional
requirements.

EPA
considered
additional
options
that
would,
for
example,
exempt
construction
activities
taking
place
on
sites
of
ten
acres
or
less.
EPA
was
unable,
however,
to
identify
data
to
suggest
that
exempting
sites
under
ten
acres
from
the
requirements
of
the
proposed
rule
would
produce
substantial
additional
relief
to
small
entities.
In
fact,
EPA
found
evidence
that
even
the
largest
home
builders
operate
on
sites
in
this
size
range
(
Otsuji,
2001)
.

Waivers
for
construction
activities
occurring
in
areas
with
low
erosion
potential
remain
in
place
from
the
Phase
II
NPDES
storm
water
Final
Rule.
Under
Phase
II
such
waivers
may
be
granted
where
little
or
no
rainfall
is
expected
during
the
period
of
construction.
Qualification
for
this
waiver
may
be
determined
using
the
tables
of
rainfall­
runoff
erosivity
(
R)
factors
published
for
each
region
of
the
U.
S.

by
the
Department
of
Agriculture
(
64
FR
68774)
.
In
addition,
EPA
has
taken
regional
climate
factors
into
account
throughout
the
development
of
this
proposed
regulation
and
has
built
a
sizeable
amount
of
9
Note
that
as
in
the
Phase
II
NPDES
storm
water
rule,
this
exclusion
does
not
apply
to
development
activities
disturbing
less
than
one
acre
that
are
part
of
a
larger
development
plan
(
64
FR
68772­
68773)
.

6­
17
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
flexibility
into
the
rule
to
allow
permittees
to
choose
appropriate
controls
based
on
their
particular
site
characteristics.

6.4
EPA
 
S
ANALYSIS
OF
SMALL
BUSINESS
IMPACTS
The
following
sections
describe
the
methodologies
and
results
for
the
economic
impact
analysis
of
the
proposed
rule
on
small
businesses
in
the
C&
D
industry.

6.4.1
Classification
of
Model
Facilities
for
Impact
Analysis
For
its
economic
impact
analysis,
EPA
used
model
facilities
based
on
Census
data,
however,

these
facilities
are
not
identical
to
the
1997
Census
of
Construction
data.
This
section
describes
how
EPA
applied
its
analysis
of
small
business­
owned
establishments
to
the
model
facilities
used
in
the
impact
analysis.

In
the
single­
family
and
multifamily
housing
construction
industries,
(
NAICS
233210
and
233220,
respectively)
,
EPA
used
multiple
model
facilities
based
on
the
number
of
housing
starts
performed
by
the
establishment
per
year
for
its
economic
impact
estimates.
EPA
compared
the
model
facility
data
by
starts
class
with
both
the
1997
Census
of
Construction
data
by
employment
class
and
the
SBA
size
standard
for
small
business
status.
Table
6­
6
presents
key
model
facility
data
by
starts
class.

6­
18
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
Table
6­
6.
Key
Model
Facility
Data
by
Housing
Starts
Classification
Category
Number
of
Units
Started
Average
Number
of
Employees
Average
Value
of
Construction
Work
(
$
1,000)

NAICS
233210
Single­
Family
Housing
Construction
1
to
4
2.5
$
492
5
to
9
3.3
$
1,089
10
to
24
4.3
$
1,987
25
to
99
8.6
$
4,923
100
to
499
32.1
$
24,031
500+
160.0
$
109,033
NAICS
233220
Multifamily
Housing
Construction
2
to
9
3.2
$
645
10
to
24
5.1
$
1,382
25
to
99
8.0
$
3,500
100
to
499
13.5
$
7,410
500+
64.7
$
43,844
Source:
EPA
estimates
based
on
Rappaport
and
Cole
(
2000)
.

Single­
family
housing
construction
establishments
with
100
to
499
starts
per
year
employ,
on
average,
32
workers
per
establishment
and
earn
$
24
million
in
revenues.
Establishments
with
fewer
starts
tend
to
employ
fewer
workers
and
have
lower
average
revenues.
Conversely,
establishments
with
more
than
500
starts
per
year
employ
on
average
160
workers
and
earn
revenues
in
excess
of
$
109
million
per
establishment.

Multifamily
housing
construction
establishments
with
100
to
499
starts
per
year
employ,
on
average,
13.5
workers
per
establishment
and
earn
$
7.4
million
in
revenues.
Establishments
with
more
than
500
starts
per
year
employ
on
average
65
workers
and
earn
revenues
of
$
44
million
per
establishment.
Although
average
employment
per
establishment
in
the
500+
start
class
does
not
exceed
100
workers,
employment
per
establishment
in
that
class
is
almost
five
times
larger
than
the
100
to
499
starts
class.

6­
19
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
The
natural
break
points
in
the
employment
and
revenue
per
establishment
data
by
housing
start
class
match
reasonably
well
with
those
from
the
1997
Census
of
Construction
data
described
in
Section
6.2.2.
Therefore,
for
the
purpose
of
this
analysis,
EPA
assumes
that
model
facilities
with
fewer
than
500
housing
starts
per
year
in
both
the
233210
and
233220
NAICS
codes
are
small
business­
owned
establishments,
and
model
facilities
in
the
500+
starts
class
represent
large
business­
owned
establishments.
Note
that
based
on
1997
Census
of
Construction
figures
by
employment
class,
EPA
estimated
99.8
percent
of
establishments
in
NAICS
233210
and
99.4
percent
of
establishments
in
NAICS
233220
overall
are
small
business­
owned.
Based
on
the
Census
Housing
Starts
Statistics
special
study,

EPA
estimated
that
99.7
percent
of
establishments
in
NAICS
233210
and
98.4
percent
of
establishments
in
NAICS
233220
overall
are
small
business­
owned.
10
To
estimate
the
number
of
small
business­
owned
facilities
affected
by
the
proposed
C&
D
effluent
guideline,
EPA
first
projected
impacts
for
each
model
facility
and
extrapolated
those
to
the
establishments
represented
by
the
model.
If
the
model
facility
has
fewer
than
500
starts
per
year,
then
all
impacts
to
establishments
represented
by
that
facility
are
incurred
by
small
businesses;
impacts
to
establishments
represented
by
the
model
facility
for
the
500+
starts
class
are
incurred
by
large
business­

owned
establishments.

In
the
manufacturing
and
industrial,
commercial
and
institutional,
and
heavy
construction
industries,
(
NAICS
codes
233310,
233320,
and
23411,
respectively)
,
a
single
model
facility
was
used
for
the
economic
impact
analysis.
Selection
of
the
model
facility
for
each
industry
was
based
on
median
revenue
by
employment
class.
Because
EPA
used
a
single
model
facility
in
each
of
these
industries,
it
is
not
appropriate
to
designate
the
model
facility
as
owned
by
a
small
or
large
business.
Therefore,
EPA
calculated
the
percent
of
establishments
that
are
small
business­
owned,
as
estimated
from
the
1997
Census
of
Construction
,
and
applied
that
percentage
to
all
impacts
to
estimate
small
business
impacts.

For
example,
approximately
97
percent
of
establishments
in
NAICS
233310
are
small
business­
owned.

10
Small
differences
arise
in
estimating
the
percentages
of
total
establishments
in
the
industry
that
are
small
business­
owned
because
of
differences
in
how
the
data
is
arranged.
SBA
sets
its
definition
of
 
small
 
by
firm
revenues.
However,
the
Census
data
available
to
EPA
is
arranged
by
employment
class,
not
revenues,
while
data
in
the
Census
special
study
used
to
develop
model
establishments
is
arranged
by
starts
class,
not
revenues
or
employment.
Thus
minor
discrepancies
in
percentages
that
are
insignificant
to
the
analysis
will
occur.

6­
20
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
If
100
establishments
in
that
NAICS
code
are
projected
to
incur
compliance
costs
exceeding
one
percent
of
revenues,
EPA
assumes
that
97
of
those
establishments
are
small
businesses.

6.4.2
Revenue
Test
Methodology
EPA
assessed
the
impacts
to
small
businesses
by
examining
the
ratio
of
estimated
compliance
costs
to
business
revenues.
Impacts
are
determined
by
the
number
and
percentage
of
businesses
incurring
costs
that
exceed
one
percent
and
three
percent
of
revenues.

EPA
 
s
primary
tool
for
projecting
revenue
test
impacts
is
the
model
facility.
For
each
model
facility,
it
is
straightforward
to
divide
estimated
business­
level
compliance
costs
by
model
facility
revenues.
However,
that
answers
only
part
of
the
question
concerning
the
impact
of
the
proposed
regulation
on
small
business
entities.
To
determine
the
number
and
percentage
of
businesses
exceeding
the
revenue
test
thresholds,
EPA
must
consider
not
only
the
model
facility,
but
the
businesses
represented
by
that
model
as
well.
The
model
facility
actually
represents
a
set
of
approximately
similar
businesses
(
e.
g.
,
similar
levels
of
employment
within
some
bounded
range)
with
revenues
that
form
a
statistical
distribution
around
the
model
facility
 
s
revenue
figure.
Some
businesses
in
this
statistical
distribution
will
have
revenues
below
those
of
the
model
business
while
others
will
have
revenues
above
those
of
the
model
business.
Therefore,
simply
examining
the
ratio
of
compliance
costs
to
revenues
for
the
model
business
is
insufficient.
If,
for
example,
the
model
facility
incurs
compliance
costs
that
are
less
than
one
percent
of
revenues,
a
conclusion
that
no
businesses
are
affected
by
the
regulation
is
unwarranted.
It
is
highly
likely
that
other
businesses
represented
by
the
model
have
lower
revenues
and
therefore
may
well
incur
costs
exceeding
one
percent
of
revenues.

To
address
this
issue,
EPA
developed
estimates
of
the
statistical
revenue
distribution
of
establishments
represented
by
each
model
facility.
11
EPA
then
used
those
distributions
to
estimate
the
number
and
percentage
of
small
business­
owned
establishments
in
each
industry
that
incur
compliance
costs
exceeding
one
and
three
percent
of
revenues.
EPA
used
model
facility
revenues
for
the
mean
of
11
As
described
in
Section
6.2.2
above,
EPA
determined
that
in
the
construction
industry,
the
small
business
is
essentially
identical
to
the
small
business­
owned
establishment.

6­
21
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
each
distribution,
but
had
no
direct
information
concerning
the
dispersion
of
establishment
income
around
each
model
facility.
EPA
therefore
developed
the
distributions
by
making
reasonable
assumptions
about
the
variance
and
shape
of
the
distribution.
In
order
to
deal
with
the
uncertainty
caused
by
the
lack
of
direct
evidence
about
the
shape
of
the
distribution,
EPA
used
two
different
assumptions
about
the
distribution
of
revenues
to
generate
a
range
of
impacts.

6.4.2.1
Development
of
Revenue
Distributions
The
two
curves
in
Figure
6­
1
represent
the
cumulative
distribution
functions
for
two
different
sets
of
assumptions
concerning
the
distribution
of
establishment
income
around
a
hypothetical
model
facility
mean
of
$
1.0
million
in
annual
revenues.
The
cumulative
distribution
function
is
used
to
determine
the
probability
y
that
a
random
variable
x
is
less
than
or
equal
to
some
specified
value.
It
is
appropriate
to
use
the
cumulative
distribution
function
for
this
application
because
EPA
is
concerned
with
the
probability
that
an
establishment
earns
less
than
some
specified
level
of
revenues.
For
example,

suppose
estimated
establishment
compliance
costs
for
this
model
facility
class
are
equal
to
$
15,000.
Any
establishment
in
this
model
facility
class
that
earns
revenues
less
than
$
1.5
million
will
incur
compliance
costs
that
exceed
one
percent
of
revenues.
Thus,
EPA
would
use
the
cumulative
distribution
function
to
estimate
the
probability
that
a
facility
earns
revenues
of
$
1.5
million
or
less.

6­
22
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
Figure
6­
1
Baseline
Distribution
Functions
for
Facility
Revenues
0.00
0.25
0.50
0.75
1.00
$
0
$
1,000
$
2,000
$
3,000
$
4,000
Revenues
(
x
$
1,000)
Probability
Unit
Normal
Lognormal
Critical
Value
As
a
starting
point
for
its
analysis,
EPA
examined
the
implications
of
assuming
that
income
is
normally
distributed
and
has
a
standard
deviation
equal
to
the
mean.
That
is,
the
coefficient
of
variation
(
standard
deviation
divided
by
mean)
for
this
distribution
is
equal
to
one.
In
Figure
6­
1,
this
is
represented
by
the
curve
labeled
 
unit
normal.
 
An
implication
of
the
unit
normal
distribution
for
this
analysis
is
that
some
establishments
are
projected
to
earn
negative
revenues.
This
can
be
observed
by
examining
the
y
axis;
the
unit
normal
distribution
assumption
results
in
about
a
15
percent
probability
of
an
establishment
earning
negative
revenues.
While
negative
income
(
e.
g.
,
net
income,
cash
flow)
is
both
possible
and
plausible
for
a
business
establishment,
negative
revenue
is
not.
12
12
EPA
examined
an
alternative
assumption
that
income
is
normally
distributed,
but
with
standard
deviation
such
that
there
was
zero
probability
of
an
establishment
earning
negative
revenues.
This
adjustment
results
in
a
coefficient
of
variation
equal
to
about
0.29.
EPA
determined
that
this
was
probably
not
a
reasonable
distribution
for
use
in
this
analysis
because
the
probability
of
an
establishment
earning
low
revenues
is
quite
small.
For
example,
using
the
hypothetical
mean
revenues
of
$
1
million,
the
probability
of
an
establishment
earning
revenues
less
than
$
500,000
is
only
about
5
percent;
the
probability
of
an
establishment
earning
revenues
between
$
500,000
and
$
1.0
million
is
about
45
percent.

6­
23
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
EPA
then
examined
the
implications
of
using
a
lognormal
distribution.
EPA
estimated
the
mean
and
standard
deviation
for
the
lognormal
distribution
through
a
standard
transformation
of
the
mean
and
standard
deviation
of
the
unit
normal
distribution.
Using
this
transformation,
the
lognormal
distribution
can
be
interpreted
as
having
the
same
mean
and
standard
deviation
as
the
equivalent
unit
normal
distribution,
but
a
skewed
distribution
(
unlike
the
normal
distribution,
which
is
symmetric)
.
In
Figure
6­

1,
for
example,
the
probability
of
establishment
revenues
less
than
or
equal
to
$
1.0
million
is
50
percent
under
the
unit
normal
distribution
assumption,
as
is
the
probability
of
revenues
greater
than
$
1.0
million.

Under
the
lognormal
distribution
assumption,
about
66
percent
of
establishments
have
income
less
than
or
equal
to
$
1.0
million,
and
about
34
percent
have
income
greater
than
$
1.0
million.

The
distribution
of
establishment
revenues
may
be
skewed
because
it
is
probable
 
but
infrequent
 
that
some
establishments
in
any
model
class
will
perform
extremely
well
and
earn
very
high
revenues
relative
to
other
establishments;
there
is
no
inherent
limit
to
the
revenues
such
an
establishment
might
earn.
Conversely,
there
is
a
limit
to
the
minimum
revenues
even
the
poorest
performing
establishments
will
earn;
poor
performers
cannot
earn
less
than
zero
revenues.
Such
a
distribution
would
tend
to
be
skewed
as
is
the
lognormal
distribution
in
Figure
6­
1.

6.4.2.2
Application
of
Revenue
Distributions
to
Estimating
Small
Business
Impacts
Given
the
revenue
distributions
developed
in
the
preceding
section,
EPA
applied
the
distributions
to
the
problem
of
estimating
revenue
test
impacts
as
follows.
First,
EPA
used
revenues
for
each
model
facility
from
the
four
major
construction
industries
(
single­
family,
multifamily,

manufacturing
and
industrial,
commercial
and
institutional)
as
the
mean
of
the
distribution
for
each
model
class.
EPA
then
set
the
standard
deviation
for
each
model
class
 
distribution
equal
to
its
mean.
.

With
mean,
standard
deviation,
and
two
alternative
assumptions
concerning
the
shape
of
the
distribution
6­
24
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
(
normal
or
lognormal)
,
EPA
calculated
the
probability
that
revenues
are
less
than
or
equal
to
any
given
value
for
each
model
class.
13
After
estimating
the
compliance
costs
per
establishment
for
each
option,
EPA
calculated
the
level
of
revenues
at
which
the
estimated
compliance
costs
would
exactly
equal
one
percent
and
three
percent
of
revenues.
EPA
then
used
its
two
distributions
to
calculate
the
probability
that
establishments
have
revenues
less
than
or
equal
to
these
specified
levels.
These
probabilities
provide
the
range
for
the
percentage
of
establishments
projected
to
incur
compliance
costs
exceeding
the
one
percent
and
three
percent
thresholds.
Multiplying
these
probabilities
by
the
number
of
establishments
in
the
model
class
provides
the
range
for
the
number
of
establishments
projected
to
incur
compliance
costs
exceeding
the
one
percent
and
three
percent
thresholds.
Note
that
EPA
chose
to
truncate
the
unit
normal
distribution
at
zero
revenues;
EPA
calculated
the
probability
that
establishments
earn
revenues
equal
to
the
specified
one
or
three
percent
threshold
for
incurring
impacts.
This
is
because
analytically
the
region
of
the
distribution
showing
some
probability
of
negative
revenues
cannot
be
appropriately
evaluated.

This
process
is
illustrated
in
Figure
6­
1.
The
hypothetical
model
establishment
earns
$
1
million,

the
mean
for
each
distribution.
If
EPA
estimates
annual
compliance
costs
of
$
7,500
will
be
incurred
by
this
business,
then
any
business
in
this
model
class
earning
less
than
$
750,000
will
incur
compliance
costs
exceeding
one
percent
of
revenues,
and
any
business
earning
less
than
$
22,500
will
incur
compliance
costs
exceeding
three
percent
of
revenues.
The
 
critical
value
 
in
Figure
6­
­
1
represents
the
one
percent
threshold
(
i.
e.
,
revenues
of
$
750,000)
.
Based
on
the
normal
distribution,
EPA
would
project
that
22
percent
of
establishments
incur
costs
exceeding
the
one
percent
threshold
(
i.
e.
,
the
probability
of
revenues
less
than
$
750,000
is
equal
to
0.38,
while
the
probability
of
revenues
less
than
$
0
is
equal
to
0.16,
thus,
the
net
probability
equals
0.22)
.
Based
on
the
lognormal
distribution,
EPA
would
project
that
54
percent
of
establishments
incur
costs
exceeding
the
same
threshold.
These
provide
the
lower
and
upper
bounds
for
EPA
 
s
impacts
estimates.

13
For
calculation
purposes,
EPA
used
the
@
NORMAL
and
@
LOGNORMDIST
functions
in
the
Lotus
spreadsheet
program.

6­
25
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
6.4.3
Small
Business
Impact
Analysis
Results
Tables
6­
7a
and
6­
7b
present
the
range
of
establishments
projected
to
incur
compliance
costs
exceeding
one
percent
and
three
percent
of
revenues,
respectively,
for
each
proposed
ESC
option
under
a
zero
percent
cost
pass
through
assumption.
Tables
6­
7c
and
6­
7d
present
the
same
results
under
an
estimated
cost
pass
through
assumption.
In
each
table,
the
 
A
 
denotes
the
results
obtained
assuming
a
normal
distribution
and
the
 
B
 
indicates
the
results
obtained
using
the
lognormal
distribution,
,
as
discussed
in
Section
6.4.2.

The
number
of
small
business­
owned
establishments
incurring
compliance
costs
exceeding
the
revenue
threshold
is
less
than
one
percent
for
all
options
and
project
types
under
the
zero
CPT
assumption.
Impacts
under
the
estimated
CPT
assumption
are
even
smaller.
Under
the
zero
CPT
scenario,
the
number
of
small
businesses
with
costs
exceeding
one
percent
of
revenues
ranges
from
a
low
of
0
to
126
under
Option
1
and
from
a
low
of
104
to
a
high
of
627
under
Option
2
(
Table
6­
7a)
.
The
number
of
businesses
with
costs
exceeding
three
percent
of
revenues
ranges
from
a
low
of
0
to
a
high
of
42
under
Option
1
and
from
a
low
of
0
to
a
high
of
205
under
Option
2
(
Table
6­
7b)
.

Under
the
estimated
CPT
scenario,
the
number
of
small
businesses
with
costs
exceeding
one
percent
of
revenues
ranges
from
a
low
of
0
to
15
under
Option
1
and
from
a
low
of
0
to
a
high
of
70
under
Option
2
(
Table
6­
7c)
.
The
number
of
businesses
with
costs
exceeding
three
percent
of
revenues
ranges
from
a
low
of
0
to
a
high
of
5
under
Option
1
and
from
a
low
of
0
to
a
high
of
24
under
Option
2
(
Table
6­
7d)
.

6­
26
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
Table
6­
7a.
Estimated
Number
of
Small
Business­
Owned
Establishments
With
Compliance
Costs
Exceeding
1
Percent
of
Revenues
Zero
Percent
Cost
Pass
Through
Option
Single­
family
Multifamily
Commercial
Number
Pct.
of
Small
Businesses
Number
Pct.
of
Small
Businesses
Number
Pct.
of
Small
Businesses
Low
High
Low
High
Low
High
Low
High
Low
High
Low
High
1
0
47
0.000%
0.138%
0
5
0.000%
0.110%
0
62
0.000%
0.159%

2
40
140
0.118%
0.412%
8
18
0.175%
0.395%
18
234
0.046%
0.599%

3
0
0
0.000%
0.000%
0
0
0.000%
0.000%
0
0
0.000%
0.000%

Option
Industrial
Heavy
TOTAL
Number
Pct.
of
Small
Businesses
Number
Pct.
of
Small
Businesses
Number
Pct.
of
Small
Businesses
Low
High
Low
High
Low
High
Low
High
Low
High
Low
High
1
0
12
0.000%
0.160%
0
0
0.000%
0.000%
0
126
0.000%
0.000%

2
2
36
0.270%
0.480%
36
199
1.863%
0.337%
104
627
0.109%
0.109%

3
0
0
0.000%
0.000%
0
0
0.000%
0.000%
0
0
0.000%
0.000%

Source:
EPA
estimates
based
on
methodologies
presented
in
this
chapter
and
in
Chapter
Four.

6­
27
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
Table
6­
7b.
Estimated
Number
of
Small
Business­
Owned
Establishments
With
Compliance
Costs
Exceeding
3
Percent
of
Revenues
Zero
Percent
Cost
Pass
Through
Option
Single­
family
Multifamily
Commercial
Number
Pct.
of
Small
Businesses
Number
Pct.
of
Small
Businesses
Number
Pct.
of
Small
Businesses
Low
High
Low
High
Low
High
Low
High
Low
High
Low
High
1
0
15
0.000%
0.044%
0
2
0.000%
0.044%
0
21
0.000%
0.054%

2
0
45
0.000%
0.133%
0
6
0.000%
0.132%
0
77
0.000%
0.197%

3
0
0
0.000%
0.000%
0
0
0.000%
0.000%
0
0
0.000%
0.000%

Option
Industrial
Heavy
TOTAL
Number
Pct.
of
Small
Businesses
Number
Pct.
of
Small
Businesses
Number
Pct.
of
Small
Businesses
Low
High
Low
High
Low
High
Low
High
Low
High
Low
High
1
0
4
0.000%
0.053%
0
0
0.000%
0.000%
0
42
0.000%
0.044%

2
0
12
0.000%
0.160%
0
65
0.000%
0.607%
0
205
0.000%
0.214%

3
0
0
0.000%
0.000%
0
0
0.000%
0.000%
0
0
0.000%
0.000%

Source:
EPA
estimates
based
on
methodologies
presented
in
this
chapter
and
in
Chapter
Four.

6­
28
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
Table
6­
7c.
Estimated
Number
of
Small
Business­
Owned
Establishments
With
Compliance
Costs
Exceeding
1
Percent
of
Revenues
Estimated
Cost
Pass
Through
Option
Single­
family
Multifamily
Commercial
Number
Pct.
of
Small
Businesses
Number
Pct.
of
Small
Businesses
Number
Pct.
of
Small
Businesses
Low
High
Low
High
Low
High
Low
High
Low
High
Low
High
1
0
7
0.000%
0.021%
0
0
0.000%
0.000%
0
6
0.000%
0.015%

2
0
20
0.000%
0.059%
0
1
0.000%
0.022%
0
24
0.000%
0.061%

3
0
0
0.000%
0.000%
0
0
0.000%
0.000%
0
0
0.000%
0.000%

Option
Industrial
Heavy
TOTAL
Number
Pct.
of
Small
Businesses
Number
Pct.
of
Small
Businesses
Number
Pct.
of
Small
Businesses
Low
High
Low
High
Low
High
Low
High
Low
High
Low
High
1
0
2
0.000%
0.027%
0
0
0.000%
0.000%
0
15
0.000%
0.016%

2
0
6
0.000%
0.080%
0
19
0.000%
0.178%
0
70
0.000%
0.073%

3
0
0
0.000%
0.000%
0
0
0.000%
0.000%
0
0
0.000%
0.000%

Source:
EPA
estimates
based
on
methodologies
presented
in
this
chapter
and
in
Chapter
Four.

6­
29
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
Table
6­
7d.
Estimated
Number
of
Small
Business­
Owned
Establishments
With
Compliance
Costs
Exceeding
3
Percent
of
Revenues
Estimated
Cost
Pass
Through
Option
Single­
family
Multifamily
Commercial
Number
Pct.
of
Small
Businesses
Number
Pct.
of
Small
Businesses
Number
Pct.
of
Small
Businesses
Low
High
Low
High
Low
High
Low
High
Low
High
Low
High
1
0
2
0.000%
0.006%
0
0
0.000%
0.000%
0
2
0.000%
0.005%

2
0
7
0.000%
0.021%
0
0
0.000%
0.000%
0
8
0.000%
0.020%

3
0
0
0.000%
0.000%
0
0
0.000%
0.000%
0
0
0.000%
0.000%

Option
Industrial
Heavy
TOTAL
Number
Pct.
of
Small
Businesses
Number
Pct.
of
Small
Businesses
Number
Pct.
of
Small
Businesses
Low
High
Low
High
Low
High
Low
High
Low
High
Low
High
1
0
1
0.000%
0.013%
0
0
0.000%
0.000%
0
5
0.000%
0.005%

2
0
2
0.000%
0.027%
0
7
0.000%
0.065%
0
24
0.000%
0.025%

3
0
0
0.000%
0.000%
0
0
0.000%
0.000%
0
0
0.000%
0.000%

Source:
EPA
estimates
.

6­
30
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
6.5
REFERENCES
Otsuji,
2001.
Personal
communication
between
Patrick
Otsuji,
California
State
Water
Resources
Control
Board,
Division
of
Water
Quality,
Storm
Water
Section,
and
Dina
Metivier
of
Eastern
Research
Group,
Lexington,
MA.
April
2001.

Rappaport
B.
A.
,
T.
A.
Cole.
(
U.
S.
Census
Bureau,
Manufacturing
and
Construction
Division)
.
2000.
Construction
Sector
Special
Study:
Housing
Starts
Statistics­
­
A
Profile
of
the
Homebuilding
Industry.

SBA.
1998.
Statistics
of
U.
S.
Businesses:
Firm
Size
Data.
U.
S.
Small
Business
Administration,
Office
of
Advocacy.
Available
at:
http:
/
/
www.
sba.
gov/
advo/
stats/
data.
html.

U.
S.
Census
Bureau.
2000.
1997
Economic
Census:
Construction,
United
States.
Various
Reports.
Available
at:
http:
/
/
www.
census.
gov/
epcd/
ec97/
us/
US000_
23.
HTM.

U.
S.
EPA.
2001.
 
Final
Report
of
the
Small
Business
Advocacy
Review
Panel
on
EPA
 
s
Planned
Proposed
Rule
on
National
Pollutant
Discharge
Elimination
System
(
NPDES)
and
Effluent
Limitations
Guideline
(
ELG)
Regulations
for
Construction
and
Development
Activities.
 
U.
S.
Environmental
Protection
Agency.

U.
S.
EPA.
1999.
Revised
Interim
Guidance
for
EPA
Rulewriters:
Regulatory
Flexibility
Act
as
Amended
by
the
Small
Business
Regulatory
Enforcement
Fairness
Act.
March
29.
http:
/
/
www.
epa/
gov/
sbrefa/
documents/
igui99.
pdf.

U.
S.
GPO
(
U.
S.
Government
Printing
Office)
.
2000.
Small
Business
Size
Regulations;
Size
Standards
and
the
North
American
Industry
Classification
System;
Correction.
13
CFR
Part
121.
Washington,
DC:
Small
Business
Administration.
Federal
Register.
65(
172)
:
53533­
53558.
September
5.
http:
/
/
www.
sba.
gov/
library/
lawroom.
html
6­
31
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
CHAPTER
SEVEN
BENEFITS
METHODOLOGY
Previous
chapters
have
considered
the
costs
of
implementing
the
proposed
regulations
and
their
effect
on
the
industry,
markets,
and
economy.
Those
chapters
discussed
the
negative
impact
of
the
regulation
on
the
national
economy
but
the
purpose
of
the
regulation
is
to
benefit
the
nation
by
improving
water
quality
and
the
environment.
These
benefits
can
be
measured
in
economic
terms
and
balanced
against
the
costs
of
implementing
the
proposed
rule.
This
chapter
reviews
previous
benefits
assessments
for
similar
regulations
to
develop
a
methodology
for
measuring
the
benefits
of
the
proposed
construction
and
development
regulation.

7.1
PREVIOUS
APPROACHES
TO
BENEFITS
ASSESSMENT
Two
basic
approaches
are
used
to
measure
the
economic
benefits
of
a
policy
change.
In
the
 
top­

down
 
approach,
,
the
analyst
defines
the
total
benefits
of
an
improvement
(
or
avoidance
of
degradation)

brought
about
by
some
policy
action
or
combination
of
actions,
and
posits
a
means
of
scaling
the
benefit
to
the
size
and
scope
of
the
action.
The
overall
benefits
of
the
proposed
action
can
then
be
calculated.

The
alternative,
 
bottom­
up
 
approach
enumerates
the
pathways
through
which
society
derives
value
from
the
environmental
consequences
of
the
proposed
action
and
estimates
that
value.
Reducing
sediment
runoff,
for
example,
reduces
the
potential
need
to
dredge
navigation
channels.
A
bottom­
up
approach
makes
the
connections
from
changes
at
the
sediment
source
to
deposition
in
the
harbor
to
the
savings
to
society
from
reduced
dredging
costs.
The
following
sections
establish
a
framework
for
development
of
bottom­
up
methods
to
estimate
benefits
of
the
proposed
construction
and
development
rule.

A
prominent
study
of
the
benefits
of
reducing
sediment
in
waterways
is
Ribaudo
 
s
Water
Quality
Benefits
from
the
Conservation
Reserve
Program
(
Ribaudo,
1989)
.
For
benefit
categories
where
there
is
sufficient
information,
Ribaudo
carefully
links
soil
loss
to
water
quality
measures
and
benefit
values.
For
other
categories,
where
he
has
estimates
of
total
damage
costs,
he
assumes
that
reductions
in
sediment
discharge
will
lead
linearly
to
similar
reductions
in
damage
costs.
Fox,
et
al.
(
1995)
suggest
that
the
relationship
between
sediment
loading
and
water
quality
is
not
linear
but
S­
shaped.
At
high
sediment
7­
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
loadings,
incremental
reductions
in
sediment
discharge
may
have
essentially
no
effect
on
water
quality.

At
very
low
loadings,
incremental
reductions
may
actually
be
harmful
for
some
purposes.
Some
fish,
for
example,
prefer
some
sediment
in
the
water
column.
The
linearity
assumption
presumes
that
starting
sediment
loads
are
in
the
middle
section
of
the
S­
curve.
This
may
or
may
not
be
valid
for
a
particular
location
and
benefit
category
but
is
probably
a
reasonable
working
assumption.

In
maintaining
the
connection
from
physical
effects
of
the
policy
to
changes
in
welfare,
bottom­

up
approaches
offer
the
opportunity
to
assess
different
policy
options,
if
they
can
be
well­
described
and
have
discernible
effects.
The
connections,
however,
are
only
as
good
as
the
research
upon
which
they
are
based.
Poor
connections
may
be
bridged
with
reasonable
assumptions.
However,
weakness
at
any
level
compromises
the
credibility
of
the
results.

7.2
BENEFITS
CATEGORIES
CONSIDERED
The
Environmental
Assessment
for
the
proposed
rule
(
EPA
2002b)
accomplishes
the
first
two
or
three
steps
of
Ribaudo
 
s
process.
The
assessment
estimates
the
sediment
loads
avoided
by
implementation
of
the
proposed
regulation.
Sediment
load
can
be
linked
to
services
society
values
and
therefore
to
benefit
categories.

EPA
used
a
model
watershed
approach
to
estimate
the
impacts
of
development
on
water
quality.

Several
studies
in
Maryland
and
Pennsylvania
provided
the
basic
reference
information
for
what
occurs
in
a
watershed
as
the
landscape
is
developed.
Attention
focused
on
increased
sediment
loads
from
construction
sites.
These
case
studies
were
then
generalized
using
appropriate
adaptations
to
different
weather,
slope,
and
soil
conditions
in
different
regions
of
the
country.
Table
7­
1
summarizes
the
categories
of
information
developed
in
the
baseline
environmental
assessment
and
the
categories
of
benefits
which
they
were
used
to
estimate.

7­
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
Table
7­
1.
Environmental
Measures
from
the
Baseline
Environmental
Assessment
Environmental
Effect
Units
Benefit
Category
Settleable
Solids
Total
tons
per
Year
Dredging
Turbidity
Producing
Solids
Total
tons
per
Year
Treatment/
Dredging
The
theoretically
correct
benefit
measure
is
the
change
in
producer
and
consumer
surplus
ensuing
from
a
change
in
environmental
quality.
As
most
environmental
changes
entail
non­
market
goods,
such
as
clean
air
and
water,
demand
functions
cannot
be
readily
estimated.
Economists
instead
use
the
fact
that
environmental
externalities
impose
costs
on
the
public
to
estimate
benefits.
Most
benefit
assessments
in
the
soil
conservation
context
use
the
costs
of
avoiding
the
consequences
of
the
environmental
harm
as
a
proxy
for
the
correct
benefit
measures.
It
can
be
shown
that
averting
costs
are
a
lower
bound
on
the
correct
welfare
measures
(
Laughland,
et
al.
,
1996)
.
Whether
averting
costs
are
a
near
or
distant
lower
bound
depends
on
how
closely
the
product
of
the
averting
process
substitutes
for
the
actual
environmental
good.
Most
of
the
studies
cited
below
rely
on
avoided
cost
measures
which
should
be
considered
a
lower
bound
benefit
estimate.

Although
benefits
are
measured
in
terms
of
avoided
costs,
whether
those
costs
are
actually
incurred
or
not
is
largely
irrelevant.
The
measures
indicate
society
 
s
willingness
to
pay
for
the
environmental
change
or
the
utility
lost
due
to
the
change.
If
a
reservoir
fills
with
sediment,
for
example,

the
community
has
lost
water
storage
capacity.
Whether
or
not
it
chooses
to
replace
the
lost
capacity
depends
on
budget
constraints
and
other
priorities.
Nevertheless,
the
community
has
lost
some
of
the
utility
of
the
resource.
If
it
is
not
replaced,
the
loss
of
utility
may
be
exacted
from
the
community
in
other
ways
such
as
increased
flood
damage
or
water
shortages.
Thus,
the
avoided
costs
should
be
viewed
as
the
opportunity
cost
of
failing
to
control
sedimentation
rather
than
as
a
budgetary
saving
for
the
responsible
agency.

The
following
sections
review
benefit
categories
suggested
for
this
analysis
and
used
in
other
assessments.
For
each
category
we
discuss
the
methods,
units,
and
results
of
prior
studies
and
EPA
assessments.
We
also
describe
the
methods
used
to
assess
the
benefits
of
the
proposed
ESC
controls
for
each
category.

7­
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
7.2.1
Decreased
Erosion
and
Sediment
Generation
Faster
run
off
from
construction
sites
and
impervious
surfaces
has
ill
effects
on
stream
sediment
and
structure
both
upstream
and
downstream
in
the
watershed.
Upstream,
faster
run
off
cuts
into
streambanks
and
adds
to
the
sediment
load.
Downstream,
additional
sediment
settles
out
when
flows
slow
or
reach
larger
water
bodies.
Some
of
the
sediment
is
suspended
degrading
water
quality.
The
benefits
of
reducing
suspended
sediment
are
discussed
in
Section
7.2.2.
In
this
section
we
discuss
the
benefits
of
reducing
larger
sediment
particles
which
contribute
to
sedimentation
of
water
bodies.

7.2.1.1
Water
Storage
Capacity
People
impound
water
for
many
reasons.
Reservoirs
supply
municipal
water
systems
and
mitigate
the
rising
waters
of
floods.
Flow
control
structures
on
large
rivers
enhance
navigation.
When
any
of
these
impoundments
fill
with
sediment,
they
are
less
capable
of
fulfilling
their
purpose.
Ribaudo
(
1989)
cited
an
estimate
by
Crowder
(
1987)
that
820,000
acre­
feet
of
water
storage
capacity
are
lost
to
anthropogenic
sources
annually.
Thus,
there
is
a
benefit
in
reducing
the
amount
of
sediment
that
flows
into
these
impoundments.
Ribaudo
estimated
the
benefits
as
the
costs
of
constructing
replacement
reservoirs
and
assumed
that
a
one
percent
reduction
in
sediment
discharge
would
result
in
one
percent
lower
replacement
costs.

An
alternative
approach
would
estimate
the
connection
from
stream
bank
and
overland
erosion
to
sediment
movement
to
reservoirs
to
the
need
to
maintain
water
storage
capacity.
The
Environmental
Assessment
estimates
the
total
tons
of
sediment
moved
from
stream
bank
and
overland
erosion.
This
total
volume
affects
both
water
storage
capacity
in
reservoirs
and
the
need
for
dredging
of
navigational
channels.
The
estimate
of
total
sediment
volume
can
be
allocated
to
these
two
categories
as
well
as
to
other
fates,
such
as
redeposition
along
watercourses.
For
example,
the
regional
capacity
of
reservoirs
compared
to
the
total
capacity
of
water
bodies
indicates
the
proportion
of
sediments
settling
in
lakes
that
would
be
subject
to
dredging.
Similarly,
the
number
or
area
of
navigational
channels
maintained
in
the
region
compared
to
natural
outlets
could
indicate
the
proportion
of
sediment
that
would
need
to
be
removed
from
channels.
Given
the
animus
against
new
water
projects
in
the
current
policy
climate,

7­
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
construction
of
replacement
water
storage
capacity
is
unlikely
so
all
benefits
from
sediment
reduction
in
this
category
are
valued
at
the
average
cost
of
dredging.

Table
7­
2
illustrates
such
an
application
using
the
stream
bank
erosion
figures
from
the
Environmental
Assessment.
The
U.
S.
Army
Corps
of
Engineers
 
(
(
USACE)
National
Inventory
of
Dams
indicates
that
the
surface
area
of
reservoirs
behind
dams
represent
35.2
percent
of
the
water
area
of
the
nation
(
USACE
2001)
.
EPA
adopted
this
percentage
as
an
estimate
of
the
proportion
of
sediment
generated
from
construction
sites
that
would
reach
constructed
water
bodies.
The
tonnage
deposited
is
converted
to
cubic
yards
based
on
1.82
cubic
yards
per
ton
(
Sohngren
and
Rausch,
1998a)
.
Sohngren
and
Rausch
(
1998a)
estimate
the
variable
costs
of
dredging
as
$
2.10
per
cubic
yard
which
is
in
the
same
range
as
USACE
estimates.
As
discussed
in
Section
7.2,
the
avoided
costs
should
be
viewed
as
the
opportunity
cost
of
failing
to
control
sedimentation
rather
than
as
a
cost
saved
by
reducing
the
volume
to
be
dredged.
Whether
the
dam
owner
chooses
to
remove
the
sediment
or
not
is
irrelevant.
Sedimentation
reduces
the
social
utility
of
the
resource.
Multiplying
these
factors
together
yields
an
estimate
of
the
benefits
of
reduced
sedimentation.

Table
7­
2.
Sample
Calculation
of
Avoided
Loss
of
Water
Storage
Capacity
Row:
Formula
Effect
of
regulation
on
sediment
load
(
tons
per
year)
11,000,000
1
Allocation
to
Water
Storage
Facilities
Tons
Amount
of
sediment
reaching
reservoirs
35.2%
3,872,000
2:
1
×
0.352
Tonnage
expressed
in
cubic
yards
7,047,000
3:
2
×
1.82
Cost
of
restoration
dredging
per
cubic
yard
$
2.10
4
Total
cost
of
re­
dredging
avoided
annually
$
14,799,000
5:
3
×
4
Sources:
U.
S.
EPA,
2002a
7­
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
7.2.1.2
Navigational
Dredging
River
channels
and
harbors
are
dredged
periodically
to
maintain
a
mandated
depth.
Much
of
the
sediment
removed
can
be
traced
to
human
activities.
According
to
the
USACE,
more
than
400
ports
and
25,000
miles
of
navigation
channels
(
USACE
2002a)
are
maintained
in
the
U.
S.
There
are
two
kinds
of
dredging
operations
performed,
construction,
or
new,
dredging
and
maintenance
dredging.
Construction
dredging
involves
the
removal
of
sediments
not
previously
disturbed
in
order
to
create
a
new
channel,
or
to
enlarge
an
existing
channel.
Maintenance
dredging
is
the
removal
of
extra
sediment
in
an
existing
waterway
(
USACE
2002a)
.

Both
the
USACE
and
members
of
industry
participate
in
dredging
activities
under
the
USACE
Dredging
Program.
Under
this
program,
industry
and
the
Corps
combined
spent
$
494
million
on
maintenance
dredging
work
and
$
127
million
on
new
dredging
work,
for
a
total
of
$
622
million
in
1997.

This
activity
removed
253
million
cubic
yards
of
material
for
maintenance
and
32
million
cubic
yards
for
new
work,
combining
for
a
total
of
285
million
cubic
yards
dredged
(
USACE
2002b)
.
Based
on
this
data,
the
average
cost
per
cubic
yard
is
$
1.95
for
maintenance
dredging,
$
3.97
for
new
work,
and
$
2.18
for
both
new
and
maintenance
dredging
work.

Relatively
little
of
the
sediment
dredged
from
navigation
channels
comes
from
urban
development.
The
totals
above
represent
material
deposited
by
all
forms
of
sedimentation.
EPA
has
estimated
that
the
proposed
rule
would
keep
0.6
to
2.6
million
cubic
yards
from
reaching
navigational
channels.
This
is
less
than
one
percent
of
the
annual
amount
dredged
under
the
USACE
Dredging
Program
and
an
even
smaller
proportion
of
the
total
amount
dredged
in
the
U.
S.
annually.

Dredging
costs
have
been
used
to
estimate
the
benefits
of
sediment
reduction
in
several
other
studies.
Ribaudo
(
1989)
assumed
directly
proportional
reductions
between
erosion
and
dredging
costs
and
used
an
estimate
from
Clark
et
al.
(
1985)
for
total
dredging
costs
attributable
to
eroding
soils.

Sohngren
and
Rausch
(
1998b)
looked
specifically
at
the
Maumee
River
watershed
in
Ohio.
The
marginal
cost
of
dredging
contaminated
sediment
there
were
quite
high
as
an
existing
confined
disposal
facility
for
contaminated
dredge
spoil
was
near
its
capacity.
This
necessitated
construction
of
a
new
facility.

Sohngren
and
Rausch
(
1998a)
make
the
connections
from
farm
field
to
harbor
and
estimate
that
12.7
percent
of
soil
eroded
off
fields
in
the
watershed
ends
up
in
the
navigation
channel.

7­
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
As
discussed
in
the
water
storage
capacity
section,
the
sediment
load
deposited
in
navigation
channels
can
be
estimated
and
average
costs
per
ton
dredged
applied
to
estimate
avoided
costs
from
policy
alternatives.
The
starting
value
is
the
change
in
sediment
delivered
to
waterways.
This
value
is
taken
from
the
Environmental
Assessment.
Table
7­
3
shows
an
allocation
of
this
sediment
to
navigation
channels
using
Sohngren
and
Rausch
 
s
(
1998a)
estimate
of
the
proportion
of
sediment
reaching
navigation
channels,
12.7
percent.
The
Sohngren
and
Rausch
estimate
is
probably
relatively
high,
as
the
Maumee
River
which
they
studied
flows
into
Toledo
harbor.
Many
rivers
do
not
flow
to
developed,

commercial
harbors.
Variable
cost
avoided
is
the
appropriate
metric
for
this
application
as
the
regulation
is
unlikely
to
prevent
dredging
operations
entirely
since
other
sources
of
sediment
will
continue
to
flow.

Sohngren
and
Rausch
(
1998a)
estimate
the
variable
costs
as
$
2.10
per
cubic
yard.
This
agrees
well
with
the
$
2.18
per
cubic
yard
estimated
from
USACE
data
above.

Table
7­
3.
Sample
Calculation
of
Avoided
Navigational
Dredging
Row:
Formula
Effect
of
regulation
on
total
erosion
(
tons
per
yr)
11,000,000
1
Allocation
to
Navigational
Channels
Assume
12.7
percent
reaches
maintained
channel
(
tons
per
yr)
1,397,000
2:
1
×
0.127
Amount
of
sediment
to
be
dredged
annually
in
cubic
yards
2,543,000
3:
2
×
1.82
Variable
cost
per
cubic
yard
$
2.10
4
Total
avoided
cost
of
navigational
dredging
$
5,339,000
5:
3
×
4
Sources:
Sohngren
and
Rausch,
1998a,
and
U.
S.
EPA,
2002a.

7.2.2
Reduced
In­
Stream
TSS
and
Sediment
Concentration
Sediment
and
other
components
of
storm
water
runoff
contribute
to
low
water
quality
in
receiving
waterways.
If
these
waterways
are
used
for
public
water
supplies
or
industrial
processes,
the
water
may
need
treatment
before
it
is
used.
Excessive
sediment
in
the
water
causes
turbidity
which
impedes
the
action
of
disinfectants
and
results
in
harmful
disinfectant
by­
products.
Conventional
filtration
and
flocculation
removes
the
turbidity
before
further
treatment
processes.
The
worse
the
intake
7­
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
water
 
s
quality
the
more
intense
and
expensive
the
treatment
required.
Three
studies
in
the
late
1980'
s
and
one
in
1998
estimated
the
elasticity
of
water
treatment
costs
with
respect
to
the
turbidity
of
the
intake
water.
The
studies
used
a
hedonic
method.
Dearmont,
et
al.
(
1998)
,
for
example,
regressed
the
costs
of
chemicals
for
treatment
on
turbidity
of
intake
water
and
other
variables
for
a
sample
of
Texas
water
treatment
facilities.
They
found
that
a
one
percent
reduction
in
nephelometric
turbidity
units
(
NTUs)
in
the
intake
water
resulted
in
0.27
percent
reduction
in
treatment
chemical
costs.
Similar
elasticities
from
other
studies
ranged
from
0.07
percent
(
Holmes,
1988)
to
0.333
percent
(
Moore
and
McCarl,
1987)
.

Ribaudo
(
1989)
used
Holmes
 
(
(
1988)
results
to
link
total
suspended
solids
(
TSS)
to
turbidity
to
treatment
costs
per
gallon
for
watersheds
nationwide.
Different
studies
express
their
results
in
various
units
corresponding
to
different
points
in
the
water
use
process.
Sohngren
and
Rausch
(
1998b)
do
not
describe
their
methods
but
estimate
that
water
treatment
costs
are
$
0.05
for
each
ton
of
gross
soil
erosion.
Fox
and
Dickson
(
1990)
express
their
results
in
terms
of
sediment
in
waterways,
i.
e.
tons
of
suspended
sediment,
and
find
a
cost
of
$
13.44
(
Canadian)
per
ton.
The
two
plus
orders
of
magnitude
difference
between
these
estimates
makes
sense
if
only
1
out
of
250
tons
of
soil
eroded
became
suspended
sediment.
Fox
and
Dickson
(
1990)
adjust
their
cost
estimate
based
on
the
probability
of
the
suspended
sediment
from
their
three
sample
watersheds
reaching
water
treatment
plants
given
the
geography
of
the
region.

The
EPA
assessment
of
the
benefits
and
costs
of
President
Clinton
 
s
Clean
Water
Initiative
(
U.
S.

EPA,
1994)
estimated
that
improved
water
quality
would
reduce
nationwide
treatment
costs
by
1
to
5
percent;
storm
water
was
a
source
of
6.6
percent
of
the
impairment.
The
nationwide
avoided
costs
from
improved
storm
water
quality
were
estimated
as
$
3.2
to
$
17.0
million
per
year.

The
Environmental
Assessment
estimates
the
TSS
loadings
reductions
from
ESC
management.

EPA
estimates
water
treatment
benefits
from
reducing
TSS
loadings
by
taking
a
derivative
from
Holmes
 
(
1988)
equation
which
shows
the
change
in
NTU
from
changes
in
sediment
loads,
given
stream
flow,
and
water
storage
capacity.
Values
for
assumptions
about
stream
flow,
storage
capacity
and
costs
of
processing
intake
water
are
taken
from
Holmes
(
1988)
.
The
literature
contains
a
range
of
NTU­
to­
cost
elasticities
from
0.07
to
0.333.
Using
this
range
of
elasticities
generates
the
range
of
benefit
estimates
from
$
22.49
to
$
106.97
per
1,000
tons
of
sediment
introduced
into
waters.
Holmes
 
costs
were
reported
in
1984
values.
Updating
these
values
to
1997
price
levels
using
the
CPI
for
urban
consumers
(
CPI­
U
in
1984=
103.9,
CPI­
U
in
1997=
160.5)
yields
values
of
$
34.74
and
$
165.24
per
1,000
tons
in
1997
dollars.

7­
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
Table
7­
4.
Sample
Calculation
of
Avoided
Water
Treatment
Costs
Row:
Formula
Change
in
annual
TSS
after
development
from
pre­
development
levels
2,000
1
Low
High
Calculated
range
of
treatment
costs
per
1,000
tons/
yr
$
34.74
$
165.24
2
Range
of
changes
in
costs
b/
$
69,480
$
330,480
3:
1
×
2
Sources:
Holmes,
1988,
and
U.
S.
EPA,
2002a.
(
1,000
tons/
yr)

7.2.3
Non­
Quantified
Benefits
Several
categories
of
benefits
discussed
in
other
studies
were
considered
for
this
benefit
assessment.
For
the
most
part,
the
benefits
expected
to
be
derived
from
these
categories
are
relatively
small
and
difficult
to
quantify.
Rather
than
expend
inordinate
resources
to
quantify
small
benefits,
EPA
focused
on
the
more
promising,
larger
categories.

7.2.3.1
Water
Contact
Recreation
One
of
the
salutary
effects
of
improved
water
quality
is
wider
opportunities
for
water
contact
recreation.
Ribaudo
and
Young
(
1989)
used
a
criteria­
based
approach
to
estimate
the
benefits
of
improved
water
quality
on
recreation.
They
established
levels
of
suspended
sediment,
nitrogen,
and
phosphorous
which
would
show
whether
or
not
the
water
body
was
safe
for
swimming.
They
then
estimated
the
changes
in
runoff
and
ensuing
change
in
water
quality
indicator
levels
to
assess
whether
the
program
being
considered
would
bring
the
water
body
within
the
criteria
for
swimmable
waters.

Ribaudo
and
Young
found
that
the
changes
in
erosion
they
assessed
were
too
small
to
result
in
any
water
quality
changes
that
would
upgrade
the
receiving
waters
 
status.
.
So
there
were
no
water­
based
recreation
benefits
attributable
to
the
program.

Feather
and
Hellerstein
(
1997)
took
a
different
approach.
They
used
information
from
the
National
Resource
Inventory
and
National
Survey
of
Recreation
and
the
Environment
to
estimate
a
direct
7­
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
relationship
between
soil
loss
and
consumer
welfare
from
water­
based
recreation.
They
were
able
to
estimate
improvements
in
recreation
consumer
surplus
from
erosion
reductions
from
alternative
agricultural
practices.

While
the
ESC
regulations
would
reduce
TSS
loadings,
they
are
not
expected
to
affect
many
of
the
other
water
quality
indicators
that
preclude
water
contact
recreation.
Like
the
Ribaudo
and
Young
study,
estimation
of
recreation
benefits
could
consume
a
great
deal
of
analytical
resources
and
not
generate
any
measurable
benefits.

7.2.3.2
Biodiversity
Effects
Excess
sediment
can
play
havoc
with
natural
stream
ecosystems.
Salmon
and
trout
lay
their
eggs
in
scrapes
on
sand
or
gravel
substrates.
Flowing
sediment
can
bury
the
eggs
and
prevent
their
hatching.

Similarly,
mussel
beds
can
be
buried
by
excessive
sediment
movement,
smothering
the
mussels.
Even
relatively
small
sediment
loads
may
become
harmful
during
storm
events
when
bed
loads
shift
rapidly.

More
than
half
of
the
freshwater
mussel
species
in
the
U.
S.
are
imperiled
or
already
extinct
(
Stein
and
Flack
1997)
.
It
is
difficult
to
quantify
either
the
value
society
places
on
preservation
of
endangered
species
or
the
contribution
the
proposed
regulation
may
make
to
species
preservation.

7.2.3.3
Other
Sources
of
Benefits
Roads
and
irrigation
ditches
provide
transportation
services
to
people.
When
sediment
and
vegetation
clog
ditches
these
services
are
impeded.
Ribaudo
(
1989)
and
Fox
and
Dickson
(
1990)
both
use
government
highway
ditch
maintenance
costs
as
the
starting
point
for
valuing
decreased
roadside
sedimentation.
Ribaudo
estimates
state
removal
costs
as
a
function
of
rural
road
mileage,
gross
erosion,

and
the
reported
costs
to
remove
one
cubic
yard
of
material.
This
process
yields
an
average
cost
of
$
79
per
thousand
tons
of
gross
erosion.
Fox
and
Dickson
divide
provincial
expenses
for
ditch
maintenance
by
the
cropland
area
to
arrive
at
a
cost
of
$
3.41
per
hectare.
Both
studies
then
estimate
the
benefits
of
different
practices
by
assuming
directly
proportional
reductions
in
costs
with
reductions
in
gross
erosion.

7­
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
While
maintenance
of
roadside
swales
is
among
the
BMPs
suggested
under
this
regulation,
major
reductions
in
offsite
road
maintenance
are
not
anticipated
in
the
Environmental
Assessment.

Ribaudo
(
1989)
also
estimates
the
benefits
for
irrigation
ditch
maintenance.
He
accepts
Clark,
et
al.
 
s
(
1985)
estimate
of
overall
damage
to
irrigation
systems
from
cropland
erosion
and
assumes
reductions
in
erosion
would
result
in
proportional
reductions
in
damage.
Sohngren
and
Rausch
(
1998b)

estimate
that
drainage
ditch
maintenance
costs
are
$
0.15
per
ton
of
gross
soil
erosion
without
explaining
their
methodology.
Agricultural
water
management
is
probably
not
relevant
to
this
proposed
regulation.

7.3
CONCLUSION
These
methods
form
a
coherent
assessment
of
the
benefits
of
the
proposed
regulations.
There
are
several
opportunities
for
reality
and
sensitivity
testing
of
benefit
values
to
ensure
that
they
are
within
the
realm
of
possibility.
Information
on
total
navigational
and
reservoir
dredging
costs
in
the
region
can
be
compared
to
the
final
results
to
determine
if
the
benefits
estimates
are
in
a
reasonable
range.

7­
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
7.4
REFERENCES
Clark,
E.
H.
II,
J.
A.
Haverkamp,
and
W.
A.
Chapman.
1985.
Eroding
Soils:
The
off­
farm
impacts.
Washington,
DC:
The
Conservation
Foundation.
Cited
in
Ribaudo,
1989.

Crowder,
B.
M.
1987.
Economic
Costs
of
Reservoir
Sedimentation:
A
regional
approach
to
estimating
erosion
damage.
Journal
of
Soil
and
Water
Conservation,
42(
3)
:
194­
197.
Cited
in
Ribaudo,
1989.

Dearmont,
David,
Bruce
McCarl,
and
Deborah
A.
Tolman.
1998.
Cost
of
Water
Treatment
Due
to
Diminished
Water
Quality:
A
case
study
in
Texas.
Water
Resources
Research,
34(
4)
:
849­
855.

Feather,
Peter
and
Daniel
Hellerstein.
1997.
Calibrating
Benefit
Function
Transfer
to
Assess
the
Conservation
Reserve
Program.
American
Journal
of
Agricultural
Economics,
79(
1)
:
151­
162.

Fox,
Glenn,
and
Ed
J.
Dickson.
1990.
The
Economics
of
Erosion
and
Sediment
Control
in
Southwestern
Ontario.
Canadian
Journal
of
Agricultural
Economics,
38:
23­
44.

Fox,
Glenn,
Gloria
Umali,
and
Trevor
Dickinson.
1995.
An
Economic
Analysis
of
Targeting
Soil
Conservation
Measures
with
Respect
to
Off­
site
Water
Quality.
Canadian
Journal
of
Agricultural
Economics,
43:
105­
118.

Holmes,
Thomas
P.
1988.
The
Offsite
Impact
of
Soil
Erosion
on
the
Water
Treatment
Industry.
Land
Economics
64(
4)
:
356­
366.

Laughland,
Andrew
S.
,
Wesley
N.
Musser,
James
S.
Shortle,
and
Lynn
M.
Musser.
1996.
Construct
Validity
of
Averting
Cost
Measures
of
Environmental
Benefits.
Land
Economics
72(
1)
:
100­
112.

Moore,
W.
B.
and
B.
A.
McCarl.
1987.
Off­
site
Costs
of
Soil
Erosion:
A
case
study
in
the
Wilamette
Valley.
Western
Journal
of
Agricultural
Economics,
12:
42­
49.
Cited
in
Dearmont,
et
al.
,
1998.

Ribaudo,
Marc
O.
1989.
Water
Quality
Benefits
from
the
Conservation
Reserve
Program.
U.
S.
Department
of
Agriculture,
Economic
Research
Service,
Agriculture
Economic
Report
No.
606.
February.

Ribaudo,
Marc
O.
,
and
C.
Edwin
Young.
1989.
Estimating
Water
Quality
Benefits
from
Soil
Erosion
Control.
Water
Resources
Bulletin,
25(
1)
:
71­
78.

Sohngren,
Brent
and
Jonathan
Rausch.
1998a.
Soil
Erosion
in
the
Maumee
River
Basin:
A
case
study
using
market
methods
to
value
environmental
externalities.
Ohio
State
University
Working
Paper.
Dated
June
5,
1998.

Sohngren,
Brent
and
Jonathan
Rausch,
1998b.
Benefits
of
Controlling
Soil
Erosion
in
the
Maumee
River
Basin.
Ohio
State
University,
Department
of
Agricultural,
Environmental,
and
Development
Economics,
Natural
Resource
and
Environmental
Economics
Research
News.
November,
1998.

7­
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
Stein,
Bruce
A.
and
Stephanie
R.
Flack.
1997.
1997
Species
Report
Card:
The
State
of
U.
S.
Plants
and
Animals.
Arlington,
Va:
The
Nature
Conservancy.
Available
at:
http:
/
/
www.
natureserve.
org/
publications/
97reportcard/
title.
html
Accessed
on
February
20,
2002.

USACE
2002a.
U.
S.
Army
Corps
of
Engineers,
Philadelphia
District
­
Navigation.
Available
at:
http:
/
/
www.
nap.
usace.
army.
mil/
sb/
nav.
htm.
Accessed
on
February
12,
2002.

USACE
2002b.
Actual
Dredging
Cost
Data
for
1963­
2000:
Summary
of
Corps
and
Industry
Activities.
U.
S.
Army
Corps
of
Engineers
Navigation
Data
Center.
Available
at:
http:
/
/
www.
wrsc.
usace.
army.
mil/
ndc/
ddhisbth.
htm.
Accessed
on
February
14,
2002.

USACE
2001.
National
Inventory
of
Dams
Database.
U.
S.
Army
Corps
of
Engineers
Topographical
Engineering
Center.
Available
at:
http:
/
/
crunch.
tec.
army.
mil/
nid/
webpages/
niddownloaddamsdata.
html
Accessed
on
November
12,
2001.

U.
S.
EPA.
2002a.
Development
Document
for
the
Proposed
Effluent
Guidelines
for
the
Construction
and
Development
Point
Source
Category.
Washington,
D.
C.
:
U.
S.
Environmental
Protection
Agency.
EPA­
821­
R­
02­
007.
Available
at:
http:
/
/
www.
epa.
gov/
waterscience/
guide/
construction/
.

U.
S.
EPA.
2002b.
Environmental
Assessment
of
Effluent
Guidelines
for
the
Construction
and
Development
Point
Source
Category.
Washington,
D.
C.
:
U.
S.
Environmental
Protection
Agency.
EPA­
821­
R­
02­
009.
Available
at:
http:
/
/
www.
epa.
gov/
waterscience/
guide/
construction/
.

U.
S.
EPA.
1999.
Economic
Analysis
of
the
Final
Phase
II
Storm
Water
Rule.
Washington,
D.
C.
:
U.
S.
Environmental
Protection
Agency.
EPA­
833­
R­
99­
002.
Available
from
National
Environmental
Publications
Information
at:
http:
/
/
www.
epa.
gov/
clariton/
.

U.
S.
EPA.
1995.
Economic
Benefits
of
Runoff
Controls.
EPA
841­
S­
95­
002.
Available
at:
http:
/
/
www.
epa.
gov/
nps/
runoff.
html.
Accessed
on
May
23,
2001.

U.
S.
EPA.
1994.
President
Clinton
 
s
Clean
Water
Initiative:
Analysis
of
Benefits
and
Costs.
Cited
in
U.
S.
EPA,
1999.

7­