REVIEW OF THE EPA’S ECONOMIC ANALYSIS 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

NATIONAL RESEARCH COUNCIL
             OF THE NATIONAL ACADEMIES

THE NATIONAL ACADEMIES PRESS
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REVIEW OF THE EPA’S ECONOMIC ANALYSIS 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

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THE NATIONAL ACADEMIES PRESS 500 Fifth Street, NW Washington, DC 20001 NOTICE: The project that is the subject of this report was approved by the Govern- ing Board of the National Research Council, whose members are drawn from the councils of the National Academy of Sciences, the National Academy of Engineer- ing, 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. Environmental Protection Agency under grant EP-C-09-003, task order 15. Any opinions, findings, conclusions, or recommendations expressed in this publication are those of the author(s) and do not necessarily reflect the views of the organizations or agencies that provided sup- port for the project. International Standard Book Number-13: 978-0-309-25493-9 International Standard Book Number-10: 0-309-25493-0 Additional copies of this report are available from the National Academies Press, 500 5th Street, NW, Keck 360, Washington, DC 20001; (800) 624-6242 or (202) 334-3313; http://www.nap.edu. Copyright 2012 by the National Academy of Sciences. All rights reserved. Printed in the United States of America

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The National Academy of Sciences is a private, nonprofit, self-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 granted to it by the Congress in 1863, the Acad- emy has a mandate that requires it to advise the federal government on scientific and technical matters. Dr. Ralph J. Cicerone is president of the National Academy of Sciences. The National Academy of Engineering was established in 1964, under the charter of the National Academy of Sciences, as a parallel organization of outstanding en- gineers. It is autonomous in its administration and in the selection of its members, sharing with the National Academy of Sciences the responsibility for advising 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 achievements of engineers. Dr. Charles M. Vest is presi- dent of the 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 Insti- tute acts under the responsibility given to the National Academy of Sciences by its congressional charter to be an adviser to the federal government and, upon its own initiative, to identify issues of medical care, research, and education. Dr. Harvey V. Fineberg is president of the Institute of Medicine. The National Research Council was organized by the National Academy of Sci- ences 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 government, the public, and the scientific and engineering communities. The Council is administered jointly 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.nationalacademies.org

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COMMITTEE TO REVIEW EPA’S ECONOMIC ANALYSIS OF FINAL WATER QUALITY STANDARDS 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 Health and Environment, Topeka ALAN H. VICORY, Ohio River Valley Water Sanitation 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 Associate v

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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 University, Baltimore, Maryland YU-PING CHIN, Ohio State University, Columbus OTTO C. DOERING, Purdue University, West 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 Management District, Brooksville, 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 LAURA E. HELSABECK, Senior Program Officer STEPHANIE E. JOHNSON, Senior Program Officer M. JEANNE AQUILINO, Financial and Administrative Associate ANITA A. HALL, Senior Program Associate MICHAEL J. STOEVER, Research Associate SARAH E. BRENNAN, Senior Program Assistant vi

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Acknowledgment of Reviewers T his report has been reviewed in draft form by individuals chosen for their diverse perspectives and technical expertise, in accordance with procedures approved by the National Research Council’s Report Review Committee. The 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 institutional standards for objectivity, evidence, and responsiveness to the study charge. The review comments and draft manuscript remain confiden- tial to protect the integrity of the deliberative process. We wish to thank the following individuals for 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 Council, 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 Washington, Seattle ROBERT G. TRAVER, Villanova University, Villanova, Pennsylvania MYRON F. UMAN, Science and Technology for Public Policy LLC, West Palm Beach, Florida Although the reviewers listed above have provided many constructive comments and suggestions, they were not asked to endorse the conclusions vii

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viii ACKNOWLEDGMENT OF REVIEWERS or recommendations nor did they see the final draft of the report before its release. The review of this report was overseen by Robert A. Frosch, Har- vard 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 accor- dance 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.

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Contents SUMMARY 1 1 INTRODUCTION 11 Technical Challenges of Nutrient Management in Florida, 12 Impairment of Florida’s Inland Streams, Lakes, and Springs, 18 Water Quality Standards and the TMDL Process, 19 Numeric Nutrient Criteria in Florida, 22 Request for National Research Council Study, 31 References, 33 2 ASSESSMENT AND COMMENTARY ON EPA’S ANALYSIS 35 EPA Cost Analysis Methods: Overview, 35 Sector Cost Assessments, 44 Findings and Recommendations, 78 References, 83 3 A FRAMEWORK FOR INCREMENTAL COST ANALYSIS 88 OF A RULE CHANGE Introduction, 88 Comparing the Narrative and Numeric Nutrient Criteria Rules, 89 A Cost Analysis Framework, 98 Transparency and Dispute Resolution Under the Proposed Framework, 112 ix

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x CONTENTS Findings, 114 References, 115 ACRONYMS 117 APPENDIXES A Narrative, Numeric, and Proposed Florida Nutrient Criteria Processes Illustrated 119 B Biographical Sketches of Committee Members and Staff 127