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2 Assessment and Commentary on EPA’s Analysis A s indicated in Chapter 1, the intent of the U.S. Environmental Pro- tection Agency’s (EPA) analysis was to assess the differential costs of nutrient load reduction under the numeric nutrient criteria (NNC) rule vs. Florida’s narrative rule. This chapter accepts the EPA definition of the incremental effect of the NNC rule and focuses on the way EPA estimated that effect and the costs for different sectors including municipal wastewater facilities, industrial facilities, agriculture lands, urban stormwa- ter, and septic systems. The associated costs of governmental administration are also discussed. This chapter also includes some initial descriptions of the current regulatory requirements for each sector and how regulatory uncertainties can lead to different assumptions about the effect of the NNC rule on the level and timing of costs. Chapter 3 provides an expanded dis- cussion of the incremental effect of the rule and how uncertainty about the rule change can affect incremental costs. EPA COST ANALYSIS METHODS: OVERVIEW The first part of EPA’s analysis was conducted for point sources, iden- tifying the number of point sources that would have to improve treatment in response to the NNC rule, the likely technological upgrades that would be implemented, and the cost of upgrades based on unit costs multiplied by the actual flow rate of each point source. The next step in the EPA analysis was to determine the potential incrementally impaired waterbodies—that is, an estimate of those waters that may be expected to be in noncompliance with the numeric nutrient criteria, but that would not be impaired under the 35
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36 EPA’S ECONOMIC ANALYSIS OF NUTRIENT STANDARDS IN FLORIDA narrative rule. Once this set of waters was defined, the analysis proceeded to estimate the location and amount of land area that would require load controls to meet the numeric nutrient criteria in the waterbody. For the stormwater and agricultural sources, EPA identified the corresponding acre- age draining to the potential incrementally impaired waterbodies, reduced the acreage considered based on best management programs that were already in place, selected a set of BMPs that EPA staff deemed adequate and cost-effective, and then applied a unit cost to the resulting acreage to estimate the total cost for the two sectors. For septic systems EPA deter- mined the number of systems within 500 feet of a waterbody in a potential incrementally impaired watershed and multiplied this number by unit cost to upgrade septic systems to reduce their nutrient loads. Several key regulatory assumptions were made by EPA and are dis- cussed in the subsequent sector analyses only if the Committee took issue with them. These assumptions include the following • Impaired waterbodies where a total maximum daily load (TMDL) has already been developed based on the narrative criteria were not con- sidered, assuming that the TMDLs would serve as the basis for site-specific alternative criteria (SSAC), if needed. • Waters that are currently listed as impaired based on the narrative criteria were also not considered, because it was assumed that a TMDL for nitrogen (N) and/or phosphorus (P) would be developed and that this TMDL would serve as the basis for an SSAC determination. • Municipal and industrial plants discharging at 3 mg/L for total nitrogen (TN) and 0.1 mg/L for total phosphorus (TP) were considered “in compliance.” • The cost of actions to reduce pollutant loads associated with im- plementation of the statewide Stormwater Rule, the Urban Turf Fertilizer Rule, the Florida Department of Environmental Protection (FDEP) Dairy Rule, and Concentrated Animal Feeding Operation (CAFO) Requirements would not necessarily be accruable to the NNC rule, since these programs are already in place. Three analytical assumptions of the EPA analysis were accepted for this chapter (and are returned to in Chapter 3): • The definition of the incremental effect of the NNC rule was de- fined and limited to (1) waters that would be newly listed and determined to be stressed by nutrients and (2) National Pollutant Discharge Elimina- tion System (NPDES) municipal and industrial sources that would receive certain concentration limits in their discharge permits.
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37 ASSESSMENT AND COMMENTARY ON EPA’S ANALYSIS • EPA assessed the incremental effect of the NNC rule at a single point in time, assuming no further changes would occur under the narrative process (which was the baseline), instead of comparing the future outcomes of both processes over time. • The analysis assumed constant temporal conditions in such fac- tors as population, land use, crop types, management practices, industrial activities, and climate, even though the analysis acknowledged that the ef- fects would occur over time (for example, there was a 20-year horizon for amortizing capital costs). Determination of Incrementally Impaired Waters EPA defined one incremental effect of the NNC rule as the number of waterbodies that would be listed as impaired under the numeric nutrient criteria but not under the narrative criteria. Had monitoring data for N and P concentrations been available for all waterbodies, this would be a simple exercise. However, out of a total of 3,765 freshwater stream segments in Florida, a very large fraction (84 to 89 percent) lacks sufficient monitoring data on N and P concentrations to make an assessment, based on the ap- plication of Florida’s Impaired Waters Rule (IWR) (FDEP, 2011). For the 1,444 lake segments in Florida, 59 to 78 percent lack sufficient information to be assessed (FDEP, 2011), which covers a substantial area of the state, particularly in the north and northwest (see Figure 2-1). Thus, of the 5,209 freshwater WBIDs in Florida (see Chapter 1 for the definition of a WBID), approximately 77 to 86 percent cannot currently be assessed.1 Despite a long record of water quality monitoring in Florida, the vast majority of the water- bodies have insufficient information to determine whether action is needed. Streams and Lakes2 Faced with this limitation, EPA opted for the following approach to estimate the number of incrementally impaired streams and lakes. Using the 1 The range in unassessed segments reflects the difference in the amount of information re- quired to assess under the current narrative criteria (one year of data) compared to the NNC (three years), as well as differences in the quality of the data that EPA and FDEP considered necessary to determine whether a WBID can be assessed. Furthermore, the sentence is not im- plying that 77 to 86 percent of Florida waters have no monitoring data, just that there is not enough data to make a determination of impairment based on the requirements of the IWR. 2 In this section, WBID and waterbody are interchangeable. WBID is used when citing data on the number and status of impaired waterbodies from the EPA and FDEP documents. Also, TMDLs are developed for individual or groups of WBIDs, so this term is also used when discussing the TMDL process.
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38 EPA’S ECONOMIC ANALYSIS OF NUTRIENT STANDARDS IN FLORIDA FIGURE 2-1 WBIDs with insufficient data to assess impairment. SOURCE: EPA analysis for National Academy of Sciences. FDEP database of WBIDs and monitoring data for the past five years from IWR Run 40 (a subset of Florida’s water quality data), EPA first identified potentially impaired waterbodies by comparing their monitoring data to the numeric nutrient criteria. WBIDs where a nutrient-related TMDL had already been established were excluded, based on the assumption that FDEP would seek SSACs for those WBIDs and/or that “controls to reduce nutrients already required in the absence of EPA’s rule would be sufficient.” In addition, EPA identified WBIDs adjacent to lakes to which downstream protective values could apply.3 Finally, all of the unassessed waters were excluded by EPA from consideration as potentially impaired due to the new 3 The NNC rule requires the application of a downstream protective value when choosing the criterion for a stream segment that enters directly into a lake. That is, if a stream directly enters a lake and the lake criterion is more stringent, then the lake criterion would apply to the stream.
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39 ASSESSMENT AND COMMENTARY ON EPA’S ANALYSIS rule by assuming that unassessed waterbodies are likely to be unimpaired, given Florida’s focus on monitoring the most polluted streams and lakes. In other words, EPA assumed that if a waterbody were likely to be impaired, Florida would have already known about it and monitored it under the existing program of narrative criteria. Using these assumptions, EPA de- termined that only 325 WBIDs potentially exceed the numeric nutrient criteria [see Exhibit ES-4 in EPA (2010a)]. Given EPA’s assumptions, the Committee considers the EPA estimate to be a lower bound on the number of incrementally impaired waters that would be listed due to the new rule.4 FDEP used a different approach for estimating the number of poten- tially impaired waters that would be listed due to the new rule and deter- mined that there are between 424 and 546 incrementally impaired WBIDs under the NNC rule (FDEP, 2011). The FDEP approach was based on a statistical analysis, using the failure rate of assessed waterbodies under the current narrative criteria to predict the number of unassessed waterbodies that would fail under the numeric nutrient criteria. FDEP developed differ- ent statistics for the various “nutrient watershed regions” identified by EPA in the new rule (see Table 1-1). While using regionalized statistics acknowl- edges biogeographic and climate differences, no other consideration was given to the characteristics of a watershed that may result in impairment. It is unknown whether prior information from the currently listed WBIDs is a good predictor of the status of the unassessed WBIDs. The size and land use composition of WBIDs varies substantially, which can lead to a significant over- or underestimate of the impaired acreage. Thus, it is not possible to determine whether this approach represents an upper bound on the incremental number of potentially impaired waters due to the new rule. A more defensible approach than either of the previous ones would take into consideration the characteristics of the various WBIDs to predict the likelihood that they would fail to meet the narrative criteria or the numeric nutrient criteria. For example, using the land use data and land use man- agement statistics of the assessed WBIDs, one could establish a relationship between the likelihood of impairment and the level of urbanization, num- ber of septic systems, loading from NPDES-permitted sources, agricultural production, the level of adoption of agricultural and stormwater BMPs in a given WBID, etc. The land use information for such an analysis is read- ily available in geographic information system (GIS) format. FDEP has a database of septic systems in each WBID. Land management information could be obtained from FDACS (for agricultural BMPs implemented) or from MS4 permittees (for stormwater BMP adoption). While this approach also entails a certain level of uncertainty, the uncertainty should be easier to estimate and report. In addition, since the potential incrementally impaired 4 Assuming EPA’s definition of incrementally impaired.
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40 EPA’S ECONOMIC ANALYSIS OF NUTRIENT STANDARDS IN FLORIDA WBIDs can be identified, their specific acreage can be considered for the analysis, reducing this source of uncertainty. Springs EPA identified springs with any monthly geometric mean nitrate-nitrite concentration greater than the numeric nutrient criterion as impaired. As with streams and lakes, EPA removed from the resulting list of springs those that are currently on Florida’s 303(d) list of impaired waters. This analysis resulted in 24 incrementally impaired springs (see Exhibit ES-4 in EPA, 2010a). Waters with insufficient data to determine compliance were assumed to be unimpaired under the numeric nutrient criteria. Thus, the same issues that were discussed above for lakes and streams regarding unas- sessed waters also potentially hold for springs (in terms of the EPA number being a lower bound). Acreage of Land Draining to Incrementally Impaired Watersheds After estimating the incrementally impaired WBIDs, the next step was to determine the acreage of various land uses that contribute to the po- tential impairment. EPA used a relatively coarse “grid,” by considering the 10-digit hydrologic units code (HUC10) watersheds, as defined by the USGS. Because WBIDs may not fall within a single HUC10, to estimate the incremental acreage EPA considered all the HUC10 watersheds containing at least 10 percent of an incrementally impaired lake or stream, which may lead to a significant overestimate of the incremental acreage (EPA, 2010a). On the other hand, EPA excluded all of those HUC10 watersheds that contain at least 10 percent of a lake or stream that are currently impaired or under a TMDL. This could lead to an underestimate of the incremental acreage. The Committee’s evaluation of maps showing the incrementally impaired WBIDs and their associated HUC10s did not lead to an obvi- ous conclusion that the HUC10 units are an over- or underestimate of the acreage. The HUC10 watersheds are generally too coarse for TMDL analysis, which is typically done with a delineation closer to the USGS HUC12 sub- watershed level. Figure 2-2 provides an example of the resolution of the WBIDs for the Santa Fe River in Central Florida. As can be seen, there are dozens of WBIDs within this single basin, of varying sizes. Figure 2-3 pres- ents the HUC10s for this same region. There are only seven large HUC10s within this basin. Figure 2-4 presents the HUC12 delineation for the re- gion. Although there is no direct correspondence between the HUC12s and Florida’s WBIDs, the size of the WBIDs is generally much closer to the HUC12s. Thus, a more precise estimate of the potential incrementally
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41 ASSESSMENT AND COMMENTARY ON EPA’S ANALYSIS FIGURE 2-2 WBIDs in the Santa Fe River. SOURCE: McKee (2011). FIGURE 2-3 HUC 10 delineation for the Santa Fe River in Central Florida. SOURCE: McKee (2011).
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42 EPA’S ECONOMIC ANALYSIS OF NUTRIENT STANDARDS IN FLORIDA FIGURE 2-4 Comparable HUC 12 delineation for the Santa Fe River in Central Florida. SOURCE: McKee (2011). affected acreage due to the new rule could have been performed using the same assumptions but with the HUC12 delineation of the areas contribut- ing to the various WBIDs. Alternatively, EPA could have used the area for each specific WBID for their analysis. In addition to considering a relatively coarse grid for the analysis, EPA considered that every acre of agricultural and urban land in an HUC10 contributes equally to in-stream loading. While it is likely that the char- acteristics of Florida’s WBIDs in some regions, such as artificial drainage and highly transmissive soils, may lead to contributions from fields further away from the WBID than in other regions around the United States, the coarseness of the grid makes this assumption much less valid. While a ro- bust analysis would require a full fate-and-transport calculation, an inter- mediate approach would have considered a distance/travel time weighting factor between the contributing croplands and the WBIDs. Using the more refined HUC12 delineation of subwatersheds would also reduce the error in these estimates of land areas that contribute to water quality degradation. To estimate the urban areas, agricultural land, and septic systems that may need controls to attain the numeric nutrient criteria for springs, EPA obtained GIS data on land areas where groundwater aquifers supply wa- ter to springs (spring recharge areas or springsheds) from FDEP’s Florida
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43 ASSESSMENT AND COMMENTARY ON EPA’S ANALYSIS Geological Survey. EPA identified incrementally impaired spring recharge areas as those vulnerable to surface sources of contamination by the Florida Geological Survey Florida Aquifer Vulnerability Assessment (Arthur et al., 2007). The Committee has no concerns with this approach. Determination of Incrementally Affected NPDES-Permitted Municipal and Industrial Sources EPA made the conservative assumption that municipal and industrial wastewater point sources would be potentially affected by the NNC rule regardless of the impairment status of the WBID in which they are located. To determine the incremental effect of the NNC rule on these sources, EPA assumed that wastewater treatment plants (WWTPs) would be considered to be in compliance with the NNC rule if they could treat their discharges with advanced biological nutrient removal (BNR) to reach 3 mg/L for TN and 0.1 mg/L for TP as annual averages. This level of performance was selected based on a judgment regarding demonstrated technology that has been used at sufficient scale and can be reasonably applied in Florida (see discussion below under the subsection entitled “Effectiveness of Control Methods”). These targets for water quality-based effluent limits (WQBELs) for all WWTP permittees assume some dilution and assimilation within the receiving waters to meet the numeric nutrient criteria at the point of compli- ance. Whether more stringent effluent limits will be required, approaching or in fact equaling the appropriate numeric nutrient criterion, is a matter of dispute and is discussed further in this chapter and in Chapter 3. From the Committee’s reading of EPA (2010a), it appears that only municipal and industrial point sources that discharge to freshwater lakes and streams were considered in the analysis. Municipal and industrial point sources that discharge to groundwater via effluent spray fields or rapid infiltration basins were not considered, although they have the potential to lead to nitrate impairment in springs. For example, both Ichetucknee and Wakulla springs are suspected to be impacted by municipal wastewater effluent spray fields. Lake City’s spray field disposes 3 million gallons per day (MGD) of wastewater effluent in the Ichetucknee springshed. The City of Tallahassee’s municipal effluent sprayfield disposes of about 20 MGD in the Wakulla springshed. A more conservative analysis would have identi- fied all municipal and industrial facilities with effluent sprayfields and rapid infiltration basins in incrementally impaired springsheds and assumed that some level of additional treatment might be required before disposal of their wastewater. Discussions with EPA indicated that they were aware of this possibility, but that available data did not allow them to unambigu- ously identify all relevant municipal dischargers that would affect springs (although the data suggested that the number of such dischargers and their
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44 EPA’S ECONOMIC ANALYSIS OF NUTRIENT STANDARDS IN FLORIDA capacity was relatively small). Thus, EPA judged that exclusion of these dischargers from the cost analysis would not materially affect the total cost estimate. The quantitative assessment on which this assumption was based was not presented by EPA, making it difficult to determine whether the assumption was reasonable, especially from a water quality (as opposed to a cost) standpoint. A potential additional industrial cost could exist due to the large num- ber of general permits utilized by Florida. A footnote on Page 2-15 of the EPA analysis states there are 34,508 dischargers covered under general permits in Florida and that EPA did not include those dischargers in the analysis. General permits are used to cover a common class of dischargers in a streamlined fashion with minimal cost to the permitting authority and the permittee. There is no further information regarding the classes of dis- chargers covered by the general permits. However, if any of those general permits relate to industrial facilities discharging nutrients, those facilities could potentially lose general permit coverage and be required to obtain individual permits. Compliance costs for holders of individual permits are generally higher than for general permits. A related uncertainty of this type arises with stormwater sources. At present, most of these sources are deemed to be outside the NPDES-regulated process where WQBELs apply. However, if this changes due to regulation or third party lawsuits and if the discharge limits that would result are more stringent under the NNC rule than under the narrative rule, then these sources could realize greater costs. What is assumed about all these regulatory uncertainties has a direct influence on the cost estimates reported by EPA and others. Chapter 3 provides a discussion of the regulatory setting, and how to best incorpo- rate regulatory and other uncertainties in a cost analysis. The sections that follow here focus on uncertainty related to unit costs and effectiveness of controls by sector. SECTOR COST ASSESSMENTS This review of the EPA economic analysis considered the following issues for each sector. First, the overall methods to determine costs were analyzed, focusing on the number of affected units and the per unit cost of treatment. For example, for the agricultural sector the review considers whether EPA estimated the affected agricultural acreage correctly and the costs of BMPs that would be needed for that acreage. Each section discusses the effectiveness of the proposed control methods, where appropriate. In doing so, the Committee used the numeric nutrient criteria as a threshold for evaluating the efficacy of BMPs, in the absence of any other logical benchmark. Each section describes the relevant sources of uncertainty in the cost estimate, including variability in per unit costs, uncertainty in BMP
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45 ASSESSMENT AND COMMENTARY ON EPA’S ANALYSIS performance, and regulatory behaviors. It should be noted that some of the uncertainties discussed are not unique to using numeric nutrient criteria (as opposed to narrative criteria); nonetheless, they are discussed here because of their potential effect on the cost estimate for a given sector. Finally, the results of other competing cost analyses are given and compared to those of EPA. Municipal Wastewater Discharges EPA estimated that $22.3 to $38.1 million/year would be the cost to municipal wastewater sources to comply with the proposed NNC rule in Florida. The EPA analysis assumed that municipal wastewater dischargers would be in compliance with the NNC rule if they could meet the definition of advanced BNR as presented above (discharge limits of 3 mg/L for TN and 0.1 mg/L for TP as annual averages). It is important to note the use of an annual averaging period for TN and TP in EPA’s cost estimate. Annual averaging means that seasonal variability in wastewater discharge pollutant concentrations is averaged out over the course of a year. There has been some effort at EPA to enforce average monthly and weekly permit limits based on interpretation of 40 CFR 122.45(d) requiring average monthly and weekly permit limits if “practicable.” Monthly and weekly limits are not as applicable for pollutants such as TN and TP, which do not exhibit toxic effects, as they are for other pollutants typically regulated by NPDES permits and which exert their impacts over shorter timeframes than do TN and TP. However, if monthly and/or weekly permits were required for TN and TP, the cost of compliance would increase due to the need to build increased reliability into treatment plant design. Methods to Determine Costs EPA considered that every municipal WWTP had “reasonable poten- tial” under the NNC rule, meaning that they might discharge pollutants at levels that would prevent associated receiving waters from achieving the nu- meric nutrient criteria. Thus, their analysis focused on determining whether existing plants had already installed removal technologies that could meet the targets of 3 mg/L for TN and 0.1 mg/L for TP as annual averages. When both TN and TP removal technologies were already installed at a particular WWTP, it was assumed that additional modifications were unnecessary and that no cost was associated with these facilities to comply with NNC rule. Likewise, when either TN or TP removal technology was installed, only the cost to install and operate technology to remove the alternate nutrient was attributed to these facilities. This approach is reasonable, as costs for
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77 ASSESSMENT AND COMMENTARY ON EPA’S ANALYSIS of the SSAC, and on evaluating variance requests, but these costs were not considered in the EPA analysis. The history of using SSACs and variances for nutrient issues is virtually unwritten on a national level. Thus, their use in Florida would be breaking new ground. Second round and later costs for TMDLs. EPA assumes all TMDL costs occur over a nine-year period and then end. In reality, many adap- tively managed TMDLs will have to be evaluated after the nine-year period and adjustments made to the TMDL to further reduce nutrients. While not as costly as the original TMDL development, there are costs involved in the reevaluation of those TMDLs. Potentially Lower Stream Criteria Based on Downstream Protective Values. Once EPA promulgates numeric nutrient criteria for estuaries, those criteria could force lower nutrient concentrations in streams in order to meet the estuary criteria. Lower mandatory stream concentrations could result in additional waters being assessed as impaired, thus increasing the number and complexity of the TMDLs which must be developed. Sources of Uncertainty Government costs as analyzed by EPA are tied exclusively to TMDL development. Thus, a significant uncertainty for the government sector is the number of waterbodies that may be impaired and require a TMDL. Different estimates put that number between 325 and 1,018. While there is also a large percentage difference in the unit cost of each TMDL estimated by EPA as compared to others, the gross cost per TMDL is small in com- parison to implementation costs in other sectors. Another significant unknown is that FDEP maintains they will be un- able to develop TMDLs and BMAPs for waters deemed impaired according to the EPA numeric nutrient criteria due to Florida state law prohibitions on the use of criteria not contained in state rule (FDEP, 2010). If that is the case, EPA will be forced to take the lead in both identifying nutrient im- paired waters and developing TMDLs and BMAPs. Since EPA has no track record of developing nutrient TMDLs, it is unclear what an EPA TMDL would look like, how it would be implemented, and what it would cost. All of EPA cost estimates assume the State of Florida will implement the numeric nutrient criteria. It is anticipated that costs could be significantly higher if EPA were responsible for a nutrient TMDL program because EPA would have initial start-up costs in establishing an infrastructure capable of assessing Florida’s waters, developing TMDLs, and following up on BMAP implementation.
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78 EPA’S ECONOMIC ANALYSIS OF NUTRIENT STANDARDS IN FLORIDA TABLE 2-7 Cardno ENTRIX Total Government Cost Analysis in Millions Estimated Present Value Cost: Estimated Annualized Cost 2011-2040 Monte 5th 95th 5th 95th Carlo Assumption Percentile Percentile Mean Percentile Percentile Mean Output BMP/LOT $1 $4 $2 $11 $65 $32 $29 End-of-Pipe Criteria $3 $11 $6 $43 $175 $93 $85 Other Analyses Cardno ENTRIX (2011) performed an analysis of government cost as a part of their overall review of EPA’s cost analysis. Their Monte Carlo analy- sis of the data led to a prediction of 902 additional waters would be listed as impaired under the numeric nutrient criteria. The analysis also estimated a higher unit cost for each TMDL using EPA’s minimum and maximum unit costs as model inputs. Based on the analysis, Cardno ENTRIX estimated a TMDL unit cost of $64,000 as opposed to the EPA estimate of $47,000. To determine the total government costs, Cardno ENTRIX considered two scenarios—(1) Best Management Practices for diffuse sources and the Limit of Technology for point sources (BMP/LOT) and (2) End-of-Pipe (EOP) assumption that both point and diffuse sources would be required to meet the numeric nutrient criteria at the end-of-pipe or edge-of-field. The results of the Monte Carlo simulation, which provide a range of cost from low to high, are given in Table 2-7 and range from $1 million to $11 million with a mean of $6 million. The EPA cost estimate of $0.9 million is near the low-end Cardno ENTRIX estimate. While the difference between $0.9 million and $6 million is very sig- nificant in terms of state government budgeting, the government costs are a small fraction of the overall cost of implementation—less than 1 percent. Therefore, the government costs play an insignificant role in terms of the total costs for implementing numeric nutrient criteria. FINDINGS AND RECOMMENDATIONS The first set of findings and recommendations pertain to the determi- nation of the number of incrementally impaired waters, and as such have repercussions for several of the sector analyses. A second set of findings and recommendations are provided that are specific to each sector, pre- ceded by a summary table. All of these findings and recommendations are based on the assumption that EPA would use the same basic method for
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79 ASSESSMENT AND COMMENTARY ON EPA’S ANALYSIS any future economic analyses, with the intent of making suggestions for improvements. Incrementally Impaired Waters and Watersheds FINDING: The HUC10 delineation used to assess the acreage of vari- ous land uses that contribute to the potential impairment is too coarse. RECOMMENDATION: EPA should use the more refined HUC12 delineation to generate a more precise estimate of the acres to consider for the BMPs in the various land uses. FINDING: It is not valid to assume that the percent of unassessed waters that would be incrementally affected is zero. A more defensible approach would take into consideration the characteristics of the vari- ous WBIDs to predict the likelihood that they would fail to meet the narrative criteria or the numeric nutrient criteria. Sector Analyses Table 2-8 summarizes the Committee’s assessment of EPA’s economic analysis by sector. The color coding of Table 2-8 entries reflects the Com- mittee consensus of the accuracy of the EPA evaluation. Green indicates a satisfactory job in addressing the issue, yellow indicates only moderate agreement, and pink indicates unsatisfactory assessment. The table is based on the cost method used in the EPA analysis, in which the total sector cost was calculated as the product of the number of affected units (or area) and the unit cost. The second column refers to how well EPA determined the number of affected units, including judgments on assumptions used for the number of point discharges that will require treatment upgrades and land areas that will need to have new BMP technologies implemented. The third column deals with the accuracy of unit costs assessments. The fourth column considers whether the numeric nutrient criteria could be met by existing technologies at the “end-of-pipe” or “edge-of- field” for each sector. The EPA analysis assumes that in every case assimi- lative capacity exists somewhere in the watershed or waterbody, or that administrative relief is available, such that the each sector does not have to meet the numeric nutrient criteria at the end-of-pipe or edge-of-field. Yet the EPA has not employed watershed modeling to determine if implement- ing all assumed technologies would allow the numeric nutrient criteria to, in fact, be met. From the regulatory standpoint, if a waterbody violates the numeric nutrient criteria, its assimilative capacity is considered to already be exceeded. Thus, the numeric nutrient criteria were used in this column
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TABLE 2-8 Summary of Key Findings by Sector EPA estimate of the area EPA estimate of the unit Can chosen technologies/ 80 affected or number of units cost of BMPs BMPs meet the NNC? Strategies to improve the analysis Municipal All WWTPs included due CAPDET Works cost Assumed that WWTPs 1. Ground truth unit costs based Plants to “reasonable potential” estimates not verified using would only be required to on significant existing Florida provisions of regulations Florida-specific experience treat to 3 mg/L TN and 0.1 experience mg/L TP and none will treat 2. More realistically reflection to NNC at end of pipe of the proportion of WWTPs receiving administrative relief to avoid treating beyond 3 mg/L TN and 0.1 mg/L TP Industrial Established by averaging flows CAPDET Works program Same as for municipal Should not have investigated only Plants from only a limited number of (used for municipal WWTPs 1 or 2 plants per SIC but rather facilities and extrapolating to facilities) was misapplied to analyzed each plant others industries Agriculture EPA likely underestimated the Costs from SWET report No. Alternative BMPs will Use existing TMDLs and area of incrementally impaired not representative; need likely be required along restoration plans to identify the watersheds as well as the more site-specific cost with land retirement BMPs and regional treatment number of springs affected estimates needed to meet the criteria Urban Assumed Urban Turf Rule EPA used low end of a very Assumed traditional BMPs Consider advanced BMP Stormwater would insure compliance on wide range of unit costs would meet NNC and implementation throughout most all low-density residential land assumed 100% compliance developed land area and that all land after 1982 is and functionality for urban already in compliance BMP implementation; NNC may necessitate more advanced BMPs Septic Excluded systems beyond 500 ft Reasonable for technologies Not necessarily, but other Consider wider range of systems Systems and springs areas evaluated technologies may and updated per unit costs Government Did not consider other Used old TMDL cost data NA 1. Use contemporary, Florida Costs government costs like SSAC not specific to FL and nutrient-specific TMDL approval, variances, etc. development costs 2. Consider costs of SSACs, TMDL revision, etc.
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81 ASSESSMENT AND COMMENTARY ON EPA’S ANALYSIS because no other logical benchmark is available with which to compare the performance of technologies and BMPs. An important consideration not well captured in this summary table (but returned to in Chapter 3) is the degree of uncertainty and variability expected in each of the sector categories. In many cases, uncertainty is expected to be exceedingly high. While some uncertainty is captured in the EPA analysis, it is not considered to be adequate to describe the vast complexity inherent in many of the parameters critical to the economic analysis. In some of the sectors, especially with agriculture and with urban stormwater, technology and implementation unit costs can vary by factors approaching two orders of magnitude. Placing the assessment accuracy results summarized in Table 2-8 in the context of the high uncertainty and variability of many of the catego- ries leads to even greater concern with the EPA economic analysis. Municipal Wastewater Treatment Plants FINDING: There is significant uncertainty in the cost estimate for municipal wastewater treatment plants because (1) the unit treatment costs were not thoroughly verified by comparison to the existing and extensive Florida advanced wastewater treatment experience and (2) the assumption that no plant will be required to treat to levels more stringent than 3 mg/L TN and 0.1 mg/L TP is unrealistic. While the proportion that will be able to avoid treating to levels more stringent than 3 mg/L TN and 0.1 mg/L TP is uncertain, there is a real pos- sibility that at least some WWTPs will have to treat to more stringent levels. RECOMMENDATION: Efforts should be made to compare the unit costs of CAPDETWorks with cost data from Florida. Efforts should also be made to better estimate the percentage of plants that will be required to reach discharge limits more stringent than 3 mg/L TN and 0.1 mg/L TP by performing mass balance and dilution calculations for at least a representative proportion of plants, if not for all of the plants included in this analysis. Industrial Plants FINDING: There is significant uncertainty about the incremental cost of the NNC rule for industrial plants for several reasons. EPA based its estimates on one or two selected facilities from each sector and ignored the diversity of industrial facilities within a sector. This extrapolation led to some low-flow facilities exerting a disproportionate influence
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82 EPA’S ECONOMIC ANALYSIS OF NUTRIENT STANDARDS IN FLORIDA on the overall industrial costs. Furthermore, the same cost model and treatment processes were used for industrial facilities as was employed for municipal WWTPs. For facilities with highly variable flows, flow equalization may be a more cost-effective solution than mechanical/ chemical treatment, such that EPA may have overestimated costs for these facilities. On the other hand, some industrial facilities have higher unit costs than municipal WWTPs. Finally, industries covered under general permits were not investigated, raising the question of whether there may be costs to remove nutrients from those facilities that were not captured in EPA’s estimates. RECOMMENDATION: Given the small number of industries in- volved, the cost analysis should be improved by analyzing each plant rather than extrapolating the results of one or two plants to the entire sector. As with the municipal wastewater treatment plants, efforts should be made to compare the unit costs of CAPDETWorks with cost data from Florida and to better estimate the percentage of plants that will be required to reach discharge limits more stringent than 3 mg/L TN and 0.1 mg/L TP. Urban Stormwater FINDING: For the urban stormwater sector, the costs of complying with the NNC rule in those watersheds determined by EPA to be in- crementally impaired are expected to be higher than EPA estimates. However, high uncertainty and variability is prevalent throughout all aspects of this sector analysis, which would lead to a wide cost range and costs that are highly dependent on several critical assumptions. Most traditional Florida urban SCMs will not likely be able to comply with stringent numeric nutrient criteria, but newer, novel (and more expensive) technologies may. Per acre costs for traditional Florida SCMs are highly variable; broadening the SCM options increases the cost range even more. Many simplifying assumptions are employed to estimate urban land area incrementally affected by the NNC rule. Actual affected land area estimates are highly dependent on unverified existing SCM performance and compliance with urban stormwater rules and regulations. RECOMMENDATION: To improve the cost analysis, higher-efficiency SCMs should be considered, which have costs higher than traditional SCMs. Costs of retrofitting SCMs into already-developed land should be considered.
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83 ASSESSMENT AND COMMENTARY ON EPA’S ANALYSIS Agriculture FINDING: For the agricultural sector, the costs of complying with the NNC rule in those watersheds determined by EPA to be incrementally impaired are likely to be higher than EPA estimates. The incremental land area needing treatment was likely underestimated, individual costs for the BMPs assumed to be sufficient were underestimated, and the more effective and costly BMPs and regional treatment systems likely required to meet numeric nutrient criteria were not included in the analysis. The need for more stringent BMPs and treatment systems has been demonstrated in many of the BMAPs developed for impaired waters in Florida. Furthermore, there were some critical omissions that could well lead to increased costs, including the degree of actual participation by agricultural producers and the costs of maintaining BMPs over time. RECOMMENDATION: To improve the cost analysis, actual experi- ence from existing TMDLs should be used to identify the BMPs and regional treatment systems that were sufficient or insufficient to meet certain numeric targets. Septic Systems FINDING: For septic systems, the costs of complying with the NNC rule in those waterbodies determined by EPA to be incrementally im- paired are likely to be substantially higher than EPA estimates. The Committee was comfortable with the 500-ft threshold assumption made by EPA; however, the exclusion of septic systems in springsheds is a significant deficiency of EPA’s analysis. EPA received cost estimates from vendors of equipment capable of meeting a total nitrogen target of 20 mg/l and a total phosphorus target of 10 mg/L, values which are much higher than EPA’s numeric nutrient criteria. RECOMMENDATION: Efforts should be made to consider septic sys- tems in springsheds and a wider range of systems including permeable reactive barriers, which are known to be more effective in removing nutrients to levels consistent with the numeric nutrient criteria. Government Costs FINDING: The incremental costs for the government sector are ex- pected to be higher than EPA estimates. The key factors in determin- ing government cost are the number of incrementally affected units (WBIDs requiring a TMDL) and the unit cost of a TMDL. In the EPA
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84 EPA’S ECONOMIC ANALYSIS OF NUTRIENT STANDARDS IN FLORIDA analysis, WBIDs with insufficient data were not used, thus potentially underestimating the number of incrementally impaired waters requiring TMDLs. Unit costs were based on low-end estimates of costs from a 2001 study that focused on a broad range of TMDL work not specifi- cally related to either Florida TMDL development or nutrient TMDL development. The unit cost selected was less than the national unit cost referenced in the 2001 report. RECOMMENDATION: Effort should be made to quantify costs for Florida-specific and/or nutrient-specific TMDLs to provide more ac- curate unit costs for TMDL development. Additional government costs should also be considered, including costs for developing or approving SSACs and variances, costs associated with downstream protective values effectively reducing upstream criteria, future costs of adaptively managed TMDLs, and consideration of additional waters becoming impaired in the future. REFERENCES Anderson, D. L., and E. G. Flaig. 1995. Agricultural Best Management Practices and surface water improvement and management. J. Wat. Sci. Tech. 31:109-121. Arthur, J. D., H. A. R. Wood, A. E. Baker, J. R. Cichon, and G. L. Raines. 2007. Development and Implementation of a Bayesian-based Aquifer Vulnerability Assessment in Florida. Natural Resources Research 16(2):93-107. Ayres Associates. 2000. Florida Keys Onsite Wastewater Nutrient Reduction System Demon- stration Project, Phase II Addendum. Bureau of Onsite Sewage Programs, Tallahassee, FL, 28 pp. Retrieved September 6, 2011 from http://www.myfloridaeh.com/ostds/zip/ keysnutrientdemoph2.zip. Bachmann, R. W., M. V. Hoyer, and D. E. Canfield, Jr. 1999. The restoration of Apopka Lake in relation to alternative stable states. Hydrobiol. 394:219-232. Birr, A. S., and D. J. Mulla. 2002. Relationship between lake and ground water quality pat- terns and Minnesota agroecoregions. Hydrological Sci. Tech. 18(1-4):31-41. Bottcher, A. B., T. K. Cremwell, and K. L. Campbell. 1995. Best Management Practices for water quality improvement in the Lake Okeechobee watershed. Ecol. Engin. 5:341-356. Bouma, J. 1979. Subsurface applications of sewage effluent. Planning the Uses and Manage- ment of Land. Madison, WI: ASA-CSSA-SSSA. 665-703. Brown, C. D., M. V. Hoyer, R. W. Bachmann and D. E. Canfield, Jr. 2000. Nutrient-chlorophyll relationships: an evaluation of empirical nutrient-chlorophyll models using Florida and north-temperate lake data. Can. J. Fish Aquat. Sci. 57:1574-1583. Capece, J. C., et al. 2007. Soil Phosphorus, Cattle Stocking Rates and Water Quality in subtropical Pastures in Florida, USA. Rangeland Ecology and Management 60(1):19-3. Cardno ENTRIX. 2011. Addendum to the Economic Analysis of the Federal Numeric Nutri- ent Criteria for Florida. July 2011. Carollo Engineers. 2010. Costs for Utilities and Their Ratepayers to Comply With EPA Nu- meric Nutrient Criteria for Freshwater Dischargers. Prepared for the FL Water Environ- ment Association Utility Council. November 2010. CH2M Hill. 2010. Statewide Nutrient Removal Cost Impact Study. Prepared for the Utah Division of Water Quality, Salt Lake City, Utah. October 2010.
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85 ASSESSMENT AND COMMENTARY ON EPA’S ANALYSIS Crites, R., and G. Tchobanoglous. 1998. Small and Decentralized Wastewater Management Systems. McGraw-Hill Series in Water Resources and Environmental Engineering, Bos- ton, MA, 1084 pp. Daroub, S. H., T. A. Lang, O. A. Diaz, M. Chen, and J. D. Stuck. 2005. Everglades agricul- tural area BMPs for reducing particulate phosphorus transport. Everglades Agricultural Research and Education Center, Univ. Fl. Daroub, S., et al. 2011. Best Management Practice and Long-Term Water Quality Trends in the Everglades Agricultural Area. Critical Reviews in Environmental Science and Tech- nology 41(S1):608-632. ERD (Environmental Research & Design, Inc.) 2007. Evaluation of Current Stormwater De- sign Criteria within the State of Florida. Final Report prepared for Florida Department of Environmental Protection, Orlando, FL. http://www.dep.state.fl.us/water/nonpoint/ docs/nonpoint/SW_TreatmentReportFinal_71907.pdf. FDACS (Florida Department of Agriculture and Consumer Services). Office of Water Policy. 2011a. NSPM Annual Report. FDACS. 2011b. Fact: Sheet “Protecting Florida’s Water Resources with Agricultural Best Management Practices—What, Why, and How.” FDEP (Florida Department of Environmental Protection). 2008a. Lower St. Johns River Basin Management Action Plan. Tallahassee, FL: Florida DEP. http://www.dep.state.fl.us/Water/ watersheds/docs/bmap/adopted-lsjr-bmap.pdf. FDEP Office of Inspector General (OIG). 2008b. Total Maximum Daily Load Program Review, Division of Environmental Assessment and Restoration. Report # IA-03-14-2008-52. FDEP. 2010. Memorandum—Department Comments on the Environmental Protection Agency’s (EPA) Proposed Numeric Nutrient Criteria for Florida Lakes and Flowing Waters, January 26, 2010. Florida DEP, Tallahassee, FL. http://waterwebprod.dep.state. fl.us/nutrients/dep-comments/fdep_cover_letter.pdf. FDEP. 2011. Estimation of the Increase of Water Segment Impairments under the U.S. Envi- ronmental Protection Agency’s Numeric Nutrient Criteria. FDOH (Florida Department of Health). 2010a. Final Study and Report on phase 1 of the Florida Onsite Sewage Nitrogen Reduction Strategies Study (2008-2010). Bureau of Onsite Sewage Programs, Tallahassee, FL, 40 pp. Retrieved August 5, 2011 from http:// www.myfloridaeh.com/ostds/pdfiles/forms/NitrogenReductionReport.pdf. FDOH. 2010b. Bureau of Onsite Sewage GIS Data Files. http://www.doh.state.fl.us/Environment/ programs/EhGis/EhGisDownload.htm. Grady, C. P. L., Jr., G. T. Daigger, N. G. Love, and C. D. M Felipe. 2011. Biological Waste- water Treatment, 3rd Edition. Boca Raton, FL: CRC Press. Graetz, D., et al. 2008. Evaluating Effectiveness of Best Management Practices For Animal Waste and Fertilizer Management to Reduce Nutrient Inputs into Ground Water in the Suwannee River Basin Section 319 Nonpoint Source Pollution Control Program Educa- tion/Training Demonstration Project Final Report, January 2008. Harrison, C. B., W. D. Graham, and S. T. Lamb. 1999. Evaluating the Impact of Alternative Nitrogen Management Practices on Groundwater beneath Central Florida Citrus Groves, 2. Computer Modeling. Transactions of the ASAE 42(6):1669-1678. Lamb S. T., W. D. Graham, and C. B. Harrison. 1999. Evaluating the Impact of Alternative Nitrogen Management Practices on Groundwater beneath Central Florida Citrus Groves, 1. Monitoring Data, Transactions of the ASAE 42(6):1653-1668. Livingston-Way, P. 2001. Water Quality Monitoring and Assessment of Agricultural Best Management Practices in the Tri-County Agricultural Area Phase II Final Report, sub- mitted to the Florida Department of Environmental Protection in fulfillment of Contract No. WM602.
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86 EPA’S ECONOMIC ANALYSIS OF NUTRIENT STANDARDS IN FLORIDA Lowe, K. S., M. B. Tucholke, J. M. Tomares, K. Conn, C. Hoppe, J. E. Drewes, J. E. Mc- Cray, and J. Munkata-Marr. 2009. Influent constituent characteristics of the modern waste stream from single sources. Water Environment Research Foundation 04-DEC-1. Retrieved August 8, 2001 from http://www.decentralizedwater.org/documents/04-DEC- 1/04DEC01web.pdf. McCann, L., and K. W. Easter. 2000. Estimates of Public Sector Transaction Costs in NRCS Programs. Journal of Agricultural and Applied Economics 32(3): 555-63. McKee, K. 2011. National Hydrography Dataset Basin 311. University of Florida Water Institute. Medina, D., and S. Curtis. 2011. Comparing LID and Stream Restoration. Stormwater 12(6):10-23. Mulla, D. J., A. S. Birr, N. R. Kitchen, and M. B. David. 2008. Limitations of evaluating the effectiveness of agricultural management practices at reducing nutrient losses to surface waters. Pp. 189-212. In: (J. L. Baker, ed.), Final Report Gulf Hypoxia and Local Water Quality Concerns Workshop. Upper Mississippi River Sub-Basin Nutrient Hypoxia Com- mittee (UMRSHNC). Am. Soc. Ag. Biol. Eng., St. Joseph, MI. NRC (National Research Council). 2009. Urban Stormwater Management in the United States. Washington, DC: National Academies Press. Nowak, P. 1992. Why Farmers Adopt Production Technology. Journal of Soil and Water Conservation, Jan-Feb 1992 47(1):14-16. Robertson, W. D., and J. A. Cherry. 1995. In situ denitrification of septic-system nitrate using reactive porous media barriers: field trials. Ground Water 33(1):99-111. Shukla, S., D. Goswami, W. D. Graham, A. W. Hodges, M. C. Christman, and J. M. Knowles. 2011a. Water Quality Effectiveness of Ditch Fencing and Culvert Crossing in the Lake Okeechobee Basin, Southern Florida. Ecological Engineering, doi:10.1016/j. ecoleng.2011.02.013. Shukla, S., W. Graham, D. Goswami, J. Knowles, A. Hodges, V. Nair, M. Christman, C. Wu. 2011b. Evaluation of Cow-Calf Best Management Practices with Regards to Nutrient Discharges in the Lake Okeechobee Basin. Final Report submitted to: Florida Department of Agricultural and Consumer Services & South Florida Water Management District. Soil and Water Engineering Technology, Inc. 2008a. Tasks 1, 2 and 3: Nutrient loading rates, reduction factors and implementation costs associated with BMPs and technologies. Final Report for South Florida Water Management District. Gainesville, Fl. Soil and Water Engineering Technology, Inc. 2008b. Task 4: Nutrient loading rates, reduction factors and implementation costs associated with BMPs and technologies. Final Report for South Florida Water Management District. Gainesville, Fl. U.S. EPA (U.S. Environmental Protection Agency). 2001a. The National Costs of the Total Maximum Daily Load Program (Draft Report). EPA-841-D-01-003. U.S. EPA. 2001b. The National Costs of the Total Maximum Daily Load Program (Draft Report): Support Document #1. EPA-841-D-01-004. U.S. EPA. 2008. Final Total Maximum Daily Load (TMDL) for Biochemical Oxygen Demand, Dissolved Oxygen, and Nutrients in the Lake Okeechobee Tributaries. Atlanta, GA: EPA Region 4. U.S. EPA. 2010a. Economic analysis of final water quality standards for nutrients for lakes and flowing waters in Florida. Washington, DC: EPA Office of Water. U.S. EPA. 2010b. Guidance for Federal Land Management in the Chesapeake Bay Water- shed. Chapter 6—Decentralized Wastewater Treatment Systems. Washington, DC. EPA 841-R-10-002, May 12, 2010. Retrieved August 12, 2011 from http://www.epa.gov/ owow_keep/NPS/chesbay502/pdf/chesbay_chap06.pdf. U.S. EPA. n.d. National Water Quality Assessment Report (n.d.). Retrieved from http://www. epa.gov/waters/ir/attains_q_and_a.html#content.
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87 ASSESSMENT AND COMMENTARY ON EPA’S ANALYSIS Wan, Y., M. Voich, and S. Trost. 2001. Effectiveness of Best Management Practices. Everglades Consolidated Report. Water Environment Federation (WEF). 2009. Design of Municipal Wastewater Treatment Plants, 5th Edition, Manual of Practice No. 8, Alexandria, VA. Weiss, P. T., Gulliver, J. S. and Erickson, A. J. 2007. Cost and Pollutant Removal of Storm- Water Treatment Practices. J. Wat. Res. Plan. Mgmt. 133(3):218-229. Wilhelm, S. R., Schiff, S. L. and Robertson, W. D. 1994. Chemical Fate and Transport in a domestic septic system: unsaturated and saturated zone geochemistry. Environmental Toxicology and Chemistry 13(2):193–203.