Review of the EPA's Economic Analysis of Final Water Quality Standards for Nutrients for Lakes and Flowing Waters in Florida (2012) / Chapter Skim
Currently Skimming:
2 Assessment and Commentary on EPA's Analysis
2 Assessment and Commentary on EPA's Analysis
Pages 35-87
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From page 35... ...
Chapter 3 provides an expanded discussion 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, identifying 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.
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From page 36... ...
For the stormwater and agricultural sources, EPA identified the corresponding acreage 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 determined 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.
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From page 37... ...
. 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.
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From page 38... ...
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.
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From page 39... ...
. 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 potentially impaired waters that would be listed due to the new rule and determined that there are between 424 and 546 incrementally impaired WBIDs under the NNC rule (FDEP, 2011)
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From page 40... ...
. Waters with insufficient data to determine compliance were assumed to be unimpaired under the numeric nutrient criteria.
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From page 41... ...
. FIGURE 2-3 HUC 10 delineation for the Santa Fe River in Central Florida.
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From page 42... ...
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 water to springs (spring recharge areas or springsheds)
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From page 43... ...
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)
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From page 44... ...
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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From page 45... ...
Methods to Determine Costs EPA considered that every municipal WWTP had "reasonable potential" under the NNC rule, meaning that they might discharge pollutants at levels that would prevent associated receiving waters from achieving the numeric 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.
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From page 46... ...
. These possibilities suggest that simply assuming that MF/RO will have to be applied to all municipal dischargers affected by the NNC rule -- which is the position taken by the Florida Water Environment Association Utility Council (Carollo Engineers, 2010)
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From page 47... ...
As noted by EPA in these discussions, the costs specifically associated with nutrient upgrades must be segregated from other project costs when analyzing actual cost data. Alternate data were supplied by the Florida Water Environment Association Utility Council suggesting significantly higher upgrade unit costs.
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From page 48... ...
Data provided by the Florida Water Environment Association Utility Council suggests that Florida-specific unit costs may be significantly greater than those based on CAPDETWorks and used by EPA in their analysis. The second significant source of uncertainty is regulatory, specifically the proportion of WWTPs that would be required to treat to levels more stringent than 3 mg/L TN and 0.1 mg/L TP, perhaps approaching numeric nutrient criteria values in their discharge.
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From page 49... ...
• Because of their assumption about the needed technology, and in some cases the unit costs, the overall costs estimated by Carollo were significantly higher than those of EPA. Industrial Facilities EPA estimated that $25.4 million/year would be the cost to industrial wastewater sources to comply with the proposed NNC rule in Florida.
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From page 50... ...
from which EPA established unit costs and overall industrial point source cost estimates. Given the diversity of industries and the variability of their operations and discharges, use of the broader resource database that is available under the permit compliance system would have been useful for establishing more accurate cost estimates for the individual industries.
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From page 51... ...
Effectiveness of Control Measures The issues discussed previously for the municipal wastewater discharges also apply to industrial wastewater discharges. Range of Unit Costs EPA used the same nutrient control unit cost data established for municipal wastewater treatment to estimate industrial treatment costs (Exhibit 4-4)
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From page 52... ...
Thus, not including this single facility in the sector sample may have significantly underestimated the total annual cost for the food sector. Other Analyses Several alternate cost analyses, of varying detail, were performed to estimate industry costs to meet EPA's numeric nutrient criteria including Environ International Corp.
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From page 53... ...
Methods to Determine Costs Some of the challenges to estimating urban stormwater costs for compliance with the NNC rule are related to the amount of urban land that drains to incrementally impaired waters, the type of urban development, and the historical timeline of that development. First, EPA considered that
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From page 54... ...
The urban areas that may require additional expenditures to meet the numeric nutrient criteria may thus be significantly greater than the 23 to 41 percent estimated by EPA. On the other hand, it is also unlikely that 100 percent of urban areas would be affected due to the new NNC rule, in part because stormwater control measures (SCMs)
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From page 55... ...
. The proposed numeric nutrient criteria range from 0.5 to 1.87 mg/L TN and from 0.01 to 0.49 mg/L TP, depending upon waterbody type and region.
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From page 56... ...
. P, the runoff is generally about 3 to 16 times greater than the proposed numeric nutrient criteria.
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From page 57... ...
Higher treatment efficiencies needed to reach the proposed numeric nutrient criteria could likely be obtained through the use of more advanced SCMs, such as bioretention (up to 80 percent removal of TN and 85 percent removal of TP in high-infiltration soils) or other vegetated infiltration
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From page 58... ...
The median is $6,836 per acre, which is the fixed value used in the EPA analysis. (The 10 and 90 percentiles are $863 and $34,350 per acre, demonstrating the large variability in unit costs.)
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From page 59... ...
Finally, refining the cost analysis geographically (by considering rainfall distributions) , based on the type of urban development and by regional numeric nutrient criteria, would reduce uncertainty.
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From page 60... ...
BMP manuals will reduce agriculture's contribution to the problem sufficiently to meet the NNC rule when combined with other source control strategies. EPA estimated the incremental cost of new agricultural BMPs only for those agricultural lands in "incrementally impaired watersheds" -- some 805,793 acres (as estimated by EPA)
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From page 61... ...
, do not support the EPA's assumption that typical "owner" implemented on-farm BMPs will achieve the proposed numeric nutrient criteria. Rather, Table 2-3 suggests that treatment measures beyond typical on-farm BMPs will be required to achieve the proposed numeric nutrient criteria.
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From page 62... ...
water management BMPs TriCounty Agricultural Area Row 1-30 TN 1-14 TP Measured post-nutrient and Livingston-Way Crops, lower St. Johns River Basin water management BMPs et al., 2001 (SW)
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From page 63... ...
. Range of Unit Costs EPA estimated only the costs associated with the "owner" and "typical" BMPs currently practiced in Florida that were assumed to be required in the incrementally impaired watersheds and springsheds.
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From page 64... ...
The basis for EPA's unit costs was SWET (2008a) , a recent assessment of BMP costs and impacts on water quality in the Caloosahatchee River TABLE 2-5 Percent Reductions in Nitrogen and BMP Costs for Three Levels of BMP Implementation in Different Crop and Animal Production Systems Owner Initiated BMPs % Establishment Production System Reductions Cost ($/ac)
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From page 65... ...
, "BMP implementation costs were typically not provided with the research studies and therefore had to be developed by SWET, Inc. Cost estimates took into account the following factors: saved fertilizer, equipment and construction, operation and maintenance, energy/fuel, crop yield reduction, crop displacement, and land purchases.
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From page 66... ...
Thus, it is likely that the actual annual per acre costs of implementing BMPs on agricultural land to meet EPA's proposed numerical nutrient criteria will be much larger than their estimates. Sources of Uncertainty An underlying assumption by EPA is that the agricultural lands that would require TMDLs and BMAPs under existing state narrative standards would require the same controls to meet the proposed numeric nutrient criteria.
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From page 67... ...
While a farm in Florida in an impaired watershed is required to adopt BMPs, which BMPs the grower must implement are not specified. There is a substantial gap between what may be required, what may be economically feasible, and what may be sufficient to meet the NNC rule that may not be filled by voluntary action.
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From page 68... ...
While EPA almost surely underestimated costs by choosing low-cost BMPs, Cardno ENTRIX's "endof-pipe" scenario is beyond what would likely be required to meet the NNC rule and represents an overestimation of BMP costs (and acres to be treated)
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From page 69... ...
. Methods for Determining Costs To determine the costs of implementing the NNC Rule for septic systems, EPA considered the 793,697 active septic systems in the FDEP database, and then determined which of those systems lie within the potential
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From page 70... ...
This reduced the number of septic systems considered for the EPA cost analysis to 8,224, or just over 1 percent of all the systems in the state of Florida. For the 8,224 OSTDS, EPA assumed that they would require upgrades for nitrogen and phosphorus removal to comply with the NNC rule.
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From page 71... ...
. They are the only known technology likely to be able to approach the proposed numeric nutrient criteria in their discharge.
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From page 72... ...
Unlike for the other sectors, implementation of the NNC rule for septic systems could not occur as quickly and unilaterally because the FDEP must work through the Florida Department of Health (FDOH) , which has responsibility for regulating OSTDS in the state of Florida.
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From page 73... ...
Methods for Determining Costs The methodology for determining government costs is found in Chapter 10 of EPA's economic analysis performed in support of promulgation of numeric nutrient criteria for Florida (EPA, 2010a)
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From page 74... ...
This Committee advocates for an alternate approach to determining the number of unassessed waters likely to be out of compliance with the numeric nutrient criteria, which takes into consideration the characteristics of the various WBIDs. Range of Unit Costs The cost estimate for completing a TMDL was estimated based on a draft EPA document evaluating TMDL program costs (EPA, 2001a)
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From page 75... ...
Interestingly, in the Executive Summary of the 2001 document, EPA references only the waterbody cost estimates in approximating aggregate national TMDL unit costs. Those unit costs utilized for the national estimate range from $26,000 to $500,000 per TMDL with an average of $52,000 dollars.
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From page 76... ...
In the section on municipal and industrial wastewater treatment plants, the EPA analysis assumed there would be liberal acceptance of variances or SSACs to replace the promulgated numeric nutrient criteria on a case-specific basis. SSAC development costs could be borne by government sector or the private sector, but the possibility of the former was not factored into the government sector analysis done by EPA.
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From page 77... ...
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.
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From page 78... ...
Their Monte Carlo analysis 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.
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From page 79... ...
The fourth column considers whether the numeric nutrient criteria could be met by existing technologies at the "end-of-pipe" or "edge-offield" for each sector. The EPA analysis assumes that in every case assimilative 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.
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From page 80... ...
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.
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From page 81... ...
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.
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From page 82... ...
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.
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From page 83... ...
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.
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From page 84... ...
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.
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From page 85... ...
Proposed Numeric Nutrient Criteria for Florida Lakes and Flowing Waters, January 26, 2010. Florida DEP, Tallahassee, FL.
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From page 86... ...
2011a. Water Quality Effectiveness of Ditch Fencing and Culvert Crossing in the Lake Okeechobee Basin, Southern Florida.
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From page 87... ...
2009. Design of Municipal Wastewater Treatment Plants, 5th Edition, Manual of Practice No.
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