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Regulatory Alert - RA 01-13: EPA DRAFT REPORT ON TOTAL COSTS OF THE TMDL PROGRAM

Member Pipeline - Regulatory - Alert (RA 01-13)

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To: Members & Affiliates
From: National Office
Date: August 17, 2001
Subject: EPA DRAFT REPORT ON TOTAL COSTS OF THE TMDL PROGRAM
Reference: RA 01-13

Action Please By:
December 7, 2001

On August 9 the U.S. Environmental Protection Agency (EPA) published in the Federal Register for review and comment by December 7, 2001 a Draft Report entitled The National Costs of the Total Maximum Daily Load Program (TMDL). A copy of the Federal Register notice is attached for your review. The full Draft Report, its two accompanying technical documents, and EPA’s Fact Sheet can be found at http://www.epa.gov/owow/tmdl/. This Alert details the Draft Report’s findings particularly as they apply to publicly owned treatment works (POTWs), the process for AMSA members to comment on the Draft Report to EPA, and the National Office’s plans to evaluate and respond to the document.

The Draft Report and its two technical documents are the latest in a series of TMDL studies requested by Congress in the VA-HUD and Independent Agencies Appropriations Act for FY 2001 after the Clinton Administration finalized sweeping and controversial changes to the program in July 2000. Congress was particularly concerned that EPA’s cost estimate of $22.8 million per year accompanying the July 2000 rule was unrealistic and failed to include compliance costs to pollutant sources or costs associated with water quality monitoring and TMDL development. The Draft Report and its supporting cost analyses attempt to respond to this Congressional concern by more comprehensively assessing the costs of developing and implementing TMDLs.


Costs For POTWs and Other Pollutant Sources
EPA used three broad scenarios to estimate costs to pollutant sources to implement the TMDL program. Under the "least flexible" scenario, which increases controls on all sources, point and nonpoint, that contribute to the impairment of a listed water, EPA estimates costs as high as $4.3 billion a year. The estimated POTW-specific costs under the "least flexible" scenario range from $396 million to $697 million per year, affecting between 1,094 and 3,335 facilities.

Under the "moderately cost-effective" scenario, which includes "non-uniform and flexible allocation among sources to achieve cost effective reductions," EPA estimates costs of between $1 billion and $3.4 billion per year. This estimate might be higher or lower depending on the extent to which states choose to allocate more of the reductions to sources with lower control costs versus requiring equal percentage reductions regardless of cost. Finally, under the "more cost-effective scenario," which recognizes "the possibility of reducing TMDL costs to point source dischargers through either additional cost-effective wasteload allocations or through trading, or both," EPA estimates costs between $900 million and $3.2 billion per year. Under these two scenarios, POTW-specific estimates range from $297 million to $523 million per year, affecting between 821 and 2,502 facilities.

Notably, under the least flexible and moderately cost-effective scenarios, half or more of the costs would be incurred by point sources despite the fact that point sources affect only about one-quarter of the impaired waters while nonpoint sources affect more than 90 percent. EPA presumes under the final scenario that some point source responsibilities will shift to nonpoint sources. Even so, EPA states that point sources still may incur the majority of the implementation costs.


Costs For States and EPA
EPA estimates the total average annual costs to states and EPA to develop TMDLs over the next 15 years between $63 and $69 million per year nationwide, and at approximately $1 billion total over this time for the 36,000 TMDLs in over 20,000 water bodies known to be impaired nationwide. The average cost of developing an individual TMDL is estimated to be about $50,000, with a range of costs between $26,000 and over $500,000. EPA estimates additional water quality monitoring costs at $17 million per year.


Underlying Basis For Cost Estimates
The Draft Report’s costs are based both on the requirements of the 1992 TMDL rules still in effect today, as well as the new provisions added in July 2000. On August 9, however, EPA proposed an 18 month delay of the effective date of the July 2000 rules so that the Agency can review and revise those regulations in response to the continuing controversy and litigation. The uncertainty surrounding the July 2000 rules does not significantly impact the Draft Report’s estimates, as EPA notes that the costs of the additional requirements associated with the July 2000 regulations "represent less than 10% of the total TMDL development cost represented in this report." Thus, even if the July 2000 regulations are significantly modified in the coming months, the Draft Report’s cost estimates are still relevant and based primarily on requirements in effect today.

The Draft Report’s costs also are based on TMDLs that would be required as result of the 1998 §303(d) listing and do not take into account future listings. Since states have monitored or assessed only one third of the nation's waters, the estimated costs can be expected to increase as new waterbodies are added in future listing cycles. EPA also assumes that progress toward meeting water quality standards for the 1998 Clean Water Act (CWA) §303(d)-listed waters has probably occurred and that "many more nonpoint sources have implemented desirable Best Management Practices (BMPs)."


Significant POTW and Other Costs Omitted
Not included in EPA’s estimated costs are regulatory requirements unique to POTWs which will amass substantial costs independent of TMDLs, such as storm water, combined sewer overflows, and sanitary sewer overflows. Also not included in the estimate for pollutant sources are increased water and sewer rates that will increase the number of households facing high rates thereby placing greater economic stress on these households.

EPA also omitted other costs from the analysis because they have been unsuccessful in finding a way to estimate them." These omissions include costs for achieving load reductions from nonpoint source types such as resource extraction (mines and oil and gas development), atmospheric deposition, contaminated in-stream sediments, natural sources, and land disposal. EPA estimated that these omitted source types account for about 14 percent of all CWA §303(d) river miles and 22 percent of all §303(d) lake acres.


Next Steps
The National Office encourages AMSA members to review the Draft Report’s findings and cost estimates, to compare these cost estimates to your experiences on specific TMDLs in your geographic region, and to submit comments directly to EPA with a copy to AMSA’s National Office by the December 7, 2001 deadline. In addition, during the lengthy comment period, AMSA’s Water Quality Committee will evaluate and consider additional study and analysis on the Draft Report’s findings that may be performed by the National Office and also submitted to EPA on behalf of the membership. We will continue to report to AMSA members on the results of the Committee’s evaluation and on any additional resources that we will provide to the membership to assist you in completing comments on the Draft Report.

If you have any questions on the Draft Report or AMSA’s TMDL advocacy, please contact Lee Garrigan at 202/833-4655 or via e-mail at lgarrigan@amsa-cleanwater.org.

 

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