[Federal Register: April 26, 2004 (Volume 69, Number 80)]
[Proposed Rules]
[Page 22472-22483]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr26ap04-39]
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ENVIRONMENTAL PROTECTION AGENCY
40 CFR Part 450
[FRL-7644-2]
RIN 2040-AD42
Effluent Limitations Guidelines and New Source Performance
Standards for the Construction and Development Category
AGENCY: Environmental Protection Agency (EPA).
ACTION: Proposed rule; Withdrawal.
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SUMMARY: On June 24, 2002, EPA published a proposal that contained
several options for the control of storm water discharges from
construction sites, including effluent limitations guidelines and new
source performance standards. We have selected the option in that
proposal that continues to rely on the range of existing programs,
regulations, and initiatives at the Federal, State, and local level for
the control of storm water discharges from construction sites rather
than a new national effluent guideline or other new rule. EPA
determined that uniform national technology-based standards are not the
most effective way to address storm water discharges from construction
sites at this time. Instead, EPA believes that it is better at this
time to rely on the existing National Pollutant Discharge Elimination
System (NPDES) storm water program, which requires permit coverage for
discharges associated with construction activity disturbing at least
one acre of land, and also requires municipalities to reduce their
stormwater discharges of pollutants to the maximum extent practicable,
which can include implementation of tailored local programs to reduce
pollutant discharges from construction sites.
DATES: For judicial review purposes, this action is considered issued
as of 1 p.m. eastern daylight time (e.d.t.) on May 10, 2004, as
provided in 40 CFR 23.2. Under section 509(b)(1) of the Clean Water
Act, judicial review of the Administrator's action regarding effluent
limitations guidelines and standards can only be had by filing a
petition for review in the United States Court of Appeals within 120
days after the decision is considered issued for purposes of judicial
review.
ADDRESSES: The docket for today's action is available for public
inspection at the Water Docket in the EPA Docket Center, (EPA/DC) EPA
West, Room B102, 1301 Constitution Ave., NW., Washington, DC.
FOR FURTHER INFORMATION CONTACT: For technical information regarding
today's action, please contact Mr. Jesse W. Pritts at (202) 566-1038 or
send e-mail to: pritts.jesse@epa.gov. For economic information, please
contact Mr. George Denning at (202) 566-1067 or send e-mail to:
denning.george@epa.gov.
SUPPLEMENTARY INFORMATION:
General Information
A. What Entities Are Potentially Interested in This Action?
Entities potentially interested in this action include businesses
that conduct construction and development activities.
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Examples of common North American
Category Examples of regulated entities Industry Classification System
(NAICS) codes
----------------------------------------------------------------------------------------------------------------
Industry................................ Builders, Developers, General 233, 234
Contractors and Heavy
Construction operators that
perform construction
activities.
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This table is not intended to be exhaustive, but rather provides a
guide for readers regarding entities likely to be interested in today's
action. If you have questions this action, consult the person listed in
the preceding FOR FURTHER INFORMATION CONTACT section.
B. How Can I Get Copies of This Document and Other Related Information?
1. Docket
We have established an official public docket for this action under
Docket ID No. OW-2002-0030. The official public docket consists of the
documents specifically referenced in this action, any public comments
received, and other information related to this action. The official
public docket is the collection of materials that is available for
public viewing at the Water Docket in the EPA Docket Center, (EPA/DC)
EPA West, Room B102, 1301 Constitution Ave., NW., Washington, DC. The
EPA Docket Center Public Reading Room is open from 8:30 a.m. to 4:30
p.m., Monday through Friday, excluding legal holidays. The telephone
number for the Public Reading Room is (202) 566-1744, and the telephone
number for the Water Docket is (202) 566-2426. To view docket
materials, please call ahead to schedule an appointment. Every user is
entitled to copy 266 pages per day before incurring a charge. The
Docket may charge 15 cents for each page over the 266-page limit plus
an administrative fee of $25.00.
2. Electronic Access
You may access this Federal Register document electronically
through the
[[Page 22473]]
EPA Internet under the ``Federal Register'' listings at http://www.epa.gov/fedrgstr/
.
An electronic version of the public docket is available through
EPA's electronic public docket and comment system, EPA Dockets. You may
use EPA Dockets at http://www.epa.gov/edocket/ to view public comments,
access the index listing of the contents of the official public docket,
and to access those documents in the public docket that are available
electronically. Once in the system, select ``search,'' then key in the
appropriate docket identification number. Although not all docket
materials may be available electronically, you may still access any of
the publicly available docket materials through the docket facility
identified in section B.1.
C. What Other Information Is Available To Support This Action?
You can obtain electronic copies of this action as well as copies
of the two major supporting documents at EPA Dockets at http://www.epa.gov/edocket/ and http://www.epa.gov/waterscience/guide/
construction.
``Development Document for Final Action for
Effluent Guidelines and Standards for the Construction and Development
Category'' (EPA-821-B-04-001) referred to in the preamble as the
Technical Development Document (TDD). This document presents the
technical information that formed the basis for our decisions in
today's action, including information on the costs and performance of
the pollutant reduction technologies we considered.
``Economic Analysis for Final Action for
Effluent Guidelines and Standards for the Construction and Development
Category'' (EPA-821-B-04-002) referred to in the preamble as the
Economic Analysis (EA). This document presents the methodology employed
to assess economic impacts and environmental benefits of the options we
considered for today's action and the results of the analysis.
Table of Contents
I. Legal Authority
II. Background
A. Clean Water Act
B. NPDES Storm Water Permit Program
C. Effluent Guidelines Program
III. Summary of Proposed Rule
IV. Summary of Comments Received and Significant Changes Since
Proposal
V. Decision Not To Establish Effluent Limitations Guidelines
A. Existing Programs
B. Cost
C. The Importance of Flexibility
D. Additional Information
E. Other Options
VI. Compliance Cost Estimates of Options We Considered
VII. Economic Impact Analysis of Options We Considered
A. Description of Economic Activity
B. Methodologies for Estimating Economic Impacts
VIII. Pollutant Reductions and Environmental Benefits of Options We
Considered
A. Pollutant Reduction Estimation
B. Environmental Benefits Estimation
IX. Non-Water Quality Environmental Impacts
X. Statutory and Executive Order Reviews
I. Legal Authority
This action withdraws the proposed effluent limitations guidelines
and new source performance standards that EPA proposed for the
construction and development industry at 40 CFR part 450 and the
revisions to 40 CFR part 122 (67 FR 42644, June 24, 2002). We take this
action pursuant to sections 301, 304, 306, 308, 402 and 501 of the
Clean Water Act, 33 U.S.C. 1311, 1314, 1316, 1318, 1342 and 1361.
II. Background
A. Clean Water Act
Congress adopted the Clean Water Act (CWA) to ``restore and
maintain the chemical, physical, and biological integrity of the
nation's waters'' (section 101(a), 33 U.S.C. 1251(a)). To achieve this
goal, the CWA prohibits the discharge of pollutants into navigable
waters except in compliance with the statute. CWA section 402 requires
most ``point source'' discharges to obtain NPDES permits issued by EPA
or authorized State or tribal agencies.
Following enactment of the Federal Water Pollution Control
Amendments of 1972 (Pub. L. 92-500, October 18, 1972), EPA and the
States issued NPDES permits to thousands of dischargers, both
industrial (e.g., manufacturing, energy and mining facilities) and
municipal (sewage treatment plants). EPA promulgated effluent
limitations guidelines and standards for many industrial categories.
NPDES permits incorporate these requirements when permit authorities
issue them.
The Water Quality Act of 1987 (Pub. L. 100-4, February 4, 1987)
amended the CWA. The CWA was clarified by defining municipal and
industrial storm water discharges as point sources. Industrial storm
water dischargers, municipal separate storm sewer systems and other
storm water dischargers designated by EPA must obtain NPDES permits
pursuant to section 402(p) (33 U.S.C. 1342(p)).
B. NPDES Storm Water Permit Program
EPA's initial 1990 storm water regulations identified construction
as one of several types of industrial activity requiring an NPDES
permit. These ``Phase I'' storm water regulations require operators of
large construction sites to apply for permits (40 CFR
122.26(b)(14)(x)). A large-site construction activity is one that will
discharge storm water runoff from the construction site through a
municipal separate storm sewer system (MS4) or otherwise to waters of
the United States and meets one or more of the following conditions:
Will disturb five acres or greater;
Will disturb less than five acres but is part of
a larger common plan of development or sale if the larger common plan
of development will ultimately disturb five acres or more;
Is designated by the NPDES permitting authority.
The 1999 ``Phase II'' storm water regulations generally extend
permit coverage to sites one acre or greater (40 CFR 122.26(b)(15)).
Collectively, the Phase I and II storm water rules address
approximately 97.5% of the annual construction acreage in the U.S. (64
FR 68731) and require permits of over 5,000 municipalities. Additional
information on the NPDES storm water program can be found at http://cfpub.epa.gov/npdes/home.cfm?program_id=6
.
1. Storm Water Permits for Construction: General and Individual
Pursuant to the NPDES Phase I storm water regulations at 40 CFR
122.26, EPA and the States started issuing permits for storm water
discharges from large construction sites in 1992. The Phase II
regulations require smaller sites to obtain permits starting in March
2003. Construction sites can be regulated through either general or
individual permits.
a. General Permits
General permits cover the vast majority of construction sites
governed by the NPDES regulations. EPA and States use general permits
to cover a group of similar dischargers under one permit (see 40 CFR
122.28). General permits simplify the application process for the
industry, provide uniform requirements across covered sites, and reduce
administrative workload for the permit authorities. EPA and the States
published documents containing the construction general permits, along
with forms and related procedures. To be covered under a general
permit, the permittee (either the developer, builder or contractor for
a construction project)
[[Page 22474]]
typically submits a Notice of Intent (NOI) to the permit authority. The
NOI replaces the lengthier application package that is used for an
individual NPDES permit. By submitting the NOI, the permittee generally
agrees to the conditions in the published permit. While the specific
provisions of State general permits vary, all generally require the
permittee to prepare a storm water pollution prevention plan (SWPPP),
install and maintain best management practices (BMPs) to prevent soil
erosion and control construction site runoff, and conduct periodic
inspections of their construction sites. Permittees generally may begin
land disturbance activities after a specified period following NOI
submission unless the permit authority notifies them otherwise.
To discontinue permit coverage, an operator must generally complete
final stabilization of the site and transfer responsibility to another
party (e.g., a developer transferring land to a home builder) or, for a
residential property, complete temporary stabilization and transfer the
property to the homeowner. The permittee generally submits a Notice of
Termination (NOT) form to the permit authority when the appropriate
permit conditions are satisfied.
EPA's Construction General Permit (CGP) covers discharges from
construction activities in five States, the District of Columbia,
Puerto Rico, U.S. territories, and specifically designated portions of
other States (e.g., most land in Indian Country and Federal
facilities). The current CGP became effective on July 1, 2003, and is
available on EPA's Web site at http://cfpub.epa.gov/npdes/stormwater/cgp.cfm.
The CGP covers any site with one or more acres of disturbed
land, including smaller sites that are part of a larger common plan of
development or sale, and replaces and updates previous EPA permits.
Construction activities on Indian Country land in EPA Region 4 are
covered by a separate construction permit.
b. Individual Permits
A permit authority can require any site to apply for an individual
permit rather than a general permit. The individual permit is most
often used for complex projects and/or projects in sensitive
watersheds. Additionally, a construction site owner or operator may
request an individual permit.
2. Municipal Storm Water Permits and Local Government Regulation of
Construction Activity
Local governments have a role in the co-regulation of construction
industries along with States and EPA. In general, the Phase I rule
requires that local governments (or MS4s) serving populations of
100,000 or more obtain permits. The Phase II rule extends coverage to
most other MS4s in urbanized areas. NPDES permitting agencies may
designate additional MS4s outside of urbanized areas for permit
coverage based on State-specific criteria. Permitted MS4s are
responsible for overseeing long-term maintenance of storm water
management facilities and implementation of appropriate erosion and
sediment controls at construction sites within their jurisdiction. A
variety of State and municipal regulations addressing erosion and
sediment control and storm water runoff from construction activities
have been in place for some time, but under the NPDES storm water
regulations all permitted MS4s are required to develop such programs.
EPA's storm water regulations require that each municipality
develop a local storm water management program in order to properly
control discharges into, and out of, its MS4. MS4s also have the option
to accept end-of-pipe treatment limitations in connection with their
stormwater discharges, but MS4s rarely, if ever, pursue this option.
The Phase II MS4 regulations contain explicit requirements for a local
program to control storm water discharges from construction activities
and to manage ``post-construction'' (long-term) runoff. Phase I MS4s
are required to develop programs to control discharges resulting from
construction activities and submit them with their permit application.
The permit authority uses this application to develop permit
requirements to reduce pollutants in discharges to the maximum extent
practicable. See 40 CFR 122.26(d) for descriptions of the Phase I MS4
program and 40 CFR 122.34 for a description of the Phase II MS4
program. EPA has provided guidance to permit authorities and MS4s that
recommends appropriate components and activities for a well-operated
local storm water management program, including appropriate erosion and
sediment controls for active construction sites and post-construction
storm water management measures. Guidance materials can be found on
EPA's Web site at http://www.epa.gov/npdes/stormwater.
C. Effluent Guidelines Program
Effluent limitations guidelines and standards (called ``effluent
guidelines'' or ``ELGs'') are technology-based requirements for
categories of point source dischargers. These limitations are
incorporated into NPDES permits. The effluent guidelines are based on
the degree of control that can be achieved using different levels of
pollution control technology, as defined in Title III of the CWA and
outlined below.
1. Best Practicable Control Technology Currently Available (BPT)
In guidelines for a point source category, we may define BPT
effluent limits for conventional, toxic, and non-conventional
pollutants. In evaluating BPT, we generally look at a number of
factors. We consider the age of the equipment and facilities, the
processes employed and any required process changes, engineering
aspects of the control technologies, non-water quality environmental
impacts (including energy requirements), and such other factors as the
Administrator deems appropriate (CWA section 304(b)(1)(B)).
Traditionally, we establish BPT effluent limitations based on the
average of the best performance of facilities within the category of
similar ages, sizes, processes or other common characteristics. Where
existing performance is uniformly inadequate, we may require higher
levels of control than currently in place in a category if we determine
that the technology can be practically applied (see ``A Legislative
History of the Federal Water Pollution Control Act Amendments of
1972,'' U.S. Senate Committee of Public Works, No. 93-1, January 1973,
p. 1468).
In addition, we consider the total cost of treatment technologies
in relation to the effluent reduction benefits achieved. This inquiry
is generally designed to determine, among other things, whether the
additional reductions from adopting a potential BPT technology are
``wholly out of proportion to the costs of achieving such marginal
level of reduction'' (see ``A Legislative History of the Federal Water
Pollution Control Act Amendments of 1972,'' 1973, p. 170). The inquiry
does not require us to quantify benefits in monetary terms, although we
generally attempt to do so where feasible. See, for example, American
Iron and Steel Institute v. EPA, 526 F. 2d 1027 (3rd Cir., 1975).
In balancing costs against the benefits of effluent reduction, we
generally consider the volume and nature of expected discharges after
application of BPT, the general environmental effects of pollutants,
and the cost and economic impacts of the required level of pollution
control. The Act does not require EPA to consider water quality
problems attributable to particular point sources, or water quality
improvements in particular bodies of water when selecting BPT. Rather,
the Act provides
[[Page 22475]]
for water-quality based effluent limitations (WQBELs) over and above
the technology-based limitations established through ELGs to address
any water quality issues that may remain after technology-based
limitations have been applied (CWA section 301(b)(1)(C)). Accordingly,
we did not consider water quality in particular receiving waters in
developing today's action. See Weyerhaeuser Company v. Costle, 590 F.
2d 1011 (D.C. Cir. 1978).
2. Best Available Technology Economically Achievable (BAT)
In general, BAT effluent guidelines (CWA section 304(b)(2))
represent the best available technology economically achievable for
reducing discharges of toxic and non-conventional pollutants of direct
discharging facilities in the subcategory or category. The factors we
consider in assessing BAT include the cost of achieving BAT effluent
reductions, the age of equipment and facilities involved, the processes
employed, engineering aspects of the control technology, potential
process changes, non-water quality environmental impacts (including
energy requirements), and such factors as the Administrator deems
appropriate. We retain considerable discretion in assigning the weight
to be accorded to these factors. An additional statutory factor we
consider in setting BAT is ``economic achievability.'' Generally, we
determine the economic achievability on the basis of the total cost to
the subcategory and the overall effect of the rule on the industry's
financial health. As with BPT, where existing performance is uniformly
inadequate, we may base BAT upon technology transferred from a
different subcategory or from another category. In addition, we may
base BAT upon manufacturing process changes or internal controls, even
when these technologies are not common industry practice.
3. Best Conventional Pollutant Control Technology (BCT)
The 1977 amendments to the CWA required EPA to identify effluent
reduction levels for conventional pollutants associated with BCT
technology for discharges from existing point sources. EPA generally
follows a methodology for evaluating potential BCT limitations using a
two-part ``cost reasonableness'' test. We explained the methodology for
the development of BCT limitations in July 1986 (51 FR 24974).
Section 304(a)(4) designates the following as conventional
pollutants: biochemical oxygen demand (BOD5), total
suspended solids (TSS), fecal coliform, pH, and any additional
pollutants defined by the Administrator as conventional. The
Administrator designated oil and grease as an additional conventional
pollutant on July 30, 1979 (44 FR 44501). Sediment, which is a primary
pollutant of concern at construction sites, is commonly measured as
TSS.
4. New Source Performance Standards (NSPS)
NSPS reflect effluent reductions that are achievable based on the
best available demonstrated control technology. New facilities have the
opportunity to install the best and most efficient production processes
and wastewater treatment technologies. As a result, NSPS should
represent the greatest degree of effluent reduction attainable through
the application of the best available demonstrated control technology
for all pollutants (i.e., conventional, non-conventional, and priority
pollutants). In establishing NSPS, CWA section 306 directs us to take
into consideration the cost of achieving the effluent reduction and any
non-water quality environmental impacts and energy requirements.
5. Pretreatment Standards
The CWA also defines standards for indirect discharges, i.e.,
discharges into publicly owned treatment works (POTWs). These are
Pretreatment Standards for Existing Sources (PSES) and Pretreatment
Standards for New Sources (PSNS) under section 307(b) and (c). Because
we did not identify any specific discharges directly to POTWs, we did
not consider PSES or PSNS for the Construction and Development
Category. The information that we reviewed indicates that the vast
majority of construction sites discharge either directly to waters of
the U.S. or through MS4s. In some urban areas, construction sites
discharge to combined sewer systems (i.e., sewers carrying both storm
water and domestic sewage through a single pipe) which lead to POTWs.
Sediment is susceptible to treatment in POTWs using technologies
commonly employed such as primary clarification. As a result, we do not
expect pollutants in construction site runoff that are discharged to
POTWs to pass-through without treatment. In addition, we have no
evidence of sediment from construction sites causing interference with
or sludge contamination at POTWs.
6. Effluent Guidelines Plan and Consent Decree
Clean Water Act section 304(m) requires us to publish a plan every
two years that consists of three elements. First, under section
304(m)(1)(A), we are required to establish a schedule for the annual
review and revision of existing effluent guidelines in accordance with
section 304(b). Section 304(b) applies to ELGs for direct dischargers
and requires us to revise such regulations as appropriate. Second,
under section 304(m)(1)(B), we must identify categories of sources
discharging toxic or nonconventional pollutants for which we have not
published BAT ELGs under section 304(b)(2) or new source performance
standards under section 306. Finally, under section 304(m)(1)(C), we
must establish a schedule for promulgating BAT and NSPS for the
categories identified under subparagraph (B) not later than three years
after they are identified in the 304(m) plan. Section 304(m) does not
apply to pretreatment standards for indirect dischargers, which we
promulgate pursuant to section 307(b) and 307(c) of the Act.
On October 30, 1989, Natural Resources Defense Council, Inc.
(NRDC), and Public Citizen, Inc., filed an action against EPA in which
they alleged, among other things, that we had failed to comply with
section 304(m). Plaintiffs and EPA agreed to a settlement of that
action in a consent decree entered on January 31, 1992. (Natural
Resources Defense Council, et al. v. Whitman, D.D.C. Civil Action No.
89-2980). The consent decree, which has been modified several times,
established a schedule by which we are to propose and take final action
for eleven point source categories identified by name in the decree and
for eight other point source categories identified only as new or
revised rules, numbered 5 through 12. We selected the Construction and
Development (C&D) category as the subject for New or Revised Rule
10. The decree, as modified, calls for the Administrator to
sign a proposed ELG for the C&D category no later than May 15, 2002,
and to take final action on that proposal no later than March 31, 2004.
A settlement agreement between the parties, signed on June 28, 2000,
provided for EPA to develop regulatory options applicable to discharges
from construction, development and redevelopment, covering site sizes
included in the Phase I and Phase II NPDES storm water rules (i.e., one
acre or greater). We also agreed to develop options including numeric
effluent limitations for sedimentation and turbidity; control of
construction site pollutants other than sedimentation and turbidity
(e.g., discarded building materials, concrete truck washout,
[[Page 22476]]
trash); BMPs for controlling post-construction runoff; BMPs for
construction sites; and requirements to design storm water controls to
maintain pre-development runoff conditions where practicable. The
settlement agreement also provided for us to issue guidance to MS4s and
other permittees on maintenance of post-construction BMPs identified in
the proposed ELGs. We developed options and considered all of these
provisions, as discussed in the June 24, 2002, proposal. We did not
issue guidance for MS4s and other permittees on maintenance of post-
construction BMPs at the time of the June 24, 2002, proposal because
the proposal did not contain proposed requirements for post-
construction BMPs. However, EPA continues to develop and issue a range
of guidance materials to support continued implementation of the
program.
III. Summary of Proposed Rule
On June 24, 2002, we published a proposal (67 FR 42644) that
contained three options to control storm water runoff from construction
sites. Option 1 proposed to modify the existing NPDES regulations to
incorporate a series of inspection and certification provisions for
site owners and operators. Option 1 would have applied to all
construction sites that disturb one or more acres of land and that are
required to obtain an NPDES permit under the provisions of 40 CFR
122.26(b)(14)(x) and 122.26(b)(15). Option 2 proposed to create a new
part 450 that would codify certain provisions of the EPA construction
general permit and establish inspection and certification provisions
for site owners and operators as BPT, BAT, BCT and NSPS limitations.
These requirements would have applied to all construction sites that
disturb five or more acres of land and that are required to obtain an
NPDES permit under the provisions of 40 CFR 122.26(b)(14)(x). Option 3
did not establish new regulatory requirements, but instead explained
how we would rely on continued implementation of the existing program.
In addition to these three options, we solicited comment on
implementing Option 1 with applicability to sites with five or more
acres of disturbed land (as opposed to one acre as in Option 1). The
June 24, 2002, Federal Register notice (67 FR 42644) contains detailed
descriptions of the regulatory options.
IV. Summary of Comments Received and Significant Changes Since Proposal
One hundred five organizations and individuals submitted comments
on a range of issues in the proposal. You can find detailed responses
to all comments, including the ones summarized here, in our comment
response document in the official public docket. Among the most
prevalent comments were those questioning the need for new regulations
in light of existing programs at the Federal, State, and local level as
well as specific comments on our costing, economics and environmental
benefits analyses. A number of comments were submitted specifically
opposing our proposal of New Source Performance Standards (NSPS). Other
comments requested that we re-propose the guideline to incorporate
requirements for post-construction storm water management BMPs, and to
include more stringent requirements for erosion and sediment controls.
Many commenters were concerned that we were proposing options
(Options 1 and 2) that had a low benefit-cost ratio and felt we should
not promulgate a rule where the costs outweighed the benefits to such
an extent. In a similar vein, several commenters indicated that we did
not account for some substantial benefits. We did make changes to our
benefits estimation methodologies since the time of proposal, but there
are still a range of benefits that cannot be quantified and/or
monetized. However, the costs continue to be substantially greater than
the monetized benefits of Option 1 and 2.
The National Association of Home Builders (NAHB), the National
Multi Housing Council and the National Apartment Association commented
on certain issues with our methodology. They also provided data to
replace assumptions EPA had made on the duration of projects, timing of
expenditures, and financial independence of a firm's individual
projects from other projects. We reviewed the information and found
that it contained valid assumptions for the modeling. Thus, we now
consider single- and multi-family projects to be independent (not
cross-subsidized by other projects) and have set the duration of
single-family projects to four years and multi-family projects to nine
years. However, we still assume that all costs related to erosion and
sediment controls are incurred in the first year of a project. This
assumption would result in a slight overestimation of the annual costs
of the options, since costs incurred in future years would not be
discounted back to present values.
We also made changes to the costing analyses since the proposal.
For the proposal, we only examined a subset of existing State erosion
and sediment control programs in order to establish the baseline of
existing requirements. Since then, we conducted a more detailed
evaluation of the programs of all 50 States. This allowed us to
construct a more accurate baseline and to calculate compliance costs
for the regulatory options on a State-by-State basis. The evaluation
for this action still does not fully capture the requirements in place
at the county, municipal and conservation district level. As a result,
we may have overestimated both the incremental costs and the sediment
removals.
We also updated the best management practice (BMP) assumptions in
the costing model. Based on a review of existing State programs, we
found that all 50 States require basic sediment controls such as silt
fencing, inlet protection and check dams as part of their existing
programs. In addition, all States require permittees to prepare a SWPPP
or equivalent document, such as an erosion and sediment control plan,
clearing and grading plan or storm water management plan. The
requirements of these plans are essentially equivalent to the
requirements for a SWPPP contained in the EPA CGP. The only notable
differences between existing programs and the requirements contained in
the EPA CGP are variations in the size of sediment basins required, the
requirement for installing sediment traps for smaller sites, the time
allowed for providing stabilization of exposed soil areas, and the
frequency of site inspections. As a result, the cost model we developed
for this action only calculates costs of the options we considered for
these four elements.
We also updated the unit cost values. For sediment basins and
sediment traps, we used at proposal a cost curve for dry extended
detention basins. See Thomas R. Schueler and Heather K. Holland, eds.,
``The Economics of Stormwater Treatment: An Update,'' The Practice of
Watershed Protection, Ellicott City, MD, Center for Watershed
Protection, 2000, p. 402. However, the costs of dry extended detention
basins (which are permanent storm water management facilities) can
differ significantly from the costs of temporary sediment basins and
sediment traps due to differences in their intended functions and
design parameters. Therefore, for the analysis supporting today's
action, we instead used values for sediment basins contained in a
report issued by EPA in 1993 (see U.S. Environmental Protection Agency,
Guidance Specifying Management Measures for Sources of Nonpoint
Pollution in Coastal Waters, EPA 840-B-92-002, Washington, U.S.
Environmental Protection Agency, 1993, p. 4-78). We also examined
several
[[Page 22477]]
more up-to-date references in order to determine if current unit costs
vary significantly from the values reported in this document. We
examined a number of individual unit cost entries for sediment basins
and sediment traps contained in 32 references, including county bonding
estimates and State department of transportation contract bids, and
found that the values reported in the 1993 document are still valid for
sediment basins and sediment traps. Therefore, we used these values for
the analysis in support of today's action. As a result of these
changes, we believe that the costing analysis presents a much more
accurate estimate of the costs of compliance for the regulatory options
we considered.
We also revised the pollutant loading estimates for this action.
For the proposal, we estimated reductions in pollutant loadings by
using the per-site loads from the economic analysis for the Phase II
NPDES Storm Water rule and estimates of BMP removals based on our best
professional judgment (BPJ). We received several comments that this
approach was not clear and that the basis for our BPJ estimates was not
fully described. For today's action, we estimated soil erosion on an
ecoregion basis using the Revised Universal Soil Loss Equation (see
K.G. Renard, et al., Predicting Soil Erosion by Water: A Guide to
Conservation Planning with the Revised Universal Soil Loss Equation
(RUSLE), Agriculture Handbook No. 703, Washington, U.S. Govt. Print.
Off., 1997) and county-level soil data. We estimated loadings
reductions using the SEDCAD model (see Richard C. Warner and Pam
Schwab, SEDCAD 4 for Windows 95/98 & NT. Design Manual and User's
Guide, Ames, IA, Civil Software Design, 1998). We believe that this
resulted in a much more accurate estimate of the removals attributable
to the various regulatory options we considered.
We also made changes in our benefits assessment methodologies. For
the proposal, we estimated the total reduction in discharge of
turbidity and suspended solids nationally and then calculated avoided
costs associated with reduced water storage capacity in reservoirs,
reduced need for navigational dredging, and reduced drinking water
treatment costs. We received several comments that indicated there were
potentially other benefits that we did not quantify (such as
improvements in water quality and associated changes in designated
uses, ecological benefits, and human health impacts). For the analysis
in support of this action, we calculated monetized benefits of the
regulatory options using the National Water Pollution Control
Assessment Model (NWPCAM) developed by Research Triangle Institute for
EPA (see Research Triangle Institute, National Water Pollution Control
Assessment Model (NWPCAM) v. 2.0, Research Triangle Park, NC, Research
Triangle Institute, 2000). We believe that the NWPCAM model is a
significant improvement over the methodology we used for the proposed
rule analysis. We have used NWPCAM to value benefits in other recent
effluent guidelines rulemakings, such as Concentrated Animal Feeding
Operations and Meat and Poultry Products. You can find additional
information on our loadings analysis and benefits assessment in section
VIII, in the development document, and the public docket.
V. Decision Not To Establish Effluent Limitations Guidelines
We have decided not to promulgate effluent limitations guidelines
and standards for the construction and development industry and instead
have selected the option that relies on the range of existing programs,
regulations, and initiatives at the Federal, State, and local level for
the control of storm water runoff from construction sites. This option
was identified in the June 2002 proposal as Option 3. We made this
decision for numerous reasons.
The existing NPDES storm water regulations already require permits
for the vast majority of construction sites and municipalities
nationwide. The Phase I regulations first required permits for
construction sites disturbing 5 or more acres in 1992. The Phase II
regulations added permitting requirements for small construction sites
disturbing between 1 and 5 acres in early 2003. EPA estimates that the
Phase I and II construction site storm water regulations combined
require permits for approximately 400,000 construction sites annually.
In addition, the Phase I regulations require permits for MS4s that
include requirements that they address construction site runoff within
their municipal boundaries. Currently, there are nearly 1,000 medium
and large MS4 operators permitted, or in the final stages of being
permitted, under the NPDES storm water program. The Phase II
regulations required permits of small municipalities beginning in 2003.
Small municipalities must also develop a program to address
construction site runoff within their municipal boundaries. The Phase
II permitting requirements add over 5,000 municipalities to the
program. The Phase I and II municipal permitting requirements combined
require permits for nearly all of the urbanized area in the United
States. Since the NPDES regulations already contain permitting
requirements for most construction sites disturbing at least 1 acre,
and the municipal permitting requirements also address construction
site runoff that occurs within municipal boundaries, EPA believes that
construction site storm water discharges are already being adequately
addressed through the existing program.
The total annual costs of the proposed ELGs (Option 2) would be
more than half a billion dollars. EPA believes that these costs are
simply too high and are disproportionately large when compared to the
incremental loading reductions over the existing program that would be
attributable to the proposed ELG. Our modeling indicates that the
existing Phase I and Phase II permit programs as of the year 2003 were
already capable of controlling approximately 80-90% of sediment runoff
from construction sites, and the proposed rule would remove only 1%
more. Furthermore, continued implementation of the Phase II municipal
programs and revisions to State construction general permits will
likely result in continued improvements in the level of control for
construction site storm water discharges nationwide. This will reduce
the sediment loading reductions estimated to result from the proposed
Option 2 to an even smaller incremental amount. Moreover, EPA estimates
that under Option 2 between 673 and 5,178 jobs would be displaced each
year--an impact that would fall predominantly on small businesses. The
high economic impacts for this industry, coupled with the finding that
a national rule would remove only about 1% of the overall loads,
persuades EPA that we should not promulgate an ELG based on the June
2002 proposal. EPA concludes that employing the flexibility inherent in
the existing programs is a better approach to addressing remaining
sediment loadings at this time.
A. Existing Programs
When we began developing effluent guidelines for the construction
and development industry, we expected to find that the existing State
and local erosion and sediment control programs were not well
developed. At the time of proposal, we had evaluated a subset of
existing State programs to compare their requirements to those of the
EPA Construction General Permit (CGP). Since proposal, we have
evaluated the programs of all 50 States and have determined that these
requirements generally are comparable to and in some cases exceed those
of the EPA CGP. All
[[Page 22478]]
50 States require basic sediment controls such as silt fencing, inlet
protection and check dams as part of their existing programs. In
addition, all States require permittees to prepare a storm water
pollution prevention plan (SWPPP) or equivalent document, such as an
erosion and sediment control plan, clearing and grading plan or storm
water management plan. The requirements of these plans are essentially
equivalent to the requirements for a SWPPP contained in the EPA CGP.
The only notable differences between existing programs and the
requirements contained in the EPA CGP are variations in the size of
sediment basins required, the requirement for installing sediment traps
for smaller sites, the time allowed for providing stabilization of
exposed soil areas, and the frequency of site inspections. We thus
compared the existing State requirements with those of the EPA CGP for
each of these components. The results of this evaluation are as
follows:
All 50 States require preparation of a SWPPP,
erosion and sediment control plan, or equivalent document;
41 States require inspections of the site at
least once every 14 days;
30 States require sediment basins with at least
3,600 cubic feet of storage per acre disturbed for areas draining ten
acres or more;
27 States require stabilization of soils within
14 days after construction activities have temporarily or permanently
ceased on any portion of the site; and
22 States require sediment traps for smaller
sites.
In many cases where the State-level requirements are not equivalent
to those contained in the EPA CGP, we expect that local requirements
will be equivalent to or even more stringent than those contained in
the EPA CGP. We received comments from both NAHB and NRDC citing
examples of this. Due to the information burden of collecting this sort
of data and the significant analytical complexity of calculating costs
and loadings reductions at a level finer than at the State-level, we
did not comprehensively collect information on programs currently in
place for counties, municipalities, or conservation districts. However,
as noted before, municipalities permitted under the Phase I and Phase
II storm water regulations are required to develop programs that
control discharges of runoff from active construction sites within
their jurisdiction to the maximum extent practicable.
Moreover, we have determined that some of the States that do not
have equivalent requirements to those contained in the EPA CGP are
located in arid or semi-arid areas of the country. In these States, the
additional pollutant load reduction that would result from implementing
more stringent requirements is likely minimal, since these areas do not
experience a significant amount of rainfall. For example, four of the
States (Colorado, Montana, North Dakota and Wyoming) that do not have
sediment basin requirements equivalent to the EPA CGP have urbanized
areas that are located predominately in arid or semi-arid areas.
Using modeling data, we have determined that existing State and
Federal requirements, once fully implemented,\1\ will likely result in
removal of approximately 80-90% of sediment loads that would otherwise
be discharged from active construction sites. This suggests that
existing programs are already quite good. Our modeling data indicate
that imposing the requirements in the EPA CGP as a uniform technology
floor nationwide as proposed, however, would result in an additional
capture of relatively little additional sediment--approximately 1%
more.
---------------------------------------------------------------------------
\1\ Under Phase II, small municipalities and small construction
sites were required to obtain permit coverage by March 10, 2003. As
most Phase II municipalities are still early in their first permit
terms, and storm water programs by nature require a certain amount
of local optimization, we believe it likely that many such programs
have yet to reach their full potential.
---------------------------------------------------------------------------
EPA's decision not to go forward with an ELG at this time was also
influenced by the Agency's estimate of the relatively small portion of
the overall sediment problem the options EPA considered would have
addressed. EPA estimates that Option 2 would have resulted in
reductions of approximately 1,000,000 tons per year of sediment
loadings. While the total amount of sediment reduction may appear quite
large, it is small in comparison to the sediment reduction attributable
to the existing program and the sediment currently discharged from
other sources. As an example, the United States Department of
Agriculture (USDA) estimated in the 2001 Natural Resources Inventory
(http://www.nrcs.usda.gov/technical/land/nri01/) that sediment eroded
by water from cropland is approximately 1 billion tons per year. The
small amount of expected sediment reductions in comparison to the
reductions due to the existing program and the sediment loadings
originating from sources outside the scope of this program reinforces
our decision not to promulgate effluent limitations guidelines and
standards at this time.
The remainder of the sediment being discharged from construction
sites nationwide would be extremely difficult to capture using the
technologies contained in our proposal for a number of reasons.
Principal among these reasons is the varying soil types and topography
found at construction sites. Certain soil types (e.g., clay) do not
settle readily even in sediment ponds that hold stormwater runoff for
many days. Even where the runoff itself is amenable to treatment using
sediment controls, the topography does not always allow for large
sediment basins. We believe that these kinds of site-specific
considerations are best addressed by local permit authorities and
municipal storm water programs at this time.
B. Cost
We also considered the high incremental cost of imposing technology
requirements equivalent to the CGP nationwide and determined that the
overall cost in absolute dollars spent annually and the resulting
annual job displacement was disproportionate to the incremental
pollutant reductions that would be achieved. At proposal, EPA estimated
the cost of the proposed ELG (Option 2) at $505 million annually. As a
result of further analysis conducted since proposal in response to
comments received, EPA now estimates that the cost of the proposed ELG
would be $585 million annually. Even using the smaller $505 million
figure, the ELG would have imposed considerable annual costs on the
national economy, with little corresponding pollutant reduction when
compared to the existing program.
We are also concerned that, in addition to substantial costs, the
ELG considered by EPA would result in significant job displacement. Our
estimates for job displacement range from 461 (with a market-based cost
pass-through assumption) to 3,847 (with a 0% cost pass-through
assumption) annually. Moreover, the cost and job displacement impacts
caused by imposing these requirements nationwide would be felt
primarily by small businesses. Because of the importance of this sector
to the national economy, we determined these economic impacts to be
substantial. These impacts also support our decision not to establish
effluent limitations guidelines at this time.
Some commenters suggested that the cost of the proposed ELGs per
pound of pollutant removed was low by EPA's traditional standards. At
proposal, we
[[Page 22479]]
estimated a cost of approximately $0.01 per pound of TSS removed. For
this action, we have revised this estimate considerably, based
primarily on a significant reduction in estimated removals. We now
estimate a cost of approximately $0.29 per pound of TSS removed. While
this is still within the range that EPA has considered acceptable in
past cost-reasonableness analyses, we believe the small relative
magnitude of these reductions (approximately 1% of total loads
generated at construction sites and approximately 0.1% of estimated
discharges from cropland), the nature of the pollutants (primarily
sediment), the fact that discharges occur only through storm water, and
the existence of increasingly effective local erosion and sediment
control programs in all urbanized areas, support our conclusion that
the cost of the ELGs does not justify a national rule at this time.
While no one of these factors in isolation would necessarily lead us to
this conclusion, we believe that collectively they support it.
C. The Importance of Flexibility
The purpose of an effluent limitations guideline is generally to
set a technology-based minimum standard of pollution control on
dischargers within a given industrial sector. EPA has determined, due
largely to the wide variability of conditions under which the
construction industry operates, that imposing such national, uniform
standards is not the most effective means of controlling sediment
discharges from construction sites at this time.
As described above, there is currently variability among the State
programs addressing sediment discharges from construction sites,
although all require permits that contain provisions to address
construction site storm water runoff, such as development of a SWPPP or
similar instrument. Moreover, imposing uniform requirements
commensurate with the CGP would be very costly, with little incremental
pollutant reduction over the existing program. We considered the
possibility of crafting a national ELG that incorporated flexibility to
allow permit writers to impose different measures in areas where some
types of controls would be less effective than in other locations
(e.g., different requirements based on varying soil types). The goal of
such a flexible approach would be to retain controls on sediment
discharge where such controls would yield the best results, while
minimizing the considerable costs of such controls where they would do
little good. We ultimately concluded that, at this time, the complexity
that would result from such national standards threatened to make the
ELG too unwieldy. The existing permit programs already have the
necessary flexibility and, in the Agency's opinion, constitute the
better tool to address sediment discharges at construction sites at
this time. EPA has provided, and will continue to provide, guidance to
local authorities on how best to reduce construction site discharges to
the maximum extent practicable on a site-specific basis.
Moreover, NPDES permits issued by States are generally submitted to
EPA in draft form before issuance, are subject to public notice and
comment, and are judicially reviewable. This applies to both permits
for construction site operators, and to permits for municipalities that
must develop effective programs to control construction site storm
water discharges. Hence, EPA may exercise oversight authority to object
to inadequate State permits, and the public may comment on, and
ultimately challenge in court, permits that they deem inadequate.
D. Additional Information
EPA is authorized to promulgate BPT/BAT limitations only where we
determine that the technologies identified satisfy each element of the
statutory test. For BPT, for example, the technology in question must
be ``best,'' ``practicable'' and ``currently available.'' For BAT, the
technology basis for the limitations must be ``best,'' ``available''
and ``economically achievable.'' Hence, EPA need not make a
determination that a given technology is economically achievable if
that technology is not ``best'' or otherwise fails another statutory
requirement. See, BP Exploration & Oil, Inc. v. EPA, 66 F.3d 784, 796-
97 (6th Cir. 1995). Rather, EPA is authorized to decline to promulgate
a nationally applicable effluent limitations guideline where we
determine that a national categorical rulemaking is not the best tool
to address the problem at hand. Such is the case with today's decision.
For the various reasons cited in this action, and further discussed in
our responses to comments (e.g., high cost, low rate of pollutant
reduction compared to the existing program, adequate existing programs,
preference for site-specific flexibility), we have determined that none
of the technologies considered for this category is ``best'' at this
time, and therefore we decline to promulgate an ELG for this category.
The NPDES construction site storm water management regulations have
been in place for large sites since 1990 (permits were first required
in 1992) and small sites since 1999 (permits were first required in
2003). We expect that implementation of the NPDES permitting program is
continuing to raise awareness of erosion and sediment control issues
across the industry and leading to improvements in runoff control. This
is especially true for operators of smaller sites, which only recently
were required to obtain permits. We received many comments questioning
the need for additional regulations at this time, given that a large
portion of the NPDES program is just being implemented. We agree that
since the permitting requirement for discharges from ``small'' sites
(disturbing at least one, but less than five, acres) is now in force,
it makes sense to allow additional time for the existing program to be
more fully implemented before deciding the need for additional
regulation through effluent limitations guidelines.
In the meantime, there are a number of other maturing EPA programs
and initiatives that are expected to lead to significant reductions in
discharges from construction sites, including:
Total Maximum Daily Loads (TMDLs) are now being
developed at an accelerating pace, which will lead to increased water-
quality based management of construction site runoff where sediment and
nutrients from such sites contribute to impairments;
EPA's National Management Measures to Control
Nonpoint Source Pollution from Urban Areas, which is a draft technical
guidance and reference document for use by State, local, and tribal
managers in the implementation of nonpoint source pollution management
programs. It contains information on measures for reducing pollution of
surface and ground water from urban areas and controlling construction
site storm water runoff;
EPA's Office of Enforcement and Compliance
Assurance (OECA) Construction Workgroup has worked with the Associated
General Contractors of America (AGC), NAHB and other trade groups to
prepare ``Federal Environmental Requirements for Construction''. This
workgroup will also soon release a guide to managing storm water and
other environmental requirements for contractors and others who work
together in construction and development;
EPA's Office of Policy, Economics and Innovation
through the Sector Strategies Program is partnered with AGC to promote
industry-wide
[[Page 22480]]
performance improvements in managing storm water using Environmental
Management Systems, regulatory burden reduction, and performance
measurement; and
The Construction Industry Compliance Assistance
Center, which steers contractors to EPA and State storm water
requirements and assistance resources (see http://www.cicacenter.org/).
As a result of these and other initiatives at the Federal, State,
and local level, the sediment reductions we estimated under an ELG for
this industry may well be achieved anyway. We expect that the
combination of these EPA programs and continued implementation of
State, county, and local programs will eventually control the majority
of these discharges.
We received comments indicating that there are technologies that
would provide incremental pollutant reductions that were not included
in our BCT analysis (such as phasing, limiting amount of land exposed
at one time, improving sediment basin designs, etc.). For the purposes
of today's action, we did not apply the BCT cost test because BPT
effluent limitations guidelines themselves were determined not to be
feasible or appropriate. While these technologies would provide
incremental reductions, they do not change the overall decision process
because all of the factors discussed above (high costs, low sediment
reduction, effective local programs, need for flexibility) still apply.
As a result, we are not promulgating effluent limitations guidelines
based on BCT.
We considered the same options for BAT as BPT. We are not aware of
any additional technically feasible and economically achievable
technologies for the removal of toxics (i.e., priority metals and
organic chemicals) and non-conventional pollutants beyond those we
considered for BPT. In fact, we do not have data indicating that these
pollutants are found in construction site runoff nationwide. As a
result, we are not promulgating effluent limitations guidelines based
on BAT.
We also did not consider additional options for NSPS. At the time
of the proposal, we sought comment on various ways EPA might approach
NSPS for the construction industry. We have decided not to promulgate
NSPS because we have determined that discharges associated with
construction activity generally are not appropriately characterized as
``new sources.'' The CWA defines ``new source'' as ``any source, the
construction of which is commenced after the publication of proposed
regulations * * *'' EPA believes that this definition is best read to
generally exclude construction sites. To include construction activity
itself within the definition of a ``new source'' would be to view
construction sites as things that are themselves constructed. EPA
sought comment on this interpretation of the statute in the June 24,
2002, proposal. This is not, in EPA's view, the best way to read this
provision of the CWA. EPA's interpretation of the statute does not,
however, foreclose the possibility that the Agency might at a future
point promulgate an effluent limitations guideline set in accordance
with BPT, BCT and/or BAT. Because construction sites themselves are not
``new sources,'' NSPS is not applicable and the Agency has decided to
withdraw the NSPS proposed on June 24, 2002.
For these reasons, we have determined that at this time the
existing permit requirements along with existing programs and
initiatives at the Federal, State, and local level are adequate to
control discharges from active construction sites. Not promulgating
effluent limitations guidelines allows for continued implementation of
the existing storm water program through appropriately tailored State
and local control programs within the existing general and individual
permitting systems. This approach allows maximum flexibility for
permitting authorities to continue to regulate construction sites
reflecting site-specific conditions such as soil types and rainfall
patterns, and to develop alternative control strategies or other BMP
requirements to respond to local water quality concerns.
E. Other Options
We eliminated Option 1 from consideration because site inspection
and certification requirements by themselves are not technology-based
standards (though they may be an important operational component of
other technology-based standards) and thus do not constitute an
effluent limitations guideline. We eliminated this option from
consideration after receiving many comments indicating that these
provisions would be too burdensome, especially for small businesses. In
addition, many commenters questioned the environmental benefits of such
requirements. We agree that these provisions would have been
burdensome. Indeed, our analysis indicates that these provisions would
have had an aggregate cost of approximately $278 million annually.
Furthermore, we lack the tools to evaluate the pollutant loading
reductions that would likely result from such provisions; we also lack
any data that indicates that such provisions would result in notable
improvements in implementation of the existing program. At present,
site inspections are required under the existing stormwater programs
regulating construction activity. We believe at this time that the
timing of inspections, as well as any certification requirements, are
best determined by permitting authorities in accordance with existing
Federal, State and local requirements reflecting local conditions
(e.g., rainfall patterns).
As noted above, under the June 28, 2000, Settlement Agreement, EPA
agreed to develop options that included BMPs for controlling post-
construction runoff and requirements to design storm water controls to
maintain pre-development runoff conditions where practicable. Prior to
publishing the proposed rule, EPA developed such options, including an
option that would require developers to implement post-construction
stormwater controls to reduce pollutant discharges by 80% from
uncontrolled levels and maintain peak post-development flows at pre-
development levels. EPA ultimately decided, however, not to propose
controls on post-construction flows for several reasons. (67 FR 42644,
42660 (June 24, 2002))
First of all, EPA noted that the choice of such controls has
traditionally been left to State and local governments, who use a
variety of regulatory and non-regulatory programs (such as land use
planning) to address post-construction runoff to protect infrastructure
and achieve local resource goals. The Clean Water Act recognizes the
primary responsibility of States in the planning and use of land and
water resources (section 101(b), 33 U.S.C. 1251(b)). Furthermore, many
of the approaches used by State and local governments to address post-
construction flows, such as low impact development, do not lend
themselves to uniform standards, but require integration with land use
decisions and site design. EPA supports these approaches and does not
want to limit local flexibility. In addition, EPA determined that
adopting uniform national standards for post construction flows would
be very expensive. For the particular option that would have required
maintaining peak post-construction flows at pre-development level, EPA
estimated national costs of about $3.3 billion per year. This includes
only monetized costs, and does not include costs such as safety and
communities preferences for sewer design, road width, sidewalk
placement, and other amenities that might be
[[Page 22481]]
adversely impacted by the need to minimize impervious surface in order
to maintain pre-development flows. The primary benefit of this option
would have been the reduction in adverse impacts to small streams from
increased peak flows during storm events. Based on preliminary effort
to quantify these benefits, EPA believes that the high costs of this
option are likely disproportionate to the benefits.
A number of other issues were raised, both by other Federal
agencies during interagency review of the proposed rule, and
subsequently by commenters, which EPA considered in its decision not to
propose and promulgate post-construction stormwater controls (see e.g.,
March 30, 2004, letter from Thomas M. Sullivan, Chief Counsel for
Advocacy, Small Business Administration, to Benjamin Grumbles, Acting
Asst Administrator for Water, USEPA, and accompanying March 30, 2004,
Memorandum from Kevin Bromberg, Assistant Chief Counsel for Advocacy,
to Marvin Rubin, Chief Environmental Engineering Branch, Engineering
and Analysis Division, USEPA Office of Water; March 30, 2004, letter
from Mary E. Peters, Administrator, Federal Highway Administration, to
Benjamin H. Grumbles, Acting Asst Administrator for Water, USEPA; and
March 31, 2004, letter from A. Bryant Applegate, Director, America's
Affordable Communities Initiative, U.S. Department of Housing and Urban
Development, to Jesse Pritts, P.E., USEPA). Concerns were raised about
a number of human health and safety risks potentially associated with
structural and non-structural BMPs to address stormwater runoff. EPA
has included materials in the record describing these risks.
EPA's analysis indicated that the average incremental cost of
construction and post-construction controls for a single family house
would have ranged from about $1,000 to $2,200, depending on the degree
of implementation of the Phase II stormwater program. These cost
increases were projected to make new homes unaffordable for between
135,000 and 325,000 families. These estimates accounted only for up-
front capital costs. They did not include the costs that homeowners
would ultimately bear through fees and local property taxes for long-
term maintenance of the control structures.
Concerns were also raised about impacts of post-construction
stormwater requirements on small businesses and employment. EPA
estimated that up to 800 construction firms, almost all of which are
small, might close as a result of these requirements. About 1,300 firms
would experience impacts in excess of 3% of gross revenues, and about
8,000 firms would experience impacts in excess of 1% of gross revenues.
EPA has traditionally used these threshold to evaluate impacts on small
businesses. Net job losses in the economy were estimated at between
9,000 and 18,000 jobs, depending on whether infrastructure cost savings
were assumed or not.
Finally, concerns were raised about the impacts of post-
construction controls on road and highway construction. Roadways are
generally limited to fairly narrow, linear rights-of-way that may lack
sufficient land to construct structural BMPs (detention basins). LID
controls are also not practical because roadways are by definition
impervious, and need to be able drain water quickly from road surfaces
for safety reasons. If land for infiltration beside the roadway is
limited, it will likely not be possible to maintain pre-construction
runoff patterns.
For all of these reasons, EPA is reaffirming its decision not to
propose and promulgate post-construction stormwater controls.
VI. Compliance Cost Estimates of Options We Considered
Since we are not promulgating effluent guidelines for the
construction and development industry, there are no compliance costs
associated with today's action. However, we did estimate costs for the
regulatory options we considered. You can find more information on the
costing analysis in the Development Document and in the public record
for this action.
We estimate that the national annual compliance costs of the
options we considered, in 2002 dollars, are $278 million annually for
Option 1 and $585 million annually for Option 2.
We evaluated per-site costs individually for a series of model
construction sites. We based per-site costs on model construction sites
that reasonably represent common construction site features and factors
related to State regulations, topography, and hydrology. Using
estimates of the amount of new construction acreage developed annually
in the U.S. obtained from the 1997 USDA National Resources Inventory
(http://www.nrcs.usda.gov/technical/NRI/1997/national_results.html)
and the U.S. Census Bureau, we computed State total costs by
multiplying modeled per-site costs by the number of construction sites
in each land use/site-size combination for 48 States. Costs for Alaska
and Hawaii, as well as the U.S. territories were not estimated because
we lacked sufficient data for these areas. However, since there is
little construction in these areas compared to national development
rates, we expect that excluding these costs has little impact on the
results we obtained. We calculated national-level costs by summing
State costs.
We used a three-step process to compute the total national
compliance costs of the options we considered:
(1) Estimated model site costs using national average unit costs;
(2) Calculated model site costs using State-specific cost
adjustment factors; and
(3) Summed State totals to produce the national compliance cost
estimates.
We collected and compiled data on State construction general
permits, erosion and sediment control regulations, and storm water
management regulations to determine if existing State programs were at
least equivalent to requirements contained in the July 2003 EPA CGP. To
determine whether a State program was equivalent to the EPA CGP, we
focused on six main areas:
(1) Requirements for preparing a storm water pollution prevention
plan (SWPPP) or equivalent document and for installing general erosion
and sediment controls (such as silt fencing, inlet protection and soil
stabilization);
(2) The amount of time allowed for stabilization of exposed soil
when construction activities have temporarily or permanently ceased;
(3) Requirements for installing sediment traps for drainage areas
of less than 10 acres;
(4) Requirements for installing sediment basins for drainage areas
of 10 or more acres;
(5) Requirements for removing accumulated sediment from sediment
controls when sediment storage capacity has been reduced by at least
50%; and
(6) Requirements to conduct inspections at least every 7 days OR
every 14 days and following rainfall of 0.5 inches or more.
We found that many States have requirements similar to those
contained in the EPA construction general permit, which is the basis
for the requirements contained in Option 2. No States currently have
requirements equivalent to the inspection and certification provisions
of Options 1 and 2. For each State, we determined if certain key BMPs
are required and for what construction site size a particular BMP is
required. We used this information to determine the baseline BMP sizes
and quantities for each of the 24 model
[[Page 22482]]
construction sites in each State across the U.S. We then calculated the
incremental BMP quantities and size increases by comparing these sizes
and quantities with those required under each regulatory option. For
sediment basins and sediment traps, we also noted the size of the BMP
required by the State program. Where a State program did not note a
sediment basin size, we assumed based on BPJ that the baseline size was
1,800 cubic feet per acre.
VII. Economic Impact Analysis of Options We Considered
Since we are not promulgating effluent guidelines for the
construction and development industry, there are no economic impacts
associated with today's action. However, we did conduct an analysis of
the economic impacts of the options we considered for today's action.
Our economic analysis describes the impacts of the options in terms of
firm financial stress, employment effects, and market changes, such as
housing prices. In addition, the Economic Analysis contains information
on the impacts on sales and prices for residential construction. This
section presents selected information from the economic analysis that
supports this action. For more complete information on the economic
analysis, you may review the economic analysis and the official public
docket for this action.
A. Description of Economic Activity
For the purposes of these analyses, the Construction and
Development Category is comprised of industries that are involved in
building, developing and general contracting (NAICS 233) as well as
heavy construction (NAICS 234). We estimated that in 1997 there were
approximately 262,000 employer establishments in construction and
development industries. By subtracting establishments that are engaged
in remodeling and establishments that are unlikely to disturb more than
5 acres of land, we estimated that under Option 2 about 82,883
establishments (of which about 84% are small businesses) would
potentially be affected. Census data for 2002 were not available for
today's action.
B. Methodologies for Estimating Economic Impacts
We assessed how incremental costs of the options considered would
be shared by developers and home builders, home buyers, and society
using a cost pass-through (CPT) analysis and a partial equilibrium
analysis. We analyzed these impacts on projects, firms and markets. We
analyzed impacts on consumers and on the national housing market,
regional markets and the U.S. economy. Moreover, we analyzed economic
impacts to small businesses.
We estimated project-level costs and impacts for a series of model
projects to evaluate the options we considered. The models establish
baseline economic and financial conditions for C&D projects and assess
the significance of the change in cash flow that results from the
incremental compliance costs.
We conducted the economic impact analyses using three CPT
scenarios. We analyzed the regulatory cost impacts on the model
projects using zero and 100% CPT. In the first scenario (100% CPT), we
assumed that the developer-builder can pass through all of the
incremental compliance costs to the final customer (e.g., the new home
buyer, office lessee, or taxpayer). Under this scenario, we assume all
costs are borne by the customer in the form of higher prices for
completed construction. In the second scenario (zero CPT), we assumed
that the builder-developer cannot pass any of the cost increases
through, and therefore must absorb all of the costs. For the market
analysis, we used a partial equilibrium model with a market-based CPT
and reflecting price elasticities observed in the marketplace.
The outputs of the project and firm models include the cost
increases that might fall on consumers under the 100 percent CPT
scenario and the reductions in profits that industry might incur under
the zero percent CPT scenario. In the market models, we analyzed the
likely changes in market variables such as prices and quantities that
could occur with each option.
To estimate firm-level impacts, we developed the costs per housing
start and then assessed the effect of the annual compliance costs of
the options at the firm level on key business ratios and other
financial indicators. We examined impacts on the gross profit, current
ratio, debt-to-equity ratio and return on net worth. Industry
publications cite these financial ratios as particularly relevant to
the construction industry (see D. Linda Kone, Land Development,
Washington, Home Builders Press, 2000, and M. Benshoof, ``An Inside
Look at Builders'' Books,'' Housing Economics, Washington, National
Association of Home Builders, 2001). Two of the ratios are based on
operating income (gross profit, return on net worth), and two are based
on the balance sheet statement (current ratio, debt to equity). We
examined the compliance cost impacts by calculating the values of each
ratio with and without the compliance costs, using a zero CPT
assumption and a market-based CPT assumption.
We used the changes in financial ratios to develop probability
distributions of changes in financial status. We used these
distributions to estimate the number of firms that might experience
financial stress based on the likelihood that their financial ratios
might fall below benchmark criteria we assume are indicators of
financial stress. We define financial stress as a situation where the
firm may have to change their way of doing business to adjust to the
changing business climate. The most extreme adjustments are associated
with downsizing or closure, but financial stress does not necessarily
imply either of these. We then combined the number of firms estimated
to experience financial stress with employment figures for the relevant
size firms to estimate the numbers of employees that could potentially
be affected by the options we considered. These effects might not occur
if the firms experiencing financial stress are able to respond to the
changing conditions without downsizing or closing. Our analyses project
that 31 firms would experience financial stress and 673 employees would
be displaced under Option 2, with the market-based cost pass-through
assumption. Using the zero cost pass-through assumption, we estimate
that 258 firms would experience financial stress and 5,178 employees
would be displaced under Option 2.
We used the Small Business Administration's definitions of ``small
entity'', which includes firms ranging from $5.0 million in gross
revenue for NAICS 23311 (Land subdivision and development) to $27.5
million in gross revenue for the majority of industries within NAICS
233 and 234. The small entities potentially impacted by the options we
considered are small land developers, small residential construction
firms, small commercial, institutional, industrial and manufacturing
building firms, and small heavy construction firms. We estimated that
under Option 2 the number of small firms that would have compliance
costs exceeding 1% of revenue to be 1,376-1,811 and the number with
compliance costs exceeding 3% of revenue to be 42-571, under the zero
cost pass-through assumption. Under the market-based CPT assumption, we
estimated that 0-213 firms would have compliance costs exceeding 1% of
revenue and 0-71 firms would have compliance costs exceeding 3% of
revenue. The ranges are a result of two different distributions we used
to model impacts across firms of varying revenue.
[[Page 22483]]
VIII. Pollutant Reductions and Environmental Benefits of Options We
Considered
Since we are not promulgating effluent guidelines for the
construction and development industry, there are no pollutant
reductions or environmental benefits associated with today's action.
However, we did estimate reductions in discharge of pollutants and the
associated water quality improvements and environmental benefits of the
options we considered.
A. Pollutant Reduction Estimation
We estimated that Option 2 would result in approximately 1,000,000
tons per year of sediment load reduction. There are no reductions
attributable to Option 1. Under Option 2, additional reductions would
also likely occur in the discharge of other pollutants that may be
associated with sediment, such as phosphorus and certain metals. Due to
data limitations regarding the amounts of pollutants attached to
sediment from construction sites, we did not estimate national
reductions for any pollutants other than sediment. To the extent there
are additional discharges, local programs are best to address them at
this time.
Our estimate of 1,000,000 tons of annual sediment reduction differs
significantly from the estimate at the time of proposal. For the
proposal, we made a BPJ estimation of the incremental sediment
reductions of the options. This estimation assumed a degree of non-
compliance with the existing NPDES storm water regulations. For the
analysis in support of today's action, we assumed full compliance with
existing regulations. This is consistent with EPA's analysis for other
ELGs. Furthermore, we conducted modeling that considered regional soil
types and regional-specific pollutant removal estimates of various
technologies used on model construction sites. As a result of these
changes and the use of modeling, the estimates of pollutant reductions
attributable to the options in support of today's action are much lower
than EPA had estimated at proposal.
B. Environmental Benefits Estimation
For this action analysis, we calculated benefits using the National
Water Pollution Control Assessment Model (NWPCAM). NWPCAM is a
national-scale water quality model that simulates water quality and
economic benefits resulting from water pollution control policies.
NWPCAM characterizes water quality of the Nation's network of rivers
and streams and, to a limited extent, its lakes. The model can
translate spatially varying water quality changes resulting from
different pollution control policies to reflect the value individuals
place on water quality improvements. In this way, NWPCAM can estimate
economic benefits of the regulatory options that we considered.
We calculated economic benefits using a four-parameter continuous
Water Quality Index (WQI4), representing a composite measure of water
quality. We calculated benefits for each State at the local and non-
local scales. Local benefits represent the value that a State
population is willing to pay for improvements to waters within the
State, while non-local benefits represent the value that a State
population is willing to pay for improvements to waters in all other
States in the conterminous 48 States. Using this approach, the sum of
local and non-local benefits represented a total WTP of approximately
$19.5 million annually (2002 dollars) for Option 2. We could not
attribute any benefits to Option 1.
Some categories of economic benefits, such as reduced need for
navigational dredging, reduced loss of water storage capacity in
reservoirs, and reduced drinking water and industrial water treatment
costs, were not included in this estimate. For the proposal, these
benefits were estimated to have annual value of $22 million for Option
2. Since proposal, we have substantially reduced our estimate of the
reduction in sediment loading that would result from the proposed ELG.
We expect the monetized benefits of these categories estimated at
proposal would be correspondingly reduced.
IX. Non-Water Quality Environmental Impacts
Sections 304(b) and 306 of the CWA require us to consider the ``non
water quality'' environmental impacts when setting effluent limitations
guidelines and standards. As described in the June 2002 proposal, we
did consider the non-water quality environmental impacts of the options
we developed. We estimated, however, that these impacts would be
negligible. We are not promulgating effluent guidelines for the
construction and development industry. Therefore, there are no non-
water quality environmental impacts associated with today's action.
X. Statutory and Executive Order Reviews
Today's action does not constitute a rule under section 551 of the
Administrative Procedure Act. 5 U.S.C. 551. Hence, requirements of
other regulatory statutes and Executive Orders that generally apply to
rulemakings (e.g., the Unfunded Mandate Reform Act) do not apply to
this action.
Dated: March 31, 2004.
Michael O. Leavitt,
Administrator.
[FR Doc. 04-7865 Filed 4-23-04; 8:45 am]
BILLING CODE 6560-50-P