					

                                 

Economic Analysis of Proposed Antidegradation Implementation Methods for
the Commonwealth of Puerto Rico

                                

Draft

April 2007

Prepared for:

United States Environmental Protection Agency

Office of Water

Office of Science and Technology

1200 Pennsylvania Avenue, N.W.

Washington, D.C. 20460

Prepared by:

Science Applications International Corporation

11251 Roger Bacon Drive

Reston, VA  20190

GSA Contract Number: GS-10F-0076J

SAIC Project Number: 01-0834-04-0562            

Table of Contents

  TOC \o "2-3" \h \z \t "Heading 1,1,Heading 7,1,Exec Sum,1"   
HYPERLINK \l "_Toc164573958"  Executive Summary	ES-  PAGEREF
_Toc164573958 \h  1  

  HYPERLINK \l "_Toc164573959"  1.	Introduction	  PAGEREF _Toc164573959
\h  1-1  

  HYPERLINK \l "_Toc164573960"  1.1	Background	  PAGEREF _Toc164573960
\h  1-1  

  HYPERLINK \l "_Toc164573961"  1.2	Scope of the Analysis	  PAGEREF
_Toc164573961 \h  1-3  

  HYPERLINK \l "_Toc164573962"  1.3	Organization of the Report	  PAGEREF
_Toc164573962 \h  1-3  

  HYPERLINK \l "_Toc164573963"  2.	Overview of the Proposed Rule	 
PAGEREF _Toc164573963 \h  2-1  

  HYPERLINK \l "_Toc164573964"  2.1	Tier 1 – Existing and Designated
Uses	  PAGEREF _Toc164573964 \h  2-1  

  HYPERLINK \l "_Toc164573965"  2.2	Tier 2 – Protection of High
Quality Waters	  PAGEREF _Toc164573965 \h  2-1  

  HYPERLINK \l "_Toc164573966"  2.3	Tier 3 – Protection of ONRWs	 
PAGEREF _Toc164573966 \h  2-2  

  HYPERLINK \l "_Toc164573967"  3.	Baseline for the Analysis	  PAGEREF
_Toc164573967 \h  3-1  

  HYPERLINK \l "_Toc164573968"  3.1	Water Quality Standards	  PAGEREF
_Toc164573968 \h  3-1  

  HYPERLINK \l "_Toc164573969"  3.2	NPDES-Permitted Dischargers	 
PAGEREF _Toc164573969 \h  3-1  

  HYPERLINK \l "_Toc164573970"  3.3	Potentially Affected Facilities	 
PAGEREF _Toc164573970 \h  3-2  

  HYPERLINK \l "_Toc164573971"  3.4	Antidegradation Reviews	  PAGEREF
_Toc164573971 \h  3-2  

  HYPERLINK \l "_Toc164573972"  4.	Economic Impact of the Rule	  PAGEREF
_Toc164573972 \h  4-1  

  HYPERLINK \l "_Toc164573973"  4.1	Potential Number of Antidegradation
Requests	  PAGEREF _Toc164573973 \h  4-1  

  HYPERLINK \l "_Toc164573974"  4.2	Antidegradation Analysis
Requirements	  PAGEREF _Toc164573974 \h  4-1  

  HYPERLINK \l "_Toc164573975"  4.2.1	Financial Analysis	  PAGEREF
_Toc164573975 \h  4-2  

  HYPERLINK \l "_Toc164573976"  4.2.2	Determination of Importance	 
PAGEREF _Toc164573976 \h  4-4  

  HYPERLINK \l "_Toc164573977"  4.3	Potential Costs of the Review	 
PAGEREF _Toc164573977 \h  4-5  

  HYPERLINK \l "_Toc164573978"  4.3.1	Facility Review Costs	  PAGEREF
_Toc164573978 \h  4-5  

  HYPERLINK \l "_Toc164573979"  4.3.2	EQB Review Costs	  PAGEREF
_Toc164573979 \h  4-6  

  HYPERLINK \l "_Toc164573980"  5.	Results	  PAGEREF _Toc164573980 \h 
5-1  

  HYPERLINK \l "_Toc164573981"  5.1	Total Annual Costs	  PAGEREF
_Toc164573981 \h  5-1  

  HYPERLINK \l "_Toc164573982"  5.2	Uncertainties of the Analysis	 
PAGEREF _Toc164573982 \h  5-1  

  HYPERLINK \l "_Toc164573983"  6.	References	  PAGEREF _Toc164573983 \h
 6-1  

  HYPERLINK \l "_Toc164573984"  Appendix A.	Facility Antidegradation
Review Cost Calculations	  PAGEREF _Toc164573984 \h  A-1  

 

List of Exhibits

  TOC \h \z \t "Exhibit Title,1" \c "Figure"    HYPERLINK \l
"_Toc164573985"  Exhibit 3-1.  Potentially Affected Individual NPDES
Permitted Dischargers in Puerto Rico	  PAGEREF _Toc164573985 \h  3-1  

  HYPERLINK \l "_Toc164573986"  Exhibit 4-1.  Estimated Cost per
Facility to Prepare Antidegradation Review (2007 $)	  PAGEREF
_Toc164573986 \h  4-6  

  HYPERLINK \l "_Toc164573987"  Exhibit 5-1.  Limitations of the
Analysis	  PAGEREF _Toc164573987 \h  5-1  

 

Acronyms and Abbreviations

BLS			Bureau of Labor Statistics

CAFO			Concentrated animal feeding operation

CPP			Continuing Planning Process

CWA		Clean Water Act

ENR		Engineering News Record

EPA		Environmental Protection Agency

EQB		Environmental Quality Board

MPS		Municipal preliminary screener

NPDES		National Pollutant Discharge Elimination System

ONRW		Outstanding natural resource water

PCS		Permit compliance system

POTW		Publicly owned treatment works

PRWQSR		Puerto Rico Water Quality Standard Regulation

WQA			Water Quality Area

Executive Summary

The U.S. Environmental Protection Agency (EPA) is proposing water
quality standards that would establish methods to implement Puerto
Rico’s existing antidegradation policy for waters of the Commonwealth
of Puerto Rico.  This report presents EPA’s analysis of potential
costs associated with the proposed rule.  Specifically, the report
provides estimates of potential incremental costs that direct point
source dischargers and the Commonwealth may experience as a result of
the proposed rule.

Background

On December 16, 2003, the Environmental Quality Board (EQB) submitted a
revised draft of its consolidation of antidegradation implementation
methods.  The EQB intended to promulgate the methods as part of the
Puerto Rico Water Quality Standard Regulation (PRWQSR) to consolidate
the existing antidegradation implementation methods “either explicitly
or by reference, into one document so that it is readily accessible to
the public and the regulated community.”  

On June 17, 2004, EQB submitted its final revised consolidation
document.  On July 9, 2004, EPA sent a letter to EQB stating that the
revised antidegradation methods meet the requirements of 40 CFR
§131.12(a).  However, on February 14, 2007, the U.S. District Court of
Puerto Rico issued an Opinion and Order ordering EPA to prepare and
publish new or revised water quality standards for antidegradation
implementation methods for Puerto Rico because the document is not a
regulation.

Method

The proposed rule establishes antidegradation methods that are the same
as the existing antidegradation implementation methods for Puerto Rico
waters.  Thus, while not in regulation, the proposed implementation
methods are already in place in Puerto Rico, and this action imposes no
new requirements or costs on any person or entity.  Nonetheless, EPA
estimated the potential impacts that may be associated with the
implementation of Puerto Rico’s antidegradation policy, as established
in regulation by the proposed rule. 

Because the proposed rule only applies to point source dischargers, EPA
only evaluated potential impacts to existing facilities requesting an
increase in an effluent limit, and any new facilities expected to
discharge to surface waters.  To date, few facilities have requested an
increase in discharge, and only 8 new facilities have been brought
online since 2001.  EPA Region 2 estimates that Puerto Rico has
performed five antidegradation reviews in the last five years. 
Therefore, EPA estimated that the EQB would receive one antidegradation
review request per year.  

As part of an antidegradation review request, facilities may need to
prepare preliminary engineering analyses of pollution control
alternatives, and a financial analysis for which EPA provides guidance
and a workbook.  The decision to grant or deny a discharge request rests
with the EQB.  EPA estimated the cost of preliminary engineering
analyses and financial analysis as a percentage of potential capital
control costs, which it based on estimates that it prepared for economic
analyses of recent water quality standards actions.  Preliminary
engineering and financial analysis costs could range between $10,200 and
$79,200 for major facilities, and between $800 and $6,300 for minor
facilities.  Assuming that each type of facility (e.g., major municipal,
minor municipal, major industrial, and minor industrial) is equally
likely to request an antidegradation review, the average cost per
facility could range from $9,200 to $27,600.  In addition, EPA estimated
an average administrative cost of approximately $5,300 per EQB
antidegradation review.

Results

Potential costs to point source facilities associated with the proposed
rule can be estimated by multiplying the potential number of
antidegradation reviews per year by the average cost of an
antidegradation review.  The total annual costs to point source
dischargers could range from $9,200 to $27,600 per year.

The EQB may also incur annual costs to review the requests.  Assuming
that the EQB would spend approximately 140 hours per antidegradation
review to analyze the information in the request and respond to public
comments, EPA estimated that it could cost the EQB approximately $5,300
per review.  Thus, total annual costs of the proposed rule could be
$14,500 to $32,900.

Introduction

The U.S. Environmental Protection Agency (EPA) is proposing water
quality standards that would establish methods to implement Puerto
Rico’s existing antidegradation policy for waters in the Commonwealth
of Puerto Rico.  This report presents EPA’s analysis of potential
costs associated with the proposed rule.  Specifically, the report
provides estimates of potential incremental costs that direct point
source dischargers and the Commonwealth may experience as a result of
the proposed rule.

1.1	Background

Section 303 (33 U.S.C. 1313) of the Clean Water Act (CWA) requires
States and authorized Tribes to adopt water quality standards for waters
of the United States within their applicable jurisdictions.  Such water
quality standards must include, at a minimum: (1) designated uses for
all water bodies within their jurisdictions, (2) water quality criteria
necessary to protect the most sensitive of the uses, and (3)
antidegradation provisions consistent with the regulations at 40 CFR
131.12.  

EPA also requires that authorized entities identify implementation
methods to provide three levels of water quality protection under their
antidegradation policy.  The first level of protection at 40 CFR
131.12(a)(1) requires the maintenance and protection of existing
in-stream water uses and the level of water quality necessary to protect
these existing uses.  Existing uses are defined as those uses actually
attained on or after November 28, 1975.  This first level of protection
is the baseline of water quality protection for all waters of the United
States.

The second level of protection is for high-quality waters.  EPA defines
high-quality waters in 40 CFR 131.12(a)(2) as those where the quality of
the water exceeds levels necessary to support the propagation of fish,
shellfish, and wildlife, and recreation in and on the water.  The
quality of these waters is to be maintained and protected unless the
authorized entity finds, after public participation and
intergovernmental review, that allowing lower water quality is necessary
to accommodate important economic or social development in the area in
which the waters are located.  In permitting this, the authorized entity
is to assure that the resultant water quality remains adequate to fully
protect existing uses.  Further, the authorized entity must assure that
all applicable statutory and regulatory requirements are implemented for
all new and existing point sources, and all cost-effective and
reasonable best management practices are implemented for nonpoint source
control.

Finally, EPA designates the third and highest level of protection for
Outstanding National Resource Waters (ONRWs).  If an authorized entity
determines that the characteristics of a water body constitute an
outstanding National resource, such as waters of National and State
parks and wildlife refuges and waters of exceptional recreational or
ecological significance, those characteristics must be maintained and
protected (see 40 CFR 131.12(a)(3)).

In addition to requiring States and authorized Tribes to have an
antidegradation policy, 40 CFR 131.12 requires States to identify
methods for implementing such a policy.  Such methods are not required
to be contained in the State’s regulation, but as they inform EPA’s
judgment regarding whether the State’s antidegradation policy is
consistent with the Federal regulations at 40 CFR 131.12, they are
subject to EPA review.  Where the State chooses to make such methods
part of its water quality standards regulations, section 303(c)(3) of
the CWA and EPA’s implementing regulations require them to be
submitted to EPA for review.  When a State or authorized Tribe chooses
to develop such methods as guidance or outside of regulation, EPA
reviews the methods either in connection with the State or Tribe’s
submission of an amendment to its antidegradation regulations under CWA
section 303(c)(3) or under its discretionary authority to review
existing water quality standards under CWA section 303(c)(4).

In August 1990, the Commonwealth of Puerto Rico adopted revisions to the
Puerto Rico Water Quality Standards Regulation (PRWQSR).  The revisions
were sent to EPA Region 2 on September 21, 1990, with the caveat from
the Chairman of the Environmental Quality Board (EQB) that the
transmittal may not be final because EQB planned to hold additional
public hearings on November 1, 1990, regarding certain aspects of the
revisions.  Therefore, EPA did not act on these revisions immediately. 
From 1991 to 1993, EPA Region 2 worked with the EQB on a series of
subsequent draft revisions to the PRWQSR.  The requisite certification
from the Commonwealth’s Secretary of Justice was ultimately submitted
to EPA on February 25, 2002.  Upon receipt of this certification, EPA
took final action on all new and revised provisions of the 1990 PRWQSR
on March 28, 2002.  These revisions included revisions to the Puerto
Rico antidegradation policy.  

Prior to October 2001, Puerto Rico had antidegradation implementation
methods set forth in a document known as its Continuing Planning Process
(CPP).  In October 2001, EPA commenced work with the Puerto Rico EQB to
enhance the antidegradation implementation methods.  However, on
February 20, 2002, CORALations, American Littoral Society, and the
American Canoe Association filed a complaint in the U.S. District Court
for the District of Puerto Rico alleging, among other things, that a
letter from a EPA Region 2 Division Director to the EQB had triggered a
mandatory duty under section 303(c)(4) of the CWA for EPA to prepare and
propose regulations for Puerto Rico setting forth a revised water
quality standard for antidegradation implementation methods.

On December 16, 2003, EQB submitted a revised draft of its consolidation
of antidegradation implementation methods with the intent to promulgate
the consolidation as a regulation as part of the PRWQSR to consolidate
the existing antidegradation implementation methods “either explicitly
or by reference, into one document so that it is readily accessible to
the public and the regulated community.”  

On June 17, 2004, EQB submitted its final revised consolidation
document.  This document, however, was not in rule.  On July 9, 2004,
EPA sent a letter to EQB stating that the revised antidegradation
methods meet the requirements of 40 CFR §131.12(a).  However, on
February 14, 2007, the U.S. District Court of Puerto Rico issued an
Opinion and Order, ordering EPA to prepare and publish new or revised
water quality standards for antidegradation implementation methods for
Puerto Rico.   

1.2	Scope of the Analysis

The proposed rule would establish antidegradation methods that are the
same as the existing antidegradation implementation methods for Puerto
Rico waters.  Thus, while not in regulation, the proposed implementation
methods are already in place in Puerto Rico, and this action imposes no
new requirements or costs on any person or entity.  Nonetheless, EPA
estimated the potential impacts that may be associated with the
implementation of Puerto Rico’s antidegradation policy, as established
in regulation by the proposed rule.  

Note that EPA is only proposing to promulgate water quality standards,
and, under this proposed rule, the ultimate impacts will depend on the
outcome of each antidegradation review.  Thus, EPA has estimated only
the potential costs of completing the reviews that would be required
under the proposed rule.  These estimates could over- or understate
actual impacts.

In addition, the proposed rule only applies to point source dischargers.
 Therefore, EPA only evaluated potential impacts to point source
dischargers.  

 

1.3	Organization of the Report

This report is organized as follows:  Section 2 provides an overview of
the proposed rule and the alternatives considered.  Section 3 describes
the baseline conditions for the analysis.  Section 4 provides estimates
of the potential economic impacts of the rule, and Section 5 presents
the results and discusses the uncertainties in the analysis.   Overview
of the Proposed Rule

EPA’s proposed rule is the same as Puerto Rico’s existing
antidegradation implementation methods.  Currently, Puerto Rico must
issue a certification under Section 401 of the CWA for any federally
issued permit that the permit complies with Puerto Rico’s water
quality standards.  This includes any National Pollutant Discharge
Elimination System (NPDES) permits issued by EPA under CWA Section 402
and any permit for the discharge of dredged or fill material issued by
the Army Corps of Engineers under Section 404 of the CWA or Section 10
of the River and Harbors Act.  Thus, the proposed rule would require
that an antidegradation review commence with the submission of a CWA
Section 401 water quality certification request. 

In conducting an antidegradation review, the Water Quality Area (WQA) of
EQB would first be required to determine which level of antidegradation
applies:  

Tier 1 – impaired waters and waters for which attainment of applicable
water quality standards has been or is expected to be, achieved through
implementation of effluent limitations more stringent than
technology-based controls

Tier 2 – waters with quality better than the mandatory minimum level
to support the CWA goals of propagation of fish, shellfish, wildlife and
recreation in and on the waters; identified on a parameter-by-parameter
basis.

Tier 3 – waters classified as SA (coastal and estuarine waters of high
quality and/or exceptional ecological or recreational valued) or SE
(surface waters and wetlands of exceptional ecological valued) in the
PRWQSR, as amended, or any other water designated by Resolution of the
Governing Board of EQB; waters that are recreationally or ecologically
important, unique, or sensitive.

2.1	Tier 1 – Existing and Designated Uses

For Tier 1 waters, EQB would need to determine if a discharge would
lower the water quality to the extent that it would no longer be
sufficient to protect and maintain the existing and designated uses of
that waterbody.  When a waterbody is impaired and on the 303(d) list or
the assimilative capacity of a waterbody is not sufficient to ensure
maintenance of water quality standards, then the WQA would not be
allowed an increase in pollutant concentrations in the waterbody.    

2.2	Tier 2 – Protection of High Quality Waters

To verify that a waterbody is a high quality water for a parameter of
concern, the WQA would need to evaluate and determine:

existing water quality

projected water quality

that the existing and designated uses of the waterbody will be fully
maintained and protected in the event of a lowering of water quality.

In order for the EQB to allow lowering of water quality in high quality
waters, the applicant would need to show and justify the necessity for
such lowering of water quality.  

2.3	Tier 3 – Protection of ONRWs

The EQB would be able to designate a water as an ONRW through a
resolution.  Additionally, any interested party would be able to
nominate a specific water to be classified as an ONRW and the Governing
Board of EQB would make the final determination.  Under the proposed
rule, the existing characteristics of Class SA and SE waters shall not
be altered, except by natural causes, in order to preserve the existing
natural phenomena.  In addition, no point source discharge would be
allowed in ONRWs.Baseline for the Analysis

This section describes the existing conditions in Puerto Rico with
respect to NPDES dischargers and antidegradation review applications
that provide the basis for estimating the incremental costs of the
proposed rule.

3.1	Water Quality Standards

All waters in Puerto Rico are classified in one of five designated use
categories.  Coastal and estuarine waters are designated as Class SA,
SB, or SC waters, and surface waters (or inland waters) are classified
as SD or SE waters:  

Class SA – includes bioluminiscent lagoons and bays and any other
coastal or estuarine waters of exceptional quality of high ecological
value or recreational; applicable to the waters 500 meters seaward of
the physical and geographical limits of the bodies of water under this
classification

Class SB – includes the coastal and estuarine waters not classified
under sections as SA or SC waters, and lagoons not classified under any
other class; applicable from the zone subject to the ebb and flow of
tides (mean sea level) up to 500 meters seaward from said zone (beyond
this limit, the next less restrictive classification applies to a
maximum of 10.3 nautical miles seaward

Class SC – includes Mayaguez Bay from Punta Guanajibo to Punta
Algarrobo, Yabucoa Port, Guayanilla and Tallaboa Bays from Cayo Parguera
to Punta Verraco, Ponce Port from Punta Carenero to Punta Cuchara, and
San Juan Port from the mouth of Río Bayamón to Punta El Morro 

Class SD – includes all inland waters, except designated as Class SE

Class SE – includes Laguna Tortuguero, Laguna Cartagena and any other
surface water bodies of exceptional ecological value.

3.2	NPDES-Permitted Dischargers

Exhibit 3-1 provides a summary of facilities that are currently
permitted to discharge to Puerto Rico surface waters.  There are a total
of 265 facilities, 71% of which are minor dischargers.

Exhibit 3-1.  Potentially Affected Individual NPDES Permitted
Dischargers in Puerto Rico

Standard Industrial Classification	Number of Facilities

	Majors	Minors

Agriculture, Forestry, and Fishing

2	Agricultural Production – Livestock and Animal Specialties	-	1

Construction

15	General Contractors and Operative Builders	-	3

Manufacturing

20	Food and Kindred Products	2	5

21	Tobacco Products	-	1

28	Chemicals and Allied Products	8	2

29	Petroleum and Coal Products	6	-

32	Stone, Clay, and Glass Products	3	-

34	Fabricated Metal Products	-	2

36	Electronic and Other Electronic Equipment	1	-

Transportation and Public Utilities

49	Electric, Gas, and Sanitary Services; except 4952	12	107

4952	Sewerage Services (POTWs)	37	28

Wholesale Trade

50	Wholesale Trade ( Durable Goods	1	-

51	Wholesale Trade ( Nondurable Goods	3	3

Finance, Insurance, and Real Estate

65	Real Estate	-	1

Services

70	Hotels and Other Lodging Places	-	3

79	Amusement and Recreational Services	-	2

80	Health Services	1	-

82	Educational Services	-	18

84	Museums, Botanical, Zoological Gardens	-	2

Public Administration

91	Executive, Legislative and General Government, except Finance	-	1

92	Justice, Public Order, and Safety	-	1

97	National Security and International Affairs	1	1

99	Nonclassifiable Establishments	-	5

	No SIC Code (blank in PCS)	-	3

Total  	76	189

(-( = none

Sources: U.S. EPA (2007) and U.S. EPA Region 2 (2007).



Facility information in EPA’s permit compliance system (PCS) database
has not been updated since June 2003.  However, it indicates that 80% of
facilities (only 60% of majors) discharge to inland surface waters.  

3.3	Potentially Affected Facilities

In the case of Tier 1 waters, EQB would make a determination as to
whether a discharge would lower water quality such that it would no
longer be sufficient to protect and maintain the existing and designated
uses of that water body.  For Tier 2 waters, EQB would evaluate the
existing and protected quality of the receiving water on a
parameter-by-parameter basis.  Under this approach, EQB would determine
whether water quality is better than the applicable criteria for a
specific parameter or pollutant that would be affected by a new
discharge or an increase in an existing discharge of the pollutant.  For
example, if dissolved oxygen levels are at 7 mg/L and the criterion is 5
mg/L, that water body would be high quality for dissolved oxygen, but
may not necessarily be high quality for another parameter.  In addition,
no point source discharges would be allowed to Tier 3 waters.  

3.4	Antidegradation Reviews

Puerto Rico’s existing antidegradation implementation methods are the
same as the antidegradation implementation methods set forth in the
proposed rule.  To date, few facilities have requested an increase in
discharge, and only 8 new facilities have been brought online since
2001.  EPA Region 2 estimates that Puerto Rico has performed five
antidegradation reviews in the last five years.

Economic Impact of the Rule

Given that similar antidegradation implementation methods already apply
to Puerto Rico waters, the incremental costs associated with the
proposed rule may be minimal.  However, this section describes the types
of impacts that could be associated with implementing the proposed
methods, and provides estimates of the potential magnitude of those
impacts.

4.1	Potential Number of Antidegradation Requests

EPA Region 2 indicates that is has received five antidegradation review
requests within the last five years, or approximately one request per
year.  This frequency includes antidegradation reviews for both existing
and new facilities.  EPA assumed that each type of facility (e.g., major
municipal, minor municipal, major industrial, and minor industrial) is
equally likely to request an antidegradation review. 

4.2	Antidegradation Analysis Requirements

In conducting an antidegradation review as part of the Section 401
certification process, EQB would first determine which level of
antidegradation applies based upon a review of existing water quality
data, and other required information, to be provided by the applicant. 
Based upon this review, EQB would then determine if additional
information is necessary in order to make a determination.  The result
of this review would need to be that no cost-effective pollution
prevention alternatives and enhanced treatment techniques are available
to the entity that would eliminate or significantly reduce the extent to
which the increased loading results in a lowering of water quality.  In
addition, the review would need to show that the pollution controls
necessary to maintain the existing water quality will interfere with
economic and/or social development in the area, and that this economic
and social development is important.

As part of the review, the EQB would also prepare an intent to issue or
deny the 401 water quality certificate, and publish a notice in a
newspaper of wide circulation in Puerto Rico informing the public of its
preliminary decision and granting a public participation period of at
least 30 days.  The EQB would then address the comments received from
the interested parties, and make the final determination to issue or
deny the requested 401 certification.

EPA (1995) provides a workbook and guidelines for completing the
financial and economic and social impact analyses, and interpreting the
results.  Most of the information needed to perform these analyses is
available from easily accessible sources.  The socioeconomic indicators,
and the information required to calculate the various ratios, are often
available on the Internet or by directly contacting sources such as the
U.S. Census Bureau, Standard & Poors, Moody’s, the Bureau of Labor
Statistics, and State and local government agencies.  The portion of the
analysis requiring estimation of pollution control costs may be
performed by the entity if a qualified staff member is available.  A
facility may also wish to utilize a consultant to estimate the pollution
control cost and develop the financial analysis.

An antidegradation review of a proposed development that would result in
a lowering of water quality would need to address two factors.  First,
the review would need to establish that the pollution controls necessary
to maintain the high quality of water will interfere with the proposed
development.  Second, the review would need to demonstrate that the
development would be an important economic and social one.

							

The first factor can be addressed through a financial impact analysis. 
The entity proposing to increase their loadings would need to determine
what pollution controls would be necessary to prevent lowering of water
quality.  Those controls would need to be the most appropriate and
cost-effective means of maintaining water quality.  The entity would
then calculate the annual cost of the pollution controls, which includes
the annualized capital cost, if any, as well as the annual operation and
maintenance costs.  In addition, public entities would determine how
these costs are passed on in annual household service fees.

The second factor would require an analysis of changes in social and
economic measures that would be foregone if the proposed development
that would lower water quality is not allowed.  This might include
estimates of foregone increases in tax revenue, employment, personal
income, and property values in the affected community.

4.2.1	Financial Analysis

The first step in the financial analysis is estimating potential
pollution control costs.  Then the entity would need to determine
whether or not these costs would result in a substantial impact to the
affected community.  The required financial analysis is performed
differently for public sector and private sector facilities.

Public Sector

Public sector facilities perform a preliminary analysis in which they
calculate a Municipal Preliminary Screener (MPS) value:

MPS = Average Total Pollution Control Cost per Household/Median
Household Income.

The average total pollution control cost per household is the sum of the
existing costs (i.e., current sewer rates) plus those attributable to
the proposed pollution control.  The value of the MPS is evaluated
against thresholds of 1% and 2%, and in conjunction with the secondary
test, described below.  If the MPS is less than 1%, the control
requirements are not expected to have a substantial financial impact on
households or interfere with economic development unless the secondary
test indicates a fairly weak economy.  MPS values above 2% are a strong
indicator that the impact could be substantial, and values in between
are indeterminate, placing greater emphasis on the health of the local
economy. 

The secondary analysis provides an indication of a community’s
socioeconomic health and its ability to obtain financing.  Specific
indicators are used to demonstrate the debt, socioeconomic, and
financial management conditions within the community:

Debt indicators

bond rating - a measure, if available, of the credit worthiness of the
community

overall net debt as a percent of full market value of taxable property -
a measure of debt burden on residents within the community

Socioeconomic indicators

unemployment rate - a measure of the general economic health of the
community

median household income - a measure of the wealth of the community 

Financial management indicators

property tax revenue as a percent of full market value of taxable
property - a measure of the funding capacity available to support debt
based on the wealth of the community

property tax collection rate - a measure of how well the local
government is administered.

The analyst assigns each indicator a score from 1 to 3: indicator values
judged to be weak receive a score of 1; a score of 2 is for mid-range
indicator values, and 3 is for strong indicators.  EPA (1995) provides
guidelines for assigning values to each indicator based on comparisons
to established values, or to national and State indicator values.  The
analyst then calculates a mean score, to indicate overall conditions
within the affected community.  EPA (1995) considers an average of less
than 1.5 to be weak; 1.5 to 2.5 to be mid-range; and greater than 2.5 to
be strong.

Private Sector 

Private sector entities also perform primary and secondary tests.  The
primary measure of impact for private sector entities is the estimated
decline in the profit ratio [measured as pre-tax earnings (revenues
minus costs) divided by revenues] expected as a result of the proposed
pollution control expenditures.  However, unlike the financial analysis
for public sector entities, there is no established standard by which to
categorize the potential loss of profits as significant or
insignificant.  Instead, the profit ratios with and without pollution
controls can be compared with industry-wide profit ratios to evaluate
the relative strength of the entity and how incremental pollution
control costs might affect its financial strength.  However, if the
discharger was already in trouble (i.e., not profitable or profit far
below industry norms), it may not claim that substantial impacts would
incur due to compliance with water quality standards (U.S. EPA, 1995).

Three secondary measures further define the financial impact of the
pollution control project.  Liquidity indicates how easily an entity can
pay its short-term expenses, and is measured by the current ratio:

Current Ratio = Current Assets/Current Liabilities.

An entity is considered liquid if its current ratio is greater than 2. 
Ratio values less than 2 indicate potential liquidity problems.  The
ratio value, however, should be compared with industry averages as well
as this rule-of-thumb value.

Solvency is a measure of how easily an entity can pay its fixed and
long-term liabilities.  Although there are various solvency ratios, EPA
(1995) recommends the Beaver’s Ratio, which is an indicator of
bankruptcy:

Beaver’s Ratio = Cash Flow/Total Liabilities.

An entity is considered solvent if its Beaver’s Ratio is greater than
0.20.  A ratio of less than 0.15 indicates insolvency and a high
bankruptcy risk.  A ratio between 0.15 and 0.20 is indeterminate, but
indicates some bankruptcy risk.

An additional solvency or leverage ratio, the debt-to-equity ratio,
provides insight into how much debt is held relative to equity, whether
additional debt can be obtained, and whether existing debt can be paid. 
The term leverage refers to the use of debt to leverage equity to
acquire more assets and hopefully provide a bigger return on equity. 
One of the various forms of the debt-to-equity ratio is:

Debt-to-Equity Ratio = Long-term Liabilities/Owner’s Equity.

The ratio value should be compared to similar businesses in the region
or industry averages to determine whether the entity’s degree of
leverage is typical or whether it is highly leveraged, which indicates
an increased risk of business failure as well as a higher difficulty in
borrowing to finance incremental control costs.

If these financial tests indicate that the proposed pollution controls
would have adverse financial impacts on the business entity and,
therefore, interfere with the proposed development, then an entity must
also show that the development would be of economic and social
importance to the community.

4.2.2	Determination of Importance

Analysis of whether a proposed development is important also differs for
public and private sector entities.  In both cases, the entity must
first identify the relevant geographical area.  For public sector
entities, this is usually the municipality served by the entity.  For
private sector entities, it is typically the area in which most of the
affected workers live and where dependent businesses are located. 
However, the workbook only provides guidelines; it does not provide a
quantitative means for making a determination of importance for either
public or private sector entities.

Public Sector 

EPA (1995) suggests using the following socioeconomic indicators to
determine whether or not the development would be important to the
affected community.  The analysis focuses on how each indicator would
change due to the proposed development:

Median household income

Community unemployment rate

Overall net debt as a percentage of full market value of taxable
property

Percent of households below the poverty line

Community development potential

Property values.

Private Sector 

EPA (1995) suggests using the level of employment that would be gained,
as well as any potential decrease in the need for social services such
as unemployment insurance claims or subsidized housing due to the
development, as indicators of importance.  Other factors to consider
include potential impacts on local tax revenues and service fees that
might help improve the level of services throughout the area.

4.3	Potential Costs of the Review

Costs for the proposed antidegradation policy include costs to
facilities for preparing the review material and necessary data, and
costs associated with the Commonwealth’s review of the facility
information and certification process.

4.3.1	Facility Review Costs

The cost incurred by facilities in complying with the proposed rule may
include the cost of a preliminary engineering analysis, and the
subsequent financial analysis for which EPA provides guidance and a
workbook.  The decision to grant or deny a discharge request rests with
the EQB.  Therefore, EPA cannot determine how the proposed rule might
affect such decisions.  Consequently, estimated costs represent only the
incremental costs required to complete the antidegradation review, which
would be required by the proposed rule.

A preliminary engineering analysis consists of an analysis of the
existing industrial processes at a facility, the treatment processes
used to treat wastes generated, and the current effluent quality.  The
analysis must identify the least-cost controls for attaining no increase
in loadings, and develop approximate costs for implementing required
controls.  Detailed design work is not required to develop these likely
cost estimates – cost estimates based on a pre-conceptual design
analysis provide sufficient information for the financial analysis. 
This level of analysis could cost between 1% and 3% of the installed
cost of additional pollution controls (Spencer Engineering &
Construction Management, Inc., 2004; OTA, 1991).

Additional pollution controls necessary to prevent a lowering of water
quality could include process optimization, pollution prevention
programs, or end-of-pipe treatment technologies that target conventional
or toxic pollutants such as tertiary filtration, chemical precipitation,
and disinfection.  As an approximation of these costs, EPA used capital
control costs that it estimated could be required as a result of water
quality standards rules that it proposed or promulgated in Puerto Rico
and elsewhere (U.S. EPA, 2004; 2003a; 2003b; 2002; and 1999; see
Appendix A), escalated to 2007 dollars using the Environmental News
Record (ENR) Construction Cost Index.  (Note that the ENR index is based
on cost data from 20 cities within the continental U.S.; thus, the
historical price trend may differ in Puerto Rico.)  The potential
capital control costs for these rules averages approximately $2.64
million for major POTWs, $79,000 for minor POTWs, $751,000 for major
industrial facilities, and $209,000 for minor industrial facilities. 
Thus, antidegradation review costs (which include a preliminary
engineering and financial analysis) could range between $7,500 and
$79,200 for major facilities, and between $800 and $6,300 for minor
facilities (see Exhibit 4-1).  

Exhibit 4-1.  Estimated Cost per Facility to Prepare Antidegradation
Review (2007 $)

Cost	Municipal Facilities (POTWs)	Industrial Facilities	Average

	Major	Minor	Major	Minor

	Installed Controls1	$2,641,000	$79,400	$751,000	$209,100	$920,100

Low Estimate of Review Cost (1% of Installed Capital Cost)		$26,400	$800
$7,500	$2,100	$9,200

High Estimate of Review Cost (3% of Installed Capital Cost)	$79,200
$2,400	$22,500	$6,300	$27,600

1. Average capital costs to facilities that EPA identified as requiring
additional pollution controls in analyses of water quality standards
actions.  See Appendix A for detail.



Assuming that each type of facility is equally likely to request an
antidegradation review, average antidegradation review costs would range
from $9,200 to $27,600.

4.3.2	EQB Review Costs

Costs for the proposed antidegradation provision will include the cost
of the EQB review.  EPA assumed that the EQB’s review of the
engineering cost analysis and financial impact analysis could require up
to 40 hours.  The review process includes validating source data and
checking calculations, as well as evaluating the engineering design and
the conclusions regarding potential financial and community impacts. 
The EQB will also need to evaluate the information provided regarding
the importance of the proposed development to the economic and social
conditions of the affected community.  

The proposed rule also recommends a notification and public comment
period.  Based on time estimates to review and respond to comments on an
individual permit issued to a concentrated animal feeding operation, on
average, the notification and response to comments activities could
require 100 hours of time (U.S. EPA, 2000).  Thus, the total time
requirement to process each request is potentially 140 hours.

The mean hourly wage in Puerto Rico for an environmental engineer is
$26.07 (BLS, 2005).  To account for benefits, EPA multiplied this wage
by the ratio of total compensation to wages and salaries for state and
local government workers in professional and related occupations (a
ratio of 1.4; BLS, 2007a).  EPA also escalated to 2007 dollars using the
Employment Cost Index (BLS, 2007b), lacking employment cost information
specific to Puerto Rico, although historical labor cost trends may vary
for the Territory.  Thus, the estimated hourly labor cost is $37.81, and
the review costs are approximately $5,300 (140 × $37.81).Results

This section summarizes the potential costs of the rule, and discusses
the limitations and uncertainties associated with the analysis.

5.1	Total Annual Costs

Potential costs to point source facilities associated with the proposed
rule can be estimated by multiplying the potential number of
antidegradation reviews per year by the average cost of an
antidegradation review.  The total annual costs to point source
dischargers could range from $9,200 to $27,600 per year.

The EQB may also incur annual costs to review the requests.  Assuming
that the EQB would spend approximately 140 hours per antidegradation
review to analyze the information in the request and respond to public
comments, EPA estimated that it could cost the EQB approximately $5,300
per review.  Thus, total annual costs of the proposed rule could be
$14,500 to $32,900.

5.2	Uncertainties of the Analysis

There are a number of uncertainties associated with the frequency of
antidegradation review requests, how the EQB will respond to the
requests, and how facilities would respond to potential revised permit
conditions that affect the estimated costs of the rule.  These
uncertainties are described in Exhibit 5-1.  

Exhibit 5-1.  Limitations of the Analysis 

Limitation/Assumption	Potential Impact on Costs	Comment

Estimated costs only include cost of completing the reviews required
under the rule, and do not account for potential costs related to the
outcome of the review.  	–	The ultimate impacts will depend on the
outcome of each antidegradation review.  If a facility is denied its
request for an increase in discharge or outfall location (for a new
facility), additional costs may be incurred.  However, if the request is
denied, it is because Puerto Rico has determined that the costs
associated with maintaining water quality are not socially or
economically important. 

The average annual requests for antidegradation review may be higher or
lower than estimated.

	?	If no existing dischargers ever request an increase, or no new
entities begin operation, no costs will be incurred.  However, more
frequent requests in the future could result in higher annual costs.

The State effort for antidegradation review is based on an estimate of
the average amount of time to process an individual permit, which may
over or understate the average review hours.	?	EPA used an hour estimate
from a final NPDES rule for confined animal feeding operations. The
average amount of time required to review documentation submitted for an
antidegradation review may be higher or lower.

Capital and labor costs are escalated to 2007 dollars using the ENR
Construction Cost Index and the BLS Employment Cost Index, respectively.
?	Capital and labor costs may follow different price trends than
captured by the indices used.  In general, inflation in Puerto Rico
exceeds the rate of inflation in the United States.  However, statistics
were not readily available to estimate the price trend of capital and
labor costs in Puerto Rico. 

Key:   –   = Costs are potentially understated

          ?   = Affect on costs is unknown.



  

References

Bureau of Labor Statistics (BLS).  2005.  State Occupational Employment
and Wage Estimates Puerto Rico.  Online at
http://www.bls.gov/oes/current/oes_pr.htm.

Bureau of Labor Statistics (BLS).  2007a.  Employer Costs for Employee
Compensation.  Table 4. Employer costs per hour worked for employee
compensation and costs as a percent of total compensation: State and
local government workers, by occupational and industry group, December
2006, Professional and related.  Online at
http://www.bls.gov/news.release/pdf/ecec.pdf.

Bureau of Labor Statistics (BLS).  2007b.  Table 11. Employment Cost
Index for wages and salaries, for State and local government workers, by
occupational group and industry, Professional and related.  Online at  
HYPERLINK "http://www.bls.gov/news.release/pdf/eci.pdf" 
http://www.bls.gov/news.release/pdf/eci.pdf .

Engineering News Record (ENR).  2007.  Recent Cost Indexes: Construction
Cost Index.  Accessed March 30, 2007 at
http://www.enr.com/features/coneco/subs/recentindexes.asp.

Office of Technology Assessment (OTA).  1991.  Delivering the Goods:
Public Works

Technologies, Management, and Financing.  OTA-SET-477; NTIS Order
#PB91-197939.

Spencer Engineering & Construction Management, Inc.  2004.  City of
Ferndale USDA Rural Utilities Service Wastewater System Improvements
Financial Assistance Grant Preliminary Engineering Report.  Online at  
HYPERLINK
"http://ci.ferndale.ca.us/pdf/Preliminary-Engineering-Report.pdf" 
http://ci.ferndale.ca.us/pdf/Preliminary-Engineering-Report.pdf .

U.S. Environmental Protection Agency (EPA).  2007.  Permit Compliance
System (PCS) Database.  Accessed March 2007.  Online at
http://www.epa.gov/enviro/html/pcs/adhoc.html. 

U.S. Environmental Protection Agency (EPA).  2003a.  Economic Analysis
of the Proposed Water Quality Standards Rule for the State of Oregon. 
Office of Water, Office of Science and Technology, Washington, DC. 
September.

U.S. Environmental Protection Agency (EPA).  2003b.  Economic Analysis
of the Proposed 

Water Quality Standards Rule for Puerto Rico.  Office of Water, Office
of Science and Technology, Washington, DC.  October.

U.S. Environmental Protection Agency (EPA).  2002.  Economic Analysis of
the Proposed Water Quality Standards Rule for the State of Alabama.
Office of Water, Office of Science and Technology, Washington, DC.
November.

U.S. Environmental Protection Agency (EPA).  2000.  Supporting Statement
for the Information Collection Request for the Proposed Regulatory
Revisions to the National Pollutant Discharge Elimination System
Regulations for Concentrated Animal Feeding Operations and Feedlot
Effluent Limitations Guidelines. Washington, D.C.: U.S. EPA, Office of
Water.

U.S. Environmental Protection Agency (EPA).  1999.  Economic Analysis of
the California Toxics Rule. Office of Water, Office of Science and
Technology, Washington, DC. October.

U.S. Environmental Protection Agency (EPA).  1995.  Interim Economic
Guidance for Water Quality Standards, Workbook. Office of Water,
EPA-823-B-95-002.

U.S. Environmental Protection Agency (EPA) Region 2.  2007.  Excel
Spreadsheet for NPDES Permits in Puerto Rico.  Sent via email from Karen
O’Brien on March 13, 2007.

Facility Antidegradation Review Cost Calculations

This appendix describes the capital control costs that form the basis
for EPA’s estimate of the cost of an antidegradation review.  As
described in Section 4.3.1, EPA assumed that an antidegradation review
would include preliminary engineering analyses, and a financial
analysis, which could cost between 1% and 3% of the installed cost of
additional pollution controls (Spencer Engineering & Construction
Management, Inc., 2004; OTA, 1991).  Additional pollution controls
necessary to prevent a lowering of water quality could include process
optimization, pollution prevention programs, or end-of-pipe treatment
technologies that target conventional or toxic pollutants such as
tertiary filtration, chemical precipitation, and disinfection.  EPA
estimated the costs of potential controls based on estimates it prepared
for economic analyses of recent water quality standards actions,
described below.  

Controls for Conventional Pollutants

EPA promulgated water quality criteria for bacteria applicable to
coastal and Great Lakes waters that specific States and Territories have
designated for swimming, bathing, surfing, or similar water contact
activities and for which the State or Territory does not have in place
EPA-approved bacteria criteria that are as protective of human health as
EPA’s 1986 recommended bacteria criteria.  EPA estimated that
facilities would optimize existing disinfection processes to comply with
the rule.  Process optimization usually involves process analysis and
process modifications.  	

Exhibit A-1 shows the estimated capital costs for each sample facility
that EPA estimated would likely incur control costs for compliance with
the final rule.  Capital costs are escalated to February 2007 dollars
using the Engineering News Record (ENR) construction cost index.

Exhibit A-1.  Estimated Capital Costs for Coastal and Great Lakes Waters
Sample Facilities

Facility	Estimated Capital Control Costs (2004 $)1	Escalated Capital
Control Costs (2007 $)2

Major Municipals

Bowery Bay WPC	$4,291,000	$4,788,261

Hunt’s Point WPC	$4,291,000	$4,788,261

King County WWTP	$4,591,000	$5,123,026

Newtown Creek WPC	$9,221,000	$10,289,572

Owls Head WPC	$4,152,000	$4,633,153

Homer WWTP	$11,400	$12,721

Newport WWTF	$273,600	$305,306

Tacoma WWTP	$948,600	$1,058,528

Bird Island WWTP	$7,218,000	$8,054,455

Frank E. Van Lare WWTP 	$3,619,000	$4,038,386

Southeast WPCP	$4,617,000	$5,152,039

City of Port Clinton WWTP	$122,300	$136,473

Huron Basin STP	$98,500	$109,915

Kenosha WWTP	$1,113,000	$1,241,980

Painesville WWTP	$214,200	$239,022

Sturgeon Bay Utilities	$98,500	$109,915

Minor Municipals

Green Cove Condos	$24,600	$27,451

1. Source: U.S. EPA (2004).

2. Escalated from 2004 dollars (7061 through 3rd quarter of 2004) to
February 2007 dollars (7879.5) using ENR construction cost index.



EPA proposed to establish a new Federal use designation for primary
contact recreation use and applicable water quality criteria to protect
primary contact recreation for selected water bodies in Puerto Rico. 
The proposed use designation established new bacteriological criteria
for fecal coliform and enterococci for Class SC waters (the same
criteria as Class SB waters).  EPA estimated that facilities would
optimize existing disinfection processes to comply with the rule. 
Process optimization usually involves process analysis and process
modifications.  

	

Exhibit A-2 shows the estimated capital costs for each sample facility
that EPA estimated would likely incur control costs for compliance with
the proposed rule.  Capital costs are escalated to February 2007 dollars
using the ENR construction cost index.

Exhibit A-2.  Estimated Capital Costs for Puerto Rico Sample Facilities

Facility	Estimated Capital Control Costs (2003 $)1	Escalated Capital
Control Costs (2007 $)2

Major Municipals

Puerto Nuevo RWWTP	$509,661 	$599,924 

Vega Baja WWTP	$375,876 	$442,445 

Minor Municipals

Guanica WWTP	$96,800 	$113,944 

Fort Allen Training Annex	$66,570 	$78,360 

1. Source: U.S. EPA (2003b).

2. Escalated from 2003 dollars (6694) to February 2007 dollars (7879.5)
using ENR construction cost index.



EPA proposed temperature criteria to protect salmon and bull trout life
stages in Oregon waters, an intergravel dissolved oxygen criterion that
protects salmonid spawning, and the locations and times of year (i.e.,
“when and where”) that salmon and bull trout life stages occur in
Oregon waters. EPA estimated one sample facility would need to would
install cooling towers for a portion of its flow to reduce effluent
temperatures to the necessary levels for compliance with the rule.  

Exhibit A-3 shows the estimated capital costs for the sample facility. 
Capital costs are escalated to February 2007 dollars using the ENR
construction cost index.

Exhibit A-3.  Estimated Capital Costs for Oregon Sample Facilities

Facility	Estimated Capital Control Costs (2004 $)1	Escalated Capital
Control Costs (2007 $)2

Major Industrials

Weyerhaeuser Paper Company	$421,500	$496,150

1. Source: U.S. EPA (2003a).

2. Escalated from 2003 dollars (6694) to February 2007 dollars (7879.5)
using ENR construction cost index.



EPA proposed to upgrade 19.4 miles of Five Mile Creek in Jefferson
County, Alabama, to a higher designated use, Fish and Wildlife (F&W). 
Part of the proposed use designation established new criteria for fecal
coliforms.  EPA estimated that once in compliance with projected
baseline limits, one facility would need to implement process
optimization to achieve the incremental pollutant loading reductions
associated with a F&W use.  Process optimization usually involves
process analysis and process modifications.  

	

Exhibit A-4 shows the estimated capital costs for the facility that EPA
estimated would likely incur control costs for compliance with the
proposed rule.  Capital costs are escalated to February 2007 dollars
using the ENR construction cost index.

Exhibit A-4.  Estimated Capital Costs for Alabama Facility Discharging
to Five Mile Creek

Facility	Estimated Capital Control Costs (2002 $)1	Escalated Capital
Control Costs (2007 $)2

Major Municipals

Five Mile Creek WWTP	$360,000	$433,869

1. Source: U.S. EPA (2002).

2. Escalated from 2002 dollars (6538) to February 2007 dollars (7879.5)
using ENR construction cost index.



Controls for Toxic Pollutants

EPA proposed to upgrade 19.4 miles of Five Mile Creek in Jefferson
County, Alabama, to a higher designated use, Fish and Wildlife (F&W). 
Part of the proposed use designation established new criteria for toxic
pollutants.  EPA estimated that once in compliance with projected
baseline limits, facilities would need to implement process optimization
to achieve the incremental pollutant loading reductions associated with
a F&W use.  Process optimization usually involves process analysis and
process modifications.  

	

Exhibit A-5 shows the estimated capital costs for each facility that EPA
estimated would likely incur control costs for compliance with the
proposed rule.  Capital costs are escalated to February 2007 dollars
using the ENR construction cost index.

Exhibit A-5.  Estimated Capital Costs for Alabama Facilities Discharging
to Five Mile Creek

Facility	Estimated Capital Control Costs (2002 $)1	Escalated Capital
Control Costs (2007 $)2

Major Industrials

ABC Coke	$110,000	$132,571

Sloss Industries	$260,000	$313,350

1. Source: U.S. EPA (2002).

2. Escalated from 2002 dollars (6538) to February 2007 dollars (7879.5)
using ENR construction cost index.



EPA promulgated numeric aquatic life criteria for 23 priority toxic
pollutants and numeric human health criteria for 57 priority toxic
pollutants for inland surface waters, enclosed bays, and estuaries in
California.  EPA estimated that facilities would need to implement a
combination of end-of-pipe treatment controls (e.g., chemical
precipitation and GAC), process optimization, and pollution prevention
to reduce pollutant concentrations for compliance with the rule.  

	

Exhibit A-6 shows the estimated capital costs for each sample facility
that EPA estimated would likely incur control costs under two cost
scenarios based on different implementation options that the State could
pursue.  EPA used the average cost from the two scenarios in this
analysis.  Capital costs are escalated to February 2007 dollars using
the ENR construction cost index.

Exhibit A-6.  Estimated Capital Costs for Sample Facilities in
California

Facility	High Cost Scenario	Low Cost Scenario	Average Estimated Capital
Costs (2007 $)

	Estimated Capital Control Costs (1998 $)1	Escalated Capital Control
Costs (2007 $)2	Estimated Capital Control Costs (1998 $)1	Escalated
Capital Control Costs (2007 $)2

	Major Municipals

Arcata WWTP	$569,999	$765,524	$0	$0	$765,5243

Colton WWTP	$4,230,001	$5,681,006	$800,997	$1,075,761	$3,378,384

Merced WWTP	$4,169,999	$5,600,421	$969,999	$1,302,735	$3,451,578

Riverside WPCP	$2,230,001	$2,994,952	$630,001	$846,109	$1,920,530

Sacramento Regional WWTP	$2,230,001	$2,994,952	$630,001	$846,109
$1,920,530

San Jose/Santa Clara WPCP	$2,079,999	$2,793,494	$400,000	$537,211
$1,665,353

Sunnyvale WPCP	$4,000,000	$5,372,108	$174,002	$233,690	$2,802,899

Tillman WRP	$4,460,002	$5,989,904	$1,259,995	$1,692,208	$3,841,056

Minor Municipals

Calistoga WWTP	$50,001	$67,153	$0	$0	$67,1533

Donner WWTP	$50,001	$67,153	$0	$0	$67,1533

Forestville WWTP	$74,998	$100,724	$74,998	$100,724	$100,724

San Juan Bautista WWTP	$100,002	$134,305	$50,001	$67,153	$100,729

Major Industrials

Boeing	$352,998	$474,086	$53,000	$71,180	$272,633

Dupont	$100,002	$134,305	$0	$0	$134,3053

Exxon	$630,999	$847,448	$130,997	$175,932	$511,690

Unocal	$2,530,000	$3,397,859	$0	$0	$3,397,8593

Great Lakes Chemical	$16,997	$22,828	$0	$0	$22,8283

Minor Industrials

Hunters Point Electric	$400,000	$537,211	$400,000	$537,211	$537,211

Navy Grounds	$50,001	$67,153	$0	$0	$67,1533

1. Source: U.S. EPA (2001).

2. Escalated from 1st quarter 1998 dollars (5867) to February 2007
dollars (7879.5) using ENR construction cost index.

3. Represents high cost scenario costs because facilities with zero
costs are not included in the analysis.



Summary

Exhibit A-7 shows the average capital costs for each facility type from
the rules described above.  

Exhibit A-7.  Summary of Capital Control Costs for Facilities
Potentially Affected by Recent EPA WQS Actions

Facility Type	Number of Facilities	Total Capital Costs 

(2007 $)	Average Capital Costs (2007 $)

Major Municipal	27	$71,303,104	$2,640,856

Minor Municipal	7	$555,512	$79,359

Major Industrial	7	$5,258,558	$751,223

Minor Industrial	3	$627,191	$209,064



 PAGE   

		 

 PAGE   i 

Draft – April 2007		            

ES- PAGE   1 

Draft – April 2007                                     Executive
Summary                                                      

 PAGE   1-3 

Draft – April 2007	                    1. Introduction		            

 PAGE   2-2 

Draft – April 2007	                    2. Overview of the Proposed
Rule		            

 PAGE   3-3 

Draft – April 2007	                    3. Baseline for the Analysis		 
          

 PAGE   4-6 

Draft – April 2007	                     4. Economic Impact of the Rule
 

 PAGE   5-2 

Draft – April 2007	                   5. Results		            

 PAGE   6-2 

Draft – April 2007	                   6.  References

 PAGE   A-5 

Draft – April 2007	           Appendix A.  Facility Antidegradation
Review Cost Calculations

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