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Cost considerations for MS4 permit update

Please find an excerpt below from attachment F of the draft MS4 permit detailing some of the economic considerations taken into account regarding stormwater managment.


Statutory Considerations

California Water Code (CWC) section 13241 requires the San Diego Water Board to

consider certain factors, including economic considerations, in the adoption of water

quality objectives. CWC section 13263 requires the San Diego Water Board to take

into consideration the provisions of CWC section 13241 in adopting waste discharge


In City of Burbank v. State Water Resources Control Bd. (2005) 35 Cal.41h 613, the

California Supreme Court considered whether Regional Water Boards must comply

with ewe section 13241 when issuing waste discharge requirements under ewe

section 13263(a) by taking into account the costs a permittee will incur in complying

with the permit requirements. The Court concluded that whether it is necessary to

consider such cost information "depends on whether those restrictions meet or exceed

the requirements of the federal Clean Water Act." (/d. at p. 627.) The Court ruled that

Regional Water Boards may not consider the factors in ewe section 13241, including

economics, to justify imposing pollutant restrictions that are less stringent than

applicable federal law requires. (/d. At pp. 618, 626-627 ["[Water Code section 13377

specifies that discharge permits issued by California's regional boards must meet the

federal standards set by federal law. In effect, section 13377 forbids a regional

board's consideration of any economic hardship on the part of the permit holder if

doing so would result in the dilution of the requirements set by Congress in the Clean

Water Act. Because ewe section 13263 cannot authorize what federal law forbids, it

cannot authorize a regional board, when issuing a [] discharge permit, to use

compliance costs to justify pollutant restrictions that do not comply with federal clean

water standards."]). However, when pollutant restrictions in an NPDES permit are

more stringent than federal law requires, CWC section 13263 requires that the

Regional Water Boards consider the factors described in CWC section 13241 as they

apply to those specific restrictions.

As discussed in Section VII.F, Unfunded State Mandates, the San Diego Water Board

finds that the requirements in this Order are not more stringent than the minimum

federal requirements. Among other requirements, federal law requires MS4 permits to

include requirements to effectively prohibit non-storm water discharges into the MS4s,

in addition to requiring controls to reduce the discharge of pollutants in storm water to

the MEP, and other provisions as US EPA or the State determines are appropriate for

the control of pollutants in MS4 discharges.

The requirements in this Order may be more specific or detailed than those

enumerated in federal regulations under 40 eFR 122.26 or in the USEPA guidance.

However, the requirements have been designed to be consistent with and within the

federal statutory mandates described in CWA section 402(p)(3)(B)(ii) and (iii) and the

related federal regulations and guidance. C?onsistent with federal law, all of the

conditions in this Order could have been included in a permit adopted by USEPA in

the absence of the in lieu authority of California to issue NPDES permits.

Moreover, the inclusion of numeric WQBELs in this Order does not cause this Order to

be more stringent than federal law. Federal law authorizes both narrative and numeric

effluent limitations to meet state water quality standards. The inclusion of WQBELs as

discharge specifications in an NPDES permit in order to achieve compliance with

water quality standards is not a more stringent requirement than the inclusion of BMP

based permit limitations to achieve water quality standards (State Water Board Order

No. WQ 2006-0012 (Boeing)). Therefore, consideration of the factors set forth in CWC

section 13241 is not required for permit requirements to implement the effective

prohibition on the discharge of non-storm water discharges into the MS4 or for controls

to reduce the discharge of pollutants in storm water to the MEP, or other provisions

that the San Diego Water Board has determine appropriate to control such pollutants,

as those requirements are mandated by federal law.

Included in the provisions of the Order are monitoring and reporting requirements that

are designed to demonstrate that the Copermittees are implementing programs to

comply with the CWA municipal storm water requirements. CWA section 308(a) and

40 CFR 122.41 (h), 0)-(1), 122.44(i) and 122.48 require that all NPDES permits specify

monitoring and reporting requirements. Federal regulations applicable to large and

medium MS4s (40 CFR 122.26(d}(1}(iv}(D}, 122.26(d}(1}(v}(B}, 122.26(d}(2)(i)(F),

122.26(d)(2)(iii)(D), 122.26(d)(2)(iv)(B)(2) and 122.42(c)) also specify additional

monitoring and reporting requirements. In addition to the federal requirements of the

CWA, the San Diego Water Board also has the authority in CWC 13383 to establish

monitoring, reporting, and recordkeeping requirements that implement federal and

state laws and regulations through NPDES permits ..

The monitoring and assessment information that will be reported to the San Diego

Water Board is necessary to determine if the Copermittees are making progress

toward achieving compliance with the discharge prohibitions, receiving water

limitations, and effluent limitations under Provision A of the Order. The monitoring and

assessment information that will be reported is also expected to be key to the iterative

approach and adaptive management process that is required to be implemented by

the Copermittees if they cannot meet the discharge prohibitions and receiving water

limitations under the present conditions, which is also part of the requirements under

Provision A of the Order.

Notwithstanding the above, the San Diego Water Board has considered cost

information in issuing this Order, as discussed below. The San Diego Water Board

has also considered all of the evidence that has been presented to the San Diego

Water Board regarding the CWC section 13241 factors in adopting this Order. The

San Diego Water Board finds that the requirements in this Order are reasonably ·

necessary to protect beneficial uses identified in the Basin Plan and the economic

information related to costs of compliance and other CWC section 13241 factors are

not sufficient to justify failing to protect those beneficial uses. Where appropriate, the

San Diego Water Board has provided or will consider providing the Copermittees with

additional time to implement control measures to achieve final WQBELs and/or water

quality standards.

Cost Information

Discussions of the financial and economic ramifications of municipal storm water

management programs tend to focus on the significant costs incurred by municipalities

in developing and implementing the programs. When considering the cost of

implementing the programs, however, it is also important to consider the alternative

costs that are incurred when programs are not fully implemented, as well as the

economic benefits which result from effective program implementation.

The recent financial and economic conditions have amplified the concerns about the

costs incurred by the municipalities in developing and implementing their programs.

The reduction in resources resulting from the recent financial and economic conditions

has been cited by many of the Copermittees as a justification for reducing the

requirements that must be met by their programs. While the recent conditions are a

cause for concern in the short term, these programs also have an opportunity to

identify and implement improvements and efficiencies before the next period of growth

and development, resulting in more effective and sustainable programs over the long


In addition, it is very difficult to ascertain the true cost of implementation of the

Copermittees' management programs because of inconsistencies in reporting by the

Copermittees. Reported costs of compliance for the same program element can vary

widely from city to city, often by a very wide margin that is not easily explained. 2

Despite these problems, efforts have been made to identify management program

costs, which can be helpful in understanding the costs of program implementation.

The San Diego Water Board recognizes that the Copermittees will incur costs in

implementing this Order, potentially above and beyond the costs from the

Copermittees' prior permits. The San Diego Water Board also recognizes that, due to

California's current economic condition, many Copermittees currently have limited staff

and resources to implement actions to address its MS4 discharges. Based on the

economic considerations below, the San Diego Water Board has provided the

Copermittees a significant amount of flexibility to choose how to implement the

requirements of the Order.

The Order also allows the Copermittees to customize their plans, programs, and

monitoring requirements. In the end, it is up to the Copermittees to determine the

effective BMPs and measures necessary to comply with this Order. The Copermittees

can choose to implement the least expensive measures that are effective in meeting

the requirements of this Order. This Order also does not require the Copermittees to 

fully implement all requirements within a single permit term. Where appropriate, the

Board has provided the Copermittees with additional time outside of the permit term to

implement control measures to achieve final WQBELs and/or water quality standards.

The San Diego Water Board has considered cost information associated with

compliance with this Order. It is not possible to predict accurately the cost impact of

the requirements that involve an unknown level of implementation or that depend on

environmental variables that are as yet undefined. Only general conclusions can be

drawn from this information.

Estimated Municipal Storm Water Program Implementation Costs

The USEPA, the State Water Board, and the California Regional Water Quality Control

Boards (Regional Water Boards) have attempted to evaluate the costs of

implementing municipal storm water programs. The assessments have demonstrated

that the true costs are difficult to ascertain and reported costs vary widely. In addition,

reported fiscal analyses tend to neglect the costs incurred to municipalities when storm

water and non-storm water runoff is not effectively managed, which are incurred as a

result of pollution, contamination, nuisance, and damage to ecosystems, property, and

human health. Nonetheless, they provide a useful context for considering the costs of

requirements within Order No. R9-2013-0001.

In 1999, the USEPA reported on multiple studies it conducted to determine the cost of

management programs. A study of Phase II municipalities determined that the annual

cost of the Phase II program was expected to be $9.16 per household. The USEPA

also studied 35 Phase I municipalities, finding costs to be $9.08 per household

annually, similar to those anticipated for Phase II municipalities.3

The State Water Board commissioned a study by the California State University,

Sacramento to assess costs of the Phase I MS4 program. This study includes an

assessment of costs incurred by Phase I MS4s throughout the state to implement their

programs. Annual cost per household in the study ranged from $18 to $46, with the

Fresno-Clovis Metropolitan Area representing the lower end of the range, and the City

of Encinitas (in San Diego County) representing the upper end of the range.4

A study on Phase I MS4 program costs was also conducted by the California Regional

Water Quality Control Board, Los Angeles Region (Los Angeles Water Board), where

program costs reported in the municipalities' annual reports were assessed. The Los

Angeles Water Board estimated that average per household cost to implement the

MS4 program in Los Angeles County was $12.50. 

It is important to note that reported program costs are not all attributable to solely

complying with MS4 permits. Many program components, and their associated costs,

existed before any MS4 permits were ever issued. For example, street sweeping and

trash collection costs cannot be solely or even principally attributable to MS4 permit

compliance, since these practices have long been expected from and implemented by


Therefore, true program cost resulting from MS4 permit requirements is some fraction

of reported costs. The California State University, Sacramento study found that only

38 percent of program costs are new costs fully attributable to MS4 permits. The

remainder of the program costs was either pre-existing or resulted from enhancement

of pre-existing programs.6 In 2000, the County of Orange found that even lower

amounts of program costs are solely attributable to MS4 permit compliance, reporting

that the amount attributable to implement the County or Orange Drainage Area

Management Plan (DAMP), was less than 20 percent of the total budget. The

remaining 80 percent was attributable to pre-existing programs. 7 More current data

from the County of Orange is not used in this discussion because the County of

Orange no longer reports such information.

Estimated Value of Healthy Water Quality

Economic considerations of municipal storm water management programs cannot be

limited only to program costs. Evaluation of programs must also consider information

on the benefits derived from environmental protection and improvement. 8 Attention is

often focused on municipal storm water management program costs, but the programs

must also be viewed in terms of their value to the public.

Placing a value on healthy receiving waters is very difficult. Often the value of

receiving waters with good water quality manifests in other forms, such as tourism,

recreational opportunities, and/or increased property values. When surface water

bodies are degraded, thereby degrading the habitat within and adjacent to the water

bodies, the public loses the value and benefits associated with being able to use the

area in and around the water bodies. Surface waters that are able to support the

beneficial uses designated in the Basin Plan can sustain plants and wildlife that can

attract visitors and residents, providing aesthetic, recreational, as well as monetary

value to the public. At this time, however, there have been no studies for the San

Diego Region to quantify the added value that surface waters with healthy water

quality can provide.

USEPA has estimated that household willingness to pay for improvements in fresh

water quality for fishing and boating is approximately $158-$210.9 This estimate can

be considered conservative, since it does not include important considerations such as

marine waters benefits, wildlife benefits, or flood control benefits. Another study

conducted by California State University, Sacramento reported that the annual

household willingness to pay for statewide clean water is approximately $180.10

A study conducted by the University of Southern California and University of California,

Los Angeles assessed the costs and benefits of implementing various approaches for

achieving compliance with the MS4 permits in the Los Angeles region. The study

found that non-structural systems would cost $2.8 billion but provide $5.6 billion in

benefit. If structural systems were determined to be needed, the study found that total

costs would be $5.7 to $7.4 billion, while benefits could reach $18 billion. 11 Costs are

anticipated to be borne over many years, probably at least ten years.

As can be seen, the benefits of the municipal storm water management programs are

expected to considerably exceed their costs. Such findings are corroborated by

USEPA, which found that the benefits of implementation of its Phase II storm water

rule would also outweigh the costs. 

(Link to actual document)