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Business Observer Thursday, Jan. 28, 2010 10 years ago

Water tax war

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Proposed federal rules imposing numeric nutrient criteria for surface water may cost the state's wastewater utilities and ratepayers $50 billion, plus increase stormwater fees and construction, food and energy costs.
by: Jay Brady Government Editor

REVIEW SUMMARY
What.
EPA's numeric nutrient standards proposed for Florida.
Issue. Federal Clean Water Act vs. states' rights to regulate surface water prompting lawsuits.
Impact. Tougher water quality standards are expected to increase sewer rates and stormwater fees plus food, energy and construction costs.

Living in Florida will get much more expensive thanks to new water quality standards proposed by the U.S. Environmental Protection Agency.

The new rules are the result of a legal settlement with Florida environmental groups, who have pushed for higher regulations.

That settlement is being challenged by a statewide industry group made up of city and county wastewater utility operators. This pits one government entity against another in a case that could end up in the U.S. Supreme Court.

“This will effect local governments, utilities, stormwater utilities, agriculture, electricity,” says David Childs, a Tallahassee attorney with Hopping Green and Sams, representing the state's wastewater utilities through the Florida Water Environment Association (FWEA) Utility Council.

“The reach of this is very broad,” he says. FWEA members' wastewater utilities serve seven million residents.

Asked what the title for this story should be, Childs, who sees many court battles ahead, suggests “Regulatory Armageddon,” adding, “It's like nothing I've ever seen in the gravity of what's being proposed.”

Florida Agriculture Commissioner Charles Bronson calls the regulations so onerous that: “We may not have much in the way of farming left in the state of Florida.”

That's a daunting statements as agriculture is a $111 billion industry in the state, employing 700,000 workers, making it Florida's second largest industry.

The Florida Farm Bureau Federation states that it “will levy a de facto water tax on Floridians.”

An engineering firm's study commissioned by the FWEA Utility Council claims that the new federal numeric nutrient criteria for Florida surface waters will cause wastewater rates to double on average across the state. That means the average sewer bill goes up about $62 a month, or more than $740 a year.

Statewide, the Carollo Engineers' study estimates capital costs to comply for Florida's municipal wastewater treatment utilities may hit $50.7 billion. Annual operating costs are estimated to increase by $1.33 billion.

Environmentalists behind the lawsuits that forced the changes call those estimates “a bit ridiculous,” although they admit to not having read the report.

And if you pay stormwater assessments, as many residents do in Sarasota County, Clearwater and elsewhere in the region, expect those fees, now about $86 year in Sarasota County, to rise even more.

Builders and developers are likely to get socked as well, and surely pass those costs along as will electric utilities and agricultural operations. Expect food and energy prices to rise.

The FWEA filed suit against the EPA in November, but federal regulations, unlike state laws, don't preclude the new standards from being implemented while litigation proceeds. Where it goes from here will be determined in a Tallahassee federal court room in February.

The initial wave of regulations is set to go into effect in October when the rules for rivers, streams and lakes take effect. Another round of rules to come out next January would go in effect in October 2011 when regulations for bays and coastal areas must be met.

A 200-page rule
Gulf Coast residents looking for someone to thank for the higher expenses may look no further than their own backyard.

Two of the five environmental groups that initiated a lawsuit prompting the action by the EPA are based here: the Environmental Confederation of Southwest Florida in Charlotte County and the Naples-based Conservancy of Southwest Florida.

Asked about the Carollo study cost estimates, Conservancy President and CEO Andrew McElwaine and Natural Resources Policy Manager Jennifer Hecker say they have not read it. When told of the $50 billion capital cost figure for utilities, McElwaine argues that nationally the cost is only $200 billion, so he says, “These numbers are a bit ridiculous.”

In July 2008, California law firm Earthjustice filed suit in Tallahassee federal court against the EPA on behalf of the environmental groups. According to a 2008 DEP report, about 16% of assessed rivers and stream miles, 36% of assessed lake acres, and 25% of assessed square miles of estuaries are listed as impaired due to excess nutrients.

The suit says the EPA failed to comply with the federal Clean Water Act to force the state to expeditiously adopt numeric nutrient criteria though the state Department of Environmental Protection (DEP) has spent $20 million in efforts to collect adequate scientific data to provide needed back-up for numeric criteria.
The standards relate largely to phosphorus and nitrogen — primary fertilizer ingredients — as primary causes of blue-green algae blooms.

A year ago, the EPA declared the statewide numeric criteria necessary for Florida, and only Florida so far, to be in compliance with the Clean Water Act. That may have been to promote a legal settlement.

Adding to the controversy are charges made by Bronson at the December Senate committee meeting that Earthjustice attorneys lied to the federal judge in the case. Asked about the comment recently, Bronson says, “We know that Earthjustice does not deliver the truth on a number of issues in the past. ... I think they basically did lie to a federal judge.”

In August, the EPA entered a proposed settlement, or consent decree, in the federal lawsuit under which it would proceed to propose federal criteria for the state this month and adopt rules for rivers, streams and lakes by October 2010. U.S. District Judge Robert Hinkle approved the consent decree Nov. 16.

Nonscientific method
Public hearings on the rule are Feb. 16, 17 and 18 in Tallahassee, Orlando, and West Palm Beach, respectively.

Those criteria are set to replace Florida's current standard, which says, “In no case shall nutrient concentrations of a body of water be altered so as to cause an imbalance in natural populations of aquatic flora and fauna.”

Paul Steinbrecher, the Council's vice president and numeric nutrient criteria issue chair, says, of the ruling: “It's disappointing. It's based on a nonscientific, simplistic averaging method.” The community-owned JEA provides electric, water and sewer services in northeast Florida.

EPA's method is known as the “reference stream approach,” which Steinbrecher says amounts to carving out a few regions of the state with pristine waters and taking 70% of the average water quality measured in milligrams per liter to set the numeric standard.

He says that approach is like saying everyone weighing over 180 pounds in is overweight no matter their height, age or other characteristics. In other words, just as a 180-pound, six-foot four inch man wouldn't be considered obese, the numeric criteria don't always account for other natural characteristics of a water body such as pH, shading, water color, biological systems and flow rates.

As such, critics of the proposed rules claim it's arbitrary. Utility Council attorney Childs cites as an example the criteria for canals in south Florida. “These are manmade canals and they're trying to meet standards that DeSoto wouldn't have seen,” referring to the 16th century Spanish explorer.

Rep. Trudi Williams, R-Fort Myers, is chairman of the House agriculture and natural resources committee and a civil environmental engineer. Her committee is drafting a bill to create a panel of scientists to look at the proposed criteria to see if it's attainable.

Incalculable costs
Williams could get some valuable input from two Gulf Coast utility officials — Tracy Mercer, Clearwater's public utilities director, and Theresa Connor, Sarasota County's executive director of environmental services.

Mercer, who says the city has been looking at the criteria for a year and a half, explains that for the city is planning a groundwater replenishment facility at an estimated cost of $27.3 million, plus annual operating expenses averaging roughly $1.3 million.

“Some of this is putting a real demand on the plant. They can't really produce at the levels they're asking,” she says.

“In a nutshell, pretty soon the sewage plant is going to be a reverse osmosis plant,” Mercer says seriously. The plant will include microfiltration, reverse osmosis, advanced oxidation and capacity to handle three million gallons per day water purification, plus pipelines and injection wells to replenish the aquifer.

Connor, when asked about Sarasota County's expected costs for compliance says, “It could easily reach into the hundreds of millions for the county.”

But get this: those costs aren't for new sewage treatment plants but for stormwater. “Stormwater reuse will become very important to us to meet the guidelines.
It could potentially impact all our capital programs,” she adds.

According to “Don't Tax Florida,” a coalition of businesses, associations and concerned citizens fighting the EPA criteria, “the technology to treat agricultural wastewater to meet the proposed federal regulations simply does not exist. The time and cost needed to create such non-existent technology is literally incalculable.”

Connor's department is also working on new development regulations requiring buildings to have green cistern roofs, impervious pavements and other techniques to treat stormwater at the source. Absent taxpayer subsidies, that translates into higher construction costs for residents and business owners.

With so much at stake, it seems Child's “Regulatory Armageddon” will go through the full extent of the courts.

PUBLIC MEETINGS
Upcoming public meetings on numeric nutrient criteria rules

Feb. 4: Public Meeting on Estuarine Numeric Nutrient Criteria for Waters from Tampa Bay to Estero Bay, 9 a.m., Florida Fish and Wildlife Research Institute, 100 Eighth Ave., S. E., St. Petersburg.

Feb. 16: U.S. EPA Public Hearing. Proposed Rulemaking for Water Quality Standards for the State of Florida's Lakes and Flowing Waters, 1-5 p.m. and 7-10 p.m., Holiday Inn Capitol East, 1355 Apalachee Parkway, Tallahassee.

Feb. 17: U.S. EPA Public Hearing. Proposed Rulemaking for Water Quality Standards for the State of Florida's Lakes and Flowing Waters, 1-5 p.m. and 7-10 p.m., Crowne Plaza Orlando Universal, 7800 Universal Blvd., Orlando.

Feb. 18: U.S. EPA Public Hearing. Proposed Rulemaking for Water Quality Standards for the State of Florida's Lakes and Flowing Waters, 1-5 p.m. and 7-10 p.m., Holiday Inn Palm Beach Airport, 1301 Belvedere Road, West Palm Beach.

Jay Brady covers state and local government issues. He can be reached at [email protected], or at 941-362-4848.

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