METRO WASTEWATER RECLAMATION DISTRICT 6450 York Street - Denver, Colorado 80229-7499 (303) 286-3000 Telefax (303) 286-3030 www.metrowastewater.com

Charles W. Long, Chairman of the Board Kathryn E. Jensen, Chairman Pro Tem Curt A. Aldstadt, Secretary Robert C. Monks, Treasurer Catherine R. Gerali, District Manager

June 15, 2009 Sarah Johnson Standards Unit Manager Water Quality Control Division Colorado Department of Public Health and Environment 4300 Cherry Creek Drive South Denver, CO 80246

Re:

Comments on Proposed Discharger-Specific Variances

Dear Sarah: The Metro Wastewater Reclamation District (District) appreciates the opportunity to provide input on the concept of discharger-specific variances. Based on the questions posed by the Water Quality Control Division (Division) on May 19, 2009 at the Standards Framework Workgroup, the District offers the following comments: Components of a Discharger-Specific Variance •

Adoption by the Water Quality Control Commission: The District agrees that a dischargerspecific variance would require adoption by the Water Quality Control Commission (Commission), as it would function as a type of waiver to an existing water quality standard;

•

“Substantial and widespread economic impacts” test: The District is unsure at this time what kind of demonstration would be needed to show that there would be “substantial and widespread economic impacts” for a discharger to support a variance request and approval. Although 40 CFR 131.10(g)(6) theoretically allows a variance if these conditions are met, it is not clear how a discharger would make the necessary showing as set forth under the U.S. Environmental Protection Agency’s (EPA) current policy (see attachment, Interim Economic Guidance for Water Quality Standards). Clarifying input from EPA Region 8 would be helpful for development of guidance specific to Colorado’s unique water quality standards program. In addition, the concept of net environmental benefit associated with additional treatment technologies could facilitate the facility-specific variance decision-making process. For example, implementation of treatment facilities to reduce the temperature of the Metro District’s Robert W. Hite Treatment Facility would achieve table value standards for temperature, but only at significant financial and environmental costs (including water loss and increased energy usage). Considering the “universe” of costs makes sense in this case, because the District believes that the aquatic life use would continue to be attained with respect to temperature with a discharger-specific variance in place. On its face, 40 CFR 131.10(g)(6) assumes that attaining the designated use is not feasible. However, this may not be the case for a variety of situations where treatment options are available, but implementing those options does not make sense from a holistic perspective.

Serving Greater Denver WE USE RECYCLED PAPER

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Level of treatment: Although permit effluent limits associated with the variance would be derived based on what level can be achieved by the discharger, a supportable assessment framework would have to be developed with stakeholder input. Because a “one size fits all” approach is not likely, evaluation criteria derived from the “substantial and widespread economic impacts” test may need to be considered here as well.

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Continual improvement: Under a traditional compliance schedule regime, a discharger must evaluate and implement options over time to achieve effluent limits so that underlying water quality standards are met. It is reasonable to assume that most discharger-specific variances would be reviewed using a similar framework. However, in certain instances, facility-specific variances may be a long-term solution without installation of additional treatment, such as effluent chilling. In those situations, the District believes that continual improvement would require a showing over time that additional treatment is still infeasible, that there is still no net environmental benefit associated with additional treatment, and that there is no harm associated with the status quo, e.g., the use is being attained. Similarly, the District interprets the continual improvement requirement to include evaluation of options other than additional treatment, such as development of appropriate site-specific water quality standards.

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Review every 5 years: The District agrees that periodic review of discharger-specific variances is appropriate and that timing of such reviews to coincide with renewal permits would be an efficient mechanism with respect to Division staff workload issues.

Policy Questions •

Eligibility for a variance: The District believes that discharger-specific variances may not be appropriate in all circumstances. For example, variances are likely more appropriate for nontoxic parameters (such as nutrients) than for toxic substances or parameters related to human health.

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Criteria for “substantial and widespread”: As noted above, the District believes it may be appropriate to develop a decision-making framework that reflects the goals and methodologies of the current Colorado water quality standards program. Adopting EPA’s recommendations for this analysis does not consider sustainability-related factors such as energy consumption, greenhouse gas emissions, and other cross media impacts on the environment, which can affect quality of life issues throughout the State. In addition, the decision criteria may not be applicable to every parameter or to every facility. For example, the requirements for larger communities may not be appropriate for smaller entities with respect to decisions affecting publicly owned treatment works.

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Role of the “public interest”: The District believes that input from all affected stakeholders on individual variance requests can be addressed through existing Commission options for public participation in rulemaking proceedings.

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Incorporation into discharge permits: The District believes that permit requirements (including effluent limits) associated with discharger-specific variances will vary on a case-by-case basis.

Rulemaking Options •

The District is supportive of the discharger-specific variance concept but recognizes that significant hurdles would need to be overcome, especially clarification of what constitutes

“substantial and widespread” impacts. As such, we would support adoption as soon as possible. Under the options presented, this is Option 1 – variance rule in 2010 with a delayed effective date to allow development of a comprehensive guidance document.

The Metro District looks forward to working with the Division and others on this important potential standards tool to meeting Colorado’s water quality challenges of the future.

Yours truly,

Barbara Biggs Governmental Affairs Officer

cc:

Central Records

Attachment: Interim Economic Guidance for Water Quality Standards

Policy & Guidance Interim Economic Guidance for Water Quality Standards Table 4-1 Demonstration of Substantial and Widespread Economic and Social Impacts of Attainment of Designated Uses CHECKLIST STEPS 1. Demonstrate that designated use is a potential use and not an existing use.

INFORMATION THAT WILL BE REQUIRED FROM APPLICANT Data from State Water Quality Assessment Documents and water quality standards regulations.

2. Demonstrate that entity will incur substantial economic impacts. a. Identify all reasonable pollution reduction options,

Information on end-of-pipe treatment, possible treatment upgrades, additions to existing treatment, and pollution prevention activities including the following: o o o o o o

change in raw materials, substitution of process chemicals, change in process, water recycling, reuse and efficiency, pretreatment requirements, and public education.

b. Evaluate costs of all Assumptions about water demand, treatment capacity, reasonable pollution reduction expansion plans, population growth, and effectiveness of options, control in reducing pollution for each option. Estimate of project costs from design engineers, costs of comparable projects in the State, or judgment of experienced water pollution control engineers. c. Identify lowest cost Information on treatment efficiencies for alternative pollution reduction option that pollution reduction techniques. Cost estimates for all allows entity to meet water alternatives. quality standards.

3. Evaluate entity's financial health (Public Entities Only): a. determine method of financing,

Information on user fee financing mechanisms such as Revenue Bonds. Information on tax based financing mechanisms such as General Obligation Bonds.

b. annualize pollution reduction project costs,

Information on appropriate interest rates and period of financing.

c. allocate project costs,

Information on user groups, wastewater flow by user group, and surcharges on industrial users.

d. apply Municipal Preliminary Screener test,

Information on average total annual pollution control cost per household and median household income.

e. Depending on the results of the Municipal Preliminary Screener test, apply Secondary Test.

Information on results of Municipal Preliminary Screener test, overall net debt as a percent of full market value of taxable property, median household income, bond rating, community unemployment rate, property tax collection rate, and property tax revenues as a percent of full market value of taxable property.

4. Evaluate entity's financial health (Private Entities Only): a. annualize pollution reduction project costs,

Information on appropriate interest rates and period of financing.

b. Primary Measure: profitability,

Information that will allow evaluation of whether an entity will remain profitable after incurring the cost of pollution reduction including: revenues, cost of goods sold, portion of corporate overhead assigned to the entity, and o total annualized pollution reduction project costs. o o o

c. Secondary measures: solvency,

Information that will allow evaluation of the entity's ability to meet its fixed and long-term obligations including: o o o o

liquidity, and

long-term debt, current debt, net income after taxes, and depreciation.

Information that will allow evaluation of how easily an

entity can pay its short-term bills such as: current assets, current liabilities, and total annualized pollution reduction project

o o o

costs. leverage.

Information that will allow evaluation of the extent to which a firm already has fixed financial obligations and therefore how much money it will be able to borrow including, long-term liabilities and owner equity.

5. Determine whether impacts are widespread (Public Entities Only): a. Evaluate change in socioeconomic conditions that occur as a result of compliance.

Information on changes in median household income, community unemployment rate, overall net debt as a percent of full market value of taxable property, percent of households below the poverty line, impact on community development potential, and impact on community property values resulting from compliance.

6. Determine whether impacts are widespread (Private Entities Only): a. Define community,

Information on the geographical boundary of the area in which the majority of the entity's workers live and where most of businesses that depend on the entity are located.

b. Evaluate effect on employment,

Current unemployment, change in unemployment due to investment in pollution reduction.

c. Evaluate effect on tax revenues,

Information on the likely effect on assessed value of property tax revenues if the entity must adopt pollution reductions.

d. Assess impairment of development opportunities,

Information on the likelihood that the need to adopt pollution reductions in the affected community would discourage other businesses from locating in the area in the future.

e. Collect any relevant additional information that demonstrates widespread socioeconomic impacts.

Any additional information that suggests that there are unique conditions in the affected community that should also be considered.

7. Evaluate economic benefits of Information on potential benefits of cleaner water cleaner water. including enhanced recreational opportunities, reduced treatment costs for downstream users and increased property values.

8. Public comment and debate period.

Be prepared to supply backup information on the application to modify or change a designated use to the public.

9. If substantial and widespread Information on the cost and efficiency of affordable economic and social impacts are pollution reduction alternatives. demonstrated, determine which pollution reduction option should be implemented. 10. Redesignate uses.

Uses will be determined by the level of o o

affordable pollution reduction.

11. Standards will be adopted to protect new uses.

Once uses are established, standards should be revised to protect those uses.

12. Effluent limits and permits will be modified.

Limits will be modified to reflect effluent concentrations associated with the o o

13. Re-evaluate water quality standards in three years.

affordable pollution reduction technique.

Per federal regulations, water quality standards must be revised every three years to determine if there is any new information or technology that allows attainment of the full designated uses without causing a substantial and widespread economic and social impact.