Legal Terrain

Better Communication Among Regulators and the Regulated Can Improve Outcomes for Wastewater Permittees

June 27, 2024

   

As our understanding of the environment and anthropogenic impact grows, protection efforts increasingly spawn regulation. Media coverage of perceived harms to health and the environment and well-funded advocacy by conservation organizations usually eclipse the perspective of the regulated community. The disconnect between the regulators and the regulated is especially troubling for the public sector. The recent experience of our client, the City of Fall River Community Utilities, regarding permitting under the Clean Water Act for its Wastewater Treatment Plant highlights these challenges. Better outcomes are possible if regulators learn more about their permittee’s operations and coordinate their regulatory and enforcement roles.

The Clean Water Act authorizes EPA, and those states to which EPA has delegated authority, to regulate point sources that discharge pollutants into waters of the United States.  This regulation takes the form of the National Pollutant Discharge Elimination System, or NPDES, permitting program. Massachusetts, New Hampshire, and New Mexico do not have NPDES authority, so the EPA continues to issue NPDES permits in those states.

After the Clean Water Act was passed in the 1970s, the infrastructure needed to meet health-based standards for wastewater treatment was predominantly built with federal dollars. According to the Congressional Research Service, the federal share of capital investment in this infrastructure fell from 63% in 1977 to 9% in 2017. At the same time, more stringent limits for nutrients, a call to eliminate combined sewer overflows, and sampling for contaminants of emerging concern are straining the wastewater utilities. Approximately sixteen thousand wastewater treatment plants (WWTPs) operate in the United States. Given that an overwhelming majority of WWTPs are publicly owned, this decline in federal support puts local and state governments on the hook to fund operation and maintenance, capital costs to upgrade, and expansion of these aging systems to meet growing population and more stringent regulatory requirements.

Since the 1990s, the City of Fall River has invested over $343 million in sewer and stormwater infrastructure. Benefits have included a dramatic reduction in the volume and frequency of combined sewer overflows. Compare this with the anticipated $200 million price tag to meet just one requirement (proposed nitrogen discharge limit) in its proposed NPDES permit, which has a compliance schedule of only five years. EPA, which proposed the permit, and MassDEP, which accepted its terms, have not scientifically justified this significant and costly requirement. The schedule would derail a well-thought-out plan of treatment plant improvements the City outlined in its Integrated Plan – the same plan negotiated through a consent order and touted by the EPA’s Acting Regional Administrator as a “smart way for cities to prioritize projects and develop a manageable spending plan that regulators can agree to.”

A troubling aspect of the burden on wastewater utility owners and operators is the inability to quickly adjust prices to meet high regulatory burdens. Ratepayers fund public water and sewer systems. At the municipal level, other budget pressures arise from schools, housing, roads, police, fire, etc., and the ability to keep raising rates is not a given. An appliance manufacturer, in contrast, can pass the cost to meet energy efficiency standards on an appliance by simply increasing the item’s price. A large manufacturer might sell other products that are less heavily regulated, allowing it to profit (and pay its employees, research and develop new products, maintain equipment, etc.) even when expenses increase. Wastewater utilities sell one product:  the service of removing and treating wastewater.

Infrastructure in New England is amongst the oldest in the nation. Aging systems often include combined sewers, especially in older industrial communities. Many wastewater facilities are located on waterfronts, surrounded by industry and dense neighborhoods; these sites are now feeling redevelopment pressure, requiring expansion and improvements to be accomplished within existing footprints. Retrofitting stormwater systems and removing combined sewer overflows in these older urban areas is a costly engineering challenge.

The ratepayers most impacted by higher water and sewer rates live in densely populated regions, many of which are Environmental Justice communities. When these rates comprise a more significant percentage of the household budget, less money is available for food and healthcare. A January 2024 policy titled Addressing EJ and Equity in NPDES Permitting directs permit writers to transparently show whether and how a permit could adversely and disproportionately affect a community. Policy principles “recognize that EJ and equity should be evaluated on a case-by-case basis:” disproportionately impacted groups are to be identified and permit writers should provide opportunities for “input into the decisions that will impact community members.” EPA’s expanded concept of “fair treatment” now includes “not only consideration of how burdens are distributed across populations, but the distribution of benefits as well.” Boaters and fishermen in Mount Hope Bay will benefit from cleaner discharged water, while the Fall River ratepayers will fund permit compliance. Yet, in issuing a permit to the City of Fall River, where almost 20 % of its customers live below the poverty line, the EPA took no apparent steps to incorporate environmental justice into the permitting process.

The inability to quickly fund and deploy new treatment technologies, combined with stringent environmental standards written into new permits (lower nitrogen limits are one example), means that utilities are often out of compliance when a new permit is issued. The permittee may have no obvious path for attaining compliance, or the costs could be astronomical and unfunded. Often, there are timing issues:  municipal procurement is a slow process that requires public bidding and contract negotiation for both design contracts and construction contracts. Regulators may be unaware of construction realities: supply chain delays mean that an ordered generator won’t be delivered for two years. Regulators have told Massachusetts permittees to negotiate a consent decree in Federal Court, often with penalties, to avoid or mitigate permit violations. Construction contracts to perform permitted work should contain realistic schedules. Will contracts need to be renegotiated, along with compliance deadlines for consent orders or permits? Renegotiations involve legal and consultant services, adding to the compliance costs. And when legal requirements are missed, permittees are at risk for costly third-party lawsuits by public interest groups. Close communication between enforcement staff, permit writers, and the regulated party could avoid these costs. All share the same goal of providing clean water.

Previous debates on whether Massachusetts should seek NPDES permit-granting authority from EPA, a subject last considered by the Baker administration, shed light on some critical challenges. A state agency is better positioned to implement integrated water planning and coordinate on a watershed level. Yet, the commonwealth would rather not assume the costs for permit issuance, compliance, and enforcement. Some argue that delegating NPDES authority to Massachusetts would make regulators vulnerable to local political pressure and weaken permit requirements. There is room for the commonwealth to advance local interests, short of NPDES delegation. MassDEP has a Brownfields program with regional teams and a statewide coordinator, whose role includes maximizing Federal funding to expedite contaminated site reuse. MassDEP might define a new role or task existing Clean Water Act staff to enlighten EPA about regional issues. Competing burdens on permittees could be shared at periodic regional meetings attended by permit holders and state and federal regulators—both permit writers and enforcement staff. The current top-down approach led by the EPA is causing unachievable permits and unnecessary costs.

Few will argue that water needs less testing or treatment, or that sewage should flow more freely. What can be done is to raise awareness of the costs and processes needed to maintain these resources, so that regulators can develop more cost-sensitive approaches and bigger pockets (federal and state government) can be pursued.

receive news & alerts

Yes, I’d like to receive updates with firm news and insights that are relevant to me.