[Federal Register Volume 67, Number 121 (Monday, June 24, 2002)]
[Proposed Rules]
[Pages 42644-42686]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 02-12963]



[[Page 42643]]

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Part III





Environmental Protection Agency





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40 CFR Parts 122 and 450



Effluent Limitation Guidelines and New Source Performance Standards for 
the Construction and Development Category; Proposed Rule

Federal Register / Vol. 67, No. 121 / Monday, June 24, 2002 / 
Proposed Rules

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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Parts 122 and 450

[FRL-7217-1]
RIN 2040-AD42


Effluent Limitation Guidelines and New Source Performance 
Standards for the Construction and Development Category; Proposed Rule

AGENCY: Environmental Protection Agency (EPA).

ACTION: Proposed rule.

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SUMMARY: EPA is proposing a range of options to address storm water 
discharges from construction sites. As one option, EPA is proposing 
technology-based effluent limitation guidelines and standards (ELGs) 
for storm water discharges from construction sites required to obtain 
National Pollutant Discharge Elimination System (NPDES) permits. As 
another option, EPA is proposing not to establish ELGs for storm water 
discharges from those sites, but to allow technology-based permit 
requirements to continue to be established based upon the best 
professional judgment of the permit authority A third option would 
establish inspection and certification requirements that would be 
incorporated into the storm water permits issued by EPA and States, 
with other permit requirements based on the best professional judgment 
of the permit authority. This proposal, if implemented, is expected to 
significantly reduce the amount of sediment discharged from 
construction sites. The deposition of sediment from construction site 
runoff has contributed to the loss of capacity in small streams, lakes, 
and reservoirs, leading to the necessity for mitigation efforts such as 
dredging or replacement. Today's document also requests comment and 
information on several variations on these options and several other 
significant aspects of the proposal, such as technologies, costs, and 
economics.

DATES: EPA must receive comments on the proposal by October 22, 2002. 
EPA will conduct public meetings for this proposed rule on July 9, 
2002; July 23, 2002; July 30, 2002 and additional dates to be announced 
later.

ADDRESSES: Submit written comments to: Comment Clerk, Water Docket 
(4101), US EPA, 1200 Pennsylvania Ave., NW., Washington, DC 20460. (See 
next paragraph regarding addresses for hand deliveries.) Please refer 
to Docket No. W-02-06. EPA requests an original and three copies of 
your comments and enclosures (including references). Commenters who 
want EPA to acknowledge receipt of their comments should enclose a 
self-addressed, stamped envelope. No facsimiles (faxes) will be 
accepted. Comments may also be sent via e-mail to ow-docket@epa.gov. 
For additional information on how to submit electronic comments see 
``SUPPLEMENTARY INFORMATION, How to Submit Comments.''
    EPA will be holding public meetings on today's proposal on five 
separate dates. The first three meetings are listed below; EPA will 
announce the remaining meetings in a subsequent Federal Register 
document and on its website at http://www.epa.gov/waterscience/guide/
construction/. No registration is required for these meetings. Seating 
will be provided on a first-come, first-served basis.

 Tuesday, July 9, 2002, 9 a.m.-noon, Hyatt Regency Hotel--San 
Francisco Airport, 1333 Bayshore Highway, Burlingame, CA, Phone 650-
347-1234.
 Tuesday, July 23, 2002, 9 a.m.-noon, Wyndham Garden Hotel--
Dallas Park Central, 8051 LBJ Freeway (I-635), Dallas, TX, Phone 972-
680-3000.
 Tuesday, July 30, 2002, 9 a.m.-noon, Holiday Inn Chicago--
Elmhurst, 624 N. York Rd., Elmhurst, IL, Phone 630-279-1100.
Meeting Access: If you need special accommodations at this meeting, 
including wheelchair access, you should contact the Eastern Research 
Group Conference Registration Line at 781-674-7374, at least five 
business days before the meeting so that appropriate arrangements can 
be made. See ``Public Meeting Information'' below for additional 
meeting details.
    EPA established the public record for this proposed rulemaking 
under docket number W-02-06. The record is currently located in the 
Water Docket, Room EB 57, Waterside Mall, 401 M Street, SW., 
Washington, DC. The record is available for inspection from 9 a.m. to 4 
p.m., Monday through Friday, excluding legal holidays. For access to 
the docket materials, call 202-260-3027 to schedule an appointment. You 
may have to pay a reasonable fee for copying. Please note that several 
of the support documents are available at no charge on EPA's website; 
see ``Supporting Documentation'' below. The Water Docket will be moving 
to a new office location in August 2002. For hand deliveries of 
comments through August, submit to the above address. Please call the 
above number for details on the new location.

FOR FURTHER INFORMATION CONTACT: For technical information concerning 
today's proposed rule, contact Mr. Jesse Pritts at 202-566-1038 or Mr. 
Eric Strassler at 202-566-1026. For economic information contact Mr. 
George Denning at 202-566-1067.

SUPPLEMENTARY INFORMATION:

Regulated Entities

    Entities potentially regulated by this action include:

------------------------------------------------------------------------
                                                          North American
                                                             Industry
             Category                    Examples of      Classification
                                     regulated entities   System (NAICS)
                                                               code
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Industry..........................       Construction site operators
                                      disturbing 1 or more acres of land
                                         and performing the following
                                                 activities:
                                    Building, Developing            233
                                     and General
                                     Contracting.
                                    Heavy Construction..            234
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EPA does not intend the preceding table to be exhaustive, but provides 
it as a guide for readers regarding entities likely to be regulated by 
this action. This table lists the types of entities that EPA is now 
aware could potentially be regulated by this action. Other types of 
entities not listed in the table could also be regulated. To determine 
whether your facility is regulated by this action, you should carefully 
examine the applicability criteria in Sec. 450.10 of today's proposed 
rule and the definition of ``construction activity'' and ``small 
construction activity'' in existing EPA regulations at 40 CFR 
122.26(b)(14)(x) and 122.26(b)(15), respectively. If you have questions 
regarding the applicability of this action to a particular entity, 
consult one of the persons listed for technical information in the 
preceding FOR FURTHER INFORMATION CONTACT section.

How To Submit Comments

    The public may submit comments in written or electronic form. (See 
the ADDRESSES section above.) Electronic comments must be identified by 
the docket number W-02-06 and must be submitted as a WordPerfect, MS 
Word or ASCII text file, avoiding the use of special characters and any 
form of encryption. EPA requests that any graphics included in 
electronic comments also be provided in hard-copy form. EPA also will 
accept comments and data on disks in the aforementioned file formats. 
Electronic comments received on this notice may be filed online at many 
Federal

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Depository Libraries. No confidential business information (CBI) should 
be sent by e-mail.

Public Meeting Information

    See the ADDRESSES section of this document for dates and locations 
of public meetings. During the meetings, EPA will present information 
on the applicability of the proposed regulation, the technology options 
selected as the basis for the proposed limitations and standards, and 
the compliance costs and pollutant reductions. EPA will also allow time 
for questions and answers during these sessions. These meetings are not 
public hearings for the purpose of obtaining comment on the proposal. 
EPA will not generate a transcript of the meetings. The public may 
submit comments in writing or electronically as described above.

Supporting Documentation

    Several key documents support the proposed regulations:
    1. ``Development Document for Proposed Effluent Guidelines and 
Standards for the Construction and Development Category,'' EPA-821-R-
02-007. (``Development Document'') This document presents EPA's 
methodology and technical conclusions concerning the C&D category.
    2. ``Economic Analysis of Proposed Effluent Guidelines and 
Standards for the Construction and Development Category,'' EPA-EPA-821-
R-02-008. (``Economic Analysis'') This document presents the 
methodology employed to assess economic and environmental impacts of 
the proposed rule and the results of the analysis.
    3. ``Environmental Assessment for Proposed Effluent Guidelines and 
Standards for the Construction and Development Category,'' EPA-EPA-821-
R-02-009. (``Environmental Assessment'')
    Major supporting documents are available in hard copy from the 
National Service Center for Environmental Publications (NSCEP), U.S. 
EPA/NSCEP, P.O. Box 42419, Cincinnati, Ohio, USA 45242-2419, telephone 
800-490-9198, http://www.epa.gov/ncepihom/. You can obtain electronic 
copies of this preamble and proposed rule as well as the technical and 
economic support documents for today's proposal at EPA's website for 
the C&D rule, http://www.epa.gov/waterscience/guide/construction.

Overview

    The preamble describes the terms, acronyms, and abbreviations used 
in this notice; the background documents that support these proposed 
regulations; the legal authority of these rules; a summary of the 
proposal; background information; and the technical and economic 
methodologies used by the Agency to develop these regulations. This 
preamble also solicits comment and data on specific areas of interest.

Table of Contents

I. Legal Authority
II. Purpose & Summary of Proposed Rule
III. Background
    A. Clean Water Act
    B. NPDES Storm Water Permit Program
    1. Storm Water Permits for Construction: General and Individual
    a. General Permits
    b. EPA Construction General Permit
    c. State Construction General Permits
    d. Individual Permits
    2. Municipal Storm Water Permits and Local Government Regulation 
of Construction Activity
    a. NPDES Requirements
    b. EPA Guidance to Municipalities
    C. Other State and Local Storm Water Requirements
    D. Effluent Guidelines and Standards Program
    1. Best Practicable Control Technology Currently Available (BPT)
    2. Best Available Technology Economically Achievable (BAT)
    3. Best Conventional Pollutant Control Technology (BCT)
    4. New Source Performance Standards (NSPS)
    5. Pretreatment Standards
    6. Effluent Guidelines Plan and Consent Decree
    E. Pollution Prevention Act
IV. Scope of Proposal
V. Summary of Data Collection Activities
    A. Existing Data Sources
    B. Storm Water Discharge Sampling and Site Visits
    C. Industry-Supplied Data
    D. Summary of Public Participation
VI. Industry Profile
    A. Affected Industry Sectors
    B. Construction and Development Activities Affecting Water 
Quality
    1. Planning and Site Design
    2. Clearing, Excavating and Grading
    3. Erosion and Sediment Control
    4. Control of Other Pollutants
    5. Final Stabilization and Long-Term Storm Water Management
VII. Storm Water Discharge Characteristics
VIII. Description of Available Technologies
    A. Introduction
    B. Erosion and Sediment Controls and Other Site Management 
Practices
    1. Goals
    2. Major Categories of Best Management Practices
    C. Long-Term Storm Water Management Control
    1. Goals
    2. Major Categories of Best Management Practices
IX. Development of Effluent Limitation Guidelines and Standards
    A. Industry Subcategorization
    1. Subcategorization by Site Size
    2. Subcategorization by Industry
    3. Subcategorization by Builder/Developer Size
    4. Subcategorization Based on Hydrology, Soil Loss Potential or 
Other Geographic Factors
    5. Subcategorization Based on Past Land Use
    B. Regulatory Options Considered
    1. Overview of Regulatory Options: Erosion and Sediment Controls 
and Other Temporary BMPs
    2. Overview of Regulatory Options: Certification and Inspection
    3. Overview of Regulatory Options: Continued Reliance on State 
and Local ESC Programs
    4. Overview of Regulatory Options Considered: Long-term Storm 
Water Management
X. Determination of Best Practicable Control Technology Currently 
Available (BPT), Best Conventional Pollutant Control Technology 
(BCT), Best Available Technology Economically Achievable (BAT), and 
New Source Performance Standards (NSPS)
    A. Rationale for Selected BPT Option
    B. BCT Determination
    1. July 9, 1986 BCT Methodology
    2. Consideration of BCT Option
    C. BAT and NSPS
    D. Summary of Provisions in Today's Proposed Rule
    1. General Provisions and SWPPP Preparation
    2. Design and Installation of Erosion and Sediment Controls
    3. Inspection and Certification Provisions
    4. Maintenance
XI. Methodology for Estimating Costs
    A. Costs to the Construction and Development Category
    B. Costs to Permit Authorities
XII. Economic Impact and Social Cost Analysis
    A. Introduction
    B. Description of Economic Activity
    C. Method for Estimating Economic Impacts
    1. Model Project Analysis
    2. Model Firm Analysis
    3. Housing Market Impacts
    4. Impacts on the National Economy
    D. Results
    1. Firm-Level Impacts
    2. Impacts on Governments
    3. Community-Level Impacts
    4. Foreign Trade Impacts
    5. Impacts on New Facilities
    6. Social Costs
    7. Small Business Impacts
XIII. Cost-Effectiveness Analysis
XIV. Non-Water Quality Environmental Impacts
    A. Air Pollution
    B. Solid Waste
    C. Energy Usage
    D. By-Products from BMPs
XV. Environmental Assessment
    A. Introduction
    B. Methodology for Estimating Environmental Impacts and 
Pollutant Reductions
    C. Potential Loading Reductions of Proposed Options

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XVI. Benefit Analysis
    A. Benefits Categories Estimated
    B. Quantification of Benefits
XVII. Benefit-Cost Comparison
XVIII. Regulatory Implementation
    A. Compliance Dates
    B. Relationship of Effluent Guidelines to NPDES Permits
    C. Upset and Bypass Provisions
    D. Variances and Waivers
    1. Fundamentally Different Factors Variance
    2. Low Soil Loss Potential Waiver
    E. Other Clean Water Act Requirements
XIX. Related Acts of Congress, Executive Orders, and Agency 
Initiatives
    A. Paperwork Reduction Act
    B. Unfunded Mandates Reform Act (UMRA)
    C. Regulatory Flexibility Act (RFA) as amended by the Small 
Business Regulatory Enforcement Fairness Act of 1996 (SBREFA)
    1. Introduction
    2. Summary of Panel Recommendations
    D. Executive Order 12866: Regulatory Planning and Review
    E. Executive Order 13132: Federalism
    F. Executive Order 13045: Protection of Children from 
Environmental Health Risks and Safety Risks
    G. Executive Order 13175: Consultation and Coordination With 
Indian Tribal Governments
    H. National Technology Transfer and Advancement Act
    I. Plain Language Directive
    J. Executive Order 13211 (Energy Effects)
XX. Solicitation of Data and Comments
    A. Specific Solicitation of Comments and Data
    B. General Solicitation of Comment

I. Legal Authority

    EPA is proposing this regulation under the authorities of sections 
301, 304, 306, 308, 402 and 501 of the Clean Water Act (CWA), 33 U.S.C. 
1311, 1314, 1316, 1318, 1342 and 1361 and pursuant to the Pollution 
Prevention Act of 1990, 42 U.S.C. 13101 et seq.

II. Purpose and Summary of Proposed Rule

    Construction and development (C&D) activity affecting water quality 
typically involves site selection and planning, and land-disturbing 
tasks during construction such as clearing, excavating and grading. 
Disturbed soil, if not managed properly, can be easily washed off-site 
during storm events. Storm water discharges generated during 
construction activities can cause an array of physical, chemical and 
biological impacts. Water quality impairment may result, in part, 
because a number of pollutants are preferentially absorbed onto mineral 
or organic particles found in fine sediment. The interconnected process 
of erosion (detachment of the soil particles), sediment transport, and 
delivery is the primary pathway for introducing pollutants from 
construction sites into aquatic systems.
    A primary concern at most construction sites is the erosion and 
transport process related to fine sediment because rain splash, rills 
(small channels typically less than one foot deep) and sheetwash (thin 
sheets of water flowing across a surface) encourage the detachment and 
transport of this material to water bodies. Although streams and rivers 
naturally carry sediment loads, erosion from construction sites and 
runoff from developed areas can elevate these loads to levels above 
those in undisturbed watersheds.
    Existing national storm water regulations require construction site 
operators to implement controls to manage construction site runoff, but 
do not require any specific level of control. One of today's proposed 
approaches (Option 2) would establish effluent limitation guidelines in 
the form of minimum standards for design and implementation of erosion 
and sediment controls used during the active phase of construction. 
This approach would cover sites with five or more acres of disturbed 
land, and would establish minimum requirements for conducting site 
inspections and providing certification as to the design and completion 
of various aspects of those controls.
    EPA acknowledges that many State and local governments have 
existing standards for temporary controls. Today's proposed effluent 
guidelines are intended to work in concert with existing requirements 
where equivalent, and would not supercede more stringent requirements.
    In addition, EPA is proposing two alternatives that would not set 
national standards for control of storm water discharges from 
construction sites subject to permit requirements under section 402 of 
the CWA. Both of these approaches would rely instead on a combination 
of existing State and local requirements and additional requirements 
based on the best professional judgement (BPJ) of the permitting 
authority. Under one of these alternatives (Option 1), the proposal 
would establish minimum requirements for conducting site inspections 
and providing certification as to design and completion of controls 
required by the permit authority in its NPDES permit. These 
requirements are similar to the inspection and certification 
requirements in Option 2. Existing compliance determination practices 
for construction site storm water controls rely principally on site 
inspections by local governments, however, enforcement efforts are 
reported to be uneven nationwide, largely due to limited enforcement 
resources at the Federal, State and local levels. The inspection and 
certification requirements in today's proposed rule could strengthen 
the current permit program.
    Under another alternative (Option 3), no new requirements would be 
established under this option. Both the control requirements and the 
certification requirements would be left to the best professional 
judgement of the permitting authority in order to allow them to be 
better tailored to local conditions. These proposed options are 
discussed in more detail in sections IX and X of today's notice. At 
this time, EPA is co-proposing all three options because it sees 
advantages to each.

III. Background

A. Clean Water Act

    Congress adopted the Clean Water Act (CWA) to ``restore and 
maintain the chemical, physical, and biological integrity of the 
nation's waters'' (Section 101(a), 33 U.S.C. 1251(a)). To achieve this 
goal, the CWA prohibits the discharge of pollutants into navigable 
waters except in compliance with the statute. CWA section 402 requires 
``point source'' discharges to obtain a permit under the National 
Pollutant Discharge Elimination System (NPDES). These permits are 
issued by EPA regional offices or authorized State agencies.
    Following enactment of the Federal Water Pollution Control 
Amendments of 1972 (Public Law 92-500, October 18, 1972), EPA and the 
States issued NPDES permits to thousands of dischargers, both 
industrial (e.g. manufacturing, energy and mining facilities) and 
municipal (sewage treatment plants). As required under Title III of the 
Act, EPA promulgated effluent limitation guidelines and standards for 
many industrial categories, and these requirements are incorporated 
into the permits.
    The Water Quality Act of 1987 (Public Law 100-4, February 4, 1987) 
amended the CWA. The NPDES program was expanded by defining municipal 
and industrial storm water discharges as point sources. Industrial 
storm water dischargers, municipal separate storm sewer systems and 
other storm water dischargers designated by EPA must obtain NPDES 
permits pursuant to section 402(p) (33 U.S.C. 1342(p)).

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B. NPDES Storm Water Permit Program

    EPA's initial storm water regulations, promulgated in 1990, 
identified construction as one of several types of industrial activity 
requiring an NPDES permit. These ``Phase I'' storm water regulations 
require operators of large construction sites to apply for permits (40 
CFR 122.26(b)(14)(x)). A large-site construction activity is one that:
     Will disturb five acres or greater; or
     Will disturb less than five acres but is part of a larger 
common plan of development or sale whose total land disturbing 
activities total five acres or greater (or is designated by the NPDES 
permitting authority); and
     Will discharge storm water runoff from the construction 
site through a municipal separate storm sewer system (MS4) or otherwise 
to waters of the United States.

The Phase II storm water rule, promulgated in 1999, generally extends 
permit coverage to sites one acre or greater (40 CFR 122.26(b)(15)).
    In addition to requiring permits for construction site discharges, 
the NPDES regulations require permits for certain MS4s. The local 
governments responsible for the MS4s must operate a storm water 
management program. The local programs regulate a variety of business 
activities that affect storm water runoff, including construction, and 
the components of these programs are described in section III.B.2 of 
today's document.
1. Storm Water Permits for Construction: General and Individual
    Pursuant to the NPDES Phase I storm water regulations at 40 CFR 
122.26, EPA and the States began issuing permits for storm water 
discharges from large construction sites in 1992. The Phase II rule 
requires that permits for smaller sites be obtained starting in 2003. A 
general description of the basic requirements for the Phase I and Phase 
II regulations follows.
    a. General Permits. The vast majority of construction sites are 
covered by general permits. EPA and States use general permits to cover 
a group of similar dischargers under one permit. See 40 CFR 122.28. 
General permits simplify the application process for the industry, 
provide uniform requirements across covered sites, and reduce 
administrative workload for the permit authorities. EPA and the States 
have published documents containing the construction general permits, 
along with forms and related procedures. To obtain coverage under a 
general permit, the permittee--either the developer, builder or 
contractor for a construction project--submits a Notice of Intent (NOI) 
to the permit authority. The NOI takes the place of a lengthier 
application package that generally would be used for an individual 
NPDES permit. By submitting the NOI, the permittee agrees to the 
conditions in the published permit. The permittee may begin land 
disturbance after a specified interval (typically 48 hours) following 
NOI submission unless otherwise notified or specified by the permit 
authority.
    b. EPA Construction General Permit. EPA's Construction General 
Permit (CGP) covers construction activities in six states, the District 
of Columbia, Puerto Rico, U.S. territories, and specifically designated 
portions of other states such as Indian Country and Federal facilities. 
The ``national'' CGP, covering all the EPA Regions except Regions 4, 5 
and 6, was published on February 17, 1998 (63 FR 7898). EPA has placed 
a copy of the ``national'' CGP in the docket for today's proposal. 
Slightly different versions of the permit for Regions 4 and 6 were 
published on April 28, 2000 (65 FR 25122) and July 6, 1998 (63 FR 
36490) respectively. (EPA does not issue NPDES permits for states 
within Region 5.) EPA intends to issue a revised CGP later in 2002 to 
incorporate requirements promulgated in the Phase II rule.
    The principal requirement in the CGP is the preparation of a storm 
water pollution prevention plan (SWPPP) before submission of the NOI. 
EPA's guidance manual, ``Storm Water Management for Construction 
Activities: Developing Pollution Prevention Plans and Best Management 
Practices,'' (EPA 832/R-92-005, October 1, 1992; available on EPA's 
website at http://www.epa.gov/npdes/stormwater) describes the SWPPP 
process in detail. The plan must include a description of the site, 
with maps showing drainage, discharge points, and location of runoff 
controls; a description of the ``best management practices'' (BMPs) \1\ 
used; inspection procedures and reports. A copy of the plan must be 
kept on the construction site from the date of project initiation to 
the date of final stabilization. Permittees do not routinely submit 
plans to the permit authority, but a copy must be readily available to 
authorized inspectors during normal business hours. EPA's construction 
general permit does not require that specific BMPs be contained in the 
SWPPP, except that temporary sediment basins shall be used on sites 
with 10 or more acres disturbed at one time. Rather, the permit 
describes the general areas the plan must address (e.g., minimization 
of erosion, containment of sediment on the site, proper handling of 
chemicals and debris, etc.) and leaves it to the operator to develop 
appropriate site-specific measures to accomplish these purposes.
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    \1\ The term ``best management practices'' (BMP) is mentioned in 
a few sections of the Clean Water Act, and is used extensively in 
EPA regulations, guidance documents, state and local government 
documents, and many other technical publications. The term has a 
variety of meanings within the water quality literature, and is used 
in situations involving both point sources and nonpoint sources. 
BMPs can be procedures for operation and maintenance of municipal or 
industrial treatment plants, training courses for plant employees, 
public notification procedures, or agricultural waste handling 
practices, as well as both structural and non-structural techniques 
for controlling storm water discharges from any source. Within the 
storm water field, some publications use the term ``BMPs'' when 
referring to erosion and sediment controls. To avoid confusion, in 
today's document EPA is using the terms ``erosion and sediment 
controls'' (ESC) and ``temporary BMPs'' to describe the temporary 
controls used by construction site operators during the period of 
land disturbance, and ``storm water management BMPs'' to refer to 
the techniques and technologies designed and installed by operators 
for long-term control of storm water discharges.
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    EPA encourages multiple operators at a construction site to develop 
a comprehensive SWPPP. Other requirements in the CGP include conducting 
regular inspections and reporting releases of reportable quantities of 
hazardous substances.
    To discontinue permit coverage, an operator must complete final 
stabilization of the site, transfer responsibility to another party 
(e.g., a developer transferring land to a home builder), or for a 
residential property, complete temporary stabilization and transfer to 
the homeowner. The permittee submits a Notice of Termination (NOT) Form 
to the permit authority upon satisfying the appropriate permit 
conditions described in the CGP.
    c. State Construction General Permits. For the most part, the state 
general permits have followed EPA's format. Some states have modified 
requirements in their permits. For example, California has added 
discharge monitoring requirements for sites where the receiving water 
body is listed as impaired (water quality-limited) for sedimentation. 
(California State Water Resources Control Board, Resolution No. 2001-
046, April 26, 2001; http://www.swrcb.ca.gov/resdec/resltn/2001/
01res.html) and Georgia has added monitoring requirements for all sites 
(Georgia Department of Natural Resources, Environmental Protection 
Division, General NPDES Permit For Storm Water Discharges From 
Construction Activities, No. GAR100000, June 12, 2000; http://

[[Page 42648]]

www.DNR.State.Ga.US/dnr/environ/techguide--files/techguide.htm).
    d. Individual Permits. A permit authority may require any site to 
apply for an individual permit rather than using the general permit. 
The individual permit is most often used for complex projects and/or 
projects located in sensitive watersheds. State storm water permit 
coordinators have informed EPA that this provision has been rarely used 
for construction activities.
2. Municipal Storm Water Permits and Local Government Regulation of 
Construction Activity
    Many local governments, as MS4 permittees, have a role in the co-
regulation of construction industries along with States and EPA, and 
are responsible for overseeing long-term maintenance of storm water 
management facilities. This section describes regulatory programs 
operated by MS4s.
    a. NPDES Requirements. The NPDES storm water regulations require 
that MS4s apply for permits. In general, the Phase I rule covers MS4s 
serving populations of 100,000 or more. The Phase II rule extends 
coverage to most other MS4s in urbanized areas, and NPDES agencies may 
designate additional MS4s outside of urbanized areas for permit 
coverage based on State-specific criteria.
    The regulations contemplate that each MS4 generally will operate a 
local storm water management program in order to properly control 
discharges into, and hence out of, its MS4. The Phase II MS4 
regulations specifically anticipate a local program for regulating 
storm water discharges from construction activity and managing ``post-
construction'' (long-term) runoff. Permits for Phase I MS4s, while not 
specifically required by the regulations to do so, typically administer 
such programs as well. See 40 CFR 122.26(d) for Phase I MS4s and 40 CFR 
122.34(a) for Phase II MS4s. EPA has provided guidance to the NPDES 
agencies and MS4s that recommends components and activities for a well-
operated local storm water management program.
    b. EPA Guidance to Municipalities. EPA has issued several guidance 
documents to municipalities to implement the NPDES Phase II rule.
     National Menu of BMPs (http://www.epa.gov/npdes/
menuofbmps/menu.htm). This document provides guidance to regulated 
small MS4s as to the types of practices they could use to develop and 
implement their storm water management programs. The menu includes 
descriptions of BMPs that local programs can implement to reduce 
impacts of storm water discharges from construction activities and 
long-term runoff.
     Measurable Goals Guidance (http://www.epa.gov/npdes/storm 
water/measurablegoals). This document assists small MS4s in defining 
performance targets for each of the six minimum measures described 
above. Included in the guidance are examples of goals for BMPs to 
control storm water discharges from construction activities and urban 
runoff.
     Storm Water Phase II Compliance Assistance Guide (EPA 833-
R-00-002, March 2000, http://cfpub.epa.gov/npdes/stormwater/
smms4.cfm?program_id=6). The guide provides an overview of compliance 
responsibilities for MS4s, small construction sites, and certain other 
industrial storm water discharges affected by the Phase II rule.
     Fact Sheets on various storm water control technologies, 
including hydrodynamic separators (EPA 832-F-99-017), infiltrative 
practices (EPA 832-F-99-018 and EPA 832-F-99-019), modular treatment 
systems (EPA 832-F-99-044), porous pavement (EPA 832-F-99-023), sand 
filters (EPA 832-F-99-007), turf reinforcement mats (EPA 832-F-99-002), 
vegetative covers (EPA 832-F-99-027) and swales (EPA 832-F-99-006), wet 
detention ponds (EPA 832-F-99-048). (All fact sheets published 1999. 
Available at http://www.epa.gov/npdes/stormwater/ ; click on 
``Publications.'')

C. Other State and Local Storm Water Requirements

    States and municipalities may have other requirements for flood 
control, erosion and sediment (E&S) control, and in many cases, storm 
water quality. Many of these provisions were enacted before the 
promulgation of the EPA Phase I storm water rule. All states have laws 
for E&S control, and these are often implemented by MS4's. A summary of 
existing state and local requirements is provided in the Development 
Document.

D. Effluent Guidelines and Standards Program

    Effluent limitation guidelines and standards (hereinafter referred 
to as ``effluent guidelines'' or ``ELGs'') are technology-based 
requirements for categories of point source dischargers. These 
limitations are subsequently incorporated into NPDES permits. The 
effluent guidelines are based on the degree of control that can be 
achieved using various levels of pollution control technology, as 
defined in Title III of the CWA and outlined below.
1. Best Practicable Control Technology Currently Available (BPT)
    In guidelines for a point source category, EPA may define BPT 
effluent limits for conventional, toxic,\2\ and non-conventional 
pollutants. In specifying BPT, EPA looks at a number of factors. EPA 
first considers the cost of achieving effluent reductions in relation 
to the effluent reduction benefits. The Agency also considers the age 
of the equipment and facilities, the processes employed and any 
required process changes, engineering aspects of the control 
technologies, non-water quality environmental impacts (including energy 
requirements), and such other factors as the Agency deems appropriate 
(CWA section 304(b)(1)(B)). Traditionally, EPA establishes BPT effluent 
limitations based on the average of the best performance of facilities 
within the category of various ages, sizes, processes or other common 
characteristics. Where existing performance is uniformly inadequate, 
EPA may require higher levels of control than currently in place in a 
category if the Agency determines that the technology can be 
practically applied. See ``A Legislative History of the Federal Water 
Pollution Control Act Amendments of 1972,'' U.S. Senate Committee of 
Public Works, Serial No. 93-1, January 1973, p. 1468.
---------------------------------------------------------------------------

    \2\ In the initial stages of EPA CWA regulation, EPA efforts 
emphasized the achievement of BPT limitations for control of the 
``classical'' pollutants (e.g., TSS, pH, BOD5). However, 
nothing on the face of the statute explicitly restricted BPT 
limitation to such pollutants. Following passage of the Clean Water 
Act of 1977 (Public Law 95-217, December 27, 1977) with its 
requirement for point sources to achieve best available technology 
limitations to control discharges of toxic pollutants, EPA shifted 
its focus to developing BAT limitations for the listed priority 
toxic pollutants.
---------------------------------------------------------------------------

    In addition, the Act requires a cost-reasonableness assessment for 
BPT limitations. In determining the BPT limits, EPA considers the total 
cost of treatment technologies in relation to the effluent reduction 
benefits achieved. This inquiry does not limit EPA's broad discretion 
to adopt BPT limitations that are achievable with available technology 
unless the required additional reductions are ``wholly out of 
proportion to the costs of achieving such marginal level of 
reduction.'' See Legislative History, op. cit., p. 170. Moreover, the 
inquiry does not require the Agency to quantify benefits in monetary 
terms. See, for example, American Iron and Steel Institute v. EPA, 526 
F. 2d 1027 (3rd Cir., 1975).
    In balancing costs against the benefits of effluent reduction, EPA 
considers the volume and nature of expected discharges after 
application of BPT, the

[[Page 42649]]

general environmental effects of pollutants, and the cost and economic 
impacts of the required level of pollution control. In past effluent 
limitation guidelines and standards, BPT cost-reasonableness removal 
figures have ranged from $0.21 to $33.71 per pound removed in year 2000 
dollars. In developing guidelines, the Act does not require 
consideration of water quality problems attributable to particular 
point sources, or water quality improvements in particular bodies of 
water. Accordingly, EPA has not considered these factors in developing 
the limitations being proposed today. See Weyerhaeuser Company v. 
Costle, 590 F. 2d 1011 (D.C. Cir. 1978).
2. Best Available Technology Economically Achievable (BAT)
    In general, BAT effluent guidelines (CWA section 304(b)(2)) 
represent the best existing economically achievable performance of 
direct discharging plants in the subcategory or category. The factors 
considered in assessing BAT include the cost of achieving BAT effluent 
reductions, the age of equipment and facilities involved, the processes 
employed, engineering aspects of the control technology, potential 
process changes, non-water quality environmental impacts (including 
energy requirements), and such factors as the Administrator deems 
appropriate. The Agency retains considerable discretion in assigning 
the weight to be accorded to these factors. An additional statutory 
factor considered in setting BAT is ``economic achievability.'' 
Generally, EPA determines the economic achievability on the basis of 
the total cost to the subcategory and the overall effect of the rule on 
the industry's financial health. The Agency may base BAT limitations 
upon effluent reductions attainable through changes in a facility's 
processes and operations. As with BPT, where existing performance is 
uniformly inadequate, EPA may base BAT upon technology transferred from 
a different subcategory or from another category. In addition, the 
Agency may base BAT upon manufacturing process changes or internal 
controls, even when these technologies are not common industry 
practice.
3. Best Conventional Pollutant Control Technology (BCT)
    The 1977 amendments to the CWA required EPA to identify effluent 
reduction levels for conventional pollutants associated with BCT 
technology for discharges from existing point sources. BCT is not an 
additional limitation, but replaces Best Available Technology (BAT) for 
control of conventional pollutants. In addition to other factors 
specified in section 304(b)(4)(B), the CWA requires that EPA establish 
BCT limitations after consideration of a two-part ``cost-
reasonableness'' test. EPA explained its methodology for the 
development of BCT limitations in July 1986 (51 FR 24974).
    Section 304(a)(4) designates the following as conventional 
pollutants: Biochemical oxygen demand (BOD5), total 
suspended solids (TSS), fecal coliform, pH, and any additional 
pollutants defined by the Administrator as conventional. The 
Administrator designated oil and grease as an additional conventional 
pollutant on July 30, 1979 (44 FR 44501). A primary pollutant of 
concern at construction sites, sediment, is measured as TSS.
4. New Source Performance Standards (NSPS)
    NSPS reflect effluent reductions that are achievable based on the 
best available demonstrated control technology. New facilities have the 
opportunity to install the best and most efficient production processes 
and wastewater treatment technologies. As a result, NSPS should 
represent the greatest degree of effluent reduction attainable through 
the application of the best available demonstrated control technology 
for all pollutants (i.e., conventional, non-conventional, and priority 
pollutants). In establishing NSPS, CWA section 306 directs EPA to take 
into consideration the cost of achieving the effluent reduction and any 
non-water quality environmental impacts and energy requirements.
5. Pretreatment Standards
    The CWA also defines standards for indirect discharges, i.e. 
discharges into publicly owned treatment works (POTWs). These are 
Pretreatment Standards for Existing Sources (PSES) and Pretreatment 
Standards for New Sources (PSNS) under section 307(b). Because EPA has 
identified no deliberate discharges directly to POTWs, EPA is not 
proposing PSES or PSNS for the Construction and Development Category. 
The information reviewed by the Agency indicates that the vast majority 
of construction sites discharge either directly to waters of the U.S. 
or through MS4s. In some urban areas, construction sites discharge to 
combined sewer systems (i.e., sewers carrying both storm water and 
domestic sewage through a single pipe) which lead to POTWs. Sediment is 
susceptible to treatment in POTWs, using technologies commonly employed 
such as primary clarification, and EPA has no evidence of interference, 
pollutant pass-through or sludge contamination.
6. Effluent Guidelines Plan and Consent Decree
    Clean Water Act section 304(m) requires EPA to publish a plan every 
two years that consists of three elements. First, under section 
304(m)(1)(A), EPA is required to establish a schedule for the annual 
review and revision of existing effluent guidelines in accordance with 
section 304(b). Section 304(b) applies to ELGs for direct dischargers 
and requires EPA to revise such regulations as appropriate. Second, 
under section 304(m)(1)(B), EPA must identify categories of sources 
discharging toxic or nonconventional pollutants for which EPA has not 
published BAT ELGs under section 304(b)(2) or new source performance 
standards under section 306. Finally, under section 304(m)(1)(C), EPA 
must establish a schedule for the promulgation of BAT and NSPS for the 
categories identified under subparagraph (B) not later than three years 
after being identified in the 304(m) plan. Section 304(m) does not 
apply to pretreatment standards for indirect dischargers, which EPA 
promulgates pursuant to section 307(b) and 307(c) of the Act.
    On October 30, 1989, Natural Resources Defense Council, Inc. 
(NRDC), and Public Citizen, Inc., filed an action against EPA in which 
they alleged, among other things, that EPA had failed to comply with 
section 304(m). Plaintiffs and EPA agreed to a settlement of that 
action in a consent decree entered on January 31, 1992. (Natural 
Resources Defense Council et al v. Whitman, D.D.C. Civil Action No. 89-
2980). The consent decree, which has been modified several times, 
established a schedule by which EPA is to propose and take final action 
for eleven point source categories identified by name in the decree and 
for eight other point source categories identified only as new or 
revised rules, numbered 5 through 12. EPA selected the Construction and 
Development category as the subject for New or Revised Rule 
10. The decree, as modified, calls for the Administrator to 
sign a proposed ELG for the C&D category no later than May 15, 2002, 
and to take final action on that proposal no later than March 31, 2004. 
A settlement agreement between the parties, signed on June 28, 2000, 
requires that EPA develop regulatory options applicable to discharges 
from construction, development and redevelopment, covering site sizes 
included in the Phase I and Phase II

[[Page 42650]]

NPDES storm water rules (i.e. one acre or greater). EPA is required to 
develop options including numeric effluent limitations for 
sedimentation and turbidity; control of construction site pollutants 
other than sedimentation and turbidity (e.g. discarded building 
materials, concrete truck washout, trash); BMPs for controlling post-
construction runoff; BMPs for construction sites; and requirements to 
design storm water controls to maintain pre-development runoff 
conditions where practicable. The settlement also requires EPA to issue 
guidance to MS4s and other permittees on maintenance of post-
construction BMPs identified in the proposed ELGs. Further discussion 
of approaches not pursued by EPA at this time may be found in the 
docket for today's proposal.

E. Pollution Prevention Act

    The Pollution Prevention Act of 1990 (PPA) (42 U.S.C. 13101 et 
seq., Public Law 101-508, November 5, 1990) makes pollution prevention 
the national policy of the United States. The PPA identifies an 
environmental management hierarchy in which pollution ``should be 
prevented or reduced whenever feasible; pollution that cannot be 
prevented should be recycled in an environmentally safe manner, 
whenever feasible; pollution that cannot be prevented or recycled 
should be treated in an environmentally safe manner whenever feasible; 
and disposal or release into the environment should be employed only as 
a last resort * * *'' (42 U.S.C. 13103). In short, preventing pollution 
before it is created is preferable to trying to manage, treat or 
dispose of it after it is created. According to the PPA, source 
reduction reduces the generation and release of hazardous substances, 
pollutants, wastes, contaminants or residuals at the source, usually 
within a process. The term source reduction ``* * * includes equipment 
or technology modifications, process or procedure modifications, 
reformulation or redesign of products, substitution of raw materials, 
and improvements in housekeeping, maintenance, training, or inventory 
control. The term 'source reduction' does not include any practice 
which alters the physical, chemical, or biological characteristics or 
the volume of a hazardous substance, pollutant, or contaminant through 
a process or activity which itself is not integral to or necessary for 
the production of a product or the providing of a service.'' In effect, 
source reduction means reducing the amount of a pollutant that enters a 
waste stream or that is otherwise released into the environment prior 
to out-of-process recycling, treatment, or disposal.
    Although the PPA does not explicitly address storm water discharges 
or discharges from construction sites, the principles of the PPA are 
implicit in many of the practices used to reduce pollutant discharges 
from construction sites. These include controls that minimize the 
potential for erosion such as proper phasing of construction, retention 
of on-site vegetation and stabilization of disturbed areas as soon as 
practicable. These controls and practices are described in section IX.A 
of today's document.

IV. Scope of Proposal

    EPA is proposing three options, and soliciting comment on 
variations on these options, for further control of the discharge of 
pollutants in storm water associated with construction and development 
activities.
    One proposed option (Option 2) would establish C&D effluent 
guidelines that would apply to construction site operators at sites 
with 5 acres or more of disturbed area. Under this option, an operator 
would be required to:
     Design, install and maintain erosion and sediment 
controls;
     Prepare a storm water pollution prevention plan;
     Inspect the site throughout the land-disturbance period; 
and
     Certify that the controls meet the regulatory design 
criteria or permit conditions, as applicable.

    These provisions are explained in section X.D. of today's document. 
Today's proposal does not include requirements regarding the selection 
or implementation of long-term storm water controls at the sites using 
permanent BMPs. Under the NPDES storm water permit program, State and 
local governments are responsible for establishing requirements for 
permanent storm water controls, and for the maintenance of those 
permanent storm water controls. Today's proposed rule would not alter 
that responsibility. EPA has collected a significant body of technical 
information on the design and effectiveness of various permanent storm 
water controls that may assist State and local governments as they 
establish their requirements for construction and development activity. 
EPA anticipates releasing this document sometime after this proposal. 
EPA is also preparing a guidance manual on storm water BMP maintenance 
procedures to assist State and local governments and property owners. 
EPA anticipates releasing a final version of this document at the time 
of final action on this proposal in March of 2004. A draft of the 
document is included in the rulemaking record of this proposal.
    EPA is also considering a variation on this option that would 
establish C&D effluent guidelines that would apply to construction site 
operators at sites with five acres or more of disturbed area. Under 
this variation an operator would be required to:
     Design, install and maintain erosion and sediment 
controls; and
     Prepare a storm water pollution prevention plan.

Under this variation Federal inspection and certification requirements 
would not be established; those provisions could be addressed at the 
local level.
    Another proposed option (Option 1) would not establish C&D effluent 
guidelines, but rather would amend the NPDES storm water requirements 
for construction site operators subject to NPDES storm water 
requirements, i.e., operators of construction sites with one acre or 
more of disturbed area. (See section III.B of today's document for a 
summary of current permit requirements.) Under this option, an operator 
would be required to:
     Inspect the site throughout the land-disturbance period; 
and
     Certify that the controls meet the regulatory design 
criteria established by the Federal, Tribal, State or local government.

These provisions are explained in section X.D of today's document.
    The final proposed option (Option 3) would not establish C&D 
effluent guidelines or amend the NPDES storm water requirements for 
construction site operators. Rather, this option would continue to rely 
on control practices and any certification and inspection requirements 
tailored to local conditions that established by the permitting 
authority on a BPJ basis.

V. Summary of Data Collection Activities

A. Existing Data Sources

    In developing today's proposal, EPA collected and reviewed existing 
data from a variety of sources, including technical and professional 
literature; the National Storm Water Best Management Practices Database 
developed by the American Society of Civil Engineers (ASCE); the 
Agency's economic analysis for the Phase II NPDES storm water rule; 
State storm water and erosion and sediment control manuals and 
handbooks; EPA and State databases on construction general permits; the 
United States Department of Agriculture (USDA) National Resources 
Inventory; the Census of Construction; and the U.S. Army Corps of 
Engineers evaluation of

[[Page 42651]]

BMPs for small construction sites. Other information sources included 
Federal agencies such as the Securities and Exchange Commission and 
Small Business Administration (SBA); industry and trade association 
publications; university and nonprofit organization research centers; 
interviews with State and local officials; and interviews with industry 
representatives and consultants. EPA did not conduct any questionnaire 
surveys of the construction and development industry in preparing 
today's proposal.
    EPA drew heavily on the mass of data related to erosion and 
sediment control, and storm water technology and BMP applicability and 
efficiency contained in the technical and scientific literature in 
order to develop today's proposal. Data sources collected and evaluated 
include published papers and journal articles, ASCE and International 
Erosion Control Association (IECA) conference proceedings, research 
reports from state and federal agencies such as USDA, U.S. Department 
of Transportation, State Departments of Transportation, and the 
Transportation Research Board. EPA conducted a detailed assessment of 
these data sources, the results of which are summarized in the 
Development Document for the Construction and Development Effluent 
Guidelines (see ``Supporting Documentation''). The document summarizes 
efficiency data for most of the erosion and sediment controls in common 
usage. This literature and data summary was the main source of data 
used to evaluate BMP efficiency and applicability for today's proposal.
    EPA also augmented these data sources with data contained in the 
National Storm Water BMP Database. This database is a comprehensive 
data storage and evaluation system developed by ASCE in cooperation 
with EPA. The database contains monitoring studies on storm water BMPs 
in a consistent and transferrable format in order to allow for a 
comprehensive evaluation and comparison of various BMP designs. 
Representative information provided for each BMP includes test site 
location, researcher contact data, watershed characteristics, regional 
climate statistics, BMP design parameters, monitoring equipment types, 
and monitoring data such as precipitation, flow and water quality. The 
database can be accessed at http://www.bmpdatabase.org.
    The U.S. Census Bureau conducted the most recent Census of 
Construction in 1997. The Census provides data on the number, size, and 
geographic distribution of establishments; employment and payroll; 
financial information (such as revenues and expenses); specialization 
by type of construction; and amount and type of work subcontracted out. 
EPA relied on additional Census Bureau programs for data on market 
conditions in the industry. The Building Permits Program provided 
monthly data on the number of building permits issued for new 
residential construction. The annual Survey of Construction provided 
data on number of housing starts, completions, and units sold; 
characteristics of new homes (including size of home and building lot 
size); and value of construction put in place.
    While the Census Bureau programs provide substantial data on 
business establishment characteristics and industry output, there is a 
noticeable lack of information linking establishment data to output 
measures. For example, the Census of Construction provides average and 
median revenues and value of construction for all establishments and 
for establishments by employment size class, but does not provide a 
distribution of establishments by number of housing units started or 
completed, number of construction permits issued, or number of acres 
developed. For EPA's economic analysis this was a significant data gap, 
since the proposed regulations would be implemented at the project 
level and the Agency developed its compliance cost estimates on a per-
acre basis. This led EPA to develop a method for estimating the number 
of acres disturbed per establishment.
    EPA was able to partially fill these data gaps using information 
contained in a special Census Bureau report (``1997 Economic Census; 
Construction Sector Special Study Housing Starts Statistics; A Profile 
of the Homebuilding Industry,'' July 2000). This report contains 
estimates of the number of homebuilding establishments by number of 
housing units built each year. EPA combined this information with data 
on the average lot size for new homes to estimate a distribution of 
establishments by number of acres disturbed. EPA also used data from 
this report to determine the number of small builders who are likely to 
disturb less than one acre of land per year and who therefore are not 
covered by the storm water permit program.
    Another data source was important for further clarifying the size 
of the industry that is covered by the storm water permit program. The 
single-family and multi-family housing construction industries (NAICS 
23321 and 23322) include establishments that are engaged in new 
construction as well as renovation of existing construction. Since 
renovation and remodeling activities generally do not disturb one acre 
or more of land per site, renovation and remodeling contractors would 
not be subject to the requirements being proposed today. To estimate 
the number of such contractors, EPA used data from a recent study 
completed by the Joint Center for Housing Studies at Harvard 
University. This report classified establishments that derive at least 
half of their revenues from remodeling activities as remodelers. Based 
on this definition, the Agency concluded that a substantial portion of 
the single-family and multifamily housing construction sector may not 
be affected by today's proposal. EPA requests comment on its assumption 
that firms which derive at least half their revenues from remodeling 
will not be affected by today's proposal.
    EPA obtained information on home ownership rates, mortgage 
affordability, and interest rates from sources such as Fannie Mae and 
the Federal Housing Finance Board. Data on average costs of 
construction for various types of projects were obtained from R.S. 
Means Co. publications and the National Association of Home Builders 
(NAHB).
    EPA obtained data on the amount of land converted from undeveloped 
to developed status from the National Resources Inventory (NRI). This 
is a statistical sampling program conducted by USDA every five years 
that defines geographic sampling points in terms of their land use 
status. The most recent NRI indicates that during the period 1992 to 
1997, each year over 2.2 million acres of land previously classified as 
undeveloped were converted to developed status. For developed land, the 
NRI does not specify the type of use (i.e., single family homes, 
roadways, commercial or industrial sites). In order to estimate the 
number of acres converted by type of development, EPA used actual data 
or estimates of the number of projects permitted and the average size 
of projects, by type. For example, to determine the number of acres 
converted to residential housing development EPA multiplied the number 
of new homes permitted for construction each year by the average lot 
size for new construction. For non-residential construction, EPA had to 
fill a data gap created when the Census Bureau ceased, in 1995, 
collecting information on the number of nonresidential building permits 
issued. The Agency used historical (pre-1995) data on nonresidential 
starts to establish a relationship between residential and 
nonresidential starts from which current nonresidential activity could 
be

[[Page 42652]]

estimated. To stratify the aggregate amount of land converted to 
developed status by size of development project, EPA used data on 
construction project size collected from 14 municipalities in support 
of the NPDES Phase II storm water regulations (Economic Analysis of the 
Phase II Storm Water Rule, Final Report, October 1999.)

B. Storm Water Discharge Sampling and Site Visits

    At the time of this proposal, EPA is planning to conduct sampling 
and analysis of discharges at a number of construction sites in order 
to better characterize the pollutants commonly found in construction 
site runoff. EPA has also funded several cooperative agreements 
evaluating construction site pollutant loadings, erosion and sediment 
control effectiveness, and receiving water impacts of land development 
activities.

C. Industry-Supplied Data

    EPA has reviewed reference publications and data prepared by 
industry organizations including NAHB, the Construction Financial 
Management Association and the Urban Land Institute. The Agency 
received cost data and comments from several construction and 
development businesses during the Small Business Advocacy Review 
conducted in 2001. (This review is described in section XIX.C of 
today's document.)
    NAHB submitted a report that presents an independent evaluation of 
the data contained in the initial release of the National Stormwater 
BMP Database. (National Association of Home Builders, ``Erosion and 
Sediment Control Best Management Practices Research Project.'' 
Washington, DC, 2000). The report is included in the rulemaking record.

D. Summary of Public Participation

    EPA conducted an introductory public meeting in April 1999 
describing the effluent guidelines development process and the 
regulatory issues being considered for the C&D rule. In the Summer of 
2001 EPA conducted two additional meetings to provide an update of 
progress on the rule development.
    Since the beginning of the rule project in 1998, EPA has held 
meetings with industry associations, State and local government 
officials, professional organizations and citizen groups on the C&D 
rule. In 2000-01, EPA conducted interviews and group discussions with 
builders and developers to learn about the land development process, 
builder-developer organizational structures, operational and business 
practices, and business trends in greater detail.
    In 2001 EPA conducted a Small Business Advocacy Review panel 
pursuant to the Small Business Regulatory Enforcement Fairness Act 
(SBREFA). A discussion of this process and findings are discussed in 
section XIX.C of today's document.

VI. Industry Profile

A. Affected Industry Sectors

    The construction and development category covers establishments 
classified by the Census Bureau into two subsectors.
     The Building, Developing and General Contracting subsector 
(NAICS 233) includes land subdivision and development, and building 
construction (residential and nonresidential). Land developers select 
construction sites, conduct site planning and design activities, and 
carry out other tasks such as financing and marketing. General 
contractors build residential, industrial, commercial and other 
buildings.
     Heavy Construction contractors (NAICS 234) build sewers 
and other utilities, roads, highways, bridges and tunnels.

A single construction project may involve many firms from both 
subsectors. The number of firms involved and their financial and 
operational relationships may vary greatly from project to project.
    The residential building industries have their own variety of 
operational relationships. Many home building projects are initiated 
and managed by a developer, using one or more general contractors to 
supervise and/or carry out the physical construction activities. Other 
projects are operated by ``merchant'' builders. A merchant builder is a 
firm that develops property, constructs homes, and markets the final 
product within the same company. Although these functions may be 
conducted by different entities, the merchant builder conducts all of 
these activities within the same firm. In the past, industry members 
used the term ``operative builder'' to refer to a firm that conducts 
these activities within the same firm. The merchant builder is 
organized into divisions or departments within the firm and each 
division or department is responsible for different functions, e.g. 
land development, construction, marketing.
    Most builders and developers are separate entities. Typically, the 
developer acquires property and moves the project from raw land to 
finished lots. The lots are usually sold to builders who construct 
houses, commercial/shopping centers, office and industrial parks, and 
other products for the final consumer. In some situations home builders 
will construct speculatively without a contract. In other cases the 
home buyer will contract with a builder for a specific house. The 
builder hires subcontractors for carpentry, plumbing, electrical, and 
other services.
    Some of the operating characteristics of the heavy construction 
subsector include: (1) Usually government agency clients rather than 
private customers, (2) public sector clients typically issue 
specifications to cover many projects (e.g., a highway agency publishes 
road construction standards for all projects in its jurisdiction), and 
(3) frequent use of unit price contracts (e.g., a local public works 
agency contracts for installation of a quantity of sewer pipeline). The 
relationship between the heavy construction firm and the public 
customer is typically established through a competitive bid process. 
Private sector customers may initiate projects through negotiated 
contracts.
    EPA understands that in typical construction projects the firms 
identifying themselves as ``operators'' under a construction general 
permit are general building contractors and/or developers.\3\ While 
such projects may use the services of specialty contractors such as 
excavation companies, these firms are typically subcontractors to the 
general building contractor and are not identified as operators in the 
storm water permit. Other classes of subcontractors such as carpentry, 
painting, plumbing and electrical services typically do not apply for, 
nor receive, NPDES permits and EPA is not including these businesses in 
its population estimates for the purpose of today's proposed rule. EPA 
is also excluding businesses classified by the Census Bureau as ``non-
employer'' establishments. These establishments tend to be 
proprietorships with the owner providing individual construction 
services to the industry, and they are primarily engaged in activities, 
such as remodeling, that disturb little if any land.
---------------------------------------------------------------------------

    \3\ Under the CGP, a property owner who is not a developer or 
contractor, e.g., a corporation erecting an office building for its 
own use, may be designated as a co-permittee if it retains control 
over site plans.
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B. Construction and Development Activities Affecting Water Quality

1. Planning and Site Design
    Land development tasks that can affect pollutant discharges 
typically include the following activities:

[[Page 42653]]

     Site selection and analysis;
     Design of subdivision and lot sizes in residential and 
mixed-use projects;
     Design of infrastructure (roads, sewers, utility lines, 
etc.).
    In many cases, particularly on smaller projects, a land owner may 
manage these tasks directly without the involvement of a real estate 
developer. In larger projects, real estate developers usually manage 
the project, especially when local government requirements and approval 
processes are complex. This is often the case for residential 
developments, mixed-use projects (involving housing, commercial and/or 
other land uses), shopping centers and large office buildings and 
complexes.
    A real estate developer initiating a project will typically have a 
particular kind of project in mind (such as residential or commercial), 
but may not have identified a particular site. The developer may 
formulate a conceptual plan for the project and then search for sites 
that could accommodate such a plan. During the site selection process 
many factors are taken into consideration by the developer, and 
included among these may be the presence of water bodies on or near the 
site. For example, the developer may consider on-site water features to 
be an amenity that can add value to the site. On-site water body 
characteristics may dictate how structures can be located on the site 
to avoid flooding. Some properties may have limitations if on-site or 
adjacent water bodies have regulatory designations such as riparian 
buffers, flood plains and wetlands.
    Once a site has been selected and control of the property is 
obtained (through purchase, lease, option to purchase, etc.), the 
developer can proceed with site analysis, design and initial proposals 
for local government approval. Site analysis includes examination of 
topography, soils, and hydrology. Site design tasks depend on the 
planned uses for the land (residential, commercial, institutional, 
etc.) and may involve subdivision of the site into individual home 
lots; locating commercial, institutional or industrial buildings; 
locating streets, sidewalks and/or parking areas; and placement of 
utilities, including storm drainage systems. Planning for storm water 
management during the early stages of project formulation allows for 
consideration of site designs that can reduce the overall water quality 
impacts of the site. One such planning strategy, ``Conservation 
Design,'' includes avoiding natural wetland areas, preserving existing 
trees and vegetation, maintaining stream buffers, limiting the extent 
of clearing and grading activities, and identifying highly infiltrative 
soil areas for preservation. (See ``Growing Green,'' Natural Lands 
Trust, Inc., Media, PA. Available at http://www.natlands.org/planning/
planning.html.) The site design is subject to local government 
approval, and multiple agencies may be involved, depending on the size 
and complexity of the site and the requirements of master planning or 
zoning agencies. Once the appropriate government approvals have been 
obtained, the permittee may proceed with ground breaking activities. 
(D. Linda Kone, ``Land Development,'' Washington, DC: Home Builders 
Press, 2000).
2. Clearing, Excavating and Grading
    Construction on any size parcel of land almost always calls for a 
remodeling of the earth. Therefore, actual site construction typically 
begins with site clearing and grading. Earthwork activities are 
important in site preparation because they ensure that a sufficient 
layer of organic material--ground cover and other vegetation, 
especially roots--is removed. The size of the site, extent of water 
present, the types of soils, topography and weather determine the types 
of equipment that will be needed during site clearing and grading. 
Material that will not be used on the site must be hauled away by 
tractor-pulled wagons, dump trucks or articulated trucks.
    Clearing activities involve the movement of materials from one area 
of the site to another or complete removal from the site. Equipment 
used for lifting excavated and cleared materials include aerial-work 
platforms, forwarders cranes, rough-terrain forklifts, and truck-
mounted cranes. Truck loaders are used for digging and dumping earth.
    Excavation and grading may be performed by several different types 
of machines. They can also be done by hand, but this is generally more 
labor-intensive and more expensive. When grading a site, builders 
typically take measures to ensure that new grades are as close to the 
original grade as possible, so as not to create a dis-equilibrium, 
especially to avoid erosion and storm water runoff. Proper grade also 
ensures a flat surface for development and is designed to attain proper 
drainage away from the constructed buildings.
    Equipment used during excavation and grading include backhoes, 
bulldozers, loaders, directional drilling rigs, hydraulic excavators, 
motor graders, scrapers, skid-steer loaders, soil stabilizers, tool 
carriers, trenchers, wheel loaders and pipeliners. The type of 
equipment used generally depends on the functions to be performed and 
on specific site conditions.
    Shaping and compacting the earth is an important part of site 
preparation. Earthwork activities might require that fill material be 
used on the site. In such cases, the fill must be spread in uniform, 
thick layers and compacted to a specific density. An optimum moisture 
content must also be reached. Graders and bulldozers are the most 
common earth-spreading machines. Compaction is most often accomplished 
with various types of rollers.
    For removal of rock from the site, the contractor must first loosen 
and break the rock into small pieces. This can be accomplished by 
drilling or blasting. Drilling equipment includes jackhammers, wagon 
drills, drifters, churn rills, and rotary drills. Dynamite and other 
explosives can be used to loosen rock.
    Once materials have been excavated and removed and the ground has 
been cleared and graded, the site is ready for construction of 
buildings, roads, and/or other structures.
3. Erosion and Sediment Control
    During the land disturbance period, affected land is generally 
exposed after removal of grass, rocks, pavement and other protective 
ground covers. Where the soil surface is unprotected, soil and sand 
particles may be easily picked up by wind and/or washed away by rain or 
snow melt. This process is called erosion. The water carrying these 
particles eventually reaches a water body. The particles are deposited 
in the water body, a process called sedimentation. Descriptions of the 
environmental impacts of construction site runoff are provided in 
section XV of today's document.
    Contractors use erosion and sediment controls (ESCs) to mitigate 
these impacts. Erosion controls include mulching, vegetative filter 
strips, diversion berms and conveyance channels, slope drains, bonded 
fiber matrices, and rolled products such as turf reinforcement mats. 
These materials and methods are intended to reduce erosion where soil 
particles can be initially dislodged on a construction site, either 
from rainfall, snow melt or up-slope runoff. Erosion controls may not 
be completely effective, and sediment controls are typically employed 
in addition. Sediment controls include sediment basins, ponds, and 
traps; and barrier methods such as silt fences, straw bales and rock 
barriers. ESCs are further described in section VIII of today's 
document.

[[Page 42654]]

4. Control of Other Pollutants
    Construction activity generates a variety of waste materials. These 
materials may include concrete truck rinsate, trash, and other 
pollutants. Construction site operators utilize various practices to 
manage these wastes and minimize discharges to surface waters, 
including:
     Neat and orderly storage of chemicals, pesticides, 
fertilizers, and fuels that are being stored on the site;
     Regular collection and disposal of trash and sanitary 
waste;
     Prompt cleanup of spills of liquid or dry materials.

    These procedures are described in EPA's 1992 guidance, ``Storm 
Water Management for Construction Activities: Developing Pollution 
Prevention Plans and Best Management Practices'' (op. cit.), State and 
local government documents pertaining to construction sites, and in 
section VIII of today's document.
5. Final Stabilization and Long-Term Storm Water Management
    Construction activities on previously undeveloped land areas can 
significantly alter the hydrology of a site. In order to avoid flooding 
on the site and protect the newly constructed structures, the builder 
must design drainage facilities. The builder's site plans, as approved 
by the local government, specify the location of buildings and other 
structures, and typically indicate the site's drainage patterns and 
facilities for long-term storm water management. The plans may specify 
permanent storm water management facilities (or BMPs) to be constructed 
on the site, to control flooding, and in some cases, to protect 
receiving water quality. No single BMP type can address all storm water 
problems. Each type has certain limitations based on the drainage area 
served, available land space, cost, pollutant removal efficiency, as 
well as a variety of site-specific factors such as soil types, slope 
and depth of groundwater table. Storm water management BMPs are further 
described in section VIII of today's document.

VII. Storm Water Discharge Characteristics

    Since 1972, EPA and the States have made good progress in issuing 
discharge permits for a wide range of point sources dischargers. These 
permits have made dramatic improvements in water quality conditions and 
are largely responsible for much of the success in reducing water 
pollution. Most of these permits are for continuous discharges with 
predictable effluent quality and quantity that occur in both wet and 
dry weather conditions.
    Construction disturbance activities can generate a broad range of 
environmental impacts by altering the physical characteristics of the 
affected land area. Construction activities typically involve the 
clearing, surface stripping, grading, and excavation of existing 
vegetation followed by the active construction period when the affected 
land is usually left denuded and the soil compacted, often leading to 
an increase in storm water runoff and higher rates of erosion. The most 
significant pollutant associated with construction activity at most 
sites is sediment. Total suspended solids (TSS) concentrations from 
uncontrolled construction sites have been found to be up to 150 times 
greater than concentrations from undeveloped land.\4\ If the denuded 
and exposed areas contain contaminants, such as nutrients, pathogens, 
metals or organic compounds, they are likely to be carried at increased 
rates to surrounding water bodies via storm water runoff. The denuded 
construction site is only a temporary state, often less than six 
months. When the land is restored with the replanting of vegetation 
after construction is completed, the hydrology of the site may be 
altered. For example, the completed construction site may have a 
greater proportion of impervious surface than prior to site 
development, leading to changes in the volume and velocity, and in some 
cases temperature, of storm water runoff.
---------------------------------------------------------------------------

    \4\ TSS is an ``indicator'' parameter used to measure sediment 
discharges. The analytical test procedure for TSS is called 
``Residue-Nonfilterable.'' EPA-approved analytical methods for TSS 
are listed in 40 CFR part 136, Table I.B.
---------------------------------------------------------------------------

VIII. Description of Available Technologies

A. Introduction

    Construction and development activities have the potential to 
discharge pollutants to surface waters due to poor or inadequate site 
design, planning and BMP implementation. These impacts can be mitigated 
by the application of design techniques to preserve or avoid areas 
prone to erosion and through the use of erosion and sediment controls. 
The use of good site design and planning techniques also can reduce 
pollution control costs and improve the effectiveness of pollution 
control strategies and practices. Good site design can also integrate, 
to the extent appropriate, practices to control erosion and 
sedimentation at active construction sites with practices to control 
post-construction runoff. For example, site plans may provide for the 
conversion of short-term sediment control practices such as sediment 
basins into extended detention wet ponds or other long-term structural 
BMPs.
    A discussion of technologies and BMPs is contained in the following 
sections of today's document. Some states and local governments have 
also published detailed manuals for ESC and or storm water management 
controls. Links to on-line publications are available on EPA's website 
at http://www.epa/gov/OST/guide/construction.

B. Erosion and Sediment Controls and Other Site Management Practices

1. Goals
    Construction site activities should be managed to reduce erosion, 
and to the extent practical, retain sediment on the site. Erosion and 
sedimentation are two separate processes and the practices to control 
them differ. ``Erosion is the process of wearing away of the land 
surface by water, wind, ice, gravity, or other geologic agents. 
Sedimentation is the deposition of soil particles, both mineral and 
organic, that have been transported by water, wind, air, gravity or 
ice'' (adapted from North Carolina Erosion and Sediment Control 
Planning and Design Manual, September 1, 1988).
    Erosion can be prevented or minimized by various methods and 
practices. The main strategies used to reduce erosion include 
minimizing the time bare soil is exposed, preventing the detachment of 
soil and reducing the mobilization and transportation of soil particles 
off-site.
    Decreasing the amount of land disturbed can significantly reduce 
sediment detachment and mobilization and overall erosion and sediment 
control costs. After land has been disturbed, exposed soils should be 
covered as soon as possible and runoff should be actively managed to 
prevent run-on flows from off-site areas and uncontrolled runoff from 
the disturbed area(s). In addition, runoff should be managed to prevent 
high runoff velocities and concentrated flows that are erosive. The 
continued effectiveness of erosion controls also is dependent on 
frequent inspections of erosion control practices to identify 
maintenance needs.
    The control of sediment detached and mobilized through erosional 
processes requires a separate set of management practices. Several 
mechanisms can be used to remove suspended sediments in runoff. They 
include: filtration, settling and chemical precipitation. These 
mechanisms are used to trap, filter or

[[Page 42655]]

settle soil particles so they do not enter surface waters.
    More detailed descriptions of sediment and erosion controls can be 
found in the Development Document.
2. Major Categories of Best Management Practices
    Planning is the most critical element in designing an effective 
strategy to control erosion and sedimentation on construction sites. 
The protection of areas prone to erosion, the selection and siting of 
erosion and sediment control practices and the continued effectiveness 
of these systems will depend on a well defined plan.
    Erosion and sediment control (ESC) plans and site plans provide the 
blueprints for the protective activities that will occur on the 
construction site. The ESC and site plans may also contain descriptions 
of temporary practices such as sediment basins that will be converted 
into long-term storm water management practices.
    Several general objectives should be addressed in an effective ESC 
plan:
     Minimize clearing and grading activities;
     Protect waterways and stabilize drainage ways;
     Phase construction to limit soil exposure;
     Stabilize soils as soon as practicable;
     Protect steep slopes and cuts;
     Install perimeter controls to filter sediment;
     Employ sediment settling controls.
    To ensure that builders and contractors implement effective ESC 
plans, MS4s may employ several other program elements. These elements 
include an ESC plan review process; contractor education; training, 
licensing and certification programs, and an inspection and enforcement 
process. See EPA's MS4 ``Menu of BMPs'' website at http://www.epa.gov/
npdes/menuofbmps/menu.htm for descriptions of these activities.
    The use of erosion controls is widely recognized as being the most 
cost-effective way of managing sediment on construction sites. Typical 
practices used to prevent and reduce soil movement include: reducing 
the overall area of disturbed land, minimizing the time soils are 
exposed to precipitation, scheduling clearing and grading events to 
reduce the probability that bare soils will be exposed to rainfall, 
preventing off-site and on-site runoff from eroding soils through the 
use of berms, conveyances or energy dissipation devices, covering soils 
or stockpiles, stabilizing exposed soils as soon as possible, and 
inspecting and maintaining erosion controls on a periodic basis, e.g., 
after each storm event. Vegetative stabilization using annual grasses 
is the most common practice used to control erosion. Polymers, physical 
barriers such as geotextiles, straw, and mulch are other common methods 
of controlling erosion.
    Despite the proper use of erosion controls, some sediment 
detachment and movement is inevitable. Sediment controls are used to 
control (direct) and trap sediment that is entrained in runoff. Typical 
sediment controls include perimeter controls such as silt fences 
constructed with filter fabric, straw bale dikes, berms or swales. 
Trapping devices such as sediment traps and basins and inlet protectors 
are examples of in-line sediment controls. Sediment traps and basins 
are the primary method used to treat and settle out sediment for small 
and large disturbed areas.
    Construction site operators manage building materials and waste to 
reduce and eliminate potential water quality impacts. Construction 
materials and chemicals should be handled, stored and disposed of 
properly to avoid contamination of runoff. Site management plans 
typically include elements such as spill prevention and remediation 
plans, nutrient management plans for vegetative stabilization efforts, 
and provisions for human waste disposal, e.g., portable toilets.

C. Long-Term Storm Water Management Control

1. Goals
    After completion of construction, a variety of measures have been 
adopted to prevent flooding and achieve local resource protection 
goals, such as groundwater recharge or maintaining stream stability. 
For example, BMPs are often integrated into the overall site design, 
and generally approved by the local government. A number of States have 
developed storm water BMP selection and design criteria for use in 
their state. In addition, the Water Environment Federation (WEF) and 
the American Society of Civil Engineers (ASCE) have developed a 
methodology for storm water BMP design. (Water Environment Federation 
and the American Society of Civil Engineers, ``Urban Runoff Quality 
Management.'' 1998. WEF Manual of Practice No. 23 and ASCE Manual and 
Report on Engineering Practice No. 87. Available for purchase at http:/
/www.wef.org and http://www.asce.org).
2. Major Categories of Best Management Practices
    Planning and site design are important to ensure the selection of 
site designs that will meet the needs of the owner and be compatible 
with local infrastructure. State and local governments have a primary 
role in ensuring proper planning and the design of structural storm 
water runoff conveyance and treatment systems.
    Under any design approach, runoff flow paths are designed to route 
the runoff though functional landscaped areas or structural BMPs that 
store, infiltrate, evaporate, and slow the velocity of the runoff. 
Storage basins, swales, bioretention cells (highly permeable engineered 
soils planted with vegetation), grading to alter topography, increase 
infiltration and decrease erosion, and depression storage are the most 
typical practices used to manage runoff and reduce pollutant loadings. 
More innovative practices include rooftop storage, ``green'' roofs 
(landscaped roof systems designed to store and treat storm water), re-
vegetation, rainwater capture and reuse, street filters (systems for 
treatment of street and highway runoff), and soil amendments.\5\
---------------------------------------------------------------------------

    \5\ Low Impact Development (LID) is a site design approach that 
incorporates conservation techniques along with an integrated set of 
small site-level landscape runoff treatment and control features 
that are uniformly distributed throughout the site in order to 
prevent runoff pollution and reduce the impacts of development and 
redevelopment activities on water resources. (``Low Impact 
Development Design Strategies: An Integrated Design Approach,'' EPA 
841-B-00-003, January 2000. Available on EPA's website at http://
www.epa.gov/owow/nps/urban.html). Approaches similar to LID, 
although sometimes using different terminology, include ``Better 
Site Design'' (``Introduction to Better Site Design.'' Article no. 
45 in The Practice of Watershed Protection. Center for Watershed 
Protection, Ellicott City, MD, 2000. http://
www.stormwatercenter.net) and ``Infiltration Approach'' (``Start at 
the Source: Design Guidance Manual for Stormwater Quality 
Protection,'' Bay Area Stormwater Management Agencies Association, 
Oakland, CA, 1999).
---------------------------------------------------------------------------

    Pollution prevention practices are often called source reduction 
practices or ``non-structural'' BMPs. Education, training as well as 
proper inspections and maintenance are the primary methods to achieving 
pollution prevention objectives. Information dissemination via outreach 
efforts, professional training, licensing and certification combined 
with effective voluntary incentives, enforcement and compliance efforts 
are essential to good practice. Product substitution or the use of 
alternative methods and practices are also considered facets of 
pollution prevention.

[[Page 42656]]

IX. Development of Effluent Limitation Guidelines and Standards

A. Industry Subcategorization

    EPA may divide a point source category into groupings called 
``subcategories'' to provide a method for addressing variations between 
products, processes, and other factors which result in distinctly 
different effluent characteristics. Regulation of a category by using 
formal subcategories provides that each subcategory has a uniform set 
of effluent limitations that take into account technological 
achievability and economic impacts unique to that subcategory. In some 
cases, effluent limitations within a subcategory may be different based 
on consideration of these same factors which are identified in section 
304(b)(2)(B) of the CWA, 33 U.S.C. 1314(b)(2)(B). The CWA requires EPA, 
in developing effluent limitation guidelines and pretreatment 
standards, to consider a number of different factors, which are also 
relevant for subcategorization. The statute also authorizes EPA to take 
into account other factors that the Agency deems appropriate. One 
potential benefit of grouping similar facilities into subcategories is 
the increased likelihood that the regulations will be practicable, and 
it diminishes the need to address variations between facilities through 
a variance process (Weyerhaeuser Co. v. Costle, 590 F.2d 1011, 1053 
(D.C. Cir. 1978)).
    In preparing today's proposal, EPA considered several ways of 
subcategorizing the construction and development industry. Methods 
considered by the Agency include subcategorization by site size (such 
as disturbed acreage), development type (such as residential, 
commercial, industrial and transportation), re-development vs. 
``greenfield'' development (development on rural or agricultural land), 
geography and hydrology (such as average annual rainfall and soil 
erosivity), as well as builder or developer size (in terms of annual 
revenue, annual units constructed, annual land disturbance, etc.).
1. Subcategorization by Site Size
    EPA is not proposing to subcategorize site sizes of 10 acres or 
more. EPA is concerned, however, that as site sizes decrease below 10 
acres the choice of controls within site design parameters may become 
more limited. For this reason, EPA is proposing in Option 2 to 
establish slightly modified requirements that provide greater 
flexibility for sites disturbing less than 10 acres. Specifically, EPA 
is proposing to require sediment basins where attainable for sites 
disturbing 10 acres or more, while leaving greater flexibility in the 
choice of sediment controls for sites disturbing less than 10 acres. 
EPA requests comment on this proposed subcategorization.
    Under today's proposal, Option 2, which includes both control 
requirements and certification and inspection requirements, would apply 
to sites disturbing 5 or more acres, while Option 1, which includes 
certification and inspection requirements only, would apply to sites 
disturbing 1 acre or more. EPA is not proposing control requirements 
for sites less than 5 acres at this time in order to allow the maximum 
flexibility to the States in balancing the costs, availability, and 
effectiveness of erosion and sediment controls and to provide time for 
the States to demonstrate the effectiveness of permits to control 
discharge of pollutants associated with construction activity 
disturbing one to 5 acres under Phase II. EPA recognizes that this same 
logic may apply to the certification and inspection requirements and 
requests comment on adopting Option 1, but with a cutoff of 5 acres 
rather than 1 acre. More generally, EPA requests comment on the 
appropriate acreage cutoff for both Options 1 and 2.
2. Subcategorization by Industry
    EPA is not, at this time, proposing subcategorization by industry 
or industry group (i.e. residential building, non-residential building, 
heavy construction). EPA recognizes that there are profit differentials 
between industry groups that could affect their economic and financial 
status. Based upon EPA's current cost estimates for the options being 
proposed today, EPA has found these options to be economically 
achievable for all industry groups. EPA is concerned about the 
practical difficulty in defining an appropriate industry portion to be 
subject to alternative standards, or an appropriate industry portion 
for whom the controls being employed today would be technically or 
economically infeasible. Since a large number of development projects 
(especially larger projects) can consist of mixed land uses (such as a 
large residential subdivision built along with a commercial/retail 
center), a subcategorization by industry may also present 
implementation challenges. EPA requests comment on possible industry 
subcategorization and how to address the implementation issues 
associated with such subcategorization.
3. Subcategorization by Builder/Developer Size
    EPA is not, at this time, proposing subcategorization by builder, 
developer or contractor firm size (in terms of annual construction 
output, revenue, or acreage disturbed). Since the dollar value of a 
project or revenue of a builder or developer is not necessarily related 
to site size or disturbed area (due, in part, to differences in various 
markets), EPA has not found a direct correlation between any of these 
factors and the amount of pollutants in storm water discharges to 
receiving waters.
4. Subcategorization Based on Hydrology, Soil Loss Potential or Other 
Geographic Factors
    EPA also considered subcategorizing the industry based on hydrology 
and potential for soil loss, but determined that the existing soil loss 
waiver included in the NPDES Phase II regulations (40 CFR 
122.26(b)(15)(i)(A)) is sufficient for exempting sites with low 
expected soil loss.
    Geographic factors that may be appropriate for subcategorizing the 
industry are based on low expected rainfall, defined periods of dry and 
wet weather, and/or construction during cold weather where the ground 
is frozen. On sites with these characteristics, the Agency expects soil 
erosion to be minimal. Option 2 in today's proposal would continue the 
provision in EPA's current CGP for delaying implementation of site 
stabilization due to these geographic factors. See Sec. 450.21(h).
5. Subcategorization Based on Past Land Use
    EPA considered subcategorization of the industry based on past land 
use, such as classifying redevelopment sites differently from 
``greenfield'' projects. Redevelopment projects present some 
significant challenges in terms of erosion and sediment control due to 
the potential for site constraints and conflicts such as size, 
location, proximity to existing development, pre-development site 
contamination issues, land costs, as well as the nature of surrounding 
development. In addition, redevelopment projects are commonly perceived 
to be preferable to greenfield development, due to the proximity of 
redevelopment sites to existing infrastructure, the need to revitalize 
older neighborhoods, and the potential for providing significant 
economic stimulus to existing neighborhoods. As a result, many 
communities offer incentives in order to encourage redevelopment 
projects and to make the

[[Page 42657]]

economics of the project viable. Imposition of expensive storm water 
and erosion control requirements in such cases, in light of the 
constraints present, may inflict costs that render some projects to be 
economically unattractive to a developer. EPA does not believe that the 
level of controls being proposed in Option 2 today will be a 
significant disincentive to redevelopment. Much of the redevelopment 
occurring in urban areas involves sites of less than 5 acres in 
disturbed land. For the redevelopment that exceeds that site size, EPA 
believes that it is appropriate to require a comparable level of 
erosion and sediment control as is provided at greenfield sites. The 
design and implementation of those controls, while comparable, may be 
very different for a site that has the advantage of existing stormwater 
management infrastructure than for other sites. In either case, EPA 
believes that the requirements being proposed provide sufficient 
flexibility to allow affordable choices for both greenfield development 
and redevelopment activities.

B. Regulatory Options Considered

    In developing today's proposal, EPA initially evaluated several 
regulatory options for both erosion and sediment control and other 
temporary BMPs, storm water management, and options that would not 
establish effluent limitation guidelines regulations. The erosion and 
sediment control (ESC) options represent the controls that are 
typically temporary and are used during the land-disturbing activities. 
The storm water management options represent the long-term (permanent) 
storm water controls that are designed and installed by the C&D 
industry at the time of construction but are intended to reduce long-
term storm water impacts.
    The following sections of today's document discuss the regulatory 
options that EPA considered for today's proposal. Section X describes 
the specific options contained in today's proposal.
1. Overview of Regulatory Options: Erosion and Sediment Controls and 
Other Temporary BMPs
    For erosion and sediment control and other temporary BMPs, EPA 
considered a series of regulatory options. These options are designed 
to control the discharge of sediment, storm water and other pollutants 
from sites when construction is taking place. Construction and 
development activity involves land disturbed from previous uses such as 
agriculture or forest lands, or occurs as redevelopment of existing 
rural or urban areas. During the construction process, vegetation or 
surface cover is typically removed and soils become more available for 
transport and discharge from construction sites. Today's proposal 
provides regulatory tools to improve management and control on 
construction sites to reduce and minimize soil, storm water, and 
pollutant transport and discharge from construction sites.
    EPA initially considered a range of options that incorporate 
varying levels of management and various control strategies for sites 
of 1 acre or more. During the Agency's outreach activities in advance 
of proposal, small entity representatives expressed concern over the 
complexity of overlapping and potentially inconsistent Federal, State, 
and local storm water regulations. These individuals questioned whether 
it was appropriate to be considering additional Federal storm water 
regulations at such an early stage in implementation of the existing 
storm water program. They further questioned EPA's assumptions 
regarding the level of control that would be achieved by sites less 
than 5 acres under the NPDES Phase II requirements, pointing out that 
the compliance deadline for those sites has not yet passed.
    As EPA evaluated the options for erosion and sediment controls and 
other temporary BMPs, the Agency examined the merit of excluding sites 
less than 5 acres at this time. EPA estimates that while only 30 
percent of sites developed each year are 5 acres or more, these sites 
represent over 80 percent of the disturbed acreage. The Agency believes 
that the phased approach to issuing permits for construction and 
development has allowed, and will continue to allow, EPA and States to 
improve coordination, communication, and implementation of requirements 
in a more strategic way. By focusing first on the larger sites, EPA and 
the States are focusing resources on the universe of sites that have 
the greatest potential for reducing discharge of pollutants to surface 
waters. These sites generally have more control alternatives than 
smaller sites, and greater flexibility in designing erosion and 
sediment controls that work within overall site parameters. 
Implementation of erosion and sediment controls under the NPDES Phase I 
storm water rule has demonstrated that even though controls may be more 
limited for sites as small as 5 acres, sufficient alternatives are 
available to provide significant control. Indeed, while many of the 
erosion and sediment control practices are not dependent on site size, 
others (such as sediment basins) are not always appropriate for smaller 
sites. Other factors also affect the availability of certain control 
practices. As the site size decreases, the proportion of sites that are 
``in-fill'' projects constructed between currently-developed 
properties, or redevelopment of existing properties, likely increases. 
These projects present some significant challenges in terms of erosion 
and sediment control due to the potential for site constraints, land 
availability and costs, proximity to existing development, as well as 
the nature of surrounding development. EPA is proposing not to 
establish effluent limitation guidelines for sites smaller than 5 acres 
at this time in order to allow the maximum flexibility to the States in 
balancing the costs, availability, and effectiveness of erosion and 
sediment controls and to provide time for the States to demonstrate the 
effectiveness of permits to control discharge of pollutants associated 
with construction activity disturbing one to 5 acres under Phase II. 
The following discussion presents the options that EPA considered for 
erosion and sediment controls and other temporary BMPs.

 Codify the EPA Construction General Permit

    EPA considered an option (a variation on Option 2 being proposed 
today) that would essentially codify the provisions contained in EPA's 
construction general permit (CGP) as minimum national standards for 
erosion and sediment control (i.e., for all states, not only those with 
EPA as permitting authority). The CGP requirements that would be 
codified include preparing a Storm Water Pollution Prevention Plan 
(SWPPP) or equivalent, provisions for installing and sizing sediment 
basins on sites with more than 10 acres of disturbed land, requirements 
for providing cover on exposed soil areas within 14 days after 
construction activity has ceased, and installation and maintenance of 
other erosion and sediment control practices and other temporary BMPs 
on all construction sites.

 Codify the EPA Construction General Permit, Require Self-
Inspection and Certification

    EPA considered an option (being proposed today as Option 2) that 
would essentially codify the provisions contained in EPA's construction 
general permit (CGP) as minimum national standards for erosion and 
sediment control and add inspection and certification requirements to 
improve operator accountability. The CGP requirements that would be 
codified are

[[Page 42658]]

the same as in the previous option. In addition, EPA incorporated 
mandatory site inspection, maintenance and reporting provisions by site 
owners and operators in order to improve confidence in the 
implementation and performance of construction site erosion and 
sediment controls in this option. These certification provisions may be 
accomplished either through self-inspection by a qualified employee of 
the owner and operator (such as a professional engineer or person 
trained in erosion and sediment control techniques) or inspection by a 
third-party (such as a consulting firm). The certification provisions 
would consist of a checklist-type certification form that the permittee 
would be required to complete at various stages of the project to 
certify that the provisions contained in the permittee's SWPPP are 
being implemented. Permittees would be required to conduct periodic 
inspections in order to confirm that the permittee is conducting the 
maintenance necessary to maintain the functionality of BMPs. The 
specific activities requiring certification include: SWPPP preparation; 
installation of perimeter controls and sediment controls; site 
inspections every 14 days; final stabilization of exposed soils and 
removal of temporary erosion & sediment controls. The certification and 
inspection forms would be retained on the site, and made available to 
the permitting authority and the public upon request. This option is 
being proposed as Option 2 in today's document (see section X).

 Numerical Design Requirements

    EPA considered an option that would establish numerical 
requirements for the design of sediment basins and traps that would 
vary based on local or regional rainfall patterns and site-specific 
soil types. However, EPA determined that there were insufficient data 
available to establish national criteria of this type, and therefore 
did not include this requirement in today's proposed rule. In addition, 
this approach would be a significant departure from the current CGP 
sizing requirements, which establishes a requirement a calculated 
volume of runoff from a 2-year, 2-hour storm, or for 3,600 cubic feet 
of storage per acre, for all sites of 10 or more acres.

 Numerical Pollutant Removal Requirements

    EPA considered options that would contain numerical requirements 
for the removal of specific pollutants from construction site runoff. 
EPA initially considered targeting a variety of pollutants including 
sediment, TSS, turbidity, nutrients, metals and other priority 
pollutants. EPA considered a regulatory option that would establish 
numerical removal criteria for sediment, or an associated indicator 
parameter such as total suspended solids (TSS), suspended sediment 
concentration, settleable solids, or turbidity. This option could be 
expressed as either a percent removal through sediment controls (such 
as sediment basins or traps), or as a total site reduction 
(incorporating consideration of sheet flow and diffuse runoff in 
addition to discrete conveyances). However, EPA did not consider this 
approach to be a viable regulatory option due to several factors. The 
stochastic nature of rainfall and runoff makes verification of the 
design standards difficult. In some cases, the nature of local rainfall 
and runoff characteristics make it difficult to even design BMPs to a 
specified performance level. In addition, site-specific soil conditions 
greatly influence the amount of sediment mobilized during runoff 
events, and the soil settling characteristics greatly influence the 
performance of sediment controls. Designing an entire suite of erosion 
and sediment controls for a site to perform to a specified level would 
likely require the use of a computer model, which could add significant 
costs with little assurance of increased effectiveness. Similarly, 
monitoring to verify attainment of numerical requirements can also be 
very difficult (see ``Discharge Monitoring,'' below) with little 
demonstrated benefits. As a result, EPA did not consider numeric 
pollutant control requirements a viable option.
    In addition to establishing numerical requirements for the control 
of sediment, EPA preliminarily considered establishing requirements for 
removing fine-grained and slowly-or non-settleable particles contained 
in construction-site runoff (such as turbidity). This option would 
likely have relied primarily on chemical treatment of soils or 
construction site runoff using polymers or coagulants such as alum in 
order to prevent the non-settleable fractions of solids from being 
transported off-site. EPA did not pursue this option due to the concern 
over possible adverse environmental effects of widespread usage of 
chemical or polymer treatment of soils and, therefore, does not present 
costs, pollutant removals, or economic impacts associated with such an 
option. However, EPA recognizes that at some sites use of chemical 
treatment may be appropriate based on a site-specific determination. 
The Agency solicits comment and data on the possible long-term 
environmental effects associated with this option.
    EPA also evaluated the inclusion of separate requirements for 
controlling priority toxic pollutants, pesticides and pathogens in 
construction site runoff. If these pollutants are present as a result 
of construction activities themselves, the most appropriate means of 
control is typically through the use of source control and pollution 
prevention BMPs, which are already addressed in the existing NPDES 
regulations through the MS4 permit requirements. The Agency has been 
unable to identify any additional BMPs that are technically and 
economically feasible for use at construction sites that would remove 
these pollutants once they are in the water column. Therefore EPA does 
not present costs, pollutant removals, or economic impacts associated 
with such a separate option. Hence, EPA proposes to control the 
discharge of any such pollutants that may be associated with 
construction activity only to the extent that control of TSS will also 
control these pollutants. EPA is, however, planning to conduct 
additional sampling activities to evaluate the frequency of occurrence 
and levels of these pollutants and their sources in construction site 
runoff for the final rule. EPA solicits data and comments on the 
frequency of occurrence and levels of pollutants found in construction 
site runoff, as well as BMPs that can cost-effectively remove these 
pollutants from runoff when present.

 Discharge Monitoring

    EPA considered the inclusion of monitoring requirements for 
evaluating the effectiveness of erosion and sediment controls. 
Monitoring of storm water discharges from construction sites could be 
used to evaluate the effectiveness of individual sediment controls 
(such as sediment basins), or monitoring the receiving water above and 
below construction sites could be used to monitor the effects of an 
entire site on ambient water quality. Monitoring requirements could be 
incorporated with any of the previously discussed regulatory options 
considered. Since EPA's preferred approach for addressing construction 
site storm water does not rely on the performance of individual 
sediment controls but rather on the combined performance of a suite of 
erosion and sediment controls, monitoring the effectiveness of 
individual controls is not appropriate. Monitoring the effectiveness of 
the overall erosion and sediment control requirements specified in 
today's proposal would be very difficult at the majority of 
construction

[[Page 42659]]

sites. In order to demonstrate that the erosion and sediment control 
provisions at the site are achieving a stated overall percent reduction 
in sediment discharge would likely require monitoring of every 
discharge point on the site, or monitoring the receiving water above 
and below the construction site. The high degree of variability in site 
parameters, regional and site-specific rainfall, and erosion and 
sediment control effectiveness would, in all likelihood, make 
specification of standard storm water monitoring requirements 
impractical for a national regulation. The constantly-changing state of 
construction sites due to the action of construction equipment would 
present significant challenges in terms of monitoring equipment set-up 
and maintenance. The stochastic nature of storm events would likely 
require a dedicated staffing effort on the part of the construction 
site operator in order to ensure preparedness of the sampling equipment 
for capturing runoff events. In addition, many sites discharge to an 
existing storm drain system, making monitoring of the receiving water 
infeasible. All of these factors would add significant expense to the 
construction process, with little or no added assurance in the 
effectiveness of control measures or expected environmental benefits. 
As a result, EPA is not including discharge monitoring with today's 
proposal. Permitting authorities may include discharge monitoring 
requirements in permits, where it may be practical to specify sampling 
and monitoring procedures that are appropriate for local conditions.
2. Overview of Regulatory Options: Certification and Inspection
    During the Agency's outreach activities, EPA received many comments 
that an effluent guideline was unnecessary for sites covered by the 
NPDES Phase I storm water regulations, and untimely for sites that 
would be covered by the Phase II requirements. These commenters 
believed that the erosion and sediment control requirements currently 
being established through best professional judgement by the permitting 
authorities are appropriate in that they can be more effectively 
tailored to regional and local conditions and respect traditional State 
and local authority over land use management. Some of the commenters 
stated, however, that implementation of these State and local 
requirements is not uniform. These commenters expressed concern that 
State and local government resources are insufficient to provide 
compliance monitoring on a timely basis, particularly where inspections 
by government officials are the primary mechanism for ensuring that 
controls are installed and maintained. As a result, according to this 
view, the effectiveness of the program hinges on the amount of 
attention and oversight provided by the operator, and the knowledge and 
training that the operator has received.
    As a result of these comments, EPA considered an option that would 
not establish ELGs at this time, but would rather require site 
inspection, maintenance and reporting by site owners and operators in 
order to improve confidence in the implementation and performance of 
construction site erosion and sediment controls. This option would 
include a maintenance record of site activities, including 
certification that plans required by the permit meet all erosion and 
sediment control requirements, certification that inspection, 
stabilization and maintenance requirements have been satisfied, and 
certification by a qualified professional that BMPs have been 
adequately designed, sized and installed. This option would also 
include a requirement that the operator or designated agent conduct 
regular inspections to ensure that erosion and sediment control BMPs 
are maintained in working order. The certification and inspection forms 
would be retained on the site, and made available to the permitting 
authority upon request. (See section XVIII of today's document for more 
information on compliance paperwork and implementation.)
    EPA developed this option as a mechanism that might improve 
implementation of existing requirements. During Agency outreach 
conducted in advance of today's proposal, some small entity 
representatives commented that the problem with existing erosion and 
sediment control requirements is not the lack of standards, but rather 
the lack of adequate implementation and enforcement, including 
education, bid solicitation and evaluation, proper design, 
installation, and maintenance of BMPs, and inspection. One small entity 
representative cited a recent article,\6\ which found that contractors 
are not following good installation and maintenance practices, and 
recommended more inspection and education be instituted to remedy the 
problems, instead of additional substantive regulatory requirements. 
EPA believes that one way to implement this recommendation is by 
increasing site accountability for implementation to ensure that 
corrective steps are taken as appropriate to ensure that practices 
perform as designed. For example, inspection of perimeter silt fences 
can identify sections in need of repair or replacement to ensure 
sediment containment. Because this option is not linked to specific 
levels of performance, but applicable to any requirements that are 
established by the permit writer, EPA believes that it may be 
appropriate for sites between one and five acres as well as for sites 
of five acres or more. This option is proposed today for all sites of 
one acre or more as Option 1, and would amend the NPDES permit 
regulations at 40 CFR 122.44. See section X for a description of the 
options proposed. EPA also recognizes that this option may impose 
disproportionate costs on small operators who may have to rely on 
outside consultants to perform certifications and inspections. One way 
to reduce overall burden, including burden on small operators, while 
covering the majority of disturbed acreage would be to limit the scope 
of this option to sites of 5 acres or more. This would establish 
certification and inspection requirements for 80 percent of the 
disturbed acres. EPA thus solicits comment on limiting the scope of 
this option to sites of five acres and above. Under this approach, 
sites below 5 acres would continue to be governed by certification and/
or inspection requirements based on the BPJ of the permitting 
authority.
---------------------------------------------------------------------------

    \6\ Robert G. Paterson, ``Construction Practices: The Good, The 
Bad and the Ugly.'' Article no. 60 in The Practice of Watershed 
Protection. Center for Watershed Protection, Ellicott City, MD, 
2000. Available at http://www.stormwatercenter.net.
---------------------------------------------------------------------------

3. Overview of Regulatory Options: Continued Reliance on State and 
Local ESC Programs
    EPA is also proposing an option under which no additional national 
regulations would be established at this time. Rather, EPA would 
continue to rely on existing State and local programs to establish 
appropriate sediment and erosion control requirements for permitted 
construction sites, either on a BPJ basis or in accordance with 
applicable regulations, ordinances, land use plans, etc. Under this 
option, EPA could provide additional support for training and education 
of construction and development operators, municipalities and State 
regulators, in order to improve the effectiveness of existing programs. 
This would build on the existing regulatory framework by preserving 
State and local flexibility to tailor specific requirements to regional 
and local conditions while at the same time benefitting from enhanced 
technical

[[Page 42660]]

assistance and the latest information about emerging ESC technologies 
and their effectiveness. This option is being proposed as Option 3.
4. Overview of Regulatory Options Considered: Long-Term Storm Water 
Management
    EPA evaluated several regulatory options for control of long-term 
storm water discharges from development projects. These options are 
designed to control the discharge of sediment, storm water and other 
pollutants from sites after construction is completed. EPA specifically 
considered numerical design standards for the removal of specific 
pollutants (e.g., 80 percent TSS removal), limitations on post-
development flows (e.g., maintain peak flows at pre-development 
levels), and BMPs to address thermal loadings to sensitive cold water 
streams. EPA is not proposing any of these options today. The choice of 
such controls, whether at a specific site or through regional storm 
water management infrastructure, has historically been left to State 
and local governments. These governments use a variety of regulatory 
and non-regulatory programs (such as land use planning) to address 
post-construction storm water flows in order to protect infrastructure 
and achieve local resource goals. A summary of existing State programs 
is included in the rulemaking record. Some States and municipalities 
rely on traditional approaches, such as retention ponds and 
infiltration basins. Other States and municipalities are pursuing 
approaches that will encourage regional planning, lower impact 
development, and other progressive programs to reduce not only the 
pollutant run-off from the site, but to protect receiving streams from 
the intensity of runoff that has accompanied urbanization. Many of 
these approaches do not lend themselves to uniform standards, but 
require integration with land use decisions and site design. EPA 
supports these approaches, and does not want to limit the flexibility 
that can be afforded at the local level while advances are being made. 
Moreover, the options EPA explored for a national ELG would have been 
very expensive if calculated on a total industry cost basis. Given the 
variety of approaches being attempted across the country and the 
expense of imposing uniform post-construction controls, EPA considers 
it inappropriate to propose an ELG for long-term storm water management 
at this time. Instead, EPA has decided to confine the proposed ELG to 
controls on discharge of pollutants associated with construction 
activity during the active construction phase, and to maintain the 
traditional reliance on State and local programs to control long-term 
storm water management. At the same time, EPA is concerned that States 
and municipalities be provided the tools to assess the variety of 
practices that are available today for long-term storm water 
management. Much of the technical data that EPA collected in evaluating 
these options will be made available in the rulemaking record.

X. Determination of Best Practicable Control Technology Currently 
Available (BPT), Best Conventional Pollutant Control Technology (BCT), 
Best Available Technology Economically Achievable (BAT), and New Source 
Performance Standards (NSPS)

    As discussed in section III.D of today's document, in the 
guidelines for an industry category, EPA defines BPT effluent limits 
for conventional, toxic (priority), and non-conventional pollutants for 
direct discharging facilities. For the BPT cost-reasonableness 
assessment in today's proposal, EPA used the total pounds of TSS 
removed.

A. Rationale for Selected BPT Option

    EPA estimates that construction sites annually discharge 80 million 
tons of TSS into the surface waters of the United States. As a result 
of the quantity of pollutants currently discharged directly to the 
nation's waters and the adverse environmental effects of these 
discharges (see section VIII.B of today's document), EPA determined 
that there may be a need for BPT regulation for the construction and 
development category.
    At the same time, EPA recognizes that many States are examining the 
permit requirements they are establishing in light of their experience 
with the storm water program to date. EPA's estimates of pollutant 
discharges today are significantly lower than estimates at the time EPA 
issued the CGP. EPA is therefore co-proposing not to establish BPT 
requirements for the C&D category, but to allow and encourage fuller 
implementation of the current storm water program. This co-proposal 
takes two forms, one in which EPA essentially codifies the inspection 
and certification provisions discussed in section IX (hereinafter 
called Option 1), and one in which EPA does not amend the national 
storm water regulations at this time, but instead continues to rely on 
BPJ requirements tailored to regional and local conditions as 
determined by the permitting authority (hereinafter called Option 3).
    As one option, the Agency is proposing codification of the CGP with 
inspection and certification as the basis for BPT (Option 2). EPA's 
decision to co-propose BPT limitations based on this option reflects 
the following primary factors: (1) The degree of effluent reductions 
attainable, (2) the total cost of the proposed option in relation to 
the effluent reductions achieved, and (3) the maturity of the NPDES 
program as it pertains to construction activity at sites of 5 acres or 
greater. EPA estimates that this option will reduce pollutant 
discharges to waters of the United States by 22 billion pounds per year 
at a cost of $505 million. EPA believes this option does not create 
unacceptable deleterious non-water quality environmental impacts.
    EPA has not identified a basis for formulating different BPT 
limitations based on facility age, process or other engineering 
factors. The most pertinent factors for establishing the limitations 
are costs of the controls, the level of effluent reduction benefits 
obtainable, and the current state of the NPDES program.
    As described in section IX of today's document, EPA is proposing 
this option for sites of five acres or more. EPA is not proposing to 
establish effluent limitation guidelines for sites of less than five 
acres at this time for the reasons described in section IX.
    EPA is also considering the option (discussed in section IX) that 
would codify the CGP without adding the inspection and certification 
requirements. Although EPA believes that inspection and certification 
requirements will help ensure the proper design, installation, and 
maintenance of erosion and sediment controls, EPA recognizes that 
including specific certification and inspection requirements in 
national regulations is not the only way to accomplish this objective. 
EPA could instead leave the establishment of such requirements to the 
BPJ of the permitting authority, consistent with State and local 
program requirements. Including specific certification and inspection 
requirements in co-proposed Option 2 accounts for $65 million per year 
of the $505 million per year cost of this option. EPA is interested in 
minimizing recordkeeping and reporting burdens to the extent that 
substantive performance is not jeopardized. EPA solicits comments on 
less costly means of ensuring the performance of erosion and sediment 
controls and the merits of leaving the establishment of specific 
certification and inspection requirements to the BPJ of the permitting 
authority. EPA solicits comment on the option of codifying the CGP 
without adding specific national

[[Page 42661]]

certification and inspection requirements. Under this option, 
Secs. 450.21(f) and (g) would be removed from the proposed rule 
language, except the first sentence of Sec. 450.21(g)(1) which would be 
retained.

B. BCT Determination

1. July 9, 1986 BCT Methodology
    The BCT methodology, promulgated in 1986 (51 FR 24974), discusses 
the Agency's consideration of costs in establishing BCT effluent 
limitation guidelines. EPA evaluates the reasonableness of BCT 
candidate technologies (those that are technologically feasible) by 
applying a two-part cost test:
    (1) The publicly-owned treatment works (POTW) test; and
    (2) The industry cost-effectiveness test.
    In the POTW test, EPA calculates the cost per pound of conventional 
pollutant removed by industrial dischargers in upgrading from BPT to a 
BCT candidate technology and then compares this cost to the cost per 
pound of conventional pollutant removed in upgrading POTWs from 
secondary treatment. The upgrade cost to industry must be less than the 
POTW benchmark of $0.25 per pound (in 1976 dollars).
    In the industry cost-effectiveness test, the ratio of the 
incremental BPT to BCT cost divided by the BPT cost for the industry 
must be less than 1.29 (i.e., the cost increase must be less than 29 
percent).
2. Consideration of BCT Option
    For today's proposed rule, EPA considered whether or not to 
establish BCT effluent limitation guidelines for C&D sites that would 
attain incremental levels of effluent reduction beyond BPT for TSS. EPA 
was not able to identify a technically feasible, discrete addition to 
the BPT technology that would achieve additional TSS reductions and 
would be applicable nationally. For construction site erosion control, 
additional conventional pollutant removals would require the use of 
chemical treatments such as polyacrylamide (PAM) or alum. As described 
in section IX.C of today's document, the Agency recognizes that these 
treatments are used in some parts of the country, but has insufficient 
information about the environmental effects of the treatments to 
recommend requiring their use nationwide. Therefore, EPA did not apply 
the BCT Cost Tests and is co-proposing that BCT be set equivalent to 
BPT limitations (i.e., Option 2).

C. BAT and NSPS

    EPA generally considers the following factors in establishing the 
best available technology economically achievable (BAT) level of 
control: The age of process equipment and facilities, the processes 
employed, process changes, the engineering aspects of applying various 
types of control techniques, the costs of applying the control 
technology, economic impacts imposed by the regulation, non-water 
quality environmental impacts such as energy requirements, air 
pollution and solid waste generation, and other such factors as the 
Administrator deems appropriate (section 304(b)(2)(B) of the Act). In 
general, the BAT technology level represents the best existing 
economically achievable performance among dischargers with shared 
characteristics. In making the determination about economic 
achievability, the Agency takes into consideration factors such as 
plant closures and product line closures. Where existing wastewater 
treatment performance is uniformly inadequate, BAT technology may be 
transferred from a different subcategory or industrial category. BAT 
may also include process changes or internal plant controls which are 
not common industry practice.
    EPA considered the same option for BAT as discussed under BCT. The 
Agency is unaware of any additional technically feasible and 
economically achievable technologies for the removal of toxics (i.e., 
priority metals and organic chemicals) and non-conventional pollutants 
under BAT beyond those considered for BPT. As discussed in section IX.C 
of today's document, EPA initially considered the use of chemical 
treatment of soils or the addition of polymers (such as PAM) or 
coagulants for the removal of toxics and non-conventional pollutants. 
However, due to the concern over the unknown environmental effects of 
widespread usage of such treatment, EPA did not give this option 
further consideration. EPA is co-proposing BAT limitations equivalent 
to BPT (Option 2).
    When developing NSPS, EPA generally considers that new facilities 
have the opportunity to incorporate the best available demonstrated 
technologies including process changes, in-plant controls, pollution 
prevention, and end-of-pipe treatment technologies.
    The NSPS co-proposed in today's rule would apply to new sources as 
defined in Sec. 450.11. EPA proposes to define ``new source'' for 
purposes of part 450 as any source of storm water discharge associated 
with construction activity that results in the disturbance of at least 
five acres total land area that itself will produce an industrial 
source from which there may be a discharge of pollutants regulated by 
some other new source performance standard elsewhere under subchapter 
N. (All new source performance standards promulgated by EPA for 
categories of point sources are codified in subchapter N.)
    The definition of new source proposed today for purposes of part 
450 would mean that the land-disturbing activity associated with 
constructing a particular facility would not itself constitute a ``new 
source'' unless the results of that construction would yield a ``new 
source'' regulated by other new source performance standards. For 
example, construction activity that is intended to build a new 
pharmaceutical plant covered by 40 CFR 439.15 would be subject to new 
source performance standards under Sec. 450.24.
    EPA also seeks comment on whether no sources associated with C&D 
activity should be deemed ``new sources.'' EPA may decline to establish 
NSPS on the grounds that construction activity itself is outside the 
scope of those activities intended to be covered by CWA section 306. 
(``The term `new source' means any source, the construction of which is 
commenced * * *'' 33 U.S.C. 1316(a)(2)(emphasis added)). Because EPA 
has co-proposed to set NSPS equivalent to BPT, the Agency expects that 
this would not result in any substantive increase or decrease in the 
limitations imposed on any C&D activity.
    EPA's proposed approach to defining ``new sources'' is based 
largely on the structure of the CWA. Under the CWA, a source may not be 
a ``new source'' under section 306(a)(3) unless there is or may be a 
discharge of pollutants from the constructed facility. A discharge of 
pollutants means an addition of any pollutant to navigable waters from 
any point source, i.e., any discernible, confined and discrete 
conveyance such as a pipe, ditch or channel. See CWA section 502(12) & 
(14). Section 306(b) of the CWA itself includes a list of industries 
for which EPA was directed to address with NSPS. EPA proposes to treat 
all sources from which there may be a discharge associated with 
construction activity disturbing five acres or greater that will result 
in a ``new source'' as ``new sources'' themselves.
    There may be situations when a newly-constructed direct discharging 
point source would fall within an industrial category or subcategory 
for which EPA has not promulgated NSPS; In that case, the discharge 
associated

[[Page 42662]]

with the construction activity would be subject to BPT limitations 
outlined in Sec. 450.21. Substantively, these limitations are identical 
to those imposed on ``new sources'' under this proposed rule.
    EPA is interested in any comments on these, or other possible 
definitions of new source in this rule and is especially interested in 
comments regarding EPA's legal authority to take either of these 
approaches, the environmental benefits of these approaches and the 
potential implications these approaches may have on administration of 
the NPDES permit program.

D. Summary of Provisions in Today's Proposed Rule

    The provisions in today's proposed rule are discussed 
programmatically rather than in the order of the numbered options.
1. General Provisions and SWPPP Preparation
    Option 2 in today's proposal includes a number of specific 
provisions for preparation of Storm Water Pollution Prevention Plans 
(SWPPPs) based principally on EPA's current Construction General Permit 
(CGP). EPA is also proposing some additional provisions for inclusion 
in SWPPPs.
    Options 1 and 3 do not include specific provisions for preparation 
of a SWPPP. However, under these options sites would continue to be 
governed by existing permit requirements. All individual permits, EPA-
issued general permits, and most State-issued general permits for 
discharges associated with construction activity five acres of greater 
require the preparation of a SWPPP or similar pollution prevention 
documentation.
    The CGP requires owners and operators of construction sites subject 
to regulation to prepare a SWPPP that, among other things, describes 
the BMPs to be selected to control runoff during the land-disturbing 
phase (erosion and sediment controls). While the SWPPP terminology is 
used in EPA-issued CGPs, States need not use the SWPPP terminology. 
Instead, States may require alternate documents that are equivalent to 
SWPPPs. Examples include erosion and sediment control plans, storm 
water management plans, or other documents. EPA has conducted an 
evaluation of State-level erosion and sediment control regulations, and 
found that the majority of States include provisions equivalent to 
those contained in the EPA CGPs. As a result, the requirements co-
proposed under Option 2 today can be incorporated into SWPPPs, or 
alternate documents that are equivalent to a SWPPP, as long as these 
documents address all of the provisions contained in today's proposal.
    The requirements co-proposed today do not preclude permitting 
authorities and State, County and Municipal erosion and sediment 
control regulations or ordinances from including additional or more 
stringent requirements, nor do they replace existing requirements that 
are more stringent.
    Section 450.21(d) contains the requirements for preparing a SWPPP 
under Option 2. Explanations are provided below for selected 
provisions.
     Section 450.21(d)(1). Narrative description of the 
construction activity. Although not an explicit requirement, EPA 
presumes that any individual activity on the site that will result in a 
disturbance of more than 1,000 square feet of land will be treated as a 
``significant'' disturbance of soils and will be described in the 
SWPPP.
     Section 450.21(d)(2). General location map and site map. 
In most cases, a site drawing prepared along with the erosion and 
sediment control plan is appropriate. The site map shall be of 
sufficient scale and detail to allow easy identification of individual 
erosion and sediment controls and storm water BMPs, as well as 
delineation of drainage pathways. In many jurisdictions, local agencies 
specify a map scale for preparation of site drawings.
     Section 450.21(d)(3). Description of available data on 
soils present at the site. This type of information may be obtained 
from soil surveys conducted during the initial stages of project 
formulation, which may be needed for evaluating the engineering 
properties of soils. Information of this type might also be collected 
during initial investigations of a site, commonly referred to by the 
industry as ``due diligence'' procedures or a ``Phase I'' or ``Phase 
II'' environmental site assessment.\7\
---------------------------------------------------------------------------

    \7\ The phases referred to in this instance describes a step in 
an environmental site assessment (ESA) process, not the NPDES 
``Phase I'' of ``Phase II'' storm water regulations. ASTM 
International (formerly known as the American Society for Testing 
and Materials) has published recommended ESA procedures as standard 
no. E1527-96. http://www.astm.org
---------------------------------------------------------------------------

     Section 450.21(d)(4). Description of BMPs to be used to 
control pollutants in storm water discharges during construction. The 
operator may reference a State erosion and sediment control design 
manual used to design BMPs as an abbreviated method for a fuller 
description of the BMPs in the SWPPP. Such references should cite 
specific BMP references and/or specifications in the manual.
     Section 450.21(d)(5). Description of the general timing 
(or sequence) in relation to the construction schedule when each BMP is 
to be implemented. Although approximate dates are useful, they are not 
necessary. General descriptions are acceptable. For example, one might 
describe an installation of a BMP as follows: ``sediment basins will be 
installed prior to initial clearing and grubbing of the site.''
     Section 450.21(d)(6). Estimate of the pre-development and 
post-construction runoff coefficients of the site. Estimates of runoff 
coefficients may be determined by using a number of readily available 
resources, including models such as ``Urban Hydrology for Small 
Watersheds, Technical Release 55 (TR-55)'' and documents such as 
``Hydrology, Section 4, National Engineering Handbook (NEH-4),'' both 
published by USDA/Natural Resources Conservation Service (NRCS). In 
addition, there are a number of commercial software packages that may 
also be used to estimate these parameters.
     Section 450.21(d)(8). Delineation of SWPPP implementation 
responsibilities. The SWPPP must describe who is responsible for 
implementation of the controls described in the SWPPP.
     Section 450.21(d)(9). Any existing data that describe the 
storm water runoff characteristics of the site. Include any existing 
data that describe the quality of any discharges of storm water from 
the site. This does not require the permittee to collect additional 
data.
    It is important to note that the above requirements for SWPPP 
preparation are in addition to any requirements contained in other 
Federal, State or local regulations. Permittees should always consult 
permit authorities to obtain all requirements related to SWPPP 
preparation. In addition, Sec. 450.21(e) would require periodic 
updating of the SWPPP to address changes in activities that may require 
updating of the erosion and sediment control provisions for the site. 
Examples where updates may be needed include significant changes in the 
construction schedule or changes in the nature of construction 
activities. If periodic inspections indicate that the selected erosion 
and sediment controls are not effective in controlling pollutant 
discharges from the site, the revision of the SWPPP may be necessary. 
It is the responsibility of the permittee to keep the SWPPP current.

[[Page 42663]]

2. Design and Installation of Erosion and Sediment Controls
    Under all three options, permits would require, at a minimum, 
compliance with any applicable State and local erosion and sediment 
control requirements. Under Option 2, the selection, design and 
implementation of these controls would need to also comply with the 
national effluent guidelines in 40 CFR 450.21. Under Options 1 and 3, 
the selection, design and implementation of these controls would be 
governed by BPJ-based permit conditions established by the permit 
authority and tailored to regional or local conditions. In practice, 
many of the same control technologies may be used under all three 
options, though the design and performance could vary significantly in 
some locations.
    The erosion and sediment control provisions of Option 2 rely on 
implementation of a range of BMPs, as well as a design-based standard 
for sediment basins. This standard is different from many traditional 
effluent guidelines in that it does not establish end-of-pipe discharge 
limitations or performance standards for storm water runoff from 
construction sites, but instead establishes minimum criteria for 
erosion and sediment control selection, design, installation and 
maintenance. The design standard is based primarily on minimizing 
sediment generation and transport through the use of effective erosion 
controls, and secondly on controlling sediment discharge through the 
use of effective sediment controls. Due to the high degree of 
variability in site parameters, regional and site-specific rainfall, 
and erosion and sediment control effectiveness, Option 2 does not 
contain numerical discharge standards or discharge monitoring 
requirements. Instead, this option relies on adherence to established 
erosion and sediment control principles and demonstration of effective 
design, installation and maintenance through regular inspection and 
certification.
    Although Option 2 does not contain monitoring provisions, 
permitting authorities may require monitoring of construction site 
runoff or receiving waters to gauge performance. Examples of indicator 
parameters that may be evaluated in order to evaluate the quality of 
storm water discharged from construction sites include TSS, turbidity, 
settleable solids, and suspended sediment concentration. (EPA-approved 
analytical test methods for some of these parameters are listed in 40 
CFR part 136.) In addition, permitting authorities may also utilize 
numerical models to evaluate erosion and sediment control efficiency 
and to evaluate sediment generation and delivery from construction 
sites. Examples include empirical models such as the Revised Universal 
Soil Loss Equation (RUSLE) or process-based models such as SEDCAD and 
SEDIMOT II.\8\
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    \8\ ``Predicting Soil Erosion by Water: A Guide to Conservation 
Planning with the Revised Universal Soil Loss Equation (RUSLE).'' 
K.G. Renard, G.R. Foster, G.A. Weesies, D.K. McCool, and D.C. Yoder. 
United States Department of Agriculture, 1997.
    Warner, R.C. and P.J. Schwab, 1998. ``SEDCAD 4 for Windows 95 & 
NT: Design Manual and User's Guide.'' Civil Software Design, Ames, 
IA.
    Wilson, B.N., B.J. Barfield, A.D. Ward, and I.D. Moore. 1984. 
``A Hydrology and Sedimentology Watershed Model, Part I: Operational 
Format and Hydrologic Component.'' Transactions of the American 
Society of Agricultural Engineers 27(5):1370-1377.
---------------------------------------------------------------------------

    Under Option 2, construction site owners and operators would be 
required to consider the use of a range of erosion and sediment control 
BMPs when preparing SWPPPs for construction sites. EPA's preferred 
approach is to first limit sediment generation and transport through 
the use of effective site planning and erosion controls, and secondly 
control sediment discharges through the use of effective sediment 
controls. In addition, Sec. 450.21(c) would require implementation of 
pollution prevention practices to prevent contamination of storm water 
runoff with construction materials and litter and debris.
    Section 450.21(a) would require that construction site owners and 
operators include descriptions of general erosion and sediment controls 
and BMPs in SWPPPs to retain sediment on site (to the extent 
practicable), and to provide interim and permanent stabilization. 
Stabilization measures may include establishment of temporary or 
permanent vegetation, mulching, geotextiles, sod stabilization, 
vegetative buffer strips, and protection of trees and mature 
vegetation. This section also requires the SWPPP to contain a schedule 
indicating when practices will be implemented. EPA recommends that all 
controls be properly selected and installed in accordance with sound 
engineering practices and, when feasible, manufacturer's 
specifications.
    In Option 2, EPA is requiring that owners and operators implement 
sediment controls for all drainage areas of 5 or more acres. For 
drainage areas of between 5 and 10 acres, smaller sediment basins or 
sediment traps shall be used where attainable. For drainage areas of 10 
or more acres, sediment basins or equivalent control measures shall be 
installed where attainable. Where neither a sediment basin or 
equivalent control is attainable, silt fences, vegetative buffer strips 
or equivalent sediment controls are required. Runoff from undisturbed 
site areas that is diverted around disturbed areas can be ignored when 
designing sediment controls. Where attainable, sediment basins shall be 
designed to provide storage for a 2 year, 24-hour storm, or 
alternatively, 3,600 cubic feet of storage volume per acre drained. The 
basin sizing is based on the area of the drainage that will have 
vegetation removed and soils disturbed (i.e., if the drainage area is 
15 acres, but only 13 acres of this area will have vegetation removed 
and soils disturbed during the course of the project and the remaining 
2 acres will remain vegetated and is directed around both the disturbed 
area and the sediment basin, then the permanent storage volume can be 
sized based on 13 acres). EPA recommends that sediment control outlets 
be designed to provide a detention time at the design capacity of at 
least 6 hours. In addition, permit authorities may require that the 
basins be designed to pass larger runoff events safely, and may require 
the use of an emergency spillway, pursuant to state and/or local 
authority.
    EPA encourages permittees to utilize improved sediment basin 
designs that incorporate features such as baffles and outlet structures 
such as rock or fabric filters surrounding risers, siphoning outlets, 
and using surface skimmers and floating weirs. The use of these 
practices may significantly improve the performance of sediment basins 
in certain cases. In addition, all basins should be designed by a 
qualified engineer and local regulations regarding impoundment design 
should be consulted.
    Proposed Sec. 450.21(h) would require site owners and operators to 
provide temporary and/or permanent stabilization of exposed soil areas 
on construction sites. Exposed soil areas and slopes must be stabilized 
as soon as practicable, and in no case more than 14 days after 
construction activity has temporarily or permanently ceased on any 
portion of the site. Where construction activity has temporarily ceased 
on a portion of the site and earth-disturbing activities will be 
resumed within 21 days, stabilization is not required on that portion 
of the site. Time limits for stabilization may be extended where 
compliance is impractical due to snow cover, frozen soil, or other 
factors. Temporary or permanent erosion control measures include 
planting of vegetation, sodding, mulches, bonded fiber matrices, 
binders and tackifiers, polymers, and rolled

[[Page 42664]]

erosion control products. Exceptions are provided for low rainfall 
areas and where stabilization is temporarily impracticable.
3. Inspection and Certification Provisions
    Under all three options, permits would generally specify inspection 
and/or other requirements to ensure compliance. Under Option 3, these 
requirements would continue to be based on State and local ESC programs 
and the BPJ of the permitting authority. Both Options 1 and 2 would 
require a variety of site erosion and sediment control inspection and 
certification requirements, including inspections every 14 days and a 
final site inspection and certification. The provisions in each option 
are roughly equivalent, although each would be codified differently in 
the regulations. Under Option 3, any inspection and certification 
requirements would be based on any applicable State and local ESC 
programs and the BPJ of the permitting authority.
    In Option 1, part 122 would be amended to add conditions applicable 
to storm water permits for construction activity. Section 122.44(t)(1) 
would require a permittee (or designated agent) to maintain a site log 
book to track the implementation of erosion and sediment controls and 
other actions required by the permit. The analogous provision in Option 
2 is at Sec. 450.21(f). Any format for the site log book could be used, 
as long as the specific provisions listed in the regulation are 
addressed. EPA plans to provide guidance on a recommended format for 
the site log book at the time of promulgation if EPA ultimately 
promulgates inspection and certification requirements. EPA solicits 
comments on the log book format.
    Option 1 would also amend Sec. 122.44(i)(4) to exclude construction 
sites subject to ELGs from discharge monitoring requirements, for the 
reasons described in section IX of today's document. Permit authorities 
would retain discretion to set monitoring requirements for construction 
site discharges on a case-by-case basis.
    Options 1 and 2 would also require periodic inspection and 
certification of various provisions. This is embodied in proposed 
Sec. 122.44(t)(2) in Option 1, and Secs. 450.21(f) and (g) under Option 
2. The certification, either by the permittee or designated agent (as 
described below) would be an assurance by the certifying official that 
the various provisions concerning BMP design, installation and 
maintenance are occurring on a regular basis in order to assure 
effectiveness of the selected erosion and sediment controls. The 
permittee or designated agent would not be required to certify as to 
the performance of selected controls, but rather that the controls were 
designed and installed according to the provisions required in the 
permit and that regular maintenance activities are occurring. In some 
States and municipalities, similar inspection systems are already being 
employed, and EPA believes that these systems would generally be in 
conformance with Options 1 and 2. The Agency requests comment on 
whether the proposed inspection requirements are compatible with 
existing State and local ESC inspection systems.
    EPA recommends that these inspections be conducted by a Certified 
Professional in Erosion and Sediment Control (CPESC),\9\ licensed 
Professional Engineer (PE), or other qualified professional with 
training in erosion and sediment control principles and practices. 
However, since there will be a large number of inspections required to 
cover all construction sites nationally and there is only a limited 
number of certified professionals available, EPA is not requiring that 
these inspections be carried out by a licensed or certified 
professional. The individual conducting the inspections should have 
adequate training and a thorough understanding of the erosion and 
sediment control requirements for the site, as described in the SWPPP. 
EPA envisions that in most cases, and particularly for larger projects, 
the inspection and reporting requirements will be carried out by the 
same consulting firm(s) or prime contractor(s) that provided the 
initial site design, engineering drawings, SWPPP preparation, and 
construction supervision for that project. However, the permittee may 
make other arrangements to accomplish the inspection and reporting 
requirements, such as self-inspection and self-certification.
---------------------------------------------------------------------------

    \9\ The CPESC training program is sponsored by the International 
Erosion Control Association (http://www.ieca.org) and the Soil and 
Water Conservation Society (http://www.swcs.org ).
---------------------------------------------------------------------------

    It is important to note that compliance with the proposed 
inspection and reporting requirements would be the responsibility of 
the permittee. Although a subcontractor, consultant or third-party 
certification firm may be employed by the permittee to conduct the 
actual inspections, any discrepancies or violations noted would be a 
violation of the site owner or operator's storm water permit and 
corrective measures would be the responsibility of the permittee. EPA 
would not hold subcontractors or consultants who are providing 
inspection and certification services to permittees responsible for 
permit violations. The site log book would be the official record of 
inspection and maintenance activities, and a copy should be maintained 
by the site owner or operator in the event of a change in the entity 
providing the inspection mechanism (for example, if a developer changes 
subcontractors following the completion of initial grading).
    The site log is intended to serve multiple purposes. The first, and 
most important, is as a planning tool for the permittee and a means of 
tracking erosion and sediment control activities, including 
maintenance. The second is a tool for permitting authorities to gauge 
compliance with regulations and to aid enforcement activities. As such, 
it is in the best interest of all parties involved for the permittee to 
maintain a copy of the site log book and other documents required by 
the permit (e.g., a SWPPP) on-site, and to allow access to this 
information by the permitting authority. Since members of the public 
may also have an interest in the compliance related information 
documented in the site log book, EPA recommends that a copy be 
maintained in a public location (such as a library or courthouse), or 
that a copy be made available to the public upon request within a 
reasonable period.
4. Maintenance
    In Option 2, construction site owners would be required to remove 
accumulated sediment from sediment traps and ponds when design capacity 
has been reduced by 50 percent.

XI. Methodology for Estimating Costs

    In developing today's proposed rule, EPA has taken a model approach 
to estimating the costs of compliance.\10\ Costs were estimated that 
are expected to be borne by two distinct entities: (1) Costs that are 
expected to be directly borne by the construction and development 
category for BMP installation and administrative functions and the 
consumers of the construction projects; (2) costs that are expected to 
be borne by permitting authorities for implementing the provisions of 
today's proposal. All costs presented are incremental over the costs 
already being borne by these entities due to existing Federal, State 
and local regulations governing erosion and sediment control.
---------------------------------------------------------------------------

    \10\ A cost model identifies variables and uses equations to 
estimate costs. The model is used to estiamte costs before and after 
implementation of the proposed rule.

---------------------------------------------------------------------------

[[Page 42665]]

    In estimating costs of today's proposal to the C&D category, EPA 
has categorized costs as capital costs and administrative costs. The 
following components were included in EPA's costing analysis: (1) 
Capital costs, including design, installation (including materials and 
labor), maintenance, profit and overhead; and (2) administrative costs, 
including SWPPP preparation, inspections, installation and maintenance 
certification, permit submission, and records retention. In developing 
cost estimates for permit authorities, EPA estimated administrative 
costs to revise general permits to incorporate the effluent guidelines 
requirements.
    Using NRI and Census data, EPA estimates that the C&D category 
converts approximately 2.2 million acres of land from rural to urban 
use in the nation each year. This is based on NRI data for the years 
1992 and 1997. Although the use of NRI data is likely to overestimate 
the amount of new acreage that is actually developed (as opposed to 
just being included in the new urban land use base), EPA still chose to 
utilize NRI data for the following reasons: (1) NRI data provides a 
consistent and comprehensive picture of broad land use changes for the 
United States; (2) NRI data is presented at the watershed scale, 
allowing subsequent evaluation of environmental impacts and benefits in 
a consistent manner; and (3) NRI data allows evaluation of recent as 
well as historical land use changes, facilitating the estimation of 
trends.
    For all of the environmental and economic assessments prepared for 
today's proposal, EPA elected to use a single year's developed acreage 
as the basis for its estimations, and to present all cost data on an 
annual basis. To help establish what trends exist in new urbanizing 
areas, EPA evaluated published sources to define what an urbanized area 
contains in terms of various land uses, and used these land uses to 
apportion annual construction activity into different industries based 
on developed land area. The Agency formulated characteristics for four 
industries based on Census data: single-family housing construction, 
multi-family housing construction, manufacturing and industrial 
building construction, and commercial and institutional building 
construction. A breakdown of estimated construction acreage by sector 
can be found in Chapter four of the Development Document.
    EPA's analysis indicates that between 1999 and 2000 there were 
approximately 42,000 acres of new urban road and highway construction 
in the U.S. (Highway Statistics 1999 and Highway Statistics 2000, 
Federal Highway Administration). This constitutes less than 2 percent 
of the total new developed acreage in the U.S. Because new road and 
highway construction is such a small percentage of annual development 
acreage, EPA did not conduct a separate analysis of costs of the 
proposed rule for highway, street, bridge and tunnel construction. EPA 
requests comment on this approach, as well as data on the costs of the 
proposed rule for highway, street, bridge, and tunnel construction and 
any special implementation challenges that may be found by this sector.

A. Costs to the Construction and Development Category

    EPA used a model site approach to develop estimates of costs of the 
rule to the C&D category. Using the data on development trends within 
each industry as a starting point, EPA estimated a distribution of 
construction site sizes for each of the four industries based on census 
data and on data collected during the NPDES Phase II rulemaking. The 
Phase II rulemaking data identify distributions of site sizes within 
each industry based on construction permits issued in 14 urbanizing 
municipalities. From this data, EPA was able to develop the national 
distribution of construction activity by sector and size. Detailed 
results of this analysis can be found in Chapter four of the 
Development Document.
    EPA developed a series of model construction sites for each of the 
size strata and identified erosion and sediment control practices 
required under current State CGP baseline conditions (i.e. compliance 
with current NPDES regulations). The Agency identified costs of these 
controls using unit cost references commonly used by the industry to 
estimate their construction costs for bids (R.S. Means Co., 
Construction Cost Manual, 2000) as well as data from the literature. 
EPA also added costs for design, O&M, as well as regional cost 
adjustments. EPA then applied O&M costs, design costs, and profit and 
overhead, using costs and frequencies based on standard industry 
practice. Administrative costs for activities such as permit 
application and records retention were also estimated. Following 
development of regulatory options, EPA estimated the increase in costs 
for erosion and sediment controls due to factors such as increased 
sizing (for BMPs such as sediment basins), increased frequency of 
application (such as temporary seeding and mulching), as well as 
increased administrative costs for factors such as inspection and SWPPP 
certification. By comparing these costs to the baseline costs, EPA was 
able to estimate the incremental costs of various regulatory options. 
(See Chapter 7 of the Development Document for a more detailed 
discussion of the construction control model.)

B. Costs to Permit Authorities

    EPA identified additional administrative costs to permit 
authorities for incorporating the proposed requirements into 
appropriate general permits. EPA views the permit authorities (EPA 
regional offices and States) as the main implementors of effluent 
guidelines and NPDES regulations. The Agency expects that States will 
integrate the proposed requirements into their respective erosion and 
sediment control general permits. However, many States rely on local 
governments and quasi-governmental agencies (e.g., conservation 
districts) as partners in implementing their ESC programs. EPA 
acknowledges that the administrative costs it has estimated will likely 
be shared among a broader range of entities than just States. (See 
chapter 7 of the Development Document for a more detailed discussion of 
the administrative costs to permit authorities.)
    In estimating the total costs to administer today's proposed 
effluent guidelines requirements, EPA has built on its earlier work 
related to the Phase II NPDES storm water rule (``Economic Analysis of 
the Final Phase II Storm Water Rule,'' EPA-833-R-99-002, October 1999) 
in order to estimate incremental costs of effluent guidelines 
implementation. EPA has also built on regulatory program development 
costs identified in earlier effluent guidelines (such as the proposed 
rule for Concentrated Animal Feeding Operations, 66 FR 2960, January 
12, 2001) where they are similar in nature and scope. In estimating the 
baseline administrative costs, EPA has assumed 100 percent 
implementation of existing Phase I and II NPDES storm water 
regulations. Applications for permits for discharges of pollutants 
associated with construction activity disturbing at least one acre but 
less than five acres are not required before March 10, 2003. Hence, 
although these permits are not required under Federal regulations at 
this time, they will be when EPA takes final action on today's proposal 
in 2004.

[[Page 42666]]

XII. Economic Impact and Social Cost Analysis

A. Introduction

    EPA's Economic Analysis (see ``Supporting Documentation'') 
describes the impacts of today's proposed rule in terms of firm 
closures, employment losses, and market changes, such as housing 
prices. In addition, the report provides information on the impacts of 
the proposal on sales and prices for residential construction. The 
initial regulatory flexibility analysis (IRFA) supports EPA's 
compliance with the Regulatory Flexibility Act (RFA), as amended by the 
Small Business Regulatory Enforcement Fairness Act (SBREFA). The report 
also presents identified, quantified, and monetized benefits of the 
proposal.
    Today's document includes related sections such as the cost-
effectiveness analysis in section XIII, benefits analysis in section 
XVI, and benefit-cost analysis in section XVII. In their entirety, 
these sections comprise the economic analysis (referred to collectively 
as the ``C&D economic analysis'') for the proposed rule. EPA's 
Environmental Assessment provides the framework for the monetized 
benefits analysis. See the complete set of supporting documents for 
additional information on the environmental impacts, social costs, 
economic impact analysis, and benefit analyses.
    The C&D economic analysis, covering subsectors that disturb land 
(NAICS 233 and 234), uses information from, and builds upon, the NPDES 
Phase II rule economic analysis (op.cit.). In addition to building upon 
the work completed for the Phase II rule, the C&D economic analysis 
expands the Phase II economic analysis with, among others, an 
environmental assessment, economic achievability analysis, barrier-to-
entry analysis, and benefit-cost analysis. In addition to CWA 
requirements, EPA has followed OMB guidance on the preparation of the 
economic analyses for Federal regulations to comply with Executive 
Order 12866. See section XIX.D of today's document.

B. Description of Economic Activity

    The construction sector is a major component of the United States 
economy as measured by the gross domestic product (GDP), a measure of 
the domestic output of goods and services produced in one year by the 
U.S. economy. The construction sector directly contributes about five 
percent to the GDP. Moreover, one indicator of the economic performance 
in this industry, housing starts, is also a ``leading economic 
indicator,'' one of the indicators of overall economic performance for 
the U.S. economy. Several other economic indicators that originate in 
the C&D industry include construction spending, new home sales, and 
home ownership.
    During most of the 1990s, the construction sector experienced a 
period of relative prosperity along with the overall economy. Although 
cyclical, the number of housing starts increased from about 1.2 million 
in 1990 to almost 1.6 million in 2000, with annual cycles during this 
period. (U.S. Census Bureau, ``Current Construction Reports, Series 
C20--Housing Starts,'' 2000. http://www.census.gov/const/www). At the 
beginning of the 21st century, the economy has begun to slow relative 
to previous highs in the 1990s. The United States has been affected by 
global factors and events, that have led to temporarily reduced 
consumer spending, but the adverse impacts on the construction and 
development industry appear modest at this time. The Federal Reserve 
money market policies to keep interest rates low, particularly mortgage 
interest rates, have been a significant and positive force in light of 
the economic factors impacting the economy. The most recent data 
indicates consumer spending for new homes remains strong.
    For the purposes of today's proposed rule, the Construction and 
Development Category is comprised of industries that disturb land. The 
category contains business establishments \11\ that are involved in 
building, developing and general contracting (NAICS 233) as well as 
heavy construction (NAICS 234). As a starting point, Table XII-1 shows 
the number of business establishments in the C&D category in 1992 and 
1997. Only a portion of these establishments would be covered by the 
proposed regulation, because some of these establishments are house 
remodelers and others build on sites with less than one acre of 
disturbed land each year. (The proposed rule would cover projects one 
acre or more under Option 1, and 5 acres or more under Option 2 . See 
section IV, Scope of Proposal, in today's document.)
---------------------------------------------------------------------------

    \11\ The Census Bureau uses the term ``establishment'' to mean a 
place of business. ``Employer establishment'' means an establishment 
with employees.
---------------------------------------------------------------------------

    Table XII-1 shows a sharp decline in the number of developers 
between 1992 and 1997. The decrease in the number of developers may 
have been a response to changes in tax laws and the Financial 
Institutions Reform, Recovery, and Enforcement Act (FIRREA) of 1989 
(Public Law 101-73, August 9, 1989) and the 1993 implementing 
regulations. The objective of FIRREA and the implementing regulations 
was to correct events and policies that led to a high rate of 
bankruptcies in the thrift industry in the late 1980s. The regulations 
changed lending practices by financial institutions, requiring a higher 
equity position for most projects, with lower loan-to-value ratios, and 
more documentation from developers and builders. (Kone, ``Land 
Development,'' op. cit.)

    Table XII-1.--Number of Employer Establishments in Construction and Development Industries, 1992 and 1997
----------------------------------------------------------------------------------------------------------------
                                                                                                      Change
               NAICS                           Industry            1992  number    1997  number      (percent)
----------------------------------------------------------------------------------------------------------------
233, except 2331...................  Building, developing, and           168,407         191,101            13.5
                                      general contracting,
                                      except land development
                                      and sub-development.
2331...............................  Land development and sub-            15,338           8,185           -46.6
                                      development.
234................................  Heavy construction.........          37,180          42,557            14.5
235 \a\............................  Special trade contracting..          14,864          19,771            33.0
                                                                 -----------------------------------------------
    Total..........................  ...........................         235,789         261,617           11.0
----------------------------------------------------------------------------------------------------------------
\a\ Includes NAICS 23593 (Excavation contractors) and 23594 (Wrecking and demolition contractors).
 Sources: 1992 and 1997 Census of Construction; Economic Analysis.


[[Page 42667]]

    Building upon Table XII-1, Table XII-2 shows the number of 
establishments that could potentially be covered under the C&D proposed 
regulation. From the total of about 262,000 establishments in 1997, EPA 
subtracted about 62,400 establishments that are engaged in home 
remodeling, and would not be subject to the proposed regulations. This 
estimate is based upon a study by the Harvard University Joint Center 
for Housing Studies (``Remodeling Homes for Changing Households,'' 
2001). The elimination of remodelers is based on the fact that 
remodeling and renovation activities generally disturb less than one 
acre of land, if any at all.
    EPA also deducted 50,661 establishments that build one to four 
houses. Given an average lot size of about 0.3 acres per house, EPA 
assumes that a builder that builds between one and four houses per year 
is unlikely to disturb one acre or more in a given year. The estimate 
of the number of establishments building one to four houses was based 
upon a study and report by the Census Bureau (``Construction Sector 
Special Study Housing Starts Statistics,'' op.cit.). Some of the sites 
built upon by these establishments would be covered by NPDES storm 
water permits if they are located within a ``common plan of 
development'' (i.e., a subdivision) that is at or above the regulatory 
threshold. (This threshold is currently 5 acres under the Phase I rule, 
and will become 1 acre under the Phase II rule in 2003.) However, the 
Agency does not have information on the amount of houses that are built 
within subdivisions, rather than on discrete lots, by these 
establishments. EPA requests comment on its methodology for removing 
remodelers and firms that do not disturb more than one acre of land 
from the analysis.
    Based upon these adjustments of the total number of establishments, 
EPA believes that about 150,000 establishments would be covered under 
Option 1. Although it is likely that fewer establishments would be 
covered under Option 2, EPA has not made adjustments to account for 
establishments that do not disturb more than five acres. The population 
of establishments that would be covered after the adjustments that EPA 
has made may also include subcontractors. Many, if not most of these 
establishments also would not be covered by the proposed rule, because 
they do not disturb land. However, the Agency has insufficient data to 
make any further adjustments to the population of developers and 
builders covered by the proposal. For example, no adjustments have been 
made to account for establishments in the non-residential construction 
or heavy construction industries that may disturb less than one acre of 
land. EPA solicits comment on the Agency's estimate of the number of 
establishments that would be covered under the proposal. For general 
discussion, EPA will refer to the 150,000 establishments as the covered 
population. As estimated from the data sources available, the actual 
estimate is 148,556 establishments. EPA requests comment and any other 
information available about the potentially covered population.

     Table XII-2.--Number of Establishments Covered by the Construction and Development Proposed Regulations
----------------------------------------------------------------------------------------------------------------
                                                                                          Establishments
                                                                                 -------------------------------
                   NAICS                               Industry sector                              Percent of
                                                                                      Number           total
----------------------------------------------------------------------------------------------------------------
2331.......................................  Land development and subdivision...           8,185             5.5
23321......................................  Single-family residential building           31,615            21.3
                                              construction.
23322......................................  Multi-family residential building             1,718             1.1
                                              construction.
2333.......................................  Nonresidential construction........          44,710            30.1
234........................................  Heavy construction.................          42,557            28.7
235........................................  Special trade contracting..........          19,771            13.3
                                                                                 -------------------------------
    Total..................................  ...................................         148,556          100.0
----------------------------------------------------------------------------------------------------------------
 Source: Economic Analysis.

C. Method for Estimating Economic Impacts

    EPA has conducted economic impact analyses to determine the 
economic achievability of each of the three co-proposed options. An 
important methodology used in the economic impact analysis is an 
assessment of how incremental costs would be shared by developers and 
home builders, home buyers, and society. This method is called ``cost 
pass-through'' analysis or CPT analysis. Details of this method may be 
found in Chapter 4 of the Economic Analysis.
    The economic analysis for the C&D proposal also uses another method 
called partial equilibrium analysis that builds upon analytical models 
of the marketplace. These models are used to estimate the changes in 
market equilibrium that could occur as result of the proposed 
regulations. In theory, incremental compliance costs could shift the 
market supply curve, lowering the supply of construction projects in 
the market place. This would increase the market price and lower the 
quantity of output, i.e., construction projects. If the demand schedule 
remains unchanged, the new market equilibrium would result in higher 
costs for housing and lower quantity of output. The market analysis is 
an important methodology for estimating the impacts of the provision 
proposed in today's document. The economic analysis also reflects 
comments in the October 2001 final report from the Small Business 
Advocacy Review (SBAR) Panel submitted to the EPA Administrator as part 
of the requirements under SBREFA. EPA is making this report available 
along with today's C&D effluent guidelines proposal.
    For the technology-based construction and development effluent 
guidelines, EPA is required under Title III of the Clean Water Act to 
make a determination about the available technologies for BPT, BCT, 
BAT, and NSPS. EPA is required by the Act to ensure that technologies 
selected as the basis for BAT are economically achievable. EPA uses a 
different economic test for NSPS, a ``barrier to entry'' test. This 
test is typically applied to new sources or projects to determine if 
the proposed regulation could pose a barrier to entry in terms of 
starting a new project or business. The Agency typically uses a 
methodology that analyzes the incremental compliance

[[Page 42668]]

costs of the rule in comparison to the total assets required to start a 
new project or business. If these costs are excessive, then a barrier 
to entry could be a problem for entrepreneurs considering new business 
opportunities in the C&D category.
    EPA used several broad cost components to estimate the compliance 
costs in an engineering cost model (see the Technical Development 
Support Document): ``hard'' compliance costs and ``soft'' compliance 
costs. Hard costs are the incremental construction costs for controls 
such as sediment basins. Soft compliance costs are the incremental 
costs for planning, design, permits, and engineering and legal 
services. Detailed information on the compliance costs is provided in 
the Development Document.
    EPA estimated the incremental compliance costs for the BMPs using 
an engineering cost model that takes account cost factors such as labor 
rates and material costs. In most of the economic analyses described 
below, however, EPA has used weighted average national costs obtained 
by multiplying the regionalized costs by the share of total projects 
estimated to take place within each region of the country.
    EPA estimated both the incremental compliance costs and the 
economic impacts of each proposed regulatory option at the project, 
establishment, firm, and industry (national) level. The economic impact 
analysis considered impacts on both the firms in the C&D industry, and 
on consumers who purchase the homes, and buy or rent industrial 
buildings and commercial and office space. In the case of public works 
projects, such as roads, schools, and libraries, the economic impacts 
would accrue to the final consumers, who, in most circumstances, are 
the taxpaying residents of the community. The sections below describe 
each modeling effort in turn. Detailed information on the data, models, 
methods, and results of the economic impact analyses are available in 
the Economic Analysis.
1. Model Project Analysis
    EPA estimated project-level costs and impacts for a series of model 
projects. The models establish the baseline economic and financial 
conditions for model projects and assess the significance of the change 
in cash flow that results from the incremental compliance costs. EPA 
used the model project analysis to indicate whether typical projects 
affected by the proposed regulations would be vulnerable to abandonment 
or closure. The Agency developed model projects for four industries: 
single family residential; multi-family residential; commercial & 
institutional building; and manufacturing & industrial building. The 
models also included various construction project site sizes: 1, 3, 
7.5, 25, 70, and 200 acres. In total, EPA developed 24 different model 
projects (4 types of development or land uses, multiplied by 6 project 
sizes) and used these models to assess the impacts of the proposed 
regulations at the project level.
    Each model project is assumed to be undertaken in its entirety by a 
single entity acting as both developer and builder. EPA recognizes that 
in practice there may be several parties with a financial investment 
and role in a particular land development and construction project. For 
example, on some projects a developer may acquire the land, conduct the 
initial engineering and site assessments, and obtain the necessary 
approvals. The land may then be sold to another developer or builder 
who will undertake the actual construction work. Projects are also 
frequently undertaken by a consortium of firms or individuals, through 
various types of limited liability partnerships (LLP). While it is 
important to acknowledge this variation, for modeling purposes EPA has 
simplified this aspect and assumed only a single entity is involved 
from beginning to end, referred to below as a ``developer-builder.'' 
EPA requests comment about this economic modeling approach.
    The model projects reflect the range of development type and 
project scale seen in actual industry practice. The model project 
characteristics were developed from the statistical data described in 
section V of today's document, information distilled from academic 
literature and industry publications, and information provided to EPA 
in meetings with industry representatives. The model projects account 
for all of the steps in a typical land development project.
    Although EPA has developed regional compliance costs, there were 
insufficient data available to develop model projects reflective of 
specific geographic zones or real estate markets. For this reason, EPA 
applied weighted average national costs to these models. The Agency 
obtained some of the model project parameters from home builders and 
developers in the mid-west region, so to some extent the model projects 
may be more reflective of conditions in this general market area.
    Land development and construction typically occurs in a series of 
stages or phases. The model projects developed by EPA incorporate 
assumptions concerning the costs and revenues incurred at each stage. 
EPA has modeled all of the projects to reflect three principal 
development stages:
    (1) Land acquisition. The starting point is usually acquisition of 
a parcel of land deemed suitable for the nature and scale of 
development envisioned. The developer-builder puts together the 
necessary financing to purchase the parcel. When lenders are involved, 
they may require certain documentation, such as financial statements, 
tax returns, appraisals, proof of the developer's ability to obtain 
necessary zoning, evaluations of project location, assessments of the 
capacity of existing infrastructure, letters of intent from city/town 
to install infrastructure, environmental approvals, etc. To satisfy 
these needs, the developer may incur costs associated with compiling 
these data.
    (2) Land development. The developer-builder obtains all necessary 
site approvals and prepares the site for the construction phase of the 
project. Costs incurred during this stage are divided among ``soft'' 
costs for architectural and engineering services, legal work, permits, 
fees, and testing, and ``hard'' costs such as land clearing, installing 
utilities and roads, and preparing foundations or pads. The result of 
this phase is a legally subdivided parcel with finished lots ready for 
construction.
    (3) Construction. The developer-builder undertakes the actual 
construction of the housing units. A substantial portion of this work 
may be subcontracted out to specialty subcontractors (foundation, 
framing, roofing, plumbing, electrical, painting, etc.). Marketing a 
development generally begins prior to the start of this phase, hence 
the developer-builder may also incur some marketing costs at this time. 
Housing units may come under agreement at any time prior to, during, or 
after completion of construction. Marketing costs are part of the 
baseline costs. EPA determined that no incremental marketing costs 
would be imposed by today's proposed rule.
    EPA developed estimates of the project-specific costs and revenues 
at each stage of project development in the baseline scenario. The 
result is a cash flow analysis of the costs and revenues associated 
with the project. The general approach used in establishing the 
baseline scenario is to assume normal returns on invested capital and 
normal operating profit margins to arrive at the sales price for the 
final product (for example, completed new single-family homes in a 
residential development).

[[Page 42669]]

    EPA analyzed the impact of today's proposed rule by adding in the 
regulatory costs at the appropriate stage of the project life cycle. 
The regulatory cost impacts on the model projects were analyzed under 
two alternative assumptions concerning cost pass-through. In the first 
scenario, EPA assumed that the developer-builder can pass through all 
of the incremental compliance costs associated with meeting the 
proposed regulations to the final customer (e.g., the new home buyer, 
consumers of public transportation services). Under this scenario, all 
costs are assumed to be borne by the customer in the form of higher 
prices for completed construction. In the second approach, EPA assumed 
that the builder-developer can not pass through cost increases to the 
buyer and therefore realizes a reduced profit on the project. In 
general, EPA believes that builders do pass through regulatory costs to 
customers, and this is supported by the academic literature and 
industry publications. The analysis simulates the results under two 
extremes in which consumers or industry absorb all of the cost impacts.
    EPA notes that under certain conditions developers might also 
attempt to pass regulatory costs back to land sellers. For example, in 
a depressed market builders may argue successfully that a regulatory 
cost increase would make a particular project unprofitable unless the 
land costs can be reduced. If the land seller is convinced that a 
residential subdivision project would not proceed, they may be willing 
to accept a lower price for raw land. The ability of developers to pass 
such costs back would likely depend on the sophistication of the land 
owner, their experience in land development projects, knowledge of the 
local real estate market, and, in particular, their understanding of 
the regulations and their likely cost. While evidence of cost pass-back 
to land owners exists for fixed and readily identifiable regulatory 
costs such as development impact fees, it is unclear whether a 
builder's claim that costs would be higher due to construction site 
control regulations would induce land owners to make concessions. EPA 
requests comment on the likely success of developers attempting to pass 
regulatory costs for incremental storm water controls back to land 
owners.
2. Model Firm Analysis
    EPA analyzed the impacts of the regulations at the level of the 
firm by building financial models of representative construction firms. 
The models for residential construction firms are based on data from 
the special Census report on the homebuilding industry. This source 
provides the average value of construction, average employment, and 
average number of housing starts for firms in various housing start 
classes. Within each housing starts size class, EPA constructed balance 
sheets and income statements by scaling published Dun and Bradstreet 
(D&B) data presented for ``median'' firms (``1999--2000 Industry Norms 
and Key Business Ratios,'' Dun and Bradstreet, 2000).\12\ The basic 
approach was to calculate the ratio of key components of the balance 
sheet and income statement to net sales, and then scale the value of 
these components to the size of the model firm. For the commercial and 
industrial building construction industries, EPA scaled the balance 
sheet and income statement elements according to differences between 
incomes for these C&D industries reported by the Census Bureau and 
median incomes reported among firms sampled by D&B. EPA analyzed one 
model firm for these industries since comparable data by starts size 
class were not available.
---------------------------------------------------------------------------

    \12\ The D&B data are based on a sample of firms with response 
ratios that are greater for larger firms than for small firms.
---------------------------------------------------------------------------

    To determine the annual compliance costs incurred by model 
residential construction firms, EPA converted the costs per acre to 
costs per housing start using estimates of the average lot size for new 
home construction, and then multiplied these costs by the number of 
housing units started. EPA was then able to assess the impact of the 
annual compliance costs on key business ratios and other financial 
indicators. Specifically, EPA examined impacts on the following 
measures: (1) the Gross Profit, (2) Current Ratio, (3) Debt to Equity 
Ratio, and (4) Return on Net Worth. Industry publications cite these 
financial ratios as particularly relevant to the construction industry 
(Kone, ``Land Development,'' op.cit.; M. Benshoof, ``An Inside Look at 
Builders'' Books,'' Housing Economics, National Association of Home 
Builders, Washington, DC, 2001). Two of the ratios examined are based 
on operating income (gross profit, return on net worth), and two are 
based on the balance sheet statement (current ratio, debt to equity). 
The impacts of the compliance costs were examined by calculating the 
values of each ratio with and without the compliance costs. For this 
analysis, EPA assumed zero cost pass-through, which is a worst-case 
scenario in terms of describing the potential economic impacts on this 
industry.
    To determine the annual compliance costs incurred by commercial and 
industrial construction firms, EPA first divided the total estimated 
number of construction starts by the number of establishments to obtain 
the average number of starts per establishment. To estimate the average 
number of acres per start, the Agency reviewed industry cost data (R.S. 
Means, 2000. ``Building Construction Cost Data, 58th Annual Edition,'' 
Kingston, MA) for representative projects. EPA estimated an average of 
three acres per start, and then used this average to calculate the 
average number of acres developed per establishment. The number of 
acres developed per establishment was then multiplied by the regulatory 
costs per acre to obtain the annual regulatory costs incurred per 
establishment. As noted above, EPA examined the impact of these costs 
by examining changes in financial ratios for the median-sized firm. To 
do this, EPA scaled the financial data for the median firm drawn from 
the D&B data to the Census median firm, using the median income from 
each source as the scaling factor. EPA requests comment on the extent 
to which basing the analysis on the median-sized firm will 
appropriately capture impacts on smaller or larger firms.
3. Housing Market Impacts
    EPA also developed models to assess the potential impacts of the 
regulations on the national housing market. To analyze the impacts of 
compliance costs on housing affordability, EPA estimated the level of 
income that would be necessary to purchase the average priced new home 
without the proposed regulation, and the change in income needed to 
purchase the average priced new home under each of the proposed 
regulatory options. The Agency then used income distribution data to 
estimate the change in the number of households that would qualify to 
purchase the average priced new home under each of the regulatory 
options. In this way, EPA was able to determine the number of 
households that may be priced out of the new housing market, assuming 
that all prospective buyers were targeting the averaged priced new 
home. The results of this analysis may be found in the Economic 
Analysis.
4. Impacts on the National Economy
    The market model generates an estimate of the change in the total 
value of construction produced by the industry, i.e., industry output. 
Two effects of the regulation are acting on the

[[Page 42670]]

market value of construction output. First, the cost of construction 
increases, leading to a price rise and an increase in market value of 
final projects. Second, the quantity of houses sold is reduced because 
of the higher price due to compliance costs. The net effect on market 
value may be either positive or negative, depending on whether the 
elasticity of demand for housing is less than or greater than 1. There 
are also secondary impacts in other markets, caused by the shift in 
consumer spending, necessitated by the increased housing costs, from 
other goods to housing.
    As these changes pass through the economy, they generate shifts in 
production and employment. The U.S. Department of Commerce uses input-
output techniques to derive ``multipliers'' which indicate, for a given 
change in one industry's output, how output and employment in the whole 
U.S. economy will respond. EPA has applied the multipliers from the 
Regional Input-Output Modeling System, version 2 (RIMS II) to the 
change in output estimated from the market model to estimate the 
impacts on national output and employment.

D. Results

1. Firm-Level Impacts
    EPA has estimated the economic impacts of the proposal at the firm 
level by estimating the number of firm closures, the number of lost 
jobs, and the decrease in firms' profits. The economic impact analysis 
at the firm level assumes that none of the incremental costs would be 
passed through to the final consumer, i.e., zero cost pass-through. The 
Agency used this assumption for the economic impact analysis, because 
it presents the worst-case scenario (i.e., the largest impacts to the 
firm). However, EPA's review of the academic literature and its 
discussions with industry officials indicate that most, if not all 
costs, are passed through to the final consumer and are not absorbed by 
firms in the industry.
    The firm is the responsible entity for the installation of ESC BMPs 
and is the entity responsible for managing financial and economic 
information. Moreover, the firm is responsible for maintaining and 
monitoring financial accounts. For the C&D category, most of the 
business establishments, as defined by the Census Bureau, are firms. A 
small number of establishments are entities within a larger firm. A 
small percentage of firms have multiple establishments and some firms 
are regional or national in scope.
    Table XII-3 presents one economic indicator, firm closures, by 
regulatory options and by industry (e.g., Multi-family Residential).

      Table XII-3.--Firm Closures by Industry for the Regulatory Options: Zero Cost Pass-Through Assumption
                                    (Number of firms, percent of total firms)
----------------------------------------------------------------------------------------------------------------
                                                   Single-Family   Multi-family   Commercial and   Manufacturing
                     Option                         Residential     residential    institutional  and industrial
                                                   (/%)   (/%)   (/%)   (/%)
----------------------------------------------------------------------------------------------------------------
1. Self-inspection, certification, 1 acre or              4/0.01          1/0.02         11/0.03          2/0.03
 more...........................................
2. Codification, self-inspection, certification,         13/0.02          3/0.07         43/0.11          7/0.09
 5 acres or more................................
3. No regulation................................          0/0             0/0             0/0            0/0
----------------------------------------------------------------------------------------------------------------
Source: Economic Analysis.

    EPA also estimated the number of potential jobs that could be lost 
as a result of the proposal. Table XII-4 provides the number of 
potential job losses by option and by industry.

        Table XII-4. Job Losses by Industry for the Regulatory Options: Zero Cost Pass-Through Assumption
                                        [Number of jobs, percent of jobs]
----------------------------------------------------------------------------------------------------------------
                                                   Single-Family   Multi-Family   Commercial and   Manufacturing
                     Option                         Residential     Residential    Institutional  and Industrial
                                                   (/%)   (/%)   (/%)   (/%)
----------------------------------------------------------------------------------------------------------------
1. Self-inspection, certification; 1 acre or             34/0.01         12/0.03        162/0.03         43/0.03
 more...........................................
2. Codification, self-inspection, certification;        145/0.04         61/0.17        604/0.11        133/0.09
 5 acres or more................................
3. No regulation................................          0/0             0/0             0/0            0/0
----------------------------------------------------------------------------------------------------------------
Source: Economic Analysis.

    EPA also estimated potential decreases in firms' profits. These 
results are presented in Table XII-5 by regulatory options and by 
industry. The potential changes in profits are in the range of a 
decrease in profits of one percent or less.

   Table XII-5.--Changes in Profits by Industry for the Regulatory Options: Zero Cost Pass-Through Assumption
                                              [Percent of profits]
----------------------------------------------------------------------------------------------------------------
                                                   Single family   Multi-family     Commercial      Industrial
                     Option                             (%)             (%)             (%)             (%)
----------------------------------------------------------------------------------------------------------------
1. Self-inspection, certification; 1 acre or               -0.23           -0.31           -0.17           -0.14
 more...........................................
2. Codification, self-inspection, certification;           -0.52           -0.95           -0.40           -0.32
 5 acres or more................................
3. No regulation................................            0               0               0              0
----------------------------------------------------------------------------------------------------------------
Source: Economic Analysis.


[[Page 42671]]

    For additional information on EPA's analysis of the change in 
financial position, see Chapters 4 and 5 of the Economic Analysis for 
the methodology and analysis on estimating firm-level impacts.
2. Impacts on Governments
    EPA has analyzed the impacts of today's proposed rule on government 
entities. This analysis includes both the cost to governments for 
compliance at government-owned construction project sites 
(construction-related) and government costs associated with 
implementation of storm water programs (administration costs). For 
construction-related costs EPA assumed that 100 percent of the 
incremental compliance costs that contractors incur at government-owned 
construction sites are passed through to the government. Under this 
assumption EPA estimates the following impacts:
     Under Option 1, EPA estimates that State and local 
governments would incur about $12 million in annual costs and the 
private sector would incur about $114 million in annual costs. Of the 
$12 million in annual costs to State and local governments, about $2 
million would be incurred by small government entities, less than 
50,000 population, and about $10 million annually would be incurred by 
large government entities, greater than 50,000 population.
     Under Option 2, about $50 million of annual incremental 
costs would accrue to State and local governments.
     Of the $50 million in costs accruing to State and local 
government agencies, about $5 million per year would be incurred by 
small government agencies, communities with less than 50,000 
population, and about $45 million would accrue to large communities, 
those with more than 50,000 population.
    A subsidy or other complementary financing of these projects with 
Federal or State grants or revolving funds could reduce the direct 
impact on local taxpayers.
    For administration costs, the analysis is based upon two elements 
for construction storm water programs: (1) Incremental costs to 
establish or modify programs, and (2) incremental costs to implement 
the proposed options. Table XII-6 provides information on the costs to 
establish or modify construction storm water programs. The program 
elements to establish the proposed options may include, among other 
program needs, those needed to revise State general permits. In 
addition, the States, and to some extent local governments, may need to 
provide basic program administration, education, public hearings, and 
public notifications as appropriate. These incremental program elements 
may be in place and may not be needed by all States or local 
governments.

 Table XII-6.--Annualized One-Time Incremental Costs to State and Local
   Governments for Establishing or Modifying Construction Storm Water
                           Management Programs
------------------------------------------------------------------------
                                                           Total  (year
                     Program element                          2000 $
                                                             million)
------------------------------------------------------------------------
General permit development..............................            0.30
Program administration..................................            0.15
Education and information distribution..................            0.01
Public hearings.........................................            0.07
Quarterly public notification...........................            5.80
                                                         ---------------
    Total...............................................            6.33
------------------------------------------------------------------------

    The detailed analysis is available in its entirety in the Economic 
Analysis.
3. Community-Level Impacts
    EPA has estimated community-level impacts based upon the 
incremental costs of the proposal at the household level. The household 
impacts are those that would affect local communities in terms of the 
costs of housing. EPA's analysis considers the impacts on the price of 
housing based on the increase/decrease in the average price per house. 
Table XII-7 shows the change by selected option in the price per house.

       Table XII-7.--Change in Housing Prices for Selected Options
                     [100 Percent cost pass-through]
------------------------------------------------------------------------
                                                           Average price
                                                           increase per
                         Option                            house  (year
                                                              2000 $)
------------------------------------------------------------------------
1. Self-inspection, certification; 1 acre or more.......              18
2. Codification, self-inspection, certification; 5 acres              97
 or more................................................
3. No regulation........................................              0
------------------------------------------------------------------------
Source: Economic Analysis.

    The price increase per house that may be attributable to the 
proposal compared to the average price of a new house in the U.S., 
currently about $250,900, is very small. For these costs, the average 
monthly mortgage payment would increase by less than $5.00 per month.
4. Foreign Trade Impacts
    As part of its economic analysis, EPA has evaluated the potential 
for changes in U.S. trade (imports, exports) of construction and 
development related goods and services. A significant component of the 
U.S. construction and development category operates internationally, 
and, in addition, numerous foreign firms that participate in this 
category also operate in the U.S. EPA judged that the potential for 
U.S. construction and development firms to be differentially affected 
by the proposed rule is negligible. The proposed rule will be 
implemented at the project level, not the firm level, and will affect 
projects within the U.S. only. All firms undertaking such projects, 
domestic or foreign, will be subject to the proposed rule. U.S. firms 
doing business outside the U.S. will not be differentially affected 
compared to foreign firms, nor will foreign firms doing business in the 
U.S.
    The proposed rule could theoretically stimulate or depress demand 
for some construction-related goods. To the extent that the proposed 
rule acts to depress the overall construction market, demand for 
conventional construction-related products may decline. This decline 
may be offset by purchase of goods and services related to erosion and 
sediment control. Overall, EPA does not anticipate that any shifts in 
demand for such goods and services resulting from the proposal would 
have a significant implication for U.S. and foreign trade.
5. Impacts on New Facilities
    EPA has conducted an analysis to assess the impacts on new firms 
that choose to enter the C&D category. This analysis uses a method 
called ``barrier to entry'' analysis. EPA examined the ratio of 
compliance costs to current and total assets to determine if new market 
entrants could find it more difficult to obtain construction loans to 
start a project than would existing firms. The Economic Analysis 
provides more complete information on the barrier to entry analysis. As 
discussed in more detail in the Economic Analysis, this methodology is 
conservative, because it doesn't account for the fact that a firm would 
typically be expected to finance 20 percent of the incremental 
compliance costs from their own financial resource to obtain the loan--
not the full amount as assumed here. In addition, existing firms would 
more than likely need to meet the same requirement, and therefore would 
not obtain a competitive advantage over new entrants.
    From the barrier to entry analysis, annual incremental compliance 
costs under Option 2 would comprise a maximum of 0.82 percent of the 
current assets for the Multi-Family Residential

[[Page 42672]]

Building Industry. For the Commercial and Institutional Building and 
Manufacturing and Industrial Building Industries, incremental 
compliance costs comprise less than 0.5 percent of current assets. For 
the Single Family Housing Industry, incremental costs comprise less 
than 0.2 percent of current assets. These costs are small as a percent 
of current assets. EPA believes that these costs pose no significant 
barrier to entry for potential businesses and projects.
6. Social Costs
    EPA's analysis of social costs for Option 2 contains four costs 
components: (1) installation, design, and permitting costs; (2) O&M 
costs; (3) government costs; and (4) deadweight loss. When summed, 
these four cost categories comprise the total social costs for each 
option.
    For Option 2 (codify CGP, self-inspection, certification, 5 acres 
or more), the total social costs of the proposal are about $505 million 
annually (year 2000 $). EPA has conducted a social cost analysis for 
each option. The Economic Analysis provides the complete social cost 
analysis for the proposed regulation.
7. Small Business Impacts
    Section XIX.C of today's document provides EPA's SBREFA analysis. 
For purposes of assessing the economic impacts of today's rule on small 
entities, ``small entity'' is defined by SBA size standards for small 
businesses and RFA default definitions for small governmental 
jurisdictions. The small entities regulated by this proposed rule are 
small land developers, small residential construction firms, small 
commercial, institutional, industrial and manufacturing building firms, 
and small heavy construction firms.
    Table XII-8 shows the impacts of the proposal using the one percent 
and three percent revenue tests, a method used by EPA to estimate the 
impacts on small businesses. The table presents the results for the 
proposed options.

  Table XII-8.--Small Business Analysis for Regulatory Options, 1% and 3% Revenue Tests, Assume Zero Cost Pass-
                                                     Through
----------------------------------------------------------------------------------------------------------------
                                                          1% Revenue test                 3% Revenue test
                                                 ---------------------------------------------------------------
                     Option                          Number of      Percent of       Number of      Percent of
                                                    small firms     small firms     small firms     small firms
----------------------------------------------------------------------------------------------------------------
Self-inspection and certification; 1 acre or                 126           <0.01              42           <0.01
 more...........................................
Codify CGP, self inspection, certification; 5                428            0.07             140           <0.01
 acres or more..................................
No regulation...................................               0            0                  0           0
----------------------------------------------------------------------------------------------------------------
Source: Economic Analysis.

XIII. Cost-Effectiveness Analysis

    EPA has conducted a cost-reasonableness analysis that indicates 
that the cost of this proposal for option 2 is about $0.01 per pound 
for TSS. EPA customarily performs a cost-effectiveness (C-E) analysis 
using toxic-pound equivalents. The pollutant removal calculations in 
today's proposed rule are all based on TSS, a conventional pollutant. 
The Agency does not have a methodology for converting TSS to toxic 
pound equivalents for a C-E analysis.

XIV. Non-Water Quality Environmental Impacts

    Under sections 304(b) and 306 of the CWA, EPA is to consider the 
``non water quality'' environmental impacts when setting effluent 
limitation guidelines and standards. EPA used various methods to 
estimate the NWQI for each of the options considered for today's 
proposed rule. For the purposes of today's proposal, the Agency 
interprets the term ``non water quality'' impacts to mean environmental 
impacts other than those related to surface water quality, and 
therefore is including groundwater impacts in this section.

A. Air Pollution

    EPA estimates that today's proposed rule would have no measurable 
effect on air pollution because none of the proposed options (including 
the ``no change'' option), would significantly alter the use of heavy 
equipment at construction sites, nor the manner in which construction 
sites are prepared. Accordingly, the levels of exhaust emissions from 
diesel-powered heavy construction equipment and fugitive dust emissions 
generated by construction activities would not change substantially 
from current conditions.

B. Solid Waste

    Generation of solid waste would not be substantially affected 
regardless of the option selected because the majority of solid waste 
generated at construction activities derives from wastage of materials 
brought onto and used at construction sites. Likewise, for 
redevelopment projects, the amount of solid waste generated, while 
greater than the amounts generated at new developments, would not vary 
regardless of the option selected (including the ``no change'' option).

C. Energy Usage

    The consumption of energy as a result of today's proposed rule is 
not expected to be measurably affected regardless of the option 
selected because the operations that currently consume energy (both 
direct fossil fuel use and electricity) will not be changing to any 
substantial degree during land disturbance.

D. By-Products From BMPs

    EPA projects that by-products from BMPs used during the 
construction phase as a result of today's rule would not substantially 
change the pollutant types or quantities generated. Pollutant sources 
during the construction phase are primarily characterized by sediment 
from the in-place soils (trapping and ultimate removal or repositioning 
on the site), various constituents in excess concrete slurry and wash 
water (these include high pH and solids, such as sand and the fine 
particulate matter that comprise cement), and the possible residual 
effects from soil amendments such as polyacrylamide (PAM).

XV. Environmental Assessment

A. Introduction

    In its Environmental Assessment (see ``Supporting Documentation''), 
EPA evaluated environmental impacts associated with the discharge of 
storm water from construction activities. Construction and land 
development activities can generate a broad range of environmental 
impacts by introducing new sources of contamination and by altering the 
physical characteristics of the affected land area. In particular, 
these activities can result in both short- and long-term adverse 
impacts to

[[Page 42673]]

surface water quality in streams, rivers, and lakes within the affected 
watershed by increasing the loads of various pollutants in receiving 
water bodies, including sediments, metals, polynuclear-aromatic 
hydrocarbons (PAHs), oil, grease, pathogens, and nutrients. Groundwater 
can also be adversely affected through diminished recharge capacity. 
Other potential impacts may include the physical alteration of existing 
streams and rivers due to excessive flow and velocity of storm water 
runoff. The 1998 National Water Quality Inventory identifies siltation 
as one of the leading pollutants contributing to impairments in 
assessed stream miles, and lists urban runoff and hydrologic 
modification as two of the leading sources of impairments.
    Sediment is an important and ubiquitous constituent in urban storm 
water runoff. Surface runoff and raindrops detach soil from the land 
surface, and this often results in sediment transport into streams. 
Sediment can be divided into three distinct subgroups: turbidity, 
suspended solids, and dissolved solids. Total suspended solids (TSS) 
are a measure of the suspended material in water. The measurement of 
TSS in urban storm water allows for estimation of sediment transport, 
which can have significant effects locally and in downstream receiving 
waters. Turbidity is a function of the suspended solids and is a 
measure of the ability of light to penetrate the water. Turbidity can 
exhibit control over biological functions, such as the ability of 
submerged aquatic vegetation to receive light and the ability of fish 
to breathe dissolved oxygen through their gills. Total dissolved solids 
are a measure of the dissolved constituents in water and are a primary 
indication of the purity of drinking water.
    Using total suspended solids (TSS) as an indicator pollutant, EPA 
quantified the impacts of construction site storm water discharges on 
water quality. As detailed in the economic assessment and described in 
section XII of today's document, economic benefits were estimated to 
the extent reductions in water quality impacts could be attributed to 
implementation of the proposed rule.

B. Methodology for Estimating Environmental Impacts and Pollutant 
Reductions

    For purposes of the environmental assessment, EPA is using the term 
``impact'' broadly to refer to negative conditions related to elevated 
concentrations of pollutants, physical destruction of habitat by 
excessive flows, elevation of water temperature, and loss of fish 
spawning access due to new road crossings.
    The Agency was able to assess only a subset of all of the potential 
environmental impacts of storm water discharges from construction 
sites. Construction activities generate initial environmental impacts 
on each acre of land as the land is converted from an undeveloped state 
(e.g., forest or rural land) to a developed condition. In addition, 
environmental impacts continue long after construction activities are 
completed because developed lands are permanently and hydrologically 
altered from their pre-developed state. Hydrologic changes result from 
alterations in storm water discharge patterns and characteristics that 
can lead to ongoing environmental damages.
    In its analysis of the options contained in this proposal, EPA only 
considered the benefits that result from reductions in sediment 
discharges that occur while land is disturbed due to implementation of 
erosion and sediment controls and conducting site inspections and 
certifications. The Agency limited its analysis to this category of 
impacts primarily because some environmental impacts are difficult to 
correlate with a specific industry activity and/or assess on a national 
basis due to the wide variety of pollutants and sources of impairment 
present in a water body. The technical tools and analytical approaches 
available simply do not lend themselves to isolating impacts 
attributable to this industry from other sources.
    For this analysis, EPA first analyzed loadings that would occur 
nationwide in the absence of any erosion and sediment control 
requirements. EPA built on an earlier analysis developed for the Phase 
II rulemaking and described in the Phase II economic analysis (op. 
cit.). This analysis estimated sediment discharged from a variety of 
``model construction sites'' incorporating various site characteristics 
(3 soil erodibility levels with 5 slopes in 15 climatic regions). From 
this model site analysis, EPA was able to estimate that the total 
sediment discharged from construction sites nationwide in the absence 
of any controls would be about 90 million tons per year. EPA did not 
calculate the total reduction in this loading that is expected to occur 
following implementation of existing Federal, State and local 
requirements (the baseline condition), but rather estimated the 
expected incremental reduction that would result from the proposed 
options. For option 1, EPA estimated based on its experience and 
engineering expertise that the additional site inspection and 
certification provisions would reduce this national loading estimate by 
approximately 5 to 15 percent (a midpoint estimate of this range was 
used for calculating benefits) over the reductions attributable to 
existing requirements. For option 2, EPA estimated based on its 
experience and engineering expertise that the additional site 
inspection and certification provisions along with the technology 
requirements would reduce this national loading estimate by 
approximately 25 percent over the reductions attributable to existing 
requirements. EPA then further subdivided these loading estimated into 
two size categories, turbidity and settleable solids, in order to 
estimate specific benefits estimates using appropriate indicators. EPA 
estimated based on its experience and engineering expertise that the 
sediment discharged would be comprised of 80 percent particles as 
settleable solids and 20 percent of particles as turbidity, by mass. 
The settleable solids loads are used to calculate monetized benefits 
for water storage capacity and navigational dredging. The turbidity 
producing solids loads are used to calculate monetized benefits for 
water treatment. The annual loads were reduced to reflect states with 
equivalent programs for Option 1 and Option 2. The supporting documents 
discusses in detail this analysis.
    EPA solicits data and comments on this approach, as well as the 
merits of conducting a more detailed analysis that estimates actual BMP 
efficiencies and associated national loadings reductions. EPA also 
solicits data and comments on conducting an analysis that incorporates 
other pollutant indicators, such as nutrients, metals and any 
additional pollutants that would be attached to sediments or contained 
in runoff discharged from construction sites.

C. Potential Loading Reductions of Proposed Options

    EPA used TSS as the primary indicator to evaluate loadings 
reductions and to determine potential water quality benefits of the 
proposed options. Reductions in TSS from construction sites would arise 
from greater oversight of construction activities and better 
implementation of BMPs (Options 1 and 2), as well as more efficient 
BMPs in certain cases (Option 2). The estimated reductions due to 
implementation of EPA's proposed Option 1 would be an annual reduction 
of 1.05 million tons of turbidity producing solids per year and a 
reduction of 4.2 million tons of

[[Page 42674]]

settleable solids per year. The estimated reductions due to Option 2 
would be 2.2 million tons of turbidity producing solids per year and a 
reduction of 8.9 million tons of settleable solids per year. EPA 
expects that the potential for considerable benefits from today's 
proposal exists due to decreases in sediment discharges to water 
bodies. EPA solicits data and comments that can provide information on 
the extent of impairments that are caused by the construction and land 
development industries, and methods of quantifying the benefits of 
today's proposal.

XVI. Benefit Analysis

    EPA has identified, quantified and monetized certain benefits 
attributable to the construction co-proposal options in today's 
document. For some benefits, EPA has identified benefits categories, 
but is unable to quantify and/or monetize them at this time. Section 
XV, Environmental Assessment, established the analytical framework for 
the benefits analysis.

A. Benefits Categories Estimated

    As discussed in section XV, EPA has chosen TSS as the most 
appropriate environmental indicator for the analysis of environmental 
impacts and benefits analysis. The primary environmental indicator 
selected was sediment entering waterways. The Agency used a simplified 
approach for the environmental assessment, because monitoring 
representative sites for a cross-section of the 2.2 million acres 
developed would not be technically and economically feasible.
    Section XV.C discusses the anticipated amount of TSS removals as a 
result of today's document. The Agency estimates that 11.1 million tons 
of TSS each year would be removed from construction site discharges 
with Option 2 and 5.3 million tons of TSS each year would be removed 
with Option 1 presented in today's proposal. EPA used its experience 
and engineering expertise to determine the amount of TSS removal that 
each option would achieve.
    When identifying environmental impacts to assess for this industry, 
the Agency decided against analyzing impacts that are extremely 
difficult to correlate with the specific industry activity and/or 
assess on a national basis. Large natural variations in watershed 
ecology (e.g., changes in species diversity, density of aquatic 
species) and variable climatic conditions greatly complicate the task 
of determining cause and effect with regard to construction site storm 
water discharges. In particular, the Agency did not analyze 
construction impacts in the following areas: (1) Habitat/biology, (2) 
stream temperatures, (3) flow and velocity, (4) conventional pollutants 
and pollutant loadings, (5) human health, and (6) groundwater. EPA 
believes that these benefit categories may have substantial benefits. 
However, the Agency has chosen not to analyze these benefits at this 
time for the proposed options because EPA is unable to quantify and/or 
monetize them. EPA solicits comments on appropriate methods to quantify 
these benefits categories.

B. Quantification of Benefits

    TSS discharged from construction sites have a substantial and 
adverse impact on downstream property owners. The TSS is suspended in 
the water column that may serve as a source of drinking water for a 
community or municipal water system. When influent for drinking water 
supplies is contaminated with TSS, the system would likely need to 
treat the water to remove the TSS and provide additional disinfection 
before distribution to system customers. These costs will lead to rate 
increases for drinking water system customers. Thus, the upstream 
actions of the construction activity impose both direct costs (e.g., 
higher treatment costs for utility operators) and indirect costs (e.g., 
higher water bills for system customers). These costs could be reduced 
by controlling construction site runoff through the use of erosion and 
sediment controls and other BMPs.
    Another impact of the discharge of sediment from construction sites 
is to reduce the capacity of water storage reservoirs. Settleable 
solids fall out of suspension and settle into water storage reservoirs. 
These accumulated solids reduce the capacity of the reservoir to hold 
as much water as in the past. With the reduced capacity of the water 
reservoir, the water supply system will bear the direct cost of 
dredging the water supply reservoir or replacing the water reservoir as 
it is taken out of service for accumulation of sediment. Water system 
customers generally bear indirect costs through rate increases. Again, 
by installing erosion and sediment controls and other BMPs at 
construction sites, these costs can be reduced.
    Yet another impact of construction and the discharge of TSS and 
storm water is the sediment that falls out of suspension and into 
navigational and shipping channels. In most cases, the public pays for 
the consequent dredging through taxes and/or higher cost of products. 
Use of erosion and sediment controls and construction sites can also 
reduce these costs.
    Reduced costs for water treatment, water storage, and navigational 
dredging are three benefit categories that EPA is using to estimate the 
benefits of the proposed rule. The Agency believes that there are many 
more benefits to this rule, but the state-of-the-art of benefit 
analysis does not provide the tools at this point to quantify and 
monetize them. For example, habitat preservation and protection is not 
easily quantified and estimated for benefits analysis. However, we know 
that people value habitat protection, because they are spending funds 
to repair streams for habitat preservation and protection.
    EPA has formulated a numeric estimate of the benefits of the 
proposed options by determining the reduction in the amount of sediment 
discharged from construction sites and in turn quantifying certain 
environmental benefits. In particular, the amount of sediment reduced 
is the primary variable in the benefits analysis.
    EPA identified three potential economic methods to monetize the 
benefits: (1) Avoided damages, (2) contingent evaluation, (3) hedonic 
assessments of property values. The Economic Analysis provides the 
details of these methods. The method that the Agency used initially to 
monetize benefits is the method of avoided damages. EPA recognizes that 
avoided damages is not the preferred approach and is working to improve 
its methods. The Agency also considered contingent evaluation and 
hedonic assessments to validate and confirm the avoided damages 
methodology.
    The avoided damages approach is a method that considers the damages 
avoided as a result of the proposal. EPA has analyzed the magnitude of 
costs primarily using the avoided damages. This method may also be 
referred to as the avoided cost approach. This method uses the costs of 
repair to estimate the benefits. These are costs that could be avoided 
if construction sites did not discharge sediment and storm water into 
surface waters.
    These costs are used to estimate the monetary value of the benefits 
of the proposal. EPA has also looked at academic literature for 
contingent valuation studies, such those used in the economic analysis 
for the NPDES Phase II storm water regulations. The Agency has used 
those studies to validate the benefits models and for sensitivity 
analyses to gain a clearer picture of the benefits of the proposed 
rule. Additional information on the benefits analysis may be found in 
the

[[Page 42675]]

Environmental Assessment and Economic Analysis.
    The benefits analysis results are shown in Table XVI-1.

           Table XVI-1.--Annual Benefits for Proposed Construction and Development Regulatory Options
----------------------------------------------------------------------------------------------------------------
                                                                                Regulatory options
                                                                 -----------------------------------------------
                                                                                     Option 2
                                                                  Option 1 (Self- (Codification,
                       Benefit categories                           inspection,        self-
                                                                  certification;    inspection,    Option 3 (No
                                                                     1 acre or    certification;    regulation)
                                                                       more)        5 acres or
                                                                                       more)
----------------------------------------------------------------------------------------------------------------
                                               Turbidity Reduction
----------------------------------------------------------------------------------------------------------------
Turbidity producing solids (million tons per year)..............            1.05             2.2               0
Water treatment monetized benefits (year 2000 $ millions).......            0.1              0.2               0
----------------------------------------------------------------------------------------------------------------
                                           Settleable Solids Reduction
----------------------------------------------------------------------------------------------------------------
Settleable Solids (million tons per year).......................            4.2              8.9               0
Water storage monetized benefits (year 2000 $ millions).........            7.6             16.0               0
Navigational dredging monetized benefits (year 2000 $ millions).            2.7              5.8               0
�����������������������������������������������������������������
    Total Monetized Benefits (year 2000 $ millions).............           10.4             22.0              0
----------------------------------------------------------------------------------------------------------------
Source: Economic Analysis; Environmental Assessment.

XVII. Benefit-Cost Comparison

    EPA has conducted a benefit-cost analysis of the construction and 
development effluent guidelines proposed in today's document. The 
benefit-cost analysis may be found in the complete set of support 
documents. Sections XII, XV, and XVI of this preamble provide 
additional details of the benefit-cost analysis.
    Table XVII-1 provides the results of the benefit-cost analysis.

   Table XVII-1.--Total Annualized Benefits and Costs of the Proposed
                           Regulatory Options
                     [Tons of sediment, year 2000 $]
------------------------------------------------------------------------
                                                      Costs     Benefits
                                                     (2000 $    (2000 $
                      Option                         millions   millions
                                                    per year)  per year)
------------------------------------------------------------------------
Self-inspection, certification; 1 acre or more....        130       10.4
Codification, self-inspection, certification; 5           505       22.0
 acres or more....................................
No regulation.....................................          0          0
------------------------------------------------------------------------

XVIII. Regulatory Implementation

A. Compliance Dates

    C&D sites must comply with the C&D regulation, once finalized, at 
the time of issuance, re-issuance, or modification of their NPDES 
permit.
    New sources must comply with the new source performance standards 
(NSPS) (once it is finalized) at the time they commence discharging 
process wastewater (i.e., storm water runoff from land disturbing 
construction activities). Because the final rule is not expected within 
120 days of the proposed rule, the Agency considers the date for 
compliance under NSPS to be when the discharge from a new source 
construction site commences following promulgation of the final rule 
(see 40 CFR 122.2). See section X.D of today's document for the 
discussion on defining new sources for the C&D category.
    EPA expects to issue a renewed Construction General Permit (CGP) in 
2003. Following promulgation of the C&D rule, which is expected in 
2004, the Agency plans to incorporate the provisions of any effective 
ELG at the time of the next permit renewal. Based on the standard five-
year period for NPDES permits, that renewal would take place in 2008. 
However, States that have issued either general or individual permits 
may choose a different (i.e. shorter) time period to implement the 
final effluent guidelines requirements. EPA requests comment on this 
planned schedule.

B. Relationship of Effluent Guidelines to NPDES Permits

    Effluent limitation guidelines and pretreatment standards act as a 
primary mechanism to control the discharges of pollutants to waters of 
the United States. Once finalized, the proposed C&D regulations would 
be applied to sites through individual NPDES permits or a general 
permit issued by EPA or authorized States under section 402 of the Act.
    The Agency has developed the limitations for this proposed rule to 
cover the discharge of pollutants for this industrial category. In 
specific cases, the NPDES permitting authority may elect to establish 
technology-based permit limits for pollutants not covered by this 
regulation. In addition, if State water quality standards or other 
provisions of State or Federal law require limits on pollutants not 
covered by this regulation (or require more stringent limits or 
standards on covered pollutants to achieve compliance), the permitting 
authority must apply those limitations or standards.

C. Upset and Bypass Provisions

    A ``bypass'' is an intentional diversion of the streams from any 
portion of a treatment facility. An ``upset'' is an exceptional 
incident in which there is unintentional and temporary noncompliance 
with technology-based permit effluent limitations because of factors 
beyond the reasonable control of the permittee. EPA's regulations 
concerning bypasses and upsets for direct dischargers are set forth at 
40 CFR 122.41(m) and (n).
    Because much of today's proposal includes design standards for 
design, installation, and maintenance of ESC BMPs, EPA considered the 
need for a bypass-type provision in regard to large storm events. 
However, EPA did not specifically include such a provision because 
today's proposed design standards only require BMPs to be designed to 
capture a specified volume of storm runoff for pollutant removal. 
Because EPA is not establishing requirements for control of larger 
storm events, specific bypass provisions were not necessary.

[[Page 42676]]

D. Variances and Waivers

    The CWA requires application of effluent limitation guidelines 
established pursuant to section 301 to all direct dischargers. However, 
the statute provides for the modification of these national 
requirements in a limited number of circumstances. Moreover, the Agency 
has established administrative mechanisms to provide an opportunity for 
relief from the application of the national effluent limitation 
guidelines for categories of existing sources for toxic, conventional, 
and nonconventional pollutants. ``Ability to Pay'' and ``water 
quality'' waivers do not apply to conventional or toxic pollutants 
(e.g., TSS, PCBs) and, therefore, do not apply to today's proposal. 
However, the variance for Fundamentally Different Factors (FDFs) may 
apply in some circumstances.
1. Fundamentally Different Factors Variance
    EPA will develop effluent limitations or standards different from 
the otherwise applicable requirements if an individual discharging 
facility is fundamentally different with respect to factors considered 
in establishing the limitation of standards applicable to the 
individual facility. Such a modification is known as a ``fundamentally 
different factors'' (FDF) variance.
    Early on, EPA, by regulation provided for the FDF modifications 
from the BPT and BAT limitations for toxic and nonconventional 
pollutants and BPT limitations for conventional pollutants for direct 
dischargers. For indirect dischargers, EPA provided for modifications 
for PSES. FDF variances for toxic pollutants were challenged judicially 
and ultimately sustained by the Supreme Court. (Chemical Manufacturers 
Assn v. NRDC, 479 U.S. 116 (1985)).
    Subsequently, in the Water Quality Act of 1987, Congress added new 
section 301(n) of the Act explicitly to authorize modifications of the 
otherwise applicable BAT effluent limitations or categorical 
pretreatment standards for existing sources if a facility is 
fundamentally different with respect to the factors specified in 
section 304 (other than costs) from those considered by EPA in 
establishing the effluent limitations or pretreatment standard. Section 
301(n) also defined the conditions under which EPA may establish 
alternative requirements. Under section 301(n), an application for 
approval of a FDF variance must be based solely on (1) information 
submitted during rulemaking raising the factors that are fundamentally 
different or (2) information the applicant did not have an opportunity 
to submit. The alternate limitation or standard must be no less 
stringent than justified by the difference and must not result in 
markedly more adverse non-water quality environmental impacts than the 
national limitation or standard.
    EPA regulations at 40 CFR part 125, subpart D, authorizing the 
Regional Administrators to establish alternative limitations and 
standards, further detail the substantive criteria used to evaluate FDF 
variance requests for direct dischargers. Thus, 40 CFR 125.31(d) 
identifies six factors (e.g., volume of process wastewater, age and 
size of a discharger's facility) that may be considered in determining 
if a facility is fundamentally different. The Agency must determine 
whether, on the basis of one or more of these factors, the facility in 
question is fundamentally different from the facilities and factors 
considered by EPA in developing the nationally applicable effluent 
guidelines. The regulation also lists four other factors (e.g., 
infeasibility of installation within the time allowed or a discharger's 
ability to pay) that may not provide a basis for an FDF variance. In 
addition, under 40 CFR 125.31(b) (3), a request for limitations less 
stringent than the national limitation may be approved only if 
compliance with the national limitations would result in either (a) a 
removal cost wholly out of proportion to the removal cost considered 
during development of the national limitations, or (b) a non-water 
quality environmental impact (including energy requirements) 
fundamentally more adverse than the impact considered during 
development of the national limits. EPA regulations provide for an FDF 
variance for indirect dischargers at 40 CFR 403.13. The conditions for 
approval of a request to modify applicable pretreatment standards and 
factors considered are the same as those for direct dischargers.
    The legislative history of section 301(n) underscores the necessity 
for the FDF variance applicant to establish eligibility for the 
variance. EPA's regulations at 40 CFR 125.32(b)(1) are explicit in 
imposing this burden upon the applicant. The applicant must show that 
the factors relating to the discharge controlled by the applicant's 
permit which are claimed to be fundamentally different are, in fact, 
fundamentally different from those factors considered by the EPA in 
establishing the applicable guidelines. An FDF variance is not 
available to a new source subject to NSPS.
2. Low Soil Loss Potential Waiver
    Some sites may qualify for a waiver due to low potential for soil 
loss. The waiver is provided for small sites (1 to 5 acres) in the 
existing NPDES storm water regulations. See Sec. 122.26(b)(15)(i)(A).

E. Other Clean Water Act Requirements

    Compliance with the provisions in any of the rules proposed today 
would not exempt a discharger from any requirement for a permit for 
dredged or fill material under section 404 of the CWA.

XIX. Related Acts of Congress, Executive Orders, and Agency Initiatives

A. Paperwork Reduction Act

    The information collection requirements in today's proposed rule 
have been submitted for approval to OMB under the Paperwork Reduction 
Act, 44 U.S.C. 3501 et seq. An Information Collection Request (ICR) 
document has been prepared by EPA (ICR No. 1842.03) and a copy may be 
obtained from Susan Auby by mail at Collection Strategies Division; 
U.S. Environmental Protection Agency (2822T); 1200 Pennsylvania Ave., 
NW, Washington, DC 20460, by email at auby.susan@epa.gov, or by calling 
(202) 566-1672. A copy may also be downloaded from the internet at 
http://www.epa.gov/icr. In today's proposed Option 2, 40 CFR 450.21(f) 
and (g) would require operators to maintain a site log. The equivalent 
provision in proposed Option 1 is 40 CFR 122.44(t). See section X.D. of 
today's document for a description of these provisions. EPA estimates 
that this provision would create a total annual burden of about 760,158 
hours for Option 1 and 633,033 hours for Option 2. This estimate is the 
incremental burden above the currently-approved burden level for the 
EPA and State construction general permits. EPA has received OMB 
approval for the current permit requirements under control no. 2040-
0188, ``Notice of Intent for Storm Water Discharges Associated with 
Construction Activity under a NPDES General Permit.''
    In today's proposed Option 2, 40 CFR 450.21(a) would require 
permittees to prepare a Storm Water Pollution Prevention Plan (SWPPP). 
This requirement would essentially codify current CGP requirements and 
no additional burden would be imposed.
    Burden means the total time, effort, or financial resources 
expended by persons to generate, maintain, retain, or disclose or 
provide information to or for a

[[Page 42677]]

Federal agency. This includes the time needed to review instructions; 
develop, acquire, install, and utilize technology and systems for the 
purposes of collecting, validating, and verifying information, 
processing and maintaining information, and disclosing and providing 
information; adjust the existing ways to comply with any previously 
applicable instructions and requirements; train personnel to be able to 
respond to a collection of information; search data sources; complete 
and review the collection of information; and transmit or otherwise 
disclose the information.
    An Agency may not conduct or sponsor, and a person is not required 
to respond to a collection of information unless it displays a 
currently valid OMB control number. The OMB control numbers for EPA's 
regulations are listed in 40 CFR part 9 and 48 CFR chapter 15.
    Comments are requested on the Agency's need for this information, 
the accuracy of the provided burden estimates, and any suggested 
methods for minimizing respondent burden, including through the use of 
automated collection techniques. Send comments on the ICR to the 
Director, Collection Strategies Division; U.S. Environmental Protection 
Agency (2822); 1200 Pennsylvania Ave., NW, Washington, DC 20460; and to 
the Office of Information and Regulatory Affairs, Office of Management 
and Budget, 725 17th St., NW, Washington, DC 20503, marked ``Attention: 
Desk Officer for EPA.'' Include the ICR number in any correspondence. 
Since OMB is required to make a decision concerning the ICR between 30 
and 60 days after June 24, 2002, a comment to OMB is best assured of 
having its full effect if OMB receives it by July 24, 2002. The final 
rule will respond to any OMB or public comments on the information 
collection requirements contained in this proposal.

B. Unfunded Mandates Reform Act (UMRA)

    Title II of the Unfunded Mandates Reform Act of 1995 (UMRA), Public 
Law 104-4, establishes requirements for Federal agencies to assess the 
effects of their regulatory actions on State, local, and Tribal 
governments and the private sector. Under section 202 of UMRA, EPA 
generally must prepare a written statement, including a cost-benefit 
analysis, for proposed and final rules with ``Federal mandates'' that 
may result in expenditures by State, local, and Tribal governments, in 
the aggregate, or by the private sector, of $100 million or more in any 
one year. Before promulgating an EPA rule for which a written statement 
is needed, section 205 of UMRA generally requires EPA to identify and 
consider a reasonable number of regulatory alternatives and adopt the 
least costly, most cost-effective or least burdensome alternative that 
achieves the objectives of the rule. The provisions of section 205 do 
not apply when they are inconsistent with applicable law. Moreover, 
section 205 allows EPA to adopt an alternative other than the least 
costly, most cost-effective or least burdensome alternative if the 
Administrator publishes with the final rule an explanation why that 
alternative was not adopted. Before EPA establishes any regulatory 
requirements that may significantly or uniquely affect small 
governments, including tribal governments, it must have developed under 
section 203 of UMRA a small government agency plan. The plan must 
provide for notifying potentially affected small governments, enabling 
officials of affected small governments to have meaningful and timely 
input in the development of EPA regulatory proposals with significant 
Federal intergovernmental mandates, and informing, educating, and 
advising small governments on compliance with the regulatory 
requirements.
    EPA has determined that this rule contains a Federal mandate that 
may result in the expenditure by State, local, and Tribal governments, 
in the aggregate, or by the private sector of $100 million or more in 
any one year. Accordingly, EPA has prepared under section 202 of UMRA a 
written statement which is summarized below.
    EPA is proposing the technology-based construction and development 
(C&D) effluent guidelines under sections 301, 304, 306, 308, 402,and 
501 of the Clean Water Act CWA), 33 U.S.C. 1311, 1314, 1316, 1318, 1342 
and 1361 and under authority of the Pollution Prevention Act of 1990, 
42 U.S.C. 13101 et seq.
    Today, EPA is co-proposing three options for this C&D effluent 
limitation guideline: (1) Construction site permittee self-inspection 
and certification, (2) ``codify'' provisions of the current EPA 
construction general permit with inspection and certification, and (3) 
no regulation. EPA is considering each of the three options; no option 
is preferred over the other. Options 1 and 2 would impose a mandate on 
the States, local, or Tribal governments, in the aggregate, or private 
sector that would exceed $100 million per year. Option 3 would not 
impose a mandate with costs that exceed $100 million per year for the 
public or private sectors. The Agency has conducted economic analyses 
for each of the three options, which are provided in the Economic 
Analysis for today's proposed rule (see ``Supporting Documentation''). 
Additional summary economic information may be found in sections XII, 
XVI, and XVII of today's document.
    Option 1 would establish permittee self-inspection and 
certification requirements to improve the effectiveness of ESCs at 
construction sites subject to NPDES storm water permits. Option 1 would 
apply to sites 1 acre or more. This option would require permittees to 
periodically inspect their ESCs during land disturbing activities and 
certify that they have been properly installed and maintained. Option 1 
would cost about $130 million annually; the benefits for this option 
are about $10 million per year. This option would encourage permittees 
to adopt better ESC practices and, in the process, reduce discharges of 
sediment and other pollutants from those sites. Under Option 1, EPA 
estimates that State and local governments would incur about $13 
million in annual costs and the private sector would incur about $117 
million in annual costs. Of the $13 million in annual costs to State 
and local governments, about $3 million would be incurred by small 
government entities, less than 50,000 population, and about $10 million 
annually would be incurred by large government entities, equal to or 
greater than 50,000 population. EPA has determined that this option is 
the least expensive of the set of two regulatory options in today's 
proposal. Option 1 would amend the existing NPDES regulations and 
improve the effectiveness of the storm water permit program. The no 
regulation option, discussed later in this section, is the least 
expensive proposed option in terms of direct costs outlays.
    Option 2 would establish a new national standard for ESC at 
construction sites of five acres or more, basically codifying the 
requirements of EPA's construction general permit. In addition, this 
option would add permittee self-inspection and certification 
requirements for ESCs to improve compliance. EPA estimates that these 
controls would remove, on average, 80 percent of the total suspended 
solids (TSS) discharged from construction sites. The problem that EPA 
is addressing through this proposed rule is the need to reduce 
construction site erosion and reduce the amount of sediment discharged 
during land disturbance activities. EPA estimates that Option 2 would 
cost about $505 million annually and would have about $22 million in 
annual monetized benefits. The benefits of the

[[Page 42678]]

proposal would accrue to the public in the form of reduced sediment and 
polluted storm water discharged to the Nation's surface waters. The 
sediment and polluted storm water is discharged from active 
construction sites and settles into stream beds, drinking water 
reservoirs, and navigational channels. If the excess sediment 
discharged from construction sites could be reduced or avoided 
altogether, the public would benefit with improved water quality and 
less frequent dredging of drinking water reservoirs and navigational 
channels. This option is the more expensive of the options. The 
codification of the CGP plus self-inspection and certification (Option 
2) would improve controls at construction sites and in the process 
reduce the amount of sediment and storm water discharged from 
construction sites. EPA found that the cost of sediment removed is 
about $0.01 per pound. The Agency believes that this cost is reasonable 
for the pollutant reduction achieved.
    Under Option 2, about $50 million of annual incremental costs would 
accrue to State and local governments and about $455 million to the 
private sector. The Agency does not have data to estimate the costs to 
Tribal lands and is searching for additional information about Tribal 
lands for the final rule. The Agency requests information about the 
impacts and costs on Tribal lands. Of the $50 million in costs accruing 
to State and local government agencies, about $5 million per year would 
be incurred by small government agencies, communities with less than 
50,000 population, and about $45 million would accrue to large 
communities, those with more than 50,000 population. EPA has analyzed 
the impacts on small government entities. This analysis is discussed 
later in this section. EPA estimates that about $2 million of the 
annual benefits will come from improvements to State and local 
government-funded projects and about $20 million in benefits will come 
from improvements to private sector projects. This distribution of the 
benefits reflects the distribution of construction and development in 
the United States economy. About 25 percent of all construction is 
funded by Federal, state and local governments, according to the 1997 
Census of Construction. The Federal portion of the incremental costs of 
the proposal are not covered by UMRA.
    State and local governments may find resources available at the 
Federal, State and local level to defray some of the costs associated 
with the proposed rule. The Clean Water Act State Revolving Fund (SRF) 
provides capitalization grants to eligible States, that provide a 
twenty percent match, and then provide financial assistance to 
municipalities or State agencies. Some of these funds are eligible to 
finance storm water controls. In some cases, these funds are available 
to the private sector if projects are located in a designated estuary. 
Other funds are available through other programs such as grant and loan 
programs, public/private partnerships, and private sector 
contributions.
    This proposal will not have any disproportionate impacts on 
particular regions of the country, or particular State, local, or 
Tribal governments, or communities, or particular segments of the 
private sector. The regulatory options proposed in today's document 
apply broadly to the construction and development industry in the 
United States. The proposed options will have an impact in those 
locations, wherever they happen to be, in which construction and 
development is occurring. Over time, different regions of the country 
experience more construction and development than other regions of the 
country. For example, at this time, California and Texas are 
experiencing a relatively large amount of development, along with 
Florida and Pennsylvania.
    Option 3 is the no-regulation option for the construction and 
development industry. Under Option 3, there would be no costs or 
benefits directly attributable to government entities or to the private 
sector, with the following important exception. Executive Order 12866 
advises agencies to consider the state of the world before and after 
the prospective regulation. Under the no-regulation option, the current 
state of the world would not be changed, nor would the discharge of 
sediment into the Nation's surface waters from C&D activities. These 
partially-controlled sediments would continue to contribute to the loss 
of water quality, and sedimentation in water reservoirs and streams. 
These effects can be attributed as costs imposed on society as an 
externality, and realized when choices are made to reclaim or restore 
the functionality of the water body. EPA's benefit methodology is 
limited in terms of the state-of-the-art to monetize these benefits. 
However, the Agency believes that the benefits may be substantially 
larger than EPA is claiming through monetized benefits.
    Additional information about the costs and economic impacts of the 
proposed rule may be found in section XII of today's document. In 
addition, section XVI and section XVII of today's document provide 
information and analyses about the environmental assessment and benefit 
analysis. The analyses for these proposed options may be found in the 
support documents in the record for this proposed action.
    The proposed regulatory options would not impose any costs on the 
industry or government entities after termination of the applicable 
NPDES permits. Option 1 would require only permittee self-inspection 
and certification activities during the active construction period. 
Option 2, in addition to the inspection and certification requirements, 
would require installation, operation and maintenance of temporary ESCs 
during the active construction period. Option 2 would not require 
maintenance of these controls after the active construction period.
    EPA has determined that the mandates under this proposal will not 
have a significant impact on the national economy in the form of 
productivity, economic growth, full employment, creation of productive 
jobs and international competitiveness. Nevertheless, the Agency has 
conducted an extensive analysis of the economic impacts of the proposed 
rule on the construction and development industry and the national 
economy. These analyses are presented in section XII of today's 
document. While the impact analysis shows that less than one percent of 
firms in the industry could potentially fail under the rule and that 
less than one percent of jobs in the industry could be lost from the 
most stringent options under analysis, the Agency concluded that, based 
upon the scale of this industry which is a major component of the U.S. 
economy, even a small percentage of jobs or firms closed is 
significant, especially in a sluggish economy. Accordingly, the burden 
on the economy is one of the reasons the Agency rejected more stringent 
options. The options proposed today are a result of an extensive 
economic analysis of a suite of construction and storm water options. 
The Agency determined that Option 1 is the least costly and least 
burdensome regulatory option.
    EPA is not required by UMRA to consult with elected representatives 
(or their designated authorized employees) of the affected State, 
local, and Tribal governments, because the proposed rule would not 
impose a Federal mandate on State, local and tribal governments, in the 
aggregate, of $100 million or more in any one year. The Agency 
estimates that the costs to State, local and tribal governments is 
about $50 million on an annual basis. Nevertheless, EPA has conducted 
outreach to the public and private sectors to obtain their input on the 
proposed regulations. The Agency

[[Page 42679]]

has conducted two national public meetings in the past year: one in 
Washington, DC and one in Denver, Colorado. Representatives of several 
State and local agencies, and engineering consultants representing 
builders and developers attended these national meetings. The Agency 
also convened a 60-day Small Business Advocacy Review (SBAR) Panel on 
July 16, 2001 to obtain input from the small business community on the 
possible impacts of the proposed regulations on small businesses. The 
SBAR Panel was composed of representatives of the Office of Management 
and Budget, the Small Business Administration, and EPA. The SBAR Panel 
met with small entity representatives (SERs) and held conference calls 
with the SERs to discuss the impact of the proposal. The Panel issued a 
final report to the Administrator in October 2001. In addition, through 
the auspices of the National Association of Home Builders (NAHB), EPA 
conducted six focus group meetings with residential builders and 
developers to learn more about the economic and business practices of 
the construction and development industry. Finally, the Agency has 
conducted numerous conference calls with builders and developers to 
learn more about their business and technical practices and 
participated in conferences and meetings across the country.
    EPA has determined that none of the options proposed today might 
significantly or uniquely affect small governments. Thus, today's rule 
is not subject to the requirements of section 203 of UMRA. 
Nevertheless, the Agency has taken steps to provide information and 
accessability to small government agencies. The Agency has conducted an 
extensive small government economic impact analysis, because the Agency 
wants to understand the impacts of the proposed rule. Moreover, the 
Agency usually conducts a small government analysis for all effluent 
guidelines to comply with all applicable Federal requirements and 
Executive Orders. The most expensive proposed regulatory option would 
impose requirements for ESC at construction sites. These requirements 
are technology-based requirements for construction sites that are 
designed to work with the NPDES storm water program. Some construction 
and development projects are funded by State and local governments, but 
most are funded by the private sector. The Agency has determined that 
about 12 percent of all projects funded by State and local governments 
are funded by small government entities, those with a population under 
50,000, and about 88 percent are funded by large governments, those 
with a population greater than 50,000. EPA's economic analysis shows 
that the cost to small governments of the most costly option is 
significantly less than one tenth of one percent of the revenues of 
those communities.
    Nevertheless, EPA considered approaches to reduce any impact and 
assessed methods to find better ways to meet the objectives of the 
proposal with as few impacts as possible. EPA used several methods to 
determine costs to small communities, and each method shows that the 
cost to small communities from the most costly option is much less than 
one tenth of one percent of their annual revenues. Under one method the 
Agency compared the aggregate incremental costs of the most costly 
option to small governments with the aggregate annual revenue of small 
governments. In another method, the Agency analyzed the impacts on 
average small government agencies, based upon data on small government 
annual revenues and costs. As a result, this rule will not result in a 
significant cost to small communities. The Agency requests comment on 
the impacts on small communities from the requirements under this 
proposal. The small government agency analysis can be found in the 
Economic Analysis.
    EPA is developing procedures and methods with which to provide 
information about this proposal to small government agencies. In 
particular, the Agency has established a website to distribute 
information to the public, industry, and government entities, in 
particular small government agencies, about today's proposed rule. The 
website may be accessed at http://www.epa.gov/waterscience/guide/
construction/. This website provides information on EPA's effluent 
guidelines program and will contain information about today's proposed 
regulation.

C. Regulatory Flexibility Act (RFA) as Amended by the Small Business 
Regulatory Enforcement Fairness Act of 1996 (SBREFA)

1. Introduction
    The RFA, 5 U.S.C. 601 et. seq., generally requires an agency to 
prepare a regulatory flexibility analysis of any rule subject to notice 
and comment rulemaking requirements under the Administrative Procedure 
Act or any other statute unless the agency certifies that the rule will 
not have a significant impact on a substantial number of small 
entities. Small entities include small businesses, small organizations, 
and small governmental jurisdictions.
    For purposes of assessing the impacts of today's rule on small 
entities, EPA defined: (1) Small businesses, according to SBA size 
standards, as construction businesses that receive less than $27.5 
million in annual revenue and developers that receive less than $5 
million in annual revenue; (2) small government jurisdictions as small 
governments of a city, county, town, school district or special 
district with a population of less than 50,000; and (3) small 
organizations as any not-for-profit enterprise that is independently 
owned and operated and is not dominant in its field.
    In accordance with section 603 of the RFA, EPA has prepared an 
initial regulatory flexibility analysis (IRFA) that examines the impact 
of the proposed rule on small entities along with regulatory 
alternatives that could reduce that impact. The IRFA is available for 
review in the docket and is summarized below.
    The objective for the proposed effluent guidelines for the 
construction and development (C&D) industry is to reduce sediment and 
storm water discharged from active construction sites. EPA's analysis 
indicates that storm water discharges from construction sites 
contribute sediment to the nation's surface waters that is deposited in 
stream beds, lakes, navigational channels, and water supply reservoirs. 
Notwithstanding the social policy objective of reducing sediment and 
storm water discharges, EPA has conducted extensive analyses of the 
impacts on small businesses based upon the costs and impacts of three 
co-proposed options. EPA used the small business analyses to identify 
approaches that would reduce and minimize impacts on small businesses, 
while at the same time striking a balance that would achieve the highly 
desirable goal of reducing storm water pollution. EPA also is 
soliciting comments on other, less costly approaches to meet the 
objective of the proposal. The Economic Analysis in its entirety and 
the initial regulatory flexibility analysis (IRFA)(Chapter 6 within the 
Economic Analysis) provide EPA's analysis of the proposed requirements 
on small business entities. Additional information on the economic 
impacts and, in particular, the impacts on small businesses, may be 
found in section XII of today's document.
    EPA proposes to set technology-based effluent guidelines to control 
sediment and storm water discharges from active

[[Page 42680]]

construction sites. Construction and development activity disturbs the 
soil on construction sites, and, in the process, releases sediment and 
storm water into surface streams, lakes, and water supply reservoirs. 
See section VI.B.2, Clearing, Excavating and Grading of today's 
document for additional details. Disturbed soil, if not managed 
properly, can be easily washed off-site during storm events. Storm 
water and sediment discharges during construction can cause an array of 
physical, chemical and biological impacts. Water quality impairment 
results, in part, because pollutants available at construction sites 
are released into surface waters. The interconnected process of erosion 
(detachment of the soil particles), sediment transport, and delivery is 
the primary pathway for introducing key pollutants, such as nutrients 
(nitrogen and phosphorous), metals and organic compounds into surface 
waters and aquatic systems.
    The proposed rule would establish technology-based effluent 
guidelines for the control of erosion and sediment on active 
construction projects. The technology-based options would complement 
the requirements of the existing NPDES storm water requirements. EPA is 
proposing this regulation under the authorities of sections 301, 304, 
306, 308, 402 and 501 of the Clean Water Act, 33 U.S.C. 1311, 1314, 
1316, 1318, 1342 and 1361 and under authority of the Pollution 
Prevention Act of 1990, 42 U.S.C. 13101 et seq., Public Law 101-508, 
November 5, 1990.
    For purposes of assessing the economic impacts of today's rule on 
small entities through the IRFA, ``small entity'' is defined by SBA 
size standards for small businesses and RFA default definitions for 
small governmental jurisdictions and small organizations. The small 
entities directly regulated by this proposed rule include small land 
developers, small residential construction firms, small commercial and 
industrial firms, and small special trade firms. Over ninety percent of 
the businesses in the construction and development industry are small 
businesses. EPA recognizes the tremendous contributions that these 
small businesses make to the fabric of the American economy. 
Accordingly, the Agency has attempted to reduce impacts to small 
businesses while, at the same time, working to identify ways to achieve 
the objective of today's document.
    Table XII-8 in section XII of today's document presents the results 
of EPA's small business analysis.
    EPA also has analyzed the projected reporting, recordkeeping, and 
other compliance requirements under the Paperwork Reduction Act for 
today's proposed rule, including an estimate of the classes of small 
entities that would be subject to the proposed rule. The results of the 
analysis are reported in section XIX.A, Paperwork Reduction Act. EPA 
anticipates that small firms may incur some incremental costs for 
reporting, record keeping and other compliance requirements. However, 
these incremental costs are expected to be small. EPA has analyzed the 
incremental burden and costs of reporting and record keeping 
requirements. These costs are covered by the approved information 
collection request (ICR) for the existing NPDES Storm Water Program. 
Moreover, these costs are included in the engineering cost models and 
in the economic impact models that support the regulatory options in 
today's document.
    EPA has not identified any rules that duplicate, overlap, of 
conflict with today's proposal. Moreover, this proposal would 
complement the existing NPDES storm water regulations.
    There may be alternatives to the proposed options that accomplish 
the objectives of today's proposal. EPA is seeking comment on 
variations to these options and is particularly interested in 
information that would accomplish these objectives and minimize any 
significant economic impact on small entities.
    The Agency as analyzed a broad suite of regulatory options and 
technology alternatives. The three regulatory options in today's 
document provide the final set of options that the Agency is 
considering for the proposal.
    As required by section 609(b) of the RFA, as amended by SBREFA, EPA 
also conducted outreach to small entities and convened a Small Business 
Advocacy Review (SBAR) Panel to obtain advice and recommendations of 
representatives of the small entities that potentially would be subject 
to the rule's requirements. On July 16, 2001, EPA's Small Business 
Advocacy Chairperson convened the C&D SBAR panel under section 609(b). 
In addition to the Chairperson, the Panel consists of the Director of 
the Engineering and Analysis Division of the Office of Science and 
Technology within EPA's Office of Water, the Administrator of the 
Office of Information and Regulatory Affairs within the Office of 
Management and Budget (OMB), and the Acting Chief Counsel for Advocacy 
of the Small Business Administration (SBA).
    Prior to convening the Panel on July 16, 2001, EPA held a 
conference call/meeting on June 14, 2001 to receive information from 
prospective small entity representatives (SER) about plans for 
convening the Panel and their early concerns about the planned proposed 
regulation. EPA invited seven residential builders and developers, five 
heavy construction company representatives, one local government 
official, one trade association representative, and five consultants to 
serve as potential SERs during the pre-panel outreach process. The full 
Panel report lists the materials provided to the SERs and summarizes 
their comments. Their full written comments also are attached to the 
report. In light of these comments, the Panel considered the regulatory 
flexibility issues specified by RFA/SBREFA and developed the findings 
and discussion summarized below.
    Consistent with the RFA/SBREFA requirements, the Panel evaluated 
the assembled materials and small-entity comments on issues related to 
the elements of the IRFA. A copy of the Panel report is included in the 
docket for this proposed rule.
2. Summary of Panel Recommendations
    The SBAR Panel submitted a final report of the sixty day panel 
process, that convened on July 16, 2001, to the Administrator of EPA in 
October 2001. The following issues and EPA's response provides 
information about the discussions between the SBAR Panel and the SERs. 
The final SBAR Panel Report is available in the docket for the proposed 
effluent guidelines for the construction and development industry.
a. Related Federal Rules
     The Panel recommended that EPA, during the development of 
the proposed effluent guidelines, evaluate the adequacy of the current 
NPDES storm water program. The Panel also recommended that EPA proceed 
with the development of proposed effluent guidelines, but that in doing 
so, keep open the option of ultimately declining to promulgate final 
guidelines until the effectiveness of Phase I and Phase II, without 
national effluent guidelines, can be evaluated more fully.
    EPA response. EPA is proposing a set of three options that is 
consistent with the comments from the Small Business Advocacy Review 
(SBAR) Panel. One of the options would require additional ESCs. The 
three options are: (1) Self-inspection and certification for projects 
one acre or more; (2) Codify the CGP with self-inspection and 
certification for projects five acres or more; (3) a no-regulation 
option that considers the possibility of not issuing a final

[[Page 42681]]

regulation. The Agency appreciates the comments from the SBAR Panel, 
and the regulatory options in today's document reflect the Panel's 
final report.
     The Panel further recommended the inclusion in the 
proposal of regulatory language that would provide a mechanism by which 
construction sites could meet the effluent guidelines requirement by 
complying with State and/or local regulations that provide a comparable 
level of environmental protection. The Panel also noted and endorsed 
EPA's intention to incorporate any additional requirements for ESC and 
storm water management developed under the effluent guidelines into the 
existing construction general permitting system, which should ease the 
regulatory burden associated with the new requirements, at least in 
terms of permitting and related paperwork costs.
    EPA response. EPA plans to recognize States with excellent storm 
water programs. In those States, there would be no additional 
requirements beyond those currently in place. In addition, there would 
be no incremental costs to those States or the dischargers in those 
States.
    EPA plans to implement the technology-based effluent guidelines 
through the existing NPDES storm water program. Moreover, EPA plans to 
implement the effluent guidelines through the construction general 
permits as recommended by the SBAR Panel.
b. Regulatory Alternatives
     Many of the SERs commented that quantitative or numerical 
effluent standards are not appropriate for storm water discharges. 
Another SER indicated that numeric limits are unproven in a 
construction discharge context and are extremely cost-ineffective. The 
Panel recommended against establishing across-the-board storm water 
monitoring requirements as part of the effluent guidelines.
    EPA response. For the reasons discussed in section IX.B of today's 
document, EPA is not proposing quantitative or numerical effluent 
standards for construction and development, and is not proposing storm 
water monitoring requirements in today's proposed rule.
     The Panel urged EPA, as it conducts evaluations of the 
feasibility of establishing numeric effluent limitations to comply with 
the settlement agreement with NRDC, to fully consider the many 
challenges associated with developing numeric effluent standards, such 
as monitoring difficulties, site-specific variability, and the 
stochastic nature of rainfall and runoff events. The Panel recommended 
that EPA acquire and evaluate data on both costs and effectiveness of 
such requirements from sites across the country, reflecting a variety 
of geographic, weather, soil, and other site conditions, before it 
makes any determination on the utility and feasibility of such 
standards. The Panel also recommended that any BMP certification 
requirements that may be included in the guidelines be limited to 
design parameters only and not include performance certification or 
liability of the certifier for failure of BMPs to perform as expected.
    EPA response. As described in the Agency's response to the previous 
Panel recommendation, EPA is not proposing quantitative or numerical 
effluent standards. EPA has compiled data from across the country and 
found that numeric limits and monitoring requirements are not the most 
effective tools for management and control of storm water discharges.
     Several SERs suggested that EPA base the effluent 
guidelines on the existing CGP requirements. The panel recommended that 
EPA give consideration to this approach and that, at a minimum, EPA 
should present it for comment in the preamble to the proposed effluent 
guidelines as a regulatory option under consideration.
    EPA response. EPA gave considerable weight to this recommendation 
from the SBAR Panel. The Agency has concluded that using the 
technology-based requirements to complement those in the CGP has 
considerable advantages and served as the basis for one of the options 
proposed today.
c. Methodological Issues
     The Panel recommended that EPA fully evaluate the 
appropriateness of the selected baseline requirements and the estimated 
costs, and the regulatory requirements and their costs in the 
development of the proposed rule. The Panel further recommended that 
EPA specifically consider the comments of the SERs in this effort.
    EPA response. EPA has assessed the baseline and understands the 
progress that the industry has made in improving the implementation of 
ESCs. The Agency has conducted an analysis that reflects the current 
level of progress and the progress anticipated under the existing storm 
water programs.
    EPA invites comments on all aspects of this proposal and its 
impacts on small entities.

D. Executive Order 12866: Regulatory Planning and Review

    Under Executive Order 12866 (58 FR 51735, October 4, 1993), the 
Agency must determine whether the regulatory action is ``significant'' 
and therefore subject to OMB review and the requirements of the 
Executive Order. The Order defines ``significant regulatory action'' as 
one that is likely to result in a rule that may:
    (1) Have an annual effect on the economy of $100 million or more or 
adversely affect in a material way the economy, a sector of the 
economy, productivity, competition, jobs, the environment, public 
health or safety, or State, local, or tribal governments or 
communities;
    (2) Create a serious inconsistency or otherwise interfere with an 
action taken or planned by another agency;
    (3) Materially alter the budgetary impact of entitlements, grants, 
user fees, or loan programs or the rights and obligations of recipients 
thereof; or
    (4) Raise novel legal or policy issues arising out of legal 
mandates, the President's priorities, or the principles set forth in 
the Executive Order.
    Pursuant to the terms of Executive Order 12866, EPA has concluded 
that this rule is a ``significant regulatory action.'' As such, this 
action was submitted to OMB for review. Changes made in response to OMB 
suggestions or recommendations will be documented in the public record.

E. Executive Order 13132: Federalism

    Executive Order 13132, entitled ``Federalism'' (64 FR 43255, August 
10, 1999), requires EPA to develop an accountable process to ensure 
``meaningful and timely input by State and local officials in the 
development of regulatory policies that have Federalism implications.'' 
``Policies that have Federalism implications'' is defined in the 
Executive Order to include regulations that have ``substantial direct 
effects on the States, on the relationship between the national 
government and the States, or on the distribution of power and 
responsibilities among the various levels of government.''
    This proposed rule does not have Federalism implications. It will 
not have substantial direct effects on the States, on this relationship 
between the national government and the States, or on the distribution 
of power and responsibilities among the various levels of government, 
as specified in Executive Order 13132. EPA estimates that the average 
impact on all authorized States and local governments of the most 
expensive of the options

[[Page 42682]]

proposed today is $50 million (year 2000 $) annually. EPA does not 
consider an impact of $50 million (year 2000 $) on States and local 
governments a substantial effect. Moreover, this annual cost is less 
than one tenth of one percent of the revenues of State and local 
government.
    Further, the revised regulations would not alter the basic State-
Federal scheme established in the Clean Water Act under which EPA 
authorizes States to carry out the NPDES permitting program. EPA 
expects the revised regulations to have little effect on the 
relationship between, or the distribution of power and responsibilities 
among, the Federal and State governments. Thus, Executive Order 13132 
does not apply to this rule.
    In the spirit of Executive Order 13132, and consistent with EPA 
policy to promote communications between EPA and State and local 
governments, EPA specifically solicits comments on this proposed rule 
from State and local officials.

F. Executive Order 13045: Protection of Children From Environmental 
Health Risks and Safety Risks

    Executive Order 13045, ``Protection of Children from Environmental 
Health Risks and Safety Risks'' (62 FR 19885, April 23, 1997) applies 
to any rule that: (1) Is determined to be ``economically significant'' 
as defined under Executive Order 12866, and (2) concerns an 
environmental health or safety risk that EPA has reason to believe may 
have a disproportionate effect on children. If the regulatory action 
meets both criteria, the Agency must evaluate the environmental health 
or safety effects of the planned rule on children, and explain why the 
planned regulation is preferable to other potentially effective and 
reasonably feasible alternatives considered by the Agency.
    This proposed rule is not subject to Executive Order 13045 because 
it does not concern an environmental health or safety risk that EPA has 
reason to believe may have a disproportionate effect on children. This 
rule is based on technology performance, not health or safety risks.

G. Executive Order 13175: Consultation and Coordination With Indian 
Tribal Governments

    Executive Order 13175, entitled ``Consultation and Coordination 
with Indian Tribal Governments'' (65 FR 67249, November 6, 2000), 
requires EPA to develop an accountable process to ensure ``meaningful 
and timely input by tribal officials in the development of regulatory 
policies that have tribal implications.''
    ``Policies that have Tribal implications'' is defined in the 
Executive Order to include regulations that have substantial direct 
effects on one or more Indian Tribes, on the relationship between the 
Federal government and the Indian Tribes, or on the distribution of 
power and responsibilities between the Federal government and Indian 
Tribes. This proposed rule does not have tribal implications. It will 
not have substantial direct effects on Tribal governments, on the 
relationship between the Federal government and Indian Tribes, or on 
the distribution of power and responsibilities between the Federal 
government and Indian tribes as specified in Executive Order 13175. 
Today's proposed rule contains no Federal mandates for Tribal 
governments and does not impose any enforceable duties on Tribal 
governments. Thus, Executive Order 13175 does not apply to this rule. 
In the spirit of Executive Order 13175, and consistent with EPA policy 
to promote communications between EPA and Tribal governments, EPA 
specifically solicits comment on this proposed rule from tribal 
officials.

H. National Technology Transfer and Advancement Act

    Section 12(d) of the National Technology Transfer and Advancement 
Act (NTTAA) of 1995, (Public Law 104-113, section 12(d); 15 U.S.C. 272 
note) directs EPA to use voluntary consensus standards in its 
regulatory activities unless to do so would be inconsistent with 
applicable law or otherwise impractical. Voluntary consensus standards 
are technical standards (e.g., materials specifications, test methods, 
sampling procedures, and business practices) that are developed or 
adopted by voluntary consensus standard bodies. The NTTAA directs EPA 
to provide Congress, through OMB, explanations when the Agency decides 
not to use available and applicable voluntary consensus standards.
    The Agency is not aware of any consensus-based technical standards 
for the types of controls contained in today's proposal. EPA welcomes 
comments on this aspect of the proposed rulemaking and, specifically, 
invites the public to identify potentially-applicable voluntary 
consensus standards and to explain why such standards should be used in 
this regulation.

I. Plain Language Directive

    Executive Order 12866 requires each agency to write all rules in 
plain language. EPA invites comments on how to make this proposed rule 
easier to understand.

J. Executive Order 13211 (Energy Effects)

    This rule is not a ``significant energy action'' as defined in 
Executive Order 13211, ``Actions Concerning Regulations That 
Significantly Affect Energy Supply, Distribution, or Use'' (66 FR 
28355, May 22, 2001) because it is not likely to have a significant 
adverse effect on the supply, distribution, or use of energy. The 
treatment systems required by today's proposal rely on passive 
treatment techniques that do not utilize mechanical equipment. The 
proposed rule may require larger sediment basins in certain cases, and 
therefore may result in the use of additional fuel for construction 
equipment conducting excavation and soil moving activities. EPA 
estimates that this additional fuel usage will be approximately 700,000 
gallons per year, which is insignificant compared to the annual 
consumption in the United States.

XX. Solicitation of Data and Comments

A. Specific Solicitation of Comments and Data

    EPA solicits comments on all aspects of today's proposal. In 
addition to the various topics on which EPA has specifically solicited 
comments throughout this proposal, EPA solicits comments in several 
additional areas.
    Today's proposal at Sec. 450.21(i) specifies requirements for 
permittees to remove accumulated sediment from sediment traps and ponds 
when design capacity has been reduced by 50 percent. Today's proposal 
does not require any other specific maintenance requirements, although 
some additional maintenance costs such as replacing mulching have been 
included in the costs of Option 2. EPA solicits comments on the 
assumption that these maintenance activities would be a natural outcome 
of the inspection requirements. Alternatively, EPA solicits comment on 
additional maintenance requirements that the Agency should consider 
requiring through regulation, as well as the costs and benefits of such 
requirements.
    EPA solicits comments on the effectiveness and appropriateness of 
each of the technologies contained in today's proposal. The Agency also 
solicits comments on any other equivalent technologies the Agency 
should consider, as well as the costs,

[[Page 42683]]

benefits and effectiveness of such technologies.
    EPA has attempted to capture all of the provisions of the EPA's 
``national'' CGP (63 FR 7901, February 17,1998) in today's proposal. 
EPA solicits comments on the components of the CGP that were 
inadvertently left out of today's proposal, as well as the costs and 
benefits of such components. In addition, EPA recognizes that the EPA 
CGP is scheduled to be revised in 2003 and that certain provisions 
contained in the permit may change prior to final action on the 
effluent guideline. EPA solicits comments on the appropriate approach 
to take to reconcile any changes made in the EPA CGP with today's 
proposal.

B. General Solicitation of Comment

    EPA encourages public participation in this rulemaking. EPA asks 
that commenters address any perceived deficiencies in the record 
supporting this proposal and that suggested revisions or corrections to 
the rule, preamble or record be supported by data. EPA invites all 
parties to coordinate their data collection activities with the Agency 
to facilitate mutually beneficial and cost-effective data submissions. 
Please refer to the FOR FURTHER INFORMATION section at the beginning of 
this preamble for technical contacts at EPA.

List of Subjects

40 CFR Part 122

    Environmental protection, Administrative practice and procedure, 
Confidential business information, Hazardous substances, Reporting and 
recordkeeping requirements, Water pollution control.

40 CFR Part 450

    Environmental protection, Construction industry, Land development, 
Erosion, Sediment, Storm water, Water pollution control.

    Dated: May 15, 2002.
Christine Todd Whitman,
Administrator.
    For the reasons set out in the preamble, EPA proposes to amend 
title 40, chapter I of the Code of Federal Regulations as follows:

[Option 1]

    Part 122 is proposed to be amended to read as follows:

PART 122--EPA ADMINISTERED PERMIT PROGRAMS: THE NATIONAL POLLUTANT 
DISCHARGE ELIMINATION SYSTEM

    1. The authority citation for part 122 continues to read as 
follows:

    Authority: The Clean Water Act, 33 U.S.C. 1251 et seq.

    2. Section 122.44 is amended by revising paragraph (i)(4) and 
adding paragraph (t) to read as follows:


Sec. 122.44  Establishing limitations, standards, and other permit 
conditions (applicable to State NPDES programs, see Sec. 123.25).

* * * * *
    (i) * * *
    (4) Requirements to report monitoring results for storm water 
discharges associated with industrial activity (other than construction 
activity pursuant to 40 CFR 122.26(b)(14)(x) and those discharges 
addressed in paragraph (i)(3) of this section) shall be established on 
a case-by-case basis with a frequency dependent on the nature and 
effect of the discharge. * * *
* * * * *
    (t) Inspection and certification for construction site storm water 
discharges.
    (1) Site log book. The permittee for a point source discharge under 
Sec. 122.26(b)(14)(x) or Sec. 122.26(b)(15) shall maintain a record of 
site activities in a site log book. The site log book shall be 
maintained as follows:
    (i) A copy of the site log book shall be maintained on site and be 
made available to the permitting authority upon request;
    (ii) In the site log book, the permittee shall certify, prior to 
the commencement of construction activities, that any plans required by 
the permit meet all Federal, State, Tribal and local erosion and 
sediment control requirements and are available to the permitting 
authority;
    (iii) The permittee shall have a qualified professional 
(knowledgeable in the principles and practices of erosion and sediment 
controls, such as a licensed professional engineer, or other 
knowledgeable person) conduct an assessment of the site prior to 
groundbreaking and certify in the log book that the appropriate best 
management practices (BMPs) described in plans required by the permit 
have been adequately designed, sized and installed to ensure overall 
preparedness of the site for initiation of groundbreaking activities. 
The permittee shall record the date of initial groundbreaking in the 
site log book. The permittee shall also certify that any inspection, 
stabilization and BMP maintenance requirements of the permit have been 
satisfied within 48 hours of actually meeting such requirements; and
    (iv) The permittee shall post at the site, in a publicly-accessible 
location, a summary of the site inspection activities on a monthly 
basis;
    (2) Site Inspections. The permittee or designated agent of the 
permittee (such as a consultant, subcontractor, or third-party 
inspection firm) shall conduct regular inspections of the site and 
record the results of such inspection in the site log book in 
accordance with paragraph (t)(1) of this section.
    (i) After initial groundbreaking, permittees shall conduct site 
inspections at least every 14 calendar days and within 24 hours of the 
end of a storm event of 0.5 inches or greater. These inspections shall 
be conducted by a qualified professional. During each inspection, the 
permittee or designated agent shall record the following information:
    (A) Indicate on a site map the extent of all disturbed site areas 
and drainage pathways. Indicate site areas that are expected to undergo 
initial disturbance or significant site work within the next 14 days;
    (B) Indicate on a site map all areas of the site that have 
undergone temporary or permanent stabilization;
    (C) Indicate all disturbed site areas that have not undergone 
active site work during the previous 14 days;
    (D) Inspect all sediment control practices and note the approximate 
degree of sediment accumulation as a percentage of the sediment storage 
volume (for example 10 percent, 20 percent, 50 percent, etc.). Note all 
sediment control practices in the site log book that have sediment 
accumulation of 50 percent or more; and
    (E) Inspect all erosion and sediment control BMPs and note 
compliance with any maintenance requirements such as verifying the 
integrity of barrier or diversion systems (e.g., earthen berms or silt 
fencing) and containment systems (e.g., sediment basins and sediment 
traps). Identify any evidence of rill or gully erosion occurring on 
slopes and any loss of stabilizing vegetation or seeding/mulching. 
Document in the site log book any excessive deposition of sediment or 
ponding water along barrier or diversion systems. Note the depth of 
sediment within containment structures, any erosion near outlet and 
overflow structures, and verify the ability of rock filters around 
perforated riser pipes to pass water.
    (ii) Prior to filing of the Notice of Termination or the end of 
permit term, a final site erosion and sediment control

[[Page 42684]]

inspection shall be conducted by the permittee or designated agent. The 
inspector shall certify that the site has undergone final stabilization 
as required by the permit and that all temporary erosion and sediment 
controls (such as silt fencing) not needed for long-term erosion 
control have been removed.

[Option 2]

    Part 122 is proposed to be amended and part 450 is proposed to be 
added to read as follows:

PART 122--EPA ADMINISTERED PERMIT PROGRAMS: THE NATIONAL POLLUTANT 
DISCHARGE ELIMINATION SYSTEM

    1. The authority citation for part 122 continues to read as 
follows:

    Authority: The Clean Water Act, 33 U.S.C. 1251 et seq.

    2. Section 122.44 is amended by revising paragraph (i)(3) as 
follows:


Sec. 122.44  Establishing limitations, standards, and other permit 
conditions (applicable to State NPDES programs, see Sec. 123.25).

* * * * *
    (i) * * *
    (3) Requirements to report monitoring results for storm water 
discharges associated with industrial activity, with the exception of 
construction activity as defined in Sec. 122.26(b)(14)(x), that are 
subject to an effluent limitation guideline shall be established on a 
case-by-case basis with a frequency dependent on the nature and effect 
of the discharge, but in no case less than once a year. Discharges from 
construction activity pursuant to Sec. 122.26(b)(14)(x) shall be 
governed instead by 40 CFR part 450.
    3. A new part 450 is added to read as follows:

PART 450--CONSTRUCTION AND DEVELOPMENT POINT SOURCE CATEGORY

Subpart A--General Provisions
Sec.
450.10   Applicability.
450.11   General Definitions.
Subpart B--Erosion and Sediment Controls
450.21   Effluent limitations reflecting the best practicable 
technology currently available (BPT).
450.22   Effluent limitations reflecting the best available 
technology economically achievable (BAT).
450.23   Effluent limitations reflecting the best conventional 
pollutant control technology (BCT).
450.24   New source performance standards (NSPS).

    Authority: Sections 301, 304, 306, 308, 402, and 501 of the 
Clean Water Act, as amended; 33 U.S.C. 1311, 1314, 1316, 1318, 1342, 
and 1361.

Subpart A--General Provisions


Sec. 450.10  Applicability.

    This part applies to any point source discharges from construction 
and development activities that are subject to an NPDES permit under 
the definition of ``construction activity'' at 40 CFR 122.26(b)(14)(x). 
This may include, but is not restricted to, construction of residential 
buildings and non-residential buildings, and heavy construction 
(including highways and streets, bridges and tunnels, pipelines, 
transmission lines and industrial non-building structures). Where there 
is more than one operator of a discharge at a site, the requirements of 
this part may be shared among operators if all the requirements of this 
part are met for the entire site. The Storm Water Pollution Prevention 
Plan (SWPPP) required by Sec. 450.21(d) shall clearly delineate the 
responsibilities of all operators.


Sec. 450.11  General definitions.

    In addition to the definitions set forth in 40 CFR 122.2, 122.26(b) 
and 40 CFR 401.11, the following definitions apply to this part:
    Best Management Practices (BMPs) means schedules of activities, 
prohibitions of practices, maintenance procedures, and other management 
practices to prevent or reduce the discharge of pollutants to waters of 
the United States. BMPs also include treatment requirements, operating 
procedures, and practice to control plant site runoff, spillage or 
leaks, sludge or waste disposal, or drainage from raw material storage.
    Commencement of construction means the initial removal of 
vegetation and disturbance of soils associated with clearing, grading 
or excavating activities or other construction activities.
    Final stabilization means that either:
    (1) All soil-disturbing activities at the site have been completed 
and a uniform (e.g, evenly distributed, without large bare areas) 
perennial vegetative cover with a density of 70 percent of the native 
background vegetative cover for the area has been established on all 
unpaved areas and areas not covered by permanent structures, or 
equivalent permanent stabilization measures (such as the use of riprap, 
gabions, or geotextiles) have been employed; or
    (2) For individual lots in residential construction by either: The 
homebuilder completing final stabilization as specified above; or the 
homebuilder establishing temporary stabilization including perimeter 
controls for an individual lot prior to occupation of the home by the 
homeowner and informing the homeowner of the need for, and benefits of, 
final stabilization; or
    (3) For construction projects on land used for agricultural 
purposes (e.g., pipelines across crop or range land), final 
stabilization may be accomplished by returning the disturbed land to 
its preconstruction agricultural use. Disturbed areas that were not 
previously used for agricultural activities, such as buffer strips 
immediately adjacent to ``waters of the United States,'' and areas that 
are not being returned to their preconstruction agricultural use must 
meet the final stabilization criteria in paragraph (1) or (2) of this 
definition.
    Groundbreaking means the commencement of construction activity at a 
site.
    New Source means any source from which there may be a discharge 
associated with construction activity pursuant to 40 CFR 
122.26(b)(14)(x) that will result in a building, structure, facility or 
installation from which there may be a discharge of pollutants 
regulated by new source performance standards elsewhere under 
subchapter N.
    Operator for the purpose of this Part and in the context of storm 
water associated with construction activity, means any party associated 
with a construction project that meets either of the following two 
criteria:
    (1) The party has operational control over construction plans and 
specifications, including the ability to make modifications to those 
plans and specifications; or
    (2) The party has day-to-day operational control of those 
activities at a project that are necessary to ensure compliance with a 
storm water pollution prevention plan (SWPPP) for the site or other 
permit conditions (e.g., they are authorized to direct workers at a 
site to carry out activities required by the SWPPP required by 
Sec. 450.21(d) or to comply with other permit conditions).
    Perimeter controls means best management practices that are 
designed to prevent uncontrolled discharge of sediment from the site. 
Perimeter controls include BMPs such as diversion dikes, storm drain 
inlet protection, berms, and silt fencing.
    Qualified professional means a person knowledgeable in the 
principles and practice of erosion and sediment controls, such as a 
licensed professional engineer, or other knowledgeable person.

[[Page 42685]]

    Runoff coefficient means the fraction of total rainfall that will 
appear at the conveyance as runoff.
    Stabilization means covering or maintaining an existing cover over 
soil. Cover can be vegetative (e.g., grass, trees, seed and mulch, 
shrubs, or turf) or non-vegetative (e.g., geotextiles, riprap, or 
gabions).

Subpart B--Erosion and Sediment Control


Sec. 450.21  Effluent limitations reflecting the best practicable 
technology currently available (BPT).

    Except as provided in 40 CFR 125.30 through 125.32, any existing 
point source subject to this subpart must achieve the following 
effluent limitations representing the application of the best 
practicable control technology currently available (BPT). Permittees 
with operational control over construction plans and specification, 
including the ability to make modifications to those plans and 
specifications (e.g., developer or owner), must ensure the project 
specifications that they develop meet the minimum requirements of a 
SWPPP required by paragraph (d) of this section.
    (a) General Erosion and Sediment Controls. Each SWPPP shall include 
a description of appropriate controls designed to retain sediment on 
site to the extent practicable. These general erosion and sediment 
controls shall be included in the SWPPP developed pursuant to paragraph 
(d) of this section. The SWPPP must include a description of interim 
and permanent stabilization practices for the site, including a 
schedule of when the practices will be implemented. Stabilization 
practices may include:
    (1) Establishment of temporary or permanent vegetation;
    (2) Mulching, geotextiles, or sod stabilization;
    (3) Vegetative buffer strips;
    (4) Protection of trees and preservation of mature vegetation.
    (b) Sediment controls. The SWPPP must include a description of 
structural practices to divert flows from exposed soils, store flows, 
or otherwise limit runoff and the discharge of pollutants from exposed 
areas of the site to the degree attainable.
    (1) For common drainage locations that serve an area with 10 or 
more acres disturbed at one time, a temporary (or permanent) sediment 
basin that provides storage for a calculated volume of runoff from a 2 
year, 24-hour storm from each disturbed acre drained, or equivalent 
control measures, shall be provided where attainable until final 
stabilization of the site. Where no such calculation has been 
performed, a temporary (or permanent) sediment basin providing 3,600 
cubic feet of storage per acre drained, or equivalent control measures, 
shall be provided where attainable until final stabilization of the 
site. When computing the number of acres draining into a common 
location it is not necessary to include flows from off-site areas and 
flows from on-site areas that are either undisturbed or have undergone 
final stabilization where such flows are diverted around both the 
disturbed area and the sediment basin.
    (2) In determining whether a sediment basin is attainable, the 
operator may consider factors such as site soils, slope, available area 
on site, etc. In any event, the operator must consider public safety, 
especially as it relates to children, as a design factor for the 
sediment basin, and alternative sediment controls shall be used where 
site limitations would preclude a safe basin design.
    (3) For portions of the site that drain to a common location and 
have a total contributing drainage area of less than 10 disturbed 
acres, the operator should use smaller sediment basins and/or sediment 
traps.
    (4) Where neither a sediment basin nor equivalent controls are 
attainable due to site limitations, silt fences, vegetative buffer 
strips or equivalent sediment controls are required for all down slope 
boundaries of the construction area and for those side slope boundaries 
deemed appropriate as dictated by individual site conditions.
    (c) Pollution Prevention Measures. The SWPPP shall include the 
following pollution prevention measures:
    (1) Litter, construction chemicals, and construction debris exposed 
to storm water shall be prevented from becoming a pollutant source in 
storm water discharges (e.g., screening outfalls, picked up daily); and
    (2) A description of construction and waste materials expected to 
be stored on-site with updates as appropriate, and a description of 
controls to reduce pollutants from these materials including storage 
practices to minimize exposure of the materials to storm water, and 
spill prevention and response.
    (d) Storm Water Pollution Prevention Plan. Operators subject to 
this part shall compile Storm Water Pollution Prevention Plans (SWPPPs) 
prior to groundbreaking at any construction site. In areas where EPA is 
not the permit authority, operators may be required to prepare 
documents that may serve as the functional equivalent of a SWPPP. Such 
alternate documents will satisfy the requirements for a SWPPP so long 
as they contain the necessary elements of a SWPPP. A SWPPP shall 
incorporate the following information:
    (1) A narrative description of the construction activity, including 
a description of the intended sequence of major activities that disturb 
soils on the site (major activities include grubbing, excavating, 
grading, and utilities and infrastructure installation, or any other 
activity that disturbs soils for major portions of the site);
    (2) A general location map (e.g., portion of a city or county map) 
and a site map. The site map shall include descriptions of the 
following:
    (i) Drainage patterns and approximate slopes anticipated after 
major grading activities;
    (ii) The total area of the site and areas of disturbance;
    (iii) Areas that will not be disturbed;
    (iv) Locations of major structural and nonstructural controls 
identified in the SWPPP;
    (v) Locations where stabilization practices are expected to occur;
    (vi) Locations of off-site material, waste, borrow or equipment 
storage areas;
    (vii) Surface waters (including wetlands); and
    (viii) Locations where storm water discharges to a surface water;
    (3) A description of available data on soils present at the site;
    (4) A description of BMPs to be used to control pollutants in storm 
water discharges during construction as described elsewhere in this 
section;
    (5) A description of the general timing (or sequence) in relation 
to the construction schedule when each BMP is to be implemented;
    (6) An estimate of the pre-development and post-construction runoff 
coefficients of the site;
    (7) The name(s) of the receiving water(s);
    (8) Delineation of SWPPP implementation responsibilities for each 
site owner or operator;
    (9) Any existing data that describe the storm water runoff 
characteristics at the site.
    (e) Updating the SWPPP. The operator shall amend the SWPPP and 
corresponding erosion and sediment control BMPs whenever:
    (1) There is a change in design, construction, or maintenance that 
has a significant effect on the discharge of pollutants to waters of 
the United States which has not been addressed in the SWPPP; or
    (2) Inspections or investigations by site operators, local, State, 
Tribal or

[[Page 42686]]

Federal officials indicate that the SWPPP is proving ineffective in 
eliminating or significantly minimizing pollutant discharges.
    (f) Site Log Book/Certification. The operator shall maintain a 
record of site activities in a site log book, as part of the SWPPP. The 
site log book shall be maintained as follows:
    (1) A copy of the site log book shall be maintained on site and be 
made available to the permitting authority upon request;
    (2) In the site log book, the operator shall certify, prior to the 
commencement of construction activities, that the SWPPP prepared in 
accordance with paragraph (d) of this section meets all Federal, State 
and local erosion and sediment control requirements and is available to 
the permitting authority;
    (3) The operator shall have a qualified professional conduct an 
assessment of the site prior to groundbreaking and certify in the log 
book that the appropriate BMPs and erosion and sediment controls 
described in the SWPPP and required by paragraphs (a), (b), (c) and (d) 
of this section have been adequately designed, sized and installed to 
ensure overall preparedness of the site for initiation of 
groundbreaking activities. The operator shall record the date of 
initial groundbreaking in the site log book. The operator shall also 
certify that the requirements of paragraphs (g), (h) and (i) of this 
section have been satisfied within 48 hours of actually meeting such 
requirements;
    (4) The operator shall post at the site, in a publicly-accessible 
location, a summary of the site inspection activities on a monthly 
basis.
    (g) Site Inspections. The operator or designated agent of the 
operator (such as a consultant, subcontractor, or third-party 
inspection firm) shall conduct regular inspections of the site and 
record the results of such inspection in the site log book in 
accordance with paragraph (f) of this section.
    (1) After initial groundbreaking, operators shall conduct site 
inspections at least every 14 calendar days and within 24 hours of the 
end of a storm event of 0.5 inches or greater. These inspections shall 
be conducted by a qualified professional. During each inspection, the 
operator or designated agent shall record the following information:
    (i) On a site map, indicate the extent of all disturbed site areas 
and drainage pathways. Indicate site areas that are expected to undergo 
initial disturbance or significant site work within the next 14-day 
period;
    (ii) Indicate on a site map all areas of the site that have 
undergone temporary or permanent stabilization;
    (iii) Indicate all disturbed site areas that have not undergone 
active site work during the previous 14-day period;
    (iv) Inspect all sediment control practices and note the 
approximate degree of sediment accumulation as a percentage of the 
sediment storage volume (for example 10 percent, 20 percent, 50 
percent, etc.). Record all sediment control practices in the site log 
book that have sediment accumulation of 50 percent or more; and
    (v) Inspect all erosion and sediment control BMPs and record all 
maintenance requirements such as verifying the integrity of barrier or 
diversion systems (earthen berms or silt fencing) and containment 
systems (sediment basins and sediment traps). Identify any evidence of 
rill or gully erosion occurring on slopes and any loss of stabilizing 
vegetation or seeding/mulching. Document in the site log book any 
excessive deposition of sediment or ponding water along barrier or 
diversion systems. Record the depth of sediment within containment 
structures, any erosion near outlet and overflow structures, and verify 
the ability of rock filters around perforated riser pipes to pass 
water.
    (2) Prior to filing of the Notice of Termination or the end of 
permit term, a final site erosion and sediment control inspection shall 
be conducted by the operator or designated agent. The inspector shall 
certify that the site has undergone final stabilization using either 
vegetative or structural stabilization methods and that all temporary 
erosion and sediment controls (such as silt fencing) not needed for 
long-term erosion control have been removed.
    (h) Stabilization. The operator shall initiate stabilization 
measures as soon as practicable in portions of the site where 
construction activities have temporarily or permanently ceased, but in 
no case more than 14 days after the construction activity in that 
portion of the site has temporarily or permanently ceased. This 
requirement does not apply in the following instances:
    (1) Where the initiation of stabilization measures by the 14th day 
after construction activity temporarily or permanently ceased is 
precluded by snow cover or frozen ground conditions, stabilization 
measures shall be initiated as soon as practicable;
    (2) Where construction activity on a portion of the site is 
temporarily ceased, and earth-disturbing activities will be resumed 
within 21 days, temporary stabilization measures need not be initiated 
on that portion of the site.
    (3) In arid areas (areas with an average annual rainfall of 0 to 10 
inches), semi-arid areas (areas with an average annual rainfall of 10 
to 20 inches), and areas experiencing droughts where the initiation of 
stabilization measures by the 14th day after construction activity has 
temporarily or permanently ceased is precluded by seasonably arid 
conditions, the operator shall initiate stabilization measures as soon 
as practicable.
    (i) Maintenance. Sediment shall be removed from sediment traps or 
sediment ponds when design capacity has been reduced by 50 percent.


Sec. 450.22  Effluent limitations reflecting the best available 
technology economically achievable (BAT).

    Except as provided in 40 CFR 125.30 through 125.32, any existing 
point source subject to this subpart must employ the best management 
practices (BMPs) in this section, representing the application of the 
best available technology economically achievable (BAT): The effluent 
limitations are the same as those specified in Sec. 450.21.


Sec. 450.23  Effluent limitations reflecting the best conventional 
pollutant control technology (BCT).

    Except as provided in 40 CFR 125.30 through 125.32, any existing 
point source subject to this subpart must employ the best management 
practices (BMPs) in this section, representing the application of the 
best conventional pollutant control technology (BCT): The effluent 
limitations are the same as those specified in Sec. 450.21.


Sec. 450.24  New source performance standards (NSPS).

    Any new source subject to this subpart must achieve new source 
performance standards (NSPS): The effluent limitations are the same as 
those specified in Sec. 450.21.

[FR Doc. 02-12963 Filed 6-21-02; 8:45 am]
BILLING CODE 6560-50-P