Presentation_PFAS-02B-SWStandards_Cost-Benefit_Bolyard

PFAS Surface Water Quality Standards Rules Fiscal Impacts: Cost-Benefit Analysis Approach
January 10, 2024
Stephanie C. Bolyard, PhD
Environmental Management Commission – Water Quality Committee
Desired Outcome of the Fiscal Note
•For Stakeholders
•Rationale regarding why a rule change is necessary.
•The problem the rule change is addressing and how.
•Affected entities are identified.
•Costs and benefits are addressed.
•For Decisionmakers (e.g., EMC)
•Provides necessary tools and information to make decisions.
•Identifies relative magnitude and distribution of costs and benefits and net impacts.
•Provides comparison to baseline and other alternative approaches.
•Illustrates uncertainty levels and degree of confidence in expected outcomes.
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Fiscal and Regulatory Impact Analysis Requirements for
Office of State Budget and Planning Certification
•Adherence to G.S. 150B-21.4: Administrative Procedures Act (Fiscal
and Regulatory Impact Analysis on Rules)
•Assess the impacts on all affected entities
•Demonstrate that sufficient state funds are available to implement the rule
•Adherence to economic principles in G.S. 150B-19.1 such as:
•Seek to reduce burden on regulated entities
•Consider cumulative effect of rules
•Consider sound, reasonably available information
•Achieve rule objective in cost-effective and timely manner
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Key Starting Point
•Proposed Rule: Surface water quality narrative rule translated into numeric standards for 8 PFAS with known toxicological data; effluent limits incorporated into permits per implementation schedule
•Sensitivity Analysis: describes uncertainties, key assumptions, research or data limitation and how their variability affects results
1.All Industrial dischargers and Significant Industrial Users (SIUs) treat for PFAS at their sites.
2.Municipal Pretreatment Operators take on full treatment cost at their facility and impose no additional reductions from SIUs.
3.Municipal Pretreatment Operators apply for funding under Division of Water Infrastructure emerging contaminants program to offset monitoring, planning, engineering design and/or construction costs.
4.Other options solicited from stakeholder input
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Cost-Benefit Analysis Approach
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Benefits
•Estimate the anticipated benefits of the proposed PFAS regulatory alternatives relative to the baseline, including quantification and monetization.
Costs
•What are the costs associated with the proposed PFAS regulatory changes?
Cost Categories
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Private Sector
Monitoring
Minimization
Treatment (if required)
Local Government
Monitoring
Minimization
Treatment (if required)
State Government Resources
(laboratory & personnel)
Cost Drivers and Timing
•Implementation plan will guide the determination of scope and scale of the impact as well as timing.•There will be a subset of each permit type that will be considered a “priority facility” based on any of the following:
•Direct Industrial Discharger or SIUs associated with PFAS releasing industry
•Known sector to produce wastewater containing PFAS
•Existing PFAS assessment monitoring data
•Upstream of a drinking water intake
•Other Cost Drivers
•7% rate of return
•Project life of 30 years
•Costs based on $ 2024 and escalated based on appropriate future indices
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Monitoring Costs: Example
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•Costs calculated per “sampling event”
•Frequency is based on the implementation plan stages
•The long-term projection of monitoring costs throughthe incorporation of an effluent limit, compliance schedule, and continued compliance sampling were projected based on each facility’s permit expiration date and prioritization.
Cost Categories Cost Component Descriptions Frequency
or Cost
Lab Costs to Analyze
Samples
Number of Samples per
Sampling Event 5
Cost of 1633 per Sample $486
Total Laboratory Analysis Costs $2,430
Supplies, Labor to
Collect Samples, Data
Review, Coordination
Supplies $40.00
Field Staff Hourly Rate ($/hr)$58.73
Average Labor Time (hr)24-44
Staff Lab Costs ($/event)$1,409
Future cost escalation
factors
Lab Costs 0.73%
Labor Costs 3.22%
Supply Costs 2.49%
Total - $/event
Minimization Costs
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•Strongly encourage permittees to consider how PFAS can be minimized in their discharge to reduce treatment costs
•Material replacement/substitutions
•Replacement of PFAS containing infrastructure and/or manufacturing process changes to minimize PFAS formation
•Best Management Practices to reduce PFAS in final discharge
Cost Component Specifics/Description
Evaluation and Planning Costs associated with retaining a consultant to evaluate a
process/facility to determine if there are ways to reduce PFAS
Product Replacement/Substitution Replacing a PFAS processing aide with a non-PFAS
alternative (if available)
Replacing Infrastructure If PFAS is removed from a process – it is possible that
residual PFAS still remains in the piping
Treatment Cost Components
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Capital Expenditure
(CapEx)
Initial investment in
treatment infrastructure
Operation and
Maintenance (O&M)
Recurring costs to
operate treatment
system (annual basis)
Repair and Replacement
Based on equipment life
and calculated as a %
of CapEx
Treatment Costs Overview – Technology Review
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•Conducted a comprehensive treatment evaluation – focused on shelf-ready technologies
•Information used to determine the effectiveness of treatment technologies by sector type
Treatment Type Removal Mechanism Residual Type
Granular Activated
Carbon (GAC)Adsorption to Media Media
Ion Exchange (IX)Adsorption to Media Media
Reverse Osmosis (RO)Filtration (membrane)Concentrate
(liquid)
Treatment Costs Overview – Capital Costs
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•Analysis followed industry standard through an Association for the Advancement of Cost Engineering (AACE) Class 5 estimate:
•Total Installed Cost (TIC) estimated
•Pretreatment costs (if needed)
•Electrical and water supply currently available
•Building provided for operators, electrical and other non-weatherable equipment
•Contingency is 35%
•Calculated costs will be presented as low, average, or high based on a -30% and +50% of the calculated value
•Cost curves for each treatment type was developed by our consultants based on actual vendor estimates from their “treatment database” that consists of designs costs for completed/existing projects.
•PFAS funding applications received by the Division of Water Infrastructure for water and wastewater systems will be used to conduct reasonableness checks.
•Minnesota report and other available studies will be used to conduct additional comparisons.
Treatment Costs Overview – Operating Expenses
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•Costs include:
•Replacement of media or treatment of membrane fouling (i.e., clogging)
•Personnel required to operate the treatment facility
•Electricity
•Chemicals (if needed)
•Residuals Management
•Equipment and building maintenance – 4% of the combined equipment and building costs
Benefits Categories
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•Human Health Benefits (Quantitative)
•Improvements in total cholesterol, blood pressure, birth weight
•Quantify using national studies to extrapolate to NC
•Human Health Benefits (Qualitative)
•Improvements in low-density lipoprotein cholesterol (LDLC), small for gestational age, antibody response
•Environmental and Socio-Economic Benefits (Qualitative)
•Recreational and accidental ingestion of surface waters
•Reduced PFAS exposure to fish that are then consumed
•Ecosystem enhancement and wildlife protection
•Societal (commercial, community, natural resources value)
•Savings for Downstream Drinking Water Utilities (Quantitative)
•Reduction in surface water clean up requirements and related treatment system CapEx+OpEx avoided costs
•Reduced rate payer impacts
•Infrastructure spending support (e.g., BIL, SRF)
•Sources for Data and Methodology
•EPA Economic Analysis for Proposed PFAS National Primary Drinking Water Regulation
•Other states reports (WI, PA, NJ, MI)
•Academic and Research Institution papers
Summary of Net Impacts
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•Results will be reported as net impacts (benefits & costs) and net present value.
•Net Present Value (NPV) represents the value of the expected effect of the rules and is calculated as the sum of the net impact over time, discounted to a present-day dollar value equivalent.
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Questions?
Stephanie C. Bolyard, PhD
Senior Engineer to the Assistant Secretary
Secretary’s Office
NC DEQ
[e-mail]