WSR 17-20-107

PROPOSED RULES

[Order 17-02—Filed October 4, 2017, 9:49 a.m.]

Preproposal statement of inquiry was filed as WSR 17-14-104.

Title of Rule and Other Identifying Information: The Washington state department of ecology is proposing new chapter 173-228 WAC, Vessel sewage no discharge zones, to establish a Puget Sound no discharge zone (NDZ).

The Puget Sound NDZ would cover two thousand three hundred square miles of marine waters of Washington state inward from the line between New Dungeness Lighthouse and the Discovery Island Lighthouse to the Canadian border, and fresh waters of Lake Washington, Lake Union, and connecting waters between and to Puget Sound.

Hearing Location(s): On November 13, 2017, at 2:00 p.m., webinar only hearing, to join the webinar hearings, use the following: Web link https://watech.webex.com/watech/onstage/g.php?MTID=ec7e53ab91e33e8d47a6493617234fc20 or phone 240-454-0887 (Access code: 805 088 513); on November 13, 2017, at 6:00 p.m., webinar only hearing, to join the webinar hearings, use the following: Web link https://watech.webex.com/watech/onstage/g.php?MTID=ed5c33f0e9867db925e1f1b0b35563375 or phone 240-454-0887 (Access code: 803 382 624); and on November 15, 2017, at 11:00 a.m., in-person only hearing, South Seattle College, Georgetown Campus, 6737 Corson Avenue South, Seattle, WA 98108. All three scheduled hearings will have the same agenda:

We are holding the two November 13 hearings via webinar. Webinars are an online meeting forum that you can attend from any phone and computer using internet access.

Date of Intended Adoption: February 28, 2018.

Submit Written Comments to: Amy Jankowiak, Department of Ecology, 3190 160th Avenue S.E., Bellevue, WA 98008-5452, email please submit comments online or by mail, electronic comments http://ws.ecology.commentinput.com/?id=EQHJt, by November 30, 2017.

Assistance for Persons with Disabilities: Contact Hanna Waterstrat, phone 360-407-7668, TTY 877-833-6341, email hanna.waterstrat@ecy.wa.gov, 711, by November 7, 2017.

Purpose of the Proposal and Its Anticipated Effects, Including Any Changes in Existing Rules: The department of ecology is proposing new chapter 173-228 WAC, Vessel sewage no discharge zones. This rule will establish a Puget Sound NDZ, which would prohibit the release of sewage (black water) from vessels, whether treated or not.

Reasons Supporting Proposal: Puget Sound is a unique, sensitive water body. Its limited tidal flushing makes it prone to poor water quality conditions. Federal law currently allows vessels to discharge treated sewage within three miles of shore.

We are beginning a rule making to make Puget Sound an NDZ, which would prohibit the release of sewage (black water) from vessels, whether treated or not. This follows the five year stakeholder process, the petition submittal to the Environmental Protection Agency (EPA), and EPA's final affirmative determination that adequate pumpout facilities for the safe and sanitary removal and treatment of sewage from vessels are reasonably available for the waters of Puget Sound. This information will all be used as part of this rule making.

The Puget Sound NDZ would cover two thousand three hundred square miles of marine waters of Washington state inward from the line between New Dungeness Lighthouse and the Discovery Island Lighthouse to the Canadian border, and fresh waters of Lake Washington, Lake Union, and connecting waters between and to Puget Sound.

Vessel sewage discharges have a high potential impact due to proximity, often directly over or near shellfish and other protected resources, such as swimming beaches. Shellfish beds are vulnerable to pathogen pollution (which comes from sewage), which threatens an important shellfish food supply in Washington state. Due to this risk, we have closed approximately three thousand acres of shellfish harvesting areas that are in close proximity to marinas, we anticipate that under these rules the status of these shellfish harvesting restrictions would be reevaluated.

Our state has made large investments in sewage treatment, stormwater management, and in the prevention of industrial pollution and agricultural runoff. Making Puget Sound an NDZ for vessel sewage addresses a missing piece in our strategy to cleanup and restore Puget Sound. It is a near-term action in the Puget Sound action agenda, and is a recommendation of the Washington shellfish initiative.

On February 21, 2017, EPA made a final affirmative determination that the Puget Sound region, as described above, has adequate facilities for the safe and sanitary removal and treatment of sewage from all vessels reasonably available. EPA said the state may finalize its proposed designation.

Most of Puget Sound's estimated one hundred fifty-six thousand six hundred recreational and commercial vessels with onboard toilets have sewage holding tanks and use pump-out stations, or wait to discharge more than three miles from shore or at sea. Roughly two thousand two hundred, or two percent, have limited treatment systems and would need to add holding tanks.

The rule will clarify requirements necessary to implement the NDZ determination by EPA, which applies to all recreational and commercial vessels. Previous work in preparation for the petition to EPA lead to including a delayed implementation of five years for some commercial vessels such as tugs, fishing, research, and small overnight passenger cruise vessels to add sewage holding tanks.

Statutory Authority for Adoption: RCW 90.48.030, 90.48.035, 90.48.260, and 33 U.S.C. § 1322.

Statute Being Implemented: Chapter 90.48 RCW and 33 U.S.C. § 1322.

Name of Proponent: Washington state department of ecology, governmental.

Name of Agency Personnel Responsible for Drafting: Amy Jankowiak, 3190 160th Avenue S.E., Bellevue, WA 98008, 425-649-7195; Implementation: Heather R. Bartlett, 300 Desmond Drive S.E., Lacey, WA 98503, 360-407-6600; and Enforcement: Coordinated by water quality program staff and other agencies with jurisdiction, 300 Desmond Drive S.E., Lacey, WA 98503, 360-407-6600.

A cost-benefit analysis is required under RCW 34.05.328. A preliminary cost-benefit analysis may be obtained by contacting Kasia Patora, Department of Ecology, 300 Desmond Drive S.E., Lacey, WA 98503, phone 360-407-6184, TTY 877-833-6341, email kasia.patora@ecy.wa.gov.

Calculations show the rule proposal likely imposes more-than-minor cost to businesses, and a small business economic impact statement (SBEIS) is required.

Relevant Information for State Register Publication

Proposed chapter 173-228 WAC, Vessel Sewage No Discharge Zones

This SBEIS presents the:

A small business is defined by the Regulatory Fairness Act (chapter 19.85 RCW) as having fifty or fewer employees. Estimated costs are determined as compared to the existing regulatory environment, the regulations in the absence of the rule. The SBEIS only considers costs to "businesses in an industry" in Washington state. This means that impacts, for this document, are not evaluated for nonprofit or government agencies. The existing regulatory environment is called the "baseline" in this document. It includes only existing laws and rules at federal and state levels.

COMPLIANCE REQUIREMENTS OF THE PROPOSED RULE, INCLUDING PROFESSIONAL SERVICES: The baseline for our analyses generally consists of existing rules and laws, and their requirements. This is what allows us to make a consistent comparison between the state of the world with and without the proposed rule. For this proposed rule making, the baseline includes:

COSTS OF COMPLIANCE: EQUIPMENT

The proposed rule elements that differ from the baseline and are not specifically dictated in the authorizing statute or elsewhere in law or rule include all elements of the proposed rule:

The proposed rule is likely to result in compliance costs for retrofits (equipment, labor, professional services) and using pumpouts (professional services).

Total twenty year present value costs for retrofits are estimated to be between $511 million and $551 million, including all costs estimated. Isolating only costs to businesses and government, this number is $113 million to $153 million.

Total twenty year present value costs associated with pumpouts are estimated to be between $190 million and $211 million, including all costs estimated.

COSTS OF COMPLIANCE: ADMINISTRATIVE COSTS

Where applicable, ecology estimates administrative costs (overhead) as part of the cost of labor and professional services, above.

COMPARISON OF COMPLIANCE COST FOR SMALL VERSUS LARGE BUSINESSES: The average affected small business likely to be covered by the proposed rule employs approximately 7.5 people1. The largest ten percent of affected businesses employ an average of 140.5 people.2 Based on present-value cost estimates from Chapter 3, we estimated the following compliance costs per employee.

1 WA Employment Security Department (2017) Establishment size by number of Employees 2016. https://www.esd.wa.gov/labormarketinfo/establishment-size.

2 Ibid.

Unknown cost ratios are due to limited data availability for the largest businesses, which could be potentially individually identified in aggregate data.3 Note that commercial fishing values are based on entire commercial fishing vessel population of three hundred forty-seven initial 2005 population, and commercial passenger estimates are based on an initial population of three if they choose to retrofit.

3 Ibid.

We concluded that the proposed rule is likely to have disproportionate impacts on small businesses within the industries that incur compliance costs, based on identifiable data, and therefore ecology must include elements in the proposed rule to mitigate this disproportion, as far as is legal and feasible. Where the relative ratios are unknown, ecology must also mitigate costs to small businesses. Note that employment distributions were available at the three-digit NAICS level, which combined different sizes of vessel[s] (such as small commercial passenger vessels that are primarily large businesses, and large cruise ships owned exclusively by large businesses) and were identified at the facility or location level. This means the disproportionate impact identified in the table above is likely overestimated.

CONSIDERATION OF LOST SALES OR REVENUE: Businesses that would incur costs could experience reduced sales or revenues if the costs would significantly affect the prices of the goods they sell. The degree to which this could happen is strongly related to each business's production and pricing model (whether additional lump-sum costs significantly affect marginal costs), as well as the specific attributes of the markets in which they sell goods, including the degree of influence of each firm on market prices, as well as the relative responsiveness of market demand to price changes. Businesses could also lose sales and revenue under the proposed rule if they need to take time away from business operations to comply. Based on the assumption that tugs would need to take additional time off of doing business, and a reported cost of between approximately $2,500 and $3,000 in lost revenues per pumpout event for tugs that were not retrofitted with a Type III MSD.4

4 WA Ecology (2012). Phase 2 Vessel Population and Pumpout Facility Estimates, Puget Sound No Discharge Zone for Vessel Sewage. Publication no. 12-10-031 Part 4.

MITIGATION OF DISPROPORTIONATE IMPACT: The RFA (RCW 19.85.030(2)) states that:

Based upon the extent of disproportionate impact on small business identified in the statement prepared under RCW 19.85.040, the agency shall, where legal and feasible in meeting the stated objectives of the statutes upon which the rule is based, reduce the costs imposed by the rule on small businesses. The agency must consider, without limitation, each of the following methods of reducing the impact of the proposed rule on small businesses:

(a) Reducing, modifying, or eliminating substantive regulatory requirements;

(b) Simplifying, reducing, or eliminating recordkeeping and reporting requirements;

(c) Reducing the frequency of inspections;

(d) Delaying compliance timetables;

(e) Reducing or modifying fine schedules for noncompliance; or

(f) Any other mitigation techniques including those suggested by small businesses or small business advocates.

Ecology considered all of the above options, and included the following legal and feasible elements in the proposed rule that reduce costs. In addition, ecology considered the alternative rule contents discussed in Chapter 6, and excluded those elements that would have imposed excess compliance burden on businesses. For vessel types that expressed concern about being able to comply, which included small businesses, the proposed rule allows an additional five years before compliance is required. Other NDZs, such as in Massachusetts, required immediate compliance.

SMALL BUSINESS AND LOCAL GOVERNMENT CONSULTATION: Ecology involved small businesses and local government in its development of the proposed rule as part of its overall engagement strategy, summarized in the table below.

NAICS CODES OF INDUSTRIES IMPACTED BY THE PROPOSED RULE: The proposed rule is likely to impact North American Industry Classification System (NAICS) codes:

IMPACT ON JOBS: Ecology used the Washington state office of financial management's (OFM) 2007 Washington Input-Output Models to estimate the impact of the proposed rule on jobs in the state. The model accounts for interindustry impacts and spending multipliers of earned income and changes in output.

5See OFM's site for more information on the input-output model. http://www.ofm.wa.gov/economy/io/2007/default.asp.

The proposed rule will result in transfers of money within and between industries. Because pumpouts and dump stations could be public or private, we conservatively assumed that those expenditures were made at public facilities, which does not result in additional jobs or spending in the OFM model (the model does not include a public sector). It was also not possible to confidently assume what proportion of retrofit expenditures would stay in state. This means job losses are overestimated, and net impacts to jobs would likely be smaller due to some types of expenditure staying in the state and funding positions such as public or private pumpout facility staff.

Under the low cost assumptions, the Washington state economy could experience a net loss of two hundred fourteen full-time employees (FTEs) over twenty years, across all private industries in the state. Most losses would be within the most impacted industry, of sixty-two FTEs in shipping and transportation support industries.

Under the high cost assumptions, the Washington state economy could experience a net loss of two hundred forty-two FTEs over twenty years, across all industries in the state. Similarly to the estimate under low-cost assumptions, most losses would be within the most impacted industry, of sixty-two FTEs in shipping and transportation. The higher total job losses stem from higher estimated costs for commercial fishing.

These prospective changes in overall employment in the state are the sum of multiple small increases and decreases across all industries in the state. These estimates include only the impacts of compliance cost expenditures, and do not include potential job growth from increases in harvestable shellfish acreage.

A copy of the statement may be obtained by contacting Kasia Patora, Department of Ecology, 300 Desmond Drive S.E., Lacey, WA 98503, phone 360-407-6184, TTY 877-833-6341, email kasia.patora@ecy.wa.gov.

October 4, 2017

Heather R. Bartlett

Water Quality

Program Manager

Chapter  173-228  WAC