Determination of Substantial and Widespread Economic and Social Impacts for the Cities of Page, Mullan and Smelterville Wastewater Treatment Plants

The following is an excerpted summary of the process used to determine the Economic and Social Impacts for the Cities of Page, Mullan and Smelterville

The permittees have requested a variance based on a demonstration that the costs associated with a proposal to install controls to meet Idaho’s water quality criteria for specific metals would result in substantial and widespread adverse economic and social impacts. EPA has evaluated these costs and related socioeconomic information based on EPA’s “Interim Economic Guidance for Water Quality Standards Workbook” (EPA-823-B-95-002, March 1995).

In order to evaluate whether or not a community or communities will incur substantial adverse impacts as a result of implementing the pollution controls, the following five steps are followed:

·  Verify Project Costs and Calculate the Annual Cost of the Pollution Control Project

·  Calculate Total Annualized Pollution Control Costs Per Household

·  Calculate and Evaluate the Municipal Preliminary Screener

·  Apply the Secondary Test, and

·  Assess Where the Community Falls in the Substantial Impacts Matrix

Verify Project Costs and Calculate the Annual Cost of the Pollution Control Project

 Table 6

 Community Estimates of Proposed Capital and O&M Costs

Page*   Mullen*  Smelterville

(1) Total Capital Costs      28,395,500   7,236,000   710,000**

(2) Total Capital Costs for Page & Mullen  35,631,500  

(3) Annualized Capital Costs       2,738,712     51,093

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

(4) Annual O& M Costs     374,000   50,000     24,419**

(a) O&M Costs for Page & Mullen   424,000

(b) Upgrade O&M Costs Increases

For Power and Equipment   48,800

(5) Total Annual O&M Costs       472,800     16,800  

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

(6) Total Annual Cost of Pollution Control

for Proposed Project  [ (3) + (5) ]   3,211,512     67,893

___________      

* Page and Mullen submitted a joint, single submission.

** Based on EPA estimate for alternative option for metals removal at Page facility.

In addition, EPA subsequently provided the costs associated with an alternative pollution control process, as shown in Table 7, one purpose being to test how these alternative costs would impact on the communities.

 Table 7

 EPA Estimates of Proposed Capital and O&M Costs

Page*   Mullen*  Smelterville

(1) Total Capital Costs      16,490,042   4,897,588   4,897,588

(2) Total Capital Costs for Page & Mullen  21,387,630  

(3) Annualized Capital Costs       1,716,199     392,995

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

(4) Annual O& M Costs       231,125   70,187   70,187

(a) O&M Costs for Page & Mullen   301,312

(b) Upgrade O&M Costs Increases

For Power and Equipment   48,800

(5) Total Annual O&M Costs       350,112     70,187  

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

(6) Total Annual Cost of Pollution Control

for Proposed Project  [ (3) + (5) ]   2,066,311     463,182

___________      

* Page and Mullen submitted a joint, single submission.

Calculate Total Annualized Pollution Control Costs Per Household

This calculation provides a means to assess the financial burden on each household as a result of the proposed project, as shown in Table 8.

 Table 8

 Current Total Annual Pollution Control Costs per Household

Page & Mullen*     Smelterville

 Permittee EPA est.    Permittee EPA est.

Existing Pollution Control

(1) Total Annual Costs         666,017      63,344

(2) Percent of Costs Paid per Household     84%       88%  

(3) Amount of Paid

per Household [ (1) x (2) ]       559,839       55,743

(4) Number of Households       4,546       238

(5) Annual Cost per Household

for Current Pollution Controls [ (3) ¸ (4) ] 123       234  

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

Proposed Pollution Control Project

(6) Total Annual Cost for Proposed Project     3,211,512 2,066,311     67,893 463,182

(7) Amount to be Paid by Households

[ (6) x (2) ]         2,697,670 1,735,701     59,746 407,600

(8) Annual Cost per Household       593 382     251 1,713

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

(9) Total Annual Pollution Control Costs

per Household  [ (5) + (8) ]     716   505     485 1,947

____* Page and Mullen submitted a joint, single submission.

Calculate and Evaluate the Municipal Preliminary Screener Score

The Municipal Preliminary Screener is one of two tests that are used to determine whether a community can clearly pay for the project without incurring any substantial adverse impacts by looking at the total annual pollution costs per household. The screener is derived as follows:

Municipal Preliminary Screener (MPS) = Average Total Pollution Control Cost per Household

Median Household Income

The actual calculations are shown below in Table 9.

 Table 9

Total Annual Pollution Control Costs per Household as a Percentage of Median Household Income

Page and Mullen *   Smelterville

Permittee EPA est.  Permittee EPA est.

(1) Total Annual Pollution Control Costs

per Household [Table 2, line 9]   716   505     485     1,947

(2) Median Household Income     25,277 25,277     31,662* 27,927**

(3) Municipal Preliminary Screener

[ (1) ¸ (2) ]       2.84% 2.00%     1.54% 6.98%

1.74%***

* 1997 data.

** 1999 data.

*** Calculated using a Median Household Income of $27,927.

If the average annual cost per household exceeds 2.0 percent of median household income, then the project may place an unreasonable financial burden on many of the households within the community and the community should also look at the Secondary Test (in the next section.) Where the screener value falls between 1.0 and 2.0 percent (i.e., the mid-range) then the community, there could be a mid-range impact and here too the community should also perform the Secondary Test.

For Page and Mullen, the screener value using the communities’ data is 2.84% and the screener value based on EPA’s estimate for costs is 2.0%. Both screener values indicate that these two communities could face an unreasonable financial burden by implementing the project. The screener value calculated by the City of Smelterville is 1.54%, a mid-range value. However, when EPA used a more current Median Household Income figure then the screener value increased to 1.74%, indicating an increased probability for an adverse impact when a more relevant Median Household Income figure is used. When EPA’s estimates are used the resulting screener is 6.98%, far exceeding the 2.0% threshold for that may indicate the project may place an unreasonable burden on the City of Smelterville.

Apply Secondary Test

The Secondary Test is used to indicate the community’s ability to obtain financing for the proposed project and describes the community’s financial health. Six indicators are used:

Debt Indicators

·  Bond Rating - a measure of the community’s credit worthiness

·  Overall Net Debt as a Percent of Full Market Value of Taxable Property - a measure of debt burden on the community’s residents

Socioeconomic Indicators

·  Unemployment Rate - a measure of the general health of the community

·  Median Household Income - a measure of the community’s wealth

Financial Management Indicators

·  Property Tax Revenue as a Percent of Full Market value of Taxable Property - a measure of the funding capacity available to support debt based on the wealth of the community

·  Property Tax Collection Rate - a measure of how well local government is administered

When completed, each indicator is then assessed against a scoring table where that indicator is assigned a value: 1 if the indicator is judged to be weak, 2 if the indicator is judged to be mid-range, and 3 for a strong indicator. The values are then added and the sum divided by six (the number of indicators) to get an average score. The Secondary Test scores for the communities are shown in Table 10.

 Table 10

 Community Average Secondary Test Scores

Assess Where the Community Falls in The Substantial Impacts Matrix

In order to determine if there will be substantial adverse impacts to the community from the proposed project, the results of the Municipal Preliminary Score and the Secondary Test Score are evaluated together within the Assessment of Substantial Impacts Matrix. In this matrix the Municipal Preliminary Score determines the column and the Secondary Test Score determines the row. The intersection of the two scores defines a box, and that box within the EPA Guidance indicates the relative magnitude of the impact due to the project, i.e., the impact will not likely be substantial, it will likely be substantial, or the impact is not clear. As shown in Table 11, the matrix indicates that substantial adverse impacts will occur for Page and Mullen. For Smelterville, while the initial indication in the matrix is that the impact is unclear, moving to the next closest box in the matrix based on the screening scores indicates that substantial impacts are likely to occur. The EPA calculation draws the same conclusion from the matrix.

 Table 11

 Results from the Assessment of Substantial Impacts Matrix