Fort Walton Beach Council agenda — 12-24-2010 Regular — reading text

to cover the expenses related to the JALR. 4. RECOMMENDATION: 4. 1. Staff requests that City Council authorize the City Manager to execute the JALR with Oertel, Fernandez, Cole & Bryant, P.A. in Tallahassee, Florida, to provide legal services related to the Numeric Nutrient Criteria Rule adopted by EPA and provide the necessary funding to equally share the cost of the legal services, which has a maxirrium total fee of $70, 000. ATTACHMENTS: Joint Agreement for Legal Representation - 12 -08 -10 ( PDF) NNC Cost Analysis ( PDF) NNC Report ( PDF) SIGNATURE BLOCK: Michael Beedie Completed 12/ 08/ 2010 4: 51 PM Finance Completed 12/ 09/ 2010 8: 55 AM City Attorney Completed 12/ 09/ 2010 11: 13 AM Carole Jones Completed 12/ 09/ 2010 10: 52 AM City Manager Completed 12/ 09/ 2010 10: 30 AM City Council Pending Packet Pg. 93  14.1. a JOINT AGREEMENT FOR LEGAL REPRESENTATION This is an agreement for the engagement of legal services. It creates an attorney -client relationship between the Parties. The clients include: Destin Water Users South Walton Utility Okaloosa County Emerald Coast Utility Authority City of Fort Walton Beach The clients agree to engage the law firm of Oertel, Fernandez, Cole & Bryant, P.A., 301 S. Bronough Street, Suite 500, Tallahassee, Florida 32302. The purpose of this engagement is to analyze and review the validity of recently adopted EPA rules regarding Water Quality Standards for the State of Florida' s lakes and flowing waters as they affect wastewater utilities. The clients shall equally share the costs and fees generated by the law firm, which may include filing of a lawsuit in the United States District Court concerning the validity of the rules in question. Fee Structure: The law firm shall charge fees based on an hourly rate. The attorneys who will be the principals on this matter shall be Kenneth G. Oertel and Terry Cole, who shall charge 300. 00 per hour, and Angela K. Oertel, who shall be billed at the rate of $150. 00 per hour. The maximum fee charged shall be $ 70, 000. 00. Oertel, Fernandez, Cole & Bryant, P.A. will make every effort to minimize the costs and fees it will generate on this matter. Fees for services shall be billed on a monthly basis. One itemized bill will be produced and provided to each client with a separate invoice to each client for its prorata share of the total bill. Packet Pg. 94  14. 1. a Agreed to this on this day of 2010. Kenneth G. Oertel Oertel, Fernandez, Cole & Bryant, P. A. DESTIN WATER USERS OKALOOSA COUNTY 0 L0 Its: Its: SOUTH WALTON UTILITY EMERALD COAST UTILITY AUTHORITY LIM ion Its: Its: CITY OF FORT WALTON BEACH 0 Its: 2 Packet Pg. 95  14. 1. b Cnvdno ENTR X / Shaping the Future Economic Analysis of the Proposed Federal Numeric Nutrient Criteria for Florida November, 2010 Florida Numeric Nutrient Criteria No. 02953001. 00 Prepared For Florida Water Quality Coalition Packet Pg. 96  14. 1. b Executive Summary Economic Analysis of the Proposed Numeric Nutrient Criteria for Florida November 2010 Florida Numeric Nutrient Criteria No. 02953001. 00 Prepared for Florida Water Quality Coalition Prepared by Cardno ENTRIX 3141 John Humphries Wynd, Suite 265, Raleigh, NC 27612 Tel 919 2398900 Fax 919 239 8913 Toll -free 800 368 7511 www.cardnoentrix. com Packet Pg. 97  14.1. b Economic Analysis of the Proposed Numeric Nutrient Criteria for Florida Table of Contents ExecutiveSummary ...................................................................................... .............................. 1 ES. 1 Direct Compliance Costs of the Proposed Federal NNC Far Exceed the EPAEstimates ........................................................................ ............................... 2 ES. 2 There are Significant Distributional and Socioeconomic Impacts of EPA' s ProposedRegulations ............................................................. ...............................5 ES. 3 Benefits Associated with EPA' s New Water Quality Standards are Uncertain................................................................................. ...............................6 Figures Figure ES -1 Financial Risk —End -of P - ipe Requirement Annual Cost .................... ............................... 4 Figure ES -2 Financial Risk —BMP and LOT Requirement Annual Cost ................ ...............................4 Figure ES -3 Direct Annual Compliance Costs by Scenario and Sector ................... ............................... 5 Figure ES -4 Distribution of Annual Compliance Cost by Water Body Category .... ...............................7 November 2010 Cardno ENTRIX Table of packet Pg. 98  14. 1. b Executive Summary Florida currently has a narrative nutrient standard to guide the management and protection of its waters. In January 2010, the Environmental Protection Agency (EPA) published proposed " Water : lorida' s Lakes and Flowing Waters" which details numeric Quality Standards for the State of F nutrient criteria ( federal proposed NNC). Estuarine, marine, and canal criteria will be the subject of a subsequent phase of rule- making and are not considered in this report. EPA provided an assessment ( i.e. " EPA Economic Analysis ") of the potential benefits and costs of its proposed federal NNC, along with an assessment of the economics associated with the draft NNC rule from 1 the Florida Department of Environmental Protection ( FDEP). Per unit compliance costs from the EPA Economic Analysis differed widely from estimates provided by other entities, including FDEP. On behalf of the Florida Water Quality Coalition, Cardno ENTRIX has conducted an independent study of compliance costs using the EPA Economic Analysis, the economic studies conducted by the regulated community, public comments, and information gathered from interviews of many Florida entities that will be affected by the proposed rule. In contrast to many previous analyses, this study considers the impact of uncertainty about the stringency with which the NNC would be applied, the compliance costs for different types of water bodies compared to the benefits, and the indirect costs on the Florida economy. This study provides a summary of findings regarding the relative magnitude of the direct and indirect costs of the proposed federal NNC, as well as a review of EPA' s benefit estimating methodology and findings. The major findings of the study are: The costs of the proposed federal NNC regulations far exceed the EPA estimates. The EPA has inadequately accounted for existing baseline conditions, failed to address all direct costs, and did not considered all indirect costs to businesses and the public including the costs of uncertainty. If the EPA enforces " end -of-pipe" criteria (requiring all discharger effluent levels to be at or below the NNC), the total annual costs could range from $3. 1 to $ 8. 4 billion (based on the estimated fifth and ninety -fifth percentile of costs). Even if EPA enforces criteria to a less strict Best Management Practices ( BMPs) and Limit of Technology (LOT) standard in which effluent is not at or below the federal proposed NNC, then the annual costs could range from $ 1. 0 to $ 3. 2 2 billion (based on the estimated fifth and ninety -fifth percentile of costs in this scenario). These annual costs include operation and maintenance costs a well as capital costs annualized over a 30 -year period; estimated annual costs may extend indefinitely past the 30 -year period as new capital costs may be required. Environmental Protection Agency, 2010, " Preliminary estimate of Potential Compliance Costs and Benefits Associated with EPA's Proposed Numeric Nutrient Criteria for Florida ". Even assuming, as the EPA Economic; Analysis does, that the direct compliance costs of the proposed federal NNC are limited to implementing BMP' s and LOT for dischargers located only on impaired water bodies ($ 481 million annually), this analysis still estimates that the direct compliance costs are 45 times greater than the upper end of EPA costs ($ 10. 6 million). It is important to note that the FDEP disagreed with EPA' s characterization of LOT and the assumption that implementation of BMPs would be sufficient to comply with the proposed federal NNC. November 2010 Cardno ENTRIX Executive S Packet Pg. 99