Outsourcing and Privatization: An Advantage for Florida's Stormwater Program
As Florida tackles an aggressive initiative to reduce the size of state government, its stormwater program is also undergoing privatization. Public agencies around the country will be watching to see how this public/private partnership might work for them too.
Florida became the last state in EPA’s Region IV of southeastern states to assume delegation of the National Pollutant Discharge Elimination System (NPDES) stormwater program, effective October 22. As it inherits the NPDES program, Florida also becomes the first state to outsource the bulk of its program activities on such a large scale. The outsourcing will be handled by private contractors, who will help enforce permits and inspect construction, municipal, and industry permittees.
Although it is just one component of Governor Jeb Bush’s privatization initiative that seeks to reduce the number of state employees by 25% in five years, the outsourcing of a regulatory program such as the state’s stormwater plan will provide an unusual set of challenges, along with opportunities for benefit and growth.
Acquisition of the NPDES stormwater program should improve the state’s ability to more effectively address urban programs and revisit longstanding issues. The transition will provide Florida’s Department of Environmental Protection (DEP) with new tools to improve the state’s stormwater infrastructure.
Delegation to Florida
The DEP will assume administration of the NPDES stormwater program. As part of a phased approach, Florida accepted delegation of domestic and industrial wastewater point sources in 1995, but a five-year transition period was imposed on the delegation process by the Florida legislature, as allowed by the Clean Water Act.
With an average of nearly 60 in. of rainfall per year across the state and a varied topography that includes pinewoods, hills, and valleys, Florida recognized the need early on to implement a comprehensive stormwater program. Approximately half of the state’s water-quality impairment in surface waters is the result of nonpoint-source runoff.
To address surface-water issues, Florida implemented its stormwater program in the early 1980s, establishing new regulations to address construction. The environmental resource permits that Florida ultimately developed from this initiative were designed with even more stringent requirements than those permits issued by EPA.
As it now takes on the challenge of privatization, administration of the state’s program is to be coordinated by the DEP’s Tallahassee office under the Bureau of Submerged Lands and Environmental Resources. In preparation for its outsourcing efforts, Florida’s DEP has consulted closely with the State of Texas, which received its delegation from the NPDES one year ago and carried out privatization through its transition process.
In Florida, a core group of existing DEP staff will be responsible for directing and managing the program. The state is also hiring one more full-time and two part-time employees to help direct the contractor and oversee the program.
A private contractor - as yet to be selected as of this writing - will provide processing of Notices of Intent (NOIs), municipal separate storm sewer system (MS4) permitting, and inspection services. The DEP will retain signatory responsibility of "agency action" documents and therefore will remain in charge regarding all permitting and enforcement issues.
The selected contractor will provide a Notice Processing Center for accepting NOIs, Notices of Termination, and Discharge Monitoring Reports associated with the general permitting program for construction and industrial activities. The request for proposals indicates an expected 3,500 NOIs for construction projects will be submitted each year, along with 1,500 current construction projects and 3,000 NOIs for the industrial Multi-Sector General Permit. The DEP is planning for 500 no-exposure certifications each year.
Under the guidance of the DEP, the contractor will be responsible for review of MS4 permit reapplications, modifications, and annual reports. The contractor’s duties will include evaluation of stormwater management plans, review of water-quality monitoring data, and assembling other information needed for permit reissuance.
Florida has 28 Phase I MS4 permits involving 220 coapplicants. Every MS4 community will be inspected each year. Municipal inspections will average approximately two days and may include a record review, interviews, inspection of maintenance activities, and inspection of the citizen complaint log. Enforcement activity could include case preparation and fact witness testimony.
At the direction of the DEP, the contractor will also be responsible for compliance inspections for construction and industrial permittees. Activities will include review of records, observation of pollution prevention and best management practices, and interviews with maintenance personnel. For industrial and construction sites, the DEP will periodically assign a list of inspections to be conducted in the form of a task order. EPA expects annual compliance rates of 30% for construction sites and 10% for industrial permittees. Each of the major municipal permits will be inspected annually.
The compliance reports will be prepared for each inspection and forwarded to the DEP. Staff at the DEP will evaluate noncompliance findings and decide what action is to be taken in response to violations. The DEP will initiate all enforcement activities. The contractor may be required to provide testimony as a fact witness in subsequent legal proceedings.
Because the DEP will develop the checklist for inspections, contractors should be able to make the transition with little adjustment. In particular, there should be few privatization issues related to construction inspections, since the contractor will be certified under the state’s erosion and sediment control program. As a result, the contractor should be capable of carrying out inspections with few problems.
Because there is less standardization with regard to industrial inspections, however, these could prove to be more challenging. With less defined specifications for contractors to perform investigations compared with construction inspections, quality control will become paramount. Management practices that vary from industry to industry will have to be identified, and effective communication between the DEP and contractor will be essential.
The MS4 program presents its own set of challenges because, in Florida, permits have been written by EPA. A challenge facing the DEP has been EPA’s failure to provide the department with the necessary records for carrying out many of its functions. This failure is a result of a lack of resources at the federal level. Still, with only 28 MS4 permits to be concerned with each year, and with only 224 that can be considered major dischargers, private contractors should not be overwhelmed when carrying out municipal inspections.
A Self-Supporting Entity
A new aspect of Florida’s permit fees program will be its self-supporting status. The 2000 Florida legislature provided the DEP with $1.9 million of spending authority to implement the NPDES stormwater program. But Florida’s legislature, during the delegation process, required that all operating costs for administrators be recovered by collection of permit fees. The law also allows for collection of "annual" compliance and surveillance fees for larger facilities and MS4s. No longer will the program be subsidized by general revenues. In the past, up to 70% of the fee for a permit could be subsidized by trust funds. With the subsidies eliminated, the fees will increase with or without privatization.
During the delegation process, the DEP held several workshops and meetings in determining an equitable fee structure, particularly for MS4s. In an effort to ensure equity, dozens of draft versions were passed before a reasonable fee formula was agreed upon. For the MS4 fee, each permittee is required to pay a standard flat fee, plus an additional amount based on population. The population-based portion of the fee was based solely on the 1990 census. For municipalities, the formula agreed to was a proposed permit fee of $8,000 + $0.017 per capita (annual fee). Under the formula, the largest municipality, Dade County in south Florida, would be assessed $32,410. The proposed industrial fee is $500 for five years of NOI coverage. The cost for a construction permit is a one-time $150 NOI processing fee.
The regulated community will be viewing the recent privatization of the Florida DEP’s stormwater program with a watchful eye, especially as the private and public sectors form partnerships on an increasing basis. A private contractor acting on behalf of the public trust will be an interesting outgrowth of the privatization. An effective working relationship between the contractor and the DEP will be vital. Recent advances in technology should assist the new partnership, as the contractor will have easier computer access to records.
In general, the privatization of Florida’s stormwater program should be a fortuitous development for the state. After years of anticipation and preparation, the DEP is anxious to begin operation of the NPDES stormwater program. Successful implementation could provide public agencies with a new model for partnering with the private sector.
Author's Bio: Phil Coram is the bureau chief of submerged lands and environmental resources for Florida's DEP.
Author's Bio: Michael Bateman, P.E., engineering manager with Berryman & Henigar in Tallahassee, FL, is a former Florida DEP employee who led the delegation team that assumed control of the NPDES stormwater program.