Like other cities in California, Davis must balance its strong policies for environmental stewardship with the protection of interests of its ratepayer citizens. The city is not the sole decision maker in this process; regulatory requirements are imposed by state and federal agencies based on laws and regulations they have adopted, as well as based on their own judgment. The city interacts with the regulatory agencies to advocate the outcomes that the city believes are appropriate, but if the city's views are not adopted, the only options are appeals and litigation.

The city's NPDES permit is renewed approximately every five years by the Central Valley Regional Water Quality Control Board. By law, the city will be required to submit an application for renewal of the current permit in the fall of this year. The city's current permit was issued in March of 2001. The city believed that certain requirements of that permit were inappropriate and that the potential costs of compliance, which we currently estimate at $120 million are not commensurate with the benefits. It urged the Regional Board not to adopt the permit that was proposed by its staff, but the permit was adopted over the city's objection.

The city council elected to file an administrative appeal of that permit with the State Water Resources Control Board. The State Board has the authority to review and set aside decisions of the Regional Board. In October of 2002, the State Board issued a decision on a permit appeal that had been pursued by another city. Davis immediately filed a motion with the State Board, arguing that, based on the decision it had just issued, significant portions of Davis's permit should be reconsidered. This led to negotiations and ultimately a stipulation with the Regional Board. Based on these actions, the State Board, on May 7, 2003, issued an order remanding to the Regional Board for reconsideration the terms of the 2001 permit that would have required costly capital facilities. This State Board order also stayed schedules for complying with such requirements.

As a result, the city has not been required by the 2001 permit to construct the facilities it otherwise would have been required to construct. With that said, the renewal of the permit is pending, and there are no guarantees the permit will not be equally stringent as the 2001 permit, if not more so. The city is engaging in several activities that relate to this issue, which are discussed below.

It is practical and fair to ask what benefits would be achieved by construction of new facilities. In many ways, this was the subject of Davis's objection to the last permit. However, it is important to understand how this question is and is not addressed in the regulatory context. Stated simply, for many permitting decisions, the Regional Board does not necessarily base its decisions on this type of analysis. For some decisions, it exercises judgment. For others it does not. The line between what is and is not a matter of judgment can itself be a subject of debate. This is described further below.

For many years, NPDES permit requirements were largely based on what technology could reasonably achieve. In recent years, permitting has evolved such that permits must achieve certain instream water quality standards, irrespective of the cost of meeting those standards. Water quality standards are found in the Regional Board's Basin Plan (and also have been promulgated by US EPA with respect to some pollutants). The Regional Board is required to implement those standards through NPDES permit requirements. Particularly when the receiving stream has little or no dilution, even if only at times, this can result in very challenging requirements (for example, water quality standards must be met in the wastewater effluent itself). The California Supreme Court, just this month, ruled that when the Regional Board is merely implementing adopted water quality standards, it cannot take into consideration the costs of compliance.

This means of course that the water quality standards themselves are important. The Regional Board is required to consider and balance economics when it adopts the standards. Many believe that standards in the current Basin Plan were not based on good scientific analysis and/or are not appropriate for all water bodies, or did not factor in economics at all. However, so long as the Basin Plan remains in effect, the standards must be met. It is possible to amend the Basin Plan, and some municipal dischargers have initiated site-specific Basin Plan amendment processes. These processes have proven extremely difficult and extraordinarily expensive.

The City of Davis currently discharges to Willow Slough and the Yolo Bypass. The beneficial uses for the Bypass and Willow Slough, as designated in the Basin Plan, include agricultural supply, water contact recreation, non-contact recreation, Warm and Cold Freshwater Habitat, Spawning and Wildlife habitat. Each of these uses triggers different water quality objectives that are then interpreted into permit limits in the city’s NPDES permit. Because the city is considered to discharge to effluent dominated waterways (i.e. most of the water available is the city’s own effluent), the city does not receive the benefit of a dilution credit. By not receiving a dilution credit, the city must meet the actual criteria requirements at the point of discharge, regardless of the potential actual impairment to the waterbody downstream. This practice of imposing end-of-pipe effluent limits has been previously challenged at the State Water Board but has been upheld by the State Water Board.

Based on the city’s experience in its 2001 permit process and the Regional Board’s practice in other permits in the Yolo Bypass area (e.g. permits for the City of Woodland and UC Davis), the City of Davis can reasonably anticipate the pollutants that will be of issue in the regulatory context and the type of treatment upgrades that may be necessary to address the pollutants.

One of the regulatory issues driving the issue of upgrades is that of bacteria. Because the Yolo Bypass is designated for agricultural irrigation and water contact recreation, the Regional Board has determined that discharges to the Yolo Bypass must meet very low coliform standards. The standard being used by the Regional Board is significantly more stringent than the Basin Plan standard and derives from standards adopted by the Department of Health Services for direct use of recycled water. This low coliform standard and associated turbidity standards were first put into the city’s 2001 permit, and will be reconsidered in the remand. Since 2001, the Regional Board has placed these same standards in permits for the City of Woodland and UC Davis. In order to meet these standards, the city would need to upgrade to tertiary treatment. The State Board has upheld the Regional Boards practice of imposing more stringent requirements than the Basin Plan provides, but also has ruled that when the Regional Board does so it must consider economics. Because of this decision, the Regional Board now considers economics when imposing requirements that will require tertiary treatment. However, the Regional Board has determined that the imposition of tertiary treatment is appropriate and costs on municipalities and ratepayers are not significant enough to forego the perception of reducing potential risks to human health.

In fact, the Regional Board has imposed tertiary treatment on many Central Valley communities regardless of the cost to potential ratepayers and impact on the surface water. In many cases, the upgrade to tertiary treatment will cost some ratepayers to have sewer bills of over $200.00 per month. This has not discouraged the Regional Board from imposing this requirement.

Most likely, the tertiary treatment requirement will be imposed again on the City of Davis in its next permit. There are at least two cities currently litigating requirements for tertiary treatment. As noted, in the last permit Davis questioned whether the cost of tertiary treatment justified the benefit, but prudent planning requires that we anticipate what may likely be required.

The increasing regulatory demands do not relate only to surface water. Similar challenges exist with respect to groundwater.

The city is not alone in confronting high costs or potentially high costs for new facilities. It is working together with other cities and agencies to seek appropriate policies and permitting approaches that protect the environment without undue impact to ratepayers. Most notably, this includes our participation in the Central Valley Clean Water Association (CVCWA), where we actively participate in a number of special projects and activities with regional partners such as Woodland, Vacaville, Sacramento County, Fresno, and others. CVCWA provides an organization for local agencies to pool resources and approach the Regional Board on issues of broad concern. CVCWA is very concerned with the Regional Board’s practice of interpreting Basin Plan objectives in the manner currently conducted and is working diligently to challenge such interpretations and to find regulatory and policy solutions wherever possible.

The city has also been involved in a special study of the Yolo Bypass to determine the actual water quality impacts and approaches for solving the water quality impacts. The project was in part funded through a CalFed Watershed Grant and the City of Woodland. Davis was an active participant in the stakeholder group and provided additional funding for monitoring activities. In short, the project monitored 12 different monitoring locations throughout the Yolo Bypass for a year, evaluated the results of the monitoring and recommended management practices and other approaches for addressing the pollutants of concern. The final deliverable is a Yolo Bypass Water Quality Management Plan Report, which will be released this spring from CalFed.

In conjunction with the Management Plan, the City of Davis intends to explore the feasibility of developing a site specific objective for electrical conductivity in the Bypass for the protection of irrigated agriculture. The objective being used by the Regional Board is not necessarily applicable to agriculture in the Bypass so the Cities of Davis, Woodland and UC Davis are working cooperatively with the agricultural community to determine what might be a better objective that reflects agriculture in the Bypass.

These are just a few examples of what the city is doing to try and address the regulatory issues it is currently facing. In addition, of course, we are planning for the future and attempting to conduct that planning based on a reasonable range of foreseeable regulatory outcomes. The city's current treatment processes, while innovative, were not necessarily designed with today's regulatory procedures and requirements in mind. We are working with professionals who are both experienced in the regulatory world and knowledgeable of the kinds of facilities that would be required to meet potential permit requirements. This is intended both to help define our position in the regulatory context and to achieve long-term planning goals in the most cost-effective manner that is feasible.