TO: Mayor and City Council
THROUGH: Krishna Namburi, Interim City Manager
FROM: Brian D. Martin, PE, Public Works Director
SUBJECT:
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Update on the North Santiam Sewer Project and Three Basin Rulemaking by the Oregon Environmental Quality Commission
Ward(s): All Wards
Councilor(s): All Councilors
Neighborhood(s): All Neighborhoods
Result Area(s): Safe, Reliable and Efficient Infrastructure
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SUMMARY:
summary
Marion County (County), in conjunction with the North Santiam Sewer Authority, is constructing a new wastewater treatment facility that will serve the communities of Mill City and Gates. The City of Salem has been working closely with the County throughout the planning and permitting stages and has been supportive of the County’s efforts to modernize the wastewater treatment facilities for the communities while protecting the high-quality water of the North Santiam River. Among the necessary steps is a modification to the Three Basin Rule (OAR 340-041-0350), which places limits on discharges of pollutants into the North Santiam, McKenzie, and Clackamas basins. The public comment period on the proposed rule containing the necessary modifications closes on September 21, 2025.
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ISSUE:
Information only.
RECOMMENDATION:
recommendation
Information only.
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FACTS AND FINDINGS:
1. The Three Basin rule was promulgated in 1976 to protect the water quality in the Clackamas, North Santiam, and McKenzie rivers. The rule prohibits new or increased wastewater discharges to the North Santiam, McKenzie, and Clackamas rivers. Any wastewater facility permitted after 1976 is prohibited from directly discharging wastewater effluent to the three rivers and must discharge only to the ground under DEQ’s Water Pollution Control Facility (WPCF) requirements.
2. The United States Supreme Court decision in the County of Maui v. Hawaii Wildlife case (590 U.S. 165 (2020) resulted in the County not having a feasible pathway to permit the wastewater treatment facility because the ruling confirmed that discharges to groundwater are subject to the Clean Water Act (CWA) and require a federal NPDES permit if the discharge is the “functional equivalent of a direct discharge to surface waters.” Because of this ruling, the County project requires a National Pollution Discharge Elimination System (NPDES) permit, which is not allowed under the current Three Basin Rule (OAR 340-041-0350). Oregon Department of Environmental Quality (DEQ) rules also prohibit beginning construction on a wastewater treatment facility without first obtaining the appropriate discharge permit from DEQ.
3. The County petitioned the DEQ to amend the Three Basin Rule in August 2024. In response to the petition, the Environmental Quality Commission (EQC) voted to direct the DEQ to begin rule making proceedings. The County’s petition proposed allowing DEQ to issue a NPDES permit in the three basins when a discharge to the ground water system is deemed to be functionally equivalent to a surface water discharge.
4. The City worked closely with the County throughout the planning process and permitting process for the Mill City/Gates wastewater treatment facility. The proposed amendments to the Three Basin Rule will result in a positive impact to the water quality of the North Santiam River, which is the source of drinking water to approximately 200,000 water customers of the City. The amendments would not entail any increased risk of harm to the North Santiam River or Salem water customers. In fact, the opposite is true because the quality of treated effluent discharged from the Mill City/Gates facility will have a higher quality of treatment and will be subject to the stricter oversight, monitoring, and reporting requirements of an NPDES permit issued under the authority of the federal Clean Water Act in comparison to a Water Pollution Control Facility permit issued under Oregon state authority.
5. The City issued a letter of support of amendments to the Three Basin Rule in October 2024 (Attachment 1).
6. The EQC opened the rulemaking process to address the petition. A Rules Advisory Committee (RAC) was formed to draft a rule for the EQC’s consideration. The RAC, which included a member of City staff, put forward a proposed rule that would allow DEQ to issue a NPDES permit in certain circumstances within the three basins if a ground water discharge is functionally equivalent to a surface water discharge, which is the case for the County project.
7. Public comment on the proposed rule closes on September 21, 2025. Staff supported the proposed rule as written as it allows NPDES permits to be issued for ground water discharges while continuing to prohibit new surface water discharges. These proposed changes will allow communities, such as Mill City and Gates, to modernize and expand their wastewater treatment facilities while still protecting the high-quality water of the rivers within the three basins. A City letter of support was sent to the EQC earlier this week (Attachment 2).
8. Separately, Marion County, with the support of the City, successfully pursued a legislative fix in the recent Oregon Legislature’s 2025 Regular Session that allowed construction to begin on the project prior to completion of the rulemaking process and issuance of a NPDES permit. House Bill 1189, passed unanimously by the House and Senate. This was done to allow construction to proceed on a schedule that allows federal American Rescue Plan Act (ARPA) funding to be used before the grant expires.
9. The County, in conjunction with the North Santiam Sewer Authority, broke ground on the Mill City/Gates wastewater treatment facility on June 25, 2025.
BACKGROUND:
Marion County is pursuing a wastewater treatment facility upgrade for the cities of Mill City and Gates in the North Santiam canyon. The project is made possible from funding received through ARPA. However, the funds available through ARPA are required to be completely spent by the end of 2026, creating an urgency for project completion. Complicating the project are a series of permitting and regulatory hurdles that must be overcome for project success, mainly the Three Basin Rule, which places limits on discharges of pollutants into the North Santiam, McKenzie, and Clackamas basins, and a recent ruling by the United States Supreme Court, which requires certain types of discharges into groundwater to have NPDES permits.
On April 23, 2020, the U.S. Supreme Court held in County of Maui v. Hawaii Wildlife Fund, 590 U.S. 165 (2020) (the Maui decision) that discharges to groundwater are subject to the Clean Water Act (CWA) and require a federal NPDES permit if the discharge is the “functional equivalent of a direct discharge to surface waters.” This situation is remedied by proposed amendments to the Three Basin Rule. The proposed amendments would serve the purpose of the Three Basin Rule - to preserve or improve the existing high-quality water for municipal water supplies, recreation, and preservation of aquatic life. The only difference the amendments make to the Three Basin Rule is that any proposed wastewater treatment facility that meets the functional equivalency criteria of the Maui decision would now be required to comply with the more stringent requirements of an NPDES permit rather than the less extensive requirements of a WPCF Permit.
Robert D. Chandler, PhD, PE
Assistant Public Works Director
Attachments:
1. Salem Comments on Marion County’s Three Basin Rule Petition
2. Salem Public Comments on Proposed Amendments to the Three Basin Rule